Housing bubble starting to pop?

Sponge Bob

TBH I am worried about the banks. The last time there was a downturn of any sort was 25 years back when banks were run by bankers.

Now they have all retired and the banks are run by salesmen not bankers. I personally believe they will panic once there is a generalised downturn and force investors who invested post 2000 to dump ( they have less leverage with homeowners on the family home ) .

Banks can still call in an investment mortgage in extremis (even if its fully paid up or 'performing' ) or else they can call in the investor to a meeting and <cough> advise them . That sort of advice will come from about 4 bank type chappies intimidating and haranguing the investor at length in an office , anybody ever seen it in action ????

They will internally review the antics of certain investors and do these advice sessions in any sustained downturn , say if prices are off by 10-15% by this time next year across the board. They would be irresponsible if they did not TBH

As the homeower (including the FTB) is only around half the market in the past few years I expect that the interest only mortgage investor type who has built no real equity up will be the primary focus of the banks revenue assurance measures .

I only vaguely remember the early 1980s myself but you would be astonished at the number of people who were 'called in' out of the blue by the banks back then and I mean solvent sober types who owed nothing and had never non performed .

Lots of 50 and 60 years old can tell sordid tales of stampeding panicking bankers.

Afuera

antoinolachtnai wrote:

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.

I think you're overestimating how much control a bank has in the market. While they may try and hold off as long as possible on wholesale repossessions (for the good reasons you've detailed here), builders and investors will be in a position to dump houses into the market far faster than the banks anyway. At the end of the day, the banks are answerable to their shareholders and they would be reckless to carry bad debts which would affect their long-term credibility.

To be honest, in the case of a crash in the market it's very hard to see how the banks are going to get out unscathed. I'm sure the recent property sell offs by BoI and AIB is a play to keep their liquidity high, but it wouldn't be a great surprise if their stocks got crucified at the first sign of trouble with the mortgage lending market.

D'Peoples Voice

antoinolachtnai wrote:

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.

If AIB held onto the repossessed houses it would be funny becos they just sold off their commercial property interests only to replace them with residential property interests. Give their CEO a big bonus i say.

Personally I can see banks repeat what they did a few years ago, and that was to reduce the loan to value rates they are willing to give loans to, so instead og giving 100% mortgages they may move to 80%. That's why some banks such as NIB are actively trying to win over customers who have very low loan to value ratios from other banks. My guess is that we will continue to see an increasing number of mortgages being approved, the majority of which will be people moving their EXISTING mortgages from one bank to another.

hmmm

antoinolachtnai wrote:

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.

Banks in the US are instructive as they have experience of foreclosures and negative equity. In their case they will both move to foreclosure, and as they are not in the business of managing a stock of residential properties they will sell immediately and recoup what losses they can. If we think that an Irish bank will turn into a property management company we're dreaming.

CiaranC

Not much consensus on the bank question then.

gurramok

20pc of new homes built since 2002 lay empty

http://www.unison.ie/irish_independent/stories.php3?ca=9&si=1711139&issue_id=14798

There is no housing shortage, just greed.
Hell of alot of empties to be dumped by speculators at their choosing as we witness in 2nd hand market now.

miju

it seems that the "fundamentals" of immgration for next year has just been dealt a body blow

http://www.rte.ie/news/2006/1024/eu.html

Sponge Bob

Nope, plenty more supply in the 10 accession states from 2004 .

http://epp.eurostat.ec.europa.eu/pls/portal/docs/PAGE/PGP_PRD_CAT_PREREL/PGE_CAT_PREREL_YEAR_2006/PGE_CAT_PREREL_YEAR_2006_MONTH_10/3-03102006-EN-AP.PDF

Bottom Page One

.

miju

Sponge Bob wrote:

Nope, plenty more supply in the 10 accession states from 2004 .

http://epp.eurostat.ec.europa.eu/pls/portal/docs/PAGE/PGP_PRD_CAT_PREREL/PGE_CAT_PREREL_YEAR_2006/PGE_CAT_PREREL_YEAR_2006_MONTH_10/3-03102006-EN-AP.PDF

Bottom Page One

.

sorry i'm failing to see the connection between unemployment figure tables for EU states and immigration.....care to explain?

CiaranC

You dont see a connection between unemployment and emigration?

Sponge Bob

CiaranC wrote:

You dont see a connection between unemployment and emigration?

20% unemployment in Ireland in 1987 had nothing to do with the fact that 1% of the population left in that year .


20% unemployment in Ireland in 1988 had nothing to do with the fact that 1% of the population left in that year too .


NEARLY 20% unemployment in Ireland in 1989 had nothing to do with the fact that 1% of the population left in that year as well .

