Housing Bubble Bursting

The_Conductor

Anyone like to collate a examples of this, possibly through this forum? I know a friendly journalist who might be interested......

Sponge Bob

SkepticOne wrote:

So much for buying at the bottom of the market for the benefit of the people as someone suggested would happen on this forum.

That was me. The corpo in Cork did the buying not the government .

I would haul them in front of the public accounts committee right now to explain their actions.

ronbyrne2005

FF don't want a collapse before election so expect loads of buying by councils/governement over next few months to slow the price falls.

miju

joe publics confidence in the economy wont be helped any by the following in the last week

100 jobs axed in Dublin at Vodafone , 350 jobs to be axed in Cork at Motorola , 200 research jobs axed in Limerick at Thomson scientific

then theres the 240 jobs axed in Cork at FCI , 300 jobs axed in Cork at BUPA which were in the2 weeks preceeding

you can be sure as hell that at least 85% of those are high end jobs. and while the economy is creating plenty of employment it aint this kind of employment , it's more along the lines of the lower paid service jobs etc.

there will obviously be more job losses to follow (given last year 25,000 workers were made redundant) which means everyone will start tightening the belts / battening down the hatches if people start to fell a little less comfortable/secure in their jobs............then again they may well all decide to go 100mph straight over the edge

seamus

FAS claim that there are 14,000 IT jobs sitting unfilled...

NIBBS

miju wrote:

i heard it was 16% growth

however, that "growth" was in the first 6 months or so of the year after which followed stalled prices and declines

It was 16% in Dublin and 11 odd for the country as a whole.....I just don't see the big drop coming just yet.......although there's certainly been a slowdown it would see that there's some more left in the market....

miju

not having a go or anything NIBBS (so please dont take it that way) but in the interests of debate why do you not see a big drop and what is your basis for thinking that there is more left in the market?

ixoy

seamus wrote:

FAS claim that there are 14,000 IT jobs sitting unfilled...

I doubt that, I really do. Did they expand on that and say what they define as an IT job? Are they including, for example, all centres that might even touch on the concept of technology?

tibor

ixoy wrote:

I doubt that, I really do. Did they expand on that and say what they define as an IT job? Are they including, for example, all centres that might even touch on the concept of technology?

Probably counts each of those "IT" jobs 2/3 times too as advertised by different recruiters.

Smoggy

300 jobs axed in Cork at BUPA - not true anymore , Quinn group have bought it and the jobs are safe.

http://www.rte.ie/news/2007/0131/bupa.html

miju

thats excellent news hope everyone else in the other companies are this lucky

bill_ashmount

Great news. Fermoy has been taking a right battering lately.

whizzbang

The Q4 2007 Daft report is out.

http://www.daft.ie/report/index.daft

I did a comparison on the asking prices from Q3 to Q4 and got the following.
http://img469.imageshack.us/img469/9520/diffreportq3q4sp8.gif

And for Q2 to Q4
http://img297.imageshack.us/img297/1444/diffreportq2q4gp1.gif

miju

ixoy wrote:

I doubt that, I really do. Did they expand on that and say what they define as an IT job? Are they including, for example, all centres that might even touch on the concept of technology?

yes they are including call centres , listening to your man on newstalk how they compiled their data was by visiting all the jobs sites and recording the jobs from them so you can be gaurenteed with the sheer amount of duplication of jobs adverts (which your man admitted last night on newstalk was a problem witht he figures) that this 14,000 is more than likely half that

miju

whizzbang wrote:

The Q4 2007 Daft report is out.

http://www.daft.ie/report/index.daft

I did a comparison on the asking prices from Q3 to Q4 and got the following.
http://img469.imageshack.us/img469/9520/diffreportq3q4sp8.gif

And for Q2 to Q4
http://img297.imageshack.us/img297/1444/diffreportq2q4gp1.gif

and so it begins :eek:

Gurgle

miju wrote:

whizzbang wrote:

The Q4 2007 Daft report is out.

http://www.daft.ie/report/index.daft

and so it begins :eek:

Yep, at long last, from the above report:

Looking into 2007, consensus estimates among economic forecasters and market participants predict the now cliched “soft landing” with prices expected to rise by about 5% across the country.

