Boycott Of The Housing Market

faceman

ronbyrne2005 wrote:

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!

all you need to to now is put up another post saying that the shortage of development of new properties in dublin is fueling high prices and your short statements and contradictions could get you a job in the Irish Independent!!!

faceman

ronbyrne2005 wrote:

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!

ACtually, what do you mean by 'not too long to wait folks'. Are the begrudgers going to get a certain satisfaction wishing such doom and gloom??

If you own a car, i hope a brick falls out of the sky tonite and leaving a big dirty dent in the room and cracks in your windshield.

That was mean of me wasnt it!

ronbyrne2005

faceman wrote:

ACtually, what do you mean by 'not too long to wait folks'. Are the begrudgers going to get a certain satisfaction wishing such doom and gloom??

If you own a car, i hope a brick falls out of the sky tonite and leaving a big dirty dent in the room and cracks in your windshield.

That was mean of me wasnt it!

ya, whatever, i dont wish ill on anyone but the bubble is gonna burst ,look at the fundamental economics involved and youll see prices cant rise much more and houses are wildly overvalued .

daveirl

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Pa ElGrande

DublinWriter wrote:

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

There are a handful on this list if you want to start the ball rolling, but apart from localised instances of house price inflation, there are none comparing with the Irish circumstance. Historical note: house prices were still declining in Japan, 2005, they started to rise this year.
The economist has moderated its position somewhat since this article was published.

The global housing boom In come the waves
http://www.economist.com/printedition/displayStory.cfm?Story_ID=4079027

Possibly New Zealand might be the nearest example, they can control their interest rates to an extent.

Property boom concerns Reserve Bank
http://www.nzherald.co.nz/section/story.cfm?c_id=3&objectid=10126188

Sharing the property burden
http://www.stuff.co.nz/stuff/0,2106,3726318a13,00.html

Property Market Continues to Slow
http://www.nbr.co.nz/home/column_article.asp?id=15618&cid=4&cname=Business%20Today

Ireland faces a difficult problem that should have been bought under control five years ago, instead a combination of factors, threw petrol on the flames.

The facts are we do have a growing population that are looking to settle down and start families, but we have a shortage of suitable property at an affordable price in the right locations (close to work, schools), this factor alone will drive up the price of housing. The problem is we have also provided incentives through government policy for land barons, speculators, flippers, buy to let amateur landlords to enter the market and drive up the price of entry beyond a reasonable rate. It is not sustainable to saddle the child rearing section of our community with more and more debt while increasing their exposure to a property downturn. At some point the cost of entry to the housing market excludes us, then what? Already we are over-exposed to any economic downturn and the longer the housing boom continues, the greater the fallout when the downturn does occur.

DublinWriter

faceman wrote:

That was mean of me wasnt it!

Yes, bad Faceman, bad!

Honestly, I would like to debate this without the "homeownerless" coming in here, using Chicken-Little economic models to make themselves feel marginally better about not having jumped when they should.

Dudes, they were saying the market was a rip-off and that the sky was falling in the mid-90's, well before dot-com was a glimpse in anyone's eye.

My biggest mistake was listening to them and waiting too long to buy.

Thankfully I bought in 2004, my pad is now worth 1/3 more, and in the unlikely event of the Irish property market dropping 33.3%, I'm still quids in.

CiaranC

daveirl wrote:

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What kind of bitter individual salivates over a recession so people will 'learn a lesson' and get a 'slap in the face'...

I hope your lesson in ecomonics includes what will happen to a country so dependent on property for its wealth in the event of a crash. God forbid, it might even affect you, even up there on your high horse.

Pa ElGrande

daveirl wrote:

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No one should be hoping for a crash, sensible financial management and analysis of risk is what's needed, and there is no reason that prosperity cannot benefit everyone instead of transferring a large portion of wealth from the productive people in the economy. All that debt is future labour that will have to be paid at the expense of indigeneous enterprise.
It does not matter how the Germans or French manage their economies, what matters is that we use our resources efficiently.

daveirl wrote:

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Be careful what you wish for, you will not escape the effects of a downturn either, and I for one have no intention to repeat my experiences of the 1980's. I agree with you we need to correct the situation, and as more people begin to be wary of entering a lifetime debt trap, they will find alternative solutions. I have nothing against multi-nationals in the absense of any native enterprise and they have been good for the country by introducing new technology, better labour conditions and the chance to escape forced emmigration and not preventing people from working because they did not have the right address (ask anyone who applied for work in this country during the 80's about this - if your CV had Ballyfermot on it, it went straight to the bin.)

daveirl wrote:

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I agree, its dead money.

ionapaul

I think one thing some of the bears want is the crash *sooner*, rather than later, as the fallout will take years to get over and it is better to detrail the runaway train as soon as possible to begin repairing the damage! Unfortunately this train has been off the tracks for so long and is going so fast in the wrong direction that any hope for a moderate recovery is probably wishful thinking.

