Housing bubble starting to pop?

Catney

SimpleSam06 wrote:

Feeling a little exposed, are we? 30,000 salary, minus what 8k in taxes, 22k thats all yours. Assuming you spend 10k per annum on the mortgage, that leaves you with 12k, or about 200 quid a week to spend on food, fuel, insurance, and so on. Oh and lets not forget interest on the mortgage, on top of that, with rising interest rates.

Which means, essentially, that a person earning 30k per annum has zero chance of paying that off over 30 years. And honestly, I don't know a great many people earning 30k or more in any case. And 300k is no kind of house.

Boom.

in most cases someone on 30k a year couldnt get a mortgage. ie loan amount should be in the region of EUR 120,000 (4*salary) so the above doesnt ring true.

SimpleSam06

Catney wrote:

in most cases someone on 30k a year couldnt get a mortgage. ie loan amount should be in the region of EUR 120,000 (4*salary) so the above doesnt ring true.

Well its closer to 5x salary, so a couple each in full time employment earning 30k per annum could qualify for a loan of 300k. All of one salary is eaten up by repayments, plus a portion of the other salary.

But lets just say for the sake of argument that 20k of the other salary is left over per annum. Thats roughly €400 per week, or €200 per week each for food, fuel, insurance, heating, and electricity. Currently on social welfare, you can draw down around €180 a week, just to put that in perspective. And you can forget childcare, education for the children, and health requirements while mammy and daddy are out working in their jobs which hopefully they aren't made redundant from at any point.

And lets not forget rising interest rates, which may make holding on to the house unfeasable in the first place, which in a falling market means they lose the house and still owe the bank tens or hundreds of thousands of euros.

Doesn't that seem a little unreasonable to you?

Pa ElGrande

[interviewer]
It's to house prices that we're turning next and we've got Austin Hughes, Chief economist of IIB Bank on the line.
Austin the stories of the couurse of the weekend were suggesting that,,all sorts of different factors are now coming clearly into view and that we're likely to see a fairly rapid cooling of house price growth.

[Austin Hughes]
Yeah. There were some scare stories over the weekend. There were actually some positive stories in the news headline but they didn't get quite as much airtime.
I think what you've seen over the last while is a transition, the economy was growing very, very quickly towards the tail end of last year and house prices took off spectacularly. Last September house prices were rising at about 6% annual rate and over the Spring/Summer they started to rise at maybe 15 even 20% in some areas, so that really wasn't sustainable, the key issue is, what sort of slowdown or cooling we're going to have. You mentioned interest rates and certainly during the business supplement you were talking about the likelihood of further interest rate increases, those will dent the market a little bit over the next while, and, they will probably bring about a calmer market in the Autumn. I think a lot of the time that people were talking about a nasty ending for the market, they were actually talking about some of the property supplements that appeared last week because those supplements were suggesting that there were any number of houses on offer, and estate agents are saying that perhaps house supply is up 20-25% from earlier in the year. So that will calm markets. I think the most interesting element is that, you know, these are all sort of fundamental things that it was going too fast and it has to calm down, I think the most interesting element is that probably some sellers got carried away, and that's where it's going to get very interesting over the next couple of months, because seeing that the price of their house maybe rise €30-50 grand over the early part of the year, they began to think, well maybe I could add on another €30 grand, some of the expectations of what property is worth may have to be adjusted a little bit. That doesn't mean the property market is going to collapse, it just means that we probably have a calmer market over the Autumn.

[interviewer]
Is one of the, one of the other things that also happes when we begin to hear these stories about cooling is that, am, people think, "Ah if I've been holding off to buy, and if there's a cooling then now is the time to get in", which in turn tends to have an immediate impact in helping to reingites.

