Housing Bubble Bursting

patrickolee

Zambia232 wrote: »

True I did word that cr*p so I did so I did. However Still makes a point.

Yes there is a huge amount of TV Property porn

There's a fair bit of doomsday porn out there too, tbh. People will believe what they want to believe, the reality is of little consequence. They like to watch programs (read ascii) which support, feed and justify their reality with greater eloquence than they could ever muster.

miju

Irish doom and gloom "porn" has amounted to 2 or 3 programmes over the last year. I would hardly call that an abundance would you?

MrVostro

miju wrote: »

Irish doom and gloom "porn" has amounted to 2 or 3 programmes over the last year. I would hardly call that an abundance would you?

And nearly 4000 posts in this thread

Bring on the crash i say.

mikemac

Been following this thread for ages but don't post here often

As you know the Rent a room scheme has the limit upped to €10,000.
Friend of mine recently bought a 2 bed in central Dublin.

He was going to rent a room for €630 per month so just below the old limit.
But now he want's to hike the rent to €700 per month because he can get away without paying tax. As soon as the budget was announced he decided instantly to up the rent.

Now you don't need to tell that rent is based on supply and demand and I've no idea will he get this rent or not, I doubt it though, it's an undesirable area imo, near James St, Dublin 8.

Do you think rents will be hiked up in the short-term by landlords renting a room because the rent a room scheme has been altered?
This is even leaving aside a high proportion never even declared rent in the past.

SimpleSam06

MrVostro wrote: »

And nearly 4000 posts in this thread

Yes, because a few hundred people debating on the internet is exactly the same as a glossy multimedia marketing campaign being broadcast to hundreds of thousands of people.

MrVostro wrote: »

Bring on the crash i say.

Done!

SimpleSam06

patrickolee wrote: »

the reality is of little consequence. They like to watch programs (read ascii) which support, feed and justify their reality with greater eloquence than they could ever muster.

They still have to deal with the actual reality at the end of the day, no matter how much money it might cost them, eh Patrick?

Do-more

miju wrote: »

dead cat bounce was after the election IMO.

The auld cat might be trying for another go on the trampoline!

I was talking to an EA yesterday afternoon and he had sold 3 properties since Wednesday (I think that's about the same as he did in the whole of November!). He also said that the office had been busy with enquiries on Saturday morning.

Seems like Biffo has convinced some people at least that we are at the bottom! :eek:

The_Conductor

micmclo wrote:

Do you think rents will be hiked up in the short-term by landlords renting a room because the rent a room scheme has been altered?
This is even leaving aside a high proportion never even declared rent in the past.

I don't think it will lead to a massive rise. The way the rent-a-room scheme is structured- all income to the landlord, including billshares for electricity/gas/NTL/Phone/Internet/Food etc etc etc- along with the monthly rent got counted towards the old 7,200 limit. A lot of people were claiming the rent fine (600 odd) but then neglecting to declare the rest of the income- as it would put them massively over the limit, in some extreme cases perhaps as much as double the limit (one case I know of where food purchases were done by the landlord weekly in M&S and Superquinn at over E200 a pop for a house, divided 3 ways).

Its a reflection of the increases in the costs of utilities, and living expenses in general- if people are being honest when making their claims and actually counting all their income- then its a manner of legitimising their tax return- rather than extra money for them, or higher rent for their "tenant".

S.

astrofool

Is there any particular reason why they apply tax on the whole amount when it goes over the cut off point, rather than, say, reduce the cut off, but only apply it on the difference?

SkepticOne

astrofool wrote: »

Is there any particular reason why they apply tax on the whole amount when it goes over the cut off point, rather than, say, reduce the cut off, but only apply it on the difference?

Don't know the official reason but they may fear that it may have some impact on revenue from standard investment properties if they did this.

MrVostro

smccarrick wrote: »

(one case I know of where food purchases were done by the landlord weekly in M&S and Superquinn at over E200 a pop for a house, divided 3 ways).
S.

