The housing bubble has burst

TabulaRasa22

miju wrote:

aye but renting is cheaper, so what we've been doing is putting aside the money we're saving on not paying a mortgage in the bank which is cheaper as said how and ever the difference between rent/mortgage prices equals just under 35k (for us) after 2 years of saving the difference and we'll continue to do so as the savings we're making are massive (a few other couples we know are doing this as well)



your just as secure (if not more due to not paying repairs, service charges etc etc) in a rented accomodation



you've just contradicted yourself, on one hand you've said it's unlikely they'll stop rising and then finish by saying this final phase will last another 3-4 years so by that i'm taking you think the bubble will deflate at that stage?

it doesnt matter if it's another 3-4 years away it will happen, and people who are priced out of the market will just keep saving and saving towards their first property and when the deflation comes (and it will) most will buy then, on a side note i think the SSIA could be the undoing of the property market, as i think most will accept the fact that ALOT of FTB are planning on using theirs as a deposit which IMH and non-expert opinion is going to lead to the property market getting white hot over the next year and I'd imagine prices really sky rocketing over that time at which stage a hell of alot of people will be majorly priced out of the market = less buyers = massive deflation (altough by how much is anyones guess but the generally accepted figure by some anylysts is about 40-50% which would bring prices back to around the 180-200k mark which again IMHO is affordable, correct and a stable price

Rent is pretty much dead money, at least if you have a mortgage you are investing in your own future. You make a good point about the SSIA though, if the property market heats up any further a crash is, while not inevitable, highly likely. There are a lot of other factors to consider as well, not leaast the international factors which influence the ECB interest rates. For example, China is loosening up its currency regulations, which means Chinese goods are going to get more expensive, and European goods will become more attractive.

The biggest problem with Ireland is not a lack of land, its a lack of planning permission. Planning is angled towards developers, speculators, and investors, not towards actual home owners. There's plenty of land in this country; I mean, lets take a look at the Philippines, for an extreme example. 80 million people and less square mileage than Ireland. 20 grand will get you a very comfortable house with a few acres on top of that, and heres us with a humble 4 million people. For something closer to home, I invite everyone to take a look at France, see what a hundred grand will buy you - you'll be amazed. The contrast between these countries and Ireland is immense.

daveirl

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TabulaRasa22

daveirl wrote:

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Yes I did read the thread, and you're taking just as much of a risk investing in whatever as you are investing in property; some people say the boom might go on for years to come. The appreciation in your property price would more than equal whatever you might gain from short term investments.

Besides, there isn't that much of a difference in rent and mortgage repayments if you don't mind renting out a couple of rooms for a few years, by which time inflation will have taken away the pain. And negative equity is only an issue if you are investing in property as an investment, not as a home. Granted many people want it both ways, but if push comes to shove, you still have your house.

daveirl

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TabulaRasa22

daveirl wrote:

This post has been deleted.

Well maybe I should have put an IMHO in there too, its really just an opinion. Rising interest rates will cause a lot of pain if they continue, but falling house prices will only damage speculators, and you won't catch me shedding any tears for them. Anyway the point of my post was that the situation in this country when it comes to housing is very artificial; how long house prices continue to rise depends on how long these artificial conditions can be maintained. As I said, there is a lot of land in this country, so it could carry on for an awfully long time to come...

TabulaRasa22

And just a quick follow up to underline my point, take a look at this...

http://www.french-property.com/

Stone cottage with a courtyard, €107,000

http://www.french-property.com/properties/property_detail/cid/13/pid/188526/ifp/1/tid/1/show/all

Five bedroom detached house, €118,000

http://www.french-property.com/properties/property_detail/cid/26220/pid/167087/ifp/1/tid/2/show/all

I don't know about anyone else here but my French classes are coming along nicely.

useruser

TabulaRasa22 wrote:

Well maybe I should have put an IMHO in there too, its really just an opinion. Rising interest rates will cause a lot of pain if they continue, but falling house prices will only damage speculators, and you won't catch me shedding any tears for them. Anyway the point of my post was that the situation in this country when it comes to housing is very artificial; how long house prices continue to rise depends on how long these artificial conditions can be maintained. As I said, there is a lot of land in this country, so it could carry on for an awfully long time to come...

