Housing Bubble Bursting

jmayo

The Dell plant in Poland has been on the cards for ages.
Also over last couple of years they have been moving a lot of their support to India. All that is really left in Ireland is server support.

Intel have problems with increased competition from AMD.
Look at HP, Dell, etc.
They are now offering AMD processor machines, whereas years ago they were totally Intel.

Dell will move first, all they have here is an assembly plant.
Their profits have been down in last year so makes sense to get to lower cost base. Cheaper to ship from Krackow to London than Limerick to London.

House prices fall through the floor in mid-west, which has a knockon affect on prices throughout the country.

I find the idea that the government will change from it's position of renting accomodation to buying it interesting. Gicing an ould digout to their developer\builder friends. Paddy the plasterer might need a hand.

Can't see lots of homeless dubs wanting to live in Roscommon or Leitrim. Possibly if they are into fishing I suppose, but that is along shot ?

I suppose we will finally get a change of government when the **** hits the fan and people cop on what a bloody mess was made of our economic boom.

Gurgle

miju wrote:

why do you think that out of curiousity?

Because theres a lot of people who want to buy but are waiting to see if the bottom drops out of the market, as has been predicted increasingly loudly for the last 5 years. If they knew for sure their house wouldn't have lost value in the next 10 years, thats plenty of reason to buy now.

Afuera wrote:

Why would they be queueing up if the annual output of new property is currently about twice as high as the demographics can actually support?

huh?

take a look:

http://www.askaboutmoney.com//showthread.php?t=45301

DonJose

jmayo wrote:

Intel have problems with increased competition from AMD.
Look at HP, Dell, etc.
They are now offering AMD processor machines, whereas years ago they were totally Intel

Add Xerox to this equation and you are looking at another 1000 job losses. How many of these salaries are dependent on paying mortgages?

http://www.finfacts.com/irelandbusinessnews/publish/article_10008536.shtml

"There is currently a question mark over 1,000 jobs at Xerox (Europe) in Blanchardstown and the future of these positions will not be known until the first quarter of 2007. "

The average Irish worker is over priced and this will only rise, don't fool yourselves, the Indians and Chinese can do the exactly same work for a whole lot less.

SimpleSam06

DonJose wrote:

The average Irish worker is over priced and this will only rise, don't fool yourselves, the Indians and Chinese can do the exactly same work for a whole lot less.

Lads can we stop with the doom and gloom, and try to keep it on topic? Here, this should cheer ye up...

Net inflows to Ireland rose to $21 billion after large profit repatriations in 2005

Deleted User wrote:

take a look:

http://www.askaboutmoney.com//showthread.php?t=45301

Yeah I saw that over on the property pin. All I can say is, anyone who paid a quarter of a million for an apartment in Oranmore richly deserves whats coming to them. Its one of these rustic commuter villages thats styling itself as the Beverly Hills of Galway. Like Barna, Moycullen, Claregalway and all the rest of them. I've no pity for speculators in general, and stupid speculators, well...

Elainew

http://www.boards.ie/vbulletin/showthread.php?t=2055041475


People are stretched to the limit

Zambia

Elainew wrote:

http://www.boards.ie/vbulletin/showthread.php?t=2055041475


People are stretched to the limit

I read this post and while i do feel for the guy its really down to bad planning a lot of people brought houses (Myself included) without any real assessment of their future bills. This is all part of the Must --- Get --- On --- Property ---- ladder syndrome.

babytooth

but what does this fabled property ladder look like and where does it bring you..

if it one of those trenady aluminium jobs that folds away into the size of a smally phone and can be used to have breakfact on pluto, or is it one of those electric powered ones, heated by gas with plush 2 inch carpet pile, bringing us all upwards, in this marvelous "wonder-bra" way to this utopia in the sky, where photographers from house and home are waiting with champagne to congratulate us on our reaching the top of this slippery and treacherous journey through life, in our pursit to attain happiness vis-a-vie a detached dormer bungalow with sea views and two minutes walk for a dart stop and superquinns around the other corner....


On another note: anyone read on metro west...will be submitted for planning in 2008...is this some muppet taking the piss...and another councillor/td addressing his local needs instead of the national good, no wonder things here don't work!....2008...thats a delay of two bloody years, i would expect it built in that time...

