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Housing Bubble Bursting

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  • Registered Users Posts: 68,317 ✭✭✭✭seamus


    Mailman wrote:
    Where exactly in the report on sherryfitz.ie does it state that there is still demand.
    That's the thing. Figures can be bent to tell whatever story they want.
    "House prices rose by 22.2% last year. Yay! More growth this year!"
    or
    "House prices rose steadily until August, when they stopped sharply and began to drop. Only a 0.7% drop, but perhaps this signals the end?"

    Everyone will have a different outlook on what the figures are saying. Sherry Fitz are eager to get the buyers and the sellers in and optimisitic, so they're going to put a positive spin on it.

    I would be eager to see some actual data (or even just graphs) of price growth over the past few years. Perhaps there has been a traditional "slump" from August each year, we just didn't notice so much because we were at the front of the wave (in the "euphoric" stage as it were).


  • Banned (with Prison Access) Posts: 8,486 ✭✭✭miju


    Zambia232 wrote:
    A : It is true that there are currently more propertys on the market. Hence demand is not as high.

    pre-requisite to all crashes (particularly property bubbles) is a large build up in inventory , this is pretty much the case now without the traditional january properties for sale coming onto themarket
    Zambia232 wrote:
    B: It is no longer as easy to sell your house as it was pre August
    and it will get worse - see above
    Zambia232 wrote:
    C: Interest rates have gone up causing less spending on "Other items"

    and they're not stopping yet if the M3 data is anything to go by , what's more this is what most bears will tell starts to put the whole cycle into a nasty tailspin as when people don't feel rich , have money physically taken out of their pockets by rate rises it has a large effect on consumerism which means less jobs
    Zambia232 wrote:
    D: The amount of these conversations has gone up scaring of new potential buyers.

    i'd prefer to think that people are finally using common sense , the reason that this discussion topic is being talked about more and more on various websites is that people are beginning to see the writing on the wall and realise property is now very risky and adopt the wait and see approach as they're no longer at risk of not getting on the "property ladder" with prices stagnating at best
    Zambia232 wrote:
    E: I sold a house in West Dublin in July , A better property up the road can now not sell for that price but at hovers 20,000 lower.

    see above , people are seeing this and adopting the wait and see approach , it's the herd mentality / greed operating in complete reverse , why buy now when i can save nearly a years wages in 6 months time and god know how much if i wait a year

    Zambia232 wrote:
    I do not see a crash but the hot air is slowing getting out of this balloon..

    i genuinely believe this is the calm before the storm , all indicators from data from the last quarter of last year indicate that worse is to come


  • Banned (with Prison Access) Posts: 8,486 ✭✭✭miju


    seamus wrote:
    I would be eager to see some actual data (or even just graphs) of price growth over the past few years. Perhaps there has been a traditional "slump" from August each year, we just didn't notice so much because we were at the front of the wave (in the "euphoric" stage as it were).

    a quick dig around Google brought up this report and in the last 15 pages or so it shows that "traditionally" there hasn't been a slump and in fact quite the opposite in the last quarter of each year

    bear in mind that data is not as concise as i'd like but does cover 1999 - 2003 in full so is only missing the last 3 years (i'll try dig out a better one though)


  • Registered Users Posts: 68,317 ✭✭✭✭seamus


    miju wrote:
    i'd prefer to think that people are finally using common sense
    I wouldn't say common sense really. I'd say it's more the herd mentality you mention, or perhaps survival instinct. For many people, there is a lot resting on property. It's a massive supplier of labour. Hundreds of thousands of people have not only their money to lose, but their job too if the market collapses. If they lose their job, they lose their home. So by disposing of their home (or any excess homes), they limit their liability in the event that their job goes too. But of course, if they're all trying to dispose of their excess property, they're only fuelling the fire in which they're going to burn. Doesn't sound like common sense to me :)

    On the flipside, there will be a large number of people for whom their house is just their home. They have no interest in moving, and are willing to hold out even when they have negative equity, as they see it as a long-term investment. These are the guys who'll be laughing when the market recovers, having paid off a large chunk of their mortgage, and still sitting on a house worth what it was in August 2006.


  • Banned (with Prison Access) Posts: 25,234 ✭✭✭✭Sponge Bob


    seamus wrote:
    I would be eager to see some actual data (or even just graphs) of price growth over the past few years. Perhaps there has been a traditional "slump" from August each year, we just didn't notice so much because we were at the front of the wave (in the "euphoric" stage as it were).
    Actual data is best Seamus.

