Boycott Of The Housing Market

Pa ElGrande

The ECB's leisurely tightening is not enough to satisfy Axel Weber, the Bundesbank chief, who warned acidly that inflation was rising towards 3pc "which some describe as benign", and would slash the real value of German financial wealth by 45pc over 20 years. Whether he meant it or not, Mr Weber was playing on Germany's collective angst over inflation, which destroyed the middle class twice in 20th century.

Yesterday, the ECB sought to reassure the markets that it was not asleep, though it stopped short of raising rates.

"We are not behind the curve. We are doing exactly what we judge is appropriate," said Jean-Claude Trichet, the bank's chief. He called for "strong vigilance" to stop inflation lodging in the system, hammering home the likelihood of a rate rise to 3pc in August by calling for a full meeting of governors, instead of the usual summer teleconference.
<snip>
Bernard Connolly, global strategist for Banque AIG and former chief of economic research at the European Commission, said it was invidious for the ECB to blame the victims of its own policy.

"This is the Big Lie of monetary union at its most brazen. Housing markets in Spain, Ireland, Greece, and parts of Italy and France, are out of control precisely because interest rates were held too low in the early years of EMU to help Germany," he said.

Mr Connolly said no one country was to blame. The root problem was monetary union itself, entailing a "one-size-fits-none" interest rate policy that leads ineluctably to boom and bust. Portugal, the first to suffer the harrowing cycle, has been bouncing along in perma-slump with an overvalued currency for four years, another world from the euphoria of the late 1990s when rates were slashed in half by EMU.

But it is Italy that most worries EU officials. The country has lost a third of its world export share and seen a 40pc decline in labour competitiveness against Germany since the currencies were locked in 1995.

More at...

Blame game hots up over eurozone inflation fears
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2006/07/07/ccecb07.xml&menuId=242&sSheet=/money/2006/07/07/ixcoms.html

Strong vigilance = higher interest rates.

Pa ElGrande

It was a vendor's nightmare this week and, despite many agents' best endeavours to hide it, our results indicate that a lot of auctions took place where no bids were made at all.

Auction fatigue is at its strongest now and buyers are walking away from auction rooms in their droves, tired of deliberately misleading AMVs and fed up with outrageous sums changing hands for relatively ordinary homes.

It's back to the private treaty drawing board for the next few months before auction fever picks up again in September with a fresh contingent of vendors and buyers bristling to renew the battle of bricks and mortar.

A vendor's nightmare week
http://www.unison.ie/irish_independent/stories.php3?ca=303&si=1647542&issue_id=14314 [free registration required]

We'll see if sentiment really has changed in September.

SkepticOne

whizzbang wrote:

I wonder, do a lot of people believe in a soft landing as they cannot stomach anything Are they all in denial?

I think I would be too if I was highly exposed to a particular asset class.

DublinWriter is quite correct in pointing out that property market is not the same as the stock market. Obviously, like all asset markets, property is subject to the usual speculative booms and busts. I don't think anyone will deny this (except those in denial, of course). The same psychology is at work. Denial plays an essential role during the boom phase of the bubble as people stop looking at the investment in rational terms. Fundamentals get left behind and prices rise simply on the hope that they will continue to rise. It moves into the bust phase when the market runs out of speculators. Prices then stop rising and some of the speculators who bought on the basis of rising prices then sell causing prices to further fall. This causes more selling and so on. Some speculators will remain in denial and ride the bust all the way down.

Often people point to an event that "bursts the bubble", but in reality it was the speculative boom itself which caused the burst because of the intrinsic unsustainability of speculative booms.

All this is standard stuff. I merely repeat it for the benefit of those and who want a reason why markets (including obviously the property market) can crash.

While being subject to the usual booms and busts as any other market, the property market differs in two respects: a) It is highly illiquid - it takes time, money and effort to buy or sell the asset and b) it is bought and sold in large chunks. Both of these can add to the already existing denial, imo.

The illiquid nature of the asset means that people are less likely to cut their losses in the event of a downturn even though this might be the most rational thing to do.

The fact that property is sold in large chunks means that you can't make small adjustments in your portfolio to reflect different market conditions. There's no gradual shifting into other asset classes unless you are very rich. In addition, for many people property is their only investment.

