Housing Bubble Bursting

SkepticOne

Patrickof wrote: »

Well considering that the EA admitted that none had actually sold at the original price of €365000 - then is it fair to say that it was really a "price". I mean he could have said they were priced at €1.5 million and are now reduced to €250,000 for all the difference it would have made.

Nevertheless there's some people who are impressed with this sort of thing and when they see 'reductions' of this sort think they're getting a bargain.

Gurgle

SkepticOne wrote: »

Nevertheless there's some people who are impressed with this sort of thing and when they see 'reductions' of this sort think they're getting a bargain.

And then those very same 'reductions' are linked to ad nauseum on this thread as evidence that the housing market is in freefall

blast05

So, 315 pages of talking about what has been happening for the last 12 months.
What happens next though ?
When do prices start stabilising ?
Predictions, predictions, predictions please.

adam.number2

2-3 years

johnnyskeleton

blast05 wrote: »

So, 315 pages of talking about what has been happening for the last 12 months.
What happens next though ?
When do prices start stabilising ?
Predictions, predictions, predictions please.

Prices could start stabilising tomorrow, if houses were being sold at realistic prices. Realistic means the somewhere in the intersection of what a purchasor is prepared to pay and what the vendor is prepared to sell at. The market will recover when houses reach this point, but the question you are asking is when will this happen? It will only happen when the reality sinks in - my guess is that it will happen in 2011, but that's just a number plucked from the air.

SkepticOne

blast05 wrote: »

When do prices start stabilising ?
Predictions, predictions, predictions please.

Look for signs of total despair in the market when, for example, the consensus opinion seems to be that house prices will continue falling to practically nothing. When everyone that was formerly a die-hard bull in the market has sold up, then the market will stabilise.

This is kind of the reverse of what happened before the bubble burst and many people would not have believed that houses would continue to rise indefinitely or that at the very worst, there would be a levelling off of prices. Both these extremes are irrational positions.

I would be very surprised if the market stabilises within the next two years to be honest.

SimpleSam06

blast05 wrote: »

Predictions, predictions, predictions please.

2011 or 2012, prices will have fallen about 50% from the peak, or another 35-40% to go, without factoring in inflation. The banking sector and real estate sales sector will be facing much tighter regulation by the end of it, and income tax will have climbed to cover the public sector workers who were hired during the boom, tightening of the belt advised by a man who looks like he last wore a belt during world war 2. Rents will drop, just how far depends on the migrant situation.

ambro25

SimpleSam06 wrote: »

2011 or 2012, prices will have fallen about 50% from the peak, or another 35-40% to go, without factoring in inflation. The banking sector and real estate sales sector will be facing much tighter regulation by the end of it, and income tax will have climbed to cover the public sector workers who were hired during the boom, tightening of the belt advised by a man who looks like he last wore a belt during world war 2. Rents will drop, just how far depends on the migrant situation.

Had to post my applause, that "thumbs up" thingymajjig just doesn't cut it for me :cool:

As for the migrant situation, now with a turning economy which, considering the extent to which it became hitched on property gains in Ireland, is therefore likely to fall faster than neighbouring economies (after it rose faster - natural symptom of small countries/small populations), and after seeing recent stats painting a mass exodus of earlier migrants towards other shores (UK for Olympics infrastructure work, Scandinavia as the next booming place/tiger in Western Europe and simply back to home plate (Poland) after a raft of recent tax/this-that-the-other incentives), I'd say the balance is going to be increasingly negative.

Ergo, fast-falling rent rates, and maybe even as far as a vicious circle:

can't sell value-losing properties to anyone + can't face mortgage payments on all properties
= must rent out to at least gather some cash towards repayments and shore up negative equity if possible

but less and less migrants coming in to rent and
(migrant status aside) increasingly-astute tenants playing the market right
= ever dimishing returns for landlords

Long-term reliable renters are likely to become gold dust and a treasured secret amongst landlords. I know we are for ours - he does not charge a stupid rent amount by a long stretch (in fact, very cheap by location/local standards), and we are regular as clockwork for rent + look after place and decorate regularly, over nearly 4 years now.