Now, cue the bubble-bursters to either:
a) Claim that this is what they meant by 'bursting bubble' all along
- or -
b) For the hardcore - explain in detail and at length why the bubble is still going to burst at any minute now despite whats happened over the last year and what the economists are predicting for the next year.

seamus

We're still looking over the precipice Gurgle. What happens next is really anyone's guess. Up until December, "economic forecasters and market participants" were saying that this was but a minor blip and prices would sharply rise again come Springtime. Now they're changing their tune.

How many of these will say "I told you so" if the market crashes?

Whatever happens, there's no way back now, and the next 2-3 months will reveal all.

Personally I believe the odds are not stacked in our favour. Soft landings are extremely rare, and the bulk of property bubbles crash. Even soft landings aren't all that soft - much like landing an airplane, landing a property market is more "controlled falling" rather than a soft landing.

whizzbang

Gurgle wrote:

Yep, at long last, from the above report:


Now, cue the bubble-bursters to either:
a) Claim that this is what they meant by 'bursting bubble' all along
- or -
b) For the hardcore - explain in detail and at length why the bubble is still going to burst at any minute now despite whats happened over the last year and what the economists are predicting for the next year.

I've never seen the rational they use for quoting 5% growth this year, it just seems like a figure that everyone has agreed to quote. Has anyone found a breakdown of why they think we will get this growth this year?

It is also worth pointing out that it is only a "soft landing" when the rate of change stays stable at a high level for a period of quarters/years. You can't say if it is a soft landing or not based on a few months of slowed down growth. Even if there is a big crash there will always be a few month at the top where everything stagnates while people figure out what's going on. You can only call it a crash or soft landing in retrospect!

I'll leave the explaining why it's going to burst to someone else

I'd also appreciate an explanation of why prices are going to remain high?

conor_mc

seamus wrote:

How many of these will say "I told you so" if the market crashes?

Surely David McWilliams should have the monopoly on I-told-you-so's....!!!

Okay, okay, maybe Jill Kirby and George Lee might be entitled to feel somewhat vindicated, along with the Ahearne prof from NUI Galway, who's been very bearish on Newstalk lately.

Still, the mother of all I-Told-You-So's will have to belong to McWilliams...

soma

seamus wrote:

Soft landings are extremely rare

Yes some people claim that 'soft landings' never happen.. I think I believe in "soft-ish, slightly bumpy" landings. (E.g. australia recently).

However - a prequisite for a soft landing IMO is a strong and (preferably) diversified underlying economy. Whereas Ireland's economy is basket case. I cannot see anything other than a hard-landing being inevitable here.

Oh and to answer Gurgle :-) My own belief is that the crash will be proportional to the length of boom-time preceding it. I really don't care when it pops, but personally I could really do with it not popping for another year or two as right now I'm doing rather well from one or two financial institutions.. hopefully I'll have pulled-off my intended great-escape by the time the SHTF.

miju

well i've gone back into the public sector so i'm laughing , know that old saying if you cant beat em .........

personally hope it holds out for another 4 months or so myself for my own selfish reasons though but alas it's pretty evident the **** has hit the fan , its just joe public cant smell it yet

frosty66

Sorry if this is wrong thread, but all speculation is very Dublin based..
Would anyone have any ideas whether is is good idea 2 buy an apartment in Dundalk or Drogheda at the mo?

Pa ElGrande

frosty66 wrote:

Sorry if this is wrong thread, but all speculation is very Dublin based..
Would anyone have any ideas whether is is good idea 2 buy an apartment in Dundalk or Drogheda at the mo?

The answer depends on your motives.

If you are buying with the intention of gaining by speculating on future capital appreciation then you know what the sentiment expressed by the majority on this thread is, you should educate yourself about other investment oppertunities.

If you are buying in the knowledge of obtaining a rental yield of 8%+ over the next decade then it seems a reasonable proposition. Do your homework.

If you are buying as a starter home, on the basis that you will be able to trade up to a 3/4 bed house in 5 years using a projected increase in equity as a deposit, again most sentiment on this thread is negative regarding future appreciation in value, this will depend on several factors, supply of housing in the area, employment, interest rates and the level of mortgage debt people are prepared to take on.

