Media: CSO reports property prices continue to drop, and falls in prices accelerating

The_Conductor · 07-06-2011 9:41pm #1

http://www.rte.ie/news/2011/0607/houses-business.html

The CSO's Residential Property Price Index shows that property prices fell by 1.0% in April. This compares with a decline of 1.7% in March and a decrease of just 0.7% in April of last year.

The annual rate of decrease is accelerating. In the year to April, property prices fell 12.2%, nationally. This compares with a decline of 11.9% in March.

Overall, property prices have fallen 40% from their highest levels in 2007.

Dublin prices fell by 0.7% in April and were 13% lower than a year ago.

Excluding Dublin, prices fell by 1.3% in April, a drop of 11.7% from a year ago. This compares with a monthly decline of 0.5% in April of last year.

House prices in Dublin are now almost 46% lower than at their highest level in early 2007.

Apartment prices in Dublin have fallen almost 53% from their peak in February 2007.

Outside of Dublin, the fall from the peak is just over 36%.

The CSO's residential property price index is designed to measure the change in the average level of prices paid for residential properties sold in Ireland.

The index is mix-adjusted to allow for the fact that different types of property are sold in different periods and starts from 2005.

The index shows that property prices increased every month from April 2005 to July 2007.

They have decreased every month from October 2007.

The_Conductor · 07-06-2011 9:45pm

I'm not suprised that property prices are continuing to fall, though the fact that the falls are actually accelerating, is a little surprising.

The time frame this report is looking at- does feature the first ECB rate rise- which would indicate we are in for a whole lot of hurt going forward.

Allowing that Dublin prices have fallen 46% according to this report (which I think is quite optimistic)- if we continue on current trends- of perhaps 1.4-1.6% falls per month- that could very well be another 16-20% fall over the next year........

All those reports on how to declare yourself bankrupt in the UK- are starting to look incredibly interesting.........

antiskeptic · 07-06-2011 9:56pm

I note the Irish Times reporting of the same figures has an industry expert place current house value at 2002 levels.

I bought a 2up/down in 1999 for 143k. The same spec house across the street sold for 35k in 1995. There was bubble in them there hills too.

Negative equity here I come :rolleyes:

RATM · 07-06-2011 10:04pm

This report didn't surprise me all that much when assessed in light of what property prices should be averaging by historical international norms.

The annoying part is that govt.policy and NAMA still seem to believe that the next property boom is around that corner we keep turning and this is resulting in our crash occuring in slow motion.

The other salient feature is that outside of the capital the price drops are lagging behind. For many the penny still hasn't dropped and perhaps current government policy is a reflection of this.

The upcoming auctions throughout the summer should throw a bit more light on values but we need plenty more of them to really make a sound judgement. And by that I mean plenty more that do not have the frenzied 'bargain hunters' atmosphere of the first.

EKRIUQ · 07-06-2011 10:04pm

At this stage the price of falling houses is down to the lack of credit available. No credit no buyers, no buyers reducing prices and with more interest rate hikes on the way credit is even going to be harder to get.

antiskeptic · 07-06-2011 10:05pm

smccarrick wrote: »

All those reports on how to declare yourself bankrupt in the UK- are starting to look incredibly interesting.........

The Prophet Kelly (pbuh) did predict mass mortgage default as the next domino to fall.

Such stirrings are hard to argue against morally (I don't see simplistic "you made your bed" arguments holding back the tide) and are hard to argue against logically as negative equity begins to overtake residual value.

To all whole sail in that ship: my sympathy

Rabidlamb · 07-06-2011 11:03pm

antiskeptic wrote: »

The Prophet Kelly (pbuh) did predict mass mortgage default as the next domino to fall.

Such stirrings are hard to argue against morally (I don't see simplistic "you made your bed" arguments holding back the tide) and are hard to argue against logically as negative equity begins to overtake residual value.