Wrong! What do you suppose all those people who bought cr*p "starter homes" 2 hours commute from their jobs are going to think of the fact that they will be stuck in the same hovel for the next 20 years? That's right folks, the property ladder is an illusion - you will never trade up to that house you really want.

The (IMO) inevitable crash is going to be a social and economic disaster for this country and our friends in the Dail are doing absolutely nothing to prevent it (bar perhaps listening to their pals in the construction industry bleat on about how our "unique demographics" and "special economy" will see us alright in the end.)

TabulaRasa22

useruser wrote:

Wrong! What do you suppose all those people who bought cr*p "starter homes" 2 hours commute from their jobs are going to think of the fact that they will be stuck in the same hovel for the next 20 years? That's right folks, the property ladder is an illusion - you will never trade up to that house you really want.

The (IMO) inevitable crash is going to be a social and economic disaster for this country and our friends in the Dail are doing absolutely nothing to prevent it (bar perhaps listening to their pals in the construction industry bleat on about how our "unique demographics" and "special economy" will see us alright in the end.)

Well it may set them back a bit, but over the course of 5 to 8 years inflationary rises should enable them to rent that house out and square away a bit of money for the dream home without too much difficulty. They would at least have options, unlike the speculators who are righteously (and rightfully) hammered.

ronbyrne2005

if rent is dead money then what is mortgage interest? mortgage interest is the rent you pay on the amount you borrow to buy a house.
how can house prices continue to rise much further when incomes arent rising much and rents arent rising either which indicates a good supply??

as for investing in pensions instead of buying a house and risk,investment in a pension can have sero risk if you want by investing in government bonds etc,plus if you opt for more risky investments you are well diversified but a property is not.
if you are prepared to share with friends you can rent in a nice area for 400 euro a month and write off a bit against income tax,then you use the money you save by not having a mortgage to invest in a pensions with their great tax beenfits and choose the investment risk you want,pensions outperform property over 30 years hands down.

Uncle Chenzo

Not to piss on your chips ron, but how long could you live with your mates before getting liver damage, etc. I've just left the big smoke, and gone country. Saving a packet, and i commute!! Less stress, more life. Not to sound too heavy.

ronbyrne2005

Uncle Chenzo wrote:

Not to piss on your chips ron, but how long could you live with your mates before getting liver damage, etc. I've just left the big smoke, and gone country. Saving a packet, and i commute!! Less stress, more life. Not to sound too heavy.

i hear what your saying but im only replying to the guy earlier that said rent out rooms to pay your mortgage and i was saying you can similarly save money renting with other people if you want to be in a house ,they dont have to be your drinking mates,find a few boring professionals!!

miju

TabulaRasa22 wrote:

Rising interest rates will cause a lot of pain if they continue,

if i'm not mistaking the ECB have indicated that rates will rise by at least 1% over the next year, nearly sure it was the indo / sky news i heard but can't remember exactly

TBH i'm by no stetch of the imagination a financial whizz so I dont know how much an effect a 1% rise would have on your average €350,000 mortgage would anyone care to fill me and the rest of boards in

ronbyrne2005

miju wrote:

if i'm not mistaking the ECB have indicated that rates will rise by at least 1% over the next year, nearly sure it was the indo / sky news i heard but can't remember exactly

TBH i'm by no stetch of the imagination a financial whizz so I dont know how much an effect a 1% rise would have on your average €350,000 mortgage would anyone care to fill me and the rest of boards in

well funnily enough its 1% of 350k ! thats for a new mortgage so an extra 3500euro a year if rates rise by 1%,they have already risen by a half a percent so only another half to go! theres 100billion outstanding in mortgages so a one per cent rise in interest rates costs the economy one billion in extra interest which affects spending in shops etc but ssia's should smooth that out

miju

feel a bit dumb now asking that question so about €300 extra per month, it quite a hike, the 1% i heard is actually ON TOP of the hike already AFAIK,

even if it's not on top of it that's €300 extra per month by the end of the year, obviously thats not going to affect most people but one of my girlfriends, friends that will be affected and mean alot more overtime / pressure / strain i'd wonder how many other around the country would be in the same boat

JimmySmith

daveirl wrote:

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You're thinking about this in the here and now rather than over a period of time. Thats just plain wrong.
Here is an example of my situation and its one of several others i know about.
My mortgage is only €400 PM.
It will be zero when i get my SSIA paid off.
I could have rented cheaper than what i pay for my mortgage 6 years ago, but i didnt. I paid the extra to have the security of my own home.
My wife did the same 7 years ago. Her house is now rented and the mortgage will be cleared in June too.

