Boycott Of The Housing Market

mkdon05

If everyone on the boards, and all their friends and family, plus anyone else they could influence, decided not to buy a house for a ridiculous consideration for a set period of time,
Would this not be an effective drive to reduce house prices? If no one is willing to pay 380000euro for a house thats worth 250000euro, that would cause a lot of sellers to reduce their asking price.

A Tall order but I urge everyone to Spread the word.






66cent per litre of petrol is a grossly overpriced tax the government is reaping from your rewards.

jhegarty

mkdon05 wrote:

If everyone on the boards, and all their friends and family, plus anyone else they could influence, decided not to buy a house for a ridiculous consideration for a set period of time,
Would this not be an effective drive to reduce house prices? If no one is willing to pay 380000euro for a house thats worth 250000euro, that would cause a lot of sellers to reduce their asking price.

A Tall order but I urge everyone to Spread the word.






66cent per litre of petrol is a grossly overpriced tax the government is reaping from your rewards.

do I even have to say why that wouldn't work.....

oh look there is a house I want at a price I can pay... better not though , that guy I know who uses boards told me not too...

threebeards

mkdon05 wrote:

I urge everyone to Spread the word.

Yeah, so do I because it's really going to work :rolleyes:

mkdon05

1. You don't know me
2. Your in the minority of people that can afford a house
3. When you fork out for you overpriced house and the market deteriorates due to house prices topping 15 - 20 times peoples salaries, you will have less equity than assets which = you being F**k*d

dunkamania

reasons why collusion fails

1. incentive to cheat

2. inability to detect/punish cheaters

narommy

WHAT STUPIDITY.


Really??

Has the OP considered what he is saying.
Obviously would not work because there are stronger market forces at work than boardsie

Getting over that imagine it did work???????
Average House prices stagnate and then fall by say 10%
Most people would hold on to their houses and decide to stay put thus the areas where people really want to live will not see any decreaase in price. Builders will tighten supplies. And the prices will stabilise.

Taking a step back the only way house prices will fall is if Banks tighten up lending. (or interest rates go up significantly). In fact banks would have to panic and scale back lending substantially.

Who would benefit?
Banks would only extend loans to those who had a high level of collateral and repayment capacity. Thus these people would be the investors who have built up a portfolio over the past few years. The rent that they would receive from their current properties would cover the repayments on those and on any new purchase. There would still be a rental market for properties, (maybe stronger as FTB would not qualify for loans and would have to continue to rent)
The rich get richer!!!!

Idleater

mkdon05 wrote:

1. You don't know me

So why would anyone trust you?

mkdon05 wrote:

2. Your in the minority of people that can afford a house

How can anyone in the "majority" get proof that you are not one of *them* in the minority, looking to "scam" them? Say, for example, you are greedy and want to reduce some of the opposition to your buying power. And then for all people know, you could decide to inflate your rents due to your monopoly in the market.

mkdon05 wrote:

3. When you fork out for you overpriced house and the market deteriorates due to house prices topping 15 - 20 times peoples salaries, you will have less equity than assets which = you being F**k*d

And what do you propose to do then? Buy? How would the "majority" of people that are being "scammed" know when the market has completely crashed? Do you decide?

Let us all know. You seem to be "in" on something bigger than you want to let on...

L.

EKRIUQ

I think the housing market in Ireland is undervalued!!, I said this 2 years ago and people told me I was crazy, and now 2 years on prices are still rising. So maybe when the prices start to slow then we'll know when there value for money/.

Pa ElGrande

Thousands of young people took to the streets yesterday in 60 towns and cities to protest at the price of housing in Spain and to ask the Spanish government to do something to protect the right of young people to buy a decent house.

The protests were organised spontaneously via e-mail messages, websites and sms and were not coordinated by any youth organisation, trade union or any other protest group. The biggest protests were held in Madrid and Barcelona where more than one thousand protesters gathered at the Puerta del Sol and Plaza de Catalunya respectively, and in Valencia (900 protesters). In other towns like Sevilla, Granada, Cordoba, Bilbao and San Sebastian, the concentrations were smaller with 200 to 150 participants.

During the protests, the participants sat down and chanted slogans criticising national and local government for failing to guarantee the right to a house by allowing property prices to rise above what many people can afford. They also criticised real estate speculation with chants like "Hands up, this is a hold up" or "Protect our right to a roof. Housing isn't a business. It's a right".

