Housing Bubble Bursting

johnnyskeleton

silverharp wrote: »

I gather there is now international shorting of Irish banks , betting on a downside risk from the credit crunch. I'm wondering if any of the big schemes will go tits up based on dodgy financing, for instance the people that bought the jurys site for 100's of million based on the "sky is the limit" or similar around the city.

More importantly, while developers are happy to down tools across the country at the moment, are the developers of these prestige developments (e.g. U2 tower, the 32 story building at heuston station) going to plow ahead on the basis that they are already in too deep?

Pa ElGrande

biggus wrote: »

I didn't buy in Florida, but my point is don't compare Florida property collapse to any European property market, particularly Ireland or London or Paris or anywhere where people have always aspired to live over centuries, regardless of their status. Because people actually want to live here this will help the market from going down the tubes.

Construction standards are irrelevant, both the Irish and Florida property collapse are happening for the same reason - after the dot com crash, interest rates were lowered to the floor, the cheap money made available then found it's way into mortgage backed securities, which made cheap funding available for development and speculative buying in property. The money lent out expanded beyond the ability of the borrowers to repay and the bubble burst. We now have an oversupply of property for sale and even banks are unwilling to lend to each other, and are tightening up lending criteria even more for property, forcing prices still further downwards.

SOME RECENT DEMOGRAPHIC DEVELOPMENTS IN IRELAND

If you examine the historical record, the past 160 years has been dominated by waves of emigration from this country, that trend has only reversed for short periods. The question, is the past 15 years immigration a short term exception to a long running trend of emigration?

The population was over 4.2 million in the 2006 census, I reckon it will be around the 4 million mark come the 2011 census and the reason for this is two fold,

1. Most immigrants do not have roots in this country and are economic migrants themselves with a defined time line to make money, return home and setup their own business. Eastern Europe's economies are experiencing new demand for labour as manufacturing expands there and their own government agencies are running recruitment drives in the country and the UK to get them to return.

2. Employment for Irish people since 2001 has been dominated by the construction sector for men and public sector for women. With construction output collapsing there are going to be at least 100,000 men with little to no work available, and a sizeable portion of them and their families will emigrate.

biggus

As say in my florida rubbish post, if you are going to make comparisions apples and oranges are not the same.

Johnnyskeleton makes great sense and perhaps puts my point better than myself but i'm glad to bring some reality to this.

Irish Prices won't drop by 10% or 32.5% but they may drop by 50% in bally-go-backwards and not drop at all in stoneybatter.

miju

hate to burst your bubble (pardon the pun) but the price drops seem to be greater in the "prime" suburbs of Dublin

bren2002

biggus wrote: »

Irish Prices won't drop by 10% or 32.5% but they may drop by 50% in bally-go-backwards and not drop at all in stoneybatter.

:eek:

Do people still believe this? Prices are down 25% in some areas already on 2007. That's a long way past 10% and quite a bit of the way to 32.5%. Give iot another 6 months and you'll be in 30% territory.

biggus

Question for Bren2002, is your 30% fall from now, tomorrow, or 1 year ago ?

As somebody said earlier in this post, asking prices and actual sale prices are chalk and cheese.

Can some underemployed journalist do some figures on the actual contract figures as supplied to revenue for stamping?

miju

think the devil is in the detail there biggus.

bren2002 wrote: »

Prices are down 25% in some areas already on 2007.

Pa ElGrande

biggus wrote: »

Irish Prices won't drop by 10% or 32.5% but they may drop by 50% in bally-go-backwards and not drop at all in stoneybatter.

You provide no basis for this claim.

As regards Stoneybatter (I live here), actual selling prices are already down, 15% over peak in 2006 and anyone who does not drop their price stays on the market. Some of the sellers who bought these properties in the last 4 years have put them on sale with multiple agents rather than drop their price, also most of the property for sale here are 2 bedroom cottages.

jmayo

Pa ElGrande wrote: »

Not true. Builders and developers are just actors who have been misled by the money thrown at them by bankers. They are not foolish people and have made rational decisions based on availability of credit and projected demand, they are the entrepreneurs who have got up and created companies and jobs .

