Housing Bubble Bursting

nesf

jmayo wrote: »

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

These people being the same people who were saying that a soft landing for the housing market was unlikely back in 2005 and that a harsher correction was more likely. Have the builders got to them since then or something?

jmayo

nesf wrote: »

These people being the same people who were saying that a soft landing for the housing market was unlikely back in 2005 and that a harsher correction was more likely. Have the builders got to them since then or something?

I don't think we have fulled landed yet.

nesf, I didn't get chance to read full report but if they are saying that there will be wholesale residential building in urban areas in the near or medium future due to oil price/commutting costs, then they must have some magic way for people to offload their negative equity homes in some of the towns/villages that are not serviced by any decent public transport.

According to the great Indo ....
However, it added that these job losses are also part of the process of Ireland moving up the "value chain" in terms of the types of jobs we provide.

For example, manufacturing and construction jobs will be replaced by the services sector, in particular, the financial arena and managerial and professional positions will account for the lion's share of the jobs market.


We will all be managers and professionals in the future.

Ahh the great knowledge economy and services industry.
This is from the country with lousy broadband coverage :rolleyes:

nesf

jmayo wrote: »

nesf, I didn't get chance to read full report but if they are saying that there will be wholesale residential building in urban areas in the near or medium future due to oil price/commutting costs, then they must have some magic way for people to offload their negative equity homes in some of the towns/villages that are not serviced by any decent public transport.

The near future no, in the medium future, i.e over the next decade, maybe. They see the economy continuing to grow and living standards increasing over the medium term. We won't, mostly likely, return to the days of 7%+ increases in GDP but 3-4% over the term is roughly where most economists are expecting, including academics who have little stake in houses etc versus say bank economists who do have a stake in it.

jmayo wrote: »

Ahh the great knowledge economy and services industry.
This is from the country with lousy broadband coverage :rolleyes:

Whether or not you can get broadband in some hamlet in the middle of Mayo makes little difference to companies setting up in the IFSC etc. Yes, the words "knowledge economy" are horribly overused by both politicians and media pundits but we have grown our services industry very well over the last decade and we do have comparative advantages in it. Not everyone is going to be a manager but we're no longer the kind of low wage country that can be efficient in most forms of manufacturing so unless there's a serious change in the economic conditions, it's service industry or bust tbh.

orbital83

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.

The economy has the potential to grow at 100% a year over the coming decade.
All you need are the right assumptions.

Of course I have no reason to doubt the ESRI's assumptions - it's not as if they are a mouthpiece of the FF machine, or receive any government funding whatsoever.

[/sarcasm]

SimpleSam06

John J wrote: »

The economy has the potential to grow at 100% a year over the coming decade.
All you need are the right assumptions.

This is a good point. As far as I understand it, the government has been spending large amounts of money in developing areas other than the property market, attempting to follow the economic models of countries like Iceland.

Few here dispute that the country is in deep trouble, perhaps the starkest national casualty yet of the worldwide credit crisis. Last week, the central bank raised interest rates to a record 15.5 percent to curb inflation and shore up the currency. Since Jan. 1, the krona has lost 22 percent of its value against the euro.

For most of the last decade, this tiny country ran on a high-octane mix of foreign investment — much of it related to Iceland’s energy resources — borrowed money and profligate consumption, turning its 307,000 people into a miniature model of the American economy.

Of course unlike them, we don't even have energy resources. This would be the final destination of the new "knowledge based economy" theories. Managers and professionals indeed. Never mind that big iceberg, we'll be hitting that to save on refridgeration costs, all part of the plan.

SimpleSam06

nesf wrote: »

but we're no longer the kind of low wage country that can be efficient in most forms of manufacturing

Yes, much like Germany and Japan.

ixoy

From RTE news URL="http://www.rte.ie/news/2008/0514/economy.html"]link[/URL:

Irish banks are issuing 25% fewer mortgages than they were this time last year.

But the Irish Bankers Federation has said there is still a strong demand for new home loans.

The Federation has said there are currently about one million mortgages outstanding in Ireland with €142bn owed on these home loans.
Advertisement

Today's figures show that the number of first time buyers getting mortgages is down 61% since its peak at the end of 2005.

The number of people getting a mortgage to move houses has also fallen sharply. It is down 34% in the past year and is down 60% compared with its peak in late 2005.

Almost a third of mortgages are now top-up mortgages, which are used by people to borrow smaller amounts for house extensions and similar projects.

However the number of top-up mortgages issued has been reduced by 25% in the past year.

The figures also show that the average first time house buyer mortgage is now €252,000, the average for a house mover is €282,000, the average investor mortgage is €322,000 and the average new top-up mortgage is €94,000.