Just look at the last post - 'a country so dependent on property for its wealth...' - isn't it blindingly obvious that something is wrong, dead wrong, in this? Other countries economies are built on innovation, new technologies, hell, even if we were selling weapons to 3rd world countries we'd be better off than borrowing cheap money from other countries to sell one another more houses! No international investment in property in Ireland, we are the only ones mad enough to make the foolish investment decisions thousands in this country make on a monthly basis...putting good (borrowed) money into a loss-making investment!

CiaranC

ionapaul wrote:

putting good (borrowed) money into a loss-making investment!

All the economics types on here keep posting about property investment and buying a home as if they are interchangeable. Buying a home is much, much more than an ecomomic transaction, it doesnt compare to buying stocks or shares or commodites.

Buying a home today is no easier or harder than it was 20 or 30 years ago. People want to own their own home and they expect to pay more each month than they would if they lived in someone elses house. Its not rocket science.

Maybe that goes some way to explaining why the above mentioned economic types have consistantly misread the market over the last 10 years. Every year it has supposedly been on the point of collapse. Every year it has grown.

It seems to me that a lot of people are reduced to wishing ecomonic disaster on everyone around them because despite their supposed money smarts, they have misread the market and missed the boat.

Gurgle

CiaranC wrote:

All the economics types on here keep posting about property investment and buying a home as if they are interchangeable. Buying a home is much, much more than an ecomomic transaction, it doesnt compare to buying stocks or shares or commodites.

Buying a home today is no easier or harder than it was 20 or 30 years ago. People want to own their own home and they expect to pay more each month than they would if they lived in someone elses house. Its not rocket science.

Maybe that goes some way to explaining why the above mentioned economic types have consistantly misread the market over the last 10 years. Every year it has supposedly been on the point of collapse. Every year it has grown.

It seems to me that a lot of people are reduced to wishing ecomonic disaster on everyone around them because despite their supposed money smarts, they have misread the market and missed the boat.

Nice nutshell.
Just one thing to add to it - The market is controlled by banks and developers.

Who benefits most from high property prices?
Who's interests are best served by ensuring a soft landing?
Who can make sure the landing is soft?

FillSpectre

Afuera wrote:

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.

Affordability increase is just a price rise and has yet to ever casue a crash. I obviously can't show something that is the same as the Irish property increases but I am not claiming it has to do something becasue it is same as something else you are. AS you think it is is a bubble and will crash explain what makes such bubbles crash. It has never been due to the price going up excluding more from the market. I will say no other country has been in a property boom with no control over the interest rates. Any property crash has been at part blamed on interest rate tampering to control the issue. THe UK crash most noticably

Afuera wrote:

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?

Yeap it is a possibility and actually likely whether there would be a crash or not.

Afuera wrote:

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

Well if it is happening all accross Europe as has been predicted it will restrict movement either way. It is not my theory and unlike a crash can be seen to be happening

Afuera wrote:

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?

I don't really see the market ever getting exhausted due to people being born and dying etc... so you don't have people buying unrentable properties. THere will still be homeowners just a shift in who owns it. No over supply. Builders are slowing down construction as is with less planing application

Afuera wrote:

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.

Many people are also over looking the inevitability of rising fuel prices which will also effect property prices. THe far off commuter towns are going to be very expensive in 5 years let alone 20. We aren't talking major long term it is only 10 -20 years. The problem with making informed decision is you have actually do something which is always the problem. I think you would need to understand why there was emigration before and understand that the world moved on as did we and we aren't a poor little country that will really need to do that again or be able.

Afuera wrote:

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.

Actually you need mass attempted sales for it to be a crash. You are kind of suggesting stagnation there. Over supply, price drop and inability to sell. People not buying and selling is non movement

daveirl

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daveirl

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daveirl

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FillSpectre

Gurgle wrote:

Nice nutshell.
Just one thing to add to it - The market is controlled by banks and developers.

Who benefits most from high property prices?
Who's interests are best served by ensuring a soft landing?
Who can make sure the landing is soft?

The market has limits which are restricted by banks and developers they do not control it and they are also not league. Te economy has more control on the market. This is a nonscience conspiracy theory.

Nobody can make a free market do anything they can only try to guide it.