Both of these factors make it harder to make rational decisions and add to the state of denial. In the event of a downturn, you don't want to sell even though at some level you know it is the correct thing to do.

I think should a collapse occur in the Irish property market there will be many examples of people believing that there house is still worth, say, 400,000 even though the identical house two doors down went for 300,000. They will simply ignore it as they have the warnings from economists, international bodies, banks and so on. The belief that property prices only go up will take a long time to work itself out.

whizzbang

SkepticOne wrote:

I think should a collapse occur in the Irish property market there will be many examples of people believing that there house is still worth, say, 400,000 even though the identical house two doors down went for 300,000. They will simply ignore it as they have the warnings from economists, international bodies, banks and so on. The belief that property prices only go up will take a long time to work itself out.

This is an interesting point and something Estate agents should be very worried about. People holding out for last years prices will kill the EAs sales. I believe that EAs will turn quite bearish when the time comes just to get sellers to sell "You need to adjust your prices to meet the new market dyanamic", in otherwords "Drop your price so I can sell this heap"

EAs don't make money keeping a property on their books for 9 month at 450k, I think they would rather sell 3 x 300k places in the same time.

Unless they change their pricing to a per month basis rather than a straight percentage. I can see it now "We sell your house for only €999!" *



*per month.

faceman

whizzbang wrote:

I wonder, do a lot of people believe in a soft landing as they cannot stomach anything Are they all in denial?

This is an interesting point and something Estate agents should be very worried about.

here we go again. Ok so whizzbang and skepticone. demonstrate the irish property bubble in figures and demonstrate why it will crash.

With all the pessimists on this site, very few can back up their rants demonstrating if there is a bubble and the size of it. Pathetic. Property rants should be banned from boards.

ronbyrne2005

faceman wrote:

here we go again. Ok so whizzbang and skepticone. demonstrate the irish property bubble in figures and demonstrate why it will crash.

With all the pessimists on this site, very few can back up their rants demonstrating if there is a bubble and the size of it. Pathetic. Property rants should be banned from boards.

Whys should they be banned? because you dont like them? maybe theres truth in them ? what facts have you got that point to there being no bubble?

Heres the reasons/figures people beleive theres a bubble.
-Rental yields are below 2% in many parts of Dublin/Ireland,in past rental yields were enough to cover the mortgage and people didnt have to add money to the rent to pay mortgage every month.If there was a massive shortage of housing then rents would have gone much higher like house prices,if theres no massive shortage then prices of houses must correct relative to rents and incomes. the fact that investors are still buying properties with such low rents that they have to add money to pay mortgage every month demonstrates that they think capital appreciation will continue inspite of low rents and this points to a specualtive bubble where investors are speculating that prices will keep rising regardless of rental return.
-House prices are at all time highs relative to income, average house price in Dublin 400k,average wage 35/40k ,so houses are ten times salaries,the ultra low interest rates of last 3/4 years may have allowed this to happen temporarily but with rates now heading for 5% this cant continue. historically and around world income to house prices ratios have been much lower.
- one way banks allowed people to borrow ten times single salary was by stretching out the term of the loan,but theres only so long you can make mortgages last for,we have reached that level at 30/35 years and banks cant lend much more so price growth cant continue ,also with rates rising the banks will be lending less to people than last year due to their stress testing at higher interest rates.
-Affordability or percentage of incomes spent on mortgage is approaching level where no more can afford to be borrowed,bank of ireland says next year 38% of incomes will be spent on mortgages which is historically high and means when this point is reached people cant borrow much more so price growth in market will have to slow right down
-if there is a soft landing many of the investors who bought for capital appreciation and not rental yield will decide to sell as they aint getting the capital growth and dont want to be adding their money to the rent every month to pay the mortgage, this will cause a soft landing to slip into a downward movement in prices which will put off people buying houses as they dont wanna buy an asset thats falling in value,this will further drop prices untill people beleive prices will fall not much if any lower and prices look cheap.

And its gonna happen so get used to it.

whizzbang

faceman wrote:

here we go again. Ok so whizzbang and skepticone. demonstrate the irish property bubble in figures and demonstrate why it will crash.

With all the pessimists on this site, very few can back up their rants demonstrating if there is a bubble and the size of it. Pathetic. Property rants should be banned from boards.