If you want to blame someone, then follow the money, the cheap money was created by central banks and governments running deficit spending, this inflationary expansion of money and credit is what caused the problem, this is what caused the Dot.Com boom, the mortgage backed securities (MBS) boom and now the commodities boom which is driving up the cost of energy and food and robbing you and me of our income and savings through declining purchasing power.

Greenspan, Bernanke, Fukui , Shirakawa, Trichet, Hurley - these are the men who oversee the monetary inflation and combined with irresponsible politicians create the bubbles we experience, but they are seldom blamed by the public or held accountable for the destruction of wealth and impoverishment they cause.

Ah Jeeze Pa you almost had me crying there for the developers for a minute, but then I thought about the developers slipping money to dodgy politicans/planners so that they could build their ill planned estates with no infrastructure or facilities and how they have screwed generations to come.
I thought of all the estates stuck onto little villages with no addtiional schools and social planning.
I thought of the gazumping and how they basically tried to screw as much money out of their perspective buyers, left estates half finished and how they still hold onto single property in developments so that they can control the management company.

Then I thought about the poor builders that basically screwed poeple for any work undertaken and usually left shoddy workmanship behind.

Everyone wanted a slice of the action and some like our developer friends got a bigger slice.
Everyone from the government, the bankers, the mortgage brokers, the estate agents, auctioneers, right down to a lot of lucky property owning ordinary consumers wanted to climb on board the gravy train.
How many ordinary people remortgaged so that they could buy the second or third property which was affectively pushing up the prices for the FTB.

Nobody forced anyone to do anything so stop blaming the world and the fact that other countries provided cheap credit.

Anyone that did say stop and that it was going to end in tears was laughed at and told how rich they would be if they only had bought 5 years ago.
Hell even the leader of the country called people whingers when they tried to point out the crock of sh** the economy had become.

The sad thing is it has probably sent our country back to the bad old eighties but this time there will be no giant mutlinationals locating here to start the economy rolling.

IMHO some people are under the idea that only apartments or houses in the ar**hole of nowhere will drop in price and that their own house will maintain it's value.
I think it is hope rather than any logic that is dictating this believe.
Every property in the country will drop with the only question being by how much.

iguana

biggus wrote: »

Question for Bren2002, is your 30% fall from now, tomorrow, or 1 year ago ?

As somebody said earlier in this post, asking prices and actual sale prices are chalk and cheese.

Can some underemployed journalist do some figures on the actual contract figures as supplied to revenue for stamping?

There is a house on Terenure Road West which, after several price changes, is now on the market for over 35% less than another house on the street sold for in 2006. And that's one of the few recorded sales prices publicly known in Ireland.

The houses aren't identical, the cheaper house was a slightly smaller house, but was detached. The house on the market now is bigger but only a semi, which a bullish Times article from over a year ago figured evened them out. The house on the market now has dropped it's asking price by 50% from last year.

http://www5.daft.ie/searchsale.daft?id=325558

http://www.ireland.com/newspaper/property/2007/0111/1168460280534.html

Do-more

IMO there is an important difference in Irish law which will see the burst play out quite differently in Ireland compared to the US or UK.

Many of the foreclosures in the US or during the last bust in the UK in the early nineties were from people handing back the keys and walking away. They could then file for personal bankruptcy and wipe the slate clean, their credit rating was goosed but at least they didn't have banks pursuing them for the outstanding debt.

Because it's extremely expensive and difficult to declare personal bankruptcy in this country this is just not going to happen here and the amount of foreclosures of individual homeowners, will be much less here (unless they change the bankruptcy laws).


On the other hand, because of the amount of speculative and inappropriate house building, the developers here have been caught holding a much higher stock of unsold and in some cases unsalable houses and apartments.
The move by Bank of Scotland Ireland on LTV's will I think push things over the brink. Many of the developers' lenders have been holding off and giving them time in the hope that the magical recovery will come. BoSI's move has clarified the fact that the magic is not going to happen anytime soon. So that's why I think that lenders will start to make margin calls on developers and those that cannot stump up will be forced into liquidation.

faceman

Do-more wrote: »

The move by Bank of Scotland Ireland on LTV's will I think push things over the brink. Many of the developers' lenders have been holding off and giving them time in the hope that the magical recovery will come. BoSI's move has clarified the fact that the magic is not going to happen anytime soon. So that's why I think that lenders will start to make margin calls on developers and those that cannot stump up will be forced into liquidation.

