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Housing Bubble Bursting

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    #5012
    BigglesMcGee
    Closed Accounts Posts: 501 ✭✭✭BigglesMcGee


    smccarrick wrote: »
    Current calculations for mortgages have changed (depending on the lender). Now the norm is in fact 4.5 time the main income + twice the second to a max of 90% of the open market value of the property (which can itself be determined to be far below what you believe you have to pay for it.......)

    Good luck trying to find any lender willing to take rent-a-room income, bonuses, overtime or any other non-definite cash income into account too- those days are well gone......

    A couple on 75k (40+35) would qualify for a mortgage of 250k, providing 250k is less than 90% of the open market value of the property (unless they are civil servants or accountants- in which case they *may* get the 100%).


    Now thats just not true.

    Even the eejits i know who are buying now, get way more than that approved.

    Walk into a broker or a bank tomorrow and give those figures and see what they offer you.


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    #5013
    BigglesMcGee
    Closed Accounts Posts: 501 ✭✭✭BigglesMcGee


    smccarrick wrote: »
    Ps- for two civil servants earning a joint salary of 79k and claiming all relevant reliefs and credits (35,500 & 43,240) works into a takehome pay of 2412 + 2085 per month, net EUR4,497 per month.

    Would i be right in saying that 2 civil servants have significant deuctions from their take home pay that you arent taking account of here.


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    #5014
    gurramok
    Closed Accounts Posts: 13,992 ✭✭✭✭gurramok


    BigglesMcGee wrote: »
    What wage was he on, and how much did he have left after it? I remember back then the average wage in Ireland was less than £15,000 a year and tax was (more) penal at about 27% and 48%.

    About 11k i think but he did put a big deposit down he had saved for years, must of been maybe 15k.


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    #5015
    BigglesMcGee
    Closed Accounts Posts: 501 ✭✭✭BigglesMcGee


    gurramok wrote: »
    About 11k i think but he did put a big deposit down he had saved for years, must of been maybe 15k.

    A year and a halfs wages saved even now would go a long way to buying you a house too though :)


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    #5016
    miju
    Banned (with Prison Access) Posts: 8,486 ✭✭✭miju


    BigglesMcGee wrote: »
    Would i be right in saying that 2 civil servants have significant deuctions from their take home pay that you arent taking account of here.

    apart from pensions & union fees theres nothing elese that comes out of my wage packet or any of my colleagues either AFAIK


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    #5017
    beeno67
    Registered Users Posts: 1,218 ✭✭✭beeno67


    BigglesMcGee wrote: »
    Im not even going to try to think what the average wage was then.

    Bet it was less than £10,000 and only 1 person was earning?

    They were the dark days :)

    Average wage was £13,200 in 1992. First £10,600 was taxed at 27%. Rest at 48% (for single person)


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    #5018
    Gegerty
    Closed Accounts Posts: 900 ✭✭✭Gegerty


    Cantab. wrote: »
    People who slag off McW are living in another dimension
    Where is McW when it comes to predicting a solution? Everyone knew there was a bubble, what was open to debate was whether it would crash. McW spouted on about the crash from 1999 to 2006, 7 years of saying we are on the brink of a crash. So for approx 6 years he was categorically wrong because we were not on the brink until 2006. And the reason it looks likely to be a crsah and not a soft landing cannot be credited to McW's predictions. I never once heard him predicting a credit crunch, although he's happily talking the "I told you so" talk.

    Now he's spouting on about Polish construction workers leaving, pointing out the obvious there. What else do you do when you're unemployed in a foreign country? And time and time again he ignores the fact that the majority of Polish are in the services industry. Whats his answer to it? I heard him talking on the last word the other day all doom and gloom again. Making very dangerous assumptions that his flight to Poland was "full" of one way ticket holders. These are the things people hear him say and take as gospel. Come on McW, if you're so good what do we need to do to stop the freefall? Bring prices down to 2001 levels is not a solution, its a result.

    Antoher point on the scaremongers, the start of the downturn can be directly connected to the RTE program predicting what would happen if everything went belly up. Queue scary music and gloomy picture effects. That says it all.

