Housing Bubble Bursting

EDO

micmclo wrote:

Don't be so pessimestic EDO. We have a large number of employers in Financial Services.

I read an article a few weeks ago on unison.ie that employees can increase their wages by 15%-20% every year.
I know my own salary went up over 20%.

I'm afraid I don't have a link and I did search for one but noone can deny Financial Services is a secure sector to be in right now.

Ah Micmclo - at least some one is optimistic about something here! - good for you and I hope the sun stays shining for you and you keep getting those double digit pay rises - good god you might be the only private sector employee whose renumeration stays head of the benchmark bunch in the public service!

Personally - I have to be honest - Im not really that worried - the writing has been on the wall for a while - I've worked elsewhere before I joined my current crew and I will work elsewhere if and when the push happens. Unlike a lot of my current colleagues I have made no serious commitments ie marriage children etc etc since I returned to Ireland in 1999 ,have the right to work in the US and several other countries and am debt free so I can pretty much spread my wings and take off if the urge takes me.

the Financial sector is going well at the moment- given the amount of borrowing and the massive expansion in financial products recently how could it be anything but - but dont get too cocky - I can remember plenty of mates of mine being given the heave ho in the City and Hong Kong in the early -mid nineties - and The financial sector can be just as ruthless in pruning away excess baggage as the manufacturing sector is going thru right now.

The name of the game now with the expansion of the global market - the global employment market with the serious inclusion of India and China in the last 5-8 years - is that for a western employee there will always be somebody somewhere else who can do the job cheaper than you. Unless what you do is unique and you are your own boss - its got its risks and unless you're sure you are geographically protected - you're gonna have to watch your back.

Its just that of nearly all the companies that have or are closing here - none were losing money - they were doing very well here - its just that the potential for making even more money with less overheads is available elsewhere - that is something everybody who is not employed in the civil or public service should be bear in mind for the future here

jesus_thats_gre

Calina wrote:

usual explanation is a greater supply and choice of potential staff.

Yeah but this is bollox in reality. A large percentage of those working in Dublin are commuting from the places I mentioned. Another large percentage of the people working in Dublin have moved from those areas (where they may have gone to college for example) to Dublin because there is more work available.

Sponge Bob

jesus_thats_gre wrote:

Another large percentage of the people working in Dublin have moved from those areas (where they may have gone to college for example) to Dublin because there is more work available.

Sometimes a clued in employer realises this, eg Daiwa Securities. London New York Tokyo Paris Frankfurt and now Dundalk .

they also employ 200 in Dublin but expanding there was not worth the hassle for them.

jesus_thats_gre

Sponge Bob wrote:

Sometimes a clued in employer realises this, eg Daiwa Securities. London New York Tokyo Paris Frankfurt and now Dundalk .

they also employ 200 in Dublin but expanding there was not worth the hassle for them.

Jesus all we need now is a tech company and I will be leaving Dublin myself, taking a pay cut and heading home to the mammy to save my deposit

But yeah more of this is needed. Instead of trying to force civil sevants to move their lives down the country, why not make more of a concerted effort to encourage companies to set up outside of Dublin, Cork, Galway or Limerick.

book smarts

I can't wait till the bubble bursts! It'll be so exciting, like watching a car wreck. All those gloaters who thought they were set for life will be panicing. They were so secure in their smugness, well who will be laughing last, I wonder? Not that I wish anyone bad, I just think it will be an hilarious spectacle! Serves them right for their greed. Ha!:eek:

The_Conductor

jesus_thats_gre wrote:

But yeah more of this is needed. Instead of trying to force civil sevants to move their lives down the country, why not make more of a concerted effort to encourage companies to set up outside of Dublin, Cork, Galway or Limerick.

This is ongoing. What you must keep in mind though is that some of the worst unemployment blackspots in the country are actually in the Dublin area though.......

Vis-getting civil servants to move their lives down the country, its actually a case of moving the civil servants jobs down the country, not necessarily the civil servants themselves. Over 3/4 of the civil servants are based outside Dublin anyhow, but the latest scheme is an attempt at parochial politics to bring back jobs for the boys to as many random different areas as possible. There is a very good thread on this in the Politics forum.

Far more interesting in the news today is that Estate Agents are looking to increase fees 33% in a slowing market- to make up for their expected shortfall in revenue they expected from house prices booming. Apparently Pat Rabbitte had a spat with Bertie in the Dail about it yesterday.....

book smarts

book smarts wrote:

I can't wait till the bubble bursts! It'll be so exciting, like watching a car wreck. All those gloaters who thought they were set for life will be panicing. They were so secure in their smugness, well who will be laughing last, I wonder? Not that I wish anyone bad, I just think it will be an hilarious spectacle! Serves them right for their greed. Ha!:eek:

Sums up the sentiment of a lot of posters in this thread.
Tell me, do you live with mammy? Have you any children? A pension, perhaps?

Calina

Not everyone sees it quite like that. Some people consider that the property bubble/monster we create will have an absolutely horrific effect on the economy when it eventually bursts and that's why they were screaming warnings about it for the past 5 years.

Some of us live in rented accommodation and are aghast at the lack of regulation in same which contributed to said stupid bubble.

I don't have a lot of sympathy for people over extended themselves on the following three grounds 1) you can't lose money on property and 2) renting is dead money and 3) it's different here. We've had historically low interest rates along with historically poor affordability in a key sector of the market. And prices are starting to collapse from the top.