    The quarterly data is in two sheets on the Dept of Environment website in this MONSTER spreadsheet

    The relevant ones are

    a) NEW HOUSE PRICES (INCLUDING APARTMENTS) BY AREA

    and

    b) Second hand hse prices by area

    but only cover to end q2 2006. National stats only break down to quarters in 2003 2004 and 2005 , before then they are annual stats.

    In EACH of 2003 2004 and 2005 Q4 was up on Q3 for both new and second hand houses Nationally

    In EACH of 2003 2004 and 2005 Q4 was up on Q3 for both new and second hand houses in Dublin

    The drop is between q2 and q3 or q4 - q1 not q3-q4

    SH Dub Prices 2003 - 2005

    2003 Q1 323,087
    Q2 367,314
    Q3 350,603

    Q4 372,910
    2004 Q1 362,845
    Q2 399,536
    Q3 382,505
    Q4 411,439
    2005 Q1 402,698
    Q2 440,520
    Q3 430,220
    Q4 475,430
    2006 Q1 472,996
    Q2 516,589


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  • Banned (with Prison Access) Posts: 8,486 ✭✭✭miju


    beat ye to it sponge bob :):):)


  • Closed Accounts Posts: 7,333 ✭✭✭Zambia


    Cheers Miju was hoping someone would do that ...


  • Registered Users Posts: 68,317 ✭✭✭✭seamus


    Heh, I think we all got the same info at the same time. I stuck it all in a handy little spreadsheet :o

    It would seem that the normal "slumps" for second-hand homes are between q2 & q3 (slump of around 0.3%), and then again between q4 & q1 (smaller drop of around 0.2%). The massive increases would be first in q2, and then again in q4 (albeit *slightly* smaller). The data we have here shows that a drop of 0.8% in q4 is pretty 100% against the trend...


  • Registered Users Posts: 32,136 ✭✭✭✭is_that_so


    seamus wrote:
    I wouldn't say common sense really. I'd say it's more the herd mentality you mention, or perhaps survival instinct. For many people, there is a lot resting on property. It's a massive supplier of labour. Hundreds of thousands of people have not only their money to lose, but their job too if the market collapses. If they lose their job, they lose their home. So by disposing of their home (or any excess homes), they limit their liability in the event that their job goes too. But of course, if they're all trying to dispose of their excess property, they're only fuelling the fire in which they're going to burn. Doesn't sound like common sense to me :)

    On the flipside, there will be a large number of people for whom their house is just their home. They have no interest in moving, and are willing to hold out even when they have negative equity, as they see it as a long-term investment. These are the guys who'll be laughing when the market recovers, having paid off a large chunk of their mortgage, and still sitting on a house worth what it was in August 2006.

    I agree.


  • Banned (with Prison Access) Posts: 25,234 ✭✭✭✭Sponge Bob


    seamus wrote:
    Heh, I think we all got the same info at the same time. I stuck it all in a handy little spreadsheet :o

    The data we have here shows that a drop of 0.8% in q4 is pretty 100% against the trend...

    Yes . Now in Dublin there is a traditional slump at this time. ie q4-q1 . I assume it will happen this year too.

    Shall we discuss a "Sponge Bob predicted 3% drop in SH prices in Dublin in Q1 2007 and the fecker was right " when we reconvene in April chaps ????

    Q2 2007 is when I expect a ' bounce ' . This bounce is most noticeable in Dublin leading one to the conclusion that key annual price markers are set in Dublin in the spring selling season April/May time ........but what bounce one wonders with all this inventory out there.


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  • Registered Users Posts: 356 ✭✭v300


    miju wrote:
    More and more people are beginning to realise the ticking time bomb is around the corner, with particular reference to interest only mortgages !

    Interest only mortgages, a mortgage designed purely for property speculation if ever there was one.

    The Governer of the Central Bank said 2 months ago that an average house in Dublin is only worth 120,000 euro and 100,000 in the country/ rural towns.

    Come on the day, let's see who is driving the big swanky cars then...

    Let ye' reap what ye' sow.


  • Closed Accounts Posts: 752 ✭✭✭Lorax


    You would be mad to buy in Dublin now sure a crash is just around the corner.


  • Registered Users Posts: 78,218 ✭✭✭✭Victor


    Seamus, a varient of your graph, showing the change from Q4-Q1 each year (some repeats).

    In those years there was no drop in Q4, infact a steep rise.


  • Registered Users Posts: 78,218 ✭✭✭✭Victor




  • Registered Users Posts: 32,136 ✭✭✭✭is_that_so


    Also Jim Power on 30/12.


