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Housing Bubble Bursting
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Where does it say 78% are earning less than your magical figure. Nowhere. So lets ask people. Are 78% of you paying tax at standard rate or else no tax at all. According to Gurramok 36% of you are paying no tax at all. Well done everyone.Nope, i didnt provide made up stats unlike some.
Its the govts stats after tax credits are applied. (see for yourself YET AGAIN http://www.budget.gov.ie/2008/AnnexA.html )
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Is anyone here over 40. This idea that houses should cost 3.5 times one income is ridiculous. When I bought my first property it was 5 times my salary (I didn't buy alone) and I was on a very good salary. I bought what would now be called a starter home. Certainly not suitable for a familyWe faced 14% interest rates. Get real people. These glory days of cheap houses did not exist.
The problem here is that back in the past, there were high interest rates and low principles. In the early 1980s you were doing extremely well to get more than 2.5 times the principle salary out of the bank and very often, even if there was a second income it either wasn't considered, or only at 1.5 times turnover for salary.
When I started looking at mortgages in the late 1999s, the restrictions had loosened up to 3.5 times salary, buying as a single person. They've since been loosened further but at times of uniquely low interest rates and this is starting to bite as the number of repossession cases including with the traditional banks (ie not just the looser lenders) is starting to rise.
The issue is that to a great extent, the monthly cash cost was not that different because it was a period of high interest rates/low principles. Now it is low interest rates/huge principles. Thing is, in the former cases, you weren't at such risk from rises in interest rates. Now you are hugely at risk from rising interest rates - and the ECB says they're going up again - particularly because the principles are monumental.0 -
Is anyone here over 40. This idea that houses should cost 3.5 times one income is ridiculous. When I bought my first property it was 5 times my salary (I didn't buy alone) and I was on a very good salary. I bought what would now be called a starter home. Certainly not suitable for a familyWe faced 14% interest rates. Get real people. These glory days of cheap houses did not exist.
38 in 2 weeks, my first house was a 2 bed mid-terrace that was 3 times my salary.
I have now bought in Glasgow (8 years ago) and the 4 bed detached was 3.5 times my salary.
My dad bought his 3 bed semi in Firhouse for IR£43,000 in 1992. It was about 3 times his salary0 -
Yes, fine for FTBs as startup homes. So we agree.Apartments should be considered extremely bad investments and have been proved so. Why? Because they are unsuitable for living. They're fine for singles or young couples in their 20's for a few years, after that forget it.
You could get a nice 1 bed apt in the city centre for 200K in 2006. I know someone who did, as a startup home. So taking into account the drop, you're probably not far off. We agree again.IMO the average 1-bed in Dublin city centre is worth 120-150k and will be available for that price in 3 years time.
Have you been to Manchester or leeds? With all due respect, they are not comparable to Dublin, economically speaking.Have a look at the apartment market in Manchester or Leeds (funnily enough these both had large numbers of Irish investors) to see what the future might hold for Dublin.
I'm not providing links to myhome. That is all. If you can't understand that then fine, take what you may from it.Calina wrote:You have said there are nice three bedroomed houses out there that someone on 50K a year can afford. You are not providing them. From that I can only assume that you can't. End of.0 -
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I understand very clearly. You are not providing any substantiation for your position.
Someone on €45k a year can buy themselves this little beauty. It's one of the 3 cheapest 3 beds in Dublin.0 -
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Where does it say 78% are earning less than your magical figure. Nowhere. So lets ask people. Are 78% of you paying tax at standard rate or else no tax at all. According to Gurramok 36% of you are paying no tax at all. Well done everyone.
Ok, your either trolling, been disingenuous or plainly missed it. 'Gurramok is quoting the official stats' fyi.
I'll explain in baby steps.
Open "Distribution of Income Earners on the Income Tax file". Now view 'Higher Rate liability NOT fully offset by Tax Credits'
It lists 21.58% as liable for tax at the higher rate band, those that earn over 35.4k pa, all half a million of them.
37% or so pay no tax at all, thats another fact in the chart.
Now 100%-21.58% is about 78%, get the maths?
To apply tax credits, that figure goes down to 67%, that link and calculation was proven and shown to you in the buyer bubble thread which you obviously ignore consistently because you keep disputing where it came from yet the source is our own institutions.0 -
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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.
To be honest, I think a bail out will lead us further into depression than simply letting house prices drop. Essentially I view economic stagnation and recession as a form of hangover - you go out drinking at night and then you stay at home and nurse your wounds the next day so that you can function in work on monday (or go out drinking again the following night). However, if you keep drinking, you are not curing the hangover but simply patching it up and ultimately this makes it worse.
