Now I'll put my cards on the table first - I'm a long standing property bear. I would have been in a position to buy in 2003 if I wanted to (with a 95% mortgage of course, but that's what all the cool kids were doing at the time!! ::)) and I looked at the market and decided that it was overvalued. Obviously we all know how it went since then, and I haven't changed my opinion.
However that said, up to now the tone of the debate in the media was always the same. On the negative side, we had an economist, usually an academic, who expressed grave concern in a measured fashion, while on the other side we had a vested interest, usually either a mortgage lender or an estate agent who talked up this famous "soft landing" - a phenomenon as yet unheard of in any world asset market anywhere.
All that said, even I was taken back by the stark negativity of this programme. The facts do speak for themselves, but I thought the tone, the music, the camera shots of desolate housing estates, the reference to that guy in England who died of a tumour a month after his house was repossessed - it was all very biased, but even so I imagine it will have scared a lot of people. Maybe I'm wrong, but I thought that maybe if the same facts were presented without the doomsday music and "what if" stuff it mightn't have been as harrowing viewing.
That said, they didn't touch on the oversupply in the market, which was a rather large omission. I read an interesting article last week about how they were talking about 3.5 million unoccupied units in the US for a population of 250 million, and how this number is a recipe for disaster. I wonder what they'd make of Ireland's 200,000 units for 4 million people?
Quotean estate agent who talked up this famous "soft landing" - a phenomenon as yet unheard of in any world asset market anywhere.
Thats the nub of the matter I think. Why do we think that our experience will be any different than other parts of the world?
Quote from: Declan on April 17, 2007, 07:05:21 AM
Quotean estate agent who talked up this famous "soft landing" - a phenomenon as yet unheard of in any world asset market anywhere.
Thats the nub of the matter I think. Why do we think that our experience will be any different than other parts of the world?
It's the luck of the Irish don't you know - we'll be grand
The crash is more likely to become a self fulfilling prophisy with the extra amount of negative sentiment and talk that will arise from that program last night. One thing though, the crash that they envisaged on the program was driven by a rapidly falling dollar. I'm no expert on current fluctuations but how likely is this ?
Quote from: blast05 on April 17, 2007, 09:29:47 AM
The crash is more likely to become a self fulfilling prophisy with the extra amount of negative sentiment and talk that will arise from that program last night. One thing though, the crash that they envisaged on the program was driven by a rapidly falling dollar. I'm no expert on current fluctuations but how likely is this ?
Because USA interest rates will need to be increased substantially so as to boost the value of the dollar. Higher interest rates = higher mortgage charges = more depressed property market.
Prediction: there will be a property correction in South of Ireland soon, lets hope its a soft landing.
Come on don't you really hope it's a mother fcuker of a pile up ? ;)
People talk about the crash maybe happening or maybe not, but I've yet to see a plausible alternative. For as long as this data has been kept (which is pretty long in most countries) the average house price is five times the average working wage in any one country. This has been skewed a little by the change in the last 30 years where there tend to be two working wages in any given house, but even so most mature markets tend not to go beyond a factor of six, maybe seven in cases where land supply is an issue (which is most definitely not the long term case in Ireland - any shortage of land is due to regulations and our developer-friendly government rather than it not existing)
In Ireland this is running at just over ten. That, combined with the huge housing residual supply being held but not used, which as I mentioned above was not touched in the programme at all, is much more likely to precipitate the correction than the US dollar moving.
The dollare situation, to my extremely untrained eye, is as yet unsure. Many analysts are shorting the dollar, and certainly the US cannot continue as it has done. However they could devalue (probably the easier thing to do politically, though maybe not economically) or they could raise interest rates hugely, try to draw in foreign capital investment, create a credit crunch at home and tighten their belts the old fashioned way. However with the current property situation over there, that would not be a popular move. There are arguments for saying it's the right move, but with a presidential election in a year, how likely are they to take the right move over the popular one?
Gweyltah, I assume you were taking the p, if not, how do you plausibly see this soft landing working out, with so many people out there overstretched and possibly desperate to sell with nobody buying because they're waiting for the crash to end.
Quote from: downredblack on April 17, 2007, 10:27:26 AM
Come on don't you really hope it's a mother fcuker of a pile up ? ;)
I would if it only affected speculators and those builders that are rip-off merchants, but not for those who would have negative equity on their own dwelling.
One crowd of people would love a crash: first time buyers.
Quote from: GweylTah on April 17, 2007, 10:30:33 AM
One crowd of people would love a crash: first time buyers.
Like most things you obviously know fcuk all about economics.
Quote from: Donagh on April 17, 2007, 10:35:18 AM
Quote from: GweylTah on April 17, 2007, 10:30:33 AM
One crowd of people would love a crash: first time buyers.
Like most things you obviously know fcuk all about economics.
I don't even know why I'm bothering, given your form, but care to explain why you disagree that first-time buyers WOULDN'T want a crash. Forget me, forget the abuse, just give us your answer. A board awaits.
Quote from: GweylTah on April 17, 2007, 10:41:59 AM
Quote from: Donagh on April 17, 2007, 10:35:18 AM
Quote from: GweylTah on April 17, 2007, 10:30:33 AM
One crowd of people would love a crash: first time buyers.
Like most things you obviously know fcuk all about economics.
I don't even know why I'm bothering, given your form, but care to explain why you disagree that first-time buyers WOULDN'T want a crash. Forget me, forget the abuse, just give us your answer. A board awaits.
I'll take this one.