You would have to ban the bulls as well then

and then who would talk about property!

user1 "I have no opinion about property"
user2 "Neither do I"
user1 "Wow, I'm glad I came to boards to see what people were thinking"


in reality I'm a very moderate person but it just annoys me that we only (until recently) have been hearing about the upside of property rather than the potential downside. I just shout loud as so few people were suggesting there could be anythign other than a perpetual boom! (except on boards that is

I accept its a bit like "the boy who cried wolf" but remember, the wolf came in the end

SkepticOne

faceman wrote:

here we go again. Ok so whizzbang and skepticone. demonstrate the irish property bubble in figures and demonstrate why it will crash.

With all the pessimists on this site, very few can back up their rants demonstrating if there is a bubble and the size of it. Pathetic. Property rants should be banned from boards.

I don't think my post was a 'rant'. I tried to reason things out as best I could. If you feel there's problems in my reasoning then please point them out.

Figures suggesting there may be a bubble have already been posted by daveirl, FillSpectre and others. There is no point in repeating them. Why not gather them together and say why you think they are wrong? This would be better than blanket dismissals of posts as 'rants'.

SkepticOne

whizzbang wrote:

This is an interesting point and something Estate agents should be very worried about. People holding out for last years prices will kill the EAs sales. I believe that EAs will turn quite bearish when the time comes just to get sellers to sell "You need to adjust your prices to meet the new market dyanamic", in otherwords "Drop your price so I can sell this heap"

I'm inclined to think that a good proportion of these empty properties we've been hearing about are due to landlords holding out for better rents than the market will bear: "I paid X amount for this property. There's no way I'm going to rent it out at y per month!" type of thing. In a thread on the Accomodation/Property board people talk about rents not so much coming down but a far greater choice being available. Anecdotally, this would back up the holding out hypothesis.

Pa ElGrande

OIL prices could "explode" in coming weeks over international tensions and concerns about supply, an international analyst warned yesterday.

Increases at the petrol pump and heating-oil tanker are already on the cards, as crude oil reached a new peak of $75.65 in New York trading yesterday.

Oil prices are up by more than a fifth so far this year.

Bank of Ireland analysts said yesterday that movements in energy prices have been four times more volatile than changes in interest rates or currencies.
<snip>
Despite the threat from higher oil prices, the Bank of Ireland review is optimistic about the Irish economy, predicting strong retail sales, as household income rises 9pc, and a bumper year for construction.

Based on figures so far, the Review believes 100,000 dwellings could be completed this year - a huge increase on earlier estimates of 85,000.

Oil price explosion and fears of further mayhem
http://www.unison.ie/business/stories.php3?ca=81&si=1648872 [free registration required]

So we already have an estimated 275,000 vacant dwellings in the country , the construction industry is on track to break all records this year and complete 100,000 thousand dwellings (I'm genuinely impressed), interest rates are expected to increase and energy prices are expected to increase, the CSO just released the latest live register figures (seasonally adjusted +1500) and people are taking a break from property auctions (or are they).

Draw your own conclusions.......

daveirl

This post has been deleted.

daveirl

This post has been deleted.

lomb

Pa ElGrande wrote:

So we already have an estimated 275,000 vacant dwellings in the country , the construction industry is on track to break all records this year and complete 100,000 thousand dwellings (I'm genuinely impressed), interest rates are expected to increase and energy prices are expected to increase, the CSO just released the latest live register figures (seasonally adjusted +1500) and people are taking a break from property auctions (or are they).

Draw your own conclusions.......

funnily enough id agree with you, i think the biggest threat to irish property isnt interest rates its oversupply. the joke is it feeds on itself. as site prices make 5-8 million an acre, because of the margin between cost to build (60-100 grand per apartment )and resale 300-450 +vat , then builders want to build NOW to realise this as they know that there will be oversupply soon.

the only question is whether an oversupply of apartments will crash the semi detached and luxery end of the market. imho probably yes id say, as there will always be knock on effects. history teaches us the economy is like a set of dominos.
its a difficult one to predict for sure. one thing is for sure id stear wel clear of apartments. the 'true' value of a suburban apartment is probably not more than 130000 euro-200000 euro. if u are paying 400 for it then u could be potentially screwed in due course.