If you are buying as a place to live for the long term, and the area suits your needs, is near work, shops and services and you can pay it off the mortage in 20/25 years or less then its worth considering.

If you are buying because you are being pressured to get on the ladder. Then stop right now.

frosty66

thanks for the reply, it wud be a first-step 2/3 year 2 live in property
circa 300,000.. shud i wait?

Do-more

IMO A hard landing is inevitable. With no significant capital appreciation on the cards this year, investors are going to shy away in droves from the new house market. If you remove the best part of 40% of demand from any marketplace the inevitable result is a collapse in prices.

What I see at the moment around the Midlands is a mad race by developers to finish whatever units they are financially committed to, as quickly as possible, in the hope that they can exit the market. The result is that over the next 6 months the supply of new homes coming on the market is peaking while the arse is falling out of demand. It doesn't take a rocket scientist.....

I do however take my hat off to the vested interests who have done a marvellous job over the last few weeks in convincing Joe Public that a soft landing is on the cards, if I didn't know better myself I'd nearly believe them!;)

Gurgle

seamus wrote:

Whatever happens, there's no way back now, and the next 2-3 months will reveal all.

lol, I doubt it

in 6 months we'll still be predicting all kinds of stuff.

frosty66 wrote:

Would anyone have any ideas whether is is good idea 2 buy an apartment in Dundalk or Drogheda at the mo?

... it wud be a first-step 2/3 year 2 live in property
circa 300,000.. shud i wait?

I'd say no.

After 2/3 years you won't have paid enough off the mortgage to cover the costs of moving + when you trade up you wouldn't be a first time buyer and you would have to pay full rate stamp duty.

A plan to buy now and trade up inside 5 years depends on a continued rise in property prices, which I think is pretty unlikely.

At 300k, why not buy a house as a 9/10 year live in property?

soma wrote:

Oh and to answer Gurgle :-) My own belief is that the crash will be proportional to the length of boom-time preceding it.

As in a great big sudden drop or a long drawn-out fall in values?

DublinDilbert

I Think gurgle just hit on something that i've been thinking about for the last while... Leaving aside speculators, for the property lader to exist it relies on people trading up all the time... eg start with something small, then in a few years move somewhere bigger when they need extra space ect...

But the problem is stamp duty.. in the past few years poeple trading up haven't minded paying stamp duty as the property they were selling had risen in value so much, eg they've made 200K off their property sale, they dont' mind giving 50K to the government in stamp duty for th new one... but if we have 6% rises like they are predicting in 2007, prices are rising in-line with inflation, so anyone trading up will not be making huge gains and will not want to take a 50K hit for stamp duty to the government!

Gurgle wrote:

lol, I doubt it

in 6 months we'll still be predicting all kinds of stuff.



I'd say no.

After 2/3 years you won't have paid enough off the mortgage to cover the costs of moving + when you trade up you wouldn't be a first time buyer and you would have to pay full rate stamp duty.

A plan to buy now and trade up inside 5 years depends on a continued rise in property prices, which I think is pretty unlikely.

At 300k, why not buy a house as a 9/10 year live in property?



As in a great big sudden drop or a long drawn-out fall in values?

Sponge Bob

DublinDilbert wrote:

But the problem is stamp duty.. in the past few years poeple trading up haven't minded paying stamp duty as the property they were selling had risen in value so much

The key bands are 317k and 381k for most of us.

assume you buy new apartment for 300k today

FTB stamp duty = €0

then you upgrade to the €400k ish semi ( second hand becuase its a good area ) you could not afford for starters .

STB stamp duty above €381k is 7.5% . You are smacked for €30k stamp duty by Brian Cowan and thats in cash up front . This means that you must make €30k clear profit because the bank will not lend you the stamp duty .

To make €30k clear profit on a €300k flat implies that you have reduced the mortgage by 10% or had 10% appreciation ( actually its more because you will owe the solicitor and the auctioneer about €3k as well for selling the first gaff) .

As many first time buyers are interest only they may not reduce the amount so its 10% profit or you are stuck.

