Boycott Of The Housing Market

daveirl

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chump

http://www.finfacts.com/biz10/irelandhouseprices.htm
"The average price paid for a house in Dublin and outside Dublin in May 2006 was €394,795 and €256,418 respectively. "


http://www.gos.gov.uk/gol/OurRegion/LondonStats/234719/
"The average house price in London in December 2005 was £268,517 (387,920.08 EUR); the UK average for the same period was £185,788.(268,360.67 EUR)"


Interesting stats regarding weekly London salaries, 4th March 2005
http://news.bbc.co.uk/1/hi/business/4319239.stm

It is clear that like-for-like salaries in London are significantly higher than in Dublin. Anyone who has been through the grad milkroands can attest to this.

Also London is a biggest city in Western Europe, it is a money making machine that drives the english economy.

If demand for property in Dublin was so significant, why is that rents are so weak? If there was a demand problem surely rents would be higher? And rising significantly?

Rents are significantly higher in London. Imagine the cost of renting a 2-bed apart. in the London equiv. of the IFSC. 1500euro wouldn't get a betsit never mind
http://www.daft.ie/searchrental.daft?search=1&s[cc_id]=ct1&s[a_id]=3648&s[mnp]=&s[mxp]=&s[bd_no]=&limit=8&search_type=rental&id=401928
http://www.daft.ie/searchrental.daft?search=1&s[cc_id]=ct1&s[a_id]=3648&s[mnp]=&s[mxp]=&s[bd_no]=&limit=8&search_type=rental&id=404130
http://www.daft.ie/searchrental.daft?search=1&s[cc_id]=ct1&s[a_id]=3648&s[mnp]=&s[mxp]=&s[bd_no]=&offset=8&limit=8&search_type=rental&id=403578
http://www.daft.ie/searchrental.daft?search=1&s[cc_id]=ct1&s[a_id]=3648&s[mnp]=&s[mxp]=&s[bd_no]=&offset=16&limit=8&search_type=rental&id=406395

Find a comparison in London walking distance to a 'city' job.

Rents are low due to demand (amount of properties supplied by 'investors' is high) and average wages (dublin jobs don't pay in the same realm as NY, Paris, London).

In fact with so many people buying places, at any cost, the rental demand may actually decline (particularly amoung indigenous irish workers) - this will be offset by the lower-skilled minimum and close to minimum wage workers, mostly foreigners.
How many landlords advertise their properties so as to eliminate the possibility of low-skilled non-nationals getting into them? Let's not be PC. So they end up on the outskirts with 5/6 to a house.

All said I don't doubt that there isn't enough homes available to FTB's within Dublin and the close suburbs, but I certainly don't believe it's putting off people buying - they're just buying further out. Probably with the hope one day of upgrading.

shnaek

CiaranC wrote:

The size of the city or its cultural achievements arent really relevant. Dublin is the capital city of a successful western ecomony with a strong demand for housing.

The size of the city is surely relevant. The bigger the city, the greater the scarcity of land to build on in the centre. Thus the higher the value of that land.
Cultural achievements also play a part. You are forgetting or ignoring the value of the soft economy. Foreigners will always want to live in Paris, London or New York. If our economy goes belly-up there won't be many foreigners chosing to live in Dublin. Unless they enjoy drinking.
Also, if you do insist on comparing Dublin with capitals of successful economies then you must compare like with like. Chose a capital city of a similar size and compare it. That would give your point more credibility.

SkepticOne

CiaranC wrote:

Huh? By definition, its only a bubble if it pops. If the market sustains, then it wasnt a bubble after all...

Unfortunately this definition is no good since by the time it pops it may be too late, By this definition there was no bubble in tech stocks (please I know stocks != property!) until after the pop despite its obvious unsustainablity before the actual pop.

It is true that you can't know for sure it is a bubble until after it pops; some time after, in fact, since you need to be able to see a sustained downturn afterwards. Even after the tech bubble burst there were people saying that the boom was not over and buying up what they thought were 'bargains'.

Obviously we need a way of determining whether or not the current housing market is in a bubble before the actual crash (if it is a bubble).

