How long have you been waiting or expecting a crash?

iguana

But when do you buy? Though I'll admit that the Irish market is scary, but in Dublin it's all about supply and demand. And the supply of family houses in easy reach of the centre will never meet the demand. So it is unlikely that there will ever be a significant drop there.

Personally I wish there would be, as I live in London and at the moment Dublin is more expensive to buy in, so without a significant change in the next few years my options to move back to Dublin are limted as I would not want to become reliant on a car.

Perhaps an improved public transport system would have an effect on house prices in central Dublin. In London living 4/5 miles from the centre fine as it's a 15min journey by tube to the centre, or 30mins by bus all through the night. Whereas in Dublin anything more than 2miles from the centre, commits you to a life of driving and taxi's. If there was a proper 24hr public transport system people would be happier to live further out.

I know that prices in greater Dublin are also very expensive but they don't compare to areas like the South Circular or Harold's Cross. And the main draw of these areas is proximity to the centre. There are still areas of Dublin, that with decent public transport, would be good value (comparitively).

Glenbhoy

DublinWriter wrote:

I think that there's scope for an extra 10% - 20% in the current market, after that we'll see a leveling off with prices tracking inflation.QUOTE]
On what basis can you quote those figures? Affordability is already at an all time high, interest rates have just gone up and will go by a minimum of 0.5% by year end, SSIA's are deemed spent in advance by many observers, national pay agreement has given increased salaries of approx. 4% p.a. so the increased house prices are'nt going to come from salaries. BTW something many people don't realise with regards to increased interest rates, they not only increase repayments, they also decrease the amounts that a bank will lend. This is because of the stress testing factor, for example a borrower in his 20's on 60K would have qualifed for circa 300K, now he'll only qualify for circa 280K (figures by no means exact, but you get the gist), the reason being that the affordability of repayments must be stress tested at 2% above current interest rates.

Glenbhoy

iguana wrote:

But when do you buy? Though I'll admit that the Irish market is scary, but in Dublin it's all about supply and demand. And the supply of family houses in easy reach of the centre will never meet the demand. So it is unlikely that there will ever be a significant drop there.

Perhaps an improved public transport system would have an effect on house prices in central Dublin. In London living 4/5 miles from the centre fine as it's a 15min journey by tube to the centre, or 30mins by bus all through the night. Whereas in Dublin anything more than 2miles from the centre, commits you to a life of driving and taxi's. If there was a proper 24hr public transport system people would be happier to live further out.

Iguana, I think your first comment on the supply of famly houses is a myth which has been perpetuated by the media and has been part of the reason why prices have rocketted in the past 6 months. In reality there could be adequate supply, it's just that at present we have 2 other factors at work:
1. People trading up do not sell on their original home, instead keeping it as an investment property.
2. Parents buying properties for their kids, nothing wrong with that you might say, but, and I tell the truth on this one, I know several people who have bought for their 5/6/7 year old kids!!
However as rates rise and rents drop some of these people will be able to retain these properties, that's where the panic selling may set in, alternately, a little piece of government legislation making it less attractive to be an investor could also trigger increased supply.

On your other comment re public transport, yeah we could do with massive improvements, but I do live 4.5 miles from the city centre and my buses are very regular and allow me a comfortable commute of approx 30 mins.

DublinWriter

Glenbhoy wrote:

DublinWriter wrote:

I think that there's scope for an extra 10% - 20% in the current market, after that we'll see a leveling off with prices tracking inflation.

On what basis can you quote those figures? Affordability is already at an all time high, interest rates have just gone up and will go by a minimum of 0.5% by year end, SSIA's are deemed spent in advance by many observers, national pay agreement has given increased salaries of approx.

I based that on the fact that the property market is already very bouyant. People may still be whinging on about prices, but they are still buying.

It's a bit like putting the brakes on your car at 60MPH. You'll eventually come to a stop, and the tell-tale sign that you are coming to a stop is that you're slowing down.

Is growth in the housing market slowing down? No. Does supply exceed demand yet? No.

But one thing's for sure. The SSIA's will be like petrol on the bonfire of inflation. Around 80% of SSIA holders took out their accounts in the last month of the offer.

All bets are off for April 2007.

Personally, I'd predict the property market to peek in 2007, then gradually level off and track inflation.

But I think that the days of affordable property are long gone in this country.

miju

DublinWriter wrote:

I based that on the fact that the property market is already very bouyant. People may still be whinging on about prices, but they are still buying.

It's a bit like putting the brakes on your car at 60MPH. You'll eventually come to a stop, and the tell-tale sign that you are coming to a stop is that you're slowing down.

Is growth in the housing market slowing down? No. Does supply exceed demand yet? No.


But I think that the days of affordable property are long gone in this country.

personally i think you've your head in the clouds DublinWriter OR you just can't palate what's more than likely around the corner

i'll ask the question again to you, where does these figures of demand for housing come from????? i'll answer it for you it's the builders themselves so

a: they've a very vested / biased interest
b: they've never really been known for their honesty now have they
c: there is an ever increasing rate of unoccupancy in newly purchased houses what does that tell you about demand ??????

really the bottom line is that we're in a property bubble and sooner or later it will pop

this thread smacks of the same things that were said just before the dot.com crash ..... "ah sure jaysis the shares just keep going up and up and are very bouyant" etc etc

rubbish

DublinWriter

miju wrote:

really the bottom line is that we're in a property bubble and sooner or later it will pop

this thread smacks of the same things that were said just before the dot.com crash ..... "ah sure jaysis the shares just keep going up and up and are very bouyant" etc etc

As I said, comparing the Irish property market to the global equity market is pure foolishness. Apples and Oranges.