Im not entirely convinced that BoS change in strategy is an indicator of doom for eternity. When they first entered the market, for a long time they only gave 80% LTV mortgages.

SimpleSam06

When exactly do people put the peak of property prices at? I was fairly sure there was upwards movement until the last two months of 2007, but I've seen several comments referring to the peak as being sometime in 2006.

The_Conductor

SimpleSam06 wrote: »

When exactly do people put the peak of property prices at? I was fairly sure there was upwards movement until the last two months of 2007, but I've seen several comments referring to the peak as being sometime in 2006.

Different areas peaked at different times.
Some areas where there was a massive supply of property put on the market over the last few years (West Dublin for example) probably peaked a good deal earlier than some other areas where development was later starting (Portlaoise for example).

gamer

Theres an article in new york times finance section bout uk,ireland the end of the property boom, its funny ,large picture of single woman sitting on balcony,dublin south, shes interviewed ,says ,i paid 550k 4 this one bed apartment ,its lost 100k value since 2007,she should have an arrow pointed at her, IS this the last person to buy an overpriced apartment be4 prices started to go down.
4 that money you could buy a large 3bed apartment 1000sq ft in blanch,free parking space ,and still have 170k left over.IN yesterdays times paper in some article woman says new apartment not up to promised spec,she gave 20k deposit,she says even if she loses the deposit ,apartment values are going down,shes trying to pull out of the deal and buy a house in city centre ,300k .
then 4 the last 4 years i,ve been hearing houses in ireland r overvalued by 30percent.

Glenbhoy

SimpleSam06 wrote: »

When exactly do people put the peak of property prices at? I was fairly sure there was upwards movement until the last two months of 2007, but I've seen several comments referring to the peak as being sometime in 2006.

I reckon June 06 was about the absolute height, things slowed down dramatically in the Autumn '06 season, this was blamed on McDowell, but was coming anyway (we'd just had 3/4 successive interest rate rises). Prices may not have dropped intially, but volume did and that was the pre-cursor.

Someone mentioned that a gift from parents would not be acceptable to banks, I disagree with that, a bank won't care where the balance of purchase funds comes from as long as it's not borrowed and no one else has a potential claim on the asset their lending on. What they will require is a letter from the parents, stating that the money is a gift and that they will have no beneficial interest/claim in the property being purchased.

Glenbhoy

gamer wrote: »

Theres an article in new york times finance section bout uk,ireland the end of the property boom, its funny ,large picture of single woman sitting on balcony,dublin south, shes interviewed ,says ,i paid 550k 4 this one bed apartment ,its lost 100k value since 2007,she should have an arrow pointed at her, IS this the last person to buy an overpriced apartment be4 prices started to go down.
4 that money you could buy a large 3bed apartment 1000sq ft in blanch,free parking space ,and still have 170k left over.IN yesterdays times paper in some article woman says new apartment not up to promised spec,she gave 20k deposit,she says even if she loses the deposit ,apartment values are going down,shes trying to pull out of the deal and buy a house in city centre ,300k .
then 4 the last 4 years i,ve been hearing houses in ireland r overvalued by 30percent.

What she could buy in Blanch is of no relevance whatsoever, she could probably have bought a villa in Brazil with 10 maids for that money, but that's not relevant either.

seamus

SimpleSam06 wrote: »

When exactly do people put the peak of property prices at? I was fairly sure there was upwards movement until the last two months of 2007, but I've seen several comments referring to the peak as being sometime in 2006.

In Dublin, it was definitely late 2006. Although asking prices continued to rise slightly or stay high until Spring '07, it was around August '06 that sales halted, so basically the last vendors to get high prices sold around then.

There was a general unwilling & slow drop in prices through 2007, though many vendors and EAs put their fingers in their ears and refused to listen to reason. Around October '07 it seemed to be generally accepted by both vendors and EAs that prices would have to be seriously cut to get sales going again.

