Boycott Of The Housing Market

miju

what are ye one about ronbyrne sure prcies are always gonna keep rising , buy now while ye still can and sell it and trade up it's like free money :-)

lomb

ronbyrne2005 wrote:

Jimmy at what level (price to average incomes average rents etc) does irish property becomed overvalued and precarious??
You seem like the sort of person that beleives once prices are rising everything is grand,im allright jack.

by defination whatever u pay is 'market value' then it is not overvalued or precarious. however warren buffett said we live in a time where there is a vast tradable market in securites where prices are sometimes wildly far from true worth. this is much more exagurated in shares and currencies than property which is a somewhat illiquid asset affected by interest rates. there is always the human element where bubbles can and do happen. history has proved it. but who knows? id still buy selectively certain property willingly if i had the money.

Afuera

Afuera wrote:

I'll need to see if I can track down that article again. But, I'm pretty certain it was 50% of the selling price, not the cost price, that the government recieves for every new build.

Ok. This looks a bit like the statistics that I'd seen on the percentage of tax take the government gets from newly built houses. It seems that it's actually only 40% and not 50% as I thought.
http://www.cif.ie/asp/section.asp?s=1025

From the looks of the table at the bottom of the report this is taken from the average selling price, and not the cost price to build as someone suggested.

Interestingly the IHBA claim that it accounted for 8 billion Euro in 2005 which is 22% of the Total Exchequers Revenue!!!!

Bare in mind that it's a rather self-serving report, so maybe there's not much truth to it.

JimmySmith

ronbyrne2005 wrote:

Jimmy at what level (price to average incomes average rents etc) does irish property becomed overvalued and precarious??
You seem like the sort of person that beleives once prices are rising everything is grand,im allright jack.

I dont know and niether does anyone here. I dont believe property will go up in value forever, but i'm not going to pretend that i know what will happen to it, which seems to be the national pasttime. All i tried to do in this thread was point out that you cant predict property trends at all. There are just too many variables. I've been listening to the same conversations, quoting this report and that report for nearly 10 years now, and i believe people should just ignore what everyone is saying one way or the other.

Property is not overvalued yet. People are still buying property. If it was overvalued they wouldnt be buying it. When its over valued the price will not rise anymore, it may even go down. The market will regulate itself besed on the amount of money available. You can guess when that will be all you want, but at the end of the day its only a guess.

Miju, The last thing i'll say here. Let me explain what i meant about a 'chain' - as anyone who has ever bought a second hand house knows only too well. Someone buys your house for 200K, you buy another house for €300K () lets say you had equity of €150K), the person who sold you the house buys another one for €400K (and lets just say he had equity of €200K) and so on. All propeed up by the FTB buying your house for €200K.
So lets take a chain of 3 for example. So the average purchase price of a house is €300K. Thats 3 sales averaging €300K, but the most the FTB has had to borrow is €200K. The others ended up borrowing more, but they can afford to trade up at this stage. (also, theres no such thing as 'top end of the average'. You should still look it up.)
There could be any amount of houses in the chain.

Now thats just an example to demostrate that average house price doesnt mean every FTB who gets a mortgage for a house actualy gets a mortgage for that price.

I'm not pretending i know what will happen the market, just pointing out that most of the so called arguments both for a crash and a rapid rise are lacking in logical detail.

ronbyrne2005

JimmySmith wrote:

I dont know and niether does anyone here. I dont believe property will go up in value forever, but i'm not going to pretend that i know what will happen to it, which seems to be the national pasttime. All i tried to do in this thread was point out that you cant predict property trends at all. There are just too many variables. I've been listening to the same conversations, quoting this report and that report for nearly 10 years now, and i believe people should just ignore what everyone is saying one way or the other.

Property is not overvalued yet. People are still buying property. If it was overvalued they wouldnt be buying it. When its over valued the price will not rise anymore, it may even go down. The market will regulate itself besed on the amount of money available. You can guess when that will be all you want, but at the end of the day its only a guess.

.