We can do this by examining fundamentals and market psychology. In the case of fundamentals, has the market risen beyond what would be expected in changes in the fundamentals? Is supply meeting demand or is an excess of housing being built?

In the case of psychology I would start by examining the reasons people give for buying houses. Are they being rational or irrational? Do they think the property they are buying is good value or are they scared of being priced out? Are investors evaluating investments on the basis of rental yields or a belief in future capital appreciation?

JimmySmith

asdasd wrote:

* To the continuously stupid poser - JimmySmith - who thinks he can argue that Mick and Mary are not the same as Jill and Joan ( or whomever the feck) some simple statistical notes:

1) The average industrial wage is actually the median industrial wage. That should answer your question on how many people earn less than 32K a year. Thats right Einstein. One million, Out of 2 Million. Lots.
2) The median house price tends to track the median wage for obvious reasons, however higher interest rates can reduce the spread, and lower interest rates increase it. In another blow to the "house prices always follow inflation" theory Irish house prices declined in real terms in the Eighties as interest rates rose.

( Just like Japan in the nineties, except they had systemic deflation, so house prices had to fall in nominal, and not just real, prices which just seems more *obvious* a fall, but isn't).

Now your just being completely stupid here. We're not in Japan, Average is NOT the same as median. Make up your mind which you are talking about.

Median: The middle value in a distribution above and below which lie an equal number of values.

Average: The value obtained by divding a set of quantities by the number of quantities in the set.

There is noone more stupid than a person who will fight their argument tooth and nail; without regard to other arguments being put forward. I see several valid points for a crash and a soft landing and continued rises in prices in this thread, but what really gets up my nose are those who come out with bull**** like yourself and wont open their eyes and at least acknowledge that they are not all-seeing.

In fact when you are challenged on your arguements yo get nasty instead of analytical on them.

Whats the point of that?

FillSpectre

miju wrote:

oh for gods sake spectre , if it looks like a bubble , acts like a bubble it's a bubble and it will sure enough pop , just because it hasn't popped yet doesn't mean it's not a bubble

i suppose you'll tell me next a tyre isn't a tyre until it's been inflated LOL

It is ONLY a bubble when it has popped. It only looks like a bubble once it has pooped. IN fact becasue it has not poped does mean it is not a bubble yet. It may look like it could be a bubble but it aint untill there is a crash.

Calling it a bubble does not circumvent the general definition which all rely on a pop.

whizzbang wrote:

It is a strong demand for housing or a strong demand for invetment properties?

It only makes a differerence if the investors actually plan to sell it quickly in a down turn. As I have proved before the investors may still be in a better financial situation than somebody who just buys.

You are hoping for a crash so you can buy. Effectively you are telling me there is still a demand. If prices keep going up you get to test your will power. You are also actively hoping investors will be punished through "their stupidity". This is a standard physiological reaction and not a balanced argument; you are acting out your frustration. You think there will be justice and this is the same belief in heaven and hell.
It may be pop physicology but if it wasn't so obvious it wouldn't be so easy to spot.

whizzbang

JimmySmith wrote:

In fact when you are challenged on your arguements yo get nasty instead of analytical on them.

hehe try playing "Logical Fallacy Bingo", here is the game card link. So far asdasd has "Ad hominem" and "Ad baculum" I'm sure there are plenty more, its fun and educational!

whizzbang

FillSpectre wrote:

You are hoping for a crash so you can buy. Effectively you are telling me there is still a demand. If prices keep going up you get to test your will power. You are also actively hoping investors will be punished through "their stupidity". This is a standard physiological reaction and not a balanced argument; you are acting out your frustration. You think there will be justice and this is the same belief in heaven and hell.
It may be pop physicology but if it wasn't so obvious it wouldn't be so easy to spot.

Wow, this is a spectacular rant even for you MorningStar.

I will buy a house when the prices stop falling, this means I believe there is a demand for low prices houses, yes definitly. That being said, I don't think many FTB will take the punge in a downward market, I think they will have been waiting long enough to "get on the ladder" that they will be willing to wait even longer to get a place cheaper.

As for if there will be a downward market or not only time will tell.

FillSpectre

whizzbang wrote:

Wow, this is a spectacular rant even for you MorningStar.