As regards the exchequer, the funds used now will have to be borrowed, resulting in higher taxes and ultimately leading to less money overall.
As regards consumer sentiment, people will lose all sense of responsibility for their purchases, and will continue to consume at an outrageous rate.
As regards interest rates, if interest rates go down it reduces mortgage payments but increases inflation significantly. So while people who have bought are crying out for reduced interest rates from the ICB, we should also see the people who have been saving for a deposit over the last few years crying out for them to stay the same so that their savings will get eaten by inflation.
Ultimately, what the economy needs is a few years of accepting our losses and licking our wounds (i.e. saving and making sensible investments in indigenous industries). A bail out would turn a protracted recession into an all out depression.0 -
You could get a nice 1 bed apt in the city centre for 200K in 2006. I know someone who did, as a startup home.
You are kidding right?
I was actually looking at prices back then, not a single place in Dublin was available for that price. Wish i had known you back then to get that magical 200k gaff(assuming i wanted a 1bed in the first place) as i had been forced to apply for the AH scheme in 2006 due to no 200k gaffs available. (i've listed proof of my dealings for AH in 2006 on this very forum so you know i'm telling the truth)
I think you must mean that person had a mortgage drawdown in that year who had bought off the plans about 18mths previously.I'm not providing links to myhome. That is all. If you can't understand that then fine, take what you may from it.
If your believable, provide the proof0 -
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What I'm saying is there will come a point when negative equity looms upon a generation of buyers who are simply going to put their foot down. They simply will not accept it as easily as people who bought at the peak.
Reminds me of the ad on the radio where a young guy is offered a job and when his new boss says "Now, about your salary" he says "€100,000" "Come come, Connor, it's a junior position you've applied for" "I understand, I want €100,000" etc. The tag line is that he is used to getting what he wants because he gets cheap broadband or whatever, and the vendors who say "I want €250,000 for my one bed apartment in D15" are used to getting what they want because of cheap credit and are not facing the reality of how other people see them.If you want to buy a home off them, you're not going to get anywhere haggling. so what happens? People stop buying homes? People stop selling homes? Maybe for a brief period
That's exactly what's happened.How else do you suggest the downward spiral is going to stop? the credit crunch disappears and the banks go crazy throwing money around again? It's very easy to predict prices are going to continue to fall at the moment. I don't hear anything on here about whats going to stop it. It won't be when a newly qualified Garda can afford a 3 bed home in Co. Dublin. You'd want to go back to 1985 prices for that.
It's going to stop when purchasors are able to buy at the asking price, as everyone is saying.0 -
There is a massive supply of housing still left over from the boom, that will take ten to fifteen years to clear, if it ever does. I'm not sure if this includes all the empties or not, or what the breakdown into apartments and houses is, but the fundamentals are clear - there is enough property out there for everyone, and then some.
The average and median income in this country are well established, but thats not really important. The only, single and only thing that matters is what banks are willing to lend on the strength of that income. The amount in the past few years was very large. It is now being reduced significantly, and will continue to be reduced as the collapse unfolds.
Even if property was drastically undersupplied and salaries were very high, it does not matter since the amount they can get from the banks has been reduced so much. This defines the price of housing.
Even during the height of the bubble, there was a group of people emerging who believed themselves to be the new "landlord class" or "landed gentry", given divine mandate to own land, and all the peasants toil at their whim. Wrong, yes. Muppets, yes.A Dub in Glasgo wrote: »The amount of elitist stuff from some here is quite astonishing :eek:
Renting isn't an option in a country where the landlord can turf you and your family out if his breakfast was overcooked that morning, and your only recourse is the PRTB or a charity.For God's sake RENT. RENT. RENT. 25% of people rent. I am not saying people must buy. Quite the opposite. Buy if you can. Rent if you cannot.
I'd put the price considerably lower than that.IMO the average 1-bed in Dublin city centre is worth 120-150k and will be available for that price in 3 years time.
Heh. I regularly do business in cities with multiples of the entire population of this entire island, and believe me Dublin is not comparable to them, economically. So why are property prices in Dublin comparable with them?Have you been to Manchester or leeds? With all due respect, they are not comparable to Dublin, economically speaking.