To all whole sail in that ship: my sympathy

Oh man, you better run & hide, I'll see if I can hold them back.
The self appointed Boards mouthpieces on mortgage default have ruled that it morally unacceptable for anyone to escape the noose.
People are to stay here for the next 35 years & pay off all their loans including penalties.
There are be no kids, cars or holidays as their first obligation is to repay every penny of their debt regardless of personal circumstances or mental state.
The mouthpieces will also scaremonger with stories of people being pursued to the ends of the earth for any shortfall & a debtors list at every airport, all complete rubbish tbf.

I however side firmly with you in offering those people my sympathy.
If I were in difficulty with my 8x salary mortgage I wouldn't run.
My family would come first & the bank would be given what was left at the end of the month once we had a comfortable existence.
So the worst that happens is they take your home which is cause of your problems in the first place.
After all this has happened, only then think about leaving.
Between extended moratoriums & an unease amongst politicians to pursue this I'd sit back & relax for a while.

antiskeptic · 08-06-2011 8:40am

Rabidlamb wrote: »

Oh man, you better run & hide, I'll see if I can hold them back.

The self appointed Boards mouthpieces on mortgage default have ruled that it morally unacceptable for anyone to escape the noose.
People are to stay here for the next 35 years & pay off all their loans including penalties.

There are be no kids, cars or holidays as their first obligation is to repay every penny of their debt regardless of personal circumstances or mental state.

The mouthpieces will also scaremonger with stories of people being pursued to the ends of the earth for any shortfall & a debtors list at every airport, all complete rubbish tbf.

There is always, as the Prophet Kelly says, safety in numbers. It's hard to argue morals with a stampeding herd

I however side firmly with you in offering those people my sympathy.

If I were in difficulty with my 8x salary mortgage I wouldn't run.
My family would come first & the bank would be given what was left at the end of the month once we had a comfortable existence.

So the worst that happens is they take your home which is cause of your problems in the first place.

After all this has happened, only then think about leaving.

Between extended moratoriums & an unease amongst politicians to pursue this I'd sit back & relax for a while.

You'll have lost your deposit, any capital you've paid off, had a shed load of worry and some credit bad history. That'd about buy off your moral contribution to the overall debt involved.

I'm pretty sure it wasn't just folk who purchased after 2002 (or whatever the current high tide is for entering negative equity) who voted in overwhelmingly numbers for the shower of cretins who led us into this mess.

We voted them in, it seems fair that we pay the price

noxqs · 08-06-2011 8:40am

I think people should be forced to pay - taking out 8, 10, 12, 14x salary on a house was a gamble of greed, pure and simple - "ahh sure it'll be grand, with the prices going up I'll be a millionaire next year!".

You could rent a 4 bed house for half the price of the mortage repayments interest only during the height of the bubble, so the excuse that people needed a place to live is bull too.

Owning a house is not a requirement to have a family. I'd never sign a mortgage above 3.5x on a single income, even if my wife was expecting quintuplets.

You'd never see people who gambled 10x their salary away at a casino get any sympathy. Or borrowed 10x their salary to buy stocks and lost everything get sympathy. Why is houses different ?

There has to be balance in life, if they'd won the profit they would have been laughing all the way to the bank.

But I agree bankruptcy laws here needs to change. But maybe not as easy going as the UK ones. I'd like lessons to be learned.

m5ex9oqjawdg2i · 08-06-2011 9:07am

I'm sure we will have the government stating that it's leveling out and it's a great time to buy :rolleyes:

Zamboni · 08-06-2011 9:09am

Rabidlamb wrote: »

I however side firmly with you in offering those people my sympathy.

Offering sympathy is one thing.
Being forced to pay to keep these people in their tiger houses is another.
That is the moral hazard.