Because in a crash situation, many people are affected by negative equity and labour mobility is greatly restricted. Houses are worth feck all, but nobody's selling becuase they can't afford to. The overall economy is bolloxed so the tax burden has to be raised to match it. Banks are busy repossessing all round them and going conservative, so there is a long standing credit crunch. Previously people needed maybe €40k to get started on a €400k house, but now the banks will only lend 80% at most, and that's to the best of customers. So even if the house is now worth €250k, an almost 40% fall, the FTB needs a bigger deposit, will be paying higher interest rates and is getting crushed by excessive taxation.
The people of Ireland needed this to be managed back in 2001 when house prices were more or less as they should be. Of course it became a contest between what was best for the people of Ireland and what was best for the developers and landowners of Ireland. Under our current government, that wasn't much of a contest.
Well First-time Buyers are a tiny minority of the population, and while their views are important, these views are far outweighed by those of the 250,000-odd folk directly employed in the construction industry, and all the folk indirectly employed in the off-shoot service sector. A crash would be a disaster for the economy (and employment) in this country. My gut feeling is that the Government are putting a lot of resources into hiding this 'downturn' in the run-up to the May election, but it's as plain as the noses on our faces that there are already huge problems in the construction industry. I heard yesterday that there will only be 50,000 house-completions in 2007, compared to 90,000 in 2006.
Quote from: dubnut on April 17, 2007, 10:44:25 AM
Quote from: GweylTah on April 17, 2007, 10:41:59 AM
A board awaits.
Speak for yourself Gweltyah ;)
Empty vessels make most noise, you obviously have no founded opinions on anything, just mantras and what's coming out of Connolly Houe or wherever to be repeated, a waste of time.
Cheerio.
Lone Shark, surely, in economics, equilibrium (or close to it) is seldom achieved or, if it is, is not for long.
That first time buyers have been hoping for interest rate rises to dampen the housing market or at least achieve a correction is virtually unheard of, what that's what it's reached.
Maybe wanting a crash is putting it too strongly, but while if that happened people might not want or be able to afford to sell their OWN homes, investment properties would come onto the market, for first time buyers to take advantage. This happened in the south east of England in the mid 1990s in similar circumstances, no reason why it couldn't happen in Ireland.
Gweltyah dont be so pathetic, you suggested we were all waiting for a response, I wasnt and pointed this out.
The reason was that I happened to think along the lines of Lone Shark.
Try responding to one of my posts without an insult, you are starting to appear very childish. ::)
Quote from: dubnut on April 17, 2007, 11:03:53 AM
Gweltyah dont be so pathetic, you suggested we were all waiting for a response, I wasnt and pointed this out.
The reason was that I happened to think along the lines of Lone Shark.
Try responding to one of my posts without an insult, you are starting to appear very childish. ::)
Sorry, I confused you with Donagh.
Your handles both make me think of doughnuts. My mistake.
Quote from: Lone Shark on April 17, 2007, 10:30:18 AM
...
In Ireland this is running at just over ten. That, combined with the huge housing residual supply being held but not used, which as I mentioned above was not touched in the programme at all, is much more likely to precipitate the correction than the US dollar moving.
Don't fully agree there Lone Shark, they laboured on how when the construction stops, as it inevitably will, and the 30% of construction workers who are foreign nationals go home, there'll be a sudden and stark glut of further empty accommodation/properties on the market; in addition to those that are
already sitting there empty.
Quote from: GweylTah on April 17, 2007, 11:10:00 AM
Sorry, I confused you with Donagh.
Your handles both make me think of doughnuts. My mistake.
You even manage to squeeze an insult into an apology, how very talented ::)
I wouldn't want to be confused with Donagh, either, but it was an onnocent mistake and no insult was intended. Your handles are similar and sould even more similar, sometimes your attitudes are, too, though at least it seem you have your own opinion and mind of your own, thats how it comes across anyway.
Sorry, OK? Back to the issue: the threat or opportunity of a looming property crash. Have you an opinion on this?
Quote from: Fear ón Srath Bán on April 17, 2007, 11:11:24 AM
Quote from: Lone Shark on April 17, 2007, 10:30:18 AM
...
In Ireland this is running at just over ten. That, combined with the huge housing residual supply being held but not used, which as I mentioned above was not touched in the programme at all, is much more likely to precipitate the correction than the US dollar moving.
Don't fully agree there Lone Shark, they laboured on how when the construction stops, as it inevitably will, and the 30% of construction workers who are foreign nationals go home, there'll be a sudden and stark glut of further empty accommodation/properties on the market; in addition to those that are already sitting there empty.
But that's just it - they talked about all the houses that will be empty when all the immigrants go home, but they neglected to mention that we're starting from a base of a quarter of a million unoccupied units - how new estates like Adamstown have around 20% occupancy on the units released to the market so far. I find that statistic horrific, and it just surprised me that it was brushed over. Moore McDowell's comment about "overhang" was the closest it came to being referred to.
Gweyltah, some investment properties might come on the market, but as I was saying the increased restrictions on credit plus the much bigger tax burden we're all facing into will more than eliminate any reduced affordability that will result from this, for most people anyway.
Is yer man a blueshirt that was doing this documentary?
I switched off when the clown started to compare us to London, different currency, diiferent market, different interest rates, he obviously went to schumer and baucus school of economics!
Quote from: highorlow on April 17, 2007, 11:25:24 AM
Is yer man a blueshirt that was doing this documentary?
I switched off when the clown started to compare us to London, different currency, diiferent market, different interest rates, he obviously went to schumer and baucus school of economics!
