Housing bubble starting to pop?

Pa ElGrande

Woah SimpleSam06, you're gone way off topic.
Let the coffee sink in first and get back to the housing bubble.

SimpleSam06

Pa ElGrande wrote:

Woah SimpleSam06, you're gone way off topic.
Let the coffee sink in first and get back to the housing bubble.

Ah no harm in a bit of levity in a thread filled with doom and gloom for 40 pages. Besides, its Friday!

Pa ElGrande

SimpleSam06 wrote:

Ah no harm in a bit of levity in a thread filled with doom and gloom for 40 pages. Besides, its Friday!

As its Friday, here's the lighter side of the US property market

American People To Live Happily Ever After
http://www.theonion.com/content/node/28530

Home Sales Dropping
http://www.theonion.com/content/node/52979

Crack Dealer Only Tenant Landlord Can Depend On For Rent
http://www.theonion.com/content/node/53191

Pa ElGrande

PART TWO THE UK HOUSING MARKET: BUBBLES AND BUYERS
Credit Suisse First Boston, January 2004
Andrew Farlow
Department of Economics and Oriel College
University of Oxford

http://www.economics.ox.ac.uk/members/andrew.farlow/Part2UKHousing.pdf [adobe acrobat required]

Well worth a read. See section 3 in particular. Section 2 has some bits on the media.


Bubbles and busts: Will the world housing boom end in tears?
John Calverley, Chief Economist & Strategist, American Express Bank Ltd.
http://www.rbs.com/content/media_centre/rbs_and_the_economy/downloads/uk/Calverley_Scottish_Lecture.pdf [adobe acrobat required]

BigEejit

That RBS pdf is a bit of an eye-opener, I think it should be printed off and handed to every prospective ftb (along with all the extra information supplied by the economist himself when he presented it) ... or just put it like this:

Its the top or near the top of the market, it WILL go down

Pa ElGrande

Summary:

• Irish property market has topped out.
• Asking prices down, Will sellers chase the market down?
• Selling season started but nobody told the buyers.
• Eastern European property investors nervous times ahead.
• Florida property investment returns risks increased.
• Please drop the stamp duty to keep the market going.

The extraordinary glut of houses coming on the market this month has led to widespread falls in the prices being demanded by estate agents.
<snip>
While the downward trend is most evident across more expensive houses on the prime southside suburbs of Dublin, the Sunday Independent has uncovered significant falls in asking prices in other areas of the city.
<snip>
Speaking to the Sunday Independent , Douglas Newman Good economist Paul Murgatroyd said, "There is a more realistic element coming in for vendors."

more...

Dublin property prices falling by up to 20 per cent
http://www.unison.ie/irish_independent/stories.php3?ca=184&si=1694210&issue_id=14687 [free registration required]

The results were a bloodbath from the sellers' point of view. No doubt rising interest rates had an effect but stamp duty is a major inhibitor.
<snip>
A few weeks ago a mortgage broker estimated stamp duty could add ten years on to the life of a mortgage. It was the single biggest reason why young couples are not trading up and is behind decisions to put off having families.
<snip>
Dubai: Spiralling property rents and prices are likely to stabilise over the next two years.

UK: House prices rose at their fastest pace in more than two years in August, with a hike in interest rates failing to deter buyers, a survey saidlast week.
more...

Waste no time putting stamp duty on the skip
http://www.unison.ie/irish_independent/stories.php3?ca=184&si=1694079&issue_id=14687 [free registration required]

A couple of months ago the summer lull was to blame. Then it was a pesky slow start to the season, and then the darned Ryder Cup showed up. But we’re going to need some new and improved reasons as to why the hammer men are seeing very little action these days. Take last week for example, when only about 15% of properties offered for auction actually sold under the gavel. A further 4% shifted prior to auction and another 10% sold afterwards. With a small number under negotiation, almost 70% remain unsold.

