Housing bubble starting to pop?

indiewindy

Pa ElGrande wrote:

When the "capital appreciation" fizzles out, any foreign investors will be hit with higher wealth taxes by the local governments, it will be a popular electoral move.

And rightly so

Pa ElGrande

Further anecdote to add, on the way to work along the N11 (booterstown onwards toward foxrock), I have noticed a lot of devlopment of flats (luxury apartments), where the developers are rushing to get them complete. It looks like they realise there will be a glut in the area and the are trying to be first on the market.....

antoinolachtnai

how do you know those apartments haven't all been sold already and the owners aren't demanding completion? What do you mean a glut? I just don't see how the words 'booterstown', 'property' and 'glut' could all be used in the same sentence. The demand for property on that strip is immense. A lot of other places will have to cave before the market goes soft in booterstown.

Pa ElGrande

antoinolachtnai wrote:

how do you know those apartments haven't all been sold already and the owners aren't demanding completion? What do you mean a glut? I just don't see how the words 'booterstown', 'property' and 'glut' could all be used in the same sentence. The demand for property on that strip is immense. A lot of other places will have to cave before the market goes soft in booterstown.

If they are all sold then why this - http://www.booterstownwood.com/

D'Peoples Voice

antoinolachtnai wrote:

The reason AIB are selling up is because they can get a better return on capital by having the cash available for banking activities.

I'm told this Life Assurance company in the last few days have said they are not purchasing any more Irish Commercial property for the time being and will be concentrating their efforts on the british and continental european commerical property markets.
check out the first line
http://www.friendsfirst.ie/keyattractions.shtml

jesus_thats_gre

shoegirl wrote:

and its down to poor luck rather than them being "wasters."

Slightly OT but god this is so true.. I never thought it would be possible but there is a shocking amount of people out there being overpaid and underpaid.

dazberry

http://www.sbpost.ie/breakingnews/breaking_story.asp?j=192000230&p=y9zxxx936&n=192000990&x=

The Independent Mortgage Advisors Federation have predicted that the property market bubble will burst next year.

The mortgage brokers group have warned there are warning signs of major slowdown in the market that could lead to a fall in house prices in 2007.

The federation claimed that the latest hikes in interest rates and fuel prices will mean consumers will tighten their belts next year and first-time buyers will be affected, as the amount of money they can borrow will drop.

antoinolachtnai

Pa ElGrande wrote:

If they are all sold then why this - http://www.booterstownwood.com/

It's not much of an effort at a website is it? They're not exactly killing themselves to market the properties.

ButtermilkJack

dazberry wrote:

http://www.sbpost.ie/breakingnews/breaking_story.asp?j=192000230&p=y9zxxx936&n=192000990&x=

I was just reading that a few minutes ago. Does this seem like a logical conclusion?

The article is a bit of a waste of time really though. They mention a "bubble burst" and then also go on to call it a "major slowdown". Which one is it? A slowdown, albeit 'major', wont have as dramatic an effect as a bubble burst.

Just another confusing article that's not really going to enlighten anyone.

SkepticOne

ButtermilkJack wrote:

I was just reading that a few minutes ago. Does this seem like a logical conclusion?

The article is a bit of a waste of time really though. They mention a "bubble burst" and then also go on to call it a "major slowdown". Which one is it? A slowdown, albeit 'major', wont have as dramatic an effect as a bubble burst.

Just another confusing article that's not really going to enlighten anyone.

Longer article here.

The latest survey by Permanent TSB and the Economic Social Research Institute (ESRI) showed that prices here rose at an annual rate of 15.2 per cent in June.

‘‘We are beginning to see the signs that prices might have reached a plateau for two reasons,’’ Dowling said.

‘‘People will not see the effect of the latest increase in interest rates until September and with higher interest rates, oil and gas and VHI prices, people are going to have to tighten their belts.

‘‘But the real factor that everybody is ignoring is the effect of stress-testing by lenders with higher interest rates.”

Under stress-testing, banks must ensure that borrowers can afford to meet repayments if rates are 2 per cent above existing levels. As rates rise, they will be forced to cut back the amount they offer borrowers.

Dowling said a customer earning €40,000 a year who had qualified for a €280,000 mortgage in May would by last week only have been entitled to a home loan of €220,000, due to the increase in interest rates.

I think mortgage brokers have the most to lose from a stagnant market with few buyers and sellers. Better in the long run to encourage more realistic expectations.

D'Peoples Voice

SkepticOne wrote:

Longer article here.I think mortgage brokers have the most to lose from a stagnant market with few buyers and sellers. Better in the long run to encourage more realistic expectations.

and the poor solicitors, advertising agencies,etc

SkepticOne

D'Peoples Voice wrote:

and the poor solicitors, advertising agencies,etc

Yes, the poor dears.