Jimmy were dot.com shares overvalued in the year before the dot com crash? people were still buying them so they must have been by your logic? in the years before the dot com crash many people predicted it ending in tears but the majority view won out untill reality bite them.
At some point despite people still buying the fundamentals just dont stack up, ten years ago i dont remember anyone claiming houses were overvalued and you could get a good rental return on a property around three times the yield you get today.
You make it sound like a random walk ,"no one can guess" etc but we can make informed predictions which will happen eventually although the timing is the problem.
As any banker will tell you there are limits to the amounts a person can borrow and we are almost at that point for the market as a whole accordnign to many reports from the banks own economists,and with interest rates rising this reduces further the amount people can borrow.
Sentiment is everything in any market and once more people think property is likelt to fall than rise then the market will drop,the bank economists have said that growth is prices will slow to 3% in 2007 as the boundaries of affordability will have been reached, if markets only growing at 3% which is less than inflation sentiment is likely to change for the worse.
Wages are only growing at 4-5% so properties in long run cant grow by more than half of the rate of income growth otherwise people would spend ever increasing amounts of their income on housing untill their entire wages went on their mortgage! it cant/wont happen!

JimmySmith

ronbyrne2005 wrote:

Jimmy were dot.com shares overvalued in the year before the dot com crash?

Shares and houses are NOT the same thing.

ronbyrne2005 wrote:

As any banker will tell you there are limits to the amounts a person can borrow and we are almost at that point for the market as a whole accordnign to many reports from the banks own economists,and with interest rates rising this reduces further the amount people can borrow.
Sentiment is everything in any market and once more people think property is likelt to fall than rise then the market will drop,the bank economists have said that growth is prices will slow to 3% in 2007 as the boundaries of affordability will have been reached, if markets only growing at 3% which is less than inflation sentiment is likely to change for the worse.
Wages are only growing at 4-5% so properties in long run cant grow by more than half of the rate of income growth otherwise people would spend ever increasing amounts of their income on housing untill their entire wages went on their mortgage! it cant/wont happen!

All of which they (the experts) have been rabbiting on about for years. They dont know either.

ronbyrne2005

JimmySmith wrote:

Shares and houses are NOT the same thing.

shares and property are asset classes,all asset classes are subject to bubbles from time to time.

jimmysmith wrote:

All of which they (the experts) have been rabbiting on about for years. They dont know either

yeah thats right jimmy no body knows anything,the financial institutions just pay them large salaries for being wrong all the time. :rolleyes:

Gurgle

ronbyrne2005 wrote:

Sentiment is everything in any market and once more people think property is likelt to fall than rise then the market will drop,the bank economists have said that growth is prices will slow to 3% in 2007 as the boundaries of affordability will have been reached, if markets only growing at 3% which is less than inflation sentiment is likely to change for the worse.
Wages are only growing at 4-5% so properties in long run cant grow by more than half of the rate of income growth otherwise people would spend ever increasing amounts of their income on housing untill their entire wages went on their mortgage! it cant/wont happen!

You're comparing it to the dot.com bubble, where people who taught themselves html on a tuesday afternoon were charging £1200 to copy a brochure into a web page.
There are thousands of people waiting for a chance to buy a house if the market drops, and they are the investors and potential ivestors propping the market up.

If the number of people who wanted to buy were suddenly to drop, e.g. in an instant recession, why would the people own houses choose that time to sell?
Surely the marjoity would tough it out and wait for a recovery?

JimmySmith

ronbyrne2005 wrote:

shares and property are asset classes,all asset classes are subject to bubbles from time to time.

Yeah, and you can live in a share when the value goes down. :rolleyes:

ronbyrne2005 wrote:

yeah thats right jimmy no body knows anything,the financial institutions just pay them large salaries for being wrong all the time. :rolleyes:

So they have to be right because they get paid large salaries then. And they've been fantastic for the last god knows how many years havent they.

I give up, whats the point. some people just think they are psychic. Lets leave it at that.

DublinWriter

ronbyrne2005 wrote:

Jimmy were dot.com shares overvalued in the year before the dot com crash? people were still buying them so they must have been by your logic? in the years before the dot com crash many people predicted it ending in tears but the majority view won out untill reality bite them.

Wrong. Wrong. Wrong.

Most 20-somethings here invoke the dot-com crash when discussing the property market because it was their only direct experience of a drastic market movement.

The equity market has very little in common with the residential property market. It's like comparing apples and oranges.

The housing market won't crash suddenly unless the ECB goes postal with interest rates (into double-digit territory). That's it, end of story, unless you want to speculate about an meteorite hitting Dublin or Liberty Hall being eaten by a giant dinasour.

We can take it as a given that the dramatic growth we've been seeing can't continue, however a market slow down does not equal a crash.

All throughout the past zillion years, the housing market *AT WORST* has tracked inflation, even during the economically depressed 70's and 80's.