Buying a house should not be thought of as something you do today and it costs x amount a month. It should be thought of as costing x amount a month over y years. Inflation has certainly eaten my debts ferouciously.
Had we invested the difference in mortgages and rent it would not have earned even 10% of our assets now, although the family home is not really an asset unless we sell it and rent.

Now, while it wasnt my opinion that rent was dead money 6 years ago, it certainly is my view today.

FrankGrimes

if you're gonna talk figures at least get them right. use this calculator to get more accurate figures: http://www.jeacle.ie/mortgage/

D'Peoples Voice

JimmySmith wrote:

You're thinking about this in the here and now rather than over a period of time. Thats just plain wrong.
It should be thought of as costing x amount a month over y years.
Now, while it wasnt my opinion that rent was dead money 6 years ago, it certainly is my view today.

No offence, but that's like a novice investor being reluctant to invest in tech stocks, but undertaking the gamble in 94 and then in late 1999 claiming that it's definitely worth it. the period you invested in has produced a better return than practically any other 6 year period in history.
As you say, you can't look at these things in the present, it's the future you should concern yourself with. Currently we are building more houses PER YEAR now than we did over 3 years in the 1970s. Supply is catching demand rapidly. Why else would different banks/estate agencies be predicting a fall in output? You only cut back on supply if you feel you are beginning to match demand, just look at OPEC!
The problem will be in demand!
I still fear the rising costs of childcare and energy costs for young families.
Add pensions costs to that, and then ask them if they can pay a mortgage.
The massive rise in Debt in this country is telling us we are living for TODAY!
As regards interest rates affecting people, we must remember that although people are stress tested for their mortgage repayments; credit card debt & personal loans are not always stress tested for up to 2% increases. That's something the Government should be asking the banks to do. But Government taxes depend on personal consumption, so i see a double edged sword for the Government, do they reduce personal indebtness or taxation?

miju

thanks for that link, so on your average 350k mortgage (assuming 20k deposit) over 25 years at 3.2% costs €1,696.38 per month so a 1% hike (without taking into account the banks rates as someone said earlier) equals €1,886.30 an extra €189 per month possibly sometime around the end of the year which is still unwanted extra financial pressure

now after that if the ECB started hiking up again by say 0.25% that's €1995.41 and if they went higher again by 0.10% that's hit the €2015.59 per month mark and i suppose after that who knows, course that's guess work on my part, now correct me if I'm wrong but the ECB announce rates every 6 months or so that should bring it towards the end of 2007 which will possibly result in an extra €319.21 per month coupled with the usual rises in bin charges, esb, childcare, food, fuel and personal loans (not taking into account the possible interest rises on them also) etc over the course of a year and a half odd.

who knows how much extra you could be paying so IMHO that could not only price even more people out of the market (there's a good few now IMO) it could also possibly cause people not to be actually have enough to pay the bills and negative equity (i think) and therefore defaulting and more houses going on the market / people trading down leading to a downfall in the prices leading to more negative equity / investors looking to offload which leads to further deflation and CORRECTION (cos i reckon that's what'll happen rather than a crash as such) of house prices

like i said i'm no financial whizz by any stretch of the imagination so this is a bit of an educated guess jobbie, but the future doesn't really bode well IMO,

i'd actually like to compare my figure above to the average industrial wage, but after googling it i've not had any luck, does anyone know the figure for the average wage i think it's somewhere around the €27k mark

daveirl

This post has been deleted.