The mass application of economic theory as rules and regulations that make the property market act a particular way is flawed. People aren't considering the housing stock and are treating it as all property is interchangable. THere are restrictions for movement such as stamp duty which seem to rarely be considered. Most people need a property to live yet people treat it like they can sell easily in a changing market. Just to sell my house and buy one for the same value would cost me 6% plus €2-3k. Most people would ride out any porice drop and only those most recently in will be hurt.

daveirl

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Gurgle

FillSpectre wrote:

The market has limits which are restricted by banks and developers they do not control it and they are also not league. Te economy has more control on the market. This is a nonscience conspiracy theory.

This is not a conspiracy theory - its business model.

A bank which lends €100k each to 1000 borrowers at ECB + 1.5% is running at a margin of €150m per year.

The same bank requires no more staff, equipment, or anything else to lend €300k each to the same 1000 borrowers. This triples their profit without increasing their cost.Their analysis clearly tells them that a) those borrowers can make the payments and b) the property which secures the loan can hold its equity.
Therefore it makes sense to adjust their lending criteria so that people can borrow more. This change has been one of the major driving factors for the increase in property value.

Likewise, under Ireland's (corrupt)planning system, building developers can control the rate of supply to the market. Its practically impossible to get permission to build your own house, a situation designed to force us all into developments of one kind or another.

Gurgle

daveirl wrote:

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The majority of people working in the building trade are not highly skilled professional brickies, plumbers and electricians. They're mostly school-leavers between 16 and 30 with no qualifications, and they're earning great money now (better than many graduates) as labourers.

A soft landing will result in the need for building falling off, an increase in supply of semi-skilled and unskilled labour, lower pay rates (increased competition) for factory jobs and another boom in our manufacturing industry*.

Ba-Da-Bing!

*Barring global recession

Afuera

Gurgle wrote:

A soft landing will result in the need for building falling off, an increase in supply of semi-skilled and unskilled labour,

i.e. an increase in unemployment

Gurgle wrote:

lower pay rates (increased competition) for factory jobs and another boom in our manufacturing industry*.
*Barring global recession

Let's not kid ourselves. Who is going to take a job that pays only 50 cent an hour? That would be a normal manufacturing wage in India or China which would be our competition should we try and revive the manufacturing industry in Ireland.

FillSpectre

Gurgle wrote:

This is not a conspiracy theory - its business model.

That is not what you said you said the devlopers and the banks control the market. THat is a consipiracy theory and not a business model. What you are now descibing is how the banks work. That still does not show any "control" they have over the market

Gurgle wrote:

Likewise, under Ireland's (corrupt)planning system, building developers can control the rate of supply to the market. Its practically impossible to get permission to build your own house, a situation designed to force us all into developments of one kind or another.

THe assumption on corruption is also a conspiracy theory and before you point to tribunals they are for the past not the present. Linking the "corruption" with a scheme to push people on to developers completing your conspiracy is quite clever but still parnoid. The government aren't that well organised to be this cpapable. Planning restrictions are there for valid reasons, political will forces bad design out of planners. Effectively the people are willing things into being.
It is quite amazing how you shift all the blame squarely away from any personal responsibility. THe reason we have haousing issues is greed of personal consumers. People who only need an appartment buy houses. People who only need a small house buy large houses with large commutes for better value etc... Simply put demand is the issue. I know nobody renting who doesn't want to buy a house here the closest you get is refusal to buy untill prices fall. That sounds like a mass of stored demand and that type of demand doesn't really diminish with time in fact it tends to esscilate. Lots of supply on the way but not much after that. I suspect any tumble will be followed by a rise as supply will diminish again in about 5 years. Fuel prices will be a big issue 5 yearas after that. The generation of commuted kids will not want to commute and live closer to cities and rent or the older estates will have the housing transformed to flats. This theory relies on no secret hand shakes logic of how countries develop normally. You have economists telling you how social development will happen but that is not their stregth. Normal liveing means you live and die within a 20 mile radius.

Afuera

FillSpectre wrote:

Affordability increase is just a price rise and has yet to ever casue a crash. I obviously can't show something that is the same as the Irish property increases but I am not claiming it has to do something becasue it is same as something else you are. AS you think it is is a bubble and will crash explain what makes such bubbles crash. It has never been due to the price going up excluding more from the market. I will say no other country has been in a property boom with no control over the interest rates. Any property crash has been at part blamed on interest rate tampering to control the issue. THe UK crash most noticably

No lack of affordability for property is not just a price rise. It is affected by rising prices vs rising wages as well as rising interest rates. All of these combined don't bode too well for future stability.