DublinWriter

daveirl wrote:

This post has been deleted.

Like which?

daveirl

This post has been deleted.

Pa ElGrande

faceman wrote:

With all the pessimists on this site, very few can back up their rants demonstrating if there is a bubble and the size of it. Pathetic. Property rants should be banned from boards.

Warren Buffet said "We think that as the tide goes out you're going to find out who's not wearing clothes". Currently, there are a lot of indicators telling us we're in trouble and the data exists in this thread to show that the housing market has become a sort of giant pyramid scheme and ALL pyramid schemes collapse.

By joining EMU, we have given away all competence over the turbo-charged property market. All the while, the property business sucks in money and people, throwing off increases in ‘‘wealth’’ and tax revenue. But both of these are illusory.

First, the wealth is an illusion. Property booms don’t make societies wealthy, they simply transfer wealth from one section of society to another. In our case, it is from the young to the old, the landless to the landlords.

Furthermore, when we read articles trumpeting Ireland’s housing stock as being worth €400 billion, we need to ask: who says so? Who will buy Ireland’s housing stock? What foreigner has any interest in bidding for our entire housing stock? Is it liquid? I don’t think so.

The second result of the property boom is a huge increase in tax revenue from stamp duty and the like. But this is simply a transfer to the government of money we have borrowed largely from foreigners via the housing market. It is no miracle, but rather a piece of basic mathematics that a child in national school could work out.

‘‘If I take ten apples from Johnny and give them to Jim who gives them to Mary, how many apples does Mary have?’’ All this does is play a trick on us, so that, when the revenue from houses slows, we will have a huge hole in the public finances.

More at

Ireland could learn a lot from Hamburg’s economic model
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.asp

ronbyrne2005

DublinWriter wrote:

I think this topic it going a lot off-beam as people are discussing the owner-occupier and investment residential markets in the one breath.

But anyways, I haven't seen one person here who proffers the 'oohhh the bubble will burst' argument lay down one single reason as to why this will happen.

As I've said over and over and over 'till I'm blue in the face, the property market is not the equities market.

Just because the equities market went belly-up for a couple of years in 2001 over over-valued dot-com shares doesn't mean that that same pattern of investor behavior holds true in another completely unrelated market with different dynamics.

The one and only reason there would be a 'bust' is if interest rates shot up unexpectedly in a short time-frame.

Let's look at the experience of our nearest neighbours and how the property bust happened to them. Multi-billionaire George Soros wakes up and decides to dump billions in Sterling on the International Currency Market on 'Black Wednesday', leading to chancellor Gordon LaMont raising interest rates four times in one day.

The Euro is a juggernaut of a currency and wouldn't be as susceptible to a single multi-billionaire waking up with a sore head one morning.

Again, I say to the 'busters', stump up one good reason why.

Soros had nothing to do with the house price crash,prices were falling long before his actions,the speculation by soros and others was as a result of and not a cause of the economic conditions that led to the british recession in the early nineties.

faceman

Pa ElGrande wrote:

Warren Buffet said "We think that as the tide goes out you're going to find out who's not wearing clothes". Currently, there are a lot of indicators telling us we're in trouble and the data exists in this thread to show that the housing market has become a sort of giant pyramid scheme and ALL pyramid schemes collapse.

sorry but i fail to see the argument here proving anything? Can you explain?

Pa ElGrande

faceman wrote:

sorry but i fail to see the argument here proving anything? Can you explain?

“You're here because you know something. What you know you can't explain -- but you feel it. You've felt it your entire life; that there's something wrong with the world; you don't know what it is, but it's there, like a splinter in your mind, driving you mad. It is this feeling that has brought you to me. Do you know what I'm talking about?”
Morpheus.

faceman

Pa ElGrande wrote:

“You're here because you know something. What you know you can't explain -- but you feel it. You've felt it your entire life; that there's something wrong with the world; you don't know what it is, but it's there, like a splinter in your mind, driving you mad. It is this feeling that has brought you to me. Do you know what I'm talking about?”
Morpheus.

yes i do, can i have the blue pill please and the irish times for the journey home?

Pa ElGrande

A decade of house price inflation has catapulted Ireland into second place in the global wealth league, according to a new report from Bank of Ireland Private Banking
<snip>
Property, however, accounts for three-quarters of this amount, a higher proportion than any other country.