Protests over the price of housing in Spain
http://www.euroresidentes.com/Blogs/2006/05/protests-over-price-of-housing-in.html

Why not protest like they did in Spain?

Pa ElGrande

mkdon05 wrote:

If everyone on the boards, and all their friends and family, plus anyone else they could influence, decided not to buy a house for a ridiculous consideration for a set period of time,
Would this not be an effective drive to reduce house prices? If no one is willing to pay 380000euro for a house thats worth 250000euro, that would cause a lot of sellers to reduce their asking price.

It would cause a temporary blip and then it would be business as usual, but with higher prices at the end. There are too many vested interests in this market for this approach to be effective.

All western economies move in boom/bust cycles, our situation is exacerbated by the bubble, one of the characteristics of this is we don't think rationally and react emotionally to the situation.

If you want to understand who these interests driving the market are then take the time to read this. Any first time buyer in the current market should read before commiting to a lifetime of debt.

http://adam.webline.co.uk/personal/dontdoit.pdf

Phil Lynott
From Yellow Pearl

It is foolish to venture into strange enchanted places
If they aren't the places you want to be

It is foolish under the guise of love and liberty
That we should capitalize and rob and fell
The poor for the socialistic tree

We are now living in a situation
Where that self same situation depends on the Yellow Pearl

Have no fear the current prices are only sustainable while cheap credit is available, and recent international trends point to a global rise in interest rates + several housing markets globally that were previously booming are falling (some people are already in negative equity, US & Australia)
We are about to enter a turbulent period in the global economy over the next few years.

If you are planning to settle and start a family, then don't let the lack of a mortgage stop you. Kids don't care what house they live in, as long as they have the attention of their parents.

Renting also means you have the flexibilty to move as your career progresses, most of us will change jobs at least 6 times over our working lives.

If you don't have a mortgage you can save (earn interest), better returns on your money than housing are also open to you.
And if you do decide to buy a house when the market suits you, you have a bigger deposit, smaller mortgage and probably better choice of house.

MrSinn

houses houses houses,the hot topic in ireland in the 21th century,welcome to the 19th century

Pa ElGrande

MrSinn wrote:

houses houses houses,the hot topic in ireland in the 21th century,welcome to the 19th century

Its not just Ireland, The best place to go right now if you want to avoid the subject is Germany.

In come the waves
http://www.economist.com/finance/displayStory.cfm?story_id=4079027

You are right our obsession with property is regressive, there must be more more to life thab bricks and mortar.

r3nu4l

OP, I understand your frustration but unfortunately that approach just would not work for the reasons already posted and many others.

Also, mass protests? Yeah, that would work! They held mass protests against the war in Iraq and that was very successful...Oh, no it wasn't.

You see, there are far too many vested interests to allow the poor unwashed, heaving, vomit-ridden masses (i.e. regular working people) that live in rented accommodation to buy houses! Many developers, politicians and businessmen in Ireland own a huge amount of commercial and residential property so why on earth would they ever consider actively correcting the prices?

Sorry to burst the bubble but there you have it.

shoegirl

mkdon05 wrote:

Would this not be an effective drive to reduce house prices? If no one is willing to pay 380000euro for a house thats worth 250000euro, that would cause a lot of sellers to reduce their asking price.

No need. The market is overheating at a rapid pace, so it won't be long until large swathes of people simply no longer have the option of buying a house. I've a friend earning 40k a year had to jump through hoops to get a mortgage to buy a 223k house - and even then all the providers but one turned her down, and under ridiculously unfair terms (like wanting a year's repayments upfront as security!)

And that's for what is a very cheap house by today's standards - unless the mortgage providers really relax lending even more (which I don't think they are going to), a large batch of first time buyers will be priced out of the market by the end of the year, if not already.

According to this article, lenders have already tightened up lending considerably, they describe it as "cherrypicking" but I don't think its because they simply have so many people crying out for loans - I suspect they are trying to avoid against future defaulters.

The inevitable reaction to this will probably be an explosion of subprime lenders only to happy to gouge those who cannot get loans.

shepthedog

Yes of course why didnt we think of this before.. Genius... Boards will be the solution to the housing problem... Ahhhhhhhhhh Nah... How can this be serious??

