Housing Bubble Bursting

Afuera

DublinDilbert wrote: »

Lots of people rushed into buying appartments to "get on to the ladder" they need another wave of people coming behind them so they can "move up the ladder", from what i can see there isn't another wave of people coming behind them...

Unfortunately I think a lot of those will end up being leapfrogged by the generation below them, those that sat the boom out or those that managed to cash their chips in before it all went pearshaped. The idea of buying a starter property was always very questionable and really not that much different in nature to your standard pyramid scheme. Estate agents and banks pushed this idea very strongly to the masses though so I feel sorry for anyone that fell for the hype.

blah

Do-more wrote: »

I was talking to a guy last weekend who is hugely exposed with both "investment" properties and a business reliant on house building. He was convinced that the market would "take off" again in the summer, no amount of rational argument would have him believe otherwise.

It was Brendan O'Connor right?

gurramok

And point being, the FTB's that 'were left behind' in the boom are probably the ones who cannot afford the high prices anyway hence Seamus point of reality hits prices before they come back en masse plus they need steady jobs in this uncertain climate.

News today that the UK household savings is at a 48yr low(http://www.ireland.com/newspaper/breaking/2008/0328/breaking54.htm), i wonder if the same trends would be here with our similar spend now worry later attitude to credit though the SSIA factor will help certain folk.

Also price inflation in Germany is indicating a surprising upswing(http://www.ireland.com/newspaper/breaking/2008/0328/breaking38.htm) and Belgium at record inflation since 1985.
The signs are ominous for a talk of a rate rise rather than a reduction on those figures plus you wont hear the VI's harper on about that part either.

faceman

smccarrick wrote: »

100/95/92% mortgages are almost exclusively being ringfenced for those with pre-existing assets they can use as collatoral, or are in rock solid employment (e.g. Gardai, teachers, civil servants). Recently drawn FTB mortgages are increasingly at the 75-80% levels, and at higher margins than even a few months ago.

Im not convinced, are there figures to support that? Reason i say is because of friends and colleagues who bought or are in the process of buying and got 95/92% mortgages.

BobbyD10

An article from the Independent Property Plus mag page 11(no link unfortuntely):

The pick-up in the housing market has seen up to 1,800 new homes sold in the first three months of the current year. According to agents Hooke and MacDonald the first quarter sales are more than double the 800 estimated to have been sold in the last quarter of 2007.
According to Goeff Tucker, the economist with the Dublin new homes specialist, the number of new available for sale in the city at the beginning of the year was 5,500.
"The market has been much more active in the first quarter of the year than it was in the last quarter of last year" he adds. Howevere he points out that as further new homes are completed this has added to the amount of stock on the market. "Consequently at the current sales rate we expect it will be Autumn by the time the current stock will be absorbed."
Mr Tucker also rejected reports of a heavy overhang of apartment stock. "We are seeing apartment sales holding up well" he says.
Referring to the prices trend he says that some developments in some areas of Dublin have reached their price floor. "Those which needed to have their prices aggresively reduced have seen the reduction. Any further price changes are likely to be only marginal."
A recent report in one newspaper estimated that in the greater Dublin region including counties Kildare, Meath and Wicklow, the overhang of new homes had reduced by 2,000.
It estimated the overhang to have peaked at 10,000 at the end of last year. Since the overhang would have been suplemented by further completions, this suggets that sales in the greater Dublin region would be well over 2,000.


Donal Buckley.

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Supercell

I just typed a rant, but then got a headache.

Bobby, if you believe that stuff you just posted..well then good luck to ya is all I'll say.

BobbyD10

Its more ironic Longfield, knowing the truth then reading tripe like that made me laugh.

miju

some peope are just beyond reasoning longfield

smooth operater

BobbyD10 wrote: »

An article from the Independent Property Plus mag page 11(no link unfortuntely):

The pick-up in the housing market has seen up to 1,800 new homes sold in the first three months of the current year. According to agents Hooke and MacDonald the first quarter sales are more than double the 800 estimated to have been sold in the last quarter of 2007.
According to Goeff Tucker, the economist with the Dublin new homes specialist, the number of new available for sale in the city at the beginning of the year was 5,500.
"The market has been much more active in the first quarter of the year than it was in the last quarter of last year" he adds. Howevere he points out that as further new homes are completed this has added to the amount of stock on the market. "Consequently at the current sales rate we expect it will be Autumn by the time the current stock will be absorbed."
Mr Tucker also rejected reports of a heavy overhang of apartment stock. "We are seeing apartment sales holding up well" he says.
Referring to the prices trend he says that some developments in some areas of Dublin have reached their price floor. "Those which needed to have their prices aggresively reduced have seen the reduction. Any further price changes are likely to be only marginal."
A recent report in one newspaper estimated that in the greater Dublin region including counties Kildare, Meath and Wicklow, the overhang of new homes had reduced by 2,000.
It estimated the overhang to have peaked at 10,000 at the end of last year. Since the overhang would have been suplemented by further completions, this suggets that sales in the greater Dublin region would be well over 2,000.