Ireland is second in wealth league
http://www.rte.ie/business/2006/0710/wealth.html

I suppose this kind of thinking is only to be expected in a bubble

FillSpectre

ronbyrne2005 wrote:

your not making much financial sense here, ever here of opportunity cost, cash return on capital ,alternative investment,risk and return

You are discounting all the benifits of property over other investement times. There are many pros and cons of investemtns

ronbyrne2005 wrote:

Theres loads of brownfield sites around dublin to be develpped and high density will increase the amount of spce for housing,theres loads of land actually zoned and with planning permission in dublin waiting to be built on.

I still beleive it is restricted for differnt housing stocks. Finaincial people often misunderstand housing as the same comodity and ignore they different types of property and location issues.

ronbyrne2005 wrote:

Do you think if prices are falling in one part of ireland that other investors around the country wont get worried and decide to sell up, the negative sentiment would result in a downward spiral.

I think the frightened investor is way over rated as an effect. I also think many specualtors here claim to know why all investors are in the market and how they will react which is unrealistic

Afuera wrote:

So you think the estimated 32 thousand investors that bought last year are all in it for the long haul; the next 35 years or so? You don't really want to contemplate the fact that many of them are on interest only mortgages and will not own the property even after 35 years.

Explain your figures. I think investors are in it for lot of different benifits and only stupid people assume they are all in for short term.

Afuera wrote:

The demographics can change on a month by month basis in this era of no borders and cheap flights. Less marriages doesn't mean there are less couples, or more single people living on their own.

YEs they do change but not that dramtically. Less marrigaes does mean less couples and the increase in single parents families mean smaller familis and less nedd for 3 bed semis. You want to prented that the family structure is the same now as it was 20 years ago go ahead but nobody will beleive it.

Afuera wrote:

Emigrating was put forward as an other option besides renting but they could also just move in with friends or family. You stated that if they can't buy, then they have to rent. That's plain wrong.

I kept it simple. It means more will need to rent and as economic growth continues people tend to want more personal space not less. Anybody living with their parents at 40 is still considered odd here.

Afuera wrote:

Comparing the price fixing of a company which is in a monopoly to the prices of an open market is not very helpful. What's more, the demographics that you seem so fond of show a very young population in Ireland.

Actually it isn't a monopoly and nessesity was the point. You can't really live without somewhere to live.

Afuera wrote:

I think the assumption is that the LIKELY thing to give will be price.

The point is if it is so likely then the other things wouldn't keep changing. People are living at home longer. Older people are living longer. People buy property at an older age. Older generation own more property than the younger population. You see while things are changing some people are soley fixating on the price.

The assumption made by many is it is the one and only thing that will give and that is price. Life is a lot more complex and people are denying what is actually happening around them. What was once the suburbs is now becoming the unattainable for FTBs does not mean the market is gone just is costs more

Afuera

FillSpectre wrote:

Explain your figures. I think investors are in it for lot of different benifits and only stupid people assume they are all in for short term.

It was estimated by one of the estate agents that 40% of new builds were bought by investors. 40% of 80,000 newly built houses => 32,000 investors.

I don't claim that all of them are in it for the short term but I suspect a lot are hoping for some good capital appreciation. Once that slows or stops we'll be able to see at last how long term they are willing to hold on to them.

FillSpectre wrote:

YEs they do change but not that dramtically. Less marrigaes does mean less couples and the increase in single parents families mean smaller familis and less nedd for 3 bed semis. You want to prented that the family structure is the same now as it was 20 years ago go ahead but nobody will beleive it.

I never said that the family structure is the same as it was twenty years ago. All I'm saying is that people are still living together (even if they're not married), divorced people don't typically stay single indefinately and smaller families nowadays means that there will be actually less need for houses going forward.

FillSpectre wrote:

You can't really live without somewhere to live.

True, but you don't have to to buy or rent either. You can move in with friends, move home, live in one of your family's investment homes or whatever.

FillSpectre wrote:

The assumption made by many is it is the one and only thing that will give and that is price. Life is a lot more complex and people are denying what is actually happening around them.