[AH]
Well, It certainly prevents the market from calming too much, if you think about all this extra supply and all the glossy sort of property supplements, we've seen over the last couple of days, in most instances that was because people are jumping out of the market, you know, they are selling up and moving abroad, going to live in tents or wherever, most of the time it is people either trading up or trading down, its a natural market, and you will find people coming in because last week, we saw jobs numbers from the CSO that suggest we are creating 90,000 extra jobs a year, there's about 90,000 extra people coming into the economy every year. So in those circumstances, the market should remain healthy, but it should be a little bit calmer. Good properties will remain very strong, in very strong demand and poorer properties, sellers may have to adjust their expectations a little bit more. So its a very good thing for the property market and the broader economy.

[interviewer]
Now, when we're saying that it might cool, its not that house price growth is going to stop, its that it might be between, say over the next 12 months, that it could be of the order between 3-6% as opposed to the double digit growth that we've seen in the last 12 months.

[AH]
Its exactly that sort of element. Ah, the Sunday Tribune which I think ran a lot of the sort of scare stories at the weekend was saying that they conducted a poll of, that ended up with something that ended up with something like 72% of people saying they expect house prices to rise. The ESRI/AIB bank did a survey about a month ago, where 89% of people expected prices to rise, so what you're going to see is house prices no longer rising around 15-20%, where people add on €10 grand for every month in terms of trying to get a higher price, but prices rising at a more sustainable rate. The economy is going to grow in money terms by maybe 7-10% in the next couple of years on average and you'd expect house prices to rise at a broader, broadly similar rate so you're going to see house prices continue to rise, but just not as madly as they have been over the last while.

[interviewer]
Is that consumer sentiment also one of most important things in the market, the fact that between 72% and 89% of people believe that house prices will rise. That means that effectively they're going to help those prices to rise.

[AH]
I think that is a very important element, now obviously consumer sentiment can be swung by things and the interest rate rises that we're likely to see in October and again probably in December, possibly through next year, will be issues there, but, consumer sentiment is still very strong. People see that there is ongoing demand for houses, they reckon that their jobs are relatively secure and property remains a good long term investment, as well as a basic need. So those mean that the housing market should stay fairly solid, where you do get a bit of a change however, is that some of the silly prices, that we have seen over the last couple of months maybe start to calm down and that's a very good thing because if that had continued then there was risk of a bubble, maybe bursting in a couple of years. That isn't going to happen now.

[interviewer]
Alright Austin Hughes, Chief economist with IIB, always great to have you on the show, thanks for joining us this morning.

Newstalk 106 breakfast show
http://www.newstalk.ie/podcasts/library/br...st/bk180906.mp3 [20 minutes into podcast]

So its a calmer market (not a slowdown). We are have reached the zenith of this bubble, people paid silly prices for property (up 15-20%). Thats one of the classic symptoms of the mania, prices rise rapidly towards the end and everyone (89%) believes they will continue to rise higher and faster (€10,000-€30,000 per month).

Read Hyman Minsky's universal framework for understanding all bubbles, then read the above interview with Austin Hughes, he is describing the euphoria of stage 5, there have already been comments about the insiders getting out...stage 7 is not far off.

whizzbang

SimpleSam06 wrote:

Well its closer to 5x salary, so a couple each in full time employment earning 30k per annum could qualify for a loan of 300k. All of one salary is eaten up by repayments, plus a portion of the other salary.

Why is everything always quoted as a couple! don't ugly and unpopular people have a right to buy a place too?!

(general comment, not directed at you SS!)

hmmm

whizzbang wrote:

Why is everything always quoted as a couple! don't ugly and unpopular people have a right to buy a place too?!

It's classic "new paradigm" bubble economics. "These days", only couples buy, therefore you can forget the old 3.5 times salary and instead go with borrowing 5 times the combined salaries. We've seen the same thinking in all bubbles, e.g. during the tech boom the Internet meant that business had changed and P/E ratios meant nothing any more - until we found out they err did.

It'll just magnify the eventual fall in prices.

Pa ElGrande

It is unclear how exactly international investors will react to the renewed report about Ireland, given that Ireland doesn’t have a national currency to speculate against.

