Housing Bubble Bursting

Gurgle

SimpleSam06 wrote: »

Are prices levelling off?

Not yet, still going down but at a slower pace.
Another bit to go, an under-shoot and some settling before the average price settles around my predicted €280k.

And I told you I'd keep throwing that back in your face for at least two years

The implication being that I would be proven wrong, which hasn't happened yet.

Heres one of your own little nuggets of wisdom:

SimpleSam06 wrote:

I'd predict a sharp drop in prices pretty much across the board in Q1 2008"

I suppose that 2.2% is what you meant all along by a "sharp drop"?
From:http://http://www.permanenttsb.ie/news/default.asp?nid=592

In the first three months of 2008 average national prices fell by 2.2%

So are you capable of admitting it when you're proven wrong?

luckat

SimpleSam06 wrote: »

Personally I wouldn't pay too much more attention to what your friend had to say.

Probably you're right. How would you read the next couple of years yourself?

gurramok

luckat wrote: »

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.

That estate agent is stringing you along. All the indications are that its downhill everywhere for the next year at least and it has been downhill everywhere since 2006.

Gurgle wrote:

I suppose that 2.2% is what you meant all along by a "sharp drop"?
From:http://http://www.permanenttsb.ie/ne...lt.asp?nid=592
Quote:
In the first three months of 2008 average national prices fell by 2.2%
So are you capable of admitting it when you're proven wrong?

Gurgle, we've discussed that index before here in this very thread and we know that it is out of date by maybe 6 months and it does not even register sale prices with its weird sampling of prices methodology.

We do know from the IAVI themselves that they have said that prices have been down on average 15% since the peak to start of '08 where the drops accelerated when they released that info and coupled with Daft's asking price index along with IPW data, i'm afraid your wide of the mark or in other words...wrong

In other news, ECB has indicated for the first time in a year that interest rates may rise next month to combat surging inflation.
http://www.rte.ie/business/2008/0605/ecb.html

SimpleSam06

Gurgle wrote: »

Not yet, still going down but at a slower pace.
Another bit to go, an under-shoot and some settling before the average price settles around my predicted €280k.

It had undershot your prediction two months ago, and still falling.

Gurgle wrote: »

The implication being that I would be proven wrong, which hasn't happened yet.

Hahaha...

The average price paid for a house nationally in April 2008 was € 278,521. This compares to € 287,887 in December 2007.

Prices plunged in April as developers cut prices on new houses. Tightening credit conditions and rising mortgage rates have deterred buyers. The drop in the price of new homes was almost twice the national rate. Data from the Central Bank show that the growth in mortgage lending last month fell to its slowest rate since 1992.

Average national house prices fell by a further 1.1% in April according to the latest edition of the permanent tsb / ESRI House Price Index. This follows reductions [0.7%] in March, [0.8%] in February and [0.7%] in January. In the first four months of 2008 average national prices fell by 3.3%.

Measuring the rate of growth in the 12 months (year on year) to April, average national prices were down by 9.2%. This compares to a decline of 8.9% recorded in the 12 months to March.

So are you going to come on now and tell us prices have been flat since April, and will soon be recovering?

Gurgle wrote: »

I suppose that 2.2% is what you meant all along by a "sharp drop"?

Tell me, if your house lost 2.2% of its value in a few months, would you be breaking out the bubbly? Edit: Also thanks to Gurramok for pointing out the value of some statistics.

Gurgle wrote: »

So are you capable of admitting it when you're proven wrong?

Oh I have been proven wrong, more than once, and happily admitted it too. This is not one of those times, however. Ah gurgle, the last of the bulls. You would have got away with it too if you hadn't come on sneering about how everyone's predictions were wrong and trying to rile people up. Shot, meet foot. Still I can't really blame you, begrudgery is endemic in Ireland. I blame society.

luckat wrote: »

Probably you're right. How would you read the next couple of years yourself?

Eh as I've said before, I reckon we're looking at drops for the next three to five years, eventually settling at around 40% to 50% of prices at the top. Its quite a thing to say, but thats how it looks from my perspective. If we're all still here in five years discussing this, you may feel free to call me on that.

