Housing Bubble Bursting

punchestown

faceman wrote: »

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

no begrudgery faceman, just a simple question

Considering the tales I have heard of the lengths some people went to get onto the 'ladder' over the past 3 years, no harm in checking that the op is aware that prices of houses can rise aswell as fall and not all jobs are secure for the duration of your life with inflation matching increases each year with twice yearly bonus on top!

SkepticOne

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.

The soft landing was a discredited notion long before the credit crunch started affecting prices here. The bubble popped in mid-2006. Banks only really started tightening credit in Ireland around September 2007. But the notion of a soft landing never held much water to begin with.

luckat

I don't see how you can blame anyone for wanting to buy their home. The sight of some 20 grand seeping out of your wallet into a landlord's pocket every year is a sickener.

When I was saving for my first house it was always *just* out of my grasp. At one stage I went to look at a stone house in Kildare, beside a millrace. Got the loan fixed up, paid for a survey, and then when I made an offer it turned out the people were only playing. "Ah, we just wanted to see what kind of serious offers we'd get *if* we put it on the market," the guy said. I was not happy.

Eventually I actually bought the house I was renting, from my very generous landlord who bargained himself down about 7% when I didn't bargain.

It was cheap, but even then it was tough - a third of salary seemed feasible to pay on a mortgage, then the interest rates soared and it was half of salary within three months. Then I got a fixed rate mortgage, and then the moveable rates dropped like a stone...

But it was worth it to own the place.

jesus_thats_gre

luckat wrote: »

The sight of some 20 grand seeping out of your wallet into a landlord's pocket every year is a sickener.

I really don't get why Irish people feel this way about renting..

Must be some gaff too... Myself and 3 friends are playing about this for a brand new very large 4 bed, 4 bathroom house in Dublin 18.. I persoanlly am paying 550 of that a month.

luckat

Actually, I did find a three-bedroom house statistic on that propertywatch site:

http://www.irishpropertywatch.com/salesStatistics.php?Region=Co.+Dublin&Type=House&Beds=3

but it's not broken out by district.

It seems to show a sudden price rise in mid-2007, and numbers available and prices diverging at present, with fewer available and better prices, though this appears to be going the other way. But I'm not great at reading graphs.

The dip at the end of the graph is on every graph in propertywatch - either something disastrous is happening or it's a fault in their graphics.

ambro25

luckat wrote: »

The sight of some 20 grand seeping out of your wallet into a landlord's pocket every year is a sickener.

Not if, as the landlord, you have to write off the 20 grand "gain" by a 20 grand loss of value in the property price or if, as the renter, you'd be 20 grand or more in negative equity instead, having bought in the last 3 or 4 years

SimpleSam06

luckat wrote: »

The sight of some 20 grand seeping out of your wallet into a landlord's pocket every year is a sickener.

Thats what, 1600 a month? I've never lived anywhere that charged that much rent. Not that I'm saying they don't exist, but if you're paying that you would of course be much better off getting a mortgage.

For 99% of the people renting though, I'd say a mortgage in the location they are living in would be a hell of a lot more than the rent, so they are getting good value for money (and maintenance on the house thrown in as well), while keeping their mobility and freedom from debt, and allowing themselves to save up a deposit to be in a stronger position if and when they eventually do buy.

Not that sickening really.

punchestown wrote:

no begrudgery faceman, just a simple question

Eh faceman is a bull of old, everyone who criticises the property situation in Ireland is a "begrudger" and everyone who cheers on the madness is "keeping the faith" or "holding the fort". I wouldn't lose any sleep over it.

Calina

luckat wrote: »

I don't see how you can blame anyone for wanting to buy their home. The sight of some 20 grand seeping out of your wallet into a landlord's pocket every year is a sickener.

This is an overly simplistic way of looking at things, and generally rather Irish. I have no objection to paying money for a good service. In my case, renting is far more cost effective than buying as purchase where I live would almost quintuple my outgoings on a monthly basis for shelter and to spend what I rent in purchasing would add something in the region of 4 hours to my daily commute. I place a higher value on quality of life than on property ownership.

The key issue which makes purchase more attractive in Ireland is not, as it happens paying twenty grand into a landlord's pocket because you're paying that and more into the bank's pocket at the moment on a depreciating asset. The key issue is tenancy legislation here, which, although dating from 2004, has more in common with the clearances of the Highlands in Scotland in teh 19th century than with the sort of enlightened legislation they have in places like France and Germany, for example.

I don't blame other people for wanting to own their own property, no. But you have to remember that they have to rent money from the bank to do so, and even now, the cost of renting that money is still greater than the cost of actually renting the accommodation from a landlord is, even over 40 years.
Emotive calls to property ownership to avoid spending money with a landlord when you spend even more money not on capital repayments to the bank is...not nice.

luckat

Calina wrote: »

This is an overly simplistic way of looking at things, and generally rather Irish.