The Market
http://www.timesonline.co.uk/newspaper/0,,176-2369721,00.html

‘‘Not surprisingly, Hungarian interest rates are 12 per cent. At 12 per cent, no one is investing enough (apart from the Paddies buying property).A large fall in the currency is highly likely in the next few quarters as currency speculators bet that the government cannot rule with such high interest rates.

‘‘The speculators reckon that the only way to force interest rates down is a much cheaper currency that will boost exports and rein in some of Istvan’s more conspicuous consumption. Once the Hungarian forint goes, the markets will turn on the currencies of better-run economies like Poland and the Czech and Slovak republics.”
<snip>
You would therefore expect that the estate agents who are selling/have sold these properties would have some information about what is happening. An investor would expect a reassessed market analysis based on these events. What is going to happen to the currency? Where are interest rates going to go? What will happen to the euro timetable? These are crucial question for investors. Yet this weekend not one of the websites that advertises properties in Hungary even mentions the state of near anarchy, the economic crisis and the likely ramifications. Surprise, surprise!
<snip>
For the Irish investor, all this was masked by the sales patter about accession, the EU and Hungary eventually joining the euro. The exit strategy sold to the Irish investors was that, by 2008, Hungary would be in the euro and interest rates would fall to 4 per cent, kick-starting the domestic market, which would buy apartments from the foreign investor.

That will not happen now. For anyone who took ten minutes to look at the numbers - even as long as two years ago - this was Disney economics. But most investors didn’t even ask. All this was becoming apparent to the average Hungarian in recent months but the spin and smoke and mirrors of government kept the real extent of the catastrophe obscured. Then last week a political bombshell landed.

more....

Hungary’s Disney economics will hit Irish investors hard
http://www.sbpost.ie/post/pages/p/wholestory.aspx-qqqt=DAVID%20MACWILLAMS-qqqs=commentandanalysis-qqqsectionid=3-qqqc=5.2.0.0-qqqn=1-qqqx=1.asp

The Irish property market has for years rested to a large extent on the wide shoulders of first-time buyers. But three sets of figures published in recent weeks suggest first-time buyers will in future be less able to bear the burden of the massive Irish property pyramid.
<snip>
‘‘Spreading the cost of short-term debt like credit card bills or a personal loan over the life of your mortgage will cost you considerably more in interest in the long term. Our new guide to mortgages shows that consolidating €58,000 of short-term debts into a 20-year mortgage could cost you almost €12,000 more than paying the loans over the original term because you will be paying off the loan for a lot longer,” she said earlier this year.

more...
First-time buyers bear brunt
http://www.sbpost.ie/post/pages/p/wholestory.aspx-qqqt=THE%20INSIDER-qqqs=themarket-qqqsectionid=3-qqqc=3.7.0.0-qqqn=1-qqqx=1.asp

So soft is the market that some investors in Port St Lucie and Stuart, two of the fastest-growing markets in Florida, have surrendered deposits of up to $80,000 just to get out of sales contracts. The farmers reckon they can make a 15% return after tax on their Florida venture. Let’s hope the weather keeps fine for them.

more...

Irish farmers had better hope the sun hasn’t set on Florida
http://www.timesonline.co.uk/newspaper/0,,176-2371863,00.html

Sonnenblumen

Almost everyone knows that property markets throughout most developed countries have for some time been overcooked, despite the many signs, nothing seems to deter the determined Irish to buy more and more in increasingly remote places. Places which I wouldn't be able to tell how to get there or how long it would take, but no doubt Tom and/or Mary aren't worried about that. The chase for more capital seemed relentless.

Unfortunately many will ultimately get burned, and the latter may have serious repercussions for many of us.

There is a difference between making a dollar and greed and is it not time we closed the endless debate. The constant look at this, they said this etc is almost endemic, surely if you have all the facts you can outline a few solutions. Otherwise this incessant dialogue is a big pain where it hurts.

Pa ElGrande

Sonnenblumen wrote:

Almost everyone knows that property markets throughout most developed countries have for some time been overcooked, despite the many signs, nothing seems to deter the determined Irish to buy more and more in increasingly remote places. Places which I wouldn't be able to tell how to get there or how long it would take, but no doubt Tom and/or Mary aren't worried about that. The chase for more capital seemed relentless.