I believed the 'bubble' arguement 4 years ago, and lost about €150K on waiting around for it to burst.

The 'ohhh, prices are so high!' arguement for the property market crashing doesn't hold much water. Prices are very high now, yet people are still buying and the market is thriving.

So how exactly will the property market crash?

Personally I think a Euro currency crises leading to the ECB pushing interest rates over 10% will make it happen, but the chances of that happening are slim.

Whereas the Sterling was vunerable to mega-dealers like George Soros, the Euro is a much bigger ecomony which is tipped to replace the US Dollar for global oil-dealing.

utopian

DublinWriter wrote:

I believed the 'bubble' arguement 4 years ago, and lost about €150K on waiting around for it to burst.

The 'ohhh, prices are so high!' arguement for the property market crashing doesn't hold much water. Prices are very high now, yet people are still buying and the market is thriving.

Surely that would be the case whether there was a bubble or not? I mean, before the 1929 crash, prices were high and the market was thriving. Similarly, half-way through a bull market, prices are high and the market is thriving...

DublinWriter wrote:

So how exactly will the property market crash?

Events, dear boy, events.

DublinWriter

utopian wrote:

Events, dear boy, events.

Dear boy, compare like with like. The equities/futures/currency markets deal with abstracts.

The property markets deal with 'shelter'. The rooves over our heads.

Read Gilbraith, the 1929 crash was more to do with manufacturing oversupply than anything. Given the 150,000 emigrants to our country, can you see the demand exceeding the supply anytime soon.

Eeeeeeeeeeeeeeeeeehhhhhhhhhh....no.

utopian

DublinWriter wrote:

Dear boy

The dear boy was from Harold Macmillan, not me.

DublinWriter wrote:

Read Gilbraith, the 1929 crash was more to do with manufacturing oversupply than anything.

Strangely enough, I have it on my table.

In fact, any satisfactory explanation of the events of the autumn of the 1929 and thereafter must accord a dignified role to the speculative boom and subsequent collapse. (p. 112, Penguin edition)

My understanding is that Galbraith was very strong on "irrational exuberance" etc., rather than "underlying factors". Perhaps you will give me a reference to support your contention.

dochasach

miju wrote:

on a side note I see Bank Of Ireland have just agreed a sale and leaseback agreement on 30 of their branches so that's two major banks (the first being AIB ) to do such a thing, of course they say it's a them giving the vote of confidence to the property market,

personally i'd say do what they do rather than what they say, sure if they had confidence in the market they wouldn't have sold up yet surely they'd hang about a bit longer to free up more equity

Add Barclays bank to the list of banks savvy enough to see the commercial property peak through the fog on that side of the Irish Sea:
http://www.moneyweek.com/file/13079/forget-commodities---heres-a-real-investment-bubble.html

“In recognition of historically low yields on property, we have taken action to realise gains in part of our freehold property portfolio,” the bank said.

So who did Barclays sell their freeholds to? Interestingly enough, at least some of the branches were sold to the man in the street.


http://www.google.com/trends?q=leaseback&ctab=0&sa=N

dochasach

iguana wrote:

But when do you buy?

If you're certain that property will always beat inflation by enough to compensate for interest paid the answer is obvious, immediately. But if you believe that current valuations are distorted by speculation and fear of missing the mythical "ladder", I'd recommend considering fundamentals. Do you really have less outlay, more capital appreciation and less risk as an owner than you would as a renter of the same property? Barclays, AIB, and BOI found for commercial property that the numbers work in favor of the leaser. I personally found the same for midrange homes in good neighborhoods near Dublin.

Though I'll admit that the Irish market is scary, but in Dublin it's all about supply and demand. And the supply of family houses in easy reach of the centre will never meet the demand.

Then why are there so many properties available to let in Ballsbridge? Yes it is about supply and demand, but most people forget to separate owner-occupier demand which is stable, from speculator/landlord demand which could evaporate within months of a price plateau or fall. There is also a fragile demand based on the psychological fear of missing the ladder. How much demand is driven by this fear: "If I don't buy today, median property willl rise to 15 times median income and I'll never be able to buy!" What happens to that demand during a plateau or deflationary period?

Perhaps an improved public transport system would have an effect on house prices in central Dublin.

Hmm, not sure we can count on that ever happening.

Itulip had an interesting writeup on the geography of property booms. The theory is that appreciation moves outwards from the center and then collapse inwards from the suburbs (In Ireland's case, the exburbs eventually extend to Carlow, Spain, Bulgaria and Turkey): http://www.itulip.com/housingpriceregionscascade.htm The 15-year Tokyo crash seems to have followed this trend. It's too early in the U.S., U.K. or Australian property depreciation cycles to see if this is the trend they follow.

utopian

From the Irish Times property supplement yesterday:

"There are currently 104,000 investment properties sitting vacant around the country, and these are not holiday homes . . . at the same time, we still have huge waiting lists of people who just want somewhere to live."

104,000!!!:eek:

miju

not that suprised at a figure like that

like i mentioned in the thread earlier seeing as how these "demand" figures come mainly from the builders themselves who have a very vested interest in keeping things ticking over

phantom demand for housing is what it smacks of

on another sight side topic , it seems some people may already be experiencing problems http://www.boards.ie/vbulletin/showthread.php?t=2054943936