In Greater Dublin anyway now, there are more relevant parallels with London and SE England in the early 1990s than there are differences - thats what points to a crash. But, sure, sense was restored (for a time) there and things eventually recovered.
Quote from: GweylTah on April 17, 2007, 11:21:24 AM
Sorry, OK? Back to the issue: the threat or opportunity of a looming property crash. Have you an opinion on this?
Accepted! :)
As I said, I would agree with Lone Sharks post, no need for me to type the same thing again.
From my personal opinion I bought about 2 yrs ago and value has gone up by approx 90K since.
I cant see it falling by more than that, but I bought this house as a keeper after trading up a few times over the past 6-7 years so wont be looking to sell.
Maybe if I did intend on upgrading I might be a bit more nervy about the whole thing.
p.s. I can think of some posters I would take real offense at being confused with, Donagh is not one of them.
QuoteIn Greater Dublin anyway now, there are more relevant parallels with London and SE England in the early 1990s than there are differences - thats what points to a crash. But, sure, sense was restored (for a time) there and things eventually recovered.
London Population 7,500,000
Dublin Population ..1,000,000
?
In the dim and distant past meself and the missus had to have a deposit of 20% before the banks etc would look at us. Even with the multiple then of 5 times my salary it was hard going but and I know I'm going to sound like a dinosaur - We didn't drive new cars, we didn't take fancy holidays/weekend breaks, we didn't have large credit card balances - we lived within our means and they were the hard choices we made to get what we wanted. The availability of "free" credit, 100% mortgages etc and the general live for the moment me fein outlook surely means that there will be some pain involved and it will probably be the folks in the middle who will get hit the hardest. As Billy said the bigger impact is within the wider employment sector if construction slows down - as it has to. Just how many of the economic migrants leave etc and the availability of housing remains to be seen. Throw in an election campaign, currency fluctuations, proposed interst rate hikes from the ECB and we have the perfect recipe for delaying the inevitable.
I just hope that its not as bad as I fear it will be.
Quote from: Lone Shark on April 17, 2007, 11:21:39 AM
Quote from: Fear ón Srath Bán on April 17, 2007, 11:11:24 AM
Quote from: Lone Shark on April 17, 2007, 10:30:18 AM
...
In Ireland this is running at just over ten. That, combined with the huge housing residual supply being held but not used, which as I mentioned above was not touched in the programme at all, is much more likely to precipitate the correction than the US dollar moving.
Don't fully agree there Lone Shark, they laboured on how when the construction stops, as it inevitably will, and the 30% of construction workers who are foreign nationals go home, there'll be a sudden and stark glut of further empty accommodation/properties on the market; in addition to those that are already sitting there empty.
But that's just it - they talked about all the houses that will be empty when all the immigrants go home, but they neglected to mention that we're starting from a base of a quarter of a million unoccupied units - how new estates like Adamstown have around 20% occupancy on the units released to the market so far. I find that statistic horrific, and it just surprised me that it was brushed over. Moore McDowell's comment about "overhang" was the closest it came to being referred to.
OK, they could and should have set the scene more emphatically. And yes, such unoccupancy statistics have apocalyptic connotations (as a home owner).
Anyone care to comment on the ESRI's comments that property is ten to fifteen percent overvalued in this country.
It seems to me thats a little on the low side.
Anyway, me thinks that the promises of certain parties with regard to Stamp duty is doing as much damage to the property market as increased interest rates. With rates likely to be 5. to 1 percent higher this time next year the slowdown probably will continue in the short term.
I'd be more enclined to believe that we will have a correction rather than a crash.
Quote from: dubnut on April 17, 2007, 11:31:29 AM
Quote from: GweylTah on April 17, 2007, 11:21:24 AM
Sorry, OK? Back to the issue: the threat or opportunity of a looming property crash. Have you an opinion on this?
Accepted! :)
As I said, I would agree with Lone Sharks post, no need for me to type the same thing again.
From my personal opinion I bought about 2 yrs ago and value has gone up by approx 90K since.
I cant see it falling by more than that, but I bought this house as a keeper after trading up a few times over the past 6-7 years so wont be looking to sell.
Maybe if I did intend on upgrading I might be a bit more nervy about the whole thing.
p.s. I can think of some posters I would take real offense at being confused with, Donagh is not one of them.
Why don't you sell it now (at the top) and then rent for a while and then buy back another similar property after the correction that is very likely going to come?
Quote from: highorlow on April 17, 2007, 11:33:06 AM
QuoteIn Greater Dublin anyway now, there are more relevant parallels with London and SE England in the early 1990s than there are differences - thats what points to a crash. But, sure, sense was restored (for a time) there and things eventually recovered.
London Population 7,500,000
Dublin Population ..1,000,000
?
I never knew that! The only difference is scale, the close parallels still exist.
Quote from: GweylTah on April 17, 2007, 12:24:21 PM
Why don't you sell it now (at the top) and then rent for a while and then buy back another similar property after the correction that is very likely going to come?
In a nutshell is the particular house and the particular views I like.
A similar property just wouldnt cut it for me unfortunately.
Otherwise you could be on to something.
I think the term Crash is misleading in many ways. A crash suggest that there will be wholesale panic and people being turfed out of their houses left, right and centre. While the market will inevitably slow down, as it has to , and in areas that houses have been overvalued there will be a decrease in their values, I do not think there will be a doomsday crash that is being predicted.