Of course, the fact that the dollar is abysmally low and that the Irish economy, when it is not relying upon the internal money-swapping property game (which hardly creates wealth), relies vastly upon US investments, is about as problematic as the falling property market and concomitant credit crunch.

The above economical factors however abstract the human factor completely (hardly quantifiable), which could precipitate things, i.e. hard-hit/hard-up locals increasingly resenting 'non-locals' (another natural symptom in "compressing labour markets", witness for example virtually any booming-then-busting economy in Europe since 1900 or thereabouts), and 'non-locals' upping sticks even when they in particular don't really have any economic reason to do so.

Food for thought: we're going back this year, after 4 years in Dublin. We are 'migrants', though at the "professional" level. We know of several more 'migrants' of the same socio-economic level who are also going back this year, and some of those have been here about 8 years now (others less, but we all average about 5 years). There is a growing sense of unease at being a non-national, and it's been growing for the last year or so - we duly discussed with others, guardedly at first to ensure that we were not just suffering a bad bout of cabin fever/paranoia/whatever. Turns out we were not, and in fact the extent to which this feeling was shared by others was alarming. As I said, food for thought.

Caoimhín

ambro25 wrote: »

There is a growing sense of unease at being a non-national, and it's been growing for the last year or so - we duly discussed with others, guardedly at first to ensure that we were not just suffering a bad bout of cabin fever/paranoia/whatever. Turns out we were not, and in fact the extent to which this feeling was shared by others was alarming. As I said, food for thought.

I find that truly alarming and upsetting.

confuzed

mass denial after mass mania.
Things are bad but not that bad. Its a typical burst boom cycle and will stabilize soon. Not all of developed countries depend upon US economy and we used to depend doesn't mean we will be dependent on US investment forever.
We will have to look for new sectors and new opportunities.
Prices are falling because they were overinflated by so many factors. I am still waiting for any big development firm declaring bankruptcy.

DublinDilbert

confuzed wrote: »

I am still waiting for any big development firm declaring bankruptcy.

The banks have been very careful with the big developers to give them lots of lee-way... they don't want to pull the rug from under big developers as this would flood the market...

They have how ever pulled funding from smaller developers, ones who do not have the money to even finish the development themselves.... hence your now starting to see 1/2 built houses & small housing estates poping up...

johnnyskeleton

ambro25 wrote: »

Food for thought: we're going back this year, after 4 years in Dublin. We are 'migrants', though at the "professional" level. We know of several more 'migrants' of the same socio-economic level who are also going back this year, and some of those have been here about 8 years now (others less, but we all average about 5 years). There is a growing sense of unease at being a non-national, and it's been growing for the last year or so - we duly discussed with others, guardedly at first to ensure that we were not just suffering a bad bout of cabin fever/paranoia/whatever. Turns out we were not, and in fact the extent to which this feeling was shared by others was alarming. As I said, food for thought.

I'm sorry to hear that but I have to say - living in Ireland for 4 years, and it's only now that you realise we're a bunch of jerks?

faceman

ambro25 wrote: »

Food for thought: we're going back this year, after 4 years in Dublin. We are 'migrants', though at the "professional" level. We know of several more 'migrants' of the same socio-economic level who are also going back this year, and some of those have been here about 8 years now (others less, but we all average about 5 years). There is a growing sense of unease at being a non-national, and it's been growing for the last year or so - we duly discussed with others, guardedly at first to ensure that we were not just suffering a bad bout of cabin fever/paranoia/whatever. Turns out we were not, and in fact the extent to which this feeling was shared by others was alarming. As I said, food for thought.

My non national friends and colleagues dont share your views. What is the unease you are referring to?

ambro25

LOL @ johnnyskeleton (I benefit from/am cursed with extraordinary levels of patience and optimism, which may explain this and that )

faceman wrote: »

My non national friends and colleagues dont share your views. What is the unease you are referring to?

Good for them, and of course they're fully entitled to theirs.