Rabidlamb · 08-06-2011 9:25am

Korbin Greasy Mimosa wrote: »

I'm sure we will have the government stating that it's leveling out and it's a great time to buy :rolleyes:

That used to be Frank Fahey or Donnie Cassidys job.
The housing market in Ireland is like the scene in Braveheart when the English cavalry are charging the Scotish line.
"Hold.... Hold..... Hold....."

Only people who allow their heart to rule their mind are buying now.
Any smart person with approval is willing to wait until 2014.

bryaner · 08-06-2011 9:28am

noxqs wrote: »

I think people should be forced to pay - taking out 8, 10, 12, 14x salary on a house was a gamble of greed, pure and simple - "ahh sure it'll be grand, with the prices going up I'll be a millionaire next year!".

You could rent a 4 bed house for half the price of the mortage repayments interest only during the height of the bubble, so the excuse that people needed a place to live is bull too.

Owning a house is not a requirement to have a family. I'd never sign a mortgage above 3.5x on a single income, even if my wife was expecting quintuplets.

You'd never see people who gambled 10x their salary away at a casino get any sympathy. Or borrowed 10x their salary to buy stocks and lost everything get sympathy. Why is houses different ?

There has to be balance in life, if they'd won the profit they would have been laughing all the way to the bank.

But I agree bankruptcy laws here needs to change. But maybe not as easy going as the UK ones. I'd like lessons to be learned.

Profit what profit 90% of ordinary folk just bought a house to live in with their family, stop talking nonsense about profit and millionaires these houses were not bought as investments.

antiskeptic · 08-06-2011 9:45am

noxqs wrote: »

I think people should be forced to pay - taking out 8, 10, 12, 14x salary on a house was a gamble of greed, pure and simple - "ahh sure it'll be grand, with the prices going up I'll be a millionaire next year!".

You could rent a 4 bed house for half the price of the mortage repayments interest only during the height of the bubble, so the excuse that people needed a place to live is bull too.

Owning a house is not a requirement to have a family. I'd never sign a mortgage above 3.5x on a single income, even if my wife was expecting quintuplets.

People aren't financial experts and are (and were) led into their thinking by those supposedly in the know. Those authorities (largely Government and the Banks) led people to believe ours was a new paradigm, that our house prices were catching up after years of lagging behind, that you either bought now or were left behind forever.

Your attaching all the blame on the house purchaser and none on government or banks.

That the rest of the population carries the burden of government (at all times) and the banks (in this unusual time) is neither here nor there. In a democracy, the elected government is considered to reflect the will of the people.

Like it or not, you (as in the collective you) are responsible for a significant portion of the debt: that brought about by government policy and that brought about by the banks (which was brought about by government inaction)

noxqs · 08-06-2011 9:45am

A mortgage is the single largest loan anyone will ever take upon themselves. They may have been buying a house to live in, fair enough.

If they are now in 60% negative equity the house was too expensive and the loan should not have been taken out. Especially not on 100% mortgage as some did. Why did they then ? What made them believe that it was the thing to do ?

Playing with a mortgage calculator for about 30 minutes, the amount of interest to pay is staggering - the risk of interest rate increases, and the benefits of reducing principal becomes very .. visual. Without appreciation of the house price there is no way, no way, that these mortgages even made a shred of sense. So what other reason is there left ?

Fact is, many made terrible mistakes in judgement with little thought. There's books, articles, and plenty of advice available on the internet, libraries and from scholars on what a house should cost and what fundamental value is. So houses from 2002-2007 was valued between 5x to 8x a single income. That's several multiples above the norm. This wasn't a secret.

You don't sign a contract on a mortgage without research - the excuse that they didn't know better and the banks was willing to lend is bad at best. Surely, anyone in a position to sign a mortgage contract is not a child but an adult with enough mental capacity to understand what they're getting themselves into.

P.S

I get that the authorities and banks were giving out bad advice and frankly lying thru their teeth, but people could have researched better. Problem is, we can't just let the banks burn, as we're now owning the banks as tax payers. So if we forgive all debt or restructure it, we're all collectively loosing. Frustratingly badly handled by FF but what can we do.