For this to happen there are far too many variables that would need to come into place, and while some of them are near at hand they are not close enough that people will lose out dramatically. The people who will be hit most are the investors and the people who have bought in recent times with high loan to value mortgages or will buy in the next year. What you are likely to see is a decrease in value of property for many people but the majority of people buy houses for their own use. If mortgage rates do not shoot up too high people can adjust their own living requirements to suit their financial standing. It is a good time for people who own property that they live in to steady their ships as it were and perhaps go on a decent fixed rate mortgage for a few years, max 5, and ride out the current storm.
The main worry I believe will not be the value of peoples houses but the cost of living out side of their mortgage repyments. The cost of oil, increasing living expenses and the "requirement" for so many people to have the best means that payments on utilities and unsecured borrowings, coupled with the cost of things like child care will put more people under pressure than the roof over their heads. A time for many people to look at a life re-adjustment rather than worrying about how many thousand Euros their house has increased per annum since they bought it. It will test our intellectual abilities too as what conversation pieces will we have in the pub if we can't talk about how much we have made on our house!
Quote from: Lone Shark on April 17, 2007, 12:57:52 AM
Now I'll put my cards on the table first - I'm a long standing property bear. I would have been in a position to buy in 2003 if I wanted to (with a 95% mortgage of course, but that's what all the cool kids were doing at the time!! ::)) and I looked at the market and decided that it was overvalued. Obviously we all know how it went since then, and I haven't changed my opinion.
However that said, up to now the tone of the debate in the media was always the same. On the negative side, we had an economist, usually an academic, who expressed grave concern in a measured fashion, while on the other side we had a vested interest, usually either a mortgage lender or an estate agent who talked up this famous "soft landing" - a phenomenon as yet unheard of in any world asset market anywhere.
All that said, even I was taken back by the stark negativity of this programme. The facts do speak for themselves, but I thought the tone, the music, the camera shots of desolate housing estates, the reference to that guy in England who died of a tumour a month after his house was repossessed - it was all very biased, but even so I imagine it will have scared a lot of people. Maybe I'm wrong, but I thought that maybe if the same facts were presented without the doomsday music and "what if" stuff it mightn't have been as harrowing viewing.
That said, they didn't touch on the oversupply in the market, which was a rather large omission. I read an interesting article last week about how they were talking about 3.5 million unoccupied units in the US for a population of 250 million, and how this number is a recipe for disaster. I wonder what they'd make of Ireland's 200,000 units for 4 million people?
Loan Shark for someone who can post an educated piece on this subject I am amazed to read that you have been waiting since 2003 to buy. You would need a correction of circa 45% just to get back to 2003 levels. A 45% drop in house prices would be an economic catastrophe for the country. We would have a massive jump in unemployment and the necessary tax hikes to pay for it. This would stop consumer spending ( if it already hadn't ceased ) with the inevitable downturn and followed by more layoffs. In a nutshell it can't happen or we are all doomed.
The empty units are a bit overstated by the bears. I read recently that a huge amount of houses in Donegal lie empty. This was presented as further evidence of an impending crash. The thing is after a boom the building/purchase of holidays homes is normal and it is also normal for these properties to lie empty for a lot of the year. All it really indicates is that there is weallth somewhere nearby.
As for repossessions I think we will see some new FTB who can't cope with rising interst rates being hit. But the Government have given 10% pay rise to the social partners with more to come if the current disputes yield anything. That should ease the burden of rates rises.
As for the job losses in the construction industry it will not be quite what the pessimists think. Certainly the housing construction sector will lose jobs but with office space at a premium in Dublin and the huge Government infrastructure projects ( such as Terminal 2 at Dublin Airport and the various road upgrades ) on the way most of those jobs losses will be absorbed. That is the ideal scenario and while I'm certain there will be some headline nervy moments I'm also pretty certain that we will look back and say what was all the fuss about.
Final stat:
The London property crash of the lates 1980's saw only 7% of homeowners in real financial trouble. While that is too many it still means the other 93% avoided serious bother.
Most people enter the market for the long term. New entrants and short term speculators are at risk but the others, if prudent, are in for the long haul.
The other thing about a crash you can only say for definite it has happened. You can't say for sure it will happen or even that it is happening. We may be in the middile of a crash now but it will only become obvious when it has already happened.
Here is a graph of London prices for the last 30 years: (http://www.housepricecrash.co.uk/images/real-houseprice-graph.gif)
Right judging by all this I need advice quick.
Just last week I agreed on a sale in Donegal, very reasonable price, £100,000 sterling cheaper than a similar house just the other side of the border, am I in trouble?
Was told by some that the expected slowdown shouldn't have such an effect in the Northwest as property hasn't boomed there to the extent it has elsewhere, especially given the rate at which Letterkenny is currently growing.
Would imagine with the planned work on derry city airport that this area will increase in value.
Michael Martin is trying to use the airport as a carrot to entice foreign investment into the area.
Whether this bears fruition is anyones guess.
Quote from: resdubwhite on April 17, 2007, 04:14:00 PM
Would imagine with the planned work on derry city airport that this area will increase in value.
Michael Martin is trying to use the airport as a carrot to entice foreign investment into the area.
Whether this bears fruition is anyones guess.
The 'west Tyrone' side of Donegal still seems to be full of bargains. The bro got a 4bed semi with garage in Raphoe in November for a ridiculously low price.
Your bro must be gonna be holed up near me, I'm in the same area, mines a 4 bedroom detatched and also a ridiculously good price. So have I reason to be worried about my investment or not?