    So come on, I'm still waiting to hear peoples solutions. Prices need to drop so that "people" can afford a home is the only one I've heard on here so far (regurgitation of McW). I've proved "people" can afford a home. If people are so hard done by why is inflation so high?

    btw, a while back people were saying you need 50K to qualify for affordable housing. Not true (http://www.affordablehome.ie/Getting-Started/Do-I-qualify-for-an-Affordable-Home.aspx). I spoke to someone who got a 4 bedroom duplex in Co. Dublin earning 33K. Another person I spoke to got a 2 bed in Beacon South Quarter. For those who don't know beacon south quarter, its luxurious living with fibre optics and valet parking and is slap bang beside the LUAS. The poor hard done by FTBs of today :rolleyes:


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    #5019
    SkepticOne
    Closed Accounts Posts: 6,718 ✭✭✭SkepticOne


    Gegerty wrote: »
    And the reason it looks likely to be a crsah and not a soft landing cannot be credited to McW's predictions. I never once heard him predicting a credit crunch, although he's happily talking the "I told you so" talk.
    As already pointed out on this thread in response to your earlier post, the bubble had already burst before the interneational credit crunch started having any impact. There was never going to be a "soft landing".


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    #5020
    beeno67
    Registered Users Posts: 1,218 ✭✭✭beeno67


    SkepticOne wrote: »
    As already pointed out on this thread in response to your earlier post, the bubble had already burst before the interneational credit crunch started having any impact. There was never going to be a "soft landing".
    The point is though no one has a definition for hard or soft landing so everyone can say they were right.


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    #5021
    SkepticOne
    Closed Accounts Posts: 6,718 ✭✭✭SkepticOne


    beeno67 wrote: »
    The point is though no one has a definition for hard or soft landing so everyone can say they were right.
    OK, so what did you mean by "And the reason it looks likely to be a crsah and not a soft landing cannot be credited to McW's predictions."


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    #5022
    beeno67
    Registered Users Posts: 1,218 ✭✭✭beeno67


    SkepticOne wrote: »
    OK, so what did you mean by "And the reason it looks likely to be a crsah and not a soft landing cannot be credited to McW's predictions."
    I didn't say that


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    #5023
    gurramok
    Closed Accounts Posts: 13,992 ✭✭✭✭gurramok


    Gegerty wrote: »
    Antoher point on the scaremongers, the start of the downturn can be directly connected to the RTE program predicting what would happen if everything went belly up. Queue scary music and gloomy picture effects. That says it all.

    No it's not. That program was broadcast if my memory is correct in Dec '06 or maybe later than that.
    I agree it did scare ordinary people but the collapse started to happen in mid '06 with reports of house sales stagnant.
    DmcW failed to predict 9/11 which plunged the world econmy into crises with 2% ECB rates(they were about 4.5%) which fuelled an asset bubble here. It prolonged the pain. If 9/11 didn't happen, we wouldn't have had the house bubble from '02-'06, DmcW would of been right sooner in reality and this thread wouldnt exist.
    Gegerty wrote: »
    So come on, I'm still waiting to hear peoples solutions. Prices need to drop so that "people" can afford a home is the only one I've heard on here so far (regurgitation of McW). I've proved "people" can afford a home. If people are so hard done by why is inflation so high?

    You've proved nothing. You've proved the exact opposite that people canot afford a roof ove rtheir heads unless they want to live in the ghetto on professional wages.!
    Gegerty wrote: »
    btw, a while back people were saying you need 50K to qualify for affordable housing. Not true (http://www.affordablehome.ie/Getting-Started/Do-I-qualify-for-an-Affordable-Home.aspx). I spoke to someone who got a 4 bedroom duplex in Co. Dublin earning 33K. Another person I spoke to got a 2 bed in Beacon South Quarter. For those who don't know beacon south quarter, its luxurious living with fibre optics and valet parking and is slap bang beside the LUAS. The poor hard done by FTBs of today :rolleyes:

    Oh, now your moving the goalposts. Instead of not being able to afford a gaff on the free market, your now quoting the AH scheme for the first time to back up your argument!!

    Of course, many can afford to buy on the AH scheme which is NOT the free market, thats it.
    Oh yeh, have as look at Beacon when your next down there and spot the empty unsellable units.
    been067 wrote:
    The point is though no one has a definition for hard or soft landing so everyone can say they were right.

    Where were you for the last couple of years?

    We've been bombarded from the media since '06 of a soft landing as been small rises year on year which has not happened.

    It's a crash and accept it.


