House Price Boom Over - Evening Herald Front Page today

Saint_Mel

I dont think that house prices will fall dramaticially until
well after all the SSIA's have matured and spent.

For a lot of people coming up with the deposit is the main stumbling block
but with the SSIA's theres the deposit straight off and once people can
afford the deposit I cant see prices falling.

(Just my own humble opinion for outside Dublin house prices)

the_batman

Saint_Mel wrote:

For a lot of people coming up with the deposit is the main stumbling block
but with the SSIA's theres the deposit straight off and once people can
afford the deposit I cant see prices falling.

With 100% Mortgages, does the deposit really matter any more?

Noelie

It still does, you normally get a lower amount of money with a 100% mortgage than with a 92%.

Afuera

Gurgle wrote:

It used to be the rule rather than the exception that a house would sit on the market for months before selling - now you're seeing people panicking when that happens because they expect their house to be snapped up the same day they decide to sell it.

This is exactly why it will crash. People's expectations are no longer in line with reality. Some will panic when the myth that property is a one-way bet is broken.

ambro25

hmmm wrote:

People paying 9 times salary for so called "starter" homes assume that the price of their property will go up, and they will be able to sell and move to a "normal" property. Leaving aside the nonsensical reasoning behind this * (etc)

* If the price of your starter home goes up, so does the price of your target property.

I'm sure many will be quick to post something to the effect that "Yea, hmmm, but by the time they wanta move 'up', their take-home pay will be 'up' as well so the fact that starter and normal properties both go up at the same time doesn't matter"

I'm not (I'm just making a pre-emptive strike against such posts, if you will ).

The fact of the matter is, bearing in mind the market dynamic as influenced by the number of sustainable multiples of take-home pay for borrowers, the higher the price range you're looking at, *very obviously* the bigger the multiple required to move 'up' : if your starter home is €250k and you're buying with a 9 x pay mortgage, you're going to want a very serious career boost to move up to a €450k home (still at 9 x, now with kids to clothe and feed).

Briefly, my point is that maybe the slump (if it is so) corresponds to a point of equilibrium having been reached : no more buyers' repayment capacity left in the market to sustain the previous rate of growth, therefore slow down.

Gurgle

hmmm wrote:

People paying 9 times salary for so called "starter" homes assume that the price of their property will go up.

Maybe they're afraid the price will go up and they'll lose the option of ever owning their own home at all.

People pay their annual salary for a car, are they convinced its value will go up?

The decision to buy a home should be based on:
Do I want to live here long term?
Will I pay the same or not much more to own this house than to rent it?
Can I expect to be able to pay the mortgage over its term, factoring in reasonably likely rises in interest rates?

Idleater

Gurgle wrote:

People pay their annual salary for a car, are they convinced its value will go up?

Not only that, but people buy cars knowing beforehand that they will lose a huge proportion the second they take the key, yet barely blink an eye.

I agree completely with your arguments pro home ownership. Investing/Buy To Let are a different kettle of fish.

If the repayments are managable, with allowances taken for increases in monthly cost, then the stability that a home provides can be worth a lot in terms of quality of life, time, and general wellbeing that cannot be quantified in real (monetary) terms.

L.

delly

My 2c's

Since and before I bought my first house in 2002 people have predicted a crash of some form or another. I was honestly worried about buying at the time but went ahead anyway. I really feel sorry for the FTB's who have held back on the idea that a crash was on the way and have now priced themselves out of certain areas on this basis.

I currently live in a very large estate with over 900 homes just south of Drogheda which takes 20 minutes to get to Dublin airport. I would be classed as the new commuter breed, but not by much when I hear how far other people travel to get to work in the city.

With such a large mix of apartments, semi-d's, detached 4 and 5 bedroom houses in my estate there is always a good supply of properties for sale, and I keep an eye on prices to determine my own house worth. The fact is these homes are still selling and are still maintaining the pricing patterns during the year. Things may slow slightly and have the 'soft landing' that is often talked about but I'm pretty sure there will be no hard crash of these types of houses aimed at FTB's and people trading up for there second home.

soundbyte

thejuggler wrote:

this is the first time that the story has appeared on the front page of a newspaper that the average "man on the street" would see. Yes there have been numerous thinly veiled warnings over the last few months

Emm ... was I the only one that read that story in the Sunday Trib at the weekend? (The borrowing calculations were lifted from the Sunday Business Post two or three weeks ago).

Am I the only one who has read countless front page stories in the Indo and Business Post about a downturn in the market?

ionapaul

I read numerous 'bubble gonna burst!' articles about the NASDAQ in 1997...1998...in 1999...in 2000.

They were all right in the end, there was a horrible bubble with regard high-tech stocks ignoring the fundamentals, in fact despite the horrific crash some are still over-valued!

Discussion right this second on the Last Word about whether or not the crash has finally started - whether it is happening now or in a year's time, don't doubt that a market can't ignore the fundamentals forever. The bubble ends when the amount of 'greater fools' dries up - still probably a good few of them around!

Gurgle

delly wrote:

Since and before I bought my first house in 2002 people have predicted a crash of some form or another. I was honestly worried about buying at the time but went ahead anyway.

Likewise, but for me it was in 1999.

I made the mistake of listening to the economists once:
In 2000, my 1 year discounted fixed rate term was up, and everyone was absolutely certain that interest rates would not stay as low as they had been. At the time, I think variable rate was 5.7%, and we allowed ourselves to be talked into fixing at 6.7% to protect ourselves against the near-certain impending increase.

Anyhow, we fixed for 2 years at 6.7% while the going variable rate dropped to 4.1%.

Doh!

Lesson learned.

Just 2 weeks ago, my mortgage company called me out of the blue to offer me a better deal on my mortgage.

When it actually came through it was 4.15%, down from 4.5% and pushing a hard-sell of the fixed rate at 5% because - guess what - the ECB is certain to increase rates again this year :rolleyes:

If they're trying to sell you something, its in their interests not yours.