Quote from: ExiledGael on April 17, 2007, 04:22:28 PM
Your bro must be gonna be holed up near me, I'm in the same area, mines a 4 bedroom detatched and also a ridiculously good price. So have I reason to be worried about my investment or not?
I'm no expert but I'd say not. Those areas of Donegal not on the coast didn't experience anywhere near the same kind of house price inflation as the rest of the country, so any 'correction' will be negligible. The prices in and around Letterkenny (and Stranorlar/Ballybofey to a lesser extent) took off a few years with many people now taking the option of the likes of Raphoe. With the further expansion of the college in Letterkenny I can't see any letup in demand there, so I'd reckon your investment is sound.
Good good, thanks for the advice.
That's what I had bben told and thought about the area, but the whole thing is very hard to be sure about
Hello exiled Gael did you by it as an investment or to live in, i myself bought a 4 bedroom semi not a million miles away from raphoe in October 2006 , i have rented it out since no problem ,quality of the finish was top class and everthing was included in the purchase price. I could not believe the price, if i was to buy the same house in mayo it would have cost me another €80 to €90k.
Quote from: muppet on April 17, 2007, 02:39:02 PM
Quote from: Lone Shark on April 17, 2007, 12:57:52 AM
Now I'll put my cards on the table first - I'm a long standing property bear. I would have been in a position to buy in 2003 if I wanted to (with a 95% mortgage of course, but that's what all the cool kids were doing at the time!! ::)) and I looked at the market and decided that it was overvalued. Obviously we all know how it went since then, and I haven't changed my opinion.
However that said, up to now the tone of the debate in the media was always the same. On the negative side, we had an economist, usually an academic, who expressed grave concern in a measured fashion, while on the other side we had a vested interest, usually either a mortgage lender or an estate agent who talked up this famous "soft landing" - a phenomenon as yet unheard of in any world asset market anywhere.
All that said, even I was taken back by the stark negativity of this programme. The facts do speak for themselves, but I thought the tone, the music, the camera shots of desolate housing estates, the reference to that guy in England who died of a tumour a month after his house was repossessed - it was all very biased, but even so I imagine it will have scared a lot of people. Maybe I'm wrong, but I thought that maybe if the same facts were presented without the doomsday music and "what if" stuff it mightn't have been as harrowing viewing.
That said, they didn't touch on the oversupply in the market, which was a rather large omission. I read an interesting article last week about how they were talking about 3.5 million unoccupied units in the US for a population of 250 million, and how this number is a recipe for disaster. I wonder what they'd make of Ireland's 200,000 units for 4 million people?
Loan Shark for someone who can post an educated piece on this subject I am amazed to read that you have been waiting since 2003 to buy. You would need a correction of circa 45% just to get back to 2003 levels. A 45% drop in house prices would be an economic catastrophe for the country. We would have a massive jump in unemployment and the necessary tax hikes to pay for it. This would stop consumer spending ( if it already hadn't ceased ) with the inevitable downturn and followed by more layoffs. In a nutshell it can't happen or we are all doomed.
The empty units are a bit overstated by the bears. I read recently that a huge amount of houses in Donegal lie empty. This was presented as further evidence of an impending crash. The thing is after a boom the building/purchase of holidays homes is normal and it is also normal for these properties to lie empty for a lot of the year. All it really indicates is that there is weallth somewhere nearby.
As for repossessions I think we will see some new FTB who can't cope with rising interst rates being hit. But the Government have given 10% pay rise to the social partners with more to come if the current disputes yield anything. That should ease the burden of rates rises.
As for the job losses in the construction industry it will not be quite what the pessimists think. Certainly the housing construction sector will lose jobs but with office space at a premium in Dublin and the huge Government infrastructure projects ( such as Terminal 2 at Dublin Airport and the various road upgrades ) on the way most of those jobs losses will be absorbed. That is the ideal scenario and while I'm certain there will be some headline nervy moments I'm also pretty certain that we will look back and say what was all the fuss about.
Final stat:
The London property crash of the lates 1980's saw only 7% of homeowners in real financial trouble. While that is too many it still means the other 93% avoided serious bother.
Most people enter the market for the long term. New entrants and short term speculators are at risk but the others, if prudent, are in for the long haul.
The other thing about a crash you can only say for definite it has happened. You can't say for sure it will happen or even that it is happening. We may be in the middile of a crash now but it will only become obvious when it has already happened.
Here is a graph of London prices for the last 30 years: (http://www.housepricecrash.co.uk/images/real-houseprice-graph.gif)
I would need a correction of 45% in order to get back to the same nominal prices. Around 30% to get back to the same real prices. And yes, I do think that what was a slightly overvalued situation back then is much worse now.
I will accept this - part of the situation was that back then, as a young buck of turning 25, I had the means to buy for the first time since I started work, but was not really interested in buyingin Dublin since it was my place of employment, but not where I would see myself living. I was medium term at best. Buy-to-let yields were bad (nowhere near as bad as they are now mind) so I would have had to commit to living there long term if I wasn't to get involved in property speculation, which was never my aim. Bearing in mind that I have since lived in Offaly, London and now Galway there was some practical sides to it too. Let's not forget as well the costs involved in buying, both in executing the sale and in stamp duty - you have to gain a serious amount of equity just to cover that.
However you say that it would be a catastrophe for prices to fall that far - I've no idea how they landed at 30%, but here's the unpleasant bit - that was seriously conservative. Japan fell 60%. Finland 46%. Holland 42%. The UK 35%. Florida and San Diego are ongoing, but there is no way they'll fall short of 30% either.