"Unease" is exactly that, and for that reason pretty difficult to rationalise into factoids or even words. Put simply, it's been fab being around'ere the first 2 to 3 years, but a noticeable change in people's attitude over the past year, markedly so once they cop on/realise from our accents that we are not from around'ere (we would sound Brit rather than resolutely foreign), is the best way I can try to explain. In shops, in the street, at the garage, in the pub, in casual conversations, even with some acquaintances. Then the beginning of an "not-born-here" or "not-been-to-school-with-Pat" glass ceiling at work, once a certain level is reached. Etc. It's a combination of a whole lot of different little tits and tats here and there, the number of which has been increasing over time for no apparent reason, and which combination eventually amounts in my mind/psyche to this "overall unease".

Put it that way - we feel we're constantly reminded we're foreign, and not in a 'nice' way (not outright hostility, but not the 'oh that's a lovely accent' thing either), which is a feeling I had never experienced wherever I'd lived in Europe before (and I've rolled my stone some over the last 18 years or so: Lux, Belgium, Germany, UK), and didn't note the first 2/3 years we were here either.

For what it's worth, we're white, late 30s, reasonably affluent (but not flauntingly or opulently) and live in Dublin South. It may be a whole different ballpark/feel totally different in Dublin/suburbs areas with a heavier concentration of migrants.

I've gone OT far enough, so don't mind me. As I said, it was only food for thought, and given as anecdotal evidence - the relevance to this thread really only to the extent that, between ourselves and all of the friends who feel similar and are 'going back' before the end of the year (4 couples/4 houses in all), there's gonna be a shortfall of about €7k's worth of monthly rent to the Irish Landlords' pot - which, considering the current economical slowdown, the increasing supply of rental properties and the slowing influx of migrants, may prove quite difficult to offset. Is all.

Do-more

DublinDilbert wrote: »

They have how ever pulled funding from smaller developers, ones who do not have the money to even finish the development themselves.... hence your now starting to see 1/2 built houses & small housing estates poping up...

can you back that up with any links or details of repo'd property for sale?

SimpleSam06

More shenanigans in Galway as reported on the front page of the Tribune, builders slashing houses in a new development by €70,000, bringing them back to 2003 levels, in an effort to move unsold stock. No word on what people who bought at 2007 levels might have to say on that.

Also there is call for a probe into allegations that a number of affordable houses in city estates are being rented out by their owners, with people on the waiting list for eight years. So apparently the easiest way to become a landlord is to apply for social and affordable housing in Galway. In the same paper we have a councillor lamenting the measly €30 million set aside to purchase affordable housing (new stock only at market prices) this year, and yes, the phrase "dig out" was used.

Caoimhín

SimpleSam06 wrote: »

In the same paper we have a councillor lamenting the measly €30 million set aside to purchase affordable housing (new stock only at market prices) this year, and yes, the phrase "dig out" was used.

Why do we insist on electing the local trickster/character/cute hoor. We do indeed get the politicians we deserve.

JupiterKid

Most of my "non-national" friends would be in agreement with Ambro25. According to them in the past year or so, since the housing market and later the economy took a turn for the worse, there has been a creeping hostility to wards immigrants. According to tem, it's not blatant racsim/xenophobia that they're experiencing....yet....but a less friendly, more icy/curt interaction with native Irish.

I sadly think that this will worsen, as our economy worsens. And that will just add to the economic push factors for them to leave Ireland, further collapsing our fragile/house of cards property market.

portomar

caoibhin wrote: »

Why do we insist on electing the local trickster/character/cute hoor. We do indeed get the politicians we deserve.

only happens outside dublin. emmmm.... except for bertie, lawlor, ray burke, etc. etc. na only joking but i do think its different in big towns and cities around the country, where you may never meet your TD. then you have beverly cooper flynn in mayo keeps gettin in coz "her da was very good to my granny" and "ah she puts it up to all those dubs!" ditto jim mcdaid " ah he may be a danger to himself and others on the road at times but he lives down the road and he shook my hand last week and came to my cousins funeral"

back to the point, friend of a friend is splitting up with his partner, they live in lusk or some godforsaken place, and they bought their house for 420,000, now worth about 360,000, doubt theyd even get that in current market.they owe all but 20,000 of that. painful. hes trying to buy her out and probably cant.

confuzed

atleast they get a reason to stay together. financial independence was one of the culprits of splitting.