  • Registered Users Posts: 13,068 ✭✭✭✭jmayo


    I am one of those that have being saying for last 5 years that houses are overpriced.
    Look at the crazy prices charged for a shoebox appartment in the outlying areas of Dublin. Yes you can buy in Mullingar or Drogheda, you can commute to Dublin and spend your life waiting for a train or stuck in a car .
    Even worse look at all the Section 23 housing in Leitrim. Leitrim was once the butt of jokes regarding how many people lived there, in the future it will be a joke about how many empty houses (or being polite holiday homes) are there.

    I get told I am another David McWilliams and that of course some day I will be right and house prices will drop but not by much.

    What is getting more worrying over last 5/6 years, since our Celtic Tiger died back in 2001, is the dependency of the economy and our government's tax take on housebuilding, actually residential housing at that.

    Look at the list of manufacturing jobs that have gone over last number of years, most towns (e.g Carlow, Naas, Ballinasloe) have been hit to some extent to date.
    What do we now make in this country ?
    We once made carpets, fertiliser, shoes, clothes, machine parts, tyres and car components.
    Ok we make computers and develop software.
    Wrong we assemble computers from parts shipped in from China/Far East.
    That can be done anywhere.
    How much of the software we burn on CDs and ship is actually developed in Ireland.
    Yes we do some research/development but that is not what is counted, it is what we ship/sell.
    We do not even make some of the buidling materials used in our new houses, they are now being imported from Eastern Europe.
    The actual finished bathrooms are now imported ready to be hooked up to the buildings electrical, water and sewage systems.

    We can't compare ourselves to The Netherlands or Finland or even more optimistically Japan.
    All of these countries experienced property bubble bursts and they are/were established economies.
    Why are we going to be so different, what makes us so special that we will not be hit in the same way ?

    If anything we will be hit even worse, as the above countries had something going for them.
    What have we ?
    A low corporation tax whose positive benefits may be rendered useless if the US changes the playing field for it's multinationals allied to the fact that Eastern European countries now offer similar tax concessions and much lower labour costs.

    The usual garbage being trotted out is that we will be a knowledge based economy. Not everyone can be a scientist, a chemist or a biologist.
    We can't go down the call center route anymore because we are now priced out of that market.
    And look at our truly attrocious roleout of Broadband, our physical infrastructure is third world and building more roads, railways (not much chance of that happening anyway), etc will not employ all the people laid off when the housing bubble stops.




  • seamus wrote:
    On the flipside, there will be a large number of people for whom their house is just their home. They have no interest in moving, and are willing to hold out even when they have negative equity, as they see it as a long-term investment. These are the guys who'll be laughing when the market recovers, having paid off a large chunk of their mortgage, and still sitting on a house worth what it was in August 2006.
    is_that_so wrote:
    I agree.



    here is another problem :
    How many bought "just to get on the ladder"
    How many will be stuck by NEGATIVE EQUITY in silly sized apartments + townhouses considerable distances from the employment centers of this country?

    You have just highlight a problem. There is plenty of potential for new development for UPWARD development of existing buildings in our towns and cities. Should this happen then forget about: "These are the guys who'll be laughing "
    These are the guys who`ll be isolated and in negative equity cursing the day they bought. There will be bitter people.


  • Registered Users Posts: 32,136 ✭✭✭✭is_that_so


    Historically countries where home ownership was controlled by landlords there has always been a very powerful attachment to one's home and a determination to have and to keep one. It also explains the historical dislike of renting - a reminder of landlords. Up until a number of users ago this was still considered "dead money".
    Unless one is investing a house is a "home". Even those people out in the sticks go "home". A house is not actually worth anything until it's time to sell it but it's still a home.


  • Banned (with Prison Access) Posts: 25,234 ✭✭✭✭Sponge Bob


    here is another problem :
    How many bought "just to get on the ladder"

    These are the guys who`ll be isolated and in negative equity cursing the day they bought. There will be bitter people.

    That will a problem for Fianna Fail in Gorey or Carlow or Virginia or Abbeyleix where them lads will be stuck for the next decade so in their overpriced semis..

    It will also affect those closer in who bought a ****hole shoebox . These shoeboxes will be unsellable ...forever pretty much.


  • Closed Accounts Posts: 1,444 ✭✭✭Cantab.


    Sponge Bob wrote:
    That will a problem for Fianna Fail in Gorey or Carlow or Virginia or Abbeyleix where them lads will be stuck for the next decade so in their overpriced semis..

    It will also affect those closer in who bought a ****hole shoebox . These shoeboxes will be unsellable ...forever pretty much.

    They'll be too busy working & paying off their mortgages to have an interest in politics. Sure where would they get the time to go down to the polling station?


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  • Banned (with Prison Access) Posts: 25,234 ✭✭✭✭Sponge Bob


    They will soon open the polling booths till midnight sure :p


  • Closed Accounts Posts: 1,444 ✭✭✭Cantab.


