Housing Bubble Bursting

megadodge · 09-01-2007 2:18pm

As for gearing and investment , I would put my 10% of an Irish house or flat into a targeted and diverse property fund instead.

I agree 100%.

Which is why I posted the following earlier...

Most clued-in investors wouldn't be looking at investing somewhere with only a 5% projected value increase anyway. Plenty of excellent opportunities abroad if you do your homework.

My previous posts were merely "simplistic examples for explanatory purposes"
to counter some serious misinformation being bandied around by miju.

Calina · 09-01-2007 2:28pm

A striking change in many of the new properties which have been built in the past few years is signficantly less and less storage place. Having looked at a lot of one and two bedroomed apartments in the last few years, I have to say that even for a single person, none of them are a long term option if you have any hobbies at at, any clothes, any sports equipment. There is just practically nowhere to store stuff in the vaunted more suitable accommodation for single person.

Me personally, single person, I want a 3 bedroomed house for the reason of storage issues.

miju · 09-01-2007 2:57pm

found this great little synopsis while fluting about google of the Irish market from Aug 2006 from Bank of Ireland full of facts , figures and historic data with a quick prediction of interest rates by ECB , that aside it's a nice concise little document for easy reference

Kipperhell · 09-01-2007 3:18pm

Sponge Bob wrote:

In the UK the number of FTBs with interest only mortgages has gone from 6% etc..."

WE aren't talking about the UK so not much point in posting about it.

Sponge Bob wrote:

In Ireland its 20% of the whole market (not the same I know ) in 2006

You said a large portion of FTBs were on interest only mortgages nothing you posted says that. You seem to be interchagning 100% mortgage and interest only at will. THey aren't the same and I beleive they are mutually exclusive but am willing to be corrected if you can get both at the same time as FTB, can you? Again using the term "whole market" when it is not

Sponge Bob wrote:

"Property Ladder" a post millenial marketing term to get young poeple to accept shoeboxes as their first purchase .
true, most started by buying a house they could live in for 25 years...and often did so . There was a thing called the "Starter Home" in my youth but no "Ladder" as such. Remember the Starter Home anyone ???

I must be older than you because I remember this stuff from the 80s. Moving from a starter home upwards has always been refered to as moving up the property ladder. As I said whether the term existed or not the practice has been in place a long time. I consider it a economic term and nothing to do with marketing and have never really heard it in marketing terms.

Sponge Bob wrote:

Let me clarify then because I was wrong to leave that impression and thanks for pulling me up on it . Historically you are correct of course. 40% of property in Ireland is not owned by investors but some 40% of post 2000 construction is.

Again that is incorrect 40% of property bought post 2000 not "post 2000 construction". Factually not historically BTW.

Sponge Bob wrote:

I am interested in who owns the excess inventory of empty property in Ireland which has built up since 2000.etc...

You keep mixing up details together. The figures when looked at will show there is an increase in empty property but has to be compared with the historical data. Generally Ireland runs at 10-15% vacant property so there is a mild increase during a building boom big deal. Your speculation on why it is vacant doesn't make it fact. While property built there is a delay in people moving in and so forth. 100,000 (this figure is also a little doubtful it isn't from the census) property accross the population and country is quite small. There is also an increase in the age people leave home so that can eaily be absorbed. You are trying to say there is an increase in supply and none in demand. Do you think demand has diminished or just affordability has put it out of reach? That is what I think has happened

Sponge Bob wrote:

Also very very true but the 3 bed semis tend to be a bit more central and nearer services too. they also come without those other modern appendages, the Management Company and Management Agent.

Don't forget pure desire. Irish people want 3 bed semis not appartments. Need has nothing to do with their desire. I know loads of people living in property larger than their need. The next generation won't want to commute so much or living in such big costly homes.

Sponge Bob wrote:

I would ask myself why, if the 3 bed semi is possibly becoming surplus to society , then why is there demand for the grande mega rancho in East etc...

Greed. Loads of people want more for their money so they are willing to travel and so forth. I could sell my home tomorrow and buy that property and be mortgage free after 8 years in the market. I don't see what point you are making about prices with this other than you think this is too much. I also never siad the need for large family homes is gone just there was a need for more diverse property that was lacking

gurramok · 09-01-2007 3:23pm

megadodge wrote:

miju
In miju's world an investor with 400k cash buys a house worth 400k using all his cash. If the value of the house rises 5% and inflation hits 6%, then yes he loses money in real terms.

However in any investor-with-half-a-brain's world who has 400k to spare he invests (e.g.)40k as a deposit, gets a 360k mortgage
and at the end of the year when the value rises 5% (now what's 5% of
400k...umm, let me think, where's that Goddamn calculator) there's a 20k profit equalling a 50% return on investment. But hold on, isn't that funny, that's the exact same return I got using the "simplistic for explanatory purposes" example earlier. Obviously wasn't simple enough !!

Sorry to burst your bubble (couldn't resist) but clued-in investors don't pay these mortgages, their tenants do !! Which means, of course (with no deposit to pay) an even bigger return on investment (assuming values rise).

I can't possibly make it any simpler.

What you say is mostly correct in that speculators who are responsible for 100k empty units mostly use other people's money(banks) to make a return on their investment with small deposits.
Problem is that its dependent on a 5% rise, its a huge risk post '06. There was no risk pre '06 due to capital appreciation giving huge gains.
Tenants don't pay out these mortgages as no-one lives in the properties!

On the other hand, an investor will rent out the property hopefully with a long term view for a return on investment unlike the speculator who is there for the quick gain and not sacrificing his own money to service a mortgage.
A simple deposit account can return 7% guaranteed and some investment funds are now better options.
Tables have turned since mid- '06, 5% rise in hse price(appreciation) this year is an extremely tight margin for a speculator to make it his worthwhile entering the market hence many properties might not sell this year and hence triggering falls.