Imo, each of these groups are likely to be affected in subtly different ways from rises in interest rates and consequently the various PR messages from them. Mortage brokers, of course, are being hit on two fronts and so are one of the early groups to put out bearish PR.

antoinolachtnai

Well since we're in the business of anecdotes a friend of mine selling a house in the FTB range has had his house bid up by 7 or 8 percent over the asking by an FTB and a BTL. He put it on the market last week and only had two viewings.

The End Is Nigh

faceman

Deleted User wrote:

The End Is Nigh

...as everyone has been saying for years....

big LOL when house prices eventually level off and someone then says "I told you so, thats why i didnt buy a house 5 years ago"

Sizzler

Reserve judgement till you see For Sale signs still saying For Sale 2 mths later.

faceman

antoinolachtnai wrote:

Well since we're in the business of anecdotes a friend of mine selling a house in the FTB range has had his house bid up by 7 or 8 percent over the asking by an FTB and a BTL. He put it on the market last week and only had two viewings.

and its the summertime which is generally lower demand. fair play. no sign of a slump yet!

daveirl

This post has been deleted.

D'Peoples Voice

daveirl wrote:

This post has been deleted.

I agree, you would need to know more about the house, is it tough to get planning permission in the area, is it very well located in terms of public services, how competitve was it's price relative to others similar properties in the area, was it below the 3% stamp duty threshold etc.
Still though I'd be interested to know what attracted BTL buyer to the house! what the annual rent - price ratio was for that house!

galah

Sizzler wrote:

Reserve judgement till you see For Sale signs still saying For Sale 2 mths later.

it's happening...two houses in my street have not been sold although they have been the market for at least 8 weeks now (well, they are a little "higher class", priced around 800 k and above, but still...)

Maximilian

At the moment, there are a lot of property developers chasing an ever dwindling number of development sites (or "product" as they call it). The result is absolutely insane prices for sites, which you simply wouldn't believe. Frenzy, is the word I would use. Frenzy was also a word used around the time the techie stocks crashed. In some case I've seen, they would have to sell a normal sized unit at a minimum of €1million to turn a profit and I can't see how there is a market for it. Anyone who is familiar with the Jury's site in Ballsbridge will probably agree with me.

If the bubble pops, you'll see an awful lot of very wealthy builders lose an awful lot of money and not just the small guys.

antoinolachtnai

D'Peoples Voice wrote:

I agree, you would need to know more about the house, is it tough to get planning permission in the area, is it very well located in terms of public services, how competitve was it's price relative to others similar properties in the area, was it below the 3% stamp duty threshold etc.
Still though I'd be interested to know what attracted BTL buyer to the house! what the annual rent - price ratio was for that house!

No it wasn't below the threshold, it's a built up area with lots of development, it's close enough to the city and it was priced to sell, but not particularly low. Rental return would be pretty crap.

My view is that they would be interested because it represented good value for the size of the house - it was around the 500 euros/meter. People are chasing capital gains.

lomb

Maximilian wrote:

At the moment, there are a lot of property developers chasing an ever dwindling number of development sites (or "product" as they call it). The result is absolutely insane prices for sites, which you simply wouldn't believe. Frenzy, is the word I would use. Frenzy was also a word used around the time the techie stocks crashed. In some case I've seen, they would have to sell a normal sized unit at a minimum of €1million to turn a profit and I can't see how there is a market for it. Anyone who is familiar with the Jury's site in Ballsbridge will probably agree with me.

If the bubble pops, you'll see an awful lot of very wealthy builders lose an awful lot of money and not just the small guys.

they have alot of money some have become billionaires from nothing within as little as 15 or 16 years. amazing isnt it? as soon as they develop and sell they seek to turn the sale proceeds into more development sites. site prices are possible more reflective of their wealth than possible future demand. thats just my humble op. like you i cant see a demand for 700 grand 2 bed apartments in 65 sq meters of space.

Sizzler

galah wrote:

it's happening...two houses in my street have not been sold although they have been the market for at least 8 weeks now (well, they are a little "higher class", priced around 800 k and above, but still...)

LOL, sh1te argument then, dont know too many people who can afford to pay 800k for a gaff in Galway...or anywhere else for that matter

Sizzler

There seems to be a lot of people on here posting about the demise of the property market in the hope that it becomes a self fulfilling prophecy, a bit like the clowns in the banks who come out every other week on the news to say rates are going up forecasted slowdown etc and in the hope they get it right just so they can say "We told you so/ heard it here first!", but for the last few years they have been forced to perform beep beep maneouvres as they have consistently got it wrong.