I agree completely, but the only thing governments seem to be concerned with at the moment is patching up the mess and praying it all holds together. Conceivably it even might, if they can manage to subsidise banks for the next twenty or thirty years. They can't of course, but who wants to be at the wheel in the event of a depression? They need to regulate banks more, possibly split up the various sections of banks into different groups. The money supply needs to be under the control of people not out to profit from it.johnnyskeleton wrote: »Ultimately, what the economy needs is a few years of accepting our losses and licking our wounds (i.e. saving and making sensible investments in indigenous industries). A bail out would turn a protracted recession into an all out depression.0 -
So you'd put the price of an apartment in the city centre of the capital considerably lower than 10 years rent? I wonder what twisted logic you'd use to come up with that one?SimpleSam06 wrote: »
I'd put the price considerably lower than that.0 -
1. Most of the shoeboxes will be very difficult to even rent in coming years.So you'd put the price of an apartment in the city centre of the capital considerably lower than 10 years rent? I wonder what twisted logic you'd use to come up with that one?
2. Rents are coming down, especially in apartments, since people aren't buying them, there are more being put up for rent. You're making the assumption that rent on these holes will stay steady.
3. The lack of capital growth as opposed to higher rental returns will still turn off investors, driving apartment prices down even further, in a downward spiral which many of the recently built one beds truly deserve.
Twisted enough for you?0 -
Yes, fine for FTBs as startup homes. So we agree.
You could get a nice 1 bed apt in the city centre for 200K in 2006. I know someone who did, as a startup home. So taking into account the drop, you're probably not far off. We agree again.
Have you been to Manchester or leeds? With all due respect, they are not comparable to Dublin, economically speaking.
I'm not providing links to myhome. That is all. If you can't understand that then fine, take what you may from it.
God that is delluded thinking. Leeds has long been the most propserous and diversified part of Northern England. Greater Manchester has same population as entire of our Republic and is the economic powerhouse of the Northwest and offers much more than Dublin economically and even culturally.0 -
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SimpleSam06 wrote: »I agree completely, but the only thing governments seem to be concerned with at the moment is patching up the mess and praying it all holds together. Conceivably it even might, if they can manage to subsidise banks for the next twenty or thirty years. They can't of course, but who wants to be at the wheel in the event of a depression? They need to regulate banks more, possibly split up the various sections of banks into different groups. The money supply needs to be under the control of people not out to profit from it.
Which is why I think that if homeowners are crying out for drops in interest rates, we who have been saving so as to buy when it is prudent to do so should cry out for them to stay the same.0 -
Have you been to Manchester or leeds? With all due respect, they are not comparable to Dublin, economically speaking.
LOL! True, they haven't had 10 year's worth of AAA-Grade Property Bubble pushing at the @ss. I' m sorry, was there anything else for which Dublin had to be economically thankful? As, insofar as foreign multinationals are concerned, those started packing up about 2-3 years ago because of the rising employee costs... themselves so far up because of the property bubble. etc.0 -
I understand very clearly. You are not providing any substantiation for your position.
People on here clearly have a vested interest in prices coming down further. There are soooo many properties so I'll just take you through the steps of how to use the myhome filters:
1. go to http://www.myhome.ie/
2. Click on Advanced search
3. Lets start with Dublin, so in "choose a county" select "Dublin Co & City"
4. In the 2nd price box (max amount) choose 300,000.
5. Click search
You should get pages of homes. Mostly 2 beds but quite a lot of 3 beds at a maximum price of 300K. As we all know an asking price of 300K means considerably less than that.
Anyone arguing that homes in Ireland are not affordable is just blatant trolling. People who cannot afford that, I'm sorry then you just cannot afford a home in Dublin. Try elsewhere in Dublin or a different country. Or you could work towards earning more like all the generations before you and the whole rest of the western world. People who think that startup nurses and gardai (or startup anybody at that) have the god given right to a home...thats called socialism and does not belong in this discussion. Run along to the communist thread or one of the many anti-Lisbon threads to get your kicks.0 -
I just want to elaborate on what I meant by vested interest. The arguments against me on this thread have gone from:
1. People cannot afford a home in Ireland. AT ALL.
to
2. People cannot afford a nice home in Ireland.
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3. People cannot afford a nice, big home in Ireland.
to
4. People cannot afford a house in Ireland.
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5. People cannot afford a 3 bed semi-d house in Ireland.
There are 3 types on here who have vested interest in desimating the market:
1. those that want a nice big 3 bed house in Co. Dublin and they don't want to have to work for it. They want it handed to them on a plate and they want enough money left over to go out and party every weekend.
2. The socialist. A home for everyone in the country.
3. Not so much a vested interest, but those who are influenced by others with a vested interest. Namely the likes of David MacWilliams who has hedged his whole career and reputation on a housing crash. If you keep saying every day its going to rain, eventually you are going to be right. It doesn't make you smart, but unfortunately that kind of economics does make you rich and famous in Ireland.