    Sponge Bob wrote:
    They will soon open the polling booths till midnight sure :p

    That wouldn't be very politically astute now would it? I say shut the doors at 5 or 6! Should be ample time for when the commuting masses make it back around 8!


  • Closed Accounts Posts: 4,720 ✭✭✭El Stuntman


    Cantab. wrote:
    That wouldn't be very politically astute now would it? I say shut the doors at 5 or 6! Should be ample time for when the commuting masses make it back around 8!

    there is much simpler way to do this:

    (a) keep bumping up the Old Age Pension wildly. Old people vote. They will probably vote for the lads who give them money...

    (b) ensure the voter's register bears no relation to reality. Makes it much easier to fix election results in your favour....


  • Registered Users Posts: 13,068 ✭✭✭✭jmayo


    What is the breakdown of those that are buying all these shoeboxes in Tallaght, Drogheda, Mullingar, Carlow, etc, etc ?
    How many are first time buyers and how many are buy to lets ?

    BTW it is just not in outlying commuter towns that we will have problems.
    Something I have noticed nobody ever mentions, is in some counties they are still loads of one off houses, most of them big southfork lookalikes. These houses are being build for first time owners or sold to first time buyers who will still have a hefty mortgage in comparison to 10 years ago.
    I know one area in the west of Ireland that this is happening where historically there was a lot of unemployment.
    It is fine at moment but will we end up with loads of one off new houses sitting there empty when owners have to migrate/emmigrate ?


  • Closed Accounts Posts: 4,720 ✭✭✭El Stuntman


    jmayo wrote:
    It is fine at moment but will we end up with loads of one off new houses sitting there empty when owners have to migrate/emmigrate ?

    aren't there already piles of holiday homes empty for 48 weeks of the year?


  • Banned (with Prison Access) Posts: 25,234 ✭✭✭✭Sponge Bob


    jmayo wrote:
    BTW it is just not in outlying commuter towns that we will have problems.
    Something I have noticed nobody ever mentions, is in some counties they are still loads of one off houses, most of them big southfork lookalikes. These houses are being build for first time owners or sold to first time buyers who will still have a hefty mortgage in comparison to 10 years ago.
    I know one area in the west of Ireland that this is happening where historically there was a lot of unemployment.

    ONE AREA :eek: you say . Roscommon and East Galway and East Mayo and South Sligo and Leitrim are alive with them .

    The problem is that these southforks are being built where there is no work or corresponding demand. I simply love this specimen here, Its actually well into Mayo and in Hollymount not Shrule but yer man is claiming its in commuter belt Galway to get the interest up :D. Had they painted it now ...... :p


  • Registered Users Posts: 78,218 ✭✭✭✭Victor


    That link isn't working, try this one www.daft.ie/149867


  • Registered Users Posts: 4,748 ✭✭✭Do-more


    Jaysus Sponge Bob, ya should have posted that one on "Bargain Alerts".

    Thanks anyway, I have me valuer working on it now, should be able to spring a 120% mortgage on it, now I must dig out me junkmail for the pre-approved loans from BOI and AIB and get another few bob off the credit union and I'll be able to get the helicopter and not worry about the traffic into Galway.

    Keepin' up with the Jones' me arse, I'll just change me name to Jones too. Sure everybodies doin' it, why not me too. And sure the ERSI says it'll be a soft landin', very handy in helicopters them soft landings!!!

    invest4deepvalue.com



  • Registered Users Posts: 13,068 ✭✭✭✭jmayo


    The area I am talking about is in East Mayo and was one of the worst emmigration blackspots up until 10 years ago.
    Suddendly over last couple of years there are bloody bungalows, dormiers popping up all over the place. The farmers love it since return from land/farming is now cr** and sure if you can offload a few 1/4 acre plots to someone why not.

    Regarding holiday homes, I have to say Achill is a disgrace. They stand out like a sore thumb. A t least in places like Leitrim there are a few trees and bushes to hide all the damm things.

    The building in small villages in the west is also getting to be bit of joke. I know a developer who was building in Knock. It was being marketed as being close Claremorris (thriving commerical centre that it is).

    Maybe when the boom ends we will all find religion again and the numerous pilgrims will rent them out while down there asking for a miracle to help pay for the house, the holiday home and two bmeers.


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  • Registered Users Posts: 13,068 ✭✭✭✭jmayo


    Hey since when did Shrule move to Galway or is that just so that it least it appears in the same county for sales purposes.
    Next thing they will want Ballinadine.

    Why would you want 11 bathrooms ?
    That's too many to have to clean, one is bad enough.


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