Caoimhín

gamer wrote: »

Theres an article in new york times finance section bout uk,ireland the end of the property boom, its funny ,large picture of single woman sitting on balcony,dublin south, shes interviewed ,says ,i paid 550k 4 this one bed apartment ,its lost 100k value since 2007,she should have an arrow pointed at her, IS this the last person to buy an overpriced apartment be4 prices started to go down.
4 that money you could buy a large 3bed apartment 1000sq ft in blanch,free parking space ,and still have 170k left over.IN yesterdays times paper in some article woman says new apartment not up to promised spec,she gave 20k deposit,she says even if she loses the deposit ,apartment values are going down,shes trying to pull out of the deal and buy a house in city centre ,300k .
then 4 the last 4 years i,ve been hearing houses in ireland r overvalued by 30percent.

Sorry, im sure you have an interesting point, i just cant understand what you have written.

Gurgle

caoibhin wrote: »

Sorry, im sure you have an interesting point, i just cant understand what you have written.

It's a bit bizzarly written, but I think I can translate the main points:

1. The New York Times says property prices are coming down in Ireland.
2. Property is more expensive in South Dublin than North Dublin

If theres anything else in there, I don't know what it is.

beeno67

Pa ElGrande wrote: »

Construction standards are irrelevant, both the Irish and Florida property collapse are happening for the same reason - after the dot com crash, interest rates were lowered to the floor, the cheap money made available then found it's way into mortgage backed securities, which made cheap funding available for development and speculative buying in property. The money lent out expanded beyond the ability of the borrowers to repay and the bubble burst. We now have an oversupply of property for sale and even banks are unwilling to lend to each other, and are tightening up lending criteria even more for property, forcing prices still further downwards.

SOME RECENT DEMOGRAPHIC DEVELOPMENTS IN IRELAND

If you examine the historical record, the past 160 years has been dominated by waves of emigration from this country, that trend has only reversed for short periods. The question, is the past 15 years immigration a short term exception to a long running trend of emigration?

The population was over 4.2 million in the 2006 census, I reckon it will be around the 4 million mark come the 2011 census and the reason for this is two fold,

1. Most immigrants do not have roots in this country and are economic migrants themselves with a defined time line to make money, return home and setup their own business. Eastern Europe's economies are experiencing new demand for labour as manufacturing expands there and their own government agencies are running recruitment drives in the country and the UK to get them to return.

2. Employment for Irish people since 2001 has been dominated by the construction sector for men and public sector for women. With construction output collapsing there are going to be at least 100,000 men with little to no work available, and a sizeable portion of them and their families will emigrate.

This means you reckon about 2000 people will emigrate from this country every week for the next 3 years! Well they had better get a move on. In the last census 400,000 people described themselves as "Non-Irish" so even if half of them left and none arrived it would still not reach the 200,000 target.

Afuera

beeno67 wrote: »

This means you reckon about 2000 people will emigrate from this country every week for the next 3 years! Well they had better get a move on.

2000 people a week equates to less than one Boeing 747 per day. How many planes leave the country per day? It only takes a small percentage of people on those flights with the notion of leaving Ireland, never to come back, to reach the figures that Pa ElGrande mentioned.

beeno67 wrote: »

In the last census 400,000 people described themselves as "Non-Irish" so even if half of them left and none arrived it would still not reach the 200,000 target.

Half of 400k is 200k. Am I missing something?

The_Conductor

beeno67 wrote: »

This means you reckon about 2000 people will emigrate from this country every week for the next 3 years! Well they had better get a move on. In the last census 400,000 people described themselves as "Non-Irish" so even if half of them left and none arrived it would still not reach the 200,000 target.

Its actually closer to 1250 than 2,000 a week. Those leaving includes a large number of people who describe themselves as Irish- including:

1. People leaving school/college/university and unable to find work
2. People who migrated in the 1980s and 1990s and returned home but are beginning to leave again
3. Large numbers particularly of Polish who are finding employment prospects, and salaries, much improved at home, on what they were a few years back
4. Other economic migrants who are more interested in working on the continent in countries closer to home now that the restrictions first imposed on them when their home countries acceded to the EU are lifted. France and Germany often recognise their formal qualifications from their home countries, while Ireland and the UK often do not.

The Polish embassy and a number of other consulates are tracking the numbers of their nationals present here, and while they are not reporting actual figures, have noted that the numbers arriving has reduced (to about 1/4 of their 2006 levels) and the numbers leaving have accelerated (no numbers given).

