Boycott Of The Housing Market

Pa ElGrande

+ Strong price growth continues in April.
+ National prices now up 5% during the first four months of the year – compared to just 1.3% for same period last year.
+ Strong across all sectors with prices for first time buyers topping €260k in April 2006 - €30,000 more than a year ago

Permanent tsb / ESRI House Price Index: Irish house prices surged 5% in first four months of 2006
http://www.finfacts.com/irelandbusinessnews/publish/article_10006032.shtml

HOUSING Minister Noel Ahern yesterday played down the problems experienced by first-time buyers looking to get on the property ladder, insisting there were new houses available for less than €200,000 in Dublin and elsewhere.
</snip>
“There are many affordable new houses, even in Dublin, under €200,000,” he said.

Many affordable houses, insists Ahern
http://www.irishexaminer.com/irishexaminer/pages/story.aspx-qqqg=ireland-qqqm=ireland-qqqa=ireland-qqqid=5919-qqqx=1.asp

The average house price in Dublin could top four hundred thousand euro by the end of the year according to the latest statistics.

The Permanent TSB/ESRI house price index has showed there is no sign of prices coming down, as the average house price nationally is almost three hundred thousand.

The average house in Dublin is now 20 thousand euro more expensive than it was at the start of the year, while the rest of the country has seen a rise of 10 thousand.

Average Dublin house price to top €400,000 by year's end
http://www.unison.ie/breakingnews/index.php3?ca=9&si=92589

DUBLIN, May 30 (Reuters) - Irish house prices accelerated at their fatest rate for six years in the first four months of this year, a survey published on Tuesday showed, as the booming property market continues to defy expectations of a slowdown.
</snip>
Along with rising energy costs, mortgage interest is one of the main drivers of accelerating inflation in Ireland, which is hovering just below 4 percent at present compared to an average of 2.5 percent last year.

The country's central bank warned last month that the economy's high dependence on the property sector, plus sharp rises in credit to the sector, constituted a "significant risk".

Irish house price growth hits 6-yr high - survey
http://today.reuters.com/business/newsArticle.aspx?type=realEstateRestaurantsHotels&storyID=nL30698955

All together now.

Would you like to ride in my beautiful balloon
Would you like to ride in my beautiful balloon
We could float among the stars together, you and I
For we can fly we can fly

Up, up and away my beautiful, my beautiful balloon

The world's a nicer place in my beautiful balloon
It wears a nicer face in my beautiful balloon
We can sing a song and sail along the silver sky
For we can fly we can fly

Up, up and away my beautiful, my beautiful balloon

DublinWriter

Pa ElGrande wrote:

Up, up and away my beautiful, my beautiful balloon [/I]

To be honest, most of you are in your early/mid 20's and the only major market shift you ever witnessed was the dot-com boom and bust.

You should realise that that model isn't applicable to every market.

I reckon we will see a cooling off in the Dublin property marketplace, but only to the extend where growth begins to equal inflation, about 4% - 5% p.a., and that will onlt happen in the next 5 years. And that's a worst case scenario.

There's already enough pent-up demand out there to cap any market collapse and keep everything bouyant for at least a decade.

I'm sorry, but a major market collapse won't happen unless the ECB put interest rates up to about 20% or we are struck by a meteorite.

miju

i'll put this scenario to you DublinWriter

if after the next .50% rise (which going on todays news could be with us by August) the average couple with €72,000 salary between them can only get a €325,000 mortgage (as stated by the central bank late last month) but yet the average price is going to hit €400,000 what does that tell you

the prices will quickly stagnate , keep rising or more than likely starting falling towards that €325,000 mark ?????

and thats before any further rises

DublinWriter

miju wrote:

if after the next .50% rise (which going on todays news could be with us by August) the average couple with €72,000 salary between them can only get a €325,000 mortgage (as stated by the central bank late last month) but yet the average price is going to hit €400,000 what does that tell you

But aren't a number of Irish Financial Institutions now offering mortgages based on 6 times your salary?

alleepally

DublinWriter wrote:

But aren't a number of Irish Financial Institutions now offering mortgages based on 6 times your salary?