EDO

pjbrady1 wrote:

Just seen this on Unison. The countries two biggest employers Dell and Intel are now in the process of building large plants in Poland and China respectively. So the odds of both companies reducing their workforce by at least 25%+ in Ireland whithin a few short years of each other are seriously shortened. That could have the most serious impact on a housing crash speeding it up rapidly. From steady to free fall. Especially when Dell employees in Limerick were reportedly asked were they interested in training staff in Poland. So Limerick knowledge would be in Poland at 1/4 the price. Makes sense to close here.

---

INTEL, the world's top chip manufacturer, plans to invest in a major new plant in China to make leading-edge chips, its biggest investment in the country to date, according to Reuters sources.

The plant will make 65-nanometer multi-core processors, the sources told Reuters. This would make it Intel's first such manufacturing facility in Asia.

Intel, which has invested about $1bn in China to date, already has major test and assembly plants in Shanghai and the city of Chengdu.

In Ireland, Intel employs about 5,500 people, between its chip manufacturing site in Leixlip, Co Kildare, and a centre in Shannon. It is considered one of the top multinational investors here.

One source said the investment in the new plant would total a "couple of billion" dollars. Both sources declined to give further details of the project, such as the location and timing, although one said the investment could be announced in coming months.

Chip sophistication is measured by how small individual circuits are, with 65-nanometer considered one of the most advanced technologies in mass production today.

My company supplies and manufactures chip cutting,dicing and etching capital equipment to all of the big players - HP,Micron, Intel, Samsung etc etc . The last machine we shipped to Leixlip was over 2 years ago - all current business is to Singapore, South Korea ,Japan , China and Taiwan for Production machines and as ever , The USA and Japan for R/D Machines.

We are not even upgrading (As we have to do on a bi -annual basis) the machines in place here in Ireland - They are slowly being shut down and sent to the Far east and are upgraded there.

Lets Face it - the game is up for volume chip manufacturing in Ireland. They wont all close down tomorrow - All have invested massively in the years prior to 2002/2003 and will eek out very last cent of profitability from here - but the trend is down and all new investment is elsewhere.

Be wary of figures about incoming FDI - because of our "currently" favourable tax laws for multinationals , Ireland is used as a clearing house for many of them to maximise their tax-avoidance capabilities - a lot of that supposed "investment" will never see the light of day here.

I expect Dell and other component assembly manufacturers to start winding down once their new facilities in Eastern Europe come on line - then again if trade liberalisation keeps going at rate it is - maybe not even Eastern Europe - China and other low labour cost economies will benefit the most from this. This is to be expected - Irelands time as a low cost high end assembly point is drawing to a close - most economies only benefit for a decade or so from this type of economic activity before they have to move up the food chain into more cost and knowledge intensive specialized home designed and researched products or they stagnate and drop out of the world economy for a time.

IMO Ireland is on a knife edge at the moment. We have lost of a lot of momentum since 2001 . The penny appears to have dropped in regard to this with the current government (well some members of it anyway - the sooner Bertie retires for good to Fagans the better - I only think he's holding on until the Northern process beds itself down - please God he is not looking to beat Dev for the most years in office - he wouldn't be that vain -would he?) and there has been some belated investment in R&D - yet it may take a good few years for this to bear fruit and the intervening years will be tough. Unfortunately all the income we earned from the Celtic tiger years has been swallowed up by the property bubble and a massive expansion of the civil and public service , both of which to my eyes have produced little of substance as regards infrastructure and capital development. the massive growth in employment produced by this massive spending has been good in the short term , but questionable in the long term as the employment created , has in the majority , been low to medium skilled and low productivity.

The whole property game and all its associated sectors have been a colossal waste of capital and expenditure - for a country that is the second wealthiest in the world on paper - our road network is a joke , the rail system not much better ,but improving , the main qualification for becoming a planner here is that you didn't make it past primary school and you never use public transportation.

China should not be a threat to us economically - it will be the sub contractor to the West and Japan for many years to come - it has little R/D of its own and the social issues it faces internally are massive. Yet unless we get our buts in gear - start investing , seriously investing in our own country and people instead of duplexes off the coast of Africa we will be left weakend fighting over the scraps from Germany, Japan , theScandanavians and the US all who are miles ahead of us in 21st century manufacturing and R&D.

babytooth

here here edo, you have stated it all quite succicintly.

and could you put a time-scale on this scale down of production, do those teradyne and such like mackines have a long life?..