Earlier, the Economic and Social Research Institute has insisted that the Irish economy remains resilient and that it will eventually rebound to grow at about 3.75% per year in the medium term.

The institute warned that there is a danger that Irish society could become transfixed by the 'very real economic difficulties' and miss the opportunity to plan for a better future in the next decade.

It insisted that the current downturn in the economy will not inflict any lasting damage to the country's long-term growth potential.

The ESRI makes it clear that it remains upbeat about Ireland's economic prospects despite the current slowdown.

It has conducted its latest two-yearly medium-term review of the economy and taken all issues into account including the downturn in the housing market, the global financial turmoil, the potential recession in the US, and the state of Ireland's public finances.

It says it still believes the Irish economy remains fundamentally sound, and is well placed to bounce back when the global situation improves.

The ESRI says Ireland has become very good at selling services abroad and this is the key reason why it is well placed to recover when the global downturn is over.

It added that Ireland has developed a comparative advantage in the supply of financial services, computer and IT services and other business services and it expects almost 240,000 additional service sector jobs by 2015 provided competitiveness is maintained.

It says these jobs will more than compensate for about 70,000 expected job losses between agriculture, manufacturing, construction and public utilities.

It also says that demand for housing will remain strong with 48,000 new houses per year still required until 2020.

The review warns, however, that although greenhouse gas emissions will be reduced substantially as a result of a new carbon tax, Ireland will still miss its emissions targets by a considerable margin.

It also says that it is important for the Government to move fairly rapidly to introduce some form of congestion charging if good value is to be obtained from the huge investment in infrastructure that is now taking place

.

Not quite sure why there's a need for 48k houses a year when the mortgages are down - it's significant that the number of FTBs is down so vastly given they're propping up the market in many ways and they're the ones who are most likely to invest in new builds.

Interesting that the invester mortgage is much higher than the average FTB - judging by the low figures there, I suspect that the investors are more likely to be in Dublin where (I suspect) we'd see much higher average mortgages as there's very few places you can get a place here for a 250k mortgage as a FTB.

DonJose

Interesting program on BBC tomorrow

Spotlight Tuesday BBC One 10.35pm May 20

"Last year NI had the fastest rising property prices in the UK but the market's plummeted. Mandy McAuley talks to the winners and losers and finds out how much properties are really worth."

nesf

An international perspective: http://www.economist.com/daily/news/displaystory.cfm?story_id=11412394&fsrc=nwl

gurramok

Here's what Davy think, of course they keep revising their forecasts every few months.

http://www.rte.ie/news/2008/0528/economy.html?rss

rte wrote:

Economic growth is predicted to fall to 2% next year and it may not bounce back to normal growth levels until 2010.

A report from Davy stockbrokers warns that house prices have much further to fall and that unemployment will rise to 7% next year.

Davy says it cut its growth forecast for the Irish economy because conditions continue to get worse for consumers, as the labour market weakens it is harder to get credit, and because of a 'negative wealth effect'.

Davy now expects GNP growth of 1% this year, and for 2009 of 2%, down from a previous forecast of 3.4%.

On housing, Davy does not think 2008 will see building bottom out, but it has hugely reduced the number of house completions it expects to see next year - from 40,000 to 25,000.

It says house prices will fall by 10.7% over the next year, and by 7.2% in 2009.

It also forecasts that non-residential building will fall by 10% next year.

Davy says unemployment will have reached 7% by the end of next year from a current level of 5.5%.

We have various institutions forecasting falls in house prices within the year, sentiment is further damaged.

Would love to know where this economic bounce is coming from.

EDIT: here's the report http://www.davy.ie/content/pubarticles/dotiecr20080527.pdf
It's grim reading, it admits a 'housing recession' and its detrimental affect on the economy, a crash in other words.

We're about 15% down from the peak(according to estate agents themselves) and further falls of 10.7% this year and 7.2% next year, its a classic bubble bursting

(wonder what ESRI with their recent rosy report think of this Davy report, maybe Davy are wrong too? )

ionapaul

Given the still huge gap between 'da fundamentals' and 'da prices' in this country (and rents are going down!), I can't see past another two years of 10%+ price declines at the least. It's funny to see Davy et all continue to scramble to change their forcasts every few months to deal with what is only the present conditions! The whole 'yeah, prices will continue to go down, but not in Dublin, not the nice D4 redbricks or semi-Ds at least' argument by some VIs is amusing as well.

Do-more

I mentioned Glenmore Wood in Mullingar on this thread a few months back, the developer has just announced a further price drop, but this time supposedly limited to 3 weeks. And only for buyers who are either mortgage approved or will sign an "unconditional contract" within the 3 weeks.