Sure that wouldn't even buy a house anyway unless you had 100k in savings stashed away. But no lender is giving 6 times salary for a mortgage, definitely not.

alleepally

miju wrote:

i'll put this scenario to you DublinWriter

if after the next .50% rise (which going on todays news could be with us by August) the average couple with €72,000 salary between them can only get a €325,000 mortgage (as stated by the central bank late last month) but yet the average price is going to hit €400,000 what does that tell you

the prices will quickly stagnate , keep rising or more than likely starting falling towards that €325,000 mark ?????

and thats before any further rises

I know you asked Dublin Writer the question but the fact of the matter is that if you're not on the property ladder in Ireland now and don't have big savings/100k salary/rich parents, you will never be on the ladder.

lomb

from todays independant.

House price slowdown on the way


AVERAGE house prices are set to increase by about 55pc over the next 10 years, experts have predicted.

They say a number of factors will force annual growth rates to slow to 5pc over the next decade.

Although this is considerably slower than recent jumps, it will still push the average house price from €280,000 to €434,000.

Figures from a 10-year review of the Permanent TSB/ESRI House Price Index have shown that house prices jumped by 270pc over the past decade.

Gurgle

miju wrote:

the average couple with €72,000 salary between them can only get a €325,000 mortgage (as stated by the central bank late last month) but yet the average price is going to hit €400,000 what does that tell you

It tells me that the average couple will either continue to rent an apartment in Dublin or move out to buy in the ever-expanding commuter belt.

miju wrote:

more than likely starting falling towards that €325,000 mark ?????

It will be a cold day in hell when you get another chance to buy a house in Dublin for €325,000

Afuera

DublinWriter wrote:

There's already enough pent-up demand out there to cap any market collapse and keep everything bouyant for at least a decade.

What a farcical statement. Does this "pent-up demand" allign with the fact that there are an estimated 275,000 homes lying empty in Ireland? And the fact that rents have pretty much remained stagnant for the last 5-6 years?

Any cooling off period in the property market will end up hitting employment badly. Just watch the banks share prices plummet as figures suggesting a slowdown roll in. Sentiment is everything in the market today and once that changes it will have knock on effects.

jhegarty

lomb wrote:

from todays independant.

House price slowdown on the way


AVERAGE house prices are set to increase by about 55pc over the next 10 years, experts have predicted.

They say a number of factors will force annual growth rates to slow to 5pc over the next decade.

Although this is considerably slower than recent jumps, it will still push the average house price from €280,000 to €434,000.

Figures from a 10-year review of the Permanent TSB/ESRI House Price Index have shown that house prices jumped by 270pc over the past decade.

The year 2000 called, it wants its story back...

miju

Gurgle wrote:

It tells me that the average couple will either continue to rent an apartment in Dublin or move out to buy in the ever-expanding commuter belt.

there's only so many people who are willing to move to sticks before qaulity of life / commuting becomes an issue

AND

if these couples just continue to rent then who buys the houses?? other BTL investors when rental yields are so low / dropping even more or just speculative investors in it for capital appreciation???? sure jaysis that'd be a bubble wouldn't it but Ireland doesn't have one of those

Gurgle wrote:

It will be a cold day in hell when you get another chance to buy a house in Dublin for €325,000

you better buy a nice warm jacket cos winters coming , the financial markets know it too hence the banks getting hammered to the tune of billions being wiped of their share price the last few weeks

the sentiment in the property market is beginning to change (will be interesting on what effect that little RTE news story did to bed that in even more yesterday) , even people who said to me only 2-3 months "yer ****ing nuts if you think prices will come down" are singing a very different tune as of late , even my nan (who would be of the "you NEED to buy yer own house" brigade isn't even advocating buying

but sure as always time will tell

shnaek

It was reported in the Indo this morn that wealthy Irish investors are starting to diversify away from investing in real estate into other asset classes.