Sponge Bob

on the other hand we employ more and more creative accountants in services/banking/insurance to compensate for this decline in physical goods production. most IT job creation is in financials in the past few years. These are not as susceptible to cost issues as are factories.

our problem is that if construction slows down as it must then we have a sizeable cohort of unskilled or semi skilled males to redeploy. They will emigrate to build the Olympics in London for 2012 , same as it ever was in fact .

EDO

babytooth wrote:

here here edo, you have stated it all quite succicintly.

and could you put a time-scale on this scale down of production, do those teradyne and such like mackines have a long life?..

To be honest with you BT , it really comes down to other inputs , human ,energy and other overheads , as opposed to the machinery itself, how long production will stay up in Ireland.

The equipment itself is built for long life in 24/7 environment - provided it is properly maintained serviced and upgraded: 20-30 years at a minimum - its like buying an Boeing 737 - they are built for long life and cost accordingly and spares, repairs and upgrades mean a long life economic relationship between seller and buyer.

All the production equipment in HP's and Intels plants (with the exception of the FAB plants) could be dismantled shipped and recomissioned elsewhere in matter of weeks. To give you an example - We have been manufacturing a particular machine system for HP's inkjet division - the first model would have taken about a month or so to commission into production - the latest model -Mark VI - can be up and running in 48hrs. Also the first model would have had a capacity to process 12-15 wafers in 24hrs - the latest model can process over 150 wafers in the same timeperiod - all of these are Asia bound.

What will determine when these Plants close here in Ireland will have more to do with The company's share price and bottom line than anything else. Both HP and Intel are hurting big time from Asian competition and I believe both have made the decision to move chip and component production to Asia to counteract this - either by outsourcing or making direct investments themselves. This will take time but has been underway for the last 3 -5 years or so. The plants here in Ireland are still profitable but will be let run down - Id say you are talking 5-7 years or so - depending how fast the new facilties come on line and more crucially the world demand for their product - if demand is lower than anticipated and increased competition is still taking sizeble chunks from their profit margin - it could be all over very fast - witness NEC in ballivor.

babytooth

it is indeed a worrying thought,
but then again the financial services are even more moveable, all you need is a few computers and a net connection.

Alot of the larger companies have moved back and middle office functions to india and china and other asian countries...the productivity per person there is absolutely terrible. Certain (better not name names) banks have pulled back on this idea and re-established staff back in the west...i can see something similar happening with regard to high tech stuff...

dell also had similar probs along these lines with their call centre staff....now all us customers contact us call centres...

and amd have opend a manu plant in the states.

But we really do need to establish ourselves as something more than a glorified assembly worker and tax mechanisim....we should be designing and implementing our ideas here rather than taking to directions from LSE or MIT or Berkley....

A good hard shock to the system is what we sorely need to bring some realisiation back into the market....happens all the time in financial markets...the "lets look at this twice" phemomenon.

Property to drop and stay at normal levels in the mid term is the best for the country, read through all these stupid sites, full of ppl asking about this house, that apartment etc...
we mastered the art of building thousands of years ago, there is nothing new to be gained from it...lets grow up and move on to a new toy....

We need to radically overhall the education system to place far ore emphasis in creating rather than learning others ideas...especailly pushing high end eng and bio-tech as well as financial innovation....we should be able to export our education facilities like the situation currently in medicine....import foreign students, let ireland be the place where different cultures interact to solve different problems and bring themon into production...

and of course make some money on it.!

CiaranC

Does someone want to explain why if there are supposedly 250k+ empty properties out there its next to impossible to find one to rent?

Sponge Bob

babytooth wrote:

it is indeed a worrying thought,
but then again the financial services are even more moveable, all you need is a few computers and a net connection.

But once the Sun can buy credit card numbers from these outsourced centres it kind of backfires.

The high tide of outsourcing has passed and we in the west have a much clearer idea on what to send to Asia and what not to send to Asia .

Some of our best practises have made it there. We have Ryanairised their airlines for them as an example of what we have done for India.