Kipperhell · 09-01-2007 3:30pm

miju wrote:

found this great little synopsis while fluting about google of the Irish market from Aug 2006 from Bank of Ireland full of facts , figures and historic data with a quick prediction of interest rates by ECB , that aside it's a nice concise little document for easy reference

Isn't the point of posting a link to say how it supports you belief and not just to point else where blindly. I am not going to read a whole report just to see how it might or might not support your beleif.
CALINA>
That is why there are now self storage units where there weren't before. as a Single person an extra bedroom is not sufficent storage? If you can't afford a 3 bed ever are you just not going to buy? I don't see how renting will givie you any extra room. I see what your saying but reality and desires have to find common ground at some point.

miju · 09-01-2007 4:10pm

Kipperhell wrote:

Isn't the point of posting a link to say how it supports you belief and not just to point else where blindly. I am not going to read a whole report just to see how it might or might not support your beleif.

no , the point of the post was as stated to have a somewhat more central source for everyone to refer to some readily accessbile figures planning on digging up a few more up like it in the interests of a two way healthy debate , though tbh i didn't expect to read the report but on the other hand you should really stop looking for ulterior motives

Sponge Bob · 09-01-2007 4:31pm

I do know there are FTBs on IO mortgages but the overall figures are not in the public domain . Then again the IO mortgage here is very post 2000. They were rare ( under 2%) before 2000 and are 20% of the market now.

I could and do argue that the market then forced the owner to build up equity and does not any more.

Kipperhell wrote:

Again that is incorrect 40% of property bought post 2000 not "post 2000 construction". Factually not historically BTW.

I mean post 2000 construction . Homes built post 2000.

You keep mixing up details together. The figures when looked at will show there is an increase in empty property but has to be compared with the historical data.

which shows c.10% avearged since 1970 are empty .

Generally Ireland runs at 10-15% vacant property so there is a mild increase during a building boom big deal.

Genarally 10% and never 15% before now ....except that the last big boom before this one was in the 1970s and the vacant rate was at its lowest in my lifetime back then. 8% . Its now double that.

Your speculation on why it is vacant doesn't make it fact. While property built there is a delay in people moving in and so forth.

Not enough reason to explain why the vacant rate accelerated hugely post 2002 .

100,000 (this figure is also a little doubtful it isn't from the census)

It is from the census actually. 175k houses were empty during census 2002 and 275000 houses were empty during census 2006. 100k extra .

You are trying to say there is an increase in supply and none in demand. Do you think demand has diminished or just affordability has put it out of reach? That is what I think has happened

There is an increase in demand using cheap post 911 money which has led to an increase in supply of property which has then been left empty as the owner 'took' their capital appreciation without doing anything else .

Had this had an effect on the market (the empties) then rents would have risen as property was withheld from the rental market after being built and bought and not put to use. Rents have not risen (more than inflation) in the period 2002-2006

Therefore the only demand for this excess build of 100,000 units seems to be entirely founded on speculation caused by capital appreciation. As ends the appreciation so ends the speculation . Right about as we write this in fact.

Don't forget pure desire. Irish people want 3 bed semis not appartments. Need has nothing to do with their desire. I know loads of people living in property larger than their need. The next generation won't want to commute so much or living in such big costly homes.

a 3 bed semi is not that big ...typically 1100 sq ft... but its site is.

If there is a need for diversity (there is indeed ) it is that there should be more decent well built apartments for the long term apartment dweller . Instead we get tomorrows ghettos and slums , by and large.

These proper apartments are sadly lacking here in Ireland ( 3 bed 1000 sq ft type apartments) unlike Germany or France. They want houses because apartments here are crap

Thats why.

megadodge · 09-01-2007 5:00pm

Please see my last post directed at Spongebob.

I agree with you.

Kipperhell · 09-01-2007 6:58pm

Sponge Bob wrote:

Many recent FTBs are on interest only mortgage with no real equity and no prospect of equity unless prices rise.

Sponge Bob wrote:

I do know there are FTBs on IO mortgages but the overall figures are not in the public domain . Then again the IO mortgage here is very post 2000. They were rare ( under 2%) before 2000 and are 20% of the market now.

I asked you to clarify the first bit about many FTBs having IO mortgages. You can't as I thought. My understanding is IO mortgages aren't really available for FTBs without any calatiral. I doubt there are any FTBs with IO as opposed to your statement that there are many. So are you going to say your statement is true even though there is no proof. I'll even accept evidence to say it is possible as I don't think it is or if it is very very very very few people could get it from a bank.

Sponge Bob wrote:

I mean post 2000 construction . Homes built post 2000.

Which you again can't prove and is incorrect. The only figures you have are about sales after 2000 which may also be 2nd hand home was my point.

Sponge Bob wrote:

which shows c.10% avearged since 1970 are empty .
Genarally 10% and never 15% before now ....except that the last big boom before this one was in the 1970s and the vacant rate was at its lowest in my lifetime back then. 8% . Its now double that.

Not the figures I looked at before which I remeber said approx 15% in the 80s but I could have failing memory

Sponge Bob wrote:

Not enough reason to explain why the vacant rate accelerated hugely post 2002 .

I think it is and I see no evidence of actual habital property vacant on the scale you are talking about

Sponge Bob wrote:

It is from the census actually. 175k houses were empty during census 2002 and 275000 houses were empty during census 2006. 100k extra .

THat was a speculated figure by the census collectors and not fom the census offical figures is the way I recall it.

Sponge Bob wrote:

There is an increase in demand using cheap post 911 money which has led to an increase in supply of property which has then been left empty as the owner 'took' their capital appreciation without doing anything else .

So Irish people didn't want to own prior to cheap money? Not all facts can be shown in figures and this is just speculation on your behalf either way. You keep stating your speculative views as fact to the point I am not sure you can tell the difference

Sponge Bob wrote:

Therefore the only demand for this excess build of 100,000 units seems to be entirely founded on speculation caused by capital appreciation. As ends the appreciation so ends the speculation . Right about as we write this in fact.

You are saying nobody wants to buy the property? That flies in the face of all logic and what people say. I don't know anybody who in the long term doesn't want to own their home. Currently price is the big restricter AFAIK.

Sponge Bob wrote:

a 3 bed semi is not that big ...typically 1100 sq ft... but its site is.

Compared to European standards it is a big place even when you consider climate restrictions.

Sponge Bob wrote:

If there is a need for diversity (there is indeed ) it is that there should be more decent well built apartments for the long term apartment dweller . Instead we get tomorrows ghettos and slums , by and large.