As for the unoccupied units, I'm afraid holiday homes only go so far to explaining it. The days of buying off the plans are long gone, most estates have free units. For the love of God, people were buying houses without even planning on renting them - just capital appreciation alone? Even allowing for 100,000 holiday homes, which to me seems bizarrely huge, we still have 150,000 left, which pro-rate is still more than the US have in total including holiday homes, a number that their leading economists are all calling a serious predictor of doom.
I hope you're right with the construction sector - however it remains to be seen if all this construction will be completed. Capital expenditure may look a bit more foolish in the coming years when belt-tightening is going on all round. Oil prices go up another bit just to compound the damage, and then suddenly all these things grind to a halt.
I agree that we're fecked - it's just a question of to what degree. It adds to the irritation somewhat that I believe FF, who caused all this by refusing to do anything to take the heat out of the market for their developer mates, will probably lose this election, the poo will hit the fan in 2008 in a big way, and the opposition will be blamed by the electorate. But that's another matter.
I'd love to believe that we can get away with maybe a 10% drop in nominal prices over 5 years, compounding to a real fall of around 30%, which would be sustainable - however that will take good management. Something I'm loathe to believe our current government is capable of.
A bit of both to be honest, I'm exactly the same everything in, great finish and shocking low price, especially compared to the north where I'm coming from. Will be living there for the foreseeable future but probably selling again in 5/6 years
Where are you living exiled? Out of interest?
Convoy to be precise, serious number of housing developments in the area the last few years. I'm new to the area, what's the verdict?
Quote from: ExiledGael on April 17, 2007, 05:28:03 PM
Convoy to be precise, serious number of housing developments in the area the last few years. I'm new to the area, what's the verdict?
On Convoy, or on the wisdom of buying a home there?
Both! The financial wisdom I'm fairly assured of though
Obviously supply outstripping demand is not such an issue any more. It was one of the main explanations for the large price rises.
How many houses are expected to be built in the next few years?
At current rates half a million units are being added to the housing stock every 6 years.
That's a whole lot of houses and apartments for only 4 million people.
I expect the numbers of completions to decrease in the coming years, but it can't suddenly fall without a sizeable hit to the juggernaut that is the construction industry.
You can't quickly and smoothly rapidly decelerate the construction output without a huge correction.
So the already existing problem of unoccupied units is either going to get worse, or a huge industry is set to go into big decline.
A soft landing will be hard to achieve if a huge proportion of our workforce can no longer make a living producing what is no longer needed. A bit like the farming industry! I can't see us propping us the builders with subsidies to produce either.
All anecdotal evidence that I've heard is that lots of the "holiday homes" around the midlands are not selling too well or being occupied. One source was a census enumerator in a medium sized midlands town who told me there were 200 empty units in this town of 3-4000 people. In another bigger town a neighbour of ours is still the only person to have bought in a 17 house development.
The market in Dublin and other big towns will probably be ok. It's the "commuters' paradises" in the middle of nowhere that will feel it most.
Quote from: ExiledGael on April 17, 2007, 05:46:08 PM
Both! The financial wisdom I'm fairly assured of though
Depends on what you like. Convoy is a fairly typical, quiet, rural village, but its only a quick drive from Letterkenny, Balybofey/Stranorlar and Lifford/Strabane, and less than an hour from Derry. You don't get quite the same standard of scenery as you in the rest of the county, but its pleasant enough (its better farmland, which, as in parts of south Donegal, would explain the much more mixed population, in terms of religion!). Did you buy in the village itself, or out in the countryside?
It's technically in the town, but the last house in the town, just the green hills to the background!
The rental market in Dublin is actually growing so existing long term investors have little to worry about. I can't see too many new investors for the next few years though. Yield is the key word for that sectir and current yields are even below bank savings rates.
QuoteIn another bigger town a neighbour of ours is still the only person to have bought in a 17 house development.
This would be a major concern which I haven't heard of up to now. Either the builder drastically drops his prices and the value of property in that town drops considerably or he sits on his stock hoping to ride it out. The latter will only last for the short term. The thing is no one knows for sure how it will go.
The celebrity economists rushing onto the 'it's gonna crash' bandwagon are contributing to the problem along with McDowell and the other stamp duty speculators. If these two overquoted sources admitted neither are certain of either of their forecast changes then your builder might have been able to drop prices slightly and he might have attracted some buyers. His problem is that most potential buyers are adopting a 'wait and see what the next budget brings' stance. Others are waiting to see what the market does which is even more futile because as I mentioned in an earlier post all analysis is retrospective. Between deciding to buy and actually closing the deal the market can have moved quite a bit in either direction so trying to call it is difficult even for the experts.
BTW I'm no apologist for the builders who have made serious money from the boom.
Property prices in Dublin are definitely falling at the moment. The west of the County(which I am familiar with) has seen a big fall. Houses which were going for E430k last Spring are being touted at E390k and still not being sold.
Many houses for sale are not even getting any viewings.
This downturn is definitely being underreported in the media as imo the papers make a fortune in property supplement ads.
As for apartments forget about trying to sell them.
Houses in my parents' estate in the South of the County are not being sold despite being on the market since last Summer.
hello exiled Gael we could be neighbours as i bought in convoy in october 2005 not 2006 as i had allready stated. As j70 said its a nice rural village with 2 pubs,a school, football field and shops all within walking distance of many of the newly built estates.What i have noticed in my estate is that most of the houses are occupied very few are left vacant and my opinion is that people are now looking to buy in Convoy rather than Letterkenny as the houses are cheaper and its only 15-20 minutes drive away,also there are a lot of Northern reg cars in the estates so people must be commuting to work in NI.