D'Peoples Voice

CiaranC wrote:

You dont see a connection between unemployment and emigration?

I'm guessing here, but maybe what miju means is,
we know there is a connection between high unemployment and high emigration,
and there is a connection between high employment creation and high immigration,
but that does not mean there is a connection between low unemployment and high immgration.

CiaranC

Heh, are you taking the piss?

Jvizzle

If your looking for a cheap appartment I hear some are going at a knock down price in Clondalkin, might have to live next to someone who is dealing 10million in Herion and has a sub machine gun. But beggars can't be choosers.

miju

what i was getting at is that high unemployment in another country does not equate to people coming here to work (theres other countries that they can go to besides ireland)

on the other foot high unemployment here does not equate to everyone emigrating , though if that was the case then supply would increase further (and before anyone asks i'm aware unemployment in ireland is low)

D'Peoples Voice

I assume the DAFT survey for Q3 is out soon,
given that in May they released the Q1 figs (Jan - Mar), in August the Q2 figs (Apr - Jun) so it would follow that in Nov we get the Q3 figs (Jul - Sep).

What are people's predictions for the rate of annual house price growth?
In the Q2 survey annual house price growth had slowed from 14% in April to 6.2% in July.
My prediction is close to 1% in September!:o

shoegirl

miju wrote:

what i was getting at is that high unemployment in another country does not equate to people coming here to work (theres other countries that they can go to besides ireland)

on the other foot high unemployment here does not equate to everyone emigrating , though if that was the case then supply would increase further (and before anyone asks i'm aware unemployment in ireland is low)

Good point but I do think that reasons for migration don't only include poor economics, but languages spoken, the existence of large existing expat communities, difficulty of getting jobs as a foreigner etc.

The reason Ireland still has any level of unemployment is nothing to do with immigration and/or jobs as its remained practically static since around 1999 despite large levels of migration to Ireland (and since a large proportion of migrant workers only stay for less than 2 years means that they are never going to be entitled to welfare, never mind attempting to claim it). From anecdotal evidence I see that the main 3 reasons for choosing the dole over a job is one of the following:
a) lack of employability - usually due to lack of qualiications, experience or both. sometimes also down to poor skills, poor personal presentation, substance abuse problems or simply poor job seeking skills.
b) dependency on private rented accomodation - which means that the replacement income required (especially for anybody with dependents) would need to replace not only their cash income but high levels of rent supplement levels
and finally
c) a perception (which is often incorrect and shortsighted, though not always) that the welfare recipient is "better off" on the dole

You also have to remember that huge numbers who would have been traditionally on the "dole" have been moved onto the following payments:
a) lone parent payments - 80,000 families
b) sickness and illness benefits - not sure what the figures are - huge increases in "depression" illnesses seems to be a common one now that "bad backs" are being clamped down on
c) SWA - supplementary welfare allowance - or "loafers allowance" as you basically get this if you've no income - regardless of the reason

I would suspect that if entitlement rules changed it could add 4-6% back onto the dole queues.

D'Peoples Voice

Right Lads,
A few of us here are running a sweep as to where estate agents will concentrate their focus on next!
When the market is doing poor, certain property commentators single out particular areas of the market and talk about how well it's doing and pretend the rest of the market does not exist.
For example, the year before last when things weren't going too GREAT in the property market ON AVERAGE, they singled out 3 & 4 bed houses and talked about the high growth rates in their prioces. They completely forgot to include any mention of appartments in those bulletins. Then of course when the market was soaring ,they began talking about all types of houses again.

Where do you think they will zone in on?
4-bed houses in Malahide!

whizzbang

D'Peoples Voice wrote:

Right Lads,
A few of us here are running a sweep as to where estate agents will concentrate their focus on next!
When the market is doing poor, certain property commentators single out particular areas of the market and talk about how well it's doing and pretend the rest of the market does not exist.
For example, the year before last when things weren't going too GREAT in the property market ON AVERAGE, they singled out 3 & 4 bed houses and talked about the high growth rates in their prioces. They completely forgot to include any mention of appartments in those bulletins. Then of course when the market was soaring ,they began talking about all types of houses again.

Where do you think they will zone in on?
4-bed houses in Malahide!

not to forget that they will also start selling up shop!



from askaboutmoney.com http://www.askaboutmoney.com/showpost.php?p=310032&postcount=7901

dochasach

A leaflet from a major multinational estate agency arrived in the doorway of our county Dublin home. The leaflet had a photo of balloons landing and the text:

"We understand 'soft landings'. It's at times like these that we come into our own."

Is the writing on the wall?
Is the fat lady singing?
Is the end near?

dochasach

D'Peoples Voice wrote:

Right Lads,
A few of us here are running a sweep as to where estate agents will concentrate their focus on next!...
4-bed houses in Malahide!