I will buy a house when the prices stop falling, this means I believe there is a demand for low prices houses, yes definitly. That being said, I don't think many FTB will take the punge in a downward market, I think they will have been waiting long enough to "get on the ladder" that they will be willing to wait even longer to get a place cheaper.

As for if there will be a downward market or not only time will tell.

It isn't a rant it is an evaluation of your comments and your insistance you are going to be "smart" and get a home cheap by watching the market.

Your pathetic attempts to twist what I have said along with calling me a name that I have pointed out several time is not me just shows how pathetic your arguemnets are.

You want to buy a home and think you deserve it at a different price. You still want it and will support the demand. If demand doesn't drop prices are less likely to. The funny thing about waiting something out is the longer you wait the less likely you are to wait any longer.

You are preaching bubble on a constant basis like a religion. You could be right but they way you are deducing it is simple wrong. It is a religious manner you do it that is a problem as you are unreasonable and dismissive along with unfounded claims.

For somebody who doesn't own or have a vested interest you obsese about it.

Sleipnir

whizzbang wrote:

Wow, this is a spectacular rant even for you MorningStar.

I will buy a house when the prices stop falling, this means I believe there is a demand for low prices houses, yes definitly. That being said, I don't think many FTB will take the punge in a downward market, I think they will have been waiting long enough to "get on the ladder" that they will be willing to wait even longer to get a place cheaper.

As for if there will be a downward market or not only time will tell.

If that happens what do you think the banks will do? They'll increase mortgage rates...greatly! Do you think they're going to reposses a house and then sell it to you at a greatly decreased price at the interest rates we have today????!!!! HAHAHAHA! They'll hang onto that property for dear life even if that means waiting 20 years!
People won't sell in a downward market as they won't want to lose money. The banks won't sell the houses they reposess because they'll lose money and if there is one thing banks cannot stand IT IS LOSING MONEY!

You'll still be renting and the banks will own half the country.

whizzbang

FillSpectre wrote:

For somebody who doesn't own or have a vested interest you obsese about it.

I do have a vested interest, I live in Ireland and the current house prices are not good for the country. Also I want to buy a house at some stage so of course I'm interested in the market.

FillSpectre

whizzbang wrote:

I do have a vested interest, I live in Ireland and the current house prices are not good for the country. Also I want to buy a house at some stage so of course I'm interested in the market.

You live on the planet so have a vested interst in environmnetal issues but you are ranting and raving about that. Obviously owning a home is more improtant to you than the evironmnet you live in. You have an abnormal interest in the propety market for some body who is going to be waiting a few years to buy.

You are wishing a crash so you can start your clock to the point you think is the best value to buy.


It is an unhealthy interest and wishful thinking that events will suit you. As pointed out you may very likely not be able to buy if there is a crash. Live your life

ronbyrne2005

If there is truly a shortage of housing in dublin city why are rental yields at less than 2% in dublin 1/2/4/6 ?
Why are rents cheaper than than in many other european cities?
Why are prices rising faster in last 12 months than previous 12 months even though economic outlook has gotten no better and the cost of borrowing is rising (interest rates)?its because people beleive prices will rise much higher,even if demand exactly equalled demand prices would still rise at high rate IF enough people expected prices to rise.

For the pedants out there ,yes its technically accurate that a bubble cant be called a bubble till it bursts but you can say it looks a lot more like a bubble now than it did 3 years ago as prices have risen substantially and wages and rents havent. Looks like a bubble to me, ireland has loads of land per capita and loads of room to build upwards,eventually supply will exceed demand and prices then will have to fall,we are in a short term lack of supply and excess immigrant driven demand scenario.

whizzbang

Sleipnir wrote:

If that happens what do you think the banks will do? They'll increase mortgage rates...greatly! Do you think they're going to reposses a house and then sell it to you at a greatly decreased price at the interest rates we have today????!!!! HAHAHAHA! They'll hang onto that property for dear life even if that means waiting 20 years!
People won't sell in a downward market as they won't want to lose money. The banks won't sell the houses they reposess because they'll lose money and if there is one thing banks cannot stand IT IS LOSING MONEY!

You'll still be renting and the banks will own half the country.