Supercell

And all those migrant workers sustaining our construction self sustaining economy will stay here spending their credit while out of work once the current building frenzy dies down...

Dublinwriter, I fear people like you are in for a rude awakening in the years to come, there is no perpetual motion economy, especially in a tiny one like ours.

DublinWriter

Longfield wrote:

Dublinwriter, I fear people like you are in for a rude awakening in the years to come, there is no perpetual motion economy, especially in a tiny one like ours.

Tell you what, go knock yourself out and draw a graph showing average house price over time for say...ooohhhh...the last 40 years, especially including that period in the early 80's when the IMF were poised to step in and over-take the government in running the then basket case Irish economy.

Even during those years there was growth. Why? Because residential house prices are always indirectly linked to inflation.

Pa ElGrande

Longfield wrote:

And all those migrant workers sustaining our construction self sustaining economy will stay here spending their credit while out of work once the current building frenzy dies down...

On the contrary the migrant workers are increasing moving to fill the skills gaps that Irish people are not qualified or unable to provide. The construction sector increasingly draws proportionately more Irish workers than migrants, logically so since this is where the money is, anyone working in the IT or multi-national sector has seen their wages remain largely static since the .com bust (though things have picked up over the last few months). The AIB report (earlier in this thread) shows the construction sector employs the lowest number of migrant workers, of any private sector area. Its not the migrants or foreign property investors sustaining the boom - its our willingness to take on more debt.
Yes, our population is growing, so there is and will continue to be demand for a place to live, however through a combination of poor and restrictive planning (causing a scarcity of houses in areas where services and employment are) and speculation and low interest rates + loose lending criteria, property prices are well above a reasonable longterm sustainable threshold.

Update:

More than 17 per cent of the private non-farm workforce are in construction. The total rises to 20 percent when jobs in services related to construction are added. The corresponding proportions for the UK and US are 7 per cent and 5.4 per cent respectively.

There are more than 250,000 directly employed in the Irish construction sector. When an estimated 80,000 in financial and business service jobs that are dependent on the construction sector are added to direct employment, we get a total of 330,000 - just short of 20% of the private workforce according to Central Statistics Office (CSO) figures. Business service jobs have increased by 100,00 in recent years.

Employment of 290,000 in Production Industries follows job losses of 30,000 in the past five years. Not alone are there more construction related jobs than industrial jobs in the economy, average annual earnings in construction are almost €40,000 compared with €30,200 in industry - a difference of 33 percent.

As the infrastructure and house building programme winds down, it is likely that more than 100,000 construction workers will be seeking employment elsewhere in the economy.

Construction sector may shed over 100,000 jobs by 2016
http://www.finfacts.com/irelandbusinessnews/publish/article_10006275.shtml

ronbyrne2005

DublinWriter wrote:

Wrong. Wrong. Wrong.

Most 20-somethings here invoke the dot-com crash when discussing the property market because it was their only direct experience of a drastic market movement.

The equity market has very little in common with the residential property market. It's like comparing apples and oranges.

The housing market won't crash suddenly unless the ECB goes postal with interest rates (into double-digit territory). That's it, end of story, unless you want to speculate about an meteorite hitting Dublin or Liberty Hall being eaten by a giant dinasour.

We can take it as a given that the dramatic growth we've been seeing can't continue, however a market slow down does not equal a crash.

All throughout the past zillion years, the housing market *AT WORST* has tracked inflation, even during the economically depressed 70's and 80's.

The housing market will slow to sub inflationary growth in next 12-24 months which is a fall in real terms ,then there will be long slow decline in real terms with a sharp correction thrown in for good measure within 5 years.

If you look at the history of property prices the vast majority of the increase over last hundred years is general inflation and only in recent years have prices deviated substantially from income levels, see yale professor schiller on history of real estate prices relative to income,also have a look at a graph of japanese property over last 20 years. This economy is heading for the rocks so be ready to abandon ship all you young bright things.

miju

JimmySmith wrote:

Well they are taking people for fools there. I think the average Joe Soap is smarter than these guys give credit for. I'm sure if you know the difference between equity and cash then most people do.

this is the kind of idiot who they where talking about , probably released the equity in his home LOL , irrational exuberance can be a dangerous thing

Supercell

DublinWriter wrote:

Tell you what, go knock yourself out and draw a graph showing average house price over time for say...ooohhhh...the last 40 years, especially including that period in the early 80's when the IMF were poised to step in and over-take the government in running the then basket case Irish economy.

Even during those years there was growth. Why? Because residential house prices are always indirectly linked to inflation.