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    #5024
    ionapaul
    Registered Users Posts: 5,297 ✭✭✭ionapaul


    The solution was for our government to listen to those evil 'doomsayers' half a decade ago and longer and to actually GOVERN; put efforts in place to pop the bubble (that suddenly 'everybody' saw coming, lmfao! two years ago the bulls told us all that the prices were justified and various posters here fully agreed with them) early rather than actively work to inflate it and have Ireland suffer the consequences for probably a decade and more! Fianna Fail is the builders' party, plain and simple, we got the government we deserve and we deserve all that is coming to us to be honest.


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    #5025
    beeno67
    Registered Users Posts: 1,218 ✭✭✭beeno67


    gurramok wrote: »

    Where were you for the last couple of years?

    We've been bombarded from the media since '06 of a soft landing as been small rises year on year which has not happened.

    It's a crash and accept it.

    But what is a soft landing and what is a hard landing. Is 20% drop a hard landing or is it 50% or is it just any drop at all?


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    #5026
    SimpleSam06
    Closed Accounts Posts: 4,048 ✭✭✭SimpleSam06


    Gegerty wrote: »
    Where is McW when it comes to predicting a solution?
    You appear to have a real bee in your bonnet about McWilliams, possibly labouring under the assumption that hes some sort of an idol around here. I can't speak for anyone else, but I rarely if ever pay too much attention to what he has to say, preferring to work it out for myself. I'd say thats a characteristic shared by most commentators on here.
    Gegerty wrote: »
    Everyone knew there was a bubble, what was open to debate was whether it would crash.
    If it wasn't going to crash, it wouldn't be a bubble. You're contradicting yourself here.
    Gegerty wrote: »
    So for approx 6 years he was categorically wrong because we were not on the brink until 2006.
    His comments on there being problems for that period were spot on correct. The problems worsened as time went on, so he became more and more right. Just on a point of interest did he ever actually specifically give a date for the crash, or are you just trying to sneer your way out of the realisation that you bought at a bad time?
    Gegerty wrote: »
    Antoher point on the scaremongers, the start of the downturn can be directly connected to the RTE program predicting what would happen if everything went belly up. Queue scary music and gloomy picture effects. That says it all.
    Haha I remember that. That was the first time that the real problems became apparent to the general public, and if you think RTE would have shown it prior to a crash becoming plainly inevitable, you are very much mistaken. Their advertising revenue depended too much on real estate. It was just a footnote around these parts.
    Gegerty wrote: »
    So come on, I'm still waiting to hear peoples solutions.
    In order for there to be a solution, there needs to be a problem. A correction in house prices is not a problem for most people.
    Gegerty wrote: »
    If people are so hard done by why is inflation so high?
    Ye gods man, do you have any idea how inflation works? Its not based on the relative hardship of the population, otherwise you'd never have inflation in third world countries. And you do.

    Seriously, what exactly is your point? Are you trying to predict the bottom or sneering at those who foretold the top would be reached? If the latter, thats not only not constructive to this forum, its wrong, as you would know if you had been around over the last few years and observed the many ferocious debates between the bears and bulls.
    beeno67 wrote: »
    The point is though no one has a definition for hard or soft landing so everyone can say they were right.
    Hahah, yeah, thats a nice bit of face saving for the formerly bullish on property. Heres a hint: 10% drops in the price of a product or service per year could in no way be defined as a soft landing. Massive losses in jobs in the sector could in no way be defined as a soft landing.


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    #5027
    homah_7ft
    Registered Users Posts: 6,124 ✭✭✭homah_7ft


    The soft landing that was being spoken of was sub-inflation house price "growth".


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    #5028
    beeno67
    Registered Users Posts: 1,218 ✭✭✭beeno67


    SimpleSam06 wrote: »
    Hahah, yeah, thats a nice bit of face saving for the formerly bullish on property. Heres a hint: 10% drops in the price of a product or service per year could in no way be defined as a soft landing. Massive losses in jobs in the sector could in no way be defined as a soft landing.
    Why do I need to save face. I have said a few times before in this thread I believe prices will drop a total of 20%. I believe you said 60% or some such. By your reckoning we are both saying there is going to be a hard landing.