FillSpectre wrote:

I don't really see the market ever getting exhausted due to people being born and dying etc... so you don't have people buying unrentable properties.

Sounds like a utopia. An unexhaustable market. It does fly in the face of studies showing the demographic trends of a developed country however.

FillSpectre wrote:

I think you would need to understand why there was emigration before and understand that the world moved on as did we and we aren't a poor little country that will really need to do that again or be able.

High unemployment was the main cause for emigration in the past. If the 15% of jobs that are directly caused by construction get wiped out then unemployment will easily jump back up into double digits.

Also remember that emigration is easier today due to the EU and low cost travel. This is easy to see with the influx of Eastern Europeans to Ireland in the last two years and can work both ways (plenty of immigration when times are good, plenty of emmigration when times are bad).

FillSpectre wrote:

Actually you need mass attempted sales for it to be a crash. You are kind of suggesting stagnation there. Over supply, price drop and inability to sell. People not buying and selling is non movement

I'm saying that a small number or sellers and a small number of buyers in the market are the ones that set the price. It doesn't take ALL the people in the market to panic to cause a crash as you suggested earlier.

hmmm

CiaranC wrote:

All the economics types on here keep posting about property investment and buying a home as if they are interchangeable. Buying a home is much, much more than an ecomomic transaction, it doesnt compare to buying stocks or shares or commodites.

What's an "economics type" - someone who uses facts and figures to decide whether an investment makes sense, not gut instinct and some homespun belief that house prices can only go up? Fine, I'll be an economics type.

If you're buying a home and you want to live in the area and you can afford the repayments, all this house price up or down nonsense is irrelevent. The only people who care that house prices keep going up are investors, and they are the ones running scared at the moment.

FillSpectre

Afuera wrote:

No lack of affordability for property is not just a price rise. It is affected by rising prices vs rising wages as well as rising interest rates. All of these combined don't bode too well for future stability.

I am simply calling it price increase you want to refer to it as an increasing ratio fine. Can you point to any place where this caused a crash? Bare in mind rising interest rates have effected thing but only massivelysharp ones AFIK.

I have asked for example of crashes ffrom more than one person to explain how your theory has worked in the past but not one person can answer it. Why do you keep avoiding it? We can't have the same reasons as the two most commonly mentioned propertiy crashes so what will casue a crash here?

A crash may happen but not without reason or an event what are the theories for such an event?

I do believe prices will find a limit but I just don't think a crash is the only adjustment and most importantly as Ireland becomes more like the rest of the world it will become like the rest of the world in everyway. Homeownership at the high rates we have had are unsustainable not the prices. Demographic changes have meant our housing stock is under supplied in sections and over supplied in others.

FillSpectre

hmmm wrote:

What's an "economics type" - someone who uses facts and figures to decide whether an investment makes sense, not gut instinct and some homespun belief that house prices can only go up? Fine, I'll be an economics type.

If you're buying a home and you want to live in the area and you can afford the repayments, all this house price up or down nonsense is irrelevent. The only people who care that house prices keep going up are investors, and they are the ones running scared at the moment.

When did the investors start running? Surely it will only be the most recent investors?
The people who will really be hurt are those who bought to upgrade in the future. They are less sure of the risks they took and had less choice. Of all the people involved investors are the least likely to suffer as they knew the risks and probably had the money to lose. Sure there will be stupid ones but not that many will have been stupid and got the bank to beleive them also.

Economic types tend to not understand or consider property assets by small investors correctly. Facts and figures only matter if you are comparing the correct details the correct way. Averages of house prices as indicators aren't going to be very accurate when living on one street mean 50% difference for the same house. Economists are not accountants but they think they can work it all out using figures while sociologist probably has a better idea of how people will react around their homes and property

Afuera

FillSpectre wrote:

I am simply calling it price increase you want to refer to it as an increasing ratio fine. Can you point to any place where this caused a crash? Bare in mind rising interest rates have effected thing but only massivelysharp ones AFIK.

I have asked for example of crashes ffrom more than one person to explain how your theory has worked in the past but not one person can answer it. Why do you keep avoiding it? We can't have the same reasons as the two most commonly mentioned propertiy crashes so what will casue a crash here?

A crash may happen but not without reason or an event what are the theories for such an event?