Besides, dont think the demographic of the average boards user will match that of the average house buyer... Lol how many teenagers you know with their own house..
Back to the drawing board for you I think..

garred

I don't think houses are overpriced. I could'nt afford a house over 10 years ago but I can now. Being on an average salary back then and harder lending criteria the only option was renting. Now there are a lot more options available to borrowers in terms of borrowing and property. Don't know what the OP classifies as worth though. Why is a 380,000 house only worth 250,000? What criteria are you using to classify the worth?

CiaranC

Theres no need to boycott the housing market as its about to COLLAPSE any second, just as soon as all these developments with people queueing up for a week to buy them are sold its going to COLLAPSE I tell you, except it maybe will rise for another 5 years or so first but then it will COLLAPSE and you will all be sorry.

*edit* its gonna COLLAPSE! rawr

Notice: Property prices may rise as well as fall. Or stay level. Or slow down. Or ease off. Or grow.

Pa ElGrande

Here's a funny take on this, worth a listen if you get a chance.

When Will The Property Bubble Burst?"
http://leviathan.libsyn.org/

Kinetic^

Yes it will burst but we've got another 5 years or so.

Everyone thought it would burst a few years ago, you know why it didn't because the mortgage companies brought out new products so that people could afford a house, and they're still bringing them out. 100% mortgages and interest only payments. They'll use these to soak up the market and then hey'll come out with like 50 year mortgages and stuff like that.

Catney

CiaranC wrote:

Theres no need to boycott the housing market as its about to COLLAPSE any second, just as soon as all these developments with people queueing up for a week to buy them are sold its going to COLLAPSE I tell you, except it maybe will rise for another 5 years or so first but then it will COLLAPSE and you will all be sorry.

*edit* its gonna COLLAPSE! rawr

Notice: Property prices may rise as well as fall. Or stay level. Or slow down. Or ease off. Or grow.

Its about to collapse any second, but that it may rise for another 5 years and then collapse? Both very different propositions!!! If someone bought now and the market "collapsed" in 5 years, they would probably still be up, as the collapse would need to wipe out all the gains you would have made over those 5 years before you would be any worse off. There is no evidence to suggest that house prices will substantially fall, the rate of growth will temper soon, no doubt about it. Interest rates are going up, sure, but not anything like Oz, Iceland or early 90's UK.

Supercell

Catney wrote:

There is no evidence to suggest that house prices will substantially fall, the rate of growth will temper soon, no doubt about it. Interest rates are going up, sure, but not anything like Oz, Iceland or early 90's UK.

This is one attitude that I don't understand, whats different about this cycle to all others in the past?, people seem to think that this phenominal rise won't have an inverse like every other time in the past, why ?

I'm no economist, just logicaly cannot grasp the blind faith that all is fine for the housing market to keep rising at 10% + for years on end when wage inflation is far lower, and investment yields are in the 3% range ..what is special about this boom ?

I seem to remember someone posting that ~40% of housing is owned by investors, well with yields in the 3% range..what happens when they move on to the next best earner as they surely will ?, other posts suggest that the investers are already starting to cash out.

lomb

Keyser Soze 5 wrote:

Yes it will burst but we've got another 5 years or so.

Everyone thought it would burst a few years ago, you know why it didn't because the mortgage companies brought out new products so that people could afford a house, and they're still bringing them out. 100% mortgages and interest only payments. They'll use these to soak up the market and then hey'll come out with like 50 year mortgages and stuff like that.

very true. aib is doing interest only and other banks are doing similar exotic loans. there are people sitting down as we speak concocting super exotic loans to 'grow market share'. the banks are more to blame than anyone. thing is the vast majority in ireland own property and its in no ones interest that the price remains static or falls. i can see them up by another 50%-100% before theres an almighty bang and the fallout begins. thats probably 5 years away and if u buy now chances are ul still be quids in.

Catney

First of all interest rates in this country should be much higher. They are not due to the ailing Europeans economies. So we can be fairly certain that interest rates are not going to cripple us over the next say 5 years.

Secondly, I dont think that there is irresponsible lending by financial institutions. I know some of you, from experience, may have a different opinion. I got a mortgage one year ago, and the bank would only lend me 5 times my salary, even though my salary is only half my total compensation. Regular bonuses all but ignored, shares in the company i work for (under trust) completely ignored. They were very strict.