Well, those estate agents who haven't accepted at the very least a soft landing (see above) will focus on foreign property. We helped spread our property insanity through Spain, Hungary, the Czech republic, Bulgaria, Romania and Turkey. They will focus on Germany, after almost a decade of real deflation, there might be some room for growth.

I can't think of any segment of the Irish market that will perform as well as past trends. One beds and far-flung commuter homes are flaming out. The sellup shuffle is playing out. Anyone stuck when the music stops will take out top-ups and fix up what they have. Georgian brick and luxury homes are like a mars mission, exciting but unattainable for normal people. Commercial property has been dead for years (Bewley's in central Dublin is still empty and Ballsbridge is a sea of "to let" signs.) but bidders don't let that slow them down. Anyone buying to let now is insane.

well they locked the thread over on ask about money.com

I got banned twice!! hehehe free speech and the internet and all that JazZ

People must be giving out about the exposure the website is putting on their properties. A sign of an unhealthy market? Wrong or right?

It should have been a sticky not locked



http://www.thepropertypin.com/forum/index.php

Blackjack

do you have a link to the Askaboutmoney thread that you could perhaps PM me if you are not willing to link it here?.

Afuera

Blackjack wrote:

do you have a link to the Askaboutmoney thread that you could perhaps PM me if you are not willing to link it here?.

Here's a link to the famous thread here:
http://www.askaboutmoney.com/showthread.php?t=31710

Be warned that there are over 8000 posts on it as it spans from last July. I think that the moderators have locked it due to instances of falling prices being recorded on it and they are currently reviewing their policies to this.

well they have been rountinely deleting posts whether or not they mention price drops
and banning people alot its happened rather suddenly and I may add that lately they have begun to accept donations read this:
http://www.askaboutmoney.com/announcement.php?f=13&a=28

how about that!!
I dunno is it coincidence? or something far more sinister ? perhaps the crash is starting to put fear into people...... its far too late to close a thread such as that

enough fear to make you.... could you say the word bribe???
especially since the ask about money Annual General Meeting was recently

whizzbang

My take on it is that they don't want to be sued by someone whose house was blacklisted as "price dropping". Not a million miles away from the ban on talking about individual shares.

Hopefully it will reopen at some stage.

Afuera

whizzbang wrote:

My take on it is that they don't want to be sued by someone whose house was blacklisted as "price dropping". Not a million miles away from the ban on talking about individual shares.

Yes, this is what I was thinking too. It's understandable to some extent; it's not only the individual trying to sell the house that could take action but possibly the EAs as well.

blindjustice has a point though when he mentioned the fear they may have. This same fear certainly didn't exist when the thread started back in July. Sentiment surely has changed if the moderators feel they could be liable for peoples losses (the fact that people are even considering that there may be losses in the market is a huge difference from last year).

whizzbang wrote:

Hopefully it will reopen at some stage.

It looks like a similar thread may have already opened to discuss the property market on AAM.
http://www.askaboutmoney.com/showthread.php?t=40722

Not too sure if the moderators will let this one continue like the last one though. I'd expect that discussion of individual properties will be a no-no anyway which will limit it to discussion of some of the upcoming reports (Daft, ESRI, etc.) as well as any anecdotal evidence or opinions people care to put forward.

Calina

While I've some some sympathy for AAM the point is, if the two prices for a given property were in the public domain - which, the web, in fact is, there isn't much anyone owning the house can do with it other than admit they wanted to conceal the fact that no one actually wanted to buy said property at the original price.

Sponge Bob

I'd say the IFSRA has ' something ' to do with this .

Note the following .

a) IFSRA regulates the banks. When the fall in house prices becomes severe in the mid-late spring of 2007 then the IFSRA will be very busy .

b) The IFSRA have a consumer panel, chaired by the bloke who owns AAM .

c) As he accepted the chair of their consumer panel he now has a Fiduciary Duty to the IFSRA so if he ever finds out they are concerned about property drops he must act accordingly as long as he is in the chair . Once he gets the slightest little hint of concern from within the IFSRA his fiduciary duty kicks in.

A fiduciary duty is the highest standard of care imposed at either equity or law. A fiduciary is expected to be extremely loyal to the person they owe the duty (the "principal"): they must not put their personal interests before the duty , and must not profit from their position as a fiduciary, unless the principal consents. The fiduciary relationship is highlighted by good faith, loyalty and trust,

Its a hard one . If you expect open and free discussion on AAM about any matter of genuine concern to the IFSRA....such as the solvency of the banking system if the property market tanks....then you are simply looking in the wrong place in my opinion .