I wish i could find a landlord who would buy food
I have never ever been in a house share or know anyone else who has been in a house share where they chip in and food is bought by the landlord every week.
Normally people buy their own food and there is a kitty of maybe a tenner a week for sugar, tea bags etc.

MrVostro

SimpleSam06 wrote: »

Yes, because a few hundred people debating on the internet is exactly the same as a glossy multimedia marketing campaign being broadcast to hundreds of thousands of people.

Some tend to debate it a LOT more than others though.

Anyone have a link to the tool that counts each users posts in a thread?

Pa ElGrande

MrVostro wrote: »

Some tend to debate it a LOT more than others though.

Anyone have a link to the tool that counts each users posts in a thread?

http://www.boards.ie/vbulletin/misc.php?do=whoposted&t=2055033806

MrVostro

Pa ElGrande wrote: »

http://www.boards.ie/vbulletin/misc.php?do=whoposted&t=2055033806

Excellent . thanks.

Kinda tells a story alright.:D

Victor

SkepticOne wrote: »

Don't know the official reason but they may fear that it may have some impact on revenue from standard investment properties if they did this.

In a way, its a price control. It means most people are likely to get two people in at €317.50 per month, as few are going to pay €635 per month. Thats two people with roofs over their heads and that was the reasoning for the scheme.

MrVostro wrote: »

I wish i could find a landlord who would buy food

Many a young college student start off in digs with dinner and breakfast provided, if wanted.

Pa ElGrande

MrVostro wrote: »

Excellent . thanks.

Kinda tells a story alright.:D

Here is a good story for you (if you have broadband)
http://www.abc.net.au/4corners/content/2007/20070917_subprime/loans_lo.asx

SimpleSam06

MrVostro wrote: »

Excellent . thanks.

Kinda tells a story alright.:D

Its even better if you look back over the various threads over the last few years and see who was right and who was wildly wrong. So far its bears about fifty, bulls in and around zero. Almost like the people who post the most here know what they are talking about more than others, if you can imagine such a thing...

Sizzler come back, all is forgiven!

Borzoi

SimpleSam06 wrote: »

Its even better if you look back over the various threads over the last few years and see who was right and who was wildly wrong. So far its bears about fifty, bulls in and around zero.

Even a stopped clock tells the right time twice a day:D

It's not exactly rocket science to predict a bust during a boom

SimpleSam06

Borzoi wrote: »

It's not exactly rocket science to predict a bust during a boom

You might have mentioned that to the waves of bulls hurling themselves at the ramparts of reality for the last couple of years.

Gurgle

Borzoi wrote: »

Even a stopped clock tells the right time twice a day:D

It's not exactly rocket science to predict a bust during a boom

Ah, but theres predicting a bust and theres predicting the nature, the timing and the extent of the bust.

SkepticOne

Borzoi wrote: »

Even a stopped clock tells the right time twice a day:D

It's not exactly rocket science to predict a bust during a boom

There were a surprising number of people predicting that the boom would not end in a bust but would end a soft landing i.e. gradually level off. A lot of people would not accept that there was a bubble.

ionapaul

Gurgle wrote: »

Ah, but theres predicting a bust and theres predicting the nature, the timing and the extent of the bust.

Very true...most bulls have now seen the 'light' of the bears' side of the arguement, but we all differ in our predictions for the future. Some see nominal declines of 50% over a few short years, whereas others see a longer, drawn-out affair with prices declining more gently YOY (the deflating bubble), a la Japan. Over on the pin, one of the bears even got himself a mortgage, ready to jump in and get himself a bargain in the declining market, while I myself would think such a move is a few years too early! Although sentiment has definitely changed, most still believe in the property fairytale (easy way to get rich) and think we'll have some sort of soft landing and it'll all kick off again in 2009. I would think the depths of property market despondancy won't be reached till then...

Lots of us will be proved wrong over the next few years and only a few of us will be proved right, that's the only thing that is sure!

