Housing bubble starting to pop?

Sponge Bob

Dunno the exact date but I have believed this for a long time but then our banks then start offering 50 year Interest Only 107% mortgages fixed for 20 years and stuff to confound me.

At 2003 criteria there are no more borrowers left, at 2006 insanity levels there are some .

Whats next , 110% mortgages and a nice new beemer thrown in ??

Cantab.

Gurgle wrote:

Find one place I said that please.

Please explain how the market mechanism will remove the alleged oversupply of houses.


And then what?
The owners will sell them all off for 60k? Back to the pre-'bubble' prices?

You and others predict the future with no actual reasoning beyond 'houses cost too much mkay!'.

And as that future persistently doesn't happen, you carry on regardless. Is it all just based on the theory that if you predict something for long enough you will eventually be right?

-edit-
hehe - a quick trawl through old threads gave me this gem from June 2003:

Was that a different spongebob?
Or were you just -em- wrong?

In bubble markets, fundamentals don't drive the market - hysterical greed takes over and the fundamentals go out the window - this is what has been occuring in Ireland over the last couple of years. In my opinion, houses are only worth what they were in 2001-2002, based on multiples of the average salary. There is also a massive oversupply which equates to a drop in house prices from current levels.

Now, you talk of the theory of "saying something enough, it becomes true eventually" - well, you have done well digging out that post in 2003 - they are much more common in 2006 (and much louder + easier to find too). You know, the bears only need to be right once - the FTB bull living in an apartment in Clonsilla on the other hand needs to be right for the next 40 mortgage years.

Zynks

miju wrote:

you know gamer your 100% correct they won't get cheaper in 3 years time.....why???????

because they are becoming cheaper TODAY

Asking price is irrelevant. What matters is how much they sell for compared to similar properties in the past.

But I have to admit that the number of chancers quoting silly prices seems to have increased lately...

CiaranC

Cantab. wrote:

You know, the bears only need to be right once - the FTB bull living in an apartment in Clonsilla on the other hand needs to be right for the next 40 mortgage years.

What exactly do you mean by this?

gamer

he means if prices drop ,you cud be stuck in a place thats overvalued,negative equity situation.ie loan 350k, value 300k.people think every house will go up 10percent every year for the next few years.if you think ,if you are sure houses are going to continue to rise,than its logical to buy 1 now rather than pay an extra 60k in 3 years time,you may not be able to get a loan in 3 years time,i cant see the future,i dont know if they will rise, but i see high demand,and a shortage of sites suitable for house building in dublin.Not every1 wants to live in an apartment, i think people are holding off now, waiting to see if theres a change in stamp duty rates.

chump

Gurgle wrote:

You and others predict the future with no actual reasoning beyond 'houses cost too much mkay!'.

This sentence sums up precisely why no-one should even bother look at your posts any more.

Most 'bears' on here have listed reason upon reason why the believe houses are over-valued, why they believe we may be experiencing a bubble, and have hypothesized how/when/why/where/etc. they believe the market is going.

Again you're rebuttle arguments are void - in that
Wrong in past does not mean one is wrong now, and there are many here who didn't proclaim a crash in the past
If we were to rubbish claims of a possible forthcoming crash because 'someone' got it wrong in the past - we'd be foolish.

There has been a list created at least once in this thread with sound reasons why people believe the market is over-valued. (I'm gonna go have a look for it now).
Why don't you respond to the points put forward instead of another inept response.

(can't find the list, maybe il look again soon... so tired! )

DonalMcTavish

I've been reading this thread for weeks now, hoping against hope that property prices will go down. I just had to register today though as we regularly crack up laughing at the broken record from the bulls and even more so from unrecoverable broken record the '3 bears' as we effectionatly call the top 3 posters in this thread.

I've notices that some peeps post on here constantly. They must not work at all. The top 3 posters on the thread are a source of constant laughter in the office for us.
Quiet Obviously, they have an agenda. Even going as far as saying they have called estate agents to sell fictional property and they refused their businness (we called one for the fun of it in Galwayand put him on speaker phone. After he had finished trying to get our fictional property on his books we told him about this thread).

Why are you pretending that falling ASKING prices are a sign of falling prices?

But by far the biggest laugh came from this one though.
When you read the posts in the thread and then read this one its comical. Thankyou for the memories. You should be on stage.

spongebob wrote:

There now appears to be a soggy overhang on the market which indicates that the AVERAGE 4 bed semi is available in the 270-280k bracket. I think it could fall below 270k by next month.