3 bed townhouses are now down to €209,950! Anyone who (supposedly) bought in Rathgowan on the other side of town for €199,950 will no doubt be kicking themselves! After all the hooha of the sales sucess of Rathgowan no one has actually moved in yet!

Just down the road from Rathgowan you can currently buy a 2nd hand 4 bed with garage for €239,000
This month only folks, if it's not sold this month it's going for rental!

All seems like pretty desperate attempts to get FTBs to get down of the fence!

luckat

Seems to me that prices are down far more than 15%. I'd reckon that middle-range prices are down 25%, looking at Daft asks for houses in areas I know.

By the way, is there any way of finding out the price of a property that sold in, say, 2006?

DonJose

Do-more wrote: »

I mentioned Glenmore Wood in Mullingar on this thread a few months back, the developer has just announced a further price drop, but this time supposedly limited to 3 weeks. And only for buyers who are either mortgage approved or will sign an "unconditional contract" within the 3 weeks.

LOL I emailed the real estate agent handling this estate, McDonnell, to be told that the bottom price on the 4 bed semis was €329k, he told me they'd already been "reduced" from €379k and wouldn't be reduced further :eek:

Do-more

DonJose wrote: »

LOL I emailed the real estate agent handling this estate, McDonnell, to be told that the bottom price on the 4 bed semis was €329k, he told me they'd already been "reduced" from €379k and wouldn't be reduced further :eek:

Look at the ad closely, McDonnells don't "dealy" lol

Do you know how many are built and still unsold? I'm guessing it's not that many.

There is obviously no sales activity in Mullingar at present for new homes and this is an attempt to coax some who are not comfortable sitting on the fence to commit.

There is a whole section of Royal Canal which is now being offered for rent as they obviously can't sell them and I hear that they havn't sold a single unit in Pipers Court. Green Park West is also a flop and they are offering them for rent aswell. A guy in the local hardware was telling me that of 6 bookings in Cloon Lara 5 fell through! The whole back row of Belvedere Hills is also vacant!

Any developer holding stock in Mullingar must realise that they will have to drop their prices significantly to grab every available buyer out there or else facing holding onto them for a long time.

DonJose

Do-more wrote: »

Do you know how many are built and still unsold? I'm guessing it's not that many.

Roughly there are 20 x 4 bed-semi's unsold, 20 x 3 bed-semi's unsold and over 20 townhouses unsold. If you take a look at the site map the houses 29-51 are not built yet, there are no foundations laid. 15-28 are empty with the exception of number 26. So in total there are over 60 units unsold.

http://www.andrewsconstruction.ie/Glenmorewood.pdf

Yes Belvedere Hills is a ghost town and looks poorly built, a lot of the vacant houses seem to be falling apart, with lead line falling down on some. I don't even know why they are proceeding with Cloon Lara, the prices are way too expensive for timber framed houses.

Do-more

DonJose wrote: »

Roughly there are 20 x 4 bed-semi's unsold, 20 x 3 bed-semi's unsold and over 20 townhouses unsold.

Wow! I didn't realise that there were that many unsold in Glenmore, it really makes their "3 weeks offer" look farcical, they don't have a hope of shifting those sort of numbers in 3 weeks and at prices which IMO are still too expensive. Do they really think that they can put up prices again in 3 weeks time?

It's not as if they paid big money for the land, they bought it years ago for small enough money and have already made buckets on Pettitswood Manor and Ardmore Close.

They could sell them for:

€150,000 - 3 bed townhouses
€190,000 - 3 bed semis / 4 bed townhouses
€225,000 - 4 bed semis

and still be making a good profit. If they really want to sell them that's the sort of price level they will have to drop to, to get them sold.

There must be about 300 3&4 beds built and unsold in Mullingar at present.

I just googled "Tailteann Court" the apartments that are nearing completion near the hospital, nearly fell off the chair laughing at the prices, €210,000 for a 1 bed and €260,000 for a two bed! As soon as the apartments are finished and they have completed contracts with any of the poor devils who have bought off plan then you can expect to see huge price cuts there aswell.

DonJose

Do-more wrote: »

I just googled "Tailteann Court" the apartments that are nearing completion near the hospital, nearly fell off the chair laughing at the prices, €210,000 for a 1 bed and €260,000 for a two bed! As soon as the apartments are finished and they have completed contracts with any of the poor devils who have bought off plan then you can expect to see huge price cuts there aswell.

