Housing Bubble Bursting

beattie

patrickolee wrote: »

If its the same thing as I heard on the radio it was IIB. If it happens, I think it will stabilise things for a while. It will take time for peoples convidence to rise, so I would think the rates would need to stay low for a while before things would recover.... and even then it will more likely be a return to small increases rather than anything we were used to in days gone by. So yes and no.

I doubt it will be enough to arrest the correction that is continuing apace. Austin & Co look really desparate at the moment and I doubt Mr Trichet et al will lose much sleep if they are being criticised by some VI's here.

Do-more

It will be interesting to see if the Fed drops rates further on Wednesday, I suspect that they will have another 50 bp drop.

If they do, or indeed if it's more than that, I would take it as an indication that there are huge problems with the bond insurers which could result in much more turmoil in the US financial market.

Whilst we are not isolated from these problems I think they will affect the US financial market much more than the European financial markets.

IMO it will take a major crisis before the ECB will drop rates. Most likely that rates will remain level for the next 6 months with pressures to raise rates ongoing.

From my armchair that's what it looks like in any case!

miju

Sarn wrote: »

Here you go.

IIB predicts ECB to lower rates

Personally I see them staying static with at most 0.25 drop if things really get bad.

thanks. i thought it was him alright after hearing him say it on the radio. so in other words it's his opinion which has been wrong for quite a while now

trichet and co don't seem to be too eager to follow the Feds cuts and have pretty much said as much. I know who i'll be banking on as being more reliable when it comes to potential ECB cuts / rises

ixoy

Article on RTE news about 40-year mortgages doubling URL="http://www.rte.ie/news/2008/0128/mortgages.html"]link[/URL:

The Irish Mortgage Corporation says the number of first time buyers taking loans over a 40-year term has more than doubled in the last 12 months.

It says that almost a fifth of all first time purchasers it deals with are now opting to repay loans over four decades.

This means buyers have lower mortgage repayments each month than had they borrowed over a shorter term, but IMC Director Frank Conway says most people will review the situation a few years into the life of the mortgage.
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He says the number of customers taking out these long-term loans has increased from 2.7% three years ago to 18.2% in the last six months of 2007.

IMC estimates that total interest payable on a €300,000 mortgage over 40 years is €114,000 more that the amount payable on the same loan over 30 years.

It says most buyers that opt for such a long-term mortgage do so to keep repayments down, before reviewing the situation and usually refinancing to a shorter term.

Insanity to have to take a loan out over such a long period to offset the cost of houses.

SimpleSam06

gurramok wrote: »

They do take the overall picture of each micro market (micro been Dublin and Limerick as separate markets with their own conditions)

No I was talking about whats actually on sale, not where it is being sold. One and two bed apartments should be excluded from national price average discussions unless we are also talking about the kind of people who would actually buy them - single people.

Sarn wrote: »

Here you go.

IIB predicts ECB to lower rates.

Ah the IIB, I remember them whistling as they fuelled the housing market hysteria driving prices ever higher and closer to their inevitable crash. Vested interest, duly noted and filed.

Victor wrote: »

I suspect the £50,000 doesn't take into account several man years of labour.

One (1) man, working part time while managing a sizeable farm, for a couple of years. And its a castle, Victor, a castle.

Calina

SimpleSam06 wrote: »

No I was talking about whats actually on sale, not where it is being sold. One and two bed apartments should be excluded from national price average discussions unless we are also talking about the kind of people who would actually buy them - single people.

but that being said, because they are so poorly designed, many of them, they are not suitable for anyone other than a single person who will sit at home only watching television. No place to store sports equipment bigger than a table tennis bat, nowhere to put shelves for books, a desk to work at because we all have computers now.

I have looked at many one and two bedroomed apartments over the past five years. I am at a loss to understand why anyone intelligent bought them. They are not fit for the purpose of living in. This is why I want a house.

How Strange

patrickolee wrote: »

If its the same thing as I heard on the radio it was IIB. If it happens, I think it will stabilise things for a while. It will take time for peoples confidence to rise, so I would think the rates would need to stay low for a while before things would recover.... and even then it will more likely be a return to small increases rather than anything we were used to in days gone by. So yes and no.