Caoimhín

portomar wrote: »

back to the point, friend of a friend is splitting up with his partner, they live in lusk or some godforsaken place, and they bought their house for 420,000, now worth about 360,000, doubt theyd even get that in current market.they owe all but 20,000 of that. painful. hes trying to buy her out and probably cant.

I was only wondering about that today. Will the woman be entitled to half the negative equity?

Ste.phen

caoibhin wrote: »

I was only wondering about that today. Will the woman be entitled to half the negative equity?

If she signed the mortgage, yup!

Caoimhín

Igy wrote: »

If she signed the mortgage, yup!

But if she didn't sign up to the mortgage and the house WAS worth a lot she would be entitled to that too?

miju

yes, I believe it's that whole womens equality thing they like to bang on about :rolleyes::rolleyes::rolleyes:

Ste.phen

If she didn't sign the mortgage i'm not sure why she'd be entitled to anything?
[edit] unless they were married? [/edit]

Caoimhín

Igy wrote: »

If she didn't sign the mortgage i'm not sure why she'd be entitled to anything?
[edit] unless they were married? [/edit]

Wimmins rights, entitled to half i suppose?

beeno67

Surprised no one has commented yet!

The economy has the potential to grow at around 3.75% a year over the coming decade, despite significant short-term problems. When the current global economic slowdown ends, with appropriate policies the economy should recover quite rapidly. Even if current difficulties prove more severe than anticipated, the economy is resilient and a global recovery would still see it rebound. The prospect of continuing medium-term growth above the EU average is underpinned by favourable trends in labour supply and in productivity. While unemployment is currently rising, with a flexible labour market there should be a return to full employment. Despite current difficulties in building and construction, the economy needs continuing substantial investment in housing and infrastructure over the coming decade.

[simplistic-overview] Ultimately lower housing costs should be good for the many rather than the few.
If your average house owner has smaller mortgage payments, then he has more disposable income to spend elsewhere.
[/simplistic-overview]
We need more investment in infrastructure, but additional housing can wait.

jmayo

beeno67 wrote: »

Surprised no one has commented yet!

The economy has the potential to grow at around 3.75% a year over the coming decade, despite significant short-term problems. When the current global economic slowdown ends, with appropriate policies the economy should recover quite rapidly. Even if current difficulties prove more severe than anticipated, the economy is resilient and a global recovery would still see it rebound. The prospect of continuing medium-term growth above the EU average is underpinned by favourable trends in labour supply and in productivity. While unemployment is currently rising, with a flexible labour market there should be a return to full employment. Despite current difficulties in building and construction, the economy needs continuing substantial investment in housing and infrastructure over the coming decade.

Yep it's just a few short term problems.
Well spotted, if there is one thing we need it is more houses.
Lots and lots of houses for all the millions of immigrants that are coming.
And as every one knows all you need for economic growth is labour supply and favourable trends in productivity. By having millions and millions of immigrants we will have the labour and the private sector will always provide the productivity.
Sure what else would you need ?

Which letter stands for the construction industry or builders federation in that ESRI acroynm again ?

nesf

Deleted User wrote: »

We need more investment in infrastructure, but additional housing can wait.

http://www.esri.ie/UserFiles/publications/20080513162227/MTR11_ES.pdf

If you read the medium term challenges bit at the end they reference redevelopment of urban centres combined with good planning for environmental/sustainability reasons. That could be where they're foreseeing a lot of the need for housing development. Not so much "new housings" as much as it is "better housing". Considering some of the crap that's gone up in the last 15 years, they may have a point.

You also have to put this in the context of being a medium term review and they're looking out to 2025 here. They're not saying that we'll need a whole bunch of new estates in the middle of nowhere next year. Over the next 20 years unless a miracle replacement for oil comes along private transport will become a hell of a lot more expensive and they're most likely will be renewed pressure in urban areas for denser and more energy/heating/whatever efficient housing in them along with a lot of public transport etc.