But you can bet your bottom dollar that the Fitch rating will raise a red flag with investors considering allocating assets in Ireland.

They may reach the conclusion that what will bring about the adjustment in Ireland is the impact of higher prices and costs on Irish competitiveness, which will eventually slow growth.

Already, inflation is running at 4.5 per cent, which is likely to have implications for Irish competitiveness.

In the absence of a currency to speculate against, it is possible that international investors will consider shorting Irish shares - that is, selling them with a view to buying them back cheaper later on. Bank shares will be seen as particularly vulnerable in this regard.

The Fitch report came just days before remarks from credit union regulator Brendan Logue to an Oireachtas committee, which also identified risks in the financial system. Logue said last week that evidence from the supervisory process showed that ‘‘underwriting skills are weak in some credit unions and [that] arrears and bad debt provisions are rising.”

This is the second time this year that the regulator has raised a red flag in relation to the bad debt issue in the credit union movement. Earlier this year, the regulator drew attention to a sharp increase in bad debts at Monaghan credit union.

more >>>

Warning signs in financial sector
http://www.sbpost.ie/post/pages/p/story.aspx-qqqt=THE%20INSIDER-qqqs=themarket-qqqs=computersinbusiness-qqqid=17310-qqqx=1.asp

Fitch estimated that bank credit to the private sector would increase to 190 per cent of GDP this year, one of the highest ratios of 100 countries surveyed.

GDP measure may not give the most an accurate indication of living standards for Ireland. GDP measures the total output produced by factors of production located in the Irish economy. Therefore it includes the substantial profits made by foreign multinationals, much of which is repatriated.
http://www.esri.ie/content.cfm?t=Irish%20Economy&mid=4

Given that Irelands GDP is skewed by the foreign owned multinationals 190% is a tad conservative and with only 14 bankruptcies last year, have we truly discovered economic nirvana?

Sizzler

What do people make of Mickey McDowell's tesco style price promise on stamp duty if they get in for the next election

I reckon it will just drop another few quid onto the price of property a la the stamp duty band changes last year :eek:

faceman

Sizzler wrote:

What do people make of Mickey McDowell's tesco style price promise on stamp duty if they get in for the next election

I reckon it will just drop another few quid onto the price of property a la the stamp duty band changes last year :eek:

Doubt the PD's will get voted in. Would like to see FG get in office. I reckon biffo will increase stamp duty bands this year anyway. And he wont penalise investors either due to election year and increased interest rates.

Things looking good for us property owners! :cool:

ionapaul

At this late stage, government intervention will probably only make any correction worse. The time for intervention was many years ago.

Many bears on askaboutmoney are starting to identify the current season as that when the bubble finally has been pricked - air slows hisses out now for a few years. Sentiment has certainly changed in the country, people are starting to get worried.

Many experienced investors I know have privately said that the canny property investors have already sold up (during the spring and summer I expect) - anyone else believe this?

Pa ElGrande

faceman wrote:

Doubt the PD's will get voted in. Would like to see FG get in office. I reckon biffo will increase stamp duty bands this year anyway. And he wont penalise investors either due to election year and increased interest rates.

I expect you're right about Biffo changing the stamp duty bands, which should see a dead cat bounce in the spring just in time for a June election.
All the government can do at this stage is delay the inevitable, the fundamentals are already stacked up for price falls.

faceman wrote:

Things looking good for us property owners! :cool:

Only if you are intending to sell and soon!

The Irish media has kept very quiet so far about the housing price falls in the USA, once word gets into the mainstream how bad things are going over there then no government initiatives will stop the specuvestors rushing for the exits and chasing the market down.