MG

JimmySmith wrote:

You're thinking about this in the here and now rather than over a period of time. Thats just plain wrong.
Here is an example of my situation and its one of several others i know about.
My mortgage is only €400 PM.
It will be zero when i get my SSIA paid off.
I could have rented cheaper than what i pay for my mortgage 6 years ago, but i didnt. I paid the extra to have the security of my own home.
My wife did the same 7 years ago. Her house is now rented and the mortgage will be cleared in June too.

Buying a house should not be thought of as something you do today and it costs x amount a month. It should be thought of as costing x amount a month over y years. Inflation has certainly eaten my debts ferouciously.
Had we invested the difference in mortgages and rent it would not have earned even 10% of our assets now, although the family home is not really an asset unless we sell it and rent.

Now, while it wasnt my opinion that rent was dead money 6 years ago, it certainly is my view today.

Ever listen to that guy who speaks really quickly at the end of radio ads for investment products? -
“Past performance may not be a reliable guide to future performance”

miju

daveirl wrote:

This post has been deleted.

i suppose but the sentiment i meant behind the word is a gradual but significant decrease in prices over about 6 months or so

ronbyrne2005

miju wrote:

feel a bit dumb now asking that question so about €300 extra per month, it quite a hike, the 1% i heard is actually ON TOP of the hike already AFAIK,

even if it's not on top of it that's €300 extra per month by the end of the year, obviously thats not going to affect most people but one of my girlfriends, friends that will be affected and mean alot more overtime / pressure / strain i'd wonder how many other around the country would be in the same boat

sorry shoud have said thats only for an interest only mortgage.if principle is being reduced the interest element will decrease throughout mortgage term provided interest rates are constant.

miju

like i say i'm no financial whizz but i think i get what you mean, if thats the case it still would only reduce the increases fractionally would it not?

Pa ElGrande

Are the first clouds showing over Ireland’s property boom?
http://www.timesonline.co.uk/newspaper/0,,176-2078971,00.html

“Parts of the market are now showing signs of saturation, particularly in the regional towns where apartments are proving more difficult to sell. And developers in Dublin’s docklands are already moving towards larger apartments in an effort to entice family buyers,” says Hunt.

Investors still spending in Ireland are relying solely on capital value increases to earn their crust, with the recent Daft.ie rental report showing that in Dublin, three-bed homes in the city centre are the only ones capable of paying their mortgage with rental income.

Irish mortgages: Pain on the way
http://www.thepost.ie/post/pages/p/story.aspx-qqqt=THE%20INSIDER-qqqs=themarket-qqqs=computersinbusiness-qqqid=12504-qqqx=1.asp

Now that Ireland has surrendered control of its interest rate policy to the European Central Bank, it is surprising that there has been so little domestic focus on ways to mitigate the consequences of that loss of control, notably by devising products and markets that would protect borrowers from the consequences of rising interest rates.

It would be nice to think, though, that our own policymakers were working on ways to protect Irish mortgage holders from the potentially painful consequences as interest rates rise from their historic lows. But there is little to suggest that they are particularly concerned about the problem, let alone remotely bothered about finding a solution.

Ireland’s kamikaze capitalism
http://www.sbpost.ie/post/pages/p/wholestory.aspx-qqqt=DAVID%20MACWILLAMS-qqqs=commentandanalysis-qqqsectionid=3-qqqc=5.2.0.0-qqqn=1-qqqx=1.

Even when the domestic credit economy collapsed, at least manufacturing - which was controlled by Japanese executives - continued to export. We don’t have a domestic manufacturing industry. The second crucial difference is that we do not have a real central bank. If things went pear-shaped here, it is highly likely that our interest rates would be rising not falling.

This is because Germany operates in a different economic cycle to us. No country in the world has ever experienced a property meltdown that was not cushioned by falling or possibly zero interest rates.

No let up in Irish house market boom
http://today.reuters.co.uk/news/newsArticle.aspx?type=businessNews&storyID=2006-03-07T155557Z_01_L07460246_RTRUKOC_0_UK-ECONOMY-IRELAND-PROPERTY.xml&archived=False

DUBLIN (Reuters) - Irish house price growth picked up further in February and an already booming property market now looks set to heat up more than originally anticipated this year, according to a survey published on Tuesday.