Do-more

Pa ElGrande wrote: »

Here is a good story for you (if you have broadband)
http://www.abc.net.au/4corners/content/2007/20070917_subprime/loans_lo.asx

Just got to look at this programme, it's an excellent piece of work and should be compulsory viewing for anyone thinking of getting a mortgage right now!

Kipperhell

Do-more wrote: »

Just got to look at this programme, it's an excellent piece of work and should be compulsory viewing for anyone thinking of getting a mortgage right now!

LOL
You have got to be kidding me that you think this was a well done balanced show.
You would want to be blind not to notice some of the filler and biased reporting. I liked the reference to the houses being vacant for 12 years but some how this a recent issue caused by new trends. Their was the black paranoid groups very lightly covering what they though was going on.
The gun nut is only casually mentioned as paranoid.
The man who was in his 50s (maybe younger but had a 27 year old son) who only recently bought a house and was losing it because he was unaware of what he agreed to.

What can be taken from it is how economies can be effected and why legislation of brokers is important. It doesn't relate as well to Ireland as we don't have similar mortgage deals.

Do-more

Kipperhell wrote: »

LOL
You have got to be kidding me that you think this was a well done balanced show.
You would want to be blind not to notice some of the filler and biased reporting. I liked the reference to the houses being vacant for 12 years but some how this a recent issue caused by new trends. Their was the black paranoid groups very lightly covering what they though was going on.
The gun nut is only casually mentioned as paranoid.
The man who was in his 50s (maybe younger but had a 27 year old son) who only recently bought a house and was losing it because he was unaware of what he agreed to.

What can be taken from it is how economies can be effected and why legislation of brokers is important. It doesn't relate as well to Ireland as we don't have similar mortgage deals.

Heh, show me where I said in my post that it was "balanced"!

I would agree with your point about the relevance of showing houses that were vacant for 12 years, however I found the programme excellant in explaining to people the lunacy that has being going on in the US mortgage market.

In practical terms it may not appear to relate to the Irish situation, however the financial fallout is certainly having an effect.

If you read this thread on the pin, you will see that resets are only a small factor in mortgage defaults in the US and in fact job loss is by far the biggest reason given by those who have defaulted on there repayments.

It is this point that will have the greatest relevance to Ireland in the coming months and years.

The programme clearly showed that they are still not into the worst of the problem in the US and made the point that it is when the problem is effecting the real economy and not just the financial markets that people will really begin to suffer.

I would argue that we are starting to see this happen now, I have yet to speak to anyone who is happy with the business they are doing this Christmas compared to what they were doing the last few years. I was in one waste disposal firm today who have laid off a number of staff this week because of the reduced level of business. What I see is a couple of jobs here and a couple of jobs there going almost every single week.

I read recently that house repossesions in the UK will be about 25,000 for 2007 and it is expected that this figure will double in 2008. Do you believe that we will be immune to what is happening elsewhere in the world?

The graph of house prices in Amsterdam since 1600 and whatever should also be a sobering thought for all those who believe that the only way is up.

Kipperhell

Do-more wrote: »

Heh, show me where I said in my post that it was "balanced"!

You said it was excellent! I never claimed you said it was balanced but as a news/current affairs show it should be balanced as it was not I don't think it excellent. It is bad tabloid TV.

Do-more wrote: »

In practical terms it may not appear to relate to the Irish situation, however the financial fallout is certainly having an effect.

This show claimed 9-11 was the reason house prices rose there. That doesn't apply to here. The financial reliance on world banks on each other is a concern but it could just as easily mean European money stays in Europe. The retail market in the US doesn't turn a profit until November ever year. Makes sense we stop relying on them to fuel the economy like the gulf stream

Do-more wrote: »

It is this point that will have the greatest relevance to Ireland in the coming months and years.

I think you should replace your definitives such as "will" to what they are "maybe" or "I think it might"

Do-more wrote: »

The programme clearly showed that they are still not into the worst of the problem in the US and made the point that it is when the problem is effecting the real economy and not just the financial markets that people will really begin to suffer.