I totally agree that banks will sell that many houses. They are not in the property buisness, they are in the business of keeping people payable debt. As you said selling houses is the last thing they will want to do.

I do think they all the speculative investors that the market has picked up over the last few years are a different story entirely. I could imagine them being much more willing to sell their investments, especially if interest rates are going up at the same time.

You are right that a lot of people will hold on in the belief that prices will rise again but there will be enough selling to keep the market slowly slumping down. If someone bought an asset for 60k a few years ago, and now it is worth 100k this year and they think it will be worth 80k next year, I can imagine a lot will sell up to "Lock in their gains".

whizzbang

FillSpectre wrote:

It is an unhealthy interest and wishful thinking that events will suit you. As pointed out you may very likely not be able to buy if there is a crash. Live your life

MorningStar, you are on every property related thread on boards as well so I think we share the same sickness

daveirl

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Strokesfan

It's a shame Fillspectre doesn't have a clue how to spell or construct coherent sentences... "preaching bubble", "simple wrong", "obsese" ?and "arguements" but my favourite - "the funny thing about waiting something out is the longer you wait the less likely you are to wait any longer."
completely incoherent ramblings?

JimmySmith

Strokesfan wrote:

It's a shame Fillspectre doesn't have a clue how to spell or construct coherent sentences... "preaching bubble", "simple wrong", "obsese" ?and "arguements" but my favourite - "the funny thing about waiting something out is the longer you wait the less likely you are to wait any longer."
completely incoherent ramblings?

How does this add to the debate here?

JimmySmith

whizzbang wrote:

Wow, this is a spectacular rant even for you MorningStar.

I will buy a house when the prices stop falling, this means I believe there is a demand for low prices houses, yes definitly. That being said, I don't think many FTB will take the punge in a downward market, I think they will have been waiting long enough to "get on the ladder" that they will be willing to wait even longer to get a place cheaper.

As for if there will be a downward market or not only time will tell.

Like what happened in 2002?

ionapaul

The banks WILL sell any repossessed properties, and sell them as soon as they can. Even if there is a crash, will many properties be repossessed? I doubt it, people will just be stuck in that starter home for a decade or so more than they hoped, that's it.

If you think you will benefit from a property price crash, you had better a) have as much money as possible saved in low risk investments to pay off as much of the price as possible (as interest rates going up will hurt affordability as much as bubble-bursting house prices reductions help it) and b) be in very secure employment, as a massive burst in property prices AND massive reduction in constuction WILL send this country into recession.

Basically, if you have €150,000+ in safe assets and work in the civil service, then a property price crash might be good for you. I'm extemely pessimistic about the whole thing, at this point the government can't dream of doing anything to derail the runaway property train, its going to happen anyway and it would be political suicide to force the issue before market forces do, as they inevitably will.

Cantab.

ionapaul wrote:

I'm extemely pessimistic about the whole thing, at this point the government can't dream of doing anything to derail the runaway property train, its going to happen anyway and it would be political suicide to force the issue before market forces do, as they inevitably will.

Hit the nail on the head.

The current political climate is something that all those 'bulls' out there don't factor in.

It's pay-day for investors.

Pa ElGrande

JimmySmith wrote:

Like what happened in 2002?

What did happen

+ The Euro changeover.
+ Interest rates fell to their lowest rate due to the post stock market bubble and to boost consumer confidence
post September 11, 2001. In effect when inflation is taken into account anyone who took out a loan had free money.
+ The banks started to loosen their lending criteria.
+ Wages frozen in the multi-national sector or wage inflation slowed in the export economy in general (post .com
bubble), this is significant since house price inflation is outstripping the growth in income.
+ Energy prices are low. (oil has more than doubled since then)
+ People had money to spend after the extraordinary growth of the 1990's
+ The Ryanair effect - cheap flights all over Europe say the beginnings of the fly to let investments abroad.

Its 2006
Low energy prices and low interest rates won't be happening in the near term.

whizzbang

JimmySmith wrote:

Like what happened in 2002?

In 2002 prices started going up again as the tax breaks cancelled in 2001 were reintroduced.

