The bubble....

Gurgle

OK, many many people here are convinced that the housing market is a bubble on the point of popping.

So without going into why it is or isn't a bubble, how about a 'how bad and when' thread.

When is it going to pop?
How much will the average house drop in value?

Entries please on the back of a €5 note...

I think in about 2 years prices will overshoot a littlle, by maybe 1%, then settle down and level off overall. There might be up to a 10%-15% drop in the 1-bed apartment type market, and maybe 3%-6% in the Yuppie south-side semis.

hmmm

Prices will return to the long run average of about 3.5:1 in terms of salary multiples and providing about 10-12% rental yields. We're not at around 8 to 1 in terms of salary and about 2-4% yield.

That'll equate to a minimum 50-60% drop in prices across the board. Whether it happens all at once in a crash, or whether it's stagnant prices for 10 years is the question now.

SkepticOne

Yes. Although it is fairly easy to argue that there is a bubble, predicting when it will pop is much harder. Could go on for years or could be in the process of popping right now.

I don't think it will be a levelling off or a 'soft landing'. This seems unlikely given the way the bubble has inflated the last few years with many ftbs buying simply for fear that they will be left behind and investers not seeming to give a thought to rental yields.

kluivert

House prices will continue well into the future for at least another ten years.

Therefore my opinion is that the bubble wil not burst.

This is based on demographics mainly age. Ie We have a young population.

garred

^ I agree, with other factors such as low unemployment, changing attitudes, lending policies, etc.

I do think that apartment prices will take a hit in the next 18 months though.

Cantab.

Gurgle wrote:

When is it going to pop?

After the next election when FG/Labour get in to power (< 12 months' time) - there's already a race to get current apartment complexes under construction finished by then. Will be a shaky period economically.

Gurgle wrote:

How much will the average house drop in value?

30-40% commuterland apartments
15-30% commuterland houses in edward scissor hands estates
5-10% houses on DART/LUAS/within 30 mins from city
0-5% embassy belt, established even number postcodes

professore

kluivert wrote:

House prices will continue well into the future for at least another ten years.

Therefore my opinion is that the bubble wil not burst.

This is based on demographics mainly age. Ie We have a young population.

So does most of the third world.

ronbyrne2005

kluivert wrote:

House prices will continue well into the future for at least another ten years.

Therefore my opinion is that the bubble wil not burst.

This is based on demographics mainly age. Ie We have a young population.

Yeah right! We'll have loads of young people who wont be able to afford to buy as prices are too high and banks wont lend them the amount required to buy in Dublin, as interest rates rise people can borrow less and have to pay more interest. Your argument is foolish.

Gegerty

katrien_ie wrote:

So does most of the third world.

Yeah and their bubble won't burst either

I think the economy is pretty healthy as a whole so interest rate hikes will firstly result in more movement on the jobs market while people stop being complacent and settling for low salaries and start seeking out higher salaries. This is already evident in the IT industry where people can see as much as a 10K increase in salary just by changing jobs and asking for more.

So to answer your question I don't see the bubble bursting. It will have to stop rising and I think we are more likely to see what has happened recently in England where house prices fell slightly for a short period and as a result the market has become stagnant.

chump

oh and my opinion...

Bubble will fizzle downwards within the next 9-12 months and then be at a stage of slight negative or 0 growth for the next 5+ years before eventually rising again at a similar rate to wage increases.

The fizzle over the next 9-12 months I believe will affect different areas differently and would amend Cantabs view as follows

PRICE DECREASES
25+% commuterland apartments 1.5+ hr dublin city commute and commuterland belt in other cities/town
15+% commuterland houses 1.5+ hr dublin city commute and commuterland belt in other cities/town
~10% apartments on DART/LUAS/within less than 1 hr drive from city
~5% houses on DART/LUAS/within less than 1 hr drive from city
0% embassy belt, established even number postcodes, top-drawer, and also south side enclaves on the northside

I see particular issues with the apartment and small house complexes that aren't fed by any train lines and where driving into dublin city in the morning takes more than 1.5 hours, and often considerably more.

I also see the fizzle not being as spectacular a burst as some might expect, and instead see a longer more drawn out period of decline.
I also see some right awful politcal turmoil and a possibly ugly enough economic period come the next election.

galah

you are aware that there is more to Ireland than Dublin though?

Not being able to afford a house in Dublin is fair enough, what with the big city and all - but ten times your salary over 35 years for a dive half an hour's drive from Galway is unrealistic - the prices will have to come down here!

hmmm

Gurgle wrote:

ps not seeing much in the line of 'when' around here.