You are kind of proving my own point here (see the bit in bold).

What have they not been following recently, and where must they go to be back at the long term line of inflation? (which everything from the price of mars bars to fire engines follows..not only houses), its not hard to work out that they are in a bubble at the moment.

chump

Longfield wrote:

You are kind of proving my own point here (see the bit in bold).

Very true, hah.

I hope DublinWriter has the decency to come back on here and eat his hat when/if there is a significant 'correction' in prices.

Mortgages in Ireland used to be linked to roughly 3X Husbands salary + 1X Wives salary (in family home). Take 2 above-average earners, 40k salary each, that's a 160k mortgage. Be generous now and adapt for new homes where husband and wife both work professional jobs and take in 120k combined a year, and plan to work for entire period of mortgage, and wife never plans to take time off to rear children. Multiply by 4, 480k.
Now see what kind of home you can get in the dublin city suburbs for the price, add in childcare, cars, fuel costs, etc. etc.

What kind of income does a 'family' need to be comfortable these days?

Get a family home is Rush!
http://www.daft.ie/searchsale.daft?search=1&s[cc_id]=ct1&s[a_id]=ga4&s[mnp]=&s[mxp]=500000&s[bd_no]=&s[sort_by]=price&s[sort_type]=d&limit=8&search_type=sale&id=85665

A comfortable one in Lusk...
http://www.daft.ie/searchsale.daft?search=1&s[cc_id]=ct1&s[a_id]=ga4&s[mnp]=&s[mxp]=500000&s[bd_no]=&s[sort_by]=price&s[sort_type]=d&limit=8&search_type=sale&id=69025

And a box on the Swords Road...
http://www.daft.ie/searchsale.daft?search=1&s[cc_id]=ct1&s[a_id]=ga4&s[mnp]=&s[mxp]=500000&s[bd_no]=&s[sort_by]=price&s[sort_type]=d&limit=8&search_type=sale&id=85580

I'm being harsh, but it's just madness that houses cost this much, they are unaffordable, even for healthy earners.

Families used to be able to own good homes with space, relatively close to their workplace, with middle of the road jobs and raise a few kids while at it...

Obviously things have changed, and that should be expected, but I think things have gone too far.

... also there's nothing wrong with this house I've linked to above - but for the fact that that is what a 'well-off' double earning couple can purchase

miju

here's another complete idiot

Ive just put down my final deposit for a duplex in D.9 and signed contracts. The house will not be built for another 18mths but i know i will be working part-time at that stage i.e on 170pw and would not qualify for 260K in 2 yrs althought today i do and i have loan offer now but its due for review every 6mths..is this correct?

I am NOT considering flipping, could someone let me know whats exactly involved?? Do i need permission from the builder at this stage?? what costs are involved.

tenner bet's she's part of the buy , buy , buy at all costs brigage LOL

chump

miju wrote:

here's another complete idiot



tenner bet's she's part of the buy , buy , buy at all costs brigage LOL

Her mummy and daddy and uncle and aunty and neighbour and colleagues and milkman are all telling her now is the time to buy, so buy she does. Bertie is telling her that too, oh and the banks are telling her too...

ronbyrne2005

chump wrote:

Very true, hah.

I hope DublinWriter has the decency to come back on here and eat his hat when/if there is a significant 'correction' in prices.

Mortgages in Ireland used to be linked to roughly 3X Husbands salary + 1X Wives salary (in family home). Take 2 above-average earners, 40k salary each, that's a 160k mortgage. Be generous now and adapt for new homes where husband and wife both work professional jobs and take in 120k combined a year, and plan to work for entire period of mortgage, and wife never plans to take time off to rear children. Multiply by 4, 480k.
Now see what kind of home you can get in the dublin city suburbs for the price, add in childcare, cars, fuel costs, etc. etc.

What kind of income does a 'family' need to be comfortable these days?

Get a family home is Rush!
http://www.daft.ie/searchsale.daft?search=1&s[cc_id]=ct1&s[a_id]=ga4&s[mnp]=&s[mxp]=500000&s[bd_no]=&s[sort_by]=price&s[sort_type]=d&limit=8&search_type=sale&id=85665

A comfortable one in Lusk...
http://www.daft.ie/searchsale.daft?search=1&s[cc_id]=ct1&s[a_id]=ga4&s[mnp]=&s[mxp]=500000&s[bd_no]=&s[sort_by]=price&s[sort_type]=d&limit=8&search_type=sale&id=69025

And a box on the Swords Road...
http://www.daft.ie/searchsale.daft?search=1&s[cc_id]=ct1&s[a_id]=ga4&s[mnp]=&s[mxp]=500000&s[bd_no]=&s[sort_by]=price&s[sort_type]=d&limit=8&search_type=sale&id=85580

I'm being harsh, but it's just madness that houses cost this much, they are unaffordable, even for healthy earners.