That is expensive but nothing compared to Mount Prospect where dozens of 2 bed apartments are still FOR SALE at €384,950 :eek:

DonJose

UK house prices fall at record pace

British house prices fell at the fastest monthly pace on record in May to stand 4.4%lower than a year earlier, a survey shows today in a clear signal the property market downturn is gathering speed.

The Nationwide Building Society said house prices fell 2.5% this month, more than four times the rate of decline forecast by analysts, after a 0.9% fall in April.

House prices have now fallen for seven months in a row - the longest consecutive period of monthly house price falls since 1992, when Britain was emerging from recession....

http://www.rte.ie/business/2008/0529/britain.html

eirmail

DonJose wrote: »

That is expensive but nothing compared to Mount Prospect where a 2 bed apartment is still selling at €384,950 :eek:

Surely they are for sale at this price, I can't see them selling at this price.

Do-more

eirmail wrote: »

Surely they are for sale at this price, I can't see them selling at this price.

They can't even rent them at a €1000 a month never mind sell them for €384,950!

DonJose

eirmail wrote: »

Surely they are for sale at this price, I can't see them selling at this price.

Yep still for sale at €385k, but NOT selling, edited my post above to reflect this

orbital83

House prices plummet as tighter mortgages deter buyers

http://www.ireland.com/newspaper/frontpage/2008/0531/1212156448865.html

Might be some good value forced sales around Howth way, as I see another developer has hit the wall.

If you fail to drop your prices to market levels, the market teaches you a quick and effective lesson. There is only so long you can stick your fingers in your ears and sing "la la la la".

gurramok

The Indo loving FF rag today(Sunday) has gone super gloomy on the economy especially with relation to house prices and banking which is a polar opposite of what they ran before.

They finally publicise that ECB rates may not go down this year after all

One article with an accompanying picture which stuck out was the 100 or so people queuing for jobs at a deli counter in Londis at Stephens Green within 48hrs of the notice gone up.
A sign of the times?

Glenbhoy

gurramok wrote: »

The Indo loving FF rag today(Sunday) has gone super gloomy on the economy especially with relation to house prices and banking which is a polar opposite of what they ran before.

They finally publicise that ECB rates may not go down this year after all

One article with an accompanying picture which stuck out was the 100 or so people queuing for jobs at a deli counter in Londis at Stephens Green within 48hrs of the notice gone up.
A sign of the times?

Yeah, but that's because they hate Cowen, they've been on his back for the past 18 months and weren't a bit happy when he refused to give in on stamp duty immediately. Anyway, of more interest, I reckon the Sindo are launching another of their infamous campaigns, there were two different commentators calling for a "Mortgage rescue agency" and a "Mortgage relief fund", to be state backed and to bail out people who come under pressure - bad and all as the ff'ers can be, I can't see them going this far??

SimpleSam06

Glenbhoy wrote: »

bad and all as the ff'ers can be, I can't see them going this far??

Sure why not, aren't they flush with cash these days? Sure who needs new roads or infrastructure? Just because the system is buckling under the weight of the public sector doesn't mean they can't spare a few bob to give a little dig out and pay the remortgages of those who just had to have that 08 beemer? Didn't you know transport 21 meant they would get started on it in 2021? :rolleyes:

tHE vAGGABOND

The Indo loving FF rag today(Sunday) has gone super gloomy on the economy especially with relation to house prices and banking which is a polar opposite of what they ran before.

I loved that in several of those articles they were talking about first time buyers having to actually save deposits now - like they were being asked to surrender their virginity to get a mortgage!

ambro25

Erm... years-long lurker and very occasional poster in this thread, but... isn't it time this thread got locked? (& stickied for posterity)? Now that the bubble finally has burst?

Glenbhoy

ambro25 wrote: »

Erm... years-long lurker and very occasional poster in this thread, but... isn't it time this thread got locked? (& stickied for posterity)? Now that the bubble finally has burst?

Nah, we're still waiting for the bang!!

Sure why not, aren't they flush with cash these days? Sure who needs new roads or infrastructure? Just because the system is buckling under the weight of the public sector doesn't mean they can't spare a few bob to give a little dig out and pay the remortgages of those who just had to have that 08 beemer? Didn't you know transport 21 meant they would get started on it in 2021?

I suppose when we look at it, by subsidising the mortgage we're in effect subsidising the beemer, thus transport 21 is being implemented, allbeit via the private sector (good that german firms such as bmw and mercedes won the tenders).

SimpleSam06

ambro25 wrote: »

Erm... years-long lurker and very occasional poster in this thread, but... isn't it time this thread got locked? (& stickied for posterity)? Now that the bubble finally has burst?

The game isn't fully played out yet, I'd say we have a few years of life left in this.