P.P.S

Iceland also thought they had a new paradigm going - how a fishing village of 300,000 or so people could run the worlds financials. Funny how bubbles delude

antiskeptic · 08-06-2011 9:51am

noxqs wrote: »

Playing with a mortgage calculator for about 30 minutes, the amount of interest to pay is staggering - the risk of interest rate increases, and the benefits of reducing principal becomes very .. visual. Without appreciation of the house price there is no way, no way, that these mortgages even made a shred of sense. So what other reason is there left ?

Take you're average car advert. Divide it up into two streams of information:

a) hard, practical information about the car: mpg, cost of ownership, rate of depreciation

b) image projection

If car and beer (and everything else) advertisers have realised that people don't operate only according to cold, hard logic then why should you suppose they should do.

You need to deal with people as they actually are, not as you imagine they should be.

foxy06 · 08-06-2011 9:54am

Just wondering when they say prices have dropped 1% in April do they calculate using asking prices of selling prices. I know a few people that bought in the past few months the first house advertised at 279k and they bought for 215. The same house down the road was advertised 6 months later as 289 but sold for 220k but it had been extended and with attic converted and house in better state when first purchased. Makes me think asking prices are a bit of a joke. Wish I could find out the actual selling prices of property in my area.

antiskeptic · 08-06-2011 9:58am

noxqs wrote: »

Iceland also thought they had a new paradigm going - how a fishing village of 300,000 or so people could run the worlds financials. Funny how bubbles delude

Iceland are taking their former Prime Minister to court on account of his responsibility in getting the country into the crisis it got into. Which is another way of saying that Iceland figure the house owner not the only one responsible for the situation.

So. What way would you divide up the responsibility cake now. Government / Media / Banks / Individual

Hard percentages mind...

bryaner · 08-06-2011 9:58am

The government and banks completely coerced most of the nation (I know some saw trough this but most didn't) into a false sense of security. I personally lay 70% of blame with the lender and 30% with the borrower.

After all they are the risk assessors and threw around cash like a scene out of brewsters millions..

noxqs · 08-06-2011 10:01am

The calculations used in the paper released is stated in the original.

It is based on stamp duty and mortgage drawdowns which means its based on actual sales price and actual sales, not asking prices (which may not sell at all at those prices).

The RPPI is compiled using data on mortgage drawdowns provided on a monthly basis by 8 of the
main Mortgage Lending Institutions under Section 13 of the Housing Act (2002). This data
provides details on the characteristics of properties bought (such as building type and size) as well
as the price paid. It is transactions based; meaning that prices are recorded only where a sale
occurs.

I'd put the blame on the media at around 30%. There was no strong journalists and media outlets willing to even discuss the fact that the housing market was in a massive bubble. And those dissenting voices was told to kill themselves.

Government at 30% for knowingly letting this happen while castrating the financial regulator (if it had any balls to begin with).

And the lenders/borrowers at 30%.

10% residual blame for the feel good factor - "lets all shut up and hope no one notices the emperor is naked".

Zamboni · 08-06-2011 10:01am

bryaner wrote: »

I personally lay 70% of blame with the lender and 30% with the borrower.

And leave us dwindling tax payers with 100% of the mess

antiskeptic · 08-06-2011 10:01am

foxy06 wrote: »

Just wondering when they say prices have dropped 1% in April do they calculate using asking prices of selling prices. I know a few people that bought in the past few months the first house advertised at 279k and they bought for 215. The same house down the road was advertised 6 months later as 289 but sold for 220k but it had been extended and with attic converted and house in better state when first purchased. Makes me think asking prices are a bit of a joke. Wish I could find out the actual selling prices of property in my area.

From the OP

The CSO's residential property price index is designed to measure the change in the average level of prices paid for residential properties sold in Ireland.