Gurgle

SimpleSam06 wrote: »

It had undershot your prediction two months ago, and still falling.

You still haven't actually managed to read all the words in the prediction I made, have you?

SimpleSam06 wrote: »

are you going to come on now and tell us prices have been flat since April, and will soon be recovering?

Nope, why would you think that?
Or do you actually believe that I said the things you keep telling me I'm going to say?

SimpleSam06 wrote: »

Tell me, if your house lost 2.2% of its value in a few months, would you be breaking out the bubbly?

Eh, as you keep pointing out, it just did.
Why would I be worried about that?
I have no intentions of selling.
Anyone smart enough to be able to tell their left hand from their right will not be selling their property right now.

SimpleSam06 wrote: »

as I've said before

You've said pretty much everything at one time or another. Statistically you are likely to eventually say something that turns out to be correct.
I await that day in joyous anticipation.

SimpleSam06 wrote: »

You would have got away with it too if you hadn't come on sneering about how everyone's predictions were wrong and trying to rile people up.

No, just you.

SimpleSam06 wrote: »

I reckon we're looking at drops for the next three to five years, eventually settling at around 40% to 50% of prices at the top. Its quite a thing to say, but thats how it looks from my perspective. If we're all still here in five years discussing this, you may feel free to call me on that.

So, to be clear, your prediction is that the average house price in Ireland in 2012 will be around €150k ?
(Cue backpeddling with excuses ...)

SimpleSam06

Gurgle wrote: »

You've said pretty much everything at one time or another. Statistically you are likely to eventually say something that turns out to be correct.

Bahahahah... ah yes just like the old days, but with the final battlecry of the bulls - "the stopped clock is right twice a day!" Nostalgic as it may be, you're starting to get the picture now, that you can't come in trying to stir up people for your personal jollies.

Now stop cluttering up the thread with this offtopicness, I'm done with you.

/still blaming society

beeno67

Why do people refer to property bulls and bears? Surely it would be easier to divide them into people who have made money from property and people who haven't

SimpleSam06

beeno67 wrote: »

Why do people refer to property bulls and bears? Surely it would be easier to divide them into people who have made money from property and people who haven't

It refers to their outlook on the future of property in Ireland - you think its going up, bullish, think its going down, bearish. The phrase is borrowed from the stock market I believe.

Gurgle

beeno67 wrote: »

Why do people refer to property bulls and bears? Surely it would be easier to divide them into people who have made money from property and people who haven't

Whats with the need to categorize people anyway?

Maybe if we could forget about bulls, bears, VIs and deluded fools we might actually read each others' posts.

SimpleSam06 wrote:

Nostalgic as it may be, you're starting to get the picture now, that you can't come in trying to stir up people for your personal jollies.

Why the hell not?
You rise to the bait every time.

Now stop cluttering up the thread with this offtopicness, I'm done with you.

:rolleyes:
Good argument, I'm convinced.
I'd better sell my house for whatever I can get in these desperate times & move the family in under your caravan, quick before someone from the bank shows up demanding payment for the millions of negative equity.

I refuse to use sarcasm tags, even for you

The best catigorisation would be: occupiers, speculators, developers, landlords.

Mise: occupier

punchestown

And the fools that bought at the height of the boom tied to 35 year mortgages with the increasing fear of unemployment, rising cost of living and possible interest rate increase to contend with in their 2 bed apartment in the arse end of Louth/Meath/Westmeath!

Caoimhín

I was in Leitrim today. Speaking to a developer, a builder and a builder supplier. Believe me the market is nowhere near the bottom, and is getting worse by the day. It was positively 1984 down there today.

Calina

punchestown wrote: »

And the fools that bought at the height of the boom tied to 35 year mortgages with the increasing fear of unemployment, rising cost of living and possible interest rate increase to contend with in their 2 bed apartment in the arse end of Louth/Meath/Westmeath!

For the past 4 years I have been pointing out that house price rises were unsustainable and that the prices that people were paying for property were perhaps over-excited. I refuse, however, to call people fools given the state of tenancy legislation in this country. Yes, they will pay a heavy price for not waiting, but it's never quite that simple. There is a rationale for buying in this country based on the lack of a mature rental market.

punchestown

Calina, I would agree for the most part but surely any person that bought without carrying out the research and with the assumption that they were buying onto a ladder of ever increasing prices is a fool?