My job here is done.0 -
And of course, you don't have a vested interest. :rolleyes: You showed your true colours when you mentioned "desimating(sic) the market."0
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The true cost of a house is it's cost of construction (materials & labour) + the cost of the land it sits on, it is possible to get a three bed decent sized semi of good build quality for €150k if you exclude the land (the one thing that really determines the value of new property) because of its location.0
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I think sentiment had an awful lot to do with the prices. People saw prices rising and rising and became worried that they'd never be able to buy a house. The banks started practically throwing money at people by reducing interest rates, giving out 100% mortgages, 40 year mortgages and issuing mortgages for several times peoples' annual salaries. No matter how expensive houses got, there were willing buyers.
I know that the credit crunch has played a large part in calling a halt to proceedings, as did the lunatic prices but sentiment is still in the mix. Now, instead of trying to buy a house before it gets more expensive, people are waiting to see how far they can drop. Personally, I think they've a bit to go yet. I've no idea how far but I'm looking forward to being able to buy a house on my own without having a large lump of my monthly salary being gouged out on a mortgage.0 -
Anyone arguing that homes in Ireland are not affordable is just blatant trolling. People who cannot afford that, I'm sorry then you just cannot afford a home in Dublin. Try elsewhere in Dublin or a different country. Or you could work towards earning more like all the generations before you and the whole rest of the western world. People who think that startup nurses and gardai (or startup anybody at that) have the god given right to a home...thats called socialism and does not belong in this discussion. Run along to the communist thread or one of the many anti-Lisbon threads to get your kicks.
Nope, your trolling from your ivory tower. Your example of 3beds in Dublin are mostly those in the no-go areas where no-one would live there or they are in outlying towns and no-one on professional wages could afford to.I just want to elaborate on what I meant by vested interest. The arguments against me on this thread have gone from:
1. People cannot afford a home in Ireland. AT ALL.
to
2. People cannot afford a nice home in Ireland.
to
3. People cannot afford a nice, big home in Ireland.
to
4. People cannot afford a house in Ireland.
to
5. People cannot afford a 3 bed semi-d house in Ireland.
There are 3 types on here who have vested interest in desimating the market:
1. those that want a nice big 3 bed house in Co. Dublin and they don't want to have to work for it. They want it handed to them on a plate and they want enough money left over to go out and party every weekend.
2. The socialist. A home for everyone in the country.
3. Not so much a vested interest, but those who are influenced by others with a vested interest. Namely the likes of David MacWilliams who has hedged his whole career and reputation on a housing crash. If you keep saying every day its going to rain, eventually you are going to be right. It doesn't make you smart, but unfortunately that kind of economics does make you rich and famous in Ireland.
My job here is done.
That is deluded thinking. DmcW never predicted 9/11, thats his crime.
One thing your missing is that the buying public have a little justified vested interest in lower prices as its out of their pocket through high cost of living.
The other vested interest who have the media at their feet are the banks, estate agents, CIF and certain politicians etc, their vested interest is immoral as they have and are trying to saddle huge debt on young people over 35years with huge misinformation.
You cannot compare the 2 sets as equal, it's insulting to do so.0 -
You know Gegarty, I agree with you on one point - people should be required to show some level of financial responsibility to get a mortgage - but in terms of responsible money management, not pure salary.
This is something that was sorely lacking at the height of the bubble, when banks were throwing high LTV, jumbo term mortgages at every Joe Waster and inviting him to hop aboard the property gravy train with little or no savings. Joe could then continue to piss away his disposable income, safe in the knowledge that his property value was skyrocketing under his feckless ass.
As I see it, we are now moving away from that situation towards one where prices are becoming more realistic, but where people actually need to make an effort and a commitment to buy a property. This can only be a good thing IMO.0 -
In a sense this is true. He correctly identified a bubble and, of course, all bubbles eventually burst.If you keep saying every day its going to rain, eventually you are going to be right. It doesn't make you smart, but unfortunately that kind of economics does make you rich and famous in Ireland.
The interesting thing is the numbers of people that denied there was a bubble at all or that there could not possibly ever be a crash, that instead there would instead be a "soft landing". We now fully see the stupidity this, but at the time right up to the actual pop itself, it was the prevailing view.0 -
The term decimate originally referred to the killing of every tenth person. A similar fate awaits the landlords in this country who are about to get financially wiped out. The market is neutral, sometimes the buyers outnumber the sellers, now it is the reverse.There are 3 types on here who have vested interest in decimating the market:
Hasn't the amateur landlord been living this dream for the past decade? Borrow other peoples money and let the younger generation pay the mortgage for them, all the while without doing any work your asset appreciated all by itself and you could leverage even more to buy that second house in Longford (section 23) and towards the end of the boom, buy the retirement home in Spain, Bulgaria, Florida, Cape Verde etc.1. those that want a nice big 3 bed house in Co. Dublin and they don't want to have to work for it. They want it handed to them on a plate and they want enough money left over to go out and party every weekend.