You're asking the bears in here to predict when people like yourself see reality and realise that house prices will not keep going up each year, and that the current house price levels are unsustainable. You might be better advised to ask the question in the "Paranormal" forum as it might be more conducive to finding mind readers.

One thing I will be glad of when this mania has blown up is that as a country we can get back to working for a living rather than believing we can sit on our arse whilst our "investments" (on borrowed money) turn us into overnight millionaires.

FillSpectre

Chump you are saying prices will raise in the commutter belts and go down in closer to town?

After spotting you have never event rented before I really wonder how much you could even vaguely know about the property market.

To clarrify what is an economic fact. If there is no crash it will have been proved not to be a bubble and just a steap price increase.


I agree that a price crash is likely to be by type and location. Appartments are likely to loose the most value as many people still don't want to live in them and if you are commuting long dstances to live in it that won't help. Ironicly the inability to sell may actually stabalise that section of the market first.

In the event of a crash the government could easily stimulate growth too. They most likely have plans already to try to insure a soft landing.

chump

FillSpectre wrote:

Chump you are saying prices will raise in the commutter belts and go down in closer to town?

After spotting you have never event rented before I really wonder how much you could even vaguely know about the property market.

No, I'm saying they are going to fall by 25+% and 15+% respectively.

I've never rented as luckily my family home has been close enough for me to commute.

Do you believe that in order for a person to understand ancient history they needed to live in that era?
Do you believe an astrophysicist needs to travel the universe in order to study it?

Luckily I'm well enough educated to be able to read. I'm also able to write. I also have the ability to study data and make informed decisions and conclusions.

whizzbang

Gegerty wrote:

So to answer your question I don't see the bubble bursting. It will have to stop rising and I think we are more likely to see what has happened recently in England where house prices fell slightly for a short period and as a result the market has become stagnant.

The English market has started to slide after about a year of stagniation...

BBC Link

Its only one month, but it could be the start of something big.

Gegerty

whizzbang wrote:

The English market has started to slide after about a year of stagniation...

BBC Link

Its only one month, but it could be the start of something big.

I'd be surprised if did turn out to be a crash. Remember they had a big crash in the 80's, I'd be very surprised if they haven't learnt from their mistakes.

Here's an interesting article I found on the US housing market

The study reached two other conclusions. The first was that those housing bubble bursts that occurred almost always followed significant distress in the local economy. In other words, even if a real estate bubble burst followed a home price bubble, the former may have had little to do with the prior run-up of housing prices but were aligned more with underlying economic factors. The second conclusion was that the manner in which a boom ends matters most to mortgage lenders and homeowners or investors. The most common historical way for a housing boom to end was through a period of price stagnation which allowed the local economy to catch up with inflated home prices.

JimmySmith

France to win 2-0 - Zidane to score both.


You all remind me of the people interviewed by tv before a match. They come out with wild predictions but dont really know.

Can we mark the timelines given here and those that dont come true promise to withdraw any further inaccurate predictions on the property market.

For whoever is right we'll give them a cup or something.

Chump , you're the first winner or loser within 9-12 months.
Unless anyone wants to come in and risk an ealier prediction

chump

JimmySmith wrote:

France to win 2-0 - Zidane to score both.


You all remind me of the people interviewed by tv before a match. They come out with wild predictions but dont really know.

Can we mark the timelines given here and those that dont come true promise to withdraw any further inaccurate predictions on the property market.

For whoever is right we'll give them a cup or something.

Chump , you're the first winner or loser within 9-12 months.
Unless anyone wants to come in and risk an ealier prediction

What's your prediction?
You're not allowd have none surely... where's the fun it that

kluivert

ronbyrne2005 wrote:

Yeah right! We'll have loads of young people who wont be able to afford to buy as prices are too high and banks wont lend them the amount required to buy in Dublin, as interest rates rise people can borrow less and have to pay more interest. Your argument is foolish.

The OP asked a question, How much will it fall by and when.

Interest rates have risen by .75 over the last year and this has not stopped the mass borrowing.

Reasons for my opinion:

1. Land Development.
2. Re-zoning in small towns.
3. Introduction of retail parks, industry, leisure and activities in these re-zoned towns hence more employment and more local economy.
4. Improvement in roads, increasing the commuter belt.
5. Idealogy that renting is a waste of money when you can buy a house.
6. Young population per capita, meaning look around you and you will see that the majority of people working in any one given area are young. ie under 30 yrs old.