Families used to be able to own good homes with space, relatively close to their workplace, with middle of the road jobs and raise a few kids while at it...

Obviously things have changed, and that should be expected, but I think things have gone too far.

... also there's nothing wrong with this house I've linked to above - but for the fact that that is what a 'well-off' double earning couple can purchase

Correct and the couple on 120k a year both working are earning twice the average wage so god help the normal couple on a combined 70k! Markets gone bonkers and you can see the large increase in bearish sentiment in the newspapers/media.As i've said already Bank of Irelands chief economist has said growth will slow to 3% in 2007 which is below inflation and would be a decrease in real price growth! so banks are even saying prices will fall within next 16months! if banks are saying prices will slow to zero or negative growth it must be bad!

ronbyrne2005

http://www.askaboutmoney.com//showthread.php?t=29718

http://www.finfacts.com/irelandbusinessnews/publish/article_10004162.shtml

whizzbang

miju wrote:

this is the kind of idiot who they where talking about ,

"Buy now, ask questions later!"

miju

it's actually frightening to think someone actually did that and then kids himself with "sure i'm a tough oul dog who can slog it out" wtf????

what's even more frightening is the fact that there's many people like this "invested" in irish property like the 2 example i posted above

DublinWriter

chump wrote:

I hope DublinWriter has the decency to come back on here and eat his hat when/if there is a significant 'correction' in prices.

I will if the annual growth in the property prices becomes less than annual inflation.

What will you eat if it doesn't? How about a nice big steaming slice o' humble pie?

As mentioned on the Ryan Tubridy show this morning, people were having this particular argument ten years ago. Meh.

The only bubble that will be burst will be the fantasy bubble of those hanging on for a crash when they think that they'll be able to buy a house for 50 cent in Lidl.

There's only one good time to buy property, and that's right now.

The other factor I haven't seen mentioned in this argument is the predicted population growth for Dublin in the next 15 years. Didn't a recent CSO study predict the population of Dublin to double to 2 million in the next 15 years?

faceman

DublinWriter wrote:

The only bubble that will be burst will be the fantasy bubble of those hanging on for a crash when they think that they'll be able to buy a house for 50 cent in Lidl.

There's only one good time to buy property, and that's right now.

Agreed my friend.
anyone who thinks there is going to be a massive crash and prices are going to become more reasonable lives in a fantasy world.

10 years ago 70k was extorionate pricing in dublin 6. nowadays its wouldnt buy you a garden shed.

I ask you this, why do people think there is a bubble? Lets not forget rates have gone up a number of times since last year, yet demand has increased too!

And my message to the OP, if you got everyone to boycott the housing market i know what i would do. Buy right away. Cos as soon as you start buying again, Im a winner!

utopian

faceman wrote:

10 years ago 70k was extorionate pricing in dublin 6. nowadays its wouldnt buy you a garden shed.

That's a bit of an exaggeration. From an Irish Times article describing the property market in 1996:

It was reported that the downside of the boom was that people who grew up in suburbs like Terenure, Rathfarnham, Rathgar, Dartry and areas along the Dart line from Howth to Killiney wouldn't be able to buy in them unless they had what then seemed like the substantial figure of around £200,000 (€254,000) to spend.

faceman

utopian wrote:

That's a bit of an exaggeration. From an Irish Times article describing the property market in 1996:

we bought a 2 bed appartment in terenure in 1995 for 70k. we sold it in 2001 (or thereabouts) for 250k

miju

faceman wrote:

we bought a 2 bed appartment in terenure in 1995 for 70k. we sold it in 2001 (or thereabouts) for 250k

well done you ,

but how much profit did you make bearing in mind that £70,000 equates to €88,900 nowadays and please dont say €160,000 :rolleyes:

faceman

miju wrote:

well done you , how much profit did you make

technically approx 250k-70k but... none really cos the profit was used to buy a new ranch for about 270k!

miju

so when you sold for 250k you bought another for 270k

you didnt technicaly make 250k-70k cos the house prices everywhere else in the market rose at the same levels