This is still a lot more than the same house cost a year or two ago but I feel that prices have now stopped rising .

I read a lot of references to the Polish community here too.
I'm from Poland and among us there are usually 5 or 6 people renting in a 3 bed house. I know hardly anyone who wants to go home to live in Poland again. Possibly some that may move to the UK, but not many. We love Ireland and many of us have ties now that will keep us here. So please dont speak for our community. We can speak for ourselves.

Rents are going up over the last year too. Take it from someone who has been looking to rent with his Irish girlfriend for a while.

conor_mc

DonalMcTavish wrote:

I read a lot of references to the Polish community here too.
I'm from Poland and among us there are usually 5 or 6 people renting in a 3 bed house. I know hardly anyone who wants to go home to live in Poland again. Possibly some that may move to the UK, but not many. We love Ireland and many of us have ties now that will keep us here. So please dont speak for our community. We can speak for ourselves.

Rents are going up over the last year too. Take it from someone who has been looking to rent with his Irish girlfriend for a while.

Fair play for the insight. Do you think your community will increasingly contribute to house-price growth in the next few years? Do many of your friends intend to buy a home in Ireland?

This article http://www.unison.ie/irish_independent/stories.php3?ca=9&si=1691456&issue_id=14664 seems to suggest that, on average, Latvians are sending €10,000 each back to their home country every year - kinda rules out too many of them having cash for deposits.... is this something thats widespread in the Polish community too?

Appreciate your first-hand comments, rather than us paddy's second-guessing.....

DonalMcTavish

conor_mc wrote:

Fair play for the insight. Do you think your community will increasingly contribute to house-price growth in the next few years? Do many of your friends intend to buy a home in Ireland?

This article http://www.unison.ie/irish_independent/stories.php3?ca=9&si=1691456&issue_id=14664 seems to suggest that, on average, Latvians are sending €10,000 each back to their home country every year - kinda rules out too many of them having cash for deposits.... is this something thats widespread in the Polish community too?

Appreciate your first-hand comments, rather than us paddy's second-guessing.....

As with many immigrant populations it starts off with sending money home but quickly stops as you start settling down and making a life for yourself in your chosen country.
We have a lot of contact with the Latvian community. Its much the same for them, but for them there is even less desire to return to Latvia apart from holidays to see family. Most immigrants are in Ireland not because they wanted to come to Ireland in the first place but because they are much worse off in their own countries. Then you start planting roots and lose the desire to go anywhere else. Usually one big relocation would be the norm. Possibly if Poland became a much much better place to live i might move home eventually, but if i have a Irish family i wont. And if you've ever been to Latvia, Romania or Lithuania, youll know that even if you came from those countries would never return there to live again.

miju

DonalMcTavish wrote:

Why are you pretending that falling ASKING prices are a sign of falling prices?

.............

Rents are going up over the last year too. Take it from someone who has been looking to rent with his Irish girlfriend for a while.

firstly, becuase falling asking prices ARE a sign of falling prices, common sense would explain that

secondly, my rent nor any of my friends rents have gone up in the last year so you must be unlucky in that respect

though out of curiousity are you renting a brand new apt / house or is it an old one?

Sponge Bob

DonalMcTavish wrote:

I've been reading this thread for weeks now, hoping against hope that property prices will go down. I just had to register today though as we regularly crack up laughing at the broken record from the bulls and even more so from unrecoverable broken record the '3 bears' as we effectionatly call the top 3 posters in this thread.

WHAT!!! Your WHOLE OFFICE reads this ???? I am dead chuffed at that I am <bows> .

I read a lot of references to the Polish community here too.
I'm from Poland and among us there are usually 5 or 6 people renting in a 3 bed house. I know hardly anyone who wants to go home to live in Poland again. Possibly some that may move to the UK, but not many. We love Ireland and many of us have ties now that will keep us here. So please dont speak for our community. We can speak for ourselves.

Hmm, Poles is shorthand for new EU immigrants of whom the Poles are the largest group, its also shorter than "new EU immigrants" . 'Lithuanians' simply takes too long to type. The movement of new EU immigrants to Ireland since 2004 is the largest population migration in european history relative to the population of the host country save in or after wartime...and even then I am not sure .