I CANT BELIEVE AUSTIN HUGHES SAID THE PROPERTY MARKET WAS "HEALTHY"
What A schmuck

Pa ElGrande

Deleted User wrote:

I CANT BELIEVE AUSTIN HUGHES SAID THE PROPERTY MARKET WAS "HEALTHY"

For there to be a bubble must believe in a new brighter future but a bubble takes that desire and turns it upside down. A bubble demands that everyone believes in a brighter future, and so long as this euphoria continues, the bubble is sustained.

Banks and Building societies have a lot of facts and figures about the housing market. They see price movements, as in effect they are the ones that own most of the housing in this country. They make money by lending money. Every time they lend money, they use their customer’s savings accounts to lend money to those who need to borrow. They pay the savings accounts slightly less interest than they charge the borrower, and they keep the difference. They will always take the most positive view of any figures in the housing market. If prices are slowing, they will tell you they will level off. If prices are falling, then they will tell you to buy now as houses are cheap, and the fall is about to end. Whatever they tell you can be roughly translated as “PLEASE come and borrow some money, our shareholders need profit”.
If you ask someone selling fish at the fish market whether it is a good time to eat fish, what would they say?

Economists are experts in markets. Not housing markets, but all markets. Shares, gold, cheese, oil, houses, rubber and lead are all commodities; they all have markets, and those markets have trends and patterns which can be analyzed.
Generally economists have no interest in the market itself, their job is analysis.
They don’t make money if the market rises. They don’t lose out if it falls.

Austin Hughes is an economist, he works for a bank, when he says the market is healthy he looks at it from the information he has available, he is looking at the market from the perspective of the facts and graphs that show him everything is good. However none of the graphs he has can measure greed and fear, he has no data for this, the nearest indicator he has are surveys to gauge sentiment which tell him everyone expects prices to rise.

Remember we are in a bubble, every newspaper and magazine in this country carries property advertisments, The Irish Times on Thursdays would nearly crush a small child it carries so much property porn, the advertisments on the radio all speak of property expo's offering too good to be true offers of capital appreciation, guaranteed rental income in exotic locations accross the globe. The Irish consumer is on message and feeds that back in the survey when asked if they expect prices to rise.

So when Austin Hughes looks at the data in front of him, he makes a rational interpretation that the market is healthy. In his position, both of us would reach the same conclusion.

D'Peoples Voice

faceman wrote:

Doubt the PD's will get voted in. Would like to see FG get in office. I reckon biffo will increase stamp duty bands this year anyway. And he wont penalise investors either due to election year and increased interest rates.

Things looking good for us property owners! :cool:

The reason why I doubted the government would do anything that might inflate prices is because the ECB are already hinting at the Irish government to curb house price INCREASES.
So it will be very interesting to see how the Government respond in the budget! I'd be amazed if they index the bands when they know they will have to find the money elsewhere and they don't want to be cutting services in an election year!

Lets not forget, even with a bumper year this year for tax revenue, THEY ARE STILL BORROWING EUR 500 million TO meet expenditure!

Pa ElGrande

It is all a far cry from 2003, when house prices in Malaga province rose by 29%, and investors were falling over each other to buy multiple units in the latest “hot” off-plan project. As one agent wistfully describes it, “2003 was a free-for-all, a feeding frenzy”.

The really dirty little secret of the Costa del Sol is that prices at which properties actually change hands are falling, even if this is not yet reflected in government figures, which show a 10% increase in Malaga province in the 12 months to the end of June.

“Vendors’ expectations rose too far, too fast,” says Barbara Wood, who runs the Andalusian branch of The Property Finders search agency. “There is still demand for the Costa del Sol, but not at current asking prices. Serious vendors have to accept offers. If not, they don’t sell, simple as that.”

http://www.timesonline.co.uk/newspaper/0,,176-2357239,00.html

Ok this is largely a property ramping piece, but its interesting to note that Spain has also undergone a housing boom along the same timelines as Ireland, it looks like the speculative excess in prices is being eroded.

But while at one level the whole exercise can be seen as merely an illusion of greater wealth, the high level of debt many households are burdened with is completely real.

