Housing bubble starting to pop?

SimpleSam06

CiaranC wrote:

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

Ah ciaran, you're back. Hows the equity hanging?

EDIT: Why did you remove single income from my pittance? Its not bad enought that its a pittance, but not even single income now?

SimpleSam06

Heres a couple of juicy tidbits from the AAM thread, first we have a graph of inventory over the last few months on Daft, courtesy of the highly skilled Whizzbang:

And second, a link to an Irish Times article:

It's amusing , this rush to sell by the owners of second-hand houses. Given the market is overloaded, some sellers are having to drop their prices, to achieve a sale. Of course, they may not reveal the discount to their neighbours, thereby perpetuating the fiction that higher prices are being achieved.

The neighbours are not fooled, but are in denial, because they are in a panic. The result, as one estate put it to me this week, is a wholesale rush to dispose of second-hand houses, in spite of a glut on the market. It's hard, too, to have sympathy for the laggards who are making fools of themselves by rushing to sell when the market has peaked.

Now, it's probably too late to realise the massive profits of recent years. It was put to me graphically by one estate agent: "In the past three months, I sold three identical houses in the same street. The prices were - €1.5m, €1.4.m, €1.1m - in that declining order per month. The market peaked in June and had been in decline since - but sellers have panicked. There's no telling them to wait."

CiaranC

Sam wrote:

Ah ciaran, you're back. Hows the equity hanging?

Bit perilously if Im honest. Hows things at your mams?

SimpleSam06

CiaranC wrote:

Bit perilously if Im honest. Hows things at your mams?

Well at least you're honest. As for me Mam's, why, do you think you'll be needing to rent a room soon?

lads come visit me in australia!

CiaranC

Sam wrote:

Well at least you're honest. As for me Mam's, why, do you think you'll be needing to rent a room soon?

Ah, I know yis are short of the few bob, but I wont be needing a room. Thanks for the offer though. Why not rent one to your poor friends you mention in the OP? You could get some kind of commune going seeing as capatalism hasnt worked out for you

blindjustice, would you ever fix your sig out of that

SimpleSam06

CiaranC wrote:

Ah, I know yis are short of the few bob, but I wont be needing a room. Thanks for the offer though. Why not rent one to your poor friends you mention in the OP? You could get some kind of commune going seeing as capatalism hasnt worked out for you

Yeah, we'll keep a spot for you for when the ECB base rates hit 4% next May, and 5% in 2008. Ah no seriously best of luck with the place, maybe not the best time to buy, but I hope you can hang on to it...

Deleted User wrote:

lads come visit me in australia!

I've already got me plans made for the winter, unfortunately, I'm off to the tropics for a holiday in two weeks, for three weeks, and off again in January, for another three weeks in the Pacific. Nothing like a spot of midwinter surfing.

D'Peoples Voice

What do people think will be the effect on house prices caused by the implementation of the EU Directive on Energy Performance of Buildings from January 1st 2007.
http://www.environ.ie/DOEI/DOEIPub.nsf/6fb57b90102ce64c80256d12003a7a0d/47188c66bc0fbd9b802571bd003f73cd?OpenDocument
Obviously I see the Government have built in exemptions as they usually do.
However a second hand house is more marketable against a new house if it has an energy certificate, I can't see any rational person spending over a quarter of a million on a house without knowing it's energy rating.
I'm telling a friend of mine to sell his investment property now because in it's construction, the builders never used insulated concrete (http://www.eco-block.com) just cavity blocks, so it's energy rating will be dreadful.

CiaranC

Sam wrote:

Ah no seriously best of luck with the place, maybe not the best time to buy, but I hope you can hang on to it...

Cheers, nice of you to say. I'll be able to hang on to it alright, as Ive said I'll be able to afford the mortgage fairly comfortably out to 5-6%. Its what its worth when Im looking to sell 5 years down the road thats the issue.

SimpleSam06

D'Peoples Voice wrote:

What do people think will be the effect on house prices caused by the implementation of the EU Directive on Energy Performance of Buildings from January 1st 2007.

Well it will obviously push up the cost of materials, but then again materials and labour only form 35% of the cost of a house anyway, including profit for the builder. I can't see it having a particularily significant effect, except as another talking point for Estate Agents.

DonalMcTavish

SimpleSam06 wrote:

Heres a couple of juicy tidbits from the AAM thread, first we have a graph of inventory over the last few months on Daft, courtesy of the highly skilled Whizzbang:

And second, a link to an Irish Times article:

Has it not been discussed on AAm how Dafts stats are not entirely accurate.