"We are beginning to see early signs that ultra high-net worth clients in Ireland and, to a lesser extent, high-net worth clients are beginning to move away from real estate, diversify and reallocate assets.
"The smart money is beginning to reduce its allocation to real estate," said Nick Tucker, head of Merrill Lynch global private client UK and Ireland.

With both AIB and BOI selling property and going back to renting I wouldn't be over confident in the property market going forward.

Gurgle

shnaek wrote:

With both AIB and BOI selling property and going back to renting I wouldn't be over confident in the property market going forward.

Its common enough for a big corporation (in Japan for example) to build an office building, sell it and rent it back from the purchasers.

Its an excellent tax write-off for high-profit businesses.

miju

what about when they all start doing it at the same time Gurgle ???? does it tell you perhaps they think the market has peaked and therefore will get the biggest gains?

as someone else said on boards before even if the banks say they have every confidence in the market , "i'd do what they do rather than what they say"

am still interested in how you think Gurgle prices wont fall if the average wage worker just rents in Dublin as you said when they're priced out of the market and can't buy

PDelux

In China, the Starter Home is a Non Starter
http://www.businessweek.com/...

"The middle class is getting squeezed out of the country's ever-pricier housing market"

lomb

miju wrote:

am still interested in how you think Gurgle prices wont fall if the average wage worker just rents in Dublin as you said when they're priced out of the market and can't buy

same as always in history, the old money will live in dublin as will the new money from the new wealthy, the rich get richer , poor get poorer..
i would well believe another 50 % rise within 5 years, and possibly static or declining in real terms prices thereafter . in either case as another op said, the days of buying a 300 grand house in dublin are well and truely gone.

pvt. joker

Allow me to comment as an outsider looking in. Ireland is the new hot spot. Dublin is booming and I fear that the west coast will follow shortly (namely Galway City).

As an american visiting your country earlier this year, I fell in love with Counties Clare and Galway and can see the appeal. The problem lies with trading off your culture and heritage in return for a healthier economy. I can see how Dublin can strike a compromise between the two, but I don't think the smaller towns in the west can do the same. We stayed in a beautiful house in New Quay, County Claire right on Galway Bay. I couldn't imagine developers getting their hands on that land and turning it into a tourist trap.

I think the thread starter has the right idea, but trying to get people to play along is tough.

Pa ElGrande

Following inquiries the vast majority of those dwellings - some 275,000 - were identified as being vacant.

In a further 30,000 cases, there was nobody at home when census officials called on various occasions.

Almost two months after the census forms were filled in, 1.5 million forms have been completed and collected, according to the Central Statistics Office (CSO).

The CSO sent out some 1.8 million forms to addresses around the country in April.

http://www.unison.ie/irish_independent/stories.php3?ca=9&si=1636317&issue_id=14226

Sponge Bob picked this up in another thread on the boards.
Lots of empty property about.
Probably some of these are holiday homes, but I do know of the empty apartments and houses.

Gurgle

pvt. joker wrote:

The problem lies with trading off your culture and heritage in return for a healthier economy.

I think you're entirely missing the point.

Ireland is still massively under-populated by european standards. Before the famine in the 1840s, the population here was over 8 million people. Within a decade it dropped to 4 million and has been very slow to recover.

Whats driven the house prices up over the last couple of decades is the government's strategy to force people to live in housing developments, by preventing them from building new one-off houses.

Our culture and heritage is being lost by forcing people who were born and raised in the countryside to buy a 3-bed semi in a town.

Building developers can build 100 houses at a time but a family cannot build their own. The builders have direct control over the supply of houses to the market and therefore can drive the price up by limiting supply.