Two days ago at Bangalore, I encountered some of the rudest counter staff I have met in a long while. I also had an airline staffer ask me me, "Look here, do you want to go on this flight or not ? I will have you removed if you delay any more." The delay, incidentally, was because some other passenger had snucked off with my mobile phone after we had both put our phones into the check-in tray. I was asking another staffer asking him what I could do. Sure I was delaying a little (we were still ten minutes to scheduled departure) but not because I had fallen asleep or gone shopping. Govindraj Ethiraj

Alot of the larger companies have moved back and middle office functions to india and china and other asian countries...the productivity per person there is absolutely terrible. Certain (better not name names) banks have pulled back on this idea and re-established staff back in the west...i can see something similar happening with regard to high tech stuff...

They did so in the period 2000 - 2003 in the main and have now absorbed some harsh lessons. Many have quietly moved these functions back and have quietly learnt their lessons. All the top 4 banks in the UK and all th etop 43 insurers in the UK would be on the list of those who have learnt harsh lessons

Companies that fail to differentiate properly will be murdered in the market because their support and customer facing staff will lose them customers. Outsourcing is not funky if the destination has no understanding of customer service , is it ??

Have you ever seen a good interface designed in India ??

soma

CiaranC wrote:

Does someone want to explain why if there are supposedly 250k+ empty properties out there its next to impossible to find one to rent?

Ciaran the vacant properties figure pertains to the whole country, not just Dublin (which is where I think you're referring to).

Something that is very obvious at the moment (and it is a textbook stage of an early stage property crash) is that there is a rental squeeze in the prime areas of Dublin due to many investors/speculators dumping their properties (some of them former rentals) on the market in an effort to leave the market just after the top.

When a large percentage of these units fail to sell (of course some will be sold, especially by vendors willing to cut prices), properties will once again come back onto the rental market and relax the pressure on rents.

I am not claiming to have a crystal ball here, but I'm going on the experiences of other economies that have experienced the fallout from large scale property speculation.

miju

CiaranC wrote:

Does someone want to explain why if there are supposedly 250k+ empty properties out there its next to impossible to find one to rent?

quite simply these properties aren't currently on the rental market and their owners are now looking to cash in their chips

pjbrady1

We have all got it wrong. IFG have the hard data facts, and they know how to twist it. See if ye can spot the gaps in the logic of this article from IFG Mortgages on Unison. News for you IFG, market hit a peak in October, those mortgages are for 6pc more than same period last year. So few companies are coming out and saying house prices falling that when somebody does eventually (most likely www.daft.ie) there will be alot of panic when Irish independent/times report it.

---

Joint applicants, on the other hand, appeared to be coping with the six rises in interest rates over the last year or so.

Despite predictions that the housing market had peaked, consumers in the last three months of last year were forced to borrow €14,000 more to buy a house.

The average purchase mortgage was now €230,180, up 6pc on the same period last year.

IFG said this indicated that house prices were continuing to creep upwards in spite of predictions the property market had hit a peak.

And rising interest rates have prompted more borrowers to take on mortgages with a longer term. Some 43pc of house buyers have opted to pay back the home loan over 30 or more years.

Half of borrowers conducting business through IFG brokerages around the country are now taking out loans of between 25 and 35 years' duration.

Sponge Bob

pjbrady1 wrote:

We have all got it wrong. IFG have the hard data facts, and they know how to twist it. See if ye can spot the gaps in the logic of this article from IFG Mortgages on Unison.

plenty

Despite predictions that the housing market had peaked, consumers in the last three months of last year were forced to borrow €14,000 more to buy a house.

more than q3 06 or q4 05, they leaft that out

The average purchase mortgage was now €230,180, up 6pc on the same period last year.

IFG said this indicated that house prices were continuing to creep upwards in spite of predictions the property market had hit a peak.

but they mainly deal with first time buyers I'll wager.

Some 43pc of house buyers have opted to pay back the home loan over 30 or more years.

yep, no equity from tradig up, thems first time buyers all right.

and a peak in October is when money is finally drawn down for sales agreed in May or June ...but they never said if the peak in October was for approval amounts or drawdowns

IFG would have a lot to lose if the first time buyer was priced out and stopped coming to them. Thats my read of it.