I'd like to see this graph plotted all the way back to about 2004 too. Just to see if the line is about the same slope all the way back.

Sponge Bob

Its 22047 now and was 14000 in July so its gone up 50% in the last 3 months alone with an accelerating trend . If it does the same in the next 2 quarters (50% up qtr on qtr ) it will hit 50,000 by April, phew

50,000 is what we built in a year in the late 1990s early 2000's . Daft only has listings for some of the property for sale in Ireland , you are an estate agent McTavish so tell us is that 20,000 50% of all houses for sale in Ireland today or is it more than that. ???

Dzieki

SimpleSam06

DonalMcTavish wrote:

Has it not been discussed on AAm how Dafts stats are not entirely accurate.

I'd like to see this graph plotted all the way back to about 2004 too. Just to see if the line is about the same slope all the way back.

Hey your English has improved, and picked up a mild Irish twang, congratulations! Mods, anyone, mods...

Sponge Bob

you mean IAVI IPAV IAVI Sam Never came across the oppresseed variety before though

DonalMcTavish

SimpleSam06 wrote:

Hey your English has improved, and picked up a mild Irish twang, congratulations! Mods, anyone, mods...

Why do you and spongebob keep making things up?
How can someone have a 'twang' in text.
What difference would it make if i was Polish or Arab or anything else.
Why so hard to believe someone is from another country. What difference does it make.

Not that it matters but
I am not an estate agent. I am a HR manager in a university and have lived in Ireland for 8 years.

You should go to Poland or Latvia or Lithuania (the 3 countries you talk about most) take a trip about 30 miles outside the main cities and drive around and then come back and let everyone here know if you would ever expect anyone to wish to live their again, even if you were born there.

You dont know a thing about immigrants or where they are from at all.

Most eastern european immigrants here are from rural areas of eastern europe. They will never return.
The difference between Ireland and a rural Eastern European areas is something you would never believe unless you went to one.
So please stop thinkiing you know everything about immigrants. You dont.

I would like nothing better than house prices to fall, but i do not believe that there is the evidence that thay will fall at all.

Sale prices are not falling at all. Are they? Where? Certainly not in Dublin. Are they falling where you live?
Asking prices might be falling but this is no indication at all that there is a problem.
When you can show that actual sale prices are going down accross the board then you may have soemthing. Can you? Please do. But dont pretend that asking prices being reduced is a sign of a failing proerty market.
It is a sign that increments in asking prices are unrealistic. Thats all. This happens from time to time in any market. eg Even the job market. If a software developer asks for €70K and only gets €60K and was getting €50K in his last job he is better off still, he just was unrealistic about his asking price.
This is just him trying it on. He has not affected the market at all.

SkepticOne

Agents cut Dublin property prices

Reductions of up to 33% hit second-hand house market, writes Susan Mitchell.

Estate agent s are slashing the prices of property in Dublin, according to a survey carried out by The Sunday Business Post.

The survey found that agents had cut prices by as much as €2 million. Price cuts of 33 per cent were not unusual across the secondhand market. [...]

Drop in house prices at the top end of market

[...]The price falls come amid increasingly pessimistic forecasts from the country’s leading economists. AIB chief economist John Beggs said prices for second-hand properties at the top end of the market could fall by between 5 per cent and 10 per cent this winter.

Bank of Ireland chief economist, Dan McLaughlin said house price inflation would fall to 3 per cent next year, down from 14 per cent this year.

Mortgage brokers have predicted that house price inflation will drop to zero next year and warned of ‘‘a small risk’’ that property values would fall in 2007 for the first time in 12 years. Agents have said that it has become a buyers’ market.

Despite the slowdown in the market, first-time buyers on the average wage cannot afford to buy in Dublin. A survey found that a couple on the average industrial wage will still need to raise €163,000 - on top of a mortgage - to buy a house in Dublin.

DonalMcTavish

SkepticOne wrote:

Agents cut Dublin property pricesDrop in house prices at the top end of market

They mean Asking Prices?

These articles are just sensationalism again.
Why cant they just give unbiased reports and that will tell us all if we need to wait and keep saving or should buy now before the price to buy a house goes up again.

Despite the slowdown in the market, first-time buyers on the average wage cannot afford to buy in Dublin. A survey found that a couple on the average industrial wage will still need to raise €163,000 - on top of a mortgage - to buy a house in Dublin.

That is just such a stupid comment i dont know where to start.

They talk about millionaire houses in their article and then give this little bit about the bottom end of the market to back up their point.

What survey? who did it? who did they survey? how many did they survey? show us the survey.
Where are they talking about in Dublin? Foxrock, Tallaght, Blackrock, Santry, City, Ballymun?
What is a home? 2 bed, 3bed, 6 Bed? apartment, house, mansion,
On top of a mortgage of how much ?