The economical theories could be explained; then say Porters theory on factors of a competitive nations, what they are and how Ireland fits into it thus resulting in a pest anaylsis and explaining the current economic envirnoment under points of view like strenghts, weaknesses, threats and opportunities. All of which has been done to death on boards and result in only one conclusion, everyone has their own different opinion on the matter, no one has a cyrstal ball, lets look at this thread in ten years time and discuss it with the benefit of hindsight.

My opinion is my own, its not foolish, I believe that house price will continue to grow but will slow down to something honest like 1-3% per annum.

Gurgle

chump wrote:

You ask for peoples opinion.
Someone provides their opinion and you have a smarmy reply.
Get over yourself.

Fair point, I've deleted the post.

Gurgle

kluivert wrote:

lets look at this thread in ten years time and discuss it with the benefit of hindsight.

Thats what I was thinking, after finding threads from 2002 with predictions of recession, interest rate hikes and bubbles bursting. Nobody made a firm enough prediction to go back and slag or congratulate them

FillSpectre

chump wrote:

I've never rented as luckily my family home has been close enough for me to commute.
Do you believe that in order for a person to understand ancient history they needed to live in that era?
Do you believe an astrophysicist needs to travel the universe in order to study it?

So you are person without any liability for property risk who would like to own a place at a reasonable price? Motive to hope for a crash
Well actually yes I do in simple terms. Both the studies you have suggest are theories not knowledge. They draw conclusions and have been wrong and wronger. Ancient history often don't know why things happened. You know astrologist used to think the sun rotated around the earth. Study doesn't make you right:p

chump wrote:

Luckily I'm well enough educated to be able to read. I'm also able to write. I also have the ability to study data and make informed decisions and conclusions.

No you just are arrogant without any practicle experence under your belt. Something are craft,skill and intuition. Book smarts and acedemic knowledge don't always give insight just another person telling you about how they understood events. You can write what you think it still won't make it right or mean you know anything on the issue.

So we are clear what is it that you studied that means you know how the property market will go? Futurologist? Economics? Auctioneering? IT? Maths?

Now the economists have got this wrong for 10 years with experience what makes you right over them? I knew you were bluffing when you tried to bombarb me with questions before.

chump

FillSpectre wrote:

So you are person without any liability for property risk who would like to own a place at a reasonable price? Motive to hope for a crash

I'm not hoping for anything. As I've said numerous times I won't be in a position to buy for years, so it's not a determining factor for me. I'm just saying it as I see it.

FillSpectre wrote:

Well actually yes I do in simple terms. Both the studies you have suggest are theories not knowledge. They draw conclusions and have been wrong and wronger. Ancient history often don't know why things happened. You know astrologist used to think the sun rotated around the earth.

And as you say yourself

FillSpectre wrote:

economists have got this wrong for 10 years with experience

So let me get this right - When you study things, you can get it wrong. When you study other things, you can get it wrong?
Same-o same-o

FillSpectre wrote:

Study doesn't make you right:p

That's true.

FillSpectre wrote:

No you just are arrogant without any practicle experence under your belt.

What practise are you talking about? We're talking about peoples opinion on a subject matter. We're not talking about carpentry here.

FillSpectre wrote:

Something are craft,skill and intuition. Book smarts and acedemic knowledge don't always give insight just another person telling you about how they understood events.

What is your point?

FillSpectre wrote:

You can write what you think it still won't make it right or mean you know anything on the issue.

An opinion about a future event is only that - an opinion.
I've put forward numerous reasons in numerous threads about this issue - all of which you've ignored to challenge, and instead you consistently attack the poster, as you've no skill at engaging in debate.

FillSpectre wrote:

So we are clear what is it that you studied that means you know how the property market will go? Futurologist? Economics? Auctioneering? IT? Maths?

No, it is clear that I'm expressing my opinion on facts and stats laid down and providing a personal assessment.

FillSpectre wrote:

Now the economists have got this wrong for 10 years with experience what makes you right over them? I knew you were bluffing when you tried to bombarb me with questions before.

Nothing makes me right over anyone. To repete myself
- I'm expressing my opinion on facts and stats laid down and providing a personal assessment of them.
- An opinion about a future event is only that - an opinion.

Comprende?

ronbyrne2005

kluivert wrote:

The OP asked a question, How much will it fall by and when.

Interest rates have risen by .75 over the last year and this has not stopped the mass borrowing.