Unfortunately many will ultimately get burned, and the latter may have serious repercussions for many of us.

There is a difference between making a dollar and greed and is it not time we closed the endless debate. The constant look at this, they said this etc is almost endemic, surely if you have all the facts you can outline a few solutions. Otherwise this incessant dialogue is a big pain where it hurts.

Depressing as it is people know property is overvalued, but have build this shield around them that a downturn will never affect them or that the government and banks will not let this happen, or if it does happen there will be someone there to bail them out. If that were true boom/bust cycles would never occur.

All we can do at the moment is report on what's happening and hope enough people will evaluate the infomation from both sides and decide how they want to proceed with any property purchases with this knowledge.

Painful as it is the solution is the price correction in the property market.

The economy will not grind to a halt, but employment opportunities will be harder to come by and wages will not be as high paying.

On a personal level all you can do is manage your wealth and try to preserve it through the economic downward cycle. Keep investing in yourself so you can take whatever opportunity comes your way.

Sonnenblumen

This thread got to be one of the dullest around and certainly one of the least value! Property navel gazing? Sorry I'm out.

SimpleSam06

Sonnenblumen wrote:

This thread got to be one of the dullest around and certainly one of the least value! Property navel gazing? Sorry I'm out.

Don't let the door hit you on the arse. Next up, the Sunday Indo headlines, Dublin Property prices fall by up to 20%.

Sonnenblumen

SimpleSam06 wrote:

Don't let the door hit you on the arse. Next up, the Sunday Indo headlines, Dublin Property prices fall by up to 20%.

How are you after your head injury?

As soon as I get your damn bike out of the way, I'll be off, and by the way please remove all the Simple Sam Economics Greatest Hits clutter!

faceman

SimpleSam06 wrote:

Don't let the door hit you on the arse. Next up, the Sunday Indo headlines, Dublin Property prices fall by up to 20%.

the indo at it once again...

upon reading the article further you will discover that its there comments come from limited sources and relate solely to high value properties. It headline does not reflect reality. The headline is a deduction of their own, not of reality.

my friend sold his house (well sale agreed) in swords last week. Went up for 475k and sold at 532k. hmmmm, no 20% drop there.

SimpleSam06

Sonnenblumen wrote:

How are you after your head injury?

As soon as I get your damn bike out of the way, I'll be off, and by the way please remove all the Simple Sam Economics Greatest Hits clutter!

What? You are making zee no sense. I thought you were off anyway?

SimpleSam06

faceman wrote:

the indo at it once again...

upon reading the article further you will discover that its there comments come from limited sources and relate solely to high value properties. It headline does not reflect reality. The headline is a deduction of their own, not of reality.

my friend sold his house (well sale agreed) in swords last week. Went up for 475k and sold at 532k. hmmmm, no 20% drop there.

Oh I read it alright, and its not all 20% across the board, either, its up to 20%. Some places are only 15% or 10%. However I'll weigh the Sunday Independant against your anecdotes, and give to each their measure of respect. In any case its large and glaring headlines like this that make the shifty shuffle towards the door into a full blown lemming stampede. Market sentiment comprises a huge portion of the housing bubble, and this is like a domino effect. What you're seeing here is the first domino falling over in public view.

shaptakster

SimpleSam06 wrote:

Oh I read it alright, and its not all 20% across the board, either, its up to 20%. Some places are only 15% or 10%. However I'll weigh the Sunday Independant against your anecdotes, and give to each their measure of respect. In any case its large and glaring headlines like this that make the shifty shuffle towards the door into a full blown lemming stampede. Market sentiment comprises a huge portion of the housing bubble, and this is like a domino effect. What you're seeing here is the first domino falling over in public view.

lol.
Some people in here are trying really hard to paint a dire picture of the property market. So obviously hard that i'm embarressed for them.
Can you do a post count of how many times certain people posted in this thread? That would show a lot.