Your view and you can gladdly preach it but be aware it is your opinion. I suggest you compare European property as whole and understand appartments in Ireland are not actually that small. Try Italy or Spain for cities/town appartments and see they are comparatively large here

Sponge Bob wrote:

These proper apartments are sadly lacking here in Ireland ( 3 bed 1000 sq ft type apartments) unlike Germany or France. They want houses because apartments here are crap Thats why.

We don't need large appartments as we have a huge housing stock that covers that range of property size. Appartments in Ireland are not designed for family living maybe they should be but the vast majority of housing stock is designed for family living so why bother creating them again property tends to last for over 100 years well past the original dwellers needs.
Try to build an appartment block in a housing estate and there are tons of objections even though there is no property for anything other than families.

Sponge Bob · 09-01-2007 7:16pm

Kipperhell wrote:

I asked you to clarify the first bit about many FTBs having IO mortgages. You can't as I thought. My understanding is IO mortgages aren't really available for FTBs without any calatiral. I doubt there are any FTBs with IO as opposed to your statement that there are many. So are you going to say your statement is true even though there is no proof. I'll even accept evidence to say it is possible as I don't think it is or if it is very very very very few people could get it from a bank.

fair enough, not without a guarantee from a parent in too many cases . so they have them ' but don't ' as the collateral is mummy . They are not standalone IO s

Which you again can't prove and is incorrect. The only figures you have are about sales after 2000 which may also be 2nd hand home was my point.

are we to assume that investors and flippers want to pay stamp duty ????

they tend to be new, I will stick on that.

Not the figures I looked at before which I remeber said approx 15% in the 80s but I could have failing memory

10% were empy in the 80s, the number of empties did not really exceed 10% between Cromwell visiting and the late 1990s .

Refresh your memory on historic empties from table 4 of this report here

http://www.esri.ie/pdf/JACB_FitzGerald_The%20Irish%20Housing%20Stock.pdf

Again , it only exceeded 15% in a representative sampling in April 2006 . Its now about 16%. 16% empty is unknown territory in Ireland I can assure you.

I see no evidence of actual habital property vacant on the scale you are talking about

then you refuse to accept that the census was carried out last April and that they checked every habitation in the state.

The ESRI with some as yet unreleased data from the census to support them states that 20% of homes built post 2002 are empty . What a shocking misallocation of productive resources. :eek:

http://www.unison.ie/irish_independent/stories.php3?ca=9&si=1711139&issue_id=14798

THat was a speculated figure by the census collectors and not fom the census offical figures is the way I recall it.

a preliminary figure but the margin of error on the 100,0000 incease in empty homes is about 3% max , insignificant really . I am sure teh final figure will be close.

So Irish people didn't want to own prior to cheap money? Not all facts can be shown in figures and this is just speculation on your behalf either way. You keep stating your speculative views as fact to the point I am not sure you can tell the difference

Let me ask you one question only.

WHY have we started to own SO MANY EMPTY homes all of a sudden.

Why did we run 10% empty long term and now run 20% of our most expensive ( recently bought stick) as empties. I could understand sheebens being abandoned .

Its speculation , thats what.

hmmm · 09-01-2007 10:53pm

THat was a speculated figure by the census collectors and not fom the census offical figures is the way I recall it.

CSO official preliminary census figures which show 275,000 vacant dwellings
http://www.cso.ie/census/documents/2006PreliminaryReport.pdf

ronbyrne2005 · 10-01-2007 8:27am

megadodge wrote:

miju

I'm still trying to figure that one out.

BTW somebody using the name 'miju' wrote the following on another thread...

Must be an imposter.

Maybe you should ask your Maths teacher to explain the concept of percentages to you, as you're just digging youself deeper and deeper with feet full of bullets from your own guns.

But just for those who aren't quite up to speed in the sums department, please read the following very slowly and use a calculator when (not 'if') necessary...
In miju's world an investor with 400k cash buys a house worth 400k using all his cash. If the value of the house rises 5% and inflation hits 6%, then yes he loses money in real terms.

However in any investor-with-half-a-brain's world who has 400k to spare he invests (e.g.)40k as a deposit, gets a 360k mortgage
and at the end of the year when the value rises 5% (now what's 5% of
400k...umm, let me think, where's that Goddamn calculator) there's a 20k profit equalling a 50% return on investment. But hold on, isn't that funny, that's the exact same return I got using the "simplistic for explanatory purposes" example earlier. Obviously wasn't simple enough !!

Sorry to burst your bubble (couldn't resist) but clued-in investors don't pay these mortgages, their tenants do !! Which means, of course (with no deposit to pay) an even bigger return on investment (assuming values rise).

I can't possibly make it any simpler.

What about opportunity cost of capital??

ronbyrne2005 · 10-01-2007 8:29am

BackwardRussia wrote:

Before I post this I'm going to admit I don't know a lot about property markets so excuse my ignorance if this isn't a valid point but.. I don't own a house in Republic of Ireland and more than likely never will.. so I'm not biased either way.

The way I see this situation is, in order for a 'crash' (which means nationwide house prices taking a significant drop), behind every single one of those houses being sold for a lot lower than they are valued now, is a person or person(s) selling.

So for example if I personally own a house now that I could sell for €350,000 tomorrow, choose to sell the house in a years time but this "crash" has happened which means my house would only sell for, say €250,000 , me personally I would rather just stay put and not sell at all. Rent the house out or something.

What I predict is that there will just be a huge drop in "activity" in the property market, ie. people will just choose not to move, not to sell their house, etc. I can't imagine someone turning around and saying "Ok fair enough I'll sell my house for €100,000 less than what I could have got a year ago". Remember it's sellers who set the price of the house, not buyers. Only people who are really desperate to move will sell for the 'crashed' price.

There will always be some people desperste to sell(especially if prices are stagnant or falling) and these buyers set prices at the margin.

Kipperhell · 11-01-2007 11:11am

Sponge Bob wrote:

fair enough, not without a guarantee from a parent in too many cases . so they have them ' but don't ' as the collateral is mummy . They are not standalone IO s

I don't think you can get an IO mortgage on your home period. It was only ever aviable for investors was my understanding, did it change? Can you prove you can get an IO mortgage on your home? It certainly makes your statement that many FTBs have IO mortgages very questionable.