S.

hotredhead

Hi,I hope I am not going off topic here.We are first time buyers and qualifiedfor 100% mortgage 2 years ago,but decided to wait.Obviously now we are talking 90-92% and that is fine.
However we will not be in a totally comfortable position to buy until October.
By then we will have drastically cut our loans and have full deposit.
What is freaking me out is people ie.family telling me we have to make a move now as prices are starting to go up.Who knows what is going to happen.Maybe they will go up maybe they wont.All I know is I cant do anything till October.
Sorry for the rant but I had to get it off my chest.What do you guys feel in general.Thanks in advance.

Caoimhín

hotredhead wrote: »

Hi,I hope I am not going off topic here.We are first time buyers and qualifiedfor 100% mortgage 2 years ago,but decided to wait.Obviously now we are talking 90-92% and that is fine.
However we will not be in a totally comfortable position to buy until October.
By then we will have drastically cut our loans and have full deposit.
What is freaking me out is people ie.family telling me we have to make a move now as prices are starting to go up.Who knows what is going to happen.Maybe they will go up maybe they wont.All I know is I cant do anything till October.
Sorry for the rant but I had to get it off my chest.What do you guys feel in general.Thanks in advance.

Brace yourself missus.

beeno67

smccarrick wrote: »

Its actually closer to 1250 than 2,000 a week. Those leaving includes a large number of people who describe themselves as Irish- including:

1. People leaving school/college/university and unable to find work
2. People who migrated in the 1980s and 1990s and returned home but are beginning to leave again
3. Large numbers particularly of Polish who are finding employment prospects, and salaries, much improved at home, on what they were a few years back
4. Other economic migrants who are more interested in working on the continent in countries closer to home now that the restrictions first imposed on them when their home countries acceded to the EU are lifted. France and Germany often recognise their formal qualifications from their home countries, while Ireland and the UK often do not.

The Polish embassy and a number of other consulates are tracking the numbers of their nationals present here, and while they are not reporting actual figures, have noted that the numbers arriving has reduced (to about 1/4 of their 2006 levels) and the numbers leaving have accelerated (no numbers given).

S.

Obviously people are still going to be born (more than will die) and people are still going to come to this country (as they always have even during the worst of 80's emigration), hence my figures

trellheim

someone made the interesting point about difference between asking prices and those presented to Revenue for stamping;

has anyone done any research to find out if the Revenue data is accessible ? I very much doubt it is, but it perhaps would not be too difficult to FOI them for a

SELECT Address,Value from transactions order by address.

Calina

hotredhead wrote: »

Hi,I hope I am not going off topic here.We are first time buyers and qualifiedfor 100% mortgage 2 years ago,but decided to wait.Obviously now we are talking 90-92% and that is fine.
However we will not be in a totally comfortable position to buy until October.
By then we will have drastically cut our loans and have full deposit.
What is freaking me out is people ie.family telling me we have to make a move now as prices are starting to go up.Who knows what is going to happen.Maybe they will go up maybe they wont.All I know is I cant do anything till October.
Sorry for the rant but I had to get it off my chest.What do you guys feel in general.Thanks in advance.

If you cannot do anything until October for your own good reasons then do not do anything until October. No one else as the right to push you to make a decision one way or the other and you need to do what is best for you.

Part of the issue in this country is that people have been terrified into "getting their foot on the ladder before the ladder gets whipped away". If prices were actually pacing with inflation - like they should - then there would be none of this nonsense and "buying before you can't afford" would cease to be a reason to buy.

The only people qualified to make a decision for you are yourselves. Other people should politely be told to shut up as they are not privy to the factors that impact on your decision.

No one knows for sure what will happen in October but there are a lot of houses for sale right now.

hotredhead

Thanks Calina,You are right it's no ones business but our own.I will just have to keep my mouth shut,tell them absolutely nothing and hopefully we will get get a reasonable priced property by the end of the year.

Gurgle

hotredhead wrote: »

Sorry for the rant but I had to get it off my chest.What do you guys feel in general.Thanks in advance.

Don't buy anything, anywhere, ever unless:
a) You want to own it
- and -
b) You can afford to pay for it

For all the guesses, opinions and predictions on this thread (my own included), absolutely nobody knows what is going to happen.

'The day you buy is the day you sell' - Bollox
'Location, location, location' - Bollox
'You can't lose on property' - Bollox
'Get a step on the ladder' - Bollox