Although about two-thirds of households have no owner-occupier mortgage, the remaining third, plus owners of investment properties, are now quite vulnerable to any downturn in the economy.

And with the possibility that mortgage interest rates have further to rise, the dark side of the property boom is far from over.

Waiting for the roof to fall in
http://www.smh.com.au/news/opinion/waiting-for-the-roof-to-fall-in/2006/09/19/1158431709523.html

An interesting perspective on the Australian housing market.

I wonder how Irish property investors who bought apartments in Budapest feel right now in light of the news coming from Hungary and the outside possibilty of a currency crisis in Eastern Europe.

Economic woes fan Hungarian riot fires
http://news.bbc.co.uk/2/hi/business/5359574.stm

Hungary fails to count calories in its Swiss roll
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2006/09/19/cchungary19.xml

D'Peoples Voice

Who would have thought it?
Reducing stamp duty actually increases house prices for FTBS.
Why do they have to pay experts to tell them this,
when everyone knows it, even Sherry Fitz are asking for it to be abolished so obviously it's going to fuel house prices!

http://www.businessworld.ie/livenews.htm?a=1519123

Govt warned off changing house taxes

Wednesday, September 20 07:12:49

The Government was advised by Department of Finance experts not to tamper with house stamp duty ahead of last December's Budget.

Government advisers were warned last year that easing stamp duty levels would be too costly and would actually increase house prices.

The advice was provided in a paper to the Tax Strategy Group, which meets regularly in the run-up to the budget and which includes Government special advisers from both the PD and Fianna Fail as well as senior civil servants.

faceman

D'Peoples Voice wrote:

Who would have thought it?
Reducing stamp duty actually increases house prices for FTBS.
Why do they have to pay experts to tell them this,
when everyone knows it, even Sherry Fitz are asking for it to be abolished so obviously it's going to fuel house prices!

http://www.businessworld.ie/livenews.htm?a=1519123

of course it would....according to the Tax Strategy Group! :rolleyes:

I cant see how it will increase prices aside from the initial increase in demand. investors can hardly piggy back on this.

Sponge Bob

The amortisation of stamp duty into the overall loan is essentially a negative equity loan or 1 100%+ mortgage . The banks (normally) only funded 80% until the 1970s or 1980s , you had to save the rest and show the savings before you got a mortgage off them.

By the late 1980s and 1990s it was 90% and they were not looking at 'where' the rest 'came from' , not in the 90s anyway.

In 2005 it went to 100% and if you add 3% stamp duty onto a mortgage as kited by the PDs and pay it off long term the mortgage or loan will be for 103% of the property which means guaranteed negative equity

The PDs with their ill thought out 'kite' of a stamp duty change have introduced great uncertainty into the market which will lead to investors dumping out between now and the budget who may have held on otherwise. The treatment of CGT may or may not change in the budget as well.

McDowell should have had a proper plan ready or should simply have kept his mouth shut or should have waited for the budget ...or all three.

Cantab.

Sponge Bob wrote:

The amortisation of stamp duty into the overall loan is essentially a negative equity loan or 1 100%+ mortgage . The banks (normally) only funded 80% until the 1970s or 1980s , you had to save the rest and show the savings before you got a mortgage off them.

By the late 1980s and 1990s it was 90% and they were not looking at 'where' the rest 'came from' , not in the 90s anyway.

In 2005 it went to 100% and if you add 3% stamp duty onto a mortgage as kited by the PDs and pay it off long term the mortgage or loan will be for 103% of the property which means guaranteed negative equity

The PDs with their ill thought out 'kite' of a stamp duty change have introduced great uncertainty into the market which will lead to investors dumping out between now and the budget who may have held on otherwise. The treatment of CGT may or may not change in the budget as well.

McDowell should have had a proper plan ready or should simply have kept his mouth shut or should have waited for the budget ...or all three.