Reasons for my opinion:

1. Land Development.
2. Re-zoning in small towns.
3. Introduction of retail parks, industry, leisure and activities in these re-zoned towns hence more employment and more local economy.
4. Improvement in roads, increasing the commuter belt.
5. Idealogy that renting is a waste of money when you can buy a house.
6. Young population per capita, meaning look around you and you will see that the majority of people working in any one given area are young. ie under 30 yrs old.

The economical theories could be explained; then say Porters theory on factors of a competitive nations, what they are and how Ireland fits into it thus resulting in a pest anaylsis and explaining the current economic envirnoment under points of view like strenghts, weaknesses, threats and opportunities. All of which has been done to death on boards and result in only one conclusion, everyone has their own different opinion on the matter, no one has a cyrstal ball, lets look at this thread in ten years time and discuss it with the benefit of hindsight.

My opinion is my own, its not foolish, I believe that house price will continue to grow but will slow down to something honest like 1-3% per annum.

Well done! you did strategic management in college too (hence the references to swot pest and harvards porter) although i dont see the relevance and nothing above leads me to beleive house prices can be sustained and grow while at ten times average earnings and yielding rents of 2%, in any other asset market this would be considered speculation dereived price levels. Eventually supply will vastly exceed supply given the current building levels and theres plenty of land on this island to build on unlike in many other countries,so if you beleive in competitive markets you'll beleive that the market will eventually meet and exceed supply at an aggregate level. Throw into the mix 200k empty non holiday properties around the country and a speculative bubble is the most obvious conclusion one can draw. prices will fall within three years and slow to around the level of general inflation within 12 months, i assure you.
Demographics alone cannot sustain demand,affordability and price benefit vis a vis renting will scupper demand in years to come. You say prices may slow to 1-3%growth,in this case many investors would have to sell up as they are subsidising rents in their investment properties and were/are relyinh on capital apreciation,if enough investors dump their buy to let properties then prices will start falling,once prices start falling investors and buyers will defer entering market untill prices have stopped falling and absence of buyers will continue the cycle of price falls etc. im tired of trying to pursuade people of the upcoming correction so if you want to find out more about why the market will correct sooner or later(but within 1-3 years) then check out www.askaboutmoney.com in the great financial debates section/thread.

ronbyrne2005

If there is such a demand for housing is for example Dublin then why if there is undersupply as we are led to beleive have rents remained the same as 6 years ago (in real terms) ?? why are rental yields so low?why can i rent a house for 30% of the cost of the mortgage on the same house?

people say property is such a good investment in long term and say they are buying for their "pension", what will be the situation if we keep building at the current rate ? if we keep this up for even ten more years there will be more homes than households.the massive building will make property cheaper in long term as competition always does in any market, the supposed supply shortage is a short term phenomenon and will be corrected by the market in long term making investing now for your pension very dodgy.

Gurgle

Guys, any chance of scooting off into one of the other threads for the discussion and leave this one for wild unjustified guesswork pls?

daveirl

This post has been deleted.

miju

FillSpectre wrote:

So you are person without any liability for property risk who would like to own a place at a reasonable price? Motive to hope for a crash

i belive it's called consumer sentiment and if it changes (as is evident) then prices will start to fall

you know the link in my siggie there spectre check it out for an indication as to what way sentiment is going

shoegirl

hmmm wrote:

Prices will return to the long run average of about 3.5:1 in terms of salary multiples and providing about 10-12% rental yields. We're not at around 8 to 1 in terms of salary and about 2-4% yield.

That'll equate to a minimum 50-60% drop in prices across the board. Whether it happens all at once in a crash, or whether it's stagnant prices for 10 years is the question now.

It might happen indeed, but whats more likely to happen is that some houses will drop by 0% - possibly even rise, whereas others will fall by huge amounts. The stagnant prices theory combined with small decreases is what I would put my money on, but I would guess that small apartments, very rural areas and outer suburban regions could be in for 10-20% drops overnight at some point.

PDelux

The English market has started to slide after about a year of stagniation...

BBC Link

Its only one month, but it could be the start of something big.

That is except London:

http://www.ft.com/cms/s/93d08ac2-0e1d-11db-a385-0000779e2340.html
"London house price surge bucks trend
By Chris Giles, Economics Editor
Another surge in London helped to nudge house price inflation a little higher to 5.6 per cent in June, according to the FT house price index.

Bucking the trend of a slowing market in other regions of England and Wales, the capital's house prices rose by 10.3 per cent over the 12 months to May
"

whizzbang

PDelux wrote:

That is except London:
http://www.ft.com/cms/s/93d08ac2-0e1d-11db-a385-0000779e2340.html

Fair point, I guess prices will always be going up somewhere in a country!