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    #5029
    Gegerty
    Closed Accounts Posts: 900 ✭✭✭Gegerty


    gurramok wrote: »
    You've proved nothing. You've proved the exact opposite that people canot afford a roof ove rtheir heads unless they want to live in the ghetto on professional wages.!
    Go back to my post on how to use the myhome filters and have a look at the results. Play around with the filters, change the county etc. There are loads of affordable homes.

    gurramok wrote: »
    Oh, now your moving the goalposts. Instead of not being able to afford a gaff on the free market, your now quoting the AH scheme for the first time to back up your argument!!
    No, I'm saying this in response to people who say you must be on 50K in order to qualify for AH. It's not true.
    gurramok wrote: »
    Of course, many can afford to buy on the AH scheme which is NOT the free market, thats it.
    Oh ok, so council estates are a product of the bubble? Are you seriously saying that people being unable to afford a home on the free market is a product of the bubble? I grew up in a council estate in the 70s, didn't know the bubble went back that far!
    gurramok wrote: »
    It's a crash and accept it.
    So far its a crash in the construction industry, we've yet to see a crash in the housing market. We've seen a downturn. But I'm not going to argue with you here because it will become a crash, that I've been convinced of but not for the same reasons as you.

    We're going around in circles here again, so tell me something new. What stops the downward trend? Lowering interest rates is not a possibility. Do you think offsetting interest rates by maybe increasing mortage relief for FTBs would help? And I don't mean 30 euro here and there, I mean seriously offsetting so that it has the equivalent effect of lowering interest rates for FTBs.


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    #5030
    gurramok
    Closed Accounts Posts: 13,992 ✭✭✭✭gurramok


    beeno67 wrote: »
    But what is a soft landing and what is a hard landing. Is 20% drop a hard landing or is it 50% or is it just any drop at all?

    Of all the bubbles in the world of Western economies, not one is reported to have resulted in a soft landing, go figure :)

    A soft landing is that prices will slowly rise year on year from double digit rises of years previously or even stagnant trailing inflation.

    A hard landing is usually circa 10% drops every year for maybe 4 or 5 years until it bottoms out and the cycle of upward rises begins again.(we're in year 2 on this)
    When the bottom reaches non-one knows for certain, Japan had to wait about 20years, do we want that scenario here?


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    #5031
    punchestown
    Registered Users Posts: 660 ✭✭✭punchestown


    Beano and Gegerty, the forums answer to tvs The Chuckle Brothers.

    The comedy of the Chuckle Brothers usually derives from slapstick (being hit smack in the face with hard facts and figures) and other visual gags such as trying to save face as their original predictions slide ever further from the reality of whats played out. Once Beeno has a post he plays out their well uttered catchphrase of 'to me to you' and so the two post back and forth trying to create an illusion that the current fall in prices is merely a blip!


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    #5032
    joe_chicken
    Registered Users Posts: 1,287 ✭✭✭joe_chicken


    Gegerty wrote: »
    If people are so hard done by why is inflation so high?

    Exactly. That's why Zimbabwe have it so good.

    100,000% Inflation ... They must have it sweet, right?

    Eee God, and I thought my knowledge of Economics was poor...


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    #5033
    Gegerty
    Closed Accounts Posts: 900 ✭✭✭Gegerty


    SimpleSam06 wrote: »
    Seriously, what exactly is your point? Are you trying to predict the bottom or sneering at those who foretold the top would be reached? If the latter, thats not only not constructive to this forum, its wrong, as you would know if you had been around over the last few years and observed the many ferocious debates between the bears and bulls.

    My point is that houses are now affordable. Prices do not need to come down much further. Maybe a little more would be a good thing, but not much more.

    Other arguments, McWilliams etc are not me trying to make a point and are not being used to back up my argument. They're stuff I'm getting drawn into arguing about.


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    #5034
    Gegerty
    Closed Accounts Posts: 900 ✭✭✭Gegerty


    joe_chicken wrote: »
    Exactly. That's why Zimbabwe have it so good.

    100,000% Inflation ... They must have it sweet, right?

    Eee God, and I thought my knowledge of Economics was poor...

    Pouint taken. that was stupid comment I made :o


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    #5035
    Gegerty
    Closed Accounts Posts: 900 ✭✭✭Gegerty


    SimpleSam06 wrote: »
    In order for there to be a solution, there needs to be a problem. A correction in house prices is not a problem for most people.

    A correction is good, thats not my argument. What stops the downward spiral? Or do prices keep going down forever? There has to be a solution otherwise prices will keep falling.


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    #5036
    seamus
    Registered Users Posts: 68,317 ✭✭✭✭seamus


    Gegerty wrote: »
    A correction is good, thats not my argument. What stops the downward spiral? Or do prices keep going down forever? There has to be a solution otherwise prices will keep falling.
    Simple economics. Prices will stop falling when the number of people looking to buy homes matches or outstrips the number of homes available for sale.