Donal Buckley.

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Unfortunately, these are the people that will be trying to get sales up for their own sake...So by pushing reports out like that, the people holding off waiting for the housing market to settle will think its time to buy

Duckjob

smooth operater wrote: »

Unfortunately, these are the people that will be trying to get sales up for their own sake...So by pushing reports out like that, the people holding off waiting for the housing market to settle will think its time to buy

Hopefully more people have wisened up to that now.

The idea of an estate agent employing an economist to publicly commentate on the state of the housing market only serves one purpose, and it isn't to educate people.

Parasites wrote:

"Now is the time to buy"
"Things will take off again in the summer, up, up and away"
"Get your starter home while you still have an opportunity. "
"Form a line folks, get them while you can"

These guys make me slightly nauseous.

jetski

From first hand experience, those shower - (agents Hooke and MacDonald) are the biggest chancers ive encountered...

Example A

Trying to flog 1 bed appartments on parnell st for €350k :eek:

Example B

Average 3 bed houses being sold in esates by other EA's going form 370 to 385

hooke and mac donald want 400 and thats without a front garden!

Crack pots the lot of them.....

BobbyD10

smooth operater wrote: »

Unfortunately, these are the people that will be trying to get sales up for their own sake...So by pushing reports out like that, the people holding off waiting for the housing market to settle will think its time to buy

Suppose like any business they need to drum up custom and this is their attempt at it, who knows it may work.


Edit: playing devil's advocate.

gazzer

I actually got a leaflet in the door this morning from Hooke and McDonald telling me that if I wanted to sell my house that now was the time.

The funny thing is that I put my house on the market yesterday (with a different estate agent) and there is a massive For Sale sign in the garden

Duckjob

gazzer wrote: »

I actually got a leaflet in the door this morning from Hooke and McDonald telling me that if I wanted to sell my house that now was the time.

The funny thing is that I put my house on the market yesterday (with a different estate agent) and there is a massive For Sale sign in the garden

Yes, it's the perfect time to sell and the perfect time to buy at the same time

gerthewanker

Has anyone noticed any dramitic prices changes on any of the major property sites?

EnoughSaid

gerthewanker wrote: »

Has anyone noticed any dramitic prices changes on any of the major property sites?

Try this site:
http://www.irishpropertywatch.com/

The issue report from Daft about every 2 weeks.

gerthewanker

cool ,thanks!

DublinDilbert

If people want an idea of the drops which are currently happening check out the following, 3 bed town houses dropping from €500K -> €355K.

Original Prices:-
http://www.myhome.ie/residential/search/new-developments/brochure.asp?irw=true&prop_type=new&id=15697
1 bed apts from €295,950
1 bed plus study from €305,950
2 bed apt from €339,950
2 bed duplexes from €405,950
2 bed duplex townhouse from €410,950
3 bed duplexes from €490,950
3 bed duplex townhouses from €499,950


Now listing at ( and not selling at):-
http://www.daft.ie/searchsale.daft?search=1&selected_agent=&id=117836&s%5Bagent_id%5D=1815&s%5Bp%5D=qpwxwtss
1 bed apt - third floor 600 sq.ft 240,950
1 bed with study - third floor 820 sq.ft 249,950
2 bed apt (in block) ground floor 750 sq.ft 260,000
2 bed apt - own door - ground 860 sq.ft 285,000
2 bed apt - second floor - 820 sq.ft 285,000
2 bed duplex - ground/first 904 sq.ft 286,000
2 bed duplex - ground/first 1,012 sq.ft 290,000
2 bed duplex - second/third 1,120 sq.ft 265,000
3 bed duplex - Ground/ First 1,300 sq.ft 365,000
3 bed duplex - Second/third 1,420 sq.ft 355,000
3 bed duplex - First /Second 1,270 sq.ft From 355,000

DonJose

gerthewanker wrote: »

cool ,thanks!

I prefer the following site as they update weekly.

http://www.treesdontgrowtothesky.com/Blog/

johnnyskeleton

DublinDilbert wrote: »

If people want an idea of the drops which are currently happening check out the following, 3 bed town houses dropping from €500K -> €355K.

30% knocked off the 3 beds. Still a bit overpriced to be honest.

DublinDilbert

johnnyskeleton wrote: »

30% knocked off the 3 beds. Still a bit overpriced to be honest.