Caoimhín

In my humble opinion, the mass delusion and lunacy that flourished around property in this country over the past ten years can be compared to the mass lunacy that surrounded the rise of the National socialist party in 1930's Germany.

caoibhin

caoibhin wrote: »

In my humble opinion, the mass delusion and lunacy that flourished around property in this country over the past ten years can be compared to the mass lunacy that surrounded the rise of the National socialist party in 1930's Germany.

We must be near 1944 now then!

Caoimhín

Deleted User wrote: »

We must be near 1944 now then!

I feel guilty about my crash glee.

Calina

punchestown wrote: »

Calina, I would agree for the most part but surely any person that bought without carrying out the research and with the assumption that they were buying onto a ladder of ever increasing prices is a fool?

The sums of money which were borrowed were crazy. I didn't buy into myself but I have some sympathy for those who did because the overwhelming majority of people around them were telling them it was the right thing to do.

Come back to me if you can prove they all lied about their income to do so. Otherwise my view is that the establishment, the banks, collective society in Ireland and the Sunday Independent bear a greater responsibility. You have to remember that the choices were decidedly limited and rental does not work for everyone because of its nature. I think you'll find that people did do some research. Probably not enough. I would not attach the word "foolish" to anyone buying a home. For the BTL brigade, however, I have zero sympathy.

I have to say what saddens me most is the vast amount of hindsight sloshing around the country. As recently as two years ago the voices crying that this was folly were being screamed down by the overwhelming majority of people in the country. There are a lot of voices now talking about the folly of the past 10 years. Where were they over the past five years?

johnnyskeleton

Gegerty wrote: »

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?

Sure asking prices may well be going up, but people are still not paying that. Sales are way down, but any sales that are going through are going through for less than they did previously, hence the average price of a house is falling across the country.

The reason for this is that there was a great sense of false optimism over the last few months and people who had been in the doldrums were led to believe that it was all over and the soft landing had arrived. Great, they thought, I can put my asking price back up to 2006 levels and someone will buy. But the one thing that was missing was a sense of reality. There are no more buyers at these higher asking prices than there were at the lower prices.

chump

Calina wrote: »

The sums of money which were borrowed were crazy. I didn't buy into myself but I have some sympathy for those who did because the overwhelming majority of people around them were telling them it was the right thing to do.

Come back to me if you can prove they all lied about their income to do so. Otherwise my view is that the establishment, the banks, collective society in Ireland and the Sunday Independent bear a greater responsibility. You have to remember that the choices were decidedly limited and rental does not work for everyone because of its nature. I think you'll find that people did do some research. Probably not enough. I would not attach the word "foolish" to anyone buying a home. For the BTL brigade, however, I have zero sympathy.

I have to say what saddens me most is the vast amount of hindsight sloshing around the country. As recently as two years ago the voices crying that this was folly were being screamed down by the overwhelming majority of people in the country. There are a lot of voices now talking about the folly of the past 10 years. Where were they over the past five years?

Nice post.

I'd just like to row in behind you and agree that it is not right to call the ordinary joe who bought his/her house at the peak a 'fool'.
They honestly knew no better and were encouraged from every angle to 'get on'. It was a disgrace and you can be sure there will be fallout for years to come.

johnnyskeleton

Calina wrote: »

The sums of money which were borrowed were crazy. I didn't buy into myself but I have some sympathy for those who did because the overwhelming majority of people around them were telling them it was the right thing to do.

But this is why: people IMO rarely if ever look at the actual cost of the property like they do with the cost of a car, or a computer or their weekly shop. Instead, they look at the monthly installment, based on the assumption that the interest rates will not, despite the clear and unequivocal warning that banks are required to give them, go up.

The actual purchase price of a property is completely arbitrary to most people, and this has been IMO the most significant cause of the bubble.

Blackjack

johnnyskeleton wrote: »

But this is why: people IMO rarely if ever look at the actual cost of the property like they do with the cost of a car, or a computer or their weekly shop. Instead, they look at the monthly installment, based on the assumption that the interest rates will not, despite the clear and unequivocal warning that banks are required to give them, go up.