DRAWING conclusions about house prices is risky business.
http://www.unison.ie/business/stories.php3?ca=80&si=1575083

In the year to the end of January 2006, prices went up by 10.2 per cent on average, the money men say. But geographical figures buried deeper in the report suggest rises are a bit more than this.

Just for fun, anyone want to put a value on the Phoenix Park (1760 acres) at today's Dublin real estate prices?

Zynks

Pa ElGrande wrote:

Just for fun, anyone want to put a value on the Phoenix Park (1760 acres) at today's Dublin real estate prices?

If the government sold it, we could probably buy a country in the Caribbean and move there

Irish mortgages: Pain on the way
http://www.thepost.ie/post/pages/p/s...504-qqqx=1.asp

Now that Ireland has surrendered control of its interest rate policy to the European Central Bank, it is surprising that there has been so little domestic focus on ways to mitigate the consequences of that loss of control, notably by devising products and markets that would protect borrowers from the consequences of rising interest rates.

It would be nice to think, though, that our own policymakers were working on ways to protect Irish mortgage holders from the potentially painful consequences as interest rates rise from their historic lows. But there is little to suggest that they are particularly concerned about the problem, let alone remotely bothered about finding a solution.

The issue if the Irish government not having any control over interest rates always worried me a lot. I also have a big issue with stamp duty not reducing as house prices go up. However, I just realised that this may have been one of the few smart things done by this government. They actually have a mechanism to help avoid a crash!

As interest rates go up and (potentially) house prices start to dip based on an inverse proportion to the repayment costs, if stamp duty is lowered the "desirability" of property can be sustained. In case you have any doubts about the extent to which this could be applied, consider the German historic interest rates (after all, it is the economy most likely to dictate the Euro rates). They have not gone over 7% since 1948...

Granted, a 5 or 6% rate (in a very, very negative scenario in my view) would be a massive hit to Irish mortgage holders, but proportionally reduced stamp duty could keep the market alive, avoiding people hiting negative equity and allowing people to downgrade in the worst cases when they couldn't afford the repayment - though I don't really expect such a dramatic raise in interest rates for at least 5 years.

It is in the country's interest to avoid a big crash because it's effects could be widespread and could trigger a severe recession.

I suddenly feel the Irish housing market (and its economy as a result) are safer than I previously though...

ronbyrne2005

Zynks wrote:

If the government sold it, we could probably buy a country in the Caribbean and move there



The issue if the Irish government not having any control over interest rates always worried me a lot. I also have a big issue with stamp duty not reducing as house prices go up. However, I just realised that this may have been one of the few smart things done by this government. They actually have a mechanism to help avoid a crash!

As interest rates go up and (potentially) house prices start to dip based on an inverse proportion to the repayment costs, if stamp duty is lowered the "desirability" of property can be sustained. In case you have any doubts about the extent to which this could be applied, consider the German historic interest rates (after all, it is the economy most likely to dictate the Euro rates). They have not gone over 7% since 1948...

Granted, a 5 or 6% rate (in a very, very negative scenario in my view) would be a massive hit to Irish mortgage holders, but proportionally reduced stamp duty could keep the market alive, avoiding people hiting negative equity and allowing people to downgrade in the worst cases when they couldn't afford the repayment - though I don't really expect such a dramatic raise in interest rates for at least 5 years.

It is in the country's interest to avoid a big crash because it's effects could be widespread and could trigger a severe recession.

I suddenly feel the Irish housing market (and its economy as a result) are safer than I previously though...

stamp duty of 5-9% isnt gonna stop a correction if it occurs,people panic snd once prices start falling its hard to reinstill confidence in the market ,when would the government cut the stamp duty?when prices drop 10%? 20%? even if they cut stap duty people would think "why are government allowing me zero stamp duty? somethings wrong,better not buy a new house as prices will fall more"

miju

ronbyrne2005 wrote:

stamp duty of 5-9% isnt gonna stop a correction if it occurs,people panic snd once prices start falling its hard to reinstill confidence in the market ,when would the government cut the stamp duty?when prices drop 10%? 20%? even if they cut stap duty people would think "why are government allowing me zero stamp duty? somethings wrong,better not buy a new house as prices will fall more"

my sentiments exactly, if the government were to lower stamp duty there's 2 mindsets i can possibly envisage