I agree 100%... but some of these were sold at €500K, hence they are well and truly in negative equity... do people out there not realise that there has been 30% drops? or do they still have their heads suck in the sand?

johnnyskeleton

DublinDilbert wrote: »

I agree 100%... but some of these were sold at €500K, hence they are well and truly in negative equity... do people out there not realise that there has been 30% drops? or do they still have their heads suck in the sand?

Ouch! Between a couple that's €75 grand each if they have to sell up.

I think that the only group of people who realise that there have been drops are people in these part sold estates who can see the exact same properties being offered a year or two later at 30% less. I'm sure someone who lives just down the road in Blanch might think Phew - thank god that's not me.

The_Conductor

johnnyskeleton wrote:

I'm sure someone who lives just down the road in Blanch might think Phew - thank god that's not me.

Like to elaborate?
Personally I'd be of the opinion that a lot of the property in D15 direction has a hell of a lot more to fall than elsewhere.
No-where is immune from largescale falls, however those falls, be they on paper, are purely notional until such time as you *have to* dispose of the property.

Do-more

smccarrick wrote: »

however those falls, be they on paper, are purely notional until such time as you *have to* dispose of the property.

I'd disagree with you on the fact that these falls are purely notional for those involved. Because these people are now "locked in" to their current mortgage provider. Take for example someone who got a low fixed rate mortgage for say the first 3 years, with the intention of then shopping around for the best rate available when the 3 year term was up. Because they are now in negative equity no other lender will offer them finance. Their fixed rate mortgage can now reset to the highest variable rate on the market and they are powerless to do anything about it.

In fact because their LTV is above 100% their lender is entitled to move them to "sub-prime" rates even higher than the highest normal variable rate on the market.

The net effect is that these "notional" falls could in fact cost them many hundreds of euro a month in increased repayments.

patrickolee

do-More, I agree that this is indeed a danger of people getting fixed rate loans. It gave the illusion of certainty with regard to the rate. Thats why a tracker is always best in the long term; you know exactly where you stand and you are not been overcharged for trying to avoid a interest rate fluctuation risk.

That being said, the number of people who are in negative equity area at the moment, is very very small.

ionapaul

patrickolee wrote: »

That being said, the number of people who are in negative equity area at the moment, is very very small.

What % of the national housing stock is bought / sold every year? I have heard the figure 5% being bandied about; and if real house prices are at late-2004 levels, what % of houses are worth less than they were bought for? Between 10%-15%? Even if only 1 in 10 home owners are in negative equity, that is really going to impact public sentiment!

Calina

patrickolee wrote: »

That being said, the number of people who are in negative equity area at the moment, is very very small.

Obviously but the key question is what proportion of people who need to trade for whatever reason are in negative equity?

Most people who bought on a high LTV in the past two years unless they were paying off capital on a very agressive scale I would reckon.

beeno67

ionapaul wrote: »

What % of the national housing stock is bought / sold every year? I have heard the figure 5% being bandied about; and if real house prices are at late-2004 levels, what % of houses are worth less than they were bought for? Between 10%-15%? Even if only 1 in 10 home owners are in negative equity, that is really going to impact public sentiment!

Not all those who bought in last 3 years. For example if you bought a house with an 80% mortgage house prices whould have to drop by more than 20% for you to be in negative equity. On average (and I stress on average I know some properties have dropped a huge amount) house prices have dropped 8%. So at present only first time buyers who got 92% mortgages are in negative equity. Obviously prices will probably fall more over next year or 2 and effect more people.

groom

[quote=patrickolee;55564767
That being said, the number of people who are in negative equity area at the moment, is very very small.[/quote]

All those who took a 100% mortgage in the last couple of years (alot of people) are way into negative equity. Alot of people with 92% mortgages will be in there as well. And as prices keep dropping the numbers of people and the scale of their negative equity expands.

Consider someone who bought on 92% or 100% mortgage in last 2 years. A fraction of their monthly repayments actually counts towards equity while their property drops approx 1% a month in notion value which is the basis for equity.

DublinDilbert

Calina wrote: »

Obviously but the key question is what proportion of people who need to trade for whatever reason are in negative equity?

This would be very true of the apartment prices i posted above.... people will generally want to stay for a few years then move on... Even if they could just about break-even on selling up (ie make no profit) they still might not be able to afford to move up the property ladder.

For example i know one person that bought an apartment in 2004 for €195K, has been trying to sell since 2006, had some viewings early on, but none really in the last 12 months. Their asking price went €285K (2006) -> €250K -> €240K -> €230K(2008) and they still haven't sold, and have no signs of interested in it. So it looks like the current value of it is quite close to the 2004 value (€195K), if not below it..