The original cause, as with every crash, is due to overvaluation. There does not need to be an event to cause a crash; changing sentiment or the realization of an overvaluation can be enough. Have a look at this summary of the Tulip crash in Holland or the real estate crash in Florida around the 20s:
http://www.investopedia.com/features/crashes/crashes2.asp
http://www.investopedia.com/features/crashes/crashes4.asp

FillSpectre wrote:

I do believe prices will find a limit but I just don't think a crash is the only adjustment and most importantly as Ireland becomes more like the rest of the world it will become like the rest of the world in everyway. Homeownership at the high rates we have had are unsustainable not the prices. Demographic changes have meant our housing stock is under supplied in sections and over supplied in others.

You're failing to take cultural differences in to consideration. The belief in homeownership is very ingrained in some cultures and you'll see people hold onto this belief very tightly before they give in to renting for life.

Interestingly the demographics you speak of so much don't support the current output of homes at all. If you go to the Central Statistics Office and check the population growth rate of Ireland for the last 30 years, it's been running at a little bit above 1% every year. This figure is achieved by adding the birth rate to the immigration rate and subtracting the death rate. Note that 1% is considered quite high for a developed country.

Currently 1% of our population is around 40,000 people. Should this growth rate continue (unlikely) and since the average household size in Europe is 2.1 that would mean that there is only a natural demand for around 20,000 new homes every year (or a little more if you take into consideration old houses that might need to be rebuilt).

Since we're outputting about 4 times this level at the moment none of the indicators point to an undersupply.

FillSpectre

Afuera wrote:

The original cause, as with every crash, is due to overvaluation. There does not need to be an event to cause a crash; changing sentiment or the realization of an overvaluation can be enough. Have a look at this summary of the Tulip crash in Holland or the real estate crash in Florida around the 20s:

The differnece in both of thoses cases is the items had no real value to start with. Florida swamp land is not comparable to an actual property in a thriving economy.
Houses can be over priced for sure but considering there is less houses than needed. Commutable distances and travel time do restrict the market. Poor construction, desgin and services will effect some properties. I just don't think the entire market will react as suggested. You are still effectively saying high prices will casue a crash you are just claiming it is because people will cop on while at the saem time saying culturally we must own. I think that is where you contradict yourself.

Afuera wrote:

You're failing to take cultural differences in to consideration. The belief in homeownership is very ingrained in some cultures and you'll see people hold onto this belief very tightly before they give in to renting for life.

That sounds like a utopia for those who own property. You are specualting demand will remain constant no matter what. You are aslo ignoring that culturally we have already changed and are continueing to do so.

Afuera wrote:

Interestingly the demographics you speak of so much don't support the current output of homes at all. If you go to the Central Statistics Office and check the population growth rate of Ireland for the last 30 years, it's been running at a little bit above 1% every year. This figure is achieved by adding the birth rate to the immigration rate and subtracting the death rate. Note that 1% is considered quite high for a developed country.

Did you miss the home buying adult age? It is over replacement rate now but that will change. You are talking about the nature of crashes yet ignorting the nature of economic prosperity on society. We are doing nothing to encourage children and people are staying single. These are the starting signs of a declining birth rate in native populations. Imigrants will keep the population rate going but will it be ireland? Nothing rascist just social evelution

Afuera wrote:

Since we're outputting about 4 times this level at the moment none of the indicators point to an undersupply.

AS I said already that is very simplistic and ignore actual housing stock. You are effectively saying we have enough fruit but I'mm saying we don't have enough apples and we are getting too many oranges and some of the stuff is rotten. THe type of housing is unsustainable as it won't meet our needs. A housing este withoutt any amenities is no good.

miju

i love your posts fillspectre , you talk in dizzying riddles that i think most people here find hard to understand what your actually saying LOL :-)

ps: not commenting on any of your points made as at this point i'm actually sick of debating property , both sides are obviously very polarised and are sticking to their guns , i suppose the "wait and see approach" (sic) will have to be adopted to see what happens

whizzbang

FillSpectre wrote:

Houses can be over priced for sure but considering there is less houses than needed. Commutable distances and travel time do restrict the market.

needed or wanted I think is the core question...

FillSpectre

miju wrote:

i love your posts fillspectre , you talk in dizzying riddles that i think most people here find hard to understand what your actually saying LOL :-)

ps: not commenting on any of your points made as at this point i'm actually sick of debating property , both sides are obviously very polarised and are sticking to their guns , i suppose the "wait and see approach" (sic) will have to be adopted to see what happens

Not surprised some people can't follow what I say as I don't beleive either side in the polarised view.

What I find amazing is neither side really come up with reasons for what will happen or not happen.

Most of the people talking don't have a proper understanding of economics and have little or no knowledge of property. I think things will change but people here only think one type of change will happen and don't really think beyond that or the effects.