    There are hundreds of other factors which affect the number of buyers and sellers on the market, but this is the key condition.


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    #5037
    Gegerty
    Closed Accounts Posts: 900 ✭✭✭Gegerty


    punchestown wrote: »
    Beano and Gegerty, the forums answer to tvs The Chuckle Brothers.

    The comedy of the Chuckle Brothers usually derives from slapstick (being hit smack in the face with hard facts and figures) and other visual gags such as trying to save face as their original predictions slide ever further from the reality of whats played out. Once Beeno has a post he plays out their well uttered catchphrase of 'to me to you' and so the two post back and forth trying to create an illusion that the current fall in prices is merely a blip!

    Such a wonderful contribution as ever. I see you're training to be a garda. Good luck buying a house LOL!


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    #5038
    gurramok
    Closed Accounts Posts: 13,992 ✭✭✭✭gurramok


    Gegerty wrote: »
    Go back to my post on how to use the myhome filters and have a look at the results. Play around with the filters, change the county etc. There are loads of affordable homes.

    Yes, it brougt back 243 results at the time of houses in no-go areas where only people on professional wages can buy.
    Gegerty wrote: »
    No, I'm saying this in response to people who say you must be on 50K in order to qualify for AH. It's not true.
    Your getting mixed up between the AH scheme and the AH Initiative.

    The former is for the poorer applicants who have to queue maybe over a year to get that gaff.
    The latter is for the wealthier applicants and the limit is 58k max for a single earner (http://www.affordablehome.ie/Getting-Started/Do-I-qualify-for-an-Affordable-Home.aspx )
    These are the people that cannot afford on the open market on 58k wages which disproves your affordability rule for the open market, think about that one yourself.
    Gegerty wrote: »
    Oh ok, so council estates are a product of the bubble? Are you seriously saying that people being unable to afford a home on the free market is a product of the bubble? I grew up in a council estate in the 70s, didn't know the bubble went back that

    Are you trolling?

    Council estates built during the boom are a product of the boom, where else has the demand come from?
    Council estates you grew up on didn't exist in a bubble.
    Gegerty wrote: »
    So far its a crash in the construction industry, we've yet to see a crash in the housing market. We've seen a downturn. But I'm not going to argue with you here because it will become a crash, that I've been convinced of but not for the same reasons as you.

    Where do i start :)

    We have one of the highest private debts in the western world. Banks rely on two thirds of their revenue on mortgages.
    Consumers are borrowing through top-up mortgages, re-mortgaging through magical equity as a result of their house prices going sky high.
    Then we factor in credit cards along with buy now pay later culture for plasma tv's and top of the range sofa's.

    This debt has to be paid back. 22% of GNP depends on construction related activity, thats a fact(http://www.environ.ie/en/PublicationsDocuments/FileDownLoad,15353,en.pdf )
    Other countries in the OECD bar Spain, its half that and we know how Spain are fairing.
    At least 10% of that GNP is not sustainable and thats what we are seeing now disappear hence 'downturn in the greater economy'.
    Gegerty wrote: »
    We're going around in circles here again, so tell me something new. What stops the downward trend? Lowering interest rates is not a possibility. Do you think offsetting interest rates by maybe increasing mortage relief for FTBs would help? And I don't mean 30 euro here and there, I mean seriously offsetting so that it has the equivalent effect of lowering interest rates for FTBs.
    No and no. High prices along with lack of affordability and oversupply are the problem along with speculators assets amongst others. Its a mess.

    Tbh, there is nothing that can be done until the bottom is reached when houses become affordable again.
    If something is done, it will prolong the pain Japan style.


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    #5039
    Gegerty
    Closed Accounts Posts: 900 ✭✭✭Gegerty


    seamus wrote: »
    Simple economics. Prices will stop falling when the number of people looking to buy homes matches or outstrips the number of homes available for sale.

    OK thanks for pointing out the obvious. So I'll rephrase my question based on your simple economics above. What will cause the number of people buying homes to match or outstip the number of homes available for sale?


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    #5040
    steo123
    Closed Accounts Posts: 144 ✭✭steo123


    lads whats the average house price these days in dublin for a decent gaff!?


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    #5041
    gurramok
    Closed Accounts Posts: 13,992 ✭✭✭✭gurramok


    steo123 wrote: »
    lads whats the average house price these days in dublin for a decent gaff!?

    According to bulls, around an affordable 450k. Its nothing, isn't it? :D


This discussion has been closed.
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