Thirdly all demographic simulations indicate that our population is growing to increase significantly over the next decade.

Fourthly, councils seem to have an aversion in Dublin to high rise, restricting the amount of available living space.

So forces or demand and supply, and reasonably low interest rates, I would put to you in the medium term will continue to drive prices.

Re investors withdrawing from the market, probably is happening already, and the market is baring it with obvious offsetting effects.

I would say im only favourable to the Irish market over a certain timeline. There will be a peak, and possibly a small fall after, and there are going to be unfortunates that will be caught. But that is not going to happen anytime soo, in my view. Anyone who buys in say the next 1 - 2 years will be safe from the dreaded negative equity.

lomb

Catney wrote:

. I got a mortgage one year ago, and the bank would only lend me 5 times my salary, even though my salary is only half my total compensation. Regular bonuses all but ignored, shares in the company i work for (under trust) completely ignored. They were very strict.

.

ive had dealings directly with a bank and they are jokers offering to loan 70% on the back of a commerical property and 75 if another was given as security, when the industry norm is 75% of the total value of the property advanced... if u put ur proposal on paper with your bonuses etc and passed it to all the banks including the back street ones like iib i can gaurantee u u could have got much more(u may have had to claim u were buying to let and it wouldnt be ur family home to bypass central bank requirements...)

lomb

Catney wrote:

, I dont think that there is irresponsible lending by financial institutions.

there most certainly is. 35 year terms and interest only are crazy, basically whats happening is u are renting from the bank but the price is fixed and u can buy out any time. this bonanza puts severe upward pressure on prices. to increase 100 grand is nothing if the bank gets the payments down 200-300 euro a month which is possible with exotic loans. luckily even if there are 50-100 year mortgages, the banks cannot get the payments any lower than the ecb rate + their fixed margin. luckily for us we are protected from our own folly..

dochasach

jhegarty wrote:

do I even have to say why that wouldn't work.....

oh look there is a house I want at a price I can pay... better not though , that guy I know who uses boards told me not too...

If you want to see an interesting example of the exact opposite of this situation, look at this article:
http://www.news-press.com/apps/pbcs.dll/article?AID=/20060521/NEWS01/605210428/1075

"It's frustrating," Ken Koch said. "People have money, but they are waiting for the prices to go down. It's frustrating for all of us."

But getting angry at a neighbor for lowering their price isn't fair, said John McWilliams, Realtor for Coldwell Banker.

"You can't control the market," McWilliams said. "It sounds good to say, 'Let's all stick together,' but buyers are more sophisticated and shop and compare."

Competition is stiff. Inventory is at an all-time high — 50,000 homes for sale in Lee County, according to McWilliams.

A place where buyers shop and compare? Surreal ;-). I'm not boycotting the housing market, I just have no interest in out-bidding speculators and paniced young buyers who have a parental boost and only a vague understanding of the risk they are getting themselves into.

We would be much better off if we could convince speculators to abandon the Irish property market and instead, prop up the floundering Florida property market.* If the Spanish protesters really want affordable housing, they should run ads in the Irish Times which try to convince Irish speculators to buy property in Florida.
http://google.com/trends?q=spanish+property+&date=all&geo=all&ctab=1&sa=N
...or go to Monte Carlo where the risk/return ratio is comparable. Or Las Vegas (a.k.a "Lost Wages":http://www.lasvegassun.com/sunbin/stories/business/2006/may/21/566650314.html

*Don't worry about the fact that Florida property markets have record inventory, that prices are trending downwards, the house price/income ratio is still better in some Florida markets than it is in Ireland. So it must not be a bubble there either...

masterK

Many people seem to forget that we now live in a first world economy, Dublin has now become one of Europes major cities. For those who think property in Dublin in expensive why don't you see how much a 3 bedroomed semi close to the centre of London would cost, or Paris, Rome or even further a field to New York.

What has happened is house prices have corrected themselves in line with other major cities around the world as Ireland has developed from being a 2nd world economy to joining the worlds elite.

House prices will never collapse, the funny thing is I remember 7 or 8 years ago people saying that they're not buying a house because they are waiting for the market to collapse, guess what they're still waiting. This was at a time when a 3 bed semi in Dublin cost around £100,000. House prices will inevitably peak and level out with small annual increases in line with inflation, but this is still a few years away.