The way to find out what houses are going for is to get various estate agents to value yours. They'll tell you what houses they've sold recently have gone/been advertised for - you can decide if they are telling the truth or not.

Those discounts you mention sound about the same as the ones estate agents have been telling us about in recent times.

antiskeptic · 08-06-2011 10:05am

Zamboni wrote: »

And leave us dwindling tax payers with 100% of the mess

Minus whatever percentage can be retained by the borrower through debt restructuring. I'm sure there is some leverage to be had in a person retaining their home.

As for the rest? Well, the banks are ours - says all the governments we've voted in in recent times. And the value of an investment (a security on a loan being such a thing) can go down as well as up.

bryaner · 08-06-2011 10:05am

Zamboni wrote: »

And leave us dwindling tax payers with 100% of the mess

Unfortunately seems that way.

meglome · 08-06-2011 10:18am

bryaner wrote: »

The government and banks completely coerced most of the nation (I know some saw trough this but most didn't) into a false sense of security. I personally lay 70% of blame with the lender and 30% with the borrower.

After all they are the risk assessors and threw around cash like a scene out of brewsters millions..

I'm sorry but we're not talking about sending a couple of extra grand on a better car. We're talking hundreds of thousands. I told people at the time they were crazy to borrow that much money but they would not listen. I gave all the logical reasons why they shouldn't do it backed up with information from other international bubbles. Some have since come to me and said "you were right I shouldn't have bought that house". Why should I now be forced to pay for their ignorance? Bad enough I'm paying for the bankers greed and stupidity.

Zamboni · 08-06-2011 10:29am

meglome wrote: »

Why should I now be forced to pay for their ignorance? Bad enough I'm paying for the bankers greed and stupidity.

Appraently it's tough sh1t because we are in a democracy full of idiots who are not prudent in significant financial undertakings.
Personally I'd have full on repossessions in the morning.

antiskeptic · 08-06-2011 10:33am

meglome wrote: »

I'm sorry but we're not talking about sending a couple of extra grand on a better car. We're talking hundreds of thousands.

The same principles apply though. How it is people arrive at purchasing decisions isn't based solely on logic.

I told people at the time they were crazy to borrow that much money but they would not listen. I gave all the logical reasons why they shouldn't do it backed up with information from other international bubbles.

Countering you were the government, the banks and the media (by and large). And the fact that for 10 solid years, people had been mainlining a drug call "own your own property"

Why should I now be forced to pay for their ignorance? Bad enough I'm paying for the bankers greed and stupidity.

I've asked this question of others and ask it of you now. The following are responsible for the situation:

The Government

The Population who voted in that government a number of times.

The Banks

The International Banks who made our bank lending possible

The Media

The Individual house purchaser.

How would you assign blame? In percentage of the total.

The_Conductor · 08-06-2011 11:01am

Zamboni wrote: »

Appraently it's tough sh1t because we are in a democracy full of idiots who are not prudent in significant financial undertakings.
Personally I'd have full on repossessions in the morning.

Personally I would too.
Why should someone's financial imprudence be rewarded, while someone else who made a conscious decision not to overstretch themselves- end up with the bill. Then you also have the 200,000 apartment purchasers who are deciding to have kids now- having postponed it during the boom years. They were sold the idea that the apartment was their starter home- that they would trade up to a family home down the line.

Personally- I'd repossess any property in default on its mortgage- and providing the debts secured on the property were solely for the purpose of purchasing or improving the property- wipe those debts. So- the previous owner who can no longer service the debt on the property- has their slate wiped clean, however the are turfed out of their house- and the properties would then be managed as social housing- or made available to purchase to those who are not in default on their mortgages- by manner of a property swap.......

Any debts incurred or secured on the property that were not as a result of purchasing or improving the property- e.g. new cars, holidays etc- would remain debts that would remain with the borrower.