The actual purchase price of a property is completely arbitrary to most people, and this has been IMO the most significant cause of the bubble.

Spot on here, I must say. While the cost of Credit was cheap, people lying about their income so that they could get on the property ladder who have subsequently been bitten, I've little sympathy for.

Those that lied and got away with it (from 10 years ago) got lucky.

There are reasons for banks having lending guidelines. If they insist on the loan amount being 4 times your income, there is a reason for it. If a Bank fails to remain within these guidelines, then they deserve what they get.
If you inflate your income amount (i.e. Lie about it) and it all goes south, then it's hardly the Banks fault.

Sadly, whether we like it or not, the Banks have a very Central role to the performance of any Economy. If the Banks fail, the supply of money fails, and a whole bunch of other stuff fails. This is obviously only now becoming very apparent to people. We're only at the beginning of the problem with regards the Supply of Money.

As an earlier poster mentioned, in 2009, cash will be king, or at least those with a large wedge of a deposit will be kings.

EnoughSaid

The whole thing was like a giant pyramid scheme and, as always with pyramid schemes, the ones who suffer the most are the one who joined near the end!

A Dub in Glasgo

johnnyskeleton wrote: »

But this is why: people IMO rarely if ever look at the actual cost of the property like they do with the cost of a car, or a computer or their weekly shop. .

Strange as in my experience a lot of people do not consider the cost of car ownership. A lot of folk have no real idea how much that fantastic thing with 4 wheels is costing them. I think a lot of them will be very surprised!

SimpleSam06

Calina wrote: »

Come back to me if you can prove they all lied about their income to do so. Otherwise my view is that the establishment, the banks, collective society in Ireland and the Sunday Independent bear a greater responsibility.

I'd say the majority of the responsibility lies with the banks. At the end of the day it was the banks who "loosened lending criteria" and handed over the cash, enabling the bubble in the first place. Its not that hard to absolutely verify someone's earnings, making audited accounts a requirement would have nipped that in the bud.

People say that there was no subprime lending here, but there most certainly was money given to those who shouldn't have got it, under the wink-and-nod system. They lent too much to far too many, and knew what they were doing too.

Now people can't pay it back and the taxpayer (in the US and probably here too) will have to bail them out. Why? Because the economy depends on them, so unless you fancy another great depression, bailed out they shall be. So in essence they raided the economy of entire nations and got paid to do so.

Thats not to say the shower of cheeleading bastards in the media and government shouldn't bear responsiblity too.

mikemac

SimpleSam06 wrote: »

Now people can't pay it back and the taxpayer (in the US and probably here too) will have to bail them out. Why? Because the economy depends on them, so unless you fancy another great depression, bailed out they shall be. So in essence they raided the economy of entire nations and got paid to do so.

What? :eek:
Bail out people and companies who acted recklesly or on incomplete information while others tried their best by saving a deposit and trying to check all the information out there.

BOI made made over 1.6 billion euro in profit last year. Fcuk it, let the banks take the hit over any bad debts and not the taxpayer

SimpleSam06

micmclo wrote: »

What? :eek:
Bail out people and companies who acted recklesly or on incomplete information while others tried their best by saving a deposit and trying to check all the information out there.

After Bear Stearns tanked earlier this year, the US was looking at the very real possiblity of the entire economy sliding over the precipice so they set up a federal fund for the banks to dip into if they needed it. Basically the taxpayers digging them out. May or may not happen here, but if it does, there will probably be no option but to bail them out.

And there's even some talk of a mortgage bailout fund over here too, to help those who can't pay their mortgages, while the government can't even pay its own bills. I doubt that would go ahead, but if it does it better be taken directly from the salaries of politicians.

The_Conductor

And of course you do have to remember that we (the taxpayer) already bailed out AIB before......

Gegerty

Now that interest rates look likely to increase, is there any point in holding out for them to drop? Considering the medium to long term, it seems to me the smart people are buying now.

Calina

Actually, prices are going to drop even further because the amount of available credit will fall further. So the so-called smart people will wait another while yet particularly if it broadens the property choice available to them which it will.