In fairness, I think any politician who is attempting to address the property issue should be commended. I know McDowell isn't the most popular of politicians at the best of times, however, he does have the political courage to stand up and try to get some consensus on what to do with the Irish housing market.

He is setting himself up as the fall-guy in my opinion. Most politicians are keeping their mouths shut and remaining silent (probably whilst bailing themselves and their friends out of the market), so in a sense, I think McDowell is being brave - I don't think his il-thought-out plan will work though, and this issue is certainly not over. Things could spiral out of control very quickly indeed (with regards the Irish property market), and with a loose canon like McDowell in as Tanaiste, we're on a slippery slope if he continues with his rash commentry.

btw, I liked your observation that a 103% mortgage is effectively guaranteed negative equity! So the old adage "the day you buy, is the day you sell" doesn't seem to apply anymore in the modern market.

Meh

There is an excellent case to be made to reform stamp duty so that it applies only to the marginal amount (like income tax), rather than kicking in for the full amount at 317.5k as it does presently. This is undoubtedly distorting the market.

Abolishing it entirely would only fuel the already overheated property market.

Sponge Bob

Meh wrote:

There is an excellent case to be made to reform stamp duty so that it applies only to the marginal amount (like income tax)

Indeed. The bands we have now go back years and years with some adjustments and belong to the days when the difference between low / average/ and high house prices were about £10000, £25000, and £50000

We have added another zero to those house prices in the past 20 years.

We should therefore increment the bands in 0.1% increments not in 1% increments .

The current band of most interest is the FTB 3% at 317k and 4% at €385k band .

Why not bring in 3.1% at €325k and 3.2% at €332k etc .

miju

faceman wrote:

I cant see how it will increase prices aside from the initial increase in demand. investors can hardly piggy back on this.

yeah OK , so increased demand isn't going to do anything to prices?????

if this went ahead prices would really go out of the stratosphere that naturally the investors will piggy back on and is only a recipe for disaster IMO

D'Peoples Voice

faceman wrote:

of course it would....according to the Tax Strategy Group! :rolleyes:

I cant see how it will increase prices aside from the initial increase in demand. investors can hardly piggy back on this.

A reduction in stamp duty would most likely lead to an INCREASE in tax take. We saw this with CGT and more recently with the last increase in stamp duty bands. The reason the Tax Strategy Group don't want to increase house prices further is that it could destablize the economy and bring us into a recession.

No-one can argue that reduced stamp duty helps FTB outbid each other for prices at the lower end of the market. The people SELLING those houses, can then use the higher than expected proceeds to outbid each other for the houses in the middle section of the market and so on. the net effect is a gradual upward movement of the whole market. This is how investors, who own houses at various parts of the market, benefit.
What McDowell should have suggested is increasing the interest tax relief for FTBs from 7 years out to 10 or more. This would benefit FTBs infinitely more than a reduction in stamp duty would.

Pa ElGrande

“While the Government does have some schemes to help first time buyers onto the property ladder, more needs to be done for key workers, who play a vital role in the economy, particularly in major cities. If this situation is to be resolved, lenders in Ireland need to team up with the Government to design funding schemes that will help these key public sector workers buy a home.”

Bank survey says "key public sector workers" priced out of Irish housing market - all earning above the average industrial wage of €30,576
http://www.finfacts.com/irelandbusinessnews/publish/article_10007353.shtml

So what they are saying is the people we should be valuing more should be "rewarded" with bigger debts, Some foot up!

"Is ar a chéile a braithamíd". Where would the nurse be without the people who work in the kitchen preparing the meals, who would clean the floors in the hospital?, who would man the phone when requesting an ambulance or fire tender? Who mans the checkout in SPAR or Tesco's? The nurse, doctor, garda could not function without these key people.

They are "key workers" alright in the eyes of the lending institutions who have identified them as a category of worker in secure employment, whom they can exploit. It is not because their skills are more valuable than anyone else in soceity, if they were they would be paid accordingly.