A vicious circle. When I was an FTB I not only paid no stamp duty but the FTB grant in cash was 5% of the value of my house , upfront FROM the government and all . Not only that but the entry level house was the semi with no service charges either.

Furthermore it was a new build semi in a GOOD AREA . These are not being built any more. New semis are only affordable in miles out commuter towns in Westmeath and Cavan.

soma

Gurgle wrote:

As in a great big sudden drop or a long drawn-out fall in values?

My own guess (and that's all you can do in a market built on irrationality) is investor panic will result in relatively quick 10-20% drop across the board. Then over the course of about 5-10 years the fundamentals will re-assert themselves and prices will return to (adjusted for inflation) roughly 2001 levels.

My basis for this is that I am extremely bearish on Ireland's economic prospects over even the medium-term, I cannot get over the opportunity (to establish an indigineous diversified export industry) that has been missed in this country in the last decade. A shocking waste.

A real tell-tell sign is that we've never lost (or even tried to lose) the tag of a 'tiger economy'. A Tiger economy is an upstart.. often even just a flash in the pan - you must then make the transition to a mature economy with solid fundamentals, it is this transition that I believe has not occoured.

EDO

soma wrote:

My own guess (and that's all you can do in a market built on irrationality) is investor panic will result in relatively quick 10-20% drop across the board. Then over the course of about 5-10 years the fundamentals will re-assert themselves and prices will return to (adjusted for inflation) roughly 2001 levels.

My basis for this is that I am extremely bearish on Ireland's economic prospects over even the medium-term, I cannot get over the opportunity (to establish an indigineous diversified export industry) that has been missed in this country in the last decade. A shocking waste.

A real tell-tell sign is that we've never lost (or even tried to lose) the tag of a 'tiger economy'. A Tiger economy is an upstart.. often even just a flash in the pan - you must then make the transition to a mature economy with solid fundamentals, it is this transition that I believe has not occoured.

Soma - I completely agree with you on the fact that our current prosperity would appear to be built on quickstand of steadly increasing viscosity.

However the cat among the pigeons here for me is our membership of the Eurozone. The current property and consumer boom would never have happened or would have been quickly nipped in the bud without it or else it would have be built on strong economic fundamentals if it did take place.

Its very hard to know what is going to happen in future as long as we remain
members of the eurozone - I really think we are in new territory. Logically speaking our economy should converge and get in sync with the rest of the Eurozone but the past 5 years have been anything but.

That the Euro superstate is on the way is not in doubt. Im just back from a 2 day seminar given by the customs and revenue on the implications of an entire overhaul of the systems for importing and exporting outside the EU. Its to be completely streamlined and standardized across the EU and the system being put in place if followed to its logical conclusion will end up with all Duty and excise going to Brussels first and then either repatriated to the clearing country or most likely being the first EU federal tax raising agency.

Im really confused how this is going to effect us. Will the rest of Europe come to our aid when the faltering economy finally keels over - like the richer counties in Ireland to all effects and purposes keep the poorer counties afloat. Provided interest rates don't climb to suicidal levels - which they wont seeing as it the Germans who decide them and the French are anscy enough about them as it is - is it not possible that we can keep drawing down from the savers in the more frugal nations and put it on the never never as our property and consumer frenzy keeps on rocking! -

just a couple of muddled thoughts badly expressed Im afraid . It is just that I feel enonomic logic has gone out the window for the last few years here and we're determined to party like its still 1999.


As an side on all of this -At the seminar we treated to the spectacle of the true horrors of this mad centralisation scheme that FF/PDs are inflicting on us. Because the revenue and customs are being decentralised in different bits and pieces nearly all the senior staff and more specialised experts are leaving and the more junior staff being sent south,north east and west and Craggy Island are
being left to implement one of the most ambitious pieces of bureaucratic transformation ever seen - Its a complete mess - all this has to come into effect on April 1 (How ironic) this year. All tarrif codes are changing. the forms you fill in are changing etc etc etc - I can see export staff all around the country filling in for therapy and rehab by July. If this is the what decentralisation involves and hasnt really started for the majority - you think things are bad now - it's gonna get much much worse - and it will of course be nobody's fault or responsibility when the **** hits the fan.