SimpleSam06

pjbrady1 wrote:

We have all got it wrong. IFG have the hard data facts, and they know how to twist it. See if ye can spot the gaps in the logic of this article from IFG Mortgages on Unison.

See this is the kind of fun you can have with statistics. If you deal with things year on year for the last five years, yes, there has been a continual rise in prices. Looking at it month on month for the last year however, you can clearly see the rates of price rises decreasing, until November, when they (nationally) start going into decline around now.

This is why I said we won't see the stampede for the door until the end of Q4 2007. When the year on year stats show an actual decline in house prices, thats when even the most stubborn cling-on-by-the-nails investor is going to bail out. Until then we'll see a steady trickle of properties coming onto the market, as we are already seeing on Daft.

At that stage all bets are off on house prices, the not too steep downward curve of prices could well become an all-out plummet.

babytooth

SimpleSam06 wrote:

See this is the kind of fun you can have with statistics. If you deal with things year on year for the last five years, yes, there has been a continual rise in prices. Looking at it month on month for the last year however, you can clearly see the rates of price rises decreasing, until November, when they (nationally) start going into decline around now.

This is why I said we won't see the stampede for the door until the end of Q4 2007. When the year on year stats show an actual decline in house prices, thats when even the most stubborn cling-on-by-the-nails investor is going to bail out. Until then we'll see a steady trickle of properties coming onto the market, as we are already seeing on Daft.

At that stage all bets are off on house prices, the not too steep downward curve of prices could well become an all-out plummet.

ahh and then you have the rate of annual percentage change has remained the same,....the direction changes as does the size....

SimpleSam06

babytooth wrote:

ahh and then you have the rate of annual percentage change has remained the same,....the direction changes as does the size....

Its gas really. I'm convinced most of these "investors" aren't even factoring inflation or the money and taxes involved in selling a house into their equations.

EDO

Its very very quiet at the moment - I think we're what you would call the "phoney War" period of this asset bubble. The market in general definitely has peaked .After the outbreak of negativity in the last 6 months of 2006 in the media , nearly every economist who isn't on a paid retainer from Vested interests has called it way overvalued and in trouble, the interest rate rises and budget changes - everybody appears to be holding their breath . Yet little by little the sentiment is changing . I have noticed this in that where previously in company the tone of conversations would be bullish to the extreme regarding property , now it simply doesn't come up at all! - I really think the penny is dropping for a lot of folks that the party is over - like Benny over at AAM - Dont mention the war - if you're not talking about it - well it isnt happening (Therefore I think we have fully entered the Denial Stage of the bubble)

If the market has plateaued - and in all honestly it has going by the figures shown by various posters here and at other rebel sites - well what now . I have been figuriing all along that we have to get the last of SSIA money out of the way and next election and then in last quarter of this year we would start to see the beginning of a spiral downwards - but it really all comes down to sentiment - many posters have noted the fixation Irish folk have with land and how they would happily starve to death rather than give up the property - I agree and disagree - The main thing to watch will be thousands of pure amateur "investors" who have entered the market in the last 4 years or so - people who have no prior experience of investing or a bear market of any kind - people who would be terrified to invest in shares or stocks for fear of the old" prices fluctuate - values can both rise and fall" - yet because its houses - something they are under the impression they understand - they have no problem borrowing 35-40 year debt aswell as a chunk of their parents equity to bet on them.

My Mum was the census enumerator for her area last year and I helped her out at the weekends - It was a serious eye opener I'll tell you. The number of houses we visited where the offspring had all bought apartments in nearby towns and developments yet were still living it at home with Mammy and Daddy was unbelievable . I would say at least 20% of these places were rented all the others vacant - just sitting there clocking up the capital appreciation - they were not even bothered about putting them out for rent - too much hassle . Now when I hear that the census found 20% of our housing stock vacant - I can well believe it and would say it underestimates it. The reaction of this class of investor (there must be thousands of them) when the capital appreciation speedometer declines to zero will be difference between a soft landing and carnage - My bet Im afraid to say is on the latter.

babytooth

capital appreciation...like equity releases is just a lovely little catch phrase, a clever marketing ploy....