Sponge Bob wrote:

are we to assume that investors and flippers want to pay stamp duty ????

they tend to be new, I will stick on that.

I paid stamp duty as FTB and many of my friends did too. You are making a big assumption to dismiss FTBs and investors from the second hand market. Many developers buy second hand properties improve them and sell them on. In fact all those old large houses broken up into flats that were done up were bought recently and it is where many speculators get plots of land. The Superquinn and hotel purcahses are a testimont to that.

Sponge Bob wrote:

then you refuse to accept that the census was carried out last April and that they checked every habitation in the state.

There can often be statistics that don't really tell you anything. I doubt the accuracy of those figures. The main reason I do is because it doesn't really add up. Dublin has had the most new properties and is the largest population centre in the country,16% of the vacant property would have to show up very clearly in Dublin. You can point to vacant appartement blocks but to balanace out the % there would need to be very very many of them of large size vacant. Given that view if they aren't in Dublin then huge areas around the country would need to be vacant. I think that would be repoted heavily. As there has been an increase in holiday homes in the country it could easily amount for the increase as could the time dealy in transfer of property. You are probably right there are investors there with vacant pproperty but that would be assuming that the noraml 10% was always investors and the increase in population and wealth has not changed anybody other than investors. It may be as simply as people decide not to sell gran's house because they want to keep a hold of it for a kid and don't really want to rent or simply don't know how to. It extremly bias to assume any increse in vacancy rate is speculative ONLY.
You are entiled to your opinion of what things mean according to you but you are make large assumptions and stating them as certainty. I don't know if you are just blikered but you are not balanced.
I reckon something will change in the housing market but a massive price drop is not a certainty so I don't go looking for proof that it will crash. I am sure of one thing that the planning of the development has been poor for future communities and things could be done to better use the property stock in existence. Grandparents are living in large family homes while families are living in small appartments.

FreeAnd.. · 11-01-2007 11:34am

I don't think you can get an IO mortgage on your home period. It was only ever aviable for investors was my understanding, did it change?

How long ago did you buy Kipperhell? I personally know a few FTB's I/O and when I was securing a mortgage they were actively being pushed. This was all around the same time as 100% mortgages were introduced for FTS's - you know right before the market went totally crazy (the start of the great decline if you ask me)

soma · 11-01-2007 11:43am

Kipperhell wrote:

I don't think you can get an IO mortgage on your home period.

As ridiculous as it is, IOs for PPRs are most certainly available and availed of. Over at AskAboutMoney, the owner even reccommends them for the first few years of owning your PPR. (Whereas I'd be of the opinion that if you can only afford the house with an I/O in an ulra-low interest rate environment, then reality is trying to tell you you can't afford the house..).

miju · 11-01-2007 11:48am

Kipperhell wrote:

There can often be statistics that don't really tell you anything. I doubt the accuracy of those figures.

so the CSO can't compile statistics and the census is utterly meaningless

i mean you can't really get any more official or accurate than the census and the CSO yet you still dismiss them so easily

Kipperhell wrote:

As there has been an increase in holiday homes in the country it could easily amount for the increase as could the time dealy in transfer of property. You are probably right there are investors there with vacant pproperty but that would be assuming that the noraml 10% was always investors and the increase in population and wealth has not changed anybody other than investors.

for starters the vacancy rate in ireland is currently running at close to 15% so it it noticable. secondly, your right that figure does include holiday homes , i will dig out the exact figure for you later (unless someone beats me to it) but from memory approx 100,000 were identified as holiday homes with the rest being a vacant residential properties

jmayo · 11-01-2007 12:07pm

The concern is not just with what numbers of properties are vacant at the moment, take a look at the volume of apartments that are coming on-line within couple of years.
Take a look at Stepaside or even worse Sandyford.
There are a number of massive developments within what was once the Sandyford Industrial Estate.
Who are going to live in these, first time buyers or foreign workers renters ?
Oh yes they are near luas but Irish people ultimately want to live in a house not an apartment complex so long term it will only be singles, couples and renters.

It says it all:
we knock commerical industrial units to build apartments for people to live in because there is an influx of emigrants here mainly to build apartments for people to live in.
Seems like a bit of a loop to me and all it takes is building to envitably slow down to cause a downward spiral.

Are there any of those American type mortgages where you can defer your repayments for number of years because your cash flow is poor ?
Ultimately your rates and repayments are higher because of this.

pjbrady1 · 11-01-2007 12:16pm

We have data from numerous places/posters/websites/bodies showing us that the property market has levelled off. If there is going to be a serious decline in average prices what is going to be the first county to go.
I'v checked a couple of times on daft over the last few months and I have come to the conclusion that Roscommon is the most oversupplied county.
On daft it has 1111 properties for sale. Meath has 968.
Roscommon has a low rental base with many of the young people who work and live in the county living at home with their parents or have already built/purchased a house.
No university to supply renters.
No large industrial base.
Relatively small tourism sector.
No coastline and lack of "stunning vistas" such as Killarney/Croagh Patrick/Burren.
Relatively small commuting effect but some people commute to Longford/Leitrim/Galway.
Large percentage of the working young people will have no alternative to construction and in certain towns in Roscommon construction is starting to seriously wind down. Strokestown has 97 properties for sale and I know of developers renting out houses that they have not sold. Only active construction in the town at the moment is self builds with young people building their own home.

One other problem it may face is that builders have a lower margin in Roscommon than in most counties. Roscommon has one of the lowest average prices for a house. Yet the cost of materials bricks/steel/slate/copper/radiators is the same as in all other counties.
So if you have built houses for 130,000 all in costs. Alarm bells will ring if you have only sold 30% of your development at 165,000, and on the street prices start to show a 5% plus decline with a .25% rise in interest rates. If a developer gets in trouble without selling his development he can rent, he might be able to offload for social housing to the government, lastly he might just have to sell at or near cost price.

Does anyone have any opinions of another county that is showing warning signs of oversupply and has very unfavourable demographics/geography/economics?