1: market has become unstable best wait a while and see what happens (likely end result being prices coming down as people adopt the wait and see approach)

2: oh house prices have just gotten marginally cheaper i should jump in here and buy because this is a really good deal oh but wait.......why are the government doing this??? market must be becoming unstable best to wait a while and see what happens (likely end result being prices coming down as people adopt the wait and see approach)

2.1 same as mindset two except the people buy the houses (of which i'm sure there would be very few who'd make a purchase on the basis of a reduction in stamp duty)

again thats just my opinion, but the market has peaked (or is very close to it and the only way after the peak is down, but by how much is anyones guess )

Zynks

ronbyrne2005 wrote:

stamp duty of 5-9% isnt gonna stop a correction if it occurs,people panic snd once prices start falling its hard to reinstill confidence in the market ,when would the government cut the stamp duty?when prices drop 10%? 20%? even if they cut stap duty people would think "why are government allowing me zero stamp duty? somethings wrong,better not buy a new house as prices will fall more"

If suspicion of government moves was a reason to stop people from investing, the SSIA's should have been a flop.

PDelux

Granted, a 5 or 6% rate (in a very, very negative scenario in my view) would be a massive hit to Irish mortgage holders

This is exactly the situation in the US at the moment. House sales are predicted to slow by 5% and 7% for new and existing resp. this year as a direct result of 2.5 year record high mortgage rate of ~6% for the average 30yr.

replytohere2004

wikipedia has an article on the "Irish Property Bubble" :

http://en.wikipedia.org/wiki/Irish_Property_Bubble

Pa ElGrande

The frenzy in the Irish property market has intensified. In the last six months,
house price inflation has re-accelerated to an annualised rate of 15%. In the
Dublin market, prices are now rising at an annualised 20% lick, up from only
3% less than a year ago. But rents have only recently recovered after a threeyear
period in which they were in decline. As a result, yields have been driven
down to unprecedented depths. Something does not feel right.

You can read the rest at Davy Stockbrokers.
http://www.davydirect.ie/other/pubarticles/econcr20060329.pdf

Note: they do have a vested interest in pushing stocks.

Sponge Bob

Finally an intelligent comment from the economic forecasterati on the Yield or 'Return on Investment' issue . You wont hear Dan Mc Loughlin say this though, too much of his banks money is out there in the bubble .

All i can say is that the yields are lower than I thought which is bad news

lomb

Sponge Bob wrote:

All i can say is that the yields are lower than I thought which is bad news

For whom? maybe for buyers but most definately not for investors/occupiers. property has an emotional value and its price 'should' always be above the net yield. u dont get the same buzz out of owning one share of stock in some company.

daveirl

This post has been deleted.

ionapaul

lomb wrote:

For whom? maybe for buyers but most definately not for investors/occupiers. property has an emotional value and its price 'should' always be above the net yield. u dont get the same buzz out of owning one share of stock in some company.

Honestly, this doesn't make any sense. If investors are not concerned about yields, they certainly aren't investors! Did you mean owner / occupiers?

lomb

inflation even of the 'quoted official rate of 3%'+ the yield of 3-4% for classic investment type units is much more than interest rates of 4%.
add to that emotional value that u have ur name in the land registry and that actual cap increases are 15%+ and u have something else. this is the peak of the cycle, i know that, u know that. but u also know the previous prices around 1995 and even around 2000 were the trough of the cycle. property is cyclical, and the cycle is based on confidence, alternative investments, gearing, and interest rates and current capital increases, stability of currency, stability of state and its willingness to protect property owners.

no doubt there will come a prolonged period of static prices or slight falls in real terms, but by the time that happens, they will have risen another 30% imho. i would still buy GOOD property. i know in 50 years that it will be worth 5 times what it is today and all on money that was never mine in the first place(gearing) if u can meet the payments id still go for it...