Surely anything that sees the prices of houses/apts rising again in this country is a bad thing?
The fact seems to be that Ireland's property exists in a bubble in comparision to the majority of other European countries and is hugely overpriced.

I'm not a property expert but I would've thought that a drop in prices by another 20% or so would be a good thing for the property market in the long run. There will be casualties which is unfortunate but perhaps after a few years our property market will stablise and come into line with other European countries.

Any talk of a decrease in interest rates helping to stop the fall of house prices and possibly leading to modest increases in prices is IMO plain crazy and shows that the underlying hysteria to buy property at any cost still exists in this country and we have yet to smell the roses and see the situation for what it is. Prices need to get back to sensible figures where a couple can buy a property on two incomes over 30 years but still afford to save money and have some sort of quality of life.

Calina

How Strange wrote: »

I'm not a property expert but I would've thought that a drop in prices by another 20% or so would be a good thing for the property market in the long run. There will be casualties which is unfortunate but perhaps after a few years our property market will stablise and come into line with other European countries.

We will also need better tenancy regulations to match other European countries. In my opinion this is one of the key problems in Ireland. Rental is not seen as a long term option culturally so it is not regulated accordingly.

SimpleSam06

How Strange wrote: »

Surely anything that sees the prices of houses/apts rising again in this country is a bad thing?

Its not a bad thing if you are severely overextended / got a starter hole after buying in the last few years of the boom, and were depending on capital appreciation to dig you out of it. That profile only fits a very small amount of the population, however vocal they may be.

How Strange

Calina wrote: »

We will also need better tenancy regulations to match other European countries. In my opinion this is one of the key problems in Ireland. Rental is not seen as a long term option culturally so it is not regulated accordingly.

What we lack is the political will to put this legislation in place. Why? Because the developers who built most of the monstrosities in this country over the last 10-15 years are FF cronies. If we had strong tenancy laws then how would they have profited on the back of a huge FTB generation entering the market in the last 10 years.

IMO alot of people bought because they wanted the security of having their own place. I rented for years and you just get fatigued by the moving around and lack of security.

Calina

In 2006, 40% of new properties went to investors, not FTBs. So effectively the developers sold to investors...

gurramok

Calina wrote: »

but that being said, because they are so poorly designed, many of them, they are not suitable for anyone other than a single person who will sit at home only watching television. No place to store sports equipment bigger than a table tennis bat, nowhere to put shelves for books, a desk to work at because we all have computers now.

I have looked at many one and two bedroomed apartments over the past five years. I am at a loss to understand why anyone intelligent bought them. They are not fit for the purpose of living in. This is why I want a house.

Totally agree, i blame more the council who should be accountable to the public's needs and gave planning permission for these monstrosities rather than the developers themselves who we know only want their quick buck.

After all, the more units that are built, the more profit goes to the council's coffers.

D'Peoples Voice

Calina wrote: »

bI have looked at many one and two bedroomed apartments over the past five years. I am at a loss to understand why anyone intelligent bought them. They are not fit for the purpose of living in. This is why I want a house.

I must admit I wouldn't mind buying an appartment,
but it must have at least three bedrooms and have a floor space of at least 87 square meters, and not cost over EUR 295,000 & obviously be located in a prime city centre location very close to good public transport(rail) links.

Calina

Brussels might interest you then.

Do-more

Did anyone else spot Hooke & McDonald's ad in Sunday's Indo property supplement?

Big red banner across the to proclaiming "Never a better time to buy!" who are they trying to kid (joe public I guess). Even comical Austin is saying that prices will fall by a further 5% this year.

False and mis-leading advertising I'd say. The Advertising Standards Authority for Ireland accepts complaints on such like here.

Mine went in this morning!

indiewindy

Do-more wrote: »

Did anyone else spot Hooke & McDonald's ad in Sunday's Indo property supplement?

Big red banner across the to proclaiming "Never a better time to buy!" who are they trying to kid (joe public I guess). Even comical Austin is saying that prices will fall by a further 5% this year.

False and mis-leading advertising I'd say. The Advertising Standards Authority for Ireland accepts complaints on such like here.

Mine went in this morning!

Good luck with your complaint, you have a great chance of it being upheld:)

DublinWriter

Do-more wrote: »

Big red banner across the to proclaiming "Never a better time to buy!" who are they trying to kid (joe public I guess).