Carb

Catney wrote:

First of all interest rates in this country should be much higher. They are not due to the ailing Europeans economies. So we can be fairly certain that interest rates are not going to cripple us over the next say 5 years.

Secondly, I dont think that there is irresponsible lending by financial institutions. I know some of you, from experience, may have a different opinion. I got a mortgage one year ago, and the bank would only lend me 5 times my salary, even though my salary is only half my total compensation. Regular bonuses all but ignored, shares in the company i work for (under trust) completely ignored. They were very strict.

Thirdly all demographic simulations indicate that our population is growing to increase significantly over the next decade.

Fourthly, councils seem to have an aversion in Dublin to high rise, restricting the amount of available living space.

So forces or demand and supply, and reasonably low interest rates, I would put to you in the medium term will continue to drive prices.

Re investors withdrawing from the market, probably is happening already, and the market is baring it with obvious offsetting effects.

I would say im only favourable to the Irish market over a certain timeline. There will be a peak, and possibly a small fall after, and there are going to be unfortunates that will be caught. But that is not going to happen anytime soo, in my view. Anyone who buys in say the next 1 - 2 years will be safe from the dreaded negative equity.

You addressed every single issue except affordability. At the moment, house prices are been fuelled by new products such as 40 year mortgages, interest only loans, 100% mortgages etc. At some point (unless they keep increasing the term of the loan) banks will run out of options. I know plenty of people who already are struggling to meet the criteria for 200k mortgages, as contrary to popular belief, not everyone earns 40/50k per annum. What sort of a mortgage would you get on the minimum wage. All it will take is a small dip in this ridiculous confidence that people seem to have in property. If there is one year where there is no rise, or even small dip in prices, people will stop buying, wainting to see if prices will fall further, and then the cycle begins. I know developers could stop building to slow down supply, but what will this do for employment, and at 3% yields and falling house prices, I would guess that there is enough property in the hands of investors to meet demand.

Gurgle

Longfield wrote:

I seem to remember someone posting that ~40% of housing is owned by investors, well with yields in the 3% range..what happens when they move on to the next best earner as they surely will ?, other posts suggest that the investers are already starting to cash out.

These mostly aren't professional investors - they tend to be middle-aged wage slaves who have good incomes and a mortgage from 20+ years ago, if any. They can get the loan and shell out the deposit on a 'second-home' then let the rent pay the mortgage.

If the rent even covered half the mortgage and prices stagnated its still one of the best investments for long-term return.

Afuera

masterK wrote:

Many people seem to forget that we now live in a first world economy, Dublin has now become one of Europes major cities. For those who think property in Dublin in expensive why don't you see how much a 3 bedroomed semi close to the centre of London would cost, or Paris, Rome or even further a field to New York.

What has happened is house prices have corrected themselves in line with other major cities around the world as Ireland has developed from being a 2nd world economy to joining the worlds elite.

House prices will never collapse, the funny thing is I remember 7 or 8 years ago people saying that they're not buying a house because they are waiting for the market to collapse, guess what they're still waiting. This was at a time when a 3 bed semi in Dublin cost around £100,000. House prices will inevitably peak and level out with small annual increases in line with inflation, but this is still a few years away.

Comparing Dublin to New York, London or Paris is still just wishful thinking. It's distance from mainland Europe and the lack of an adequate transport system (which will be difficult if not impossible to fully realise with it's terrible planning and low density housing) are always going to hold it back.

Nearly 90% of Irelands exports are due to foreign multinationals (http://www.finfacts.com/irelandbusinessnews/publish/article_10004926.shtml) so Irelands economy is more comparable to a foreign tax haven than an actual first world economy. Recently the US government took action against Symantec for their practises in Ireland which may be a sign that they are going to try and challenge some of the money "laundered" in Ireland.

PDelux

This is an interesting discussion, I have to say.

I feel sorry for the people trying to get on the property ladder(presumably like the original poster) when I read figures like 25% of people buying the houses are investors. (I know someone mentioned 40%)
I wouldnt mind 25% or even 40% if supply was closer to demand but i just think it is frustrating for prospective home owners in the current climate.
I'm am no expert on the property market but i wonder if the Government could do anything to help people get on the ladder?