I dont think its working at all though. Prices are still going up in anything i'm looking at.
But keep trying will you Maybe you'll save us all a few quid.

I think the best option is to go out and burn down about 500 large companies.
Only massive job losses will hurt the property market. But dont burn down my company if you dont mind.

SimpleSam06

shaptakster wrote:

lol.
Some people in here are trying really hard to paint a dire picture of the property market. So obviously hard that i'm embarressed for them.
Can you do a post count of how many times certain people posted in this thread? That would show a lot.

I dont think its working at all though. Prices are still going up in anything i'm looking at.
But keep trying will you Maybe you'll save us all a few quid.

You'll no doubt be thrilled to give us all a few facts and links to back up your point of view, here. I mean, anything, really. You can be the first bull in the thread to do so. It will make you special! More so, I mean.

shaptakster wrote:

I think the best option is to go out and burn down about 500 large companies.
Only massive job losses will hurt the property market. But dont burn down my company if you dont mind.

Are you advocating arson here, or just trolling?

Pa ElGrande

shaptakster wrote:

lol.
Some people in here are trying really hard to paint a dire picture of the property market. So obviously hard that i'm embarressed for them.
Can you do a post count of how many times certain people posted in this thread? That would show a lot.

I dont think its working at all though. Prices are still going up in anything i'm looking at.
But keep trying will you Maybe you'll save us all a few quid.

I think the best option is to go out and burn down about 500 large companies.
Only massive job losses will hurt the property market. But dont burn down my company if you dont mind.

A very similar event brought down a number of Asian economies in 1997.
Rampant specualation led the papers to label them "Asian Tigers", however as many people know simply flooding your economy with money doesn't create real economic wealth.
Eventually every man and dog was going to get rich by borrowing themselves to a wonder of wealth.

Unfortunately this boom had a nasty side-effect, it starved the real economy of much-needed capital. As usual interest rates had to rise, asset prices fell and risk premiums shot up.

The whole "miracle" came crashing down, sinking a number of currencies and stock markets (and various housing markets)

Luckily, Ireland is different.

Pa ElGrande

SimpleSam06 wrote:

Oh I read it alright, and its not all 20% across the board, either, its up to 20%. Some places are only 15% or 10%. However I'll weigh the Sunday Independant against your anecdotes, and give to each their measure of respect. In any case its large and glaring headlines like this that make the shifty shuffle towards the door into a full blown lemming stampede. Market sentiment comprises a huge portion of the housing bubble, and this is like a domino effect. What you're seeing here is the first domino falling over in public view.

The sentiment change is a start but don't be too quick to associate asking price drops with actual drops, the people buying now have already committed to buy several months ago and arranged the finance. It takes at least 6 months for the interest rate rises to take effect. The next survey of house prices will still show price rises albeit on a lower volume of sales. Already the amount first time buyers can burrow today is less than it was in January this year, next year it will be less again thus reducing their purchasing power further.

SimpleSam06

Pa ElGrande wrote:

It takes at least 6 months for the interest rate rises to take effect. The next survey of house prices will still show price rises albeit on a lower volume of sales.

Oh yeah, I'm under no illusions about the pace of change. I'd say it will take until christmas 2008 to bottom out and interest rates to stabilise. When a major national newspaper prints headlines like that, however, the sentiment element is going to be severely hit. Obviously they have decided to call it and chronicle the collapse all the way down.

Pa ElGrande

SimpleSam06 wrote:

Oh yeah, I'm under no illusions about the pace of change. I'd say it will take until christmas 2008 to bottom out and interest rates to stabilise. When a major national newspaper prints headlines like that, however, the sentiment element is going to be severely hit. Obviously they have decided to call it and chronicle the collapse all the way down.