Sponge Bob · 11-01-2007 12:46pm

pjbrady1 wrote:

I'v checked a couple of times on daft over the last few months and I have come to the conclusion that Roscommon is the most oversupplied county.
On daft it has 1111 properties for sale.
Roscommon has a low rental base

East Galway/East Mayo/South Sligo/Most of Westmeath/Longford/Offaly/Laois/Carlow/Wexford/Tipp/Cavan/Monaghan are equally oversupplied. Roscommon is a good candidate to be the canary in the goldmine based on your observations but some of it is tax designated which artificially underpins prices .

All of the midlands relies on commuters to bolster demand and underpin prices at relative to Galway or Dublin . All of the midlands is grossly oversupplied so all of the midlands will get it first.

On the coast there is a holiday home market which is difficult to guage. Prices in Roundstone in Galway, for example, are decided not at all by local circumstances but entirely by affluent holiday homers from ...Galway and Dublin again.

Then the crash will creep inexorably closer and closer to where the jobs actually are , Galway and Dublin again .

Kipperhell · 11-01-2007 12:49pm

miju wrote:

so the CSO can't compile statistics and the census is utterly meaningless the CSO yet you still dismiss them so easily i mean you can't really get any more official or accurate than the census and

"Lies damn lie and statistics". Ever hear that? I am questioning the assumption of what that mean more so than the figure itself. I am also pointing out that it would very noticable to the average person and extremely noticable in Dublin. AS there is no clear way to see how many properties are holiday homes there is actually no way to get accurate figure no matter who is collating them. The CSO do not have magical powers of perception and without a registry that accurately tracks hoilday homes they can't tell.

miju wrote:

for starters the vacancy rate in ireland is currently running at close to 15% so it it noticable. etc...

By sight it would be noticable and a large portion would need to be in Dublin.
I leave you to it as I have never met people with such a blikered view other than those saying the market will keep going up.

pjbrady1 · 11-01-2007 12:51pm

Spot on with East Mayo. All of the towns in that area have experienced heavy development, yet you could count on one hand the number of companies that employ more than 150 people.
There is also alot of property going to come on the market handed down from older generation to a younger generation who will not decide to live in Mayo.
One other factor I'v noticed is the lack of people in their late 20's who live in the area. National school class size has plummeted in the towns.
Similarily I have heard of developments being rented out by the developer.
Foxford looks oversupplied in that region.

hmmm · 11-01-2007 1:07pm

Kipperhell wrote:

The CSO do not have magical powers of perception and without a registry that accurately tracks hoilday homes they can't tell.

You remind me of a poster on AAM who caused property threads to go endlessly in circles by arguing nonsensical points. The CSO stats are accurate, if you're saying that our national statistics agency who employed thousands of people to knock on every door managed to get their figures completely wrong, then I guess you'll argue anything.

hmmm · 11-01-2007 1:09pm

pjbrady1 wrote:

I'v checked a couple of times on daft over the last few months and I have come to the conclusion that Roscommon is the most oversupplied county.

You'll love this then

From GHC

Monksland could be set for another huge development of houses, services, and shops if Roscommon County Council give it the go ahead in February.
Developers Tony Downey and Kerril Creaven of nearby Moore are hoping to demolish an existing house and replace it with 255 houses, a medical centre, a civic centre, a crèche, a gym, and 22 shop units which will include a bar, cafe, restaurant, and take away.

hmmm · 11-01-2007 1:22pm

Ouch, UK rates up .25 of a %, an unexpected rise. Rates in Europe aren't stopping, no matter what the VIs say.

Calina · 11-01-2007 1:23pm

Kipperhell wrote:

AS there is no clear way to see how many properties are holiday homes there is actually no way to get accurate figure no matter who is collating them. The CSO do not have magical powers of perception and without a registry that accurately tracks hoilday homes they can't tell.

This would be why the census enumerators interviewed neighbours to establish whether houses were occupied or not or holiday homes.

What it boils down to is this: you are sitting on a fence but you want things to be nice and fluffy and alright.

The problem is this: ten years ago the average house was roughly 6 times the average salary. Now it's near to ten or eleven times the average salary. This is not sustainable without major problems. You could turn around and talk about second incomes and low interest rates, but you know, the problem is that those low interest rates are climbing and second incomes are dependent on people not having children or those children magically being born aged 13 and able to take care of themselves. Either way the second income goes as someone quits to take care of the kid(s) or creche fees have to be paid.

From what I remember - and I really have no wish to plough through it again, your point amounts to

1) I don't believe the census figures
2) I don't believe that FTBs are on IO or 100% mortgages and
3) I don't believe that there is a lot of vacancy.

It is your problem if you don't want to take note of the census figures but frankly I have a hell of a lot more faith in them than I have in you. Not only that, I have serious concerns about where those properties are. A slowdown in the market will bring vacant properties in Dublin either onto the sales or rental market when reality bites. In a lot of the country where housing prices are not matched with corresponding income rises it is likely that shifting unoccupied houses and apartments will be very difficult.

IO and 100% mortgages are being actively pushed at FTBs, or they were until very recently. I gather than some lending institutions are getting a little nervous about 100% mortgages. I have heard many mortgage advisors go the "Get a 35% IO 100% you can remortgage in a few years." and I'm an FTB. So frankly I'm inclined to be certain that while there may be a few people cashing in their SSIA chips for deposits, I am equally certain that more than a few are using these financial products to get on the mythical ladder. If you want to convince yourself that everything in that garden is rosy, then fine. Do so. But do not assume that there is any more support for your conviction that excessive debt in the FTB sector is a myth than there is for those who are very, very worried about the future prospects of this country.

We cannot sell or export houses. We have endebted people up to all their working lives on loans which they can barely afford in a period of historically low interest rates. Yes some people have gotten very rich but it is stupid to assume that this is broadly a good thing. A house, first and foremost is for living in but people in this country have forgotten that. If they hadn't, some of the new developments might actually be designed for living in rather than for renting out.

I cannot tell what is going to happen in the future. But I'll put it this way - I personally would like to owe the lowest amount of capital outstanding possible. People in this country have spent a good deal of money which they haven't earned yet on houses. Even when they manage to get their LTV down, many of them go out and borrow again against the house. We've all heard the "Your home may be at risk if you do not keep up payments" but you know what? A lot of people in Ireland ignore that reality or pretend that that day will never come. They convince themselves that it'll all be okay because it would be bad karma for the banks to throw them out.