We allegedly have 100,000 people in need of social housing or accommodation in the country, and unable to supply it. Use the repossessed homes towards this end- however give people who aren't in default on their mortgages, the option to purchase the repossessed properties- by means of a property swap (with a cash topup as necessary). That way- you are rewarding the virtue of their financial prudence- while still ensuring that the person getting turfed out, has a roof over their heads (though not their original roof, and not a property of their choosing).

?

m5ex9oqjawdg2i · 08-06-2011 11:02am

Rabidlamb wrote: »

That used to be Frank Fahey or Donnie Cassidys job.
The housing market in Ireland is like the scene in Braveheart when the English cavalry are charging the Scotish line.
"Hold.... Hold..... Hold....."

Only people who allow their heart to rule their mind are buying now.
Any smart person with approval is willing to wait until 2014.

Some people are prepared to go into negative equity for that dream home. You know when you find something you fall in love with, no reasoning can deter you from purchasing it, you know damn well you will lose money on it, but buy it anyway.

meglome · 08-06-2011 11:05am

antiskeptic wrote: »

The same principles apply though. How it is people arrive at purchasing decisions isn't based solely on logic.

I appreciate that. However having an emotional attachment to buying and losing all sense are not the same things.

antiskeptic wrote: »

Countering you were the government, the banks and the media (by and large). And the fact that for 10 solid years, people had been mainlining a drug call "own your own property"

I get I'm not the bastion of all sense. But if I was pointing a gun at my neighbour while pulling the trigger would I not be responsible for the repercussions. No matter how many times someone told me there would be none. We all have basic maths skills, it didn't take a genius to figure out something was very wrong.

antiskeptic wrote: »

I've asked this question of others and ask it of you now. The following are responsible for the situation:

The Government

The Population who voted in that government a number of times.

The Banks

The International Banks who made our bank lending possible

The Media

The Individual house purchaser.

How would you assign blame? In percentage of the total.

So if I can sum this up as long as we were told it was perfectly safe to jump off the cliff then we should be surprised by the sudden impact. What's happened to reality when we as individuals are not responsible for our actions?

We voted for people, repeatedly, that carried on with a high spend low tax model. These policies didn't make sense in the long run. We as a people had never held our politicians accountable for anything. So when politicians (or bankers) are not held accountable they have no incentive to do the right thing, they do the easy thing. All of this shíte we're in stems from that inability to hold people properly to account... ever. We may not all have borrowed too much money, we may not all have believed the hype but we (mostly) all didn't care enough about who we elected.

Zamboni · 08-06-2011 11:05am

Use the lower end properties for social housing.
The middle and upper level should be sold on the market.
Social housing should be adequate not luxurious.

user1842 · 08-06-2011 11:14am

Hold on can we not also blame the stupid ass ECB and European banks that lent to us in the first place without doing due diligence.

Why should they get of the hook. They were as stupid as us.

antiskeptic · 08-06-2011 11:16am

smccarrick wrote: »

Use the repossessed homes towards this end- however give people who aren't in default on their mortgages, the option to purchase the repossessed properties- by means of a property swap (with a cash topup as necessary). That way- you are rewarding the virtue of their financial prudence- while still ensuring that the person getting turfed out, has a roof over their heads (though not their original roof, and not a property of their choosing)

By financially prudent, I'm taking you mean people who are in negative equity/struggling to meet their mortgage (but who are still doing so) a way to escape the burden. They effectively downgrade their house to something more affordable and their n/eq debt is written off?

But the difference between them and the person next door who is in arrears (and who is to be turfed out and given a roof over their head) could be something as arbitrary as job loss.

There was no difference between them in the financial prudence stakes.

Am I understanding you correctly?

Zamboni · 08-06-2011 11:27am

antiskeptic wrote: »

By financially prudent, I'm taking you mean people who are in negative equity/struggling to meet their mortgage (but who are still doing so) a way to escape the burden. They effectively downgrade their house to something more affordable and their n/eq debt is written off?