Without exception, those who are predicting a soft-landing are from the lending sector, with the obvious vested interests (they used to deny that there'd even be a flattening of the upward curve at all). Those without any vested interests – the academics – are, without exception, much more pessimistic. That tells its own story.
Agree with Canalman: if anything, the current downturn has been understated, underreported and deliberately muted. The enticements offered by the industry now to shift property grow increasingly more generous (desperate?) – first 6 months of mortgage paid, fully fitted-kitched worth €5,000, fully fitted-kitchen plus first 6 months mortgage, etc.
Very good Deel Rover, I'll be the one kicking the O'Neills against the gable wall every evening, and probably missing
People are talking about the likeliehood of a crash of the housing market, and as BC1 points out this would require for a variety of conditions and factors to line up for it to occur.
I'd have a fear that one big sneeze from one of the Tech/Pharma giants will see the rest catching a cold and fecking off elsewhere.
Take for example if Dell were to pull out of Ireland - with massive numbers employed in both Limerick and Bray it would devestate both communities. I don't think it's too far fetched to think that the likes of HP and Intel would be too far behind them and there goes Leixlip and lots of people from West Dublin and the Midlands from the many thousands that are employed there.
While it may sound a bit far fetched , we have become so uncompetitive in terms of the wages we now demand that the above sort of scenarios cannot be ruled out.
And that's just the Tech sector, Pharmaceutical giants would than follow suit and it's curtains for the economy and the Tiger.
If anything like the above was to occur the overall knock on effect on the housing market would be pretty catastrophic
I deliberatley painted a doomsday scenario and prob unlikely - but anyone care to rule it out. I'm sure there are factors I am not considering and the more astutue economists could pick some rather large holes in my theory
Quote from: stephenite on April 19, 2007, 12:40:30 AM
People are talking about the likeliehood of a crash of the housing market, and as BC1 points out this would require for a variety of conditions and factors to line up for it to occur.
I'd have a fear that one big sneeze from one of the Tech/Pharma giants will see the rest catching a cold and fecking off elsewhere.
Take for example if Dell were to pull out of Ireland - with massive numbers employed in both Limerick and Bray it would devestate both communities. I don't think it's too far fetched to think that the likes of HP and Intel would be too far behind them and there goes Leixlip and lots of people from West Dublin and the Midlands from the many thousands that are employed there.
While it may sound a bit far fetched , we have become so uncompetitive in terms of the wages we now demand that the above sort of scenarios cannot be ruled out.
And that's just the Tech sector, Pharmaceutical giants would than follow suit and it's curtains for the economy and the Tiger.
If anything like the above was to occur the overall knock on effect on the housing market would be pretty catastrophic
I deliberatley painted a doomsday scenario and prob unlikely - but anyone care to rule it out. I'm sure there are factors I am not considering and the more astutue economists could pick some rather large holes in my theory
That was touched on in the Future Shock programme, specifically, would/could they remain if the Dollar goes into freefall.
In the follow-up Prime Time programme on the subsequent night, Morgan Kelly (UCD Economics Professor) remarked that there were currently in excess of 200,000 unoccupied properties in the state at this time, with a further 80,000 to come on stream this year, a statistic in itself that is fairly alarming.
Estate Agents are letting people/staff go as well.
Deel Rover,
Have you met any glenamoy men around convoy?
Hows it going ludermor i don't live in convoy my house is rented out,the funny thing about your question is that 1 of my parents comes from Glenamoy and many a good night i have had out in Healy's
Healys is a rare spot.
An glenamoy married a girl from convoy and moved there 3/4 years ago. Seems quite settled it must be said
Are you living in Convoy Ludermor?
Good article from Fintan O'Toole in todays Times
Stamp duty not the only issue
It's happening already. The undeclared election is well on the way to doing what all recent campaigns have done: getting hung up on relatively marginal issues while ignoring far bigger ones, writes Fintan O'Toole.
So far, debate has focused on the reform or the abolition of stamp duty. It is a classic example of the way a topic is both over-simplified and given a prominence out of all proportion to its real significance. This happens because it interests people who have clout. Meanwhile questions, even in the area of housing policy, which are far more crucial to far greater numbers of people, barely get a look in.
The debate on stamp duty is simplistic because it has concentrated on how much to cut the tax and when to do it, not on the broader consequences. Shortly before last December's budget, that well-known hotbed of bleeding-heart pinko ideology, Davy Stockbrokers, pointed out that there are questions of social equity to be taken into the equation. It drew attention to the fact that stamp duty last year contributed €2.7 billion to the exchequer. Its abolition would probably have little medium-term effect on house prices, except to take the revenue from the State's coffers and put it into the pockets of developers and property-owners. "It may," said Davys, "amount to an inequitable cash transfer from the Government to vendors and developers."
Isn't there something a little odd about our political discourse when it's left to stockbrokers to raise the question of social justice?
In the absence of any other kind of residential property tax, there is a case for being cautious (as Brian Cowen, to his credit, has been so far) about radical reductions in stamp duty which, let's remember, is not paid by owner-occupiers of new houses or of smaller second-hand houses. Yet whether or not there is a case for reform, there are at least four issues in relation to housing that are, on any objective assessment, far more urgent.