The truth is we are not well placed for any shocks because we owe too much money as a country as a whole. I personally am shocked and horrified by how stupid people in this country have been with respect to borrowing money for anything and everything. How they have convinced themselves that they can get rich quick through, well, property at the moment. Soon it'll be something else. The problem is a lot of people are not rich. They just think they are. You don't have money until you cash in your chips and regardless of whether the value of your chips fall, if you don't own them outright, the value of your debt is not so cooperative as to fall unless you pay it off.

Sponge Bob · 11-01-2007 1:26pm

hmmm wrote:

You remind me of a poster on AAM who caused property threads to go endlessly in circles by arguing nonsensical points. The CSO stats are accurate, if you're saying that our national statistics agency who employed thousands of people to knock on every door managed to get their figures completely wrong, then I guess you'll argue anything.

That would be pure muppetry and kipperhell is not a muppet. Tut tut.

The vacancy rate is highest outside the 10 main towns. Some of this like Roundstone in Galway is holiday homes and some is speculative building like Roscommon.

ALL of county Galway now has a vacancy rate of over 20% ( it was 17% in the county in 2002 but 10% in the city see table 5 )

The vacancy rate in Dublin in 2002 in the same linked table 5 was about 6% . While kipperhell is correct in saying its not 15% he also misses the point that Dublin is not Ireland...or does he , lets see ???

I am sure its not 15% vacant now in Dublin but I would think that an increase to 8-10% is bad....for Dublin that is.

Then again I never said it was 15% empty in Dublin but that Ireland as a whole NEVER had 15%/16% of homes lying empty in its entire history...since Cromwell left that is or after the Black Death hit Dublin in 1350 or maybe in the 1850s after the famine

miju · 11-01-2007 1:33pm

Kipperhell wrote:

I am also pointing out that it would very noticable to the average person and extremely noticable in Dublin. AS there is no clear way to see how many properties are holiday homes there is actually no way to get accurate figure no matter who is collating them.

it is , if you drive around the new estates in finglas (around 1 year old now) you will see the amount of apts with no blinds , furniture or ANYTHING in them , completely vacant , i can only speak for this area because it's where i live so i can't speak for anywhere else. of course logic does suggest that if your living in an older area vacancy rates would be hard to notice simply because theres always family to take over a property in some form or another , not the case though with new properties

Kipperhell wrote:

The CSO do not have magical powers of perception and without a registry that accurately tracks hoilday homes they can't tell.

your right of course they don't , but when the enumerators had to mark these properties as vacant they first has to enquire with local postmen , ESB and neighbours etc (now even holiday homes would have electricity connected would they?)

i'm pretty sure there's very few holiday homes that would be smack bang in the middle of a residential estate and i'm sure you'd agree on that point at least lest we forget the ESB connections

Kipperhell wrote:

I leave you to it as I have never met people with such a blikered view other than those saying the market will keep going up.

you say that after rubbishing the CSO census results but yet we're blinkered

i've still to see any links coming from your corner to back up your points in any way

miju · 11-01-2007 1:42pm

Calina wrote:

They convince themselves that it'll all be okay because it would be bad karma for the banks to throw them out.

must dig out that link i found before when someone said only 3 houses are repossesed a year when it's alot more and also show that repossesions are rising again on average over the course of the last ten year.

pjbrady1 · 11-01-2007 1:57pm

The most at risk group for repossessions will be young couples who bought a property in the last year, getting married this summer and borrowing for the wedding. Have two cars. Husband works in construction as general labourer and the wife earns a small wage as unskilled factory worker. There is bound to be good few people close to or in this exact situation especially in West of Ireland and midlands.
Highly borrowed couple, with main income from low skill construction and a lifestyle that will get more expensive if child arrives. Most will manage but anybody who has a spendthrift habit in the areas of holidays, clothes, nights out over the last few years will have little savings to cushion any unemployment. I think some parents might be a bit put out by their children borrowing to service mortgages from their parents.

Zambia · 11-01-2007 3:49pm

pjbrady1 wrote:

The most at risk group for repossessions will be young couples who bought a property in the last year, getting married this summer and borrowing for the wedding. Have two cars. Husband works in construction as general labourer and the wife earns a small wage as unskilled factory worker. There is bound to be good few people close to or in this exact situation especially in West of Ireland and midlands.
Highly borrowed couple, with main income from low skill construction and a lifestyle that will get more expensive if child arrives. Most will manage but anybody who has a spendthrift habit in the areas of holidays, clothes, nights out over the last few years will have little savings to cushion any unemployment. I think some parents might be a bit put out by their children borrowing to service mortgages from their parents.

If you lose your job you stay home and watch TV , and daytime TV ads are full of great Ideas on how to beat debt :rolleyes:

I reckon their could be a demand soon for a personnal finance Forum. Yes i do believe the above is true. Anyone buying in July of this year lets say an average house , average area. 375,000 would get the house, they would have paid stamp and various solicitors + moving fees. Now that house is sitting at that price and falling. Ergo this year they have not re-covered even the stamp + costs they paid. So effectivly they are stuck in the house unless they want to write off that stamp.

If interest rates keep rising in Europe as they have just done here (Thanks BOE :mad: ) then the payments will get prohibitive. They may make it if they dont spend like pjbrady1 says they will but it will be tight.

Plus if they are already mortgaged to the hilt and want to re-mortgage if the value of the house has fallen what happens??

pjbrady1 · 11-01-2007 5:19pm

Just checked growth in properties for sale in Roscommon on Daft.
It has grown from 876 on 25th November to 1112 on 11th November. A 20% jump in less than 50 days! Now at Christmas wouldn't people be more concerned with festivities than selling property. My prediction is for 1300 properties for sale in Roscommon by end of month with a serious price fall kicking in around the unsustainable 1500 mark in February.
At the same time properties for rent has gone from 38 to 19. Would seem to indicate people are not even bothering to rent out places and just have them up for sale.

11-01-2007 5:20pm

Rats damn.

I was confident of investing and making a profit as outlined above. Seems like another bidder is €10k even more confident than I am...