But the difference between them and the person next door who is in arrears (and who is to be turfed out and given a roof over their head) could be something as arbitrary as job loss.

There was no difference between them in the financial prudence stakes.

Am I understanding you correctly?

Even leaving the financial prudence aside, why would a person who can not afford something get to keep it?

antiskeptic · 08-06-2011 11:27am

meglome wrote: »

No matter how many times someone told me there would be none. We all have basic maths skills, it didn't take a genius to figure out something was very wrong.

Maths skills don't tell you that the worlds financial system is built on air. And that when it crashes it will cost you your job. If they did then a lot of people with excellent maths skills wouldn't have been burnt the world over.

The problem for most isn't the price they paid for their house, it's the fact the tide went out carrying their jobs with it. I bought in 1999 and will in all likelyhood end up in negative equity before long. Negative equity itself doesn't make any difference - it's ability to pay your mortgage that makes the difference.

We voted for people, repeatedly, that carried on with a high spend low tax model. These policies didn't make sense in the long run. We as a people had never held our politicians accountable for anything. So when politicians (or bankers) are not held accountable they have no incentive to do the right thing, they do the easy thing. All of this shíte we're in stems from that inability to hold people properly to account... ever. We may not all have borrowed too much money, we may not all have believed the hype but we (mostly) all didn't care enough about who we elected.

Which is why I asked responsibility to be assigned to ALL involved. The government, the electorate, the banks, the media, the international banks and their investors, the householders who paid too much..

How would YOU assign who owns what portion of the responsibility ... and thus, debt?

antiskeptic · 08-06-2011 11:29am

Zamboni wrote: »

Even leaving the financial prudence aside, why would a person who can not afford something get to keep it?

I'm not saying they should keep it. I'm saying that the total debt need be divided up amongst the parties responsible for creating that debt. The houseowner is but one party.

The_Conductor · 08-06-2011 11:33am

I had more in mind the person who bought an apartment, and is still paying their mortgage without issue- but has had children, and is now in unsuitable accommodation- but unable to move- as their is no market to speak of, into which they can buy/sell property........

If property prices have fallen by half since the peak- under normal borrowing conditions- virtually everything post 1998 is in negative equity- irrespective of the record of the borrower.......

Yes- the difference between two households could be a job loss versus- no job loss- but then there are people who took much lower paying jobs in the civil service and elsewhere- in recognition that they were paying a price for the job security (not that there is job security anywhere anymore).

Some people sat down- and worked through the possibilities and then went and borrowed within their means. Others- decided to borrow as much as they possibly could, and if there were consequences- they'd cross that bridge when they came to it.

Just because you could borrow 600k- doesn't mean you had to- or that it was a good idea to. You neighbour who decided on reflection that he couldn't afford to borrow 600k- and is in an apartment with 3 kids- irrespective of whether they're in negative equity or not- should have first dibs on your property that you secured with a loan you have no manner of repaying......?

meglome · 08-06-2011 11:51am

antiskeptic wrote: »

Maths skills don't tell you that the worlds financial system is built on air. And that when it crashes it will cost you your job. If they did then a lot of people with excellent maths skills wouldn't have been burnt the world over.

No they don't... but it's very safe to say even without the world financial crisis we wouldn't be looking too good financially. It's one thing losing your job and quite another thing losing your job after you've borrowed way more than made any sense.

antiskeptic wrote: »

The problem for most isn't the price they paid for their house, it's the fact the tide went out carrying their jobs with it. I bought in 1999 and will in all likelyhood end up in negative equity before long. Negative equity itself doesn't make any difference - it's ability to pay your mortgage that makes the difference.

The problem has been made worse by people losing their jobs. The big problem is people borrowed way too much, they borrowed using 100% mortgages, they borrowed large multiples of their salary etc. etc.

antiskeptic wrote: »

Which is why I asked responsibility to be assigned to ALL involved. The government, the electorate, the banks, the media, the international banks and their investors, the householders who paid too much..

