Housing Bubble Bursting

ionapaul

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?

I think you are right - we need a 'Housing Bubble Deflating' thread to last us a few years - hopefully we can take our medicine quickly and the thread won't have to drag on for 15+ years, like a thread on Japan's deflating bubble would need!

DonJose

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?

When you factor in inflation, house prices are at late 2003 levels, theres still plenty of air left in this bubble

gurramok

Also, there are alot of bulls out there but it's slowly sinking in for some.

It hasn't quite hit a large portion of the masses that a crash is possible because after all they believed 'Ireland is different' and that section of the population still believes what a VI says over common sense.

They are in denial and I ain't talking about a river in Egypt!

beeno67

DonJose wrote: »

When you factor in inflation, house prices are at late 2003 levels, theres still plenty of air left in this bubble

How come inflation should be factored in now, and not when prices were rising. So for example when prices rose 8% in 2004 and again in 2005 who was saying well really that's only 5% after inflation? Much the same for PTSB House price index. It was accurate during years when prices are rising but now it is rubbish. It is a bit like the weather in Ireland. When it is hot we talk in Farenheit eg, " it was 80 degrees" but when it is cold we talk in celsius eg "minus 4 degrees"

SimpleSam06

beeno67 wrote: »

How come inflation should be factored in now, and not when prices were rising. So for example when prices rose 8% in 2004 and again in 2005 who was saying well really that's only 5% after inflation? Much the same for PTSB House price index. It was accurate during years when prices are rising but now it is rubbish. It is a bit like the weather in Ireland. When it is hot we talk in Farenheit eg, " it was 80 degrees" but when it is cold we talk in celsius eg "minus 4 degrees"

Eh, I don't know many Irish people that even know what Farenheit is, never mind use it regularly. It was a point often made in the time of rising prices, even waaay back at the start in debates about houses vs stock markets for investment, that they had to rise faster than inflation or you were making no real gains, unless you wanted to buy more houses. I guess it depends who you were talking to over the last few years. Estate agents would never breathe a word of it, the crowd around here chewed over it many times.

In any case inflation is a real factor and should be worked into pricing calculations on the way up or down.

jmayo

SimpleSam06 wrote: »

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:

Wasn't transport 21 a 10 year plan or something like that?
Now it makes sense why Biffo mentioned that some infrastructure projects will be postponed i.e. shelved, the money is being earmarked to bail out the members of the former Galway tent appreciation society
Bail out the FTBs and thus bail out the poor old developers, estate agents and auctioneers who often second job as politicans.

Simplesam, a lot of Irish people learnt about Farenheit while they over in Florida on one of those buying inspection trips hosted by the likes of the company whose name we dare not speak

luckat

On the other hand, Saturday's Irish Times had a front page lead on house prices dropping - but it contained the line: "However, not all properties are falling victim to the decline. Average prices of three-bedroom semi-detached houses rose slightly in March and April."

allabouteve

luckat wrote: »

On the other hand, Saturday's Irish Times had a front page lead on house prices dropping - but it contained the line: "However, not all properties are falling victim to the decline. Average prices of three-bedroom semi-detached houses rose slightly in March and April."

The more sought after areas will always be somewhat protected against economic trends, it's always the generic suburbs/estate houses that feed the decline.

DublinDilbert

luckat wrote: »

On the other hand, Saturday's Irish Times had a front page lead on house prices dropping - but it contained the line: "However, not all properties are falling victim to the decline. Average prices of three-bedroom semi-detached houses rose slightly in March and April."

Did it mention the volume of activity in the 3 bed semi market and compare it to a year ago? i bet not....

You'd need to look at the volume of sales, ie if only ten 3 bed semi houses sold, they might of sold for slight more than ones did last year, but this doesn't mean that the 3 bed semi market is not stalling either...

luckat

Where are the figures, DublinDilbert?

SkepticOne

No publicly available figures on volume unfortunately in the Irish market.

luckat

Would you have inside knowledge that fewer semi-Ds are selling? Seems to me that they're selling fairly briskly, in our area anyway.

Pa ElGrande

You need look no further than the IBF data for Q1, 2008 to see what's happening.

• The average loan size increased for first-time buyers, mover purchasers and the re-mortgage (switching) segment.
• The residential investment letting segment continues to have the highest average loan size.

Now if you overlay that with the inventory for Dublin City for the period courtesy of Daftwatch, it is not unreasonable to draw the following inferences.

• There is substantially lower volume of transactions when compared with Q4 2005 and the • loan sizes for first time buyers are the highest they've ever been, • inventory has also reduced for Dublin city and since 3 beds are generally more expensive than apartments, it would seem this is the only part of the market that moved in the country this Spring.

Anecdotal feedback I've got from EA's is that it's all gone quiet again after the Spring and that would seemingly square with the inventory build-up on Daftwatch.

ronbyrne2005

The statistics on 3 bed semis are'nt likely accurate. They don't control for quality of property sold. The average property in 3 bed semi classification during boom was bog standard but now probaly has conservatory, recently decorated, converted attic etc as only best 3 bed semis are selling at present and at less than a bog standard during boom. In my area of North Dublin selling prices 3 bed semis are down 20% since boom, my relative is an estate agent and told me of selling prices of identical houses in 2006 and 2008.