As the song goes "a house is not a home". I don't see anything wrong with the argument that people on average wages should be able to afford the average house and have money left over to raise their families and plan their retirement. This is not socialism.2. The socialist. A home for everyone in the country.
David McWilliams has been one of the few people in Ireland with the courage to stand up in the face of continued and trenchant criticism and call the boom as the credit bubble it was.3. Not so much a vested interest, but those who are influenced by others with a vested interest. Namely the likes of David MacWilliams who has hedged his whole career and reputation on a housing crash. If you keep saying every day its going to rain, eventually you are going to be right. It doesn't make you smart, but unfortunately that kind of economics does make you rich and famous in Ireland.
You then undermined your own argument and conceded "eventually you are going to be right". What did you do with this knowledge that McWilliams and others who 'follow him' are right?
Did you end up on the right side of the trade in the housing market?
Maybe you sold your house at the top of the market in 2006?
Maybe you have protected your savings in the event of Irish banks folding?
Maybe you have invested in Uranium mining?
Maybe you are building your deposit with the intention to buy a large 4 bed house (for cash even) while you subsidise your landlords mortgage re-payments?
Whether the likes of you or I post here or not is irrelevant. The credit bubble has burst and house prices are now falling back to their long term trends, the bubble from 2000 to 2006 can only be regarded as a deviation from that trend.My job here is done.Net Zero means we are paying for the destruction of our economy and society in pursuit of an unachievable and pointless policy.
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If you keep saying every day its going to rain, eventually you are going to be right. It doesn't make you smart, but unfortunately that kind of economics does make you rich and famous in Ireland.
No but if in July you say it's going to rain in October, and people say "Pah, it's never going to rain ever again", it is they, not you, who will look foolish.0 -
Yes, demned peasants, what! Imagine them not wanting to toil until retirement just to have a place to call their own, the brass neck of it.There are 3 types on here who have vested interest in desimating the market:
1. those that want a nice big 3 bed house in Co. Dublin and they don't want to have to work for it. They want it handed to them on a plate and they want enough money left over to go out and party every weekend.
Actually all kidding aside, this raises an important point. People who bought in the last three years or so bought an extremely overpriced commodity, and so feel it should be relegated to "luxury" status, only within reach of a few. Its the champagne and cufflinks lifestyle marketing gone off the deep end. It will definetely be a case of adding insult to injury when normality is returned.
A nightmarish scenario indeed. What would happen if everyone had a home in Ireland? I shudder to think. I mean with there being so little land left and all. We should have a few McCarthyist purges to clear these communists out of the system.2. The socialist. A home for everyone in the country.
And once again the last cry of the die-hard bulls. If it was as obvious as you are making out, why did so many people buy in the last few years, when the country is now in the midst of a freefall in property prices? Are you saying they were stupid?3. Not so much a vested interest, but those who are influenced by others with a vested interest. Namely the likes of David MacWilliams who has hedged his whole career and reputation on a housing crash. If you keep saying every day its going to rain, eventually you are going to be right. It doesn't make you smart, but unfortunately that kind of economics does make you rich and famous in Ireland.
As for rich and famous, I'd say with a great deal of certainty that a lot of people made tidy fortunes predicting the opposite.
Oh I'd say you're done alright.My job here is done.0 -
Deleted User wrote: »The true value of a house is it's cost of construction (materials & labour) + the cost of the land it sits on, it is possible to get a three bed decent sized semi of good build quality for €150k if you exclude the land (the one thing that really determines the cost of new property) because of its location.
You are mixing up cost and value. The cost of a property is the cost of construction + the cost of the land. The value of the property is what somebody is prepared to pay for it. A property can cost a lot but if nobody is prepared to buy it, it is valueless!0 -
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SimpleSam06 wrote: »Actually all kidding aside, this raises an important point. People who bought in the last three years or so bought an extremely overpriced commodity, and so feel it should be relegated to "luxury" status, only within reach of a few. Its the champagne and cufflinks lifestyle marketing gone off the deep end. It will definetely be a case of adding insult to injury when normality is returned.
There was an apartment scheme which was marketed with the tagline "the spirit of gracious living" with the pictures of champagne, diamond earrings etc. It would be interesting to see if this development turns out to be a run down, half occupied kip or is maybe offloaded onto the county council as social/affordable housing.0
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