Victor · 11-01-2007 5:36pm

miju wrote:

must dig out that link i found before when someone said only 3 houses are repossesed a year when it's alot more and also show that repossesions are rising again on average over the course of the last ten year.

Thats because the banks are using other methods of dealing with people who can't pay their mortgages, like putting them on interest only (IO) mortgages for a year or just quietly having the person sell the house themselves. In a rising market formal repossessions don't happen a whole lot.

pjbrady1 · 11-01-2007 5:40pm

I think there is a significant chance you will look back in one month and be glad you missed that apartment in Kerry.
It looks like it is hard to sell or rent a house or apartment in Kerry these days from these graphs.
http://daftwatch.atspace.com/daftcounty_14.html

All of those counties are getting excess property for sale and we have no bad news such as "ECB rates rise again" or "House prices fall 3% in last six months".
A lot of investors seen the headlines of property rises "15% in 2006". This headline hid the fact that if you bought in September you now are sitting on a loss. As a nation our buyers have not cottoned on fully yet either. The proper tactic for buying a 3-bed semi in Kildare at the moment should be to meet as many sellers as possible and offer them at least 15% below what they are asking and tell them you are moving fast. You only need one person to accept your offer. Friend of mine picked up an asking price 3-bed semi in Leixlip for 380,000 that was quoted at 410,000. The seller did get a 390,000 offer but the deal had been done and fair play to the seller he honoured the verbal agreement. Must check what 3-bed semis are for now in Leixlip.

Zambia · 11-01-2007 6:08pm

pjbrady1 wrote:

Friend of mine picked up an asking price 3-bed semi in Leixlip for 380,000 that was quoted at 410,000. The seller did get a 390,000 offer but the deal had been done and fair play to the seller he honoured the verbal agreement. Must check what 3-bed semis are for now in Leixlip.

I still think thats a bit steep

its got a good bit to fall , anyone else agree ? My last post outlines why..

Sponge Bob · 11-01-2007 6:14pm

pjbrady1 wrote:

Would seem to indicate people are not even bothering to rent out places and just have them up for sale.

Local Roscommon Councillor Luke Flanagan (remember Ming the Merciless in Galway anyone ) had the following to say about Ballinlough near the Mayo border a few days back . He was called out there over some shoddy unfinished estate developed as a section 23 tax scam .

The majority of the 18 houses in the relatively new housing estate are investor-owned and it is estimated that half of them remain unoccupied. “This estate, which was built in the last four years Kipperhell , was put there for the benefit of investors rather the benefit of the poor unfortunate people who live there. I am no expert on the building trade but the least one could expect is that houses built in the last four years should not be falling down around peoples ears after such a short time,” Cllr Flanagan said following the meeting with tenants of the estate

he then described cracks and structural problems he found

One particular house that I looked at is starting to resemble the leaning tower of Pisa, only that the architecture is the other end of the spectrum. On the gable end there is a crack, which you could put your hand into. There are visible signs on the wall where somebody attempted to glue it back together.

On the area in general he commented.

Cllr Flanagan claimed that it was a case of the “absentee landlord” being back in business and he questioned the “true value” of the Rural Renewal Scheme given the number of vacant houses. Anecdotal evidence, he said, suggested that as many as 80% of houses in the village remained unoccupied

finally he said

“The question has to be asked as to why all these houses are being built if nobody is there to occupy them,” he said.

“Even more baffling is the fact that there is another estate being built beside it and for that matter another one behind it. It appears that the tax incentive is so strong that it makes financial sense to buy a house and leave it empty.

So that kinda explains leitrim and north roscommon and south sligo then but not that rest of the un tax designated midlands.

pjbrady1 · 11-01-2007 6:28pm

Another problem with Roscommon is its low population. It has more properties for sale than Meath, a county with not far off three times Roscommons population. There are a couple of hundred one off houses for sale in Roscommon without Section 23 at 200,000 +. Those houses will still be there in three months time, no-one is going to buy them.

11-01-2007 6:59pm

pjbrady1 wrote:

I think there is a significant chance you will look back in one month and be glad you missed that apartment in Kerry.

I haven't, it's still there! The location is great though. Had moved away as was looking at a house in a tourist area, but looks like the bidding for that is heating up. Now it's back on the horizon, hence my 'explain section 23' thread elsewhere.

Incidentally, every year in this part of Kerry (South) there is a big rush to sell property before the end of summer, or put it up for sale at the turn of the year to get a few bids before the summer. Dafts graphs wouldn't surprise me at all, everyone around here is advised to stick their house on the market in the winter and spring to sell to some tourist looking for a holiday house in the summer. The long term rental market around here was always limited anyway.

Pa ElGrande · 11-01-2007 10:27pm

pjbrady1 wrote:

Spot on with East Mayo. All of the towns in that area have experienced heavy development, yet you could count on one hand the number of companies that employ more than 150 people.
There is also alot of property going to come on the market handed down from older generation to a younger generation who will not decide to live in Mayo.
One other factor I'v noticed is the lack of people in their late 20's who live in the area. National school class size has plummeted in the towns.
Similarily I have heard of developments being rented out by the developer.
Foxford looks oversupplied in that region.

I suspect Mayo is not unique in that regard, and other rural areas away from the eastern seaboard have a similar level of construction activity. My dad works in building, the project he's currently on has about 100 houses completed, 5 of the houses on this site are 4 to 5 bedroom houses, that have not sold. Of the rest 3 bed/2 bed, only 7 have been bought by first time buyers, the rest have been bought by investors and most are rented out. Approximately one third of the houses on this estate are rented to foreign nationals, the majority of whoom work in construction. Most of those I've met from Eastern Europe & South America are here on a 5 year plan, to save as much money as possible, go back and set themselves up at home, we could start to see a levelling off of immigration circa 2009, especially if the economy dips.

Sponge Bob · 11-01-2007 11:04pm

sounds like its an estate in Tuam Pa what with that demographic profile

Pa ElGrande · 11-01-2007 11:28pm

Sponge Bob wrote:

sounds like its an estate in Tuam Pa what with that demographic profile

North Cork

Sponge Bob · 11-01-2007 11:44pm

and most of them commuting daily to work in Cork city as Tuam people do and it sounds like it has a meat factory too.