Calina

Price per square metre would interest me a little more.

luckat

I couldn't understand those graphs on Daftwatch at all, and couldn't find any reference to three-bed semis on them.

gurramok

luckat wrote: »

I couldn't understand those graphs on Daftwatch at all, and couldn't find any reference to three-bed semis on them.

You cannot be saying that all the inventory buildup on Daft are apartments?

I can concur with Ron, they ain't selling that well in D15/D11 for example, some have been on the market for over 6 months.

luckat

gurramok wrote: »

You cannot be saying that all the inventory buildup on Daft are apartments?

No, no. Just that the graphs - which are hard to understand in any case - don't seem to be broken out into property type, so they don't prove or disprove the Irish Times article's statement that three-bed semis are rising in price.

gurramok

Yeh, wish Daftwatch did that.

Try looking at http://www.irishpropertywatch.com/ for the urban centres as an example. Having to drop price mean a house is not selling until it reaches a point a buyer comes.

They have filtered out the price drops from countless reports into apts and houses with subdivisions into numbers of beds in a property with how long a property has been on the market for.

If 3beds are listed in significant numbers of which they are, that means they are not selling as much as they used to.

Gurgle

This thread is so cool - Its been going for 18 months, 320 pages, 4,790 messages and not one single person, no matter how detailed their prediction, no matter how long it is since their deadline went flying by, nobody has even considered admitting they were the slightest bit wrong

Calina

I don't recall what deadlines those are. Currently it is apparently clear that property prices are on their way down which is directly contrary to the idea that they will slow down only by tracking inflation. They're not tracking inflation. They are falling.

I don't see too many people around who said it would never happen bashfully admitting they were wrong.

pvt.joker

Indeed, where is MorningStar (was that his name) now?

ionapaul

All the old bulls have gone or shut up when the 'soft landing' didn't materialise - only the new bulls are arguing anymore. Fair play to Gurgle though, maybe he's been fighting the good fight long enough to be an old bull!

Gegerty

ionapaul wrote: »

All the old bulls have gone or shut up when the 'soft landing' didn't materialise

you're not comparing what is happening now to what was said then are you? Predictions of a soft landing were before the credit crunch. A credit crunch was not even put forward by the bubble poppers but now they're all saying I told you so, as if they had some genius insight into the world financial markets that even the countries biggest banks did not predict!

Anyway, if I were to be overly optimistic I could say that we are still within the realms of a soft landing

SimpleSam06

Gurgle wrote: »

This thread is so cool - Its been going for 18 months, 320 pages, 4,790 messages and not one single person, no matter how detailed their prediction, no matter how long it is since their deadline went flying by, nobody has even considered admitting they were the slightest bit wrong

Hahah, are we talking about predictions now Gurgle?

Gurgle wrote: »

Add the fact that we are now expecting interest rates to be cut this year. A few months ago the doom & gloomers were telling us they were going to keep going up for years.

My guess is that the overshoot is done and prices are likely to level off now at somewhere around 10% below the peak.
The average price peaked at around €310k, I'd expect to see it around ~€280k over the next couple of years.

Thank you, whoever invented bookmarking.

kluivert

Gegerty wrote: »

you're not comparing what is happening now to what was said then are you? Predictions of a soft landing were before the credit crunch. A credit crunch was not even put forward by the bubble poppers but now they're all saying I told you so, as if they had some genius insight into the world financial markets that even the countries biggest banks did not predict!

Anyway, if I were to be overly optimistic I could say that we are still within the realms of a soft landing

I think the idea of a soft landing is gone out the window.

Reasons for this:

Too much supply on the market. Too many vacate houses, unfinished houses.
1st time buyers can no longer avail of 100% mortgages.

This is just the start of it. With 62500 jobs to go in construction by the end of 2009, it is reckoned that alot of foreign nationals will return to their own country. Which leaves a larger number of vacate houses. Rental yields will drop and houses will lose their value.

Wait till September and you will read in every paper on how Ireland is in a recession.

"Recession is defined as 9 months of negative growth".

For the record I bought a house in Feb of this year. I dont mind because I dont believe I paid over the odds for it, and its my home so I can sit tight for a long while.

People in this country are obessed with property.

punchestown

Kluivert,

Congratulations on your purchase but are you in secure employment that would weather any recessionary reaction or did you pay cash?

luckat

kluivert wrote: »

People in this country are obessed with property.

True. For most Irish people, their home/s is/are their only large portfolio. We don't do stocks or bonds, though we do have some savings.

Apart from the rich and the fun-loving, very few of us have money in bloodstock or backing companies.

When we start companies, we're aiming for the 'exit strategy' - to sell up and get rich, a one-generation play. We're not aiming to found centuries-long family businesses that grow slowly and organically.

All our money is in the one place, and that's where our love is.

faceman

punchestown wrote: »

Kluivert,

Congratulations on your purchase but are you in secure employment that would weather any recessionary reaction or did you pay cash?

I bet he didnt check that before taking out a mortgage. :rolleyes: Why the begrudgery?

luckat

Calina wrote: »

Price per square metre would interest me a little more.

I'd be very interested in this, too, and whether, say, 1,200 square foot houses get significantly more than 900 square foot houses, and whether apartments with these sizes were different from houses with this size; whether two-bedroom or three-bedroom or four-bedroom flats or houses sold better, etc.