How would YOU assign who owns what portion of the responsibility ... and thus, debt?

Well it's obvious to me we're all to blame, I'm just advocating people taking personal responsibility for their part. But one thing I am strongly saying is we accepted a system that led us directly to where we are now. We elected people who we knew were corrupt. Were people actually surprised that FF made some horrible decisions in 2008. As far as I recall the only way they knew how to deal with anything was to throw money at it. That blanket bank guarantee was a car crash in slow motion.

We as individuals supported the system, we as individuals elected those in charge (repeatedly), we as individuals hold major responsibility. Doesn't mean though I wouldn't like to see some bankers or politicians in jail.

up4it · 08-06-2011 12:50pm

It seems to me that a lot of people bought property as an investment rather than just somewhere to live.

Icepick · 12-06-2011 6:22pm

dmclean1842 wrote: »

the stupid ass ECB and European banks that lent to us in the first place

Source?

ShadowHearth · 12-06-2011 7:14pm

up4it wrote: »

It seems to me that a lot of people bought property as an investment rather than just somewhere to live.

100% right.

people were just greedy. so many companies were greedy too.

everyone just wanted to make good few thousands on theyr properties. it was a mass "sitting on a pot of gold" mentality.

you can even see it now, when people are plain saying not to buy, not even interested in individual cases! As they just see that you cant make money on it, just losse. so first thing in mind is resale and property going up, not making property your permenant home.

car is not investment

house is not investment

its luxury.

user1842 · 12-06-2011 10:13pm

Icepick wrote: »

Source?

"
Proinsias de Rossa has revealed in the European Parliament that Irish banks now owe 500 billion euro to european banks. 300 billion to German and UK banks, and 200 billion to banks in other EU countries.
"

The_Conductor · 12-06-2011 10:26pm

dmclean1842 wrote: »

"
Proinsias de Rossa has revealed in the European Parliament that Irish banks now owe 500 billion euro to european banks. 300 billion to German and UK banks, and 200 billion to banks in other EU countries.
"

What does this have to do with

Originally Posted by dmclean1842:
the stupid ass ECB and European banks that lent to us in the first place

What Proinsias de Rossa was referring to was the interbank lending market- which is common place lending between financial institutions- and has been since Victorian times. Sure Irish banks borrowed over 500 billion from EU financial institutions- however they also simultaneously lent over 300 billion...... When this source of liquidity froze for Irish institutions- all hell broke loose- as their next source of borrowing was the ECB and the Irish Central Bank- and both of these institutions demanded collateral- which is where the self-issued bearer bonds with an Irish government guarantee came into being. Pretty handy- allowing the banks print IOUs that the Irish government guaranteed to honour. Unfortunately- the Irish guarantee was called on- and as we all know- the Irish government finances are rocky at best........

So- loads of European banks lent our banks money. We in turn lent money elsewhere. The ECB had an effective zero rate on over night funds (the 1% rate being above the prevailing rate of inflation)- so if there is any baddie in this story- its the ECB with a wholly inappropriate rate of interest which encouraged people to spend- a- because money was cheap as chips and b-because they certainly weren't going to keep the value of their money by saving it.........

The big problem was a one-size-fits-all approach to economic matters. Low interest rates suited the French/Germans/Belgians and a few others. They certainly didn't suit us, the Portuguese, the Spanish, the Dutch, the Danish- and a myriad of others. However- we are minnows to the French and German sharks- and our little peeps- even concerted peeps- meant nothing to the economic behemoths to whom we are now beholden........

Aprilmay · 13-06-2011 3:33pm

up4it wrote: »

It seems to me that a lot of people bought property as an investment rather than just somewhere to live.

Don't forget the holiday home aboard! I know a few people who did this

Media: CSO reports property prices continue to drop, and falls in prices accelerating

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