I wonder how many more outlying commuter towns rely on immigrant commuters to pay the rent for the investors ???

pjbrady1 · 12-01-2007 11:26am

Interesting point raised about immigrants going home.
Lets surmise that property starts to slow down. We would see an inevitable slow down in construction jobs and layoffs. As a result a significant amount of Irish population would psychologically slowdown their spending. This would impact hotels, pubs, hardware, restaurants.
All areas where a lot of immigrants work. At the same time the home countries of immigrants Poland, Lithuania, Latvia are starting to reduce unemployment and wages are starting to rise. An immigrant with staff management experience in hotel trade who has saved 10,000 euro will up sticks and go straight home if laid off in Ireland. Skilled constructions workers and civil engineers are already in decent demand in Poland. One company in Wroclaw came to Dublin and offered Polish engineers the same money as they were being paid here to work on a site in Wroclaw.
In rural towns the only significant renters are immigrants. So whithin three years you could see rental market take a hit and investors have zero income and 100% expenses on a property that is losing capital value. An investor who bought pre 2003 will accept any reasonable bid in the above scenario. That investor can afford to floor their price to sell ahead of their fellow investor who bought after 2005.

It all depends on the margin between unemployment/wages in Ireland and Poland. Poland at moment is somewhere around 18% unemployment, if that dropped to 13% and Ireland rose to 8 (how can it not if construction slows down) and similarily wages in Poland went up by 40%+ (very possible in skilled employment). You have less of a draw to work in a country like Ireland where you most likely have only a chance of working at bottom rungs of your industry.

In conclusion the really severe property collapse will occur when you get pre 2003 investors looking to offload rental property in Rural Ireland at any reasonable price as soon as possible, to get sold before their neighbours who they know are selling as well. Resulting unemployment and nationwide fear will leave a famine of buyers resulting in the largest yearly drops Europe has seen in years.

Sponge Bob · 12-01-2007 11:48am

pjbrady1 wrote:

Interesting point raised about immigrants going home.
Lets surmise that property starts to slow down. We would see an inevitable slow down in construction jobs and layoffs. As a result a significant amount of Irish population would psychologically slowdown their spending. This would impact hotels, pubs, hardware, restaurants.
All areas where a lot of immigrants work. At the same time the home countries of immigrants Poland, Lithuania, Latvia are starting to reduce unemployment and wages are starting to rise.

I am glad that somebody noticed ALL of this. Riga and Wroclaw are doing quite nicely these days and there IS work in Slovakia and Latvia and Poland (dunno about Lithaunia) which is where most of our recent immigrants came from. There IS something to go back to in many cases albeit not in rural areas in those countries. Then again a a lot of rural Irish who moved back in the 1990s from UK/US ended up in the cities in Ireland not in their home rural areas. No difference at all then ???

In conclusion the really severe property collapse will occur when you get pre 2003 investors looking to offload rental property in Rural Ireland at any reasonable price as soon as possible, to get sold before their neighbours who they know are selling as well.

or post 2003 investors, but investors of some sort yes. They will offload in their droves in certain areas and that will create a wave that washes in towards the larger towns. They will hold out longer owing to better rental prospects and schtudents

Afuera · 12-01-2007 12:00pm

pjbrady1 wrote:

It all depends on the margin between unemployment/wages in Ireland and Poland. Poland at moment is somewhere around 18% unemployment, if that dropped to 13% and Ireland rose to 8 (how can it not if construction slows down) and similarily wages in Poland went up by 40%+ (very possible in skilled employment). You have less of a draw to work in a country like Ireland where you most likely have only a chance of working at bottom rungs of your industry.

You also need to consider how immigration to Ireland will be affected by the opening up of other economies to foreign nationals. Once Germany allows the recent EU members to work there, then that gives many Poles and Eastern Europeans the option of getting very good wages and still being able to drive home for the weekend.

pjbrady1 · 12-01-2007 12:07pm

If the scenario we are talking about occurs, and it is commonly accepted it has a greater than 1/4 chance of happening. Wouldn't Stamp duty plummet by billions a year. Income tax on Construction/Hotel/Hardware/Estate Agent/Building service would plummet.
The higher value properties are set to fall most %wise in value. This will have a huge affect on stamp duty as these buildings had the higher rate applied, even allowing for the fact that they are a smaller % of national housing stock.

At the same time we are paying people 40,000+ to file folders in cabinets in the civil service (will probably be 45,000 by then). We have a 31 billion transport21 plan. A health service that costs billions to run every year. Wouldn't it be easily possible for the country to be bankrupt, I mean 1980's bankrupt whithin two short years. Raising taxes would have no effect, unemployment would rise significantly with higher taxes. If lower band rose from 20 - 35% and higher band from 40 - 50% people would not be inclined to spend much of their money. Finally putting paid to alot of rural businesses that were just ticking over pubs/shops/beauticians/florists.

That leaves entire nation solely relying on IT/Multinational manufacturing/agriculture/pharma chemicals. Financial services is a myth. Read in papers that it is only about 1% of economy and agriculture contributes multiples of Financial services benefit to economy. The only one of those industries Id leave my coat on would be agriculture as food supply will soon be an issue in Europe.

Zambia · 12-01-2007 12:11pm

Yes the return to Poland dream I have heard the Poles speak of is a reality however. If anyone really belived this then surely the thing to do now if you have a rental property in ireland is sell the thing now and buy 2 in Poland.

Once the polish economy starts to boom which it will it 2009 with all these Poles returning all cashed up to the hilt with all our construction money. Then you are surely set to be quids in. It will push up their housing market, and in doing so make them have worked hard over here for 5 years for half the return.

But hey thats life.

miju · 12-01-2007 12:14pm

just throwing this up here for general debate.....as theres no-where we could even get an indication of the potential figure BUT

what if the immigrants don't want to go home???? what percentage do you think would be willing to go home rather than staying here where they've been living for 5-10 years and have set themselves up???

can anyone show , highlight a previous countries experience in respect to building asset bubble , construction boom , immigration rising , bubble bursting and post bubble the immigrants then moving on / returning home

Housing Bubble Bursting

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