ronbyrne2005

lomb wrote:

inflation even of the 'quoted official rate of 3%'+ the yield of 3-4% for classic investment type units is much more than interest rates of 4%.
add to that emotional value that u have ur name in the land registry and that actual cap increases are 15%+ and u have something else. this is the peak of the cycle, i know that, u know that. but u also know the previous prices around 1995 and even around 2000 were the trough of the cycle. property is cyclical, and the cycle is based on confidence, alternative investments, gearing, and interest rates and current capital increases, stability of currency, stability of state and its willingness to protect property owners.

no doubt there will come a prolonged period of static prices or slight falls in real terms, but by the time that happens, they will have risen another 30% imho. i would still buy GOOD property. i know in 50 years that it will be worth 5 times what it is today and all on money that was never mine in the first place(gearing) if u can meet the payments id still go for it...

if it will be 5times what it is now in 50 years then your saying it wont go up above inflation! inflation is 3% and compounded over 50 years(i think 3% is a reasonable average for the period) any asset will be worth five times what it is now! so in real terms no change over next 50 years,wow your a financial genius lomb!

lomb

ronbyrne2005 wrote:

if it will be 5times what it is now in 50 years then your saying it wont go up above inflation! inflation is 3% and compounded over 50 years(i think 3% is a reasonable average for the period) any asset will be worth five times what it is now! so in real terms no change over next 50 years,wow your a financial genius lomb!

then go buy a car, a sink or a tap, or a jcb if everything appreciates!
property is one of the few things that doesnt depreciate, is linked to inflation, that banks are willing to loan for, ie its not even your money, that goes up. edit/that also provides a return/
its a GREAT buy at any point in the cycle if u can afford the repayments stress tested, and u are in for the long haul. there are too many 'kids' on boards looking at short term gains/losses. sure if i did that (which i have done in the past) id never get past stamp duty, solicitors fees, furnishing costs etc. if u are in it for the long haul and u live long enough to see it i think its a case of the tortoise and the hare. stamina wins out over speed anyday of the week tbh..

ronbyrne2005

lomb wrote:

then go buy a car, a sink or a tap, or a jcb if everything appreciates!
property is one of the few things that doesnt depreciate, is linked to inflation, that banks are willing to loan for, ie its not even your money, that goes up. edit/that also provides a return/
its a GREAT buy at any point in the cycle if u can afford the repayments stress tested, and u are in for the long haul. there are too many 'kids' on boards looking at short term gains/losses. sure if i did that (which i have done in the past) id never get past stamp duty, solicitors fees, furnishing costs etc. if u are in it for the long haul and u live long enough to see it i think its a case of the tortoise and the hare. stamina wins out over speed anyday of the week tbh..

cars sinks taps are wasting assets,im refering to other investment asset classes and not talking short term.good luck to you lomb youll need it.

lomb

ronbyrne2005 wrote:

im refering to other investment asset classes and not talking short term..

Like what? u cant get 90% finance on shares, and even if u could would u take the risk where some dodgy ceo is probably cooking the books?

lomb

ronbyrne2005 wrote:

cars sinks taps are wasting assets,im refering to other investment asset classes and not talking short term.good luck to you lomb youll need it.

would u lose sleep if a house u bought lost 30% overnight and u could still afford the payments? wouldnt trouble me (not alot anyway) u take good with the bad. if u can take a 30% rise u can take a fall also. its all irrelevent anyway its all theoretical, 1000 euro on a table is alot more impressive than a million euro property transaction. property money just goes around, 1000 on the table is real money.

Pa ElGrande

Dublin land sales surge to €1bn
http://www.sbpost.ie/post/pages/p/story.aspx-qqqt=NEWS-qqqs=news-qqqid=13157-qqqx=1.asp

Unzoned land in south Dublin, which has so-called ‘‘hope value’’, meaning housing development might eventually be permitted on it, has trebled in value to about €1 million an acre over the last 12 months.