'For Ireland", Bertie Ahern told his parliamentary party in Cavan, "community is the thread that holds together the fabric of our society and our future". Community is at the heart of "the brave society" we aspire to – one which "completes the great unfinished business of the social agenda".
http://www.villagemagazine.ie/article.asp?sid=1&sud=39&aid=358

The lengthy report shows that here:
* Only 10pc-15pc of children up to three years of age access half-day or full-day publicly subsided services.
* Low status, low rates of pay and high staff turnover are features of childcare positions.
* 30pc of staff are without any qualifications.

Childcare costs now devour 30pc of incomes
http://www.unison.ie/irish_independent/stories.php3?ca=9&si=1691116&issue_id=14662 [free registration required]

If anything this should be a further clear reminder of the destructive effects of this bubble, what about childminders are they a key worker? obviously not.
</rant over>

In other significant news the Indo starts to mention the housing slowdown in the USA.

Weak housing starts confirm big slowdown in US
http://www.unison.ie/irish_independent/stories.php3?ca=184&si=1691099&issue_id=14662 [free registration required]

Citizen Jake

It's about time the Irish newspapers started reporting about the US property decline. Cripes, how can they not report it? The US is the major economy that Ireland and the world look to most for guidance on trends. The old adage is true, the US sneezes the rest of the world catches cold. When the tech bubble burst in the US in 2001, it gradually took a year for it to really take hold in Ireland and then things got rough for a while.

Mind you, whether we like to admit it or not we are fundamentally tied to the UK economy also as a key trading partner, which I understand still has a healthy property market. Does anyone recall what impact the UK property bubble bursting in the late 90s had on Ireland at the time? If any?

I wondered a similar thing. If prices collapse in Ireland but the UK remains buoyant, is there the possibility of a bounce reflecting investment from NI ? I'm assuming this would be restricted to the border counties, leafier Dublin and holiday homes in Donegal and the West. I reckon probably so, but too slow and selective to adjust the market on a broad scale.

Pa ElGrande

The address: 44 Pembroke Gardens, Ballsbridge, Dublin 4.
The agent: Gunne Residential.
The property: four-bedroom townhouse for €1.4 million, representing a cost of €10,769 per sq m (€1,000 per sq ft).

How much for an investor? The repayments on an 85 per cent mortgage at a buy-to-let tracker rate of 4.17 per cent APR over 25 years would be €6,343 per month. On an interest-only loan the repayments would be €4,066 per month.

How much for a residential buyer? At AIB's discounted tracker rate of 4.11 per cent APR, the repayments over 35 years would be €5,397 per month. Repayments at AIB's standard variable rate of 4.33 per cent APR would be €5,886 per month.

On a 100 per cent mortgage at AIB's one-year discounted tracker rate of 4.11 per cent over 35 years, the repayments would be €5,866 per month for the first year.

Potential: prime rental location. This property could fetch a rent of around €2,500 per month.

Verdict: the rental return doesn't come close to meeting the mortgage repayments on either an 85 per cent annuity or interest-only mortgage. Only for an investor looking for medium to long term capital gain or a residential buyer.

Calculations by AIB

Worth the investment?
Edel Morgan
http://www.ireland.com/newspaper/property/2006/0921/1158590830873.html

Definition of philanthropy (noun)
charity; unselfishness; goodwill toward mankind

The numbers speak for themselves, is there a dividing line between investment and philantrophy.

jesus_thats_gre

So anyone gonna admit to this?

http://www.dublincoastaldevelopment.com/

"Dublin. One of the fastest growing cities in the world. A city that has begun a new era of prosperity. A city with an unfulfilled demand for property."

Pa ElGrande

Citizen Jake wrote:

Mind you, whether we like to admit it or not we are fundamentally tied to the UK economy also as a key trading partner, which I understand still has a healthy property market. Does anyone recall what impact the UK property bubble bursting in the late 90s had on Ireland at the time? If any?