I accept that it is a complex issue but I currently can't see how things can progress without a major shock to the price of property and/or the economy in general. If you can put forward a hypothesis that would allow for some of the estimated/foreseen changes without affecting the price I'll gladly listen to it.

FillSpectre

Afuera wrote:

It was estimated by one of the estate agents that 40% of new builds were bought by investors. 40% of 80,000 newly built houses => 32,000 investors.

I think you'll find it is properties not houses and the figure means little when not convied as a percetage of all housing. It is a really really small amount of overall housing

Afuera wrote:

I don't claim that all of them are in it for the short term but I suspect a lot are hoping for some good capital appreciation. Once that slows or stops we'll be able to see at last how long term they are willing to hold on to them.

Your suspicion has got to be based on something otherwise you might as well say you are randomly guessing. Now as you don't live here how do you know in anyway what investors are doing? Your exposures to Irish Investors in Irish property must be very limited in Spain.

Afuera wrote:

I never said that the family structure is the same as it was twenty years ago. All I'm saying is that people are still living together (even if they're not married), divorced people don't typically stay single indefinately and smaller families nowadays means that there will be actually less need for houses going forward.

Less people are living together it is very easy to gather and see. Less families unit of mum, dad and child. More single parents more places needed for single parent families and the partner not with them. You seem to be missing the point I am making about housing stock and houses.
30s Tenement housing made from former large family homes with large families living in one rooms
40s THe state tries to rehouse people providing cheap rental property for families. The Jesuits dislike the mass housing schemes and support their own housing schemes with the state
50s State family housing booms although cheapily built houses are well built mass produced. Tenements mostly erradicated
60s Stae still providing housing with more private devlopment. Right to buy schemes are being introduced to eliviate costly maintence to the state and freddom to tennants
70s State and private building booming right to buy scheme incresed
80s Mass unemployment property still being built mass emigration. Property in Ireland is consider low value.
90s Returning emigrants encouraged home by the IDA housing supply not high enough for increased wealthy demand
00s Building supply aims mostly for the under serviced small homes that have never been catered for in the irish property market.

The vast majority of property provided up untill recently was for families but that is not what is needed now. There is not enough supply for what is needed and more importatnly that is not what people want. People still want the 3 bed semi. So supply and demand are still not matched up right. I think there is a possibility Ordinary family homes built in the 50s may get split into two seperate places worth more than the individual property. More room for prices to go up.

Afuera wrote:

True, but you don't have to to buy or rent either. You can move in with friends, move home, live in one of your family's investment homes or whatever.

Actually you kind of do after a certain age. I know from experience people become odd and remain quite immature if they stay with family. I do note the concept of moving into a familiy memebers investment property. THat falls in line with what I said about one generation owning the property and the other renting it out. I would not let my brother rent my investment property for free.

Afuera wrote:

I accept that it is a complex issue but I currently can't see how things can progress without a major shock to the price of property and/or the economy in general. If you can put forward a hypothesis that would allow for some of the estimated/foreseen changes without affecting the price I'll gladly listen to it.

I don't think you do think it is complex as you singularly think prices will give and have no reason for a price crash other than high prices which I have yet to hear any example of ever casuing a crash. I would gladdly lie to hear an example.
Investors down grad buying a 2nd investment property to rent out as pension income. All those recoded as down sizers are also in the investemnt section without any mortgages.
FTBs can't currently afford and some of them are renting. They are renting from the older people.
Cost of living goes up more pension needed so OAPs up the rent.
OAP dies leaving a property to each child. The children already bought mortgaged rental properties with equity from their home. The new mortgage free property helps pay off the mortgage early on the investment property. Early retirement while young tenants still can't afford to buy.
Now a price crash doesn't matter unless rental income is severally effected. From my understanding is rents often increase as there is suddenly no increasing rental properties and tenants are less likely to buy during uncertainty so their is a rental shortage. Anyway the landlord can reduce rent as they have no mortgage if need be. Now many investors are actually not young and foolish many expecting an inheritence in the next 10-20 years and tend to have savings and investments. It is very possible that one genertion will own the other. And those who have saved will be working well into old age. The haves and the have nots may increase as people pass on property to the dwindling decendants
Of course this is all theory but being slightly differnt to the price one in that it is happening while the price one has been touted for over 10 years. Price is certainly a likely change but a reduction in home ownershipo rate is as likely but the age divide and inheritence is an enivitability many are ignoring. I would very much doubt the investors in the whole market will need to panic and the 40% of buyers in one year do not amount to that much of the whole market to really truely panic the whole market

Afuera

FillSpectre wrote:

I don't think you do think it is complex as you singularly think prices will give and have no reason for a price crash other than high prices which I have yet to hear any example of ever casuing a crash. I would gladdly lie to hear an example.