Lap of luxury: Irish choose to spend well
http://www.sbpost.ie/post/pages/p/story.aspx-qqqt=NEWS-qqqs=news-qqqid=13156-qqqx=1.asp

More luxury cars, including Ferraris, Aston Martins and Maseratis retailing for as much as €300,000, were sold in the first three months of this year than during the whole of 2005, new industry figures reveal

Hot money is beginning to melt Iceland’s hardy economy
http://www.sbpost.ie/post/pages/p/story.aspx-qqqt=DAVID%20McWilliams-qqqs=commentandanalysis-qqqid=13108-qqqx=1.asp

The sixth stage is the distress stage, where income from the asset - whether it is rental yield or dividend yields - begins to soften. Savvy investors start to get out in the distress phase. They see little underpinning the market and, as a result, take profits. Initially there are sufficient buyers to take up the slack, but in time, sentiment begins to turn and the overhang of supply on the market makes it impossible for yields to rise.

Irish Outlook: Damien Kiberd: Beware the brewing interest rate storm
http://www.timesonline.co.uk/newspaper/0,,2769-2113977,00.html

Ireland is now suffering a Japanese-style asset bubble. There are many senior people within the banking system who realise the crazy nature of what is happening. They can do nothing to stop it: some 60% of their loan books are now committed to mortgages or to loans to builders and developers.

Beware shifting sands if investing in Dubai
http://www.timesonline.co.uk/newspaper/0,,2770-2113703,00.html

Nearly every promoter at last week’s show was offering rental guarantees of about 7.5% per annum for the first two years. Since so many thousands of apartments and houses are still being built and have as yet no tenants, this is just another case of handing you back some of your own money to secure the deal. Such returns may not be sustained.

ionapaul

The writing may be on the wall...but I still think we'll see 20% growth in Irish property this year, no problem! That's how these things work...

Pa ElGrande

ionapaul wrote:

The writing may be on the wall...but I still think we'll see 20% growth in Irish property this year, no problem! That's how these things work...

I expect the same. If you are depending on capital appreciation then consider taking your profits now. Interest rates are going up globally for the next few years, this will limit price growth as new entrants can't bid up the price of property, unless, the banks start introducing 100 year mortgages. :eek:

House completions for January & Febuary are well ahead of any previous year, so this will increase supply (check the excel spreadsheet on the department's web site). Its shaping up to be a record breaking year for housing completions.

http://www.environ.ie/DOEI/DOEIPub.nsf/wvNavView/RegularPublications?OpenDocument&Lang=en#I2

whizzbang

Pa ElGrande wrote:

I expect the same. If you are depending on capital appreciation then consider taking your profits now. Interest rates are going up globally for the next few years, this will limit price growth as new entrants can't bid up the price of property, unless, the banks start introducing 100 year mortgages. :eek:

if the banks introduce these watch out! These were introduced in the UK a few weeks before their crash in the 80s!

~Leanne~

100 year mortgage - are ye serious??? sure how would that work - obviously we would be dead after 100 years

whizzbang

~Leanne~ wrote:

100 year mortgage - are ye serious??? sure how would that work - obviously we would be dead after 100 years

but your kids wouldn't be!

Multi generation mortgages are quite common in Japan but then again so were foot binding and eating poisionious fish but it doesn't mean its a good idea.

MrPudding

whizzbang wrote:

but your kids wouldn't be!

Multi generation mortgages are quite common in Japan but then again so were foot binding and eating poisionious fish but it doesn't mean its a good idea.

Also in Germany and some other European countries I believe.

MrP

TabulaRasa22

ionapaul wrote:

The writing may be on the wall...but I still think we'll see 20% growth in Irish property this year, no problem! That's how these things work...

Yeah, there are substantial differences between the Irish situation and any other. Planning permission here is a warped system angled largely towards developers (the grapevine tells me its nearly impossible to get planning unless you are one, outside established suburban areas anyway). I was reading in the paper there that some loon planned to keep the property bubble inflating until 2015, by, wait for it, importing 5 million immigrants. Jesus H Christ. Great for the property market, civil war, if it could be called that, for Ireland. Not that I've anything against immigrants, but we'll have to change the country to chinomaniababwessialand if they try to pull that stunt. Sigh.

LFCFan

From May this year there is going to be a lot of potential buyers who finally have a deposit (SSIA) and we're probably waiting till now to finally buy. I reckon we could see another spike in price increases over the next 12 - 18 months before it settles back down again and gradually eases off.