*edit and all the stuff Pa ElGrande said

SkepticOne

From what I can gather the argument against a crash and therefore in favour of either continuing rises or a soft landing is as follows:

1. A bubble exists only if there has been a crash..
2. Only bubbles crash.
3. There has not been a crash in the Irish property market.
4. Therefore there is no bubble (see 1).
5. Therefore there will be no crash (see 2).
6. Therefore prices will either continue rising or there will be a soft landing.

Please correct me if I have missed something.

<edit: put 'only' into line one of argument, otherwise it is not logical>

whizzbang

SkepticOne wrote:

From what I can gather the argument against a crash and therefore in favour of either continuing rises or a soft landing are as follows:

1. A bubble exists if there has been a crash..
2. Only bubbles crash.
3 There has not been a crash in the Irish property market.
4. Therefore there is no bubble (see 1).
5. Therefore there will be no crash (see 2).
6. Therefore prices will either continue rising or there will be a soft landing.

Please correct me if I have missed something.

haha! that is excellent! I think that sums it up perfectly!

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

Pa ElGrande

"An economic soft landing refers to steady deceleration of an overheated economy to a more moderate rate of growth. As such, it may appear to relate to government macro adjustment rather than the desire of the Joe Public. But its effect is one of cooling down fierce economic growth that exerts high pressure on daily life and is, therefore, of benefit."


Best definition so far, now put that in an Irish context, in order to slow down economic growth borrowing has to slow......

FillSpectre

ronbyrne2005 wrote:

For the pedants out there ,yes its technically accurate that a bubble cant be called a bubble till it bursts but you can say it looks a lot more like a bubble now than it did 3 years ago as prices have risen substantially and wages and rents havent. Looks like a bubble to me, ireland has loads of land per capita and loads of room to build upwards,eventually supply will exceed demand and prices then will have to fall,we are in a short term lack of supply and excess immigrant driven demand scenario.

The difference between those pointing out it is not a bubble and pedant is we are not talking about technical correct and symantics it is a statement of fact. Claiming a bubble is the same as saying it rained yesterday when it didn't. You can speculate that house prices will be proved to be a bubble. It is simply a false calim to say it is a bubble. It doesn't matter if you are proved to have guessed right it is still a false statement.
For all the people still going to claim it is a bubble can you all agree what year it started?

whizzbang wrote:

you are on every property related thread on boards as well so I think we share the same sickness

The difference is you don't own and keep claiming you aren't going to buy untill 2 years after a crash. You speculate to the point of lying and dismiss any view that opposes yours. I appear on many types of threads and generally dislike bullies that shout down opposing views and pedal their opinion as fact. You are hoping for a crash and I the impression you feel spreading your view in some way helps make it happen. Instead of using information to form a view you select information to reinforce your view.

JimmySmith

FillSpectre wrote:

The difference between those pointing out it is not a bubble and pedant is we are not talking about technical correct and symantics it is a statement of fact. Claiming a bubble is the same as saying it rained yesterday when it didn't. You can speculate that house prices will be proved to be a bubble. It is simply a false calim to say it is a bubble. It doesn't matter if you are proved to have guessed right it is still a false statement.
For all the people still going to claim it is a bubble can you all agree what year it started?



The difference is you don't own and keep claiming you aren't going to buy untill 2 years after a crash. You speculate to the point of lying and dismiss any view that opposes yours. I appear on many types of threads and generally dislike bullies that shout down opposing views and pedal their opinion as fact. You are hoping for a crash and I the impression you feel spreading your view in some way helps make it happen. Instead of using information to form a view you select information to reinforce your view.

So true. Those waiting for a crash are simply speculating just as much as those waiting for capital gains.

By the way - in early 2002 proerty prices started to fall. A tipping point happened in late 2002, people who were waiting for prices to fall started buying again. This caused more to buy in case they were left behind again, driving the price of property even higher.

Fair enough there were exceptional circumstances all round that triggered that glitch, but those exceptional circumstances are what cause busts, recessions, booms etc and by their very nature are not predictable unless you are a terrorist of course or Alan Greenspan (then).

daveirl

This post has been deleted.

Afuera

FillSpectre wrote:

Claiming a bubble is the same as saying it rained yesterday when it didn't.

No it's not. It's more like spotting a number of dark clouds in the air and then suspecting that it might rain in the near future.