It has already been established by a tribunal that for decades politicians have been taking massive bribes for selectively granting permission for housing developments.

The government could easily implement a strategy which would stabilise or reduce the cost of housing by allowing planning permission more easily for one-off houses. They will not do that because it would compromise the profit margins of their sponsors.

lomb

Gurgle wrote:

The government could easily implement a strategy which would stabilise or reduce the cost of housing by allowing planning permission more easily for one-off houses. They will not do that because it would compromise the profit margins of their sponsors.

or it could be seen as being unsustainable due to something called economisation of services. this means all serivices are brought to a point, like transit, water, sewage, waste collection, post offices, schools etc.

it is this unsustainability as to why one off houses are a non starter except under certain circumstances unless everyone wants to grow food in their back garden and not have any sewage, piped water, or schools nearby. its this shift in society thats caused toughening of planning laws

pvt. joker

Gurgle wrote:

I think you're entirely missing the point.

Ireland is still massively under-populated by european standards. Before the famine in the 1840s, the population here was over 8 million people. Within a decade it dropped to 4 million and has been very slow to recover.

Whats driven the house prices up over the last couple of decades is the government's strategy to force people to live in housing developments, by preventing them from building new one-off houses.

Our culture and heritage is being lost by forcing people who were born and raised in the countryside to buy a 3-bed semi in a town.

Building developers can build 100 houses at a time but a family cannot build their own. The builders have direct control over the supply of houses to the market and therefore can drive the price up by limiting supply.

It has already been established by a tribunal that for decades politicians have been taking massive bribes for selectively granting permission for housing developments.

The government could easily implement a strategy which would stabilise or reduce the cost of housing by allowing planning permission more easily for one-off houses. They will not do that because it would compromise the profit margins of their sponsors.

it's the same here. I live in a suburb of philadelphia, pa. There's no land available to build yourself. Your only choice is to buy resale or buy something in a "community". The builders basically bribe towns into letting them build by promising to improve infrastructure plus bringing in more tax revenue.

as for skyrocketing prices, supply and demand. There was an article in the paper here last year about a shack (literally) in dublin that sold for $400,000 (roughly 275,000euro).

DublinWriter

Gurgle wrote:

Its common enough for a big corporation (in Japan for example) to build an office building, sell it and rent it back from the purchasers.

Its an excellent tax write-off for high-profit businesses.

Didn't AIB do the same with their Ballsbridge HQ recently?

DublinWriter

Gurgle wrote:

Whats driven the house prices up over the last couple of decades is the government's strategy to force people to live in housing developments, by preventing them from building new one-off houses.

Not really. One off houses are an eyesore abound some of the more scenic parts of Kerry and Wicklow, and I can the reasoning why County Councils don't easily give up PP for them.

Ireland's spatial planning is a disaster. Dublin is the most densly crowded area in Europe, yet as a country we're one of the least densely populated countrys.

Decentralising the Civil Service on the whole was a good idea, but as per usual it turned into a political football and parish-pump politics. Parlon Country anyone?

It took the French almost 35 years to do something similar.

What the govt. should do is offer tax breaks for businesses to relocate out of Dublin. However, this wouldn't be possible as we have to have harmonised EU corporation tax, and the govt. barely got away with the 10% rate for all those years for the American companies coming in.

There's nothing wrong with housing estates, however, there is everything wrong with putting a size of people the population of Drogheda into an area roughly the size of an 18-hole golf course (Adamstown).

And there's everything wrong with building housing estate upon housing estate upon housing estate. Just look at the mess that is Lucan. Developers allowed to purchase vast tracts of land won't be leaving areas for schools, shops and other amenities.

ronbyrne2005

DublinWriter wrote:

Ireland's spatial planning is a disaster. Dublin is the most densly crowded area in Europe, yet as a country we're one of the least densely populated countrys.