Thanks for confirming my assumed impact on the rental market though

As an Irishman who was an immigrant in 4 other EU countries in my lifetime ( 5 to a house was the norm ) I will observe that the single major reason for Irish people going to UK Holland and Germany in my experience was that they had a building boom. When that building boom stopped the Irish left...sometimes they went home sometimes elsewhere. Some always stayed behind too . Most left, nothing to do any more.

Any comments I make on immigrant mobility are based on what I myself saw in London in 1988 (and then 1991 when the building industry collapsed and they all went to Barcelona or Berlin ) or Berlin in 1992 and then 1995 when that collapsed and is nothing really to do with Poles or New EU immigrants but to what happens to surplus labout that is mobile when a building boom stops . You may or may not be aware that the Irish were the largest migrant labour force in the EU during the 1980s and I was part of that migrant group .

1% of the Irish population emigrated every year during the second half of the 1980s , similar to the number of persons who have left certain new EU states since 2004. In terms of scale and relative to the donor population it was the same .

Rents are going up over the last year too. Take it from someone who has been looking to rent with his Irish girlfriend for a while.

Not everywhere and they have not really gone up in 5 or 6 years where I live. Rent went up like billyo in the 1990s as did house prices but have not tracked house prices in this recent post 2001 boom.

Gurgle

chump wrote:

There has been a list created at least once in this thread with sound reasons why people believe the market is over-valued. (I'm gonna go have a look for it now).
Why don't you respond to the points put forward instead of another inept response.

(can't find the list, maybe il look again soon... so tired! )

Let me save you the trouble:
Reasons why the housing market is going to crash:
1) Houses are waaaaay too dear mkay
2) Lots and lots of houses are empty
3) Investors can't get enough rent to pay the mortgage anymore
4) Some people are reducing their asking price
5) They can't keep going up forever
6) Average house price is 10 times average wage

Reasons why those reasons aren't reasons for a crash:
1) mkay
2) read my other posts, and the bit after the headlines
3) could never last and was a driving force behind the increases over the last decade
4) irrelevant, was always the case
5) doesn't mean they're gonna come crashing down
6) average family has 2 earners, average house price is still 5 times average family income.

DonalMcTavish wrote:

I've notices that some peeps post on here constantly. They must not work at all.

Not at the moment actually. Still paying my mortgage though.

DonalMcTavish wrote:

The top 3 posters on the thread are a source of constant laughter in the office for us.
Quiet Obviously, they have an agenda.

My agenda is purely to argue with people who make unfounded predictions and try to ram them down everybodies throats. I have a 'starter home' (as my Mum called it when we bought it) where I intend to stay for at least another 30 years. Boom, crash, negative equity, stamp duty, even rising interest rates are all pretty much irrelevant to me.

Calina

Gurgle wrote:

My agenda is purely to argue with people who make unfounded predictions and try to ram them down everybodies throats. I have a 'starter home' (as my Mum called it when we bought it) where I intend to stay for at least another 30 years. Boom, crash, negative equity, stamp duty, even rising interest rates are all pretty much irrelevant to me.

So your agenda is not to be constructive, in other words. No wonder I think this thread is hilarious.

As for your starter home, I'll be presumptuous enough to assume it isn't one of today's starter home types - ie one bedroomed apartment somewhere in an estate which is not particularly well served by public transport and where parking is at a premium.

For what it's worth,

1) Property prices are unsustainably high because of their ratio to average salaries particularly in a time of rising interest rates is, in fact, a valid reason for expecting a property price correction.

2) It hasn't happened yet is not a valid reason for assuming it won't happen.

Regarding rents: asking rents have gone up in the market where I have an interest. But supply hasn't fallen and more than a few properties are sitting on the rental lists for weeks. I think a lot of landlords are starting to feel the pinch.

But of course, that's only anecdotal.

Calina

DonalMcTavish wrote:

I've notices that some peeps post on here constantly. They must not work at all. The top 3 posters on the thread are a source of constant laughter in the office for us.

Why are you pretending that falling ASKING prices are a sign of falling prices?

I read a lot of references to the Polish community here too.
I'm from Poland and among us there are usually 5 or 6 people renting in a 3 bed house. I know hardly anyone who wants to go home to live in Poland again. Possibly some that may move to the UK, but not many. We love Ireland and many of us have ties now that will keep us here. So please dont speak for our community. We can speak for ourselves.

Rents are going up over the last year too. Take it from someone who has been looking to rent with his Irish girlfriend for a while.