take companies that have financial assets, they would "mark these to markets" daily and then apply a risk ratio and a band of swing. Now these are on derivatives and commodities in highly liquid markets and yet they are required to under value the Market value by 20% to more accuratley take into account the liquidity issue.

ok, now we all know houses and how liquid they are.

my house has gone up 40k cos my neighbours babysiter uncle in law knows a man who's sister had one valued......if only the real world worked like that,....

capital appreciation is only an intangible term to account for the price inflation in nominal terms of an asset. It can never be measured on a market as markets move and yet it takes times to liquidify your asset, so at time x when the process starts does not mean that at time y when transaction completed that price p is the same, it can't by market definition be...but hey, these ppl can't even figure percents out.

we are in the denial stage, things have become "sensible" now say the VI. I think not. These things take time to build up momentum, its the nature of the market. Things will stagnate for a long while to come, ppl's reluctance to accept that there views are wrong, the strong and united vested interest will work hard to shore up the edges, but it will turn and when it does, get out of the way....but something is needed first to make it turn..

This will happen, bond yields are turning, which reflects the markets risk weighting for "risk-free" assets and so on, in other words, markets see choppier times ahead and want a premium for this. Spreads on Securitised CDS have opened up enormously, markets see that the western world is on a turning point, what they don't know is whether this is a local maximum or whether this is the top of the top.


Sentiment will drive this forward, one way or another....and it will take something external to cause the rush! I'm liquid as liquid could be, and everyone i know who make a living doing this ****e are also heading ---->...

soma

pjbrady1 wrote:

Just seen this on Unison. The countries two biggest employers Dell and Intel are now in the process of building large plants in Poland and China respectively. So the odds of both companies reducing their workforce by at least 25%+ in Ireland whithin a few short years of each other are seriously shortened. That could have the most serious impact on a housing crash speeding it up rapidly.

It's being reported this morning that Intel's quarterly profit has dropped 40% and their stock has dropped 4% as a result. If they come under pressure for cost-cutting that is faster than expected, I wonder could this accelerate their relocation to cheaper destinations.

http://www.ireland.com/newspaper/breaking/2007/0117/breaking21.htm

Sponge Bob

soma wrote:

, I wonder could this accelerate their relocation to cheaper destinations.

not really if you knew their overall product mix the Irish end of it is good (for now)

babytooth

Sponge Bob wrote:

not really if you knew their overall product mix the Irish end of it is good (for now)

not the flash memory section which is in the process of being sold, should be completed in q1...some singapore company, who ain't going to hold the staff here, they will take the equip and place it in their chinesee factories.

also, middle management cull and hiring freeze in places for all but the core areas...and this is ireland as well as some of the us locations

EDO

Sponge Bob wrote:

not really if you knew their overall product mix the Irish end of it is good (for now)

If by "for now" you are talking about the next 12-24 months - I reckon you're right - after that IMO all bets are off. Intel is taking a severe beating at the moment and its only matter of time before the Top brass starting fearing for their gigantic renumeration packages. It wont matter how good your product mix is, how productive the workforce is , how well managed the facility is. All will come down to the bottom line and its effect on the share price - easiest way to boost these in the short term - cut costs - if somebody in Asia or elsewhere can do the job at 1/4 the price of Ireland - well and good - if all the companies we supply are basing their assembly operations in China - even better cuts transportation time and costs.

We've seen all before the 80's here and its starting to appear here again. Get used to it - its called globalization and capital will go where it can get the best return on its investment for the least cost . Ireland's time is up in this regard - the 2 things we had going for us were EU membership and low cost - both are history as advantages - the EU expansion eastward and falling tarriff barriers for globalized trade have done the former - the spiralling cost of doing business and living in Ireland have accounted for the latter.the only way IMO that we can keep the existing facilties that these multis have here would be to even further subsidise them - I think we have enough Gov subsidised private industry here as it is. Intel, Hp etc etc are American Multnationals - if they have any sentimentality it will be biased towards the US - We need our own.

Lennoxschips

well said. when the japanese bubble burst at least they still had the likes of honda, toyota, nissan, sony, jvc and panasonic to fall back on. we don't have much of that going on.

Zambia

Lads anyone know how to become a Balliff in the republic. Sounds like it may be a growth industry.