We want to buy a 3 bed house somewhere in Dublin.
If we settled for a 2 bed we could afford one easily. But we want a 3 bed the most as my fiance is pregnant.
It doesnt mean we cant afford a home. we just feel we would like a bigger house than what we can afford right now so we are waiting to see if they fall. Its just so hard to judge with all of the arguments around which only take one side and just forget about evidence for the opposite arguement.
If we had bought last year we could have got the 3 bed we wanted but we waited and now cant get it. if we wait longer will we not even get the 2 bed.
its just so hard to know what to do. if stamp duty falls we will be better off and will buy straight away but if it doesnt will we be worse off not buying the 2 bed?

Sponge Bob

DonalMcTavish wrote:

These articles are just sensationalism again.

well they are true but not representative. They are no worse than property supplement porn with blue skys 24/7 in Sherriff St.

DonalMcTavish wrote:

We want to buy a 3 bed house somewhere in Dublin.
If we settled for a 2 bed we could afford one easily. But we want a 3 bed the most as my fiance is pregnant.
It doesnt mean we cant afford a home. we just feel we would like a bigger house than what we can afford right now so we are waiting to see if they fall.

Sensible lad, there was me thinking you thought that property prices could only go up .Watch Lucan so. Bid no higher than €350k and wait for one seller to accept an offer for what would have been c €400k in May.

All you need is one seller.

SkepticOne

DonalMcTavish wrote:

What survey? who did it? who did they survey? how many did they survey? show us the survey.
Where are they talking about in Dublin? Foxrock, Tallaght, Blackrock, Santry, City, Ballymun?
What is a home? 2 bed, 3bed, 6 Bed? apartment, house, mansion,
On top of a mortgage of how much ?

The newspaper did a survey of the main Irish banks of how much they would lend to two first-time buyers on €30,500 each. NIB would lend €250,000 up to EBS with €330,000. Average was €292,726.

Seems to me that these are huge amounts to be lending to people on fairly standard salaries.

CiaranC

Couple of questions, maybe some of you could shed some light.

Reading of an imminent crash, one thing I consistantly heard was that apartments and properties out in commuter land would be the first to be hit, instead everyone is talking about 3 bed semis in Lucan and 4 beds in Foxrock dropping in price. Whats the deal?

Secondly, why are the banks still falling over themselves to give away money if they think a crash is coming?

Surely they must know people are simply going to stop paying a mortgage if 50% of the value of the property is wiped away? Why would you continue servicing a debt on a property worth half of what you paid for it? Wouldnt you just leave the keys in the door and walk away like they did in the UK during their crash? Doesnt this leave banks open to huge danger and huge losses?

The nearer the peak of the market the more risk for the bank, yet we saw them go further and further in giving out mortgages. Are we suggesting that financiers in banks have no clue whats happening?

SkepticOne

CiaranC wrote:

Surely they must know people are simply going to stop paying a mortgage if 50% of the value of the property is wiped away? Why would you continue servicing a debt on a property worth half of what you paid for it? Wouldnt you just leave the keys in the door and walk away like they did in the UK during their crash? Doesnt this leave banks open to huge danger and huge losses?

Handing the keys in the door does not get rid of your mortgage. The bank will try and sell the property for whatever they can get but you will still owe the difference. If it is, say, 50% on a 300,000 mortgage then you will be left with an unsecured loan of 150,000. Ouch!

If there is widespread voluntary reposessions, as you say, then that will lead to further deterioration of prices as the banks dump properties onto the market.

gurramok

CiaranC wrote:

Couple of questions, maybe some of you could shed some light.

Reading of an imminent crash, one thing I consistantly heard was that apartments and properties out in commuter land would be the first to be hit, instead everyone is talking about 3 bed semis in Lucan and 4 beds in Foxrock dropping in price. Whats the deal?

Dunno about Foxrock but the likes of Lucan, Clonee/Ongar are traffic nightmares on edge of city with lack of amenties. Same goes for commuter land.
Obviously those areas well serviced will hold their value more.

CiaranC wrote:

Secondly, why are the banks still falling over themselves to give away money if they think a crash is coming?

Surely they must know people are simply going to stop paying a mortgage if 50% of the value of the property is wiped away? Why would you continue servicing a debt on a property worth half of what you paid for it? Wouldnt you just leave the keys in the door and walk away like they did in the UK during their crash? Doesnt this leave banks open to huge danger and huge losses?