Falling asking prices are a general indication that 1) the interest is not there in the property and 2) similar properties are not making the asking price. I've spent a lot of time looking at asking prices and looking at property to buy and what it boiled down to until around three months ago is that every new similar property that arrived on the market where I was looking on average, went up around 30K in asking price. This is not happening. Asking prices are either static or falling and this does not augur well for actual selling prices being made.

Rents in Ireland are still at a lower level than they were in 1999. You were probably not here at that stage, but I was, and that's my experience. My rent has been static for the past 4 years; I expect to have to pay more come the next review of my rent/or end of lease, and that's in the nature of things. Where rents are rising, they are doing so below the rate of inflation. In real terms then, they are still actually falling.

Just because you are not posting here constantly but are reading here constantly doesn't make you any more productive than people who are posting here all the time. I have to say that I laugh to think of you querying how little work other people are doing when you are reading their output.

I actually worked outside Ireland for quite a while, in several different countries and I can tell you that there comes a point when you decide you want to come home. Every single person I know who has moved away from their home country - and I know people from a lot of different countries living in a lot of different host countries - has either hit it, or is planning for it and some of them have extremely good jobs in other countries where the health/transport/public systems are more effective and organised than they are here. The reason that most Irish people expect a significant part of the immigrant population to move on is because their past experience tells them that it will be so. Some Irish people, of course, stayed put in their host countries, but a huge number of them did not.

Sponge Bob

Here one for ye lads, back to my favourite topic, the empties we have built post 2002. Increasing our empty in only four years from 11% to 16% of the national housing stock. We have added 100,000 empties to our already large existing empty stock. I accept that 10% empty is the natural order of things in Ireland and am focusing on this extra 6% only

Lets assume each empty cost us €200,000 each to build, mostly borrowed of course .

Thats €20Bn spent on buying generally empty houses that are largely unused in ONLY four years . The same €20Bn would have finished the road network between all our major cities to Motorway standard and bought us a modern telecomunications network as well with some change left over for beers and cheesey biscuits for all .

Poland has 10 times the population of Ireland. Poland has a GDP of about €200Bn a year.

The Irish, over 4 years, have spent as much as Poland produces in a year on buying empty property, population adjusted.

Had the Poles themselves spent 1/4 of their GDP every year for 4 years on buying empty property and leaving it empty then personally speaking I would think that they were MAD ! The Poles did no such thing, of course they did not, but I believe that I am fully entitled to say, based on this gross misallocation of resources that the Irish are MAD !

So is McTavish

Gurgle

Sponge Bob wrote:

50 year Interest Only 107% mortgages fixed for 20 years and stuff to confound me.

Do you live in Ireland?

Sponge Bob wrote:

Here one for ye lads, back to my favourite topic

We know about the empties!

Sponge Bob

Gurgle wrote:

Do you live in Ireland? We know about the empties!

Yes, and are we not pure MAD! the lot of us Gurgle (or is there a rational considered explanation in you as to why not ? )

CiaranC

Can you post that graph again Sponge Bob? I have a feeling you are trying to tell us something about empties here.

Sponge Bob

CiaranC wrote:

Can you post that graph again Sponge Bob?

Gurgle

Sponge Bob wrote:

Yes, and are we not pure MAD! the lot of us Gurgle (or is there a rational considered explanation in you as to why not ? )

Ive been reading boards way too long to think otherwise.

Just wondering where I can get 107% financing over 50 years fixed for the first 20?

If that, or anything remotely like it were actually true, I would seriously consider buying a '2nd home' to rent out now!

bounty

i hate that stupid graph bob

it doesnt say it's source, and it uses stupid unreadable sideways pointy things

the best graph is a vertical bar chart

Sponge Bob

sources posted long ago had you bothered to look.

2006 data Note its 300,000 empties but 275,0000 'hard' empties census data.

1971-2002 data from esri from census data (table 4)

The sample size in each case is every home in the state at the time. You do your own graph so and if I like it I'll link it instead. Hows that for fair ?

D'Peoples Voice

bounty wrote:

i hate that stupid graph bob

it doesnt say it's source, and it uses stupid unreadable pointy things

To be fair Bob,
we don't need to know about the empties.
Most people with any background in economics knows that if there are not enough houses for our population, then both the price of houses and rents would both be increasing.

The fact that rents have been falling in recent years, means we do not have a housing shortage:)
Everything we need to know is given in the level of rents in the country.