Sit back and watch it slow down gradually but the bubble thats inflated wont 'burst' it prob just wont get any bigger.

Supercell

Sizzler wrote:

Sit back and watch it slow down gradually but the bubble thats inflated wont 'burst' it prob just wont get any bigger.

And all the investors that bought in the last couple of years will be happy to see zero growth in value of their property!!

Yes this is a valid scenario!!, we have zero investors in the Irish market, everyone lives in the homes being bought!!

Sizzler, perhaps the hob ain't so hot ?

Pa ElGrande

Sizzler wrote:

Sit back and watch it slow down gradually but the bubble thats inflated wont 'burst' it prob just wont get any bigger.

This is why there will be no soft landing for the Irish economy. As one of the most open economies in the world we are massively exposed to any international downtown in economic activity.
Take a look at the trend in the price of oil, it's been about two years now since it was under $40/barrell. Its rising due to increased demand on the Asian continent, mainly China and India. The costs of production are rising fast due to to increased cost of raw materials, some companies have initially absorbed these out of their profit margins, but now have no choice but to pass the costs on, the weakest companies are shutting down and laying people off. Inflation is not under control, with a further three interest rate rises predicted this year alone.
The housing market is already at the limits of affordabilty on low interest rates as it is and we are heading into an upward interest rate cycle with no immediate prospect of wage inflation to match, and according to Ulster Bank boss Cormac McCarthy, "....there's also one hell of a lot of supply coming onto the market,"

Further information

Japan's growth slips on US slowdown
http://www.rte.ie/business/2006/0811/japan.html

Reasons for an impending US economic recession
http://www.dailyreckoning.co.uk/article/09082006.html

Ireland 'most exposed' in EU to the effect of US downturn
http://www.unison.ie/irish_independent/stories.php3?ca=184&si=1667765&issue_id=14472 [free registration required]

Irish Economy 2006 and Future of the Celtic Tiger: Putting a brass knocker on a barn door!
http://www.finfacts.com/irelandbusinessnews/publish/article_10006912.shtml

Sizzler

Longfield wrote:

And all the investors that bought in the last couple of years will be happy to see zero growth in value of their property!!

Yes this is a valid scenario!!, we have zero investors in the Irish market, everyone lives in the homes being bought!!

Sizzler, perhaps the hob ain't so hot ?

Of course theres always going to be growth! Even in the poxy early 90's peoples houses had some sort of point rise....but never double digit!

Sizzler

Pa ElGrande wrote:

This is why there will be no soft landing for the Irish economy. As one of the most open economies in the world we are massively exposed to any international downtown in economic activity.
Take a look at the trend in the price of oil, it's been about two years now since it was under $40/barrell. Its rising due to increased demand on the Asian continent, mainly China and India. The costs of production are rising fast due to to increased cost of raw materials, some companies have initially absorbed these out of their profit margins, but now have no choice but to pass the costs on, the weakest companies are shutting down and laying people off. Inflation is not under control, with a further three interest rate rises predicted this year alone.
The housing market is already at the limits of affordabilty on low interest rates as it is and we are heading into an upward interest rate cycle with no immediate prospect of wage inflation to match, and according to Ulster Bank boss Cormac McCarthy, "....there's also one hell of a lot of supply coming onto the market,"

Further information

Japan's growth slips on US slowdown
http://www.rte.ie/business/2006/0811/japan.html

Reasons for an impending US economic recession
http://www.dailyreckoning.co.uk/article/09082006.html

Ireland 'most exposed' in EU to the effect of US downturn
http://www.unison.ie/irish_independent/stories.php3?ca=184&si=1667765&issue_id=14472 [free registration required]

Irish Economy 2006 and Future of the Celtic Tiger: Putting a brass knocker on a barn door!
http://www.finfacts.com/irelandbusinessnews/publish/article_10006912.shtml

LOL. Calm down there son. You are one the people that I referred to earlier thats looking for the pat on the back when and if things hit a brick wall.The longer you keep banging on about it the closer you are to something happening. A bit like me starting a Thread in the politics forum saying "Bertie's term is drawing to a close"....my point being, course it will, you just dont know when. So stop the nonsense and let people make their own decisions for whats right for them.

Afuera

Sizzler wrote:

Of course theres always going to be growth!

Try telling that to the Japanese who bought 15 years ago and are still stuck with property worth less than they paid for it back then!

Just because you only remember the times when there has been year-on-year rises doesn't mean it's alway or will always be like this. Check out Irish prices in late 70's early 80's for a different story.