The property boom in England mainly took place in the south-east of the country.It reached its peak in 1989 and did not recover that price level until about 1999, prices have continued upwards since, though it does appear to have topped out in 2006.


Peak unemployment in this country was in 1993 (295,000 on live register, unemployment rate 15.7%), so there were not as many oppertunities for people emmigrating to the United Kingdom. I remember in 1987 the entire leaving cert class that year got on the boat to work on the building sites in England, I expected to follow them and trained as a civil engineer when I qualified most work had dried up so I took a different path. So it did have an initial impact on the country, then the boom started and the rest you know.

For a man born into rural poverty as one of seven children in a tiny thatched cottage, Sean Mulryan could be said to have done well in the race of life.
Today he is a billionaire businessman, living in a mansion with its own stud farm, who counts the U2 singer Bono among his friends and had Debbie Harry, of Blondie fame, to sing at his 50th birthday.
But the full extent of his success is only beginning to become clear.
Mr Mulryan, it can be revealed, stands to make more money than any other individual businessman from London's successful bid to host the 2012 Olympic Games.
<snip>
His big break came after the 1990s British property crash, when he began buying up sites in east London because it was cheaper than land in his native Ireland.

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Revealed: the reclusive property mogul who has already won the Olympics
http://www.telegraph.co.uk/news/main.jhtml?xml=/news/2006/09/10/nproperty10.xml

Hard to believe that land in east London was cheaper than land in Roscommon at one stage, which should give an idea of the scale of the bust in the south-east of England, it also presented lots of opportunites for Irish people to get ahead in England

A study of official British Labour force figures has found that Irish men have overtaken British white men in gaining access to professional or managerial positions in the workplace
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Irish men top of tables in British workplaces
http://www.irishpost.co.uk/news/story.asp?j=4597

The UK has also undergone a property boom as well, but the stress among those who have over-extended themselves is beginning to show itself, they have higher interest rates than us, with a likelihood of a further .25% rise in October with defaults on mortgages and bad debts increasing at records levels, it is likely they are also not far off a recession, especially if the US economy tanks.

UK: Homes debt burden grows as loans hit £33bn
http://www.theherald.co.uk/news/70522.html

UK: Borrowers remortgage to repay expensive credit card debt
http://www.citywire.co.uk/News/NewsArticle.aspx?VersionID=85071&MenuKey=News.Home

They are walking an economic tightrope in the UK, in that they appear to be going through the soft landing phase since 2004, any further interest rate rises will propably break them, leading to a slump similar to what the Americans are experiencing right now.

SimpleSam06

Right, having read over the thread for the last while, I have decided that in the event of a property collapse, the only way to support a large and useless civil service is to increase income taxes, leading to everyone else emigrating in disgust, causing Ireland to become a sort of Douglas Adams style Golgafrinchan ark, a capsule of the most useless and overpaid members of society.

With that in mind I have been feverishly working on a modest proposal to save the nation. What we do is, we replace the jobs of anyone that doesn't need to actually be in contact with the public with callcentres in South East Asia, working at twice the efficiency for less than half the cost, and more attractive per capita to boot.

Anyone that does need to be in contact with the public can be replaced on a case by case basis. Doctors and nurses have already got a large amount of immigrants in there, so we just fire the lot and replace them with cherry picked individuals from other third world countries. Teachers could be replaced with a teleconference facility, with order being kept in the classrooms by the guards. Oh and speaking of the guards...

Who's with me??!

Sponge Bob

jesus_thats_gre wrote:

So anyone gonna admit to this?

"Dublin. One of the fastest growing cities in the world. A city that has begun a new era of prosperity. A city with an unfulfilled demand for property."

Yo!!! thats me.!!

Noel Dempsey sold me a schlab of sand out in the bay and a bit of foreshore and I copied and pasted Singapore (including their weather) onto it.

It looks Lovely !!!!!!!!!!!!!!!! , send me your boooking deposits by PM