.

not true ,dublin still has a relatively low density compared to many european cities.

ronbyrne2005

Gurgle wrote:

Its common enough for a big corporation (in Japan for example) to build an office building, sell it and rent it back from the purchasers.

Its an excellent tax write-off for high-profit businesses.

Why are they all selling their properties that they have owned for decades, if it was such a beneficial move to sell and lease back why didnt they do it ten or twenty years ago? i'll tell ya why,because 10/20 years ago they knew there was plenty of capital appreciation possible and this would out weigh the sale and lease back benefits, but now they have looked at their information (remember they have access to a lot of information that allows them to see whats happening in economy before most commentators) and see that prices are at or close to their peaks and that further capital appreciation is unlikely,if sunstantial capital appreciation was likely why would they sell and lease back as even moderate capital appreciation would outweigh the sale/leaseback benefits.

DublinWriter

ronbyrne2005 wrote:

Why are they all selling their properties that they have owned for decades, if it was such a beneficial move to sell and lease back why didnt they do it ten or twenty years ago?

Because Crystal Balls weren't widely available back then.

ronbyrne2005

DublinWriter wrote:

Because Crystal Balls weren't widely available back then.

so all people/financial institutions who have sold wisely before market crashes have been lucky??

Pa ElGrande

In Europe, Spain and Ireland look particularly exposed to higher rates. Not only have home prices and mortgage debt surged relative to incomes, but most mortgages are at variable interest rates. If these economies' housing markets stumble, they will strain the European Central Bank's “one size fits all” monetary policy, which is set on the basis of economic conditions in the whole of the euro area. Until now this policy has been unduly loose for Spain and Ireland, exacerbating their housing booms. But if house prices fall, they will be unable to cut interest rates to cushion their economies.

Several housing markets are vulnerable to higher interest rates
http://economist.com/displaystory.cfm?story_id=7034327

Looks like the tide is going out for Spain as well

soma

Just to comment on the "boycott" suggestion here. It won't work, can't work and to be honest is completely uneccessary.

Ireland has only recently stepped up to the plate and participated in the global free market economy - previously we were essentially a backwater area. As a result of this, we're now participating in one of the common features of free market capitalist economies - asset speculation. That's it, it really is that simple - just because it's houses don't lie to yourself thinking "oh yeah buying houses is in our DNA cos of the land-less peasant phase" - it's self delusion on a massive scale.

The asset being speculated upon could any number of things - but because it's houses it is particularly dangerous because it is leveraged speculation. Buy House A, re-fi for House B, re-fi for House C. Leveraged speculation caused the 1929 US Great Despression (borrowing to buy stocks) and one of the things that preceded it (~1926) was a truly spectacular property crash (due to rampant speculation) in florida - commentators say that in retrospect one of the tell tale signs was the day in something like 1926 that the florida newspapers' property supplements were bigger than the main paper. Sound familiar? (A few weeks back this happened with the Irish times for the 1st time).

In Ireland we do not seem to understand nor respect market forces. There is no need for any boycott etc - have faith in the market. The "false demand" that has been created due to speculation will eventually be exposed and personally I think Ireland is in for a fairly devastating recession within three years.

And guess what folks, in 15-20 years we will go thru all this again. Welcome to the economic cycle.

Gurgle

DublinWriter wrote:

One off houses are an eyesore abound some of the more scenic parts of Kerry and Wicklow, and I can the reasoning why County Councils don't easily give up PP for them.

Yes, theres plenty of eyesores out there.
Great big mansions plonked on the side of a hill in beautifull unspoilt countryside, visible from miles and miles around.

But these are the houses that got planning permission. One might even suggest that money changed hands to facilitate this planning permission.

The ones they turn down are the modest 3-4 bed houses in a field surrounded by tall trees, which you wouldn't see untill you turned into the drive.

The fact that these mansions get built but people born and bred on a farm are forced to live in a semi-d with a postage stamp garden is pretty much the definition of Ireland's corruption problem.