Sponge Bob

D'Peoples Voice wrote:

To be fair Bob,
we don't need to know about the empties.

well we do actually but

Most people with any background in economics knows that if there are not enough houses for our population, then both the price of houses and rents would both be increasing.

The fact that rents have been falling in recent years, means we do not have a housing shortage:)
Everything we need to know is given in the level of rents in the country.

In principle thats exactly what I think as well. The lack of pricing power by landlords was noted by me years ago and is the best guide to the real worth of the asset, ie how much it rents for. Note the way that ratios of house prices vs rents In Ireland have gone MAD! according to the OECD , but only in recent years . Graph on us and comparisons with our rich peers all c.page 9 of the OECD report .

Some will come back and say that the number of houses per 1000 people in Ireland is low. Its near the EU average (circa 420) today but was not 4 years ago. Could we have been playing catchup with our rich peers ?

Thats a no. Our average household size is bigger which means we simply require fewer houses per 1000 people than say Germany. (about 10% less for the same number of people see table 5 of the ESRI report ) Unsurprisingly our housing also has far more 3 bed units and 4 bed units ( no linked source for that lads soz ) as a % of the total than the EU average and can take more adults per unit .

Also note that table is of ADULTS per INHABITED home and does not count our larger numbers of sprogs per family .

Some of the reasons for our high vacancy rates have to do with ancestral country places held by recently urbanised Irish people. Thats why I accept the natural floor of 10% empty in Ireland as compared to a typical 5% elsewhere in Europe.

No matter how I do the figures , clipping what is really 300k empty down to 275k and assuming that 10% empty is 'natural' therefore only analysing the 6% surplus over that and justify running such a surplus of empties as I do ......I still find a figure of 100,000 / 5% or so that is hard speculative froth built up during the boom years and held solely/mainly for capital appreciation.

MAD! MAD! we all are MAD! we are so we are so we are .

Caterpillar

Gurgle wrote:

My agenda is purely to argue with people who make unfounded predictions and try to ram them down everybodies throats. I have a 'starter home' (as my Mum called it when we bought it) where I intend to stay for at least another 30 years. Boom, crash, negative equity, stamp duty, even rising interest rates are all pretty much irrelevant to me.

Rising interest rates are irrelevant to you???? Do you have a 30 year fixed rate?? ..... you sound (read) like a child in a tantrum.

I don't think anyone is trying to ram any predictions down anyone's throat........ there have been dozens of solid arguments for a severe drop in house prices throughout this thread, you should go back and read them.
The people who make the least sense on this thread are the FTB who bought recently.......... you all seem to think that everybody wants a crash....the simple fact is, a crash will hurt all of us. More tax, greater unemployment, more crime etc etc.

Gurgle

Caterpillar wrote:

there have been dozens of solid arguments for a severe drop in house prices throughout this thread, you should go back and read them.

I'm gonna drop out now and dig up this thread in 6 months time to go

jank

Gurgle wrote:

I'm gonna drop out now and dig up this thread in 6 months time to go

Well interests rate are predicated to go up .5 to .75% in between that time.

Hope you dont mind paying more for your home.

Sponge Bob

A good friend is contracting in Citywest and the contract has just been extended to end next year so he went to have a look at (maybe buying) a new shoebox nearby. These shoeboxes are not exactly flying of the shelves .

While he was there, ho humming around the place , he was offered an extra €10k worth of unpublished allowances ( sliderobes and flooring ) by the auctioneer. This is a very big firm not some small fry. Has anybody else notice allowances going up quietly on new builds, say in Adamstown for example ??? although he did not LOOK in Adamstown yet but is about to.

I remember in 2001 when prices were very soggy that some builders put the allowances up from £10k (punts back then ) to as much as £30k in order to hold to a price point around the £300k mark at the time. Consider them to be an unpublished discount .

SimpleSam06

DonalMcTavish wrote:

Quiet Obviously, they have an agenda. Even going as far as saying they have called estate agents to sell fictional property and they refused their businness (we called one for the fun of it in Galwayand put him on speaker phone. After he had finished trying to get our fictional property on his books we told him about this thread).

I find it not unlikely that you are the estate agent, my son.

Dobry wieczór, co słychać? Jaki masz zawód? Gdzie mieszkasz? Nie wierzę w to...

Quick, run, find a Polish person to translate that! You can pay them barely minimum wage to do it, so that they will have a mortgage quicker!

CiaranC

Or maybe they can come on here with their pittance and whine about how the world owes them a house