Based on previous bubbles it normally takes a minimum of 5 years to bottom out, Japanese house prices only started rising this year after their slump started over 15 years ago. I'll agree this article will have a bearing on sentiment and the upcoming ECB interest rate rises will flush out more of specuvestors by next year.

shaptakster

shaptakster wrote:

lol.
Some people in here are trying really hard to paint a dire picture of the property market. So obviously hard that i'm embarressed for them.
Can you do a post count of how many times certain people posted in this thread? That would show a lot. .

It is supposed to be a debate/discussion! With people talking back and forth ie the same people posting more than once. You reject I cant believe I am explaining this.

shaptakster wrote:

I dont think its working at all though. Prices are still going up in anything i'm looking at.
But keep trying will you Maybe you'll save us all a few quid..

I hope all your money is tied up in property
open your eyes dumbass

shaptakster wrote:

I think the best option is to go out and burn down about 500 large companies.
Only massive job losses will hurt the property market. But dont burn down my company if you dont mind.

no need they will leave of their own accord in due time

SimpleSam06

Pa ElGrande wrote:

Based on previous bubbles it normally takes a minimum of 5 years to bottom out, Japanese house prices only started rising this year after their slump started over 15 years ago.

Yes, but Ireland is different! We have built up a remarkable stack of debt in a remarkably short time, and we are now entering into a a hostile economic environment without a saving grace in sight (unlike for example the Japanese). Its impossible to say for sure at this juncture, since there are so many external factors that might come into play. However long it takes, it would be better to get it over with quickly.

faceman

SimpleSam06 wrote:

You'll no doubt be thrilled to give us all a few facts and links to back up your point of view, here. I mean, anything, really. You can be the first bull in the thread to do so. It will make you special!

Why is this such a personal vendetta for you? You chose to ignore any counter arguments by "bulls" as you call them. Not everyone who differs in a opinion is necessarily a bull.

Have you ever bought property? Do you ever intend to?

faceman

Deleted User wrote:

I hope all your money is tied up in property
open your eyes dumbass

Yet another "bear" who is bitter? This thread has really turned into something it shouldnt have.

Sure i might as well join in...

I made €65k after taxes etc on one of my properties which i sold this year. I bought it 2 years ago. How much you "bears" make this year?

chump

faceman wrote:

Yet another "bear" who is bitter? This thread has really turned into something it shouldnt have.

Sure i might as well join in...

I made €65k after taxes etc on one of my properties which i sold this year. I bought it 2 years ago. How much you "bears" make this year?

What's the relevance of any of that?

It's a bit sad tbh

faceman

chump wrote:

What's the relevance of any of that?

It's a bit sad tbh

Its just a sad as people saying "they hope your [some other poster] money is tied up in property..... ..dumbass"

This is supposed to healthy debate, no?

SimpleSam06

faceman wrote:

Why is this such a personal vendetta for you? You chose to ignore any counter arguments by "bulls" as you call them. Not everyone who differs in a opinion is necessarily a bull.

Have you ever bought property? Do you ever intend to?

Well faceman, you unlike most of the bulls here have made an honest effort to put forward thought out arguments, so I reckon that merits an answer...

lol.
Some people in here are trying really hard to paint a dire picture of the property market. So obviously hard that i'm embarressed for them.
Can you do a post count of how many times certain people posted in this thread? That would show a lot.

I dont think its working at all though. Prices are still going up in anything i'm looking at.
But keep trying will you Maybe you'll save us all a few quid.

I think the best option is to go out and burn down about 500 large companies.
Only massive job losses will hurt the property market. But dont burn down my company if you dont mind.

Can you find me the coherent argument in there please. I'll happily counter it.

ircoha

http://www.dublincoastaldevelopment.com/index.html

Just imagine the size of the brown envelopes for this project:)

BOHSBOHS

lol who thinks these things up hahaha

jesus_thats_gre

ircoha wrote:

http://www.dublincoastaldevelopment.com/index.html

Just imagine the size of the brown envelopes for this project:)

It would work if they turned it into the ultimate gated development I would easily pay the going rate for a 2 bed apartment if I could avoid the various **** bags roaming Dublin at the moment.