The nearer the peak of the market the more risk for the bank, yet we saw them go further and further in giving out mortgages. Are we suggesting that financiers in banks have no clue whats happening?

Banks are in denial of whats happening. Just look at the latest comments of what the like of Austin Hughes of IIB spurts out.
They want your money. of course if market falls, they give out less money in mortages with less interest coming into their coffers hence they shutup about falling prices.
Its not as simple as handing in keys, those that jumped on the bandwagon with jumbo mortgages will still owe a deficit when prices fall if they sell as SkepticOne just described.

indiewindy

Banks are just worried about maintaining earnings growth for their shareholders, the new NIB product must be causing them some sleepless nights. I dont see prices falling where I am , they are actually still rising mainly due to the Sunday times saying it was the best value commuter place to buy:mad:

A lot of people still seem to see property as a sure thing one way bet, but with pressure at cadburys and now Wellman on the horizon and the rumours about Dell and whether or not they will move production to Poland etc etc. 07 is looking crucial in this mad spiral or property porn as spongebob called it

ronbyrne2005

Banks know most people wont hand back keys to their home and face a large bill even if houses fall 50%. Most people bought their houses more than 3/4 years ago so even if prices dropped 50% they would still have positive equity(albeit very much reduced). People who have bought more recently will mostly continue paying their mortgages and be stuck in that home for many years. Repossesions only really become a big prob for bank when a significant amount of their customers can't pay their mortgage due to widespread job losses in the economy(a recesssion is'nt expected anytime soon even if property market drops significantly(20+%) in next few years)

miju

CiaranC wrote:

Secondly, why are the banks still falling over themselves to give away money if they think a crash is coming?

Surely they must know people are simply going to stop paying a mortgage if 50% of the value of the property is wiped away? Why would you continue servicing a debt on a property worth half of what you paid for it? Wouldnt you just leave the keys in the door and walk away like they did in the UK during their crash? Doesnt this leave banks open to huge danger and huge losses?

The nearer the peak of the market the more risk for the bank, yet we saw them go further and further in giving out mortgages. Are we suggesting that financiers in banks have no clue whats happening?

simple answer to this is more profits for the banks , the fact is that the banks are not majorly exposed to defaulted mortgage as the mortgage debt is usually sold on to a hedge fund or something similiar fairly quickly after its taken out

Sponge Bob

miju wrote:

the fact is that the banks are not majorly exposed to defaulted mortgage as the mortgage debt is usually sold on to a hedge fund or something similiar fairly quickly after its taken out

Securitisation it is called. It dramatically increases the risk the bank will repossess ( and quickly) unlike in the past where they could freeze the mortgage (in effect allow the mortgage owner to 'rent their own house' ) . Irish banks in the past were generally very reluctant to repossess formally , especially a family home . That may have changed but we do not know yet.

The bank still acts as a collection agent for the long term bond it has securitised , if there is a non performance the bank has to repo quickly or they themselves will end up paying the shortfall in funds due under the bond , if they repossses they 'get away' with it to a degree .


Securitisation is a powerful incentive to repossess and sell in other words, were their loan book ' in house ' and not sold they could be more flexible .

Afuera

ronbyrne2005 wrote:

Most people bought their houses more than 3/4 years ago so even if prices dropped 50% they would still have positive equity(albeit very much reduced). People who have bought more recently will mostly continue paying their mortgages and be stuck in that home for many years.

While most people may have bought there property more than 4 years ago, the numbers that have taken on mortgages in the last 4 years is still very high. I think that it's running at a figure of around 400,000+ over the last 4 years. The number of households in the whole country is 1.8 million, so we're talking about nearly 25% of households in the country at risk of negative equity if there was a drop as big as you said. The big question is whether the economy is strong enough to survive such a drop, as it would have knock on effects for employment, immigration, etc.

antoinolachtnai

Re securitization and repossession, is there evidence of this in other countries?

Really though, is it ever really in the interests of banks to do widespread repossessions?

Afuera

antoinolachtnai wrote:

Really though, is it ever really in the interests of banks to do widespread repossessions?

The credit rating of the bank itself would be badly hit if they decided not to try and recover their bad debts. They would find it increasingly difficult to borrow money from abroad, or sell on derivitives and it would force their cost of borrowing up as there would be a higher risk premium.

antoinolachtnai

If you are a bank, and you have a reasonably current loan book, you would just be undermining the value of your most recent homeloans if you started dumping houses into the market.

If this happens, your own most recent loans, which haven't yet been securitized will be into negative equity. You won't be able to raise money on the strength of them. You will also damage the value of the securitized loan books if you bring about a market collapse. So you will avoid this if it can.