Thank you

I am Irish. And I've paid off my mortgage.

Calina

Note the generally and note that people who are signed up to 40 year mortgages may not be so lucky to be able to pay their mortgages off ahead of schedule. In fact, a lot of people who signed up to mortgages over the past 5 years may have problems because unemployment is on the up and the mortgages are comparatively speaking, gargantuan in terms of principle sums now compared to when we had salary multiple rules that limited said principles a bit mroe than "arrah, interest rates are low, you can borrow a bit more so long as you're not too maxed out on a month by month basis".

I note you didn't address the point regarding renting money versus renting a property.

ambro25

Calina

Bah. The bruises, sometimes they get me.

luckat

Well, people were saying the same when I bought, and to an extent they were right.

If I were looking buying now, I wouldn't yet - I'd hoard up my money in the credit union and watch the market for a couple of years till things steadied up.

But I'd always have the intention of buying. After all, unless you're one of the unusual people who've bought right at the top of the market, and bought in a descending phase, you're going to be able to sell for some profit if you have to sell.

Calina

Agreed. For me the issue though - and this is an urban issue predominantly - is that because of the whole property ladder stuff people bought property they didnt intend to stay in on the expectation of trading their way up.

If you have people who buy with a close eye on their utility needs, you don't have a property bubble. If you have people who buy at all costs regardless of the suitability of the property, you get a bubble. A lot of those people are now going to get burned.

luckat

True. It's mad to buy a home as anything *but* a home, because most people live for years in the house they buy, and you might as well buy somewhere you'll be happy.

Pa ElGrande

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

But some people did see it coming and warned about it but were shouted down by the bulls.....

Housing bubble bursting
January 7th, 2007

The real problem in the United States which will hit their economy this year is the emerging ARM (Adjustable rate mortgages) scandal, as these mortgages reset to higher rates, the lenders will foreclose. Sub prime lenders in the US are also starting to go bust, with more expected to follow. I expect the US Federal Reserve to try and cut interest rates this year as this crisis develops.

How secure will you be when the credit runs out?
August 3rd, 2005

The only thing that we could do is let the state borrow enormously by issuing Irish banking bonds to international investors. This cash could then be given to the crippled banks in the form of a 30-year swap, on the condition that the increased liquidity be squeezed into the system, preventing a credit crunch from taking hold.
But who would pay for this? Well, we would, because a special tax would have to be levied initially to pay the repayments of the bonds until the banks’ balance sheets recovered. It is a scary prospect and one that the 100 per cent 35-year mortgage brokers or the guys involved in �Irish pricing’ dare not contemplate.
Awhile back I heard one of our most successful bankers musing about national plans, financial war cabinets and credit crunches. And if you know he is worried about the ramifications of Moonie economics, you should be too.

Therefore be on the alert, for you do not know which day your Lord is coming. (Matthew 24:42)

sampeters666

Now thats a boards site. New to this but great read.
Tanx folks

Glenbhoy

SimpleSam06 wrote: »

Thats what, 1600 a month? I've never lived anywhere that charged that much rent. Not that I'm saying they don't exist, but if you're paying that you would of course be much better off getting a mortgage.

And all this time I thought Sam understood the fundamentals, but no, he's just another 'rent is dead money' merchant, I'm shocked Sam, tell me it ain't true.

Victor

luckat wrote: »

The dip at the end of the graph is on every graph in propertywatch - either something disastrous is happening or it's a fault in their graphics.

Incomplete data for the current month - they should adjust it by the number of days of the month that have passed.

SimpleSam06

Glenbhoy wrote: »

And all this time I thought Sam understood the fundamentals, but no, he's just another 'rent is dead money' merchant, I'm shocked Sam, tell me it ain't true.

Haha, it ain't true. In the next sentences I pointed out that in 99% of cases out there, you wouldn't be better off getting a mortgage.

However, at some point over the next probably three to five years, its almost certain that properties will return to what I would call normal value. Then you'll see me start telling people to buy houses, get mortgages, etc. once they are happy with them for the next ten to twenty years, since the rental regulations in this country are primitive and not worth the hassle.

I'm not so much bullish or bearish, I'm reality-ish.

Gegerty

Pa ElGrande wrote: »

But some people did see it coming and warned about it but were shouted down by the bulls.....

OK second quote is good, some nice insightfulness there. First quote, it had already started but yes he guessed right that it would get worse. 50/50 odds.

To keep my positive attitude going, Limerick is at the start of a boom and Galway property prices have been going up or holding steady for a while now. In my own estate in D18 asking prices have gone up since last year although I'm guessing they are not getting the asking price. But certainly not a crash by any stretch of the imagination. Location, location, location....hasn't that always been the golden rule of property?

p.s fair play to you for sifting through the posts

gurramok

Gegerty wrote: »

OK second quote is good, some nice insightfulness there. First quote, it had already started but yes he guessed right that it would get worse. 50/50 odds.