Eh, no... I don't think that prices will give just because they are so high. I think that they will give due to lack of affordability. Try and show me a property market where average prices went to over 10 times the average salary and it didn't correct itself.

FillSpectre wrote:

Investors down grad buying a 2nd investment property to rent out as pension income. All those recoded as down sizers are also in the investemnt section without any mortgages.
FTBs can't currently afford and some of them are renting. They are renting from the older people.
Cost of living goes up more pension needed so OAPs up the rent.
OAP dies leaving a property to each child. The children already bought mortgaged rental properties with equity from their home. The new mortgage free property helps pay off the mortgage early on the investment property. Early retirement while young tenants still can't afford to buy.
Now a price crash doesn't matter unless rental income is severally effected. From my understanding is rents often increase as there is suddenly no increasing rental properties and tenants are less likely to buy during uncertainty so their is a rental shortage. Anyway the landlord can reduce rent as they have no mortgage if need be. Now many investors are actually not young and foolish many expecting an inheritence in the next 10-20 years and tend to have savings and investments. It is very possible that one genertion will own the other. And those who have saved will be working well into old age. The haves and the have nots may increase as people pass on property to the dwindling decendants
Of course this is all theory but being slightly differnt to the price one in that it is happening while the price one has been touted for over 10 years. Price is certainly a likely change but a reduction in home ownershipo rate is as likely but the age divide and inheritence is an enivitability many are ignoring. I would very much doubt the investors in the whole market will need to panic and the 40% of buyers in one year do not amount to that much of the whole market to really truely panic the whole market

Interesting theory, although I'm not sure if I was reading it all correctly due to the spelling and puctuation. Are you saying that FTBs will be priced out of the market altogether and therefore the older generation will become landlords, essentially owning the younger generation? Some of the young generation only being able to get a slice of the cake through inheritence?

I can't see why the younger generation would hang around in this scenario but let's leave that matter aside for the moment.

The other problems I see would be when rental demand is fully exhausted. Should investors continue to buy unrentable property to prevent a tenant from becoming a homeowner? Should the government keep trying to get more immigrants to come and support the oversupply of rental properties? Should the builders slowdown on the construction of homes, even if there is a demand by people to buy?

Home ownership rates changing and inheritence playing a factor are inevitable but they are so long term that I don't think they can be accurately considered. For all we know, we could enter another period of mass emigration in the next 10 years if we aren't able to create a sustainable economy in Ireland. You acknowledge that property prices are likely to change and since this is being measured on a constant basis we should be able to make more informed predictions on this based on current day indicators.

It doesn't take all of the investors in a market to panic to cause a crash. If the small percentage of sellers aren't able to sell at a certain price and the small percetage of buyers don't want to buy at that price then I'm afraid there is a fundamental problem in the market.

DublinWriter

ronbyrne2005 wrote:

Soros had nothing to do with the house price crash,prices were falling long before his actions,the speculation by soros and others was as a result of and not a cause of the economic conditions that led to the british recession in the early nineties.

Yes, the interest rate being put up four times in one day in 1992 has nothing to do with this graph...

http://www.housepricecrash.co.uk/

And please don't make me laugh bringing Japan into this anytime I ask you to cite another example. The Yen was massively over-valued before that bubble-burst:

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

C- for effort though!

chump

Or shouldn't read everything you read on wiki...

Or should you
(http://en.wikipedia.org/wiki/Irish_property_bubble)

...
I must say that is one of the most poorly written pieces I've ever seen on wiki. We need a few bears from these forums or askaboutmoney to write something dacent!

daveirl

This post has been deleted.

DublinWriter

daveirl wrote:

This post has been deleted.

Pull up a chair, name some, and we'll work through the list.

ronbyrne2005

Prices are going to stop rising in next 12 months and start falling within a year or two after this. not too long to wait folks!