Note the embedded subliminal command in that by-line.

Do-more

I see from my local rag that Rathgowan in Mullingar is being launched yet again. (I've lost count I'm not sure if this is the 3rd. or the 4th. launch)

They have dropped prices (for the second time I think) with 3 bed townhouses now priced at €199,950 (with free kitchen appliances). No prices published for the 3 bed semis.

IMO they are now approaching sensible money (I think €150,000 would be fair value).

Two more developments nearby (Cloon Lara and Greenpark West) are also currently (re-)launching with 3 bed semis priced at €275,000 which is still well wide of the mark IMO. (3 bed townhouses in Cloon Lara are €245,000!:eek:)

Victor

Calina wrote: »

In 2006, 40% of new properties went to investors, not FTBs. So effectively the developers sold to investors...

Or sold to themselves ....

SimpleSam06

Interesting thread on more fallout from the bubble bursting here. Tradesmen finding it hard to get work in Ireland...

faceman

There has been alot of talk lately of the EXB dropping its rates due to existing economic conditions. I dont see this being the case for 1 simple reason. The ECB's only mandate is to manage inflation. the US fed's mandate is to manage inflation and maximise employment.

The ECB is under no pressure to drop interest rates from the US. EU exports to the US seemingly only account for 2% of all exports from the EU therefore the low dollar value implications are minimal.

joe_chicken

faceman wrote: »

The ECB is under no pressure to drop interest rates from the US. EU exports to the US seemingly only account for 2% of all exports from the EU therefore the low dollar value implications are minimal.

Exports aren't the only thing.

You think companies like Google, IBM, Intel are gonna stick around if their operational costs (in dollars) outweigh the benefits (namely low corporate tax) of setting up in Ireland?

Our economy is most definitely reliant on the dollar.

homah_7ft

faceman wrote: »

There has been alot of talk lately of the EXB dropping its rates due to existing economic conditions. I dont see this being the case for 1 simple reason. The ECB's only mandate is to manage inflation. the US fed's mandate is to manage inflation and maximise employment.

The ECB is under no pressure to drop interest rates from the US. EU exports to the US seemingly only account for 2% of all exports from the EU therefore the low dollar value implications are minimal.

I think the US accounts for 24% of EU exports.

faceman

joe_chicken wrote: »

Exports aren't the only thing.

You think companies like Google, IBM, Intel are gonna stick around if their operational costs (in dollars) outweigh the benefits (namely low corporate tax) of setting up in Ireland?

i agree completely, however the mandate of the ECB is to only monitor inflation. Therefore to change the mandate it would need to go through EU parliment. personnally i cant see this happening unless all of this has a major impact on the german or french economy.

gurramok

You maybe right Homah, had a quick look at googling for eurozone(not EU25), it appears the US and the UK have a large equal share of exports from the eurozone in 2007
http://europa.eu/rapid/pressReleasesAction.do?reference=STAT/07/141&format=HTML&aged=0&language=EN&guiLanguage=en

And look how exposed we are with trade with USA! :eek:
http://www.eurunion.org/profile/facts.htm (2006 figures)

17bn of 52bn Ireland exports are to USA!!

astrofool

Well, on Google, IBM, Intel, any sales they have in the EU market (which goes through Ireland usually), are in Euro's, so the dollar effect will be good for the parent (EU area's become more profitable).

Calina

The Germans attach massive importance to the control of inflation, they are a strong manufacturing nation so it will take an economic downturn of major proportions to get them to abandon inflation control as the key cornerstone of monetary policy.

homah_7ft

The figure of 24% for trade with the US was incorrect on my part. That percentage is for the whole of the EU. For the EU-13 I calculate the US accounts for about 14% of exports.

faceman

astrofool wrote: »

Well, on Google, IBM, Intel, any sales they have in the EU market (which goes through Ireland usually), are in Euro's, so the dollar effect will be good for the parent (EU area's become more profitable).

Many US multinationals trade in USD, even in Europe.

miju

homah_7ft wrote: »

I think the US accounts for 24% of EU exports.

I heard a professor from NUI galway yesterday saying the US accounts for a total of 4% of EU wide exports. though in Ireland that figure is at approx 20%