The first is the cost of building land. The cost of the site for an Irish house or apartment is typically about 40 per cent of the overall cost, compared with less than half that in most developed countries. The way of tackling this has been obvious since the Kenny report of 1973: price development land at 25 per cent above the rate for agricultural land. A few years ago, the All-Party Committee on the Constitution scotched the oft-repeated excuse for not doing this: that it would infringe on the constitutional right to private property.
Doing so would have a huge impact on the second key issue: affordability. Local authority estimates show that about a third of the new households formed over the lifetime of the outgoing Government cannot afford to buy a home. This is unsurprising.
In 1994, the average price of a new home was 4.2 times the size of the average industrial wage. By June 2005, it was over nine times higher, and in Dublin it was almost 12 times higher. As a result, the number of people in housing need - 106,000 households made up of 250,000 people, according to PJ Drudy and Michael Punch in Out of Reach: Inequalities in the Irish Housing System - is far greater than the number directly affected by any possible changes in stamp duty.
These people have to deal with the third obvious and urgent problem of housing policy: the exploitation of vulnerable tenants by unscrupulous landlords. The overall position of tenants has improved in recent years, but there is a large group of people - those with little financial clout - who continue to be fleeced.
Almost a third of rental accommodation inspected each year by local authorities is found to be sub-standard. Not only is legal enforcement scandalously rare, but in many cases the State itself is actually paying the rent through supplementary welfare allowances.
The fourth area of housing policy that ought to be a major political issue is the catastrophic failure of the Government's spatial strategy.
The basic policy requirement of integrating housing development with jobs and transport is further from being met now than it was when the strategy was unveiled in 2002.
As the Irish Planning Institute's president pointed out last week, population growth in counties with supposed "gateway" cities and towns has actually been slower than in some counties without them. Villages have continued to decline, while only a pathetic 4 per cent of the population growth since 2002 has happened in the five main cities. We continue, in other words, to build houses in the wrong places for people to live a sustainable lifestyle.
It would be easy to think of many more areas of housing policy - poor provision for Travellers and people with disabilities, the Government's rowing back on its commitments to social housing - that make more difference to more people's lives than stamp duty does.
But these kinds of issues are complicated (spatial strategy), threaten the interests of very wealthy developers (controlling the cost of land) or primarily concern people who are relatively powerless (sub-standard flats).
Talking about them would, moreover, suggest that the election might actually be about real change, and we couldn't have that, could we?
Looks like the 'crash' is already underway:
http://irishpropertywatch.5gbfree.com/ipw_myhome_report5_230407.html (http://irishpropertywatch.5gbfree.com/ipw_myhome_report5_230407.html)
Nah that looks like a "Soft Landing" to me , ::)
Aware of what's happening on the ground, the Estate Agents' pr machine kicks in.
--
Over 1140 homes refused planning permission in a week
Planning refusals could lead to further price differential between city and provinces
LAST week alone more than 1,140 dwellings across Ireland were refused planning permission, bringing the total number of homes denied permission so far during April to almost 3,000 or one in four of all applications received. This compares with one in ten a decade ago.
It will mean a 15% drop in the supply of new homes, mainly in the capital where demand is strongest. This, in turn, will lead to further polarisation between high prices in Dublin versus lower price growth in the rest of the country.
Derek Brawn, head of research at Savills Hamilton Osborne King and author of this latest report, said that last year the refusal rate was running more than 25,000 but it is likely to go as high as 27,000 homes denied building permits this year.
"Reduced supply generally would allow the market to stabilise because new home prices have remained static for the last six months and the market is hampered by poor sentiment caused by rising borrowing costs and uncertainties over stamp duty.
"But reduced supply in Dublin will cause a two tier market with an even bigger price differential between the capital and provincial locations," he said.
This is already happening, according to the permanenttsb/ESRI price index which indicates prices in the commuter belt falling by 1% in the first two months of the year.
Derek Brawn suggests that over-ambitious plans by developers and a resistance to greater densities by planners is part of the problem and the lack of a strategic planning authority for the Irish state is another problematic issue.
"Individual councils are operating independently and making decisions without overall consideration for transport and infrastructure. The only other control is An Bord Pleanala which overrides local planning decisions if property developments are considered either too high, too close to water, or to motorways."
He points to the 'joined-up-thinking' approach by the Dublin Docklands Authority which co-ordinates commercial, residential and transport development with outside developers for Dublin 1 which is a Section 25 development area and exempt from the normal planning process. "This approached needs to be adopted elsewhere in the capital," he said.
Cliodhna O'Donoghue
http://www.unison.ie/irish_independent/stories.php3?ca=303&si=1820926&issue_id=15563
One year on and predictions of doom and gloom seem to be correct.
The international factors projected have come to pass. The dollar falling in value, oil prices rocketing, increasing interest rates. There has also been the sub prime crisis.
The Irish factors are making it worse too - Credit crunch, investors abandoning the market, falling rents with more to come, returning migrants reducing demand even more, thousands of unoccupied units.
I suspect the property market is screwed for another few years.
Are rents falling in the south?
Not my experience in the UK.
Property market is fucked but I'm thinking it's a good time to buy.
Quote from: pintsofguinness on June 01, 2008, 01:53:46 PM
Are rents falling in the south?
Not my experience in the UK.
Property market is fucked but I'm thinking it's a good time to buy.
According to daft they are.
http://www.rte.ie/news/2008/0520/rent.html?rss (http://www.rte.ie/news/2008/0520/rent.html?rss)
The rental inventory has doubled which suggests people who can't sell are trying their hand at renting, or a glut of new builds coming on stream.
If you buy now, at least you know you are getting a better deal than in '06 or '07.