No it didn't it gave a biased view of the worst outcome with a lot of filler

Do-more wrote: »

The graph of house prices in Amsterdam since 1600 and whatever should also be a sobering thought for all those who believe that the only way is up.

So an economist could grab the latest figure from 1600 to prove his case of what will happen now. You don't see that as a bit of over simplification and a stretch. I have yet to meet a person who actually thinks they just keep going up.


I have never seen a current affairs program claim house prices will forever go up or forget to mention the potential risks of property. So no it wasn't excellent quite the opposite. It had some details explained but it was in between other fluff.

Houses prices in Ireland are more due to our own market than what is happening in the US

miju

Kipperhell wrote: »

This show claimed 9-11 was the reason house prices rose there. That doesn't apply to here.

On the contrary. While not mentioned in direct relation to Ireland 9-11 is very relevant here. It was in the wake of 9-11 that the ECB introduced emergency interest rates and was also at that very point that more petrol was poured onto the raging Irish economy and our housing market turned into a speculative bubble.

Pa ElGrande

Kipperhell wrote: »

This show claimed 9-11 was the reason house prices rose there. That doesn't apply to here. The financial reliance on world banks on each other is a concern but it could just as easily mean European money stays in Europe. The retail market in the US doesn't turn a profit until November ever year. Makes sense we stop relying on them to fuel the economy like the gulf stream

You are correct 9-11 was not the reason house prices rose here, it was simply used as a cover by the Greenspan Federal reserve to drop interest rates further due to the deflationary effects of the dot com bust in 2000. The banks (Citigroup et al) are still sitting on bad loans from that period, that are being held off balance sheet in SIV's. The ECB panicked and followed them down.

Kipperhell wrote: »

I have never seen a current affairs program claim house prices will forever go up or forget to mention the potential risks of property. So no it wasn't excellent quite the opposite. It had some details explained but it was in between other fluff.

During the boom here if you look at the RTE news reports from the period 2001 early 2006 they always lead with the rising prices, the queues of young couples waiting to buy into developments, the record prices achieved at auction, they never mentioned that prices will go down until the boom was over. When they mentioned an end to the boom it was to say that prices would achieve a "soft landing". At the time they defined a soft landing as prices rising in line with CPI. No mainstream economist that worked for the banks, estate agents or ESRI entertained the possibility of a recession or that house prices would fall

Kipperhell wrote: »

Houses prices in Ireland are more due to our own market than what is happening in the US

What happens in the US directly impacts Ireland, it was US multinationals who kicked off the boom here in the late 90's. The liquidity crisis affecting the banking system and decline of the dollar means they will find it very difficult to continue investment here. Without continued capital investment there can be no continued growth or productivity improvements. Also the decline of the dollar vs Euro makes Irish exports to the US more uncompetitive, and means we get less American tourists, so affects employment here. Since the US consumer spending is 70% of their economy, it does mean that with a negative savings rate and huge debts that they can no longer service (see credit crisis), they are in the beginnings of a major recession. (see credit crisis)

Secondly the availability of cheap and easy credit was the primary driver (by far) for rising house prices in Ireland. It was the reason old banking rules based on income multiples were discarded, it was the reason 100% mortgages were made available, it was the reason for sub-prime companies to setup in Ireland. Without cheap credit there would have been no bubble.

The current credit crisis started in the US, their housing boom topped out in mid 2005, they raised interest rates, the ECB followed. We started to feel the effects of this on house prices with about an 8 month time lag.

SimpleSam06

Kipperhell wrote: »

I have yet to meet a person who actually thinks they just keep going up.

Ha, you haven't been hanging around here much then. "You can't lose on property" has been the mantra for years.

gurramok

Regarding rates, alot of people pre '07 got 2 yr fixed dirt cheap rates(early '06 and before that, obtained around 3% mark) and they are resetting to 4.75%+ now and in the new year and onwards. (5yr fixed ones are resetting from '03 in the new yr as well)
Considering a fair few would have had interest only mortgages, thats another bunch who will find the tough going to service that mortgage(s).