To keep my positive attitude going, Limerick is at the start of a boom and Galway property prices have been going up or holding steady for a while now. In my own estate in D18 asking prices have gone up since last year although I'm guessing they are not getting the asking price. But certainly not a crash by any stretch of the imagination. Location, location, location....hasn't that always been the golden rule of property?

p.s fair play to you for sifting through the posts

Limerick- Surely your not basing that boom on yesterdays news from Jim Power?
For those not in the know, he based this boom on the NDP plan for the regeneration of the bad surburban estates, that it goes ahead with national finances in the doldrums and the boom solely based on this, wreckless assumption.
Galway - I'm sure Simplesam with deliver the info here. I do know Galway county outside the city is plummeting like everywhere else but do not know enough about the city market.

And D18, thats the likes of Sandyford, Stepaside and Foxrock right?

IPW has detailed proof of price drops there that have been happening for the last 2 years fyi.

SimpleSam06

gurramok wrote: »

Galway - I'm sure Simplesam with deliver the info here. I do know Galway county outside the city is plummeting like everywhere else but do not know enough about the city market.

Yup, Galway is actually doing worse than most places.

Property price drop greater in Galway
The MyHome.ie national property price barometer has shown that price drops in Galway's property market are significantly greater than the national average decline of 0.2 per cent.

Asking prices for residential property have dropped by 0.2 per cent nationally over the last quarter, with the total decrease for last year now at 1.7 per cent.
The price of a three-bedroom semi-detached home in Galway has dropped by three per cent, with a 2.3 per cent drop in four bed detached homes in the last quarter of 2007.

The report also tracks the trends in asking prices against trends in actual sale prices and shows that over the last 12 months the fall in sale prices has consistently exceeded the more modest drop in asking prices.

On a purely personal level, the house I am renting at the moment was on sale for 320k last year, but the current landlord bargained it down to 280k, a four bed on the outskirts of the city centre (well within the city itself). It changed hands at the start of 2007.

luckat

I was talking to an estate agent last week who said that the price drops had appeared at first not to hit the cities outside Dublin, but they're now seeing a ripple effect where parts of Dublin are recovering, but prices are falling outside Dublin.

Irish Property Watch, which is, of course, very limited, shows a fair few drops in Galway and Limerick, some of them startling.

gurramok

luckat wrote: »

I was talking to an estate agent last week who said that the price drops had appeared at first not to hit the cities outside Dublin, but they're now seeing a ripple effect where parts of Dublin are recovering, but prices are falling outside Dublin.

Well, your estate agent friend must be talking porkies about the ripple effect in parts of Dublin as there is no evidence of it anywhere as drops have been recorded in every district with inventory mounting all the time.

Did he say where exactly?

Gurgle

SimpleSam06 wrote: »

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.

Thats at least the second time you've linked to my prediction, as though it had been proven wrong.

Has it?

SimpleSam06

Gurgle wrote: »

Thats at least the second time you've linked to my prediction, as though it had been proven wrong.

Has it?

Are prices levelling off? And I told you I'd keep throwing that back in your face for at least two years, so you have another 18 months yet to go. Or alternately you could stop trolling the forum here.

Droxol

I'm in Kerry, and only last week one of the longest estabilished builders here had layoffs,
2 joinerys left people go. Many independent tradesmen are canvassing for work. A friend who works for a well known bank has told me reposessions are up by a multiple - I'm not basing this on hearsay as I have connections in the industry, they say its actually worse than people think and its going to get worse till year end. Cash will be king in 2009, hold on to it if you are thinking of buying.

the good think is I can get my new wall build for .70c a block - rather than the 1.30 last year.

luckat

gurramok wrote: »

Well, your estate agent friend must be talking porkies about the ripple effect in parts of Dublin as there is no evidence of it anywhere as drops have been recorded in every district with inventory mounting all the time.

Did he say where exactly?

As I understood it, she said prices had dropped on the fringes Dublin about two years ago, but stayed steady outside that, then the drop rippled inwards, then outwards from the city and was now reaching the skirts of the country and expected to come back in.

She advised me to hold off selling for two years, when, she said, the prediction was that Dublin would be rising slowly, while prices in provincial cities would be at their lowest.

SimpleSam06

luckat wrote: »

As I understood it, she said prices had dropped on the fringes Dublin about two years ago, but stayed steady outside that, then the drop rippled inwards, then outwards from the city and was now reaching the skirts of the country and expected to come back in.

Yes, because the many different levels of infrastructure, demographic segments and industrial profiles of the various regions and cities of the country laid over the backdrop of turbulent economic prospects and uncertain future regulatory effects on supply and demand represent a nice round pool, with the ripples hitting the outside last. Personally I wouldn't pay too much more attention to what your friend had to say.