The sooner this corrects the better in the long run for the rest of the economy. I won't deny that it'll be nice to see a few people grasping for explanations as to what went wrong, but avoiding the fact of that isn't a good excuse for putting off the inevitable for as long as possible. But it's a common opinion, all the same.

Doesn't mean it's sensible. And oh yeah - soft landings are myths. This is not going to be nice; the question is just how nasty is it going to be and long drawn out it's going to be.

Oh yeah, there'll be a popcorn element, trainwreck television if you like...but anyone with any realism at all - and I realise there are few enough of us around - will be concerned about the wider ramiifications rather than the "property savvies" who made a million in property wealth....that wealth is meaningless unless you cash it in, and if you all try to cash it in at the same time, that wealth disappears...cos like the best pyramid schemes, without a steady supply of suckers to prop it up, it will collapse.

I agree with you on most of those points.
What I find sad is the good ol' Irish begrudgery in some posts here.
How dare people have bought in, sold up and made a quick profit!!!!!
How dare someone the same age as ME own two properties!!!!
Don't they KNOW the bubble's gonna burst and they'll be in huge trouble??

I couldn't care less. I'm not an investor, I don't stand to lose a fortune and in all honesty I've far too much going on in my life to wonder/speculate what will happen to those who have gambled.
You win some, you lose some. Life goes on.
Hell, my relatives lived through the property collapse in London....guess what? They're still alive and well and living in London!!!

As I have said here before, not everyone in Ireland is up to their necks in debt. There's a huge misconception out there that everyone who bought property in the last five years is living by the pin of their collar. They're not.

tHE vAGGABOND

I bet you all walk around with those banners you see in black and white movies, "the end of the world is nigh"

miju

book smarts wrote:

I can't wait till the bubble bursts! It'll be so exciting, like watching a car wreck. All those gloaters who thought they were set for life will be panicing. They were so secure in their smugness, well who will be laughing last, I wonder? Not that I wish anyone bad, I just think it will be an hilarious spectacle! Serves them right for their greed. Ha!:eek:

personally , I hope it doesn't happen (though fully expect it wll) as the economic hardship that will ensue will be devasting to the economy , individuals and families alike with mounting debts , job losses etc. though how long / severe it will last is anyones guess. personally, the above was the very reason i decided to re-enter the civil service last month

its also wrong to begrduge anyone who cashed in and made a mint , fair balls to them wish i could have done the same ah well maybe next time. as well as that posts like yours was what closed the monster thread over on AAM and all it does is serve to detract from the points / discussion some of us are trying to have

KingKenny7

Isnt it the speculators that has the prices the way they are?
Is people with a bit of capital, that buy and house on the plans for 280k and seel it for over 400k within a few months.

Granted if I had of been smart I would have my own house years ago, but at 21 why would you put yourself in that position.

I cant afford a house at the min, I earn good money and in a good career.
Why cant the government step in?
Granted the shared ownerhip, which I earnt to much for and the affordable is the same.(I just got under it for last year but my expected earning this year is too much) Does the Government want professional people moving to the out of the country, taking their skills with them. Leading to multinationals pulling out, plummiting the irish ecomany into chaos.

The_Conductor

One of my clerical officers just outbid me on a house in Skerries on the shared ownership scheme....

KingKenny7

smccarrick wrote:

One of my clerical officers just outbid me on a house in Skerries on the shared ownership scheme....

What way does that actually work??? How much rent to you pay to the government? When you buy them out do you buy at valuse you bought or market value?

Sponge Bob

smccarrick wrote:

One of my clerical officers just outbid me on a house in Skerries on the shared ownership scheme

In the private sector you would have your revenge when their pay review was due . I also thought houses in Skerries were way beyond a clerical officers salary in the civil service nowadays .

Even I remember the days when it only covered half a housheen in Tallaght :eek:

warrenaldo

miju wrote:

personally , I hope it doesn't happen (though fully expect it wll) as the economic hardship that will ensue will be devasting to the economy , individuals and families alike with mounting debts , job losses etc. though how long / severe it will last is anyones guess. personally, the above was the very reason i decided to re-enter the civil service last month

Im in the exact same boat as you - i joined the civil service recently due to fear over the economy- well it was one of the reasons. Its nice to know even if the economy goes belly up that your still secure enough.

KingKenny7

If the ecomany does collapse, there will be a few sections of society still in demand, the rest are French Connection UK'ed.

Who do we blame for the potenial crash?

The_Conductor

KingKenny7 wrote:

Who do we blame for the potenial crash?

Those numbskulls sitting the houses of the Oireachtas.....

Calina

There's a collective responsibility. I can't absolve the banks, Central Bank and Financial Regulator either, but it also has to be said that the people bidding up the prices were the people doing the buying. They are not without fault, but I can't see them admit that when their equity starts to fall.

warrenaldo

Personally i cant see a full blown crash - maybe im a bit naive. But the demand for Houses is still massive. As long as the demand is so great i dont see there being a massive crash as is sugested. and Demand is increasing with our increasing population.

KingKenny7

warrenaldo wrote:

Personally i cant see a full blown crash - maybe im a bit naive. But the demand for Houses is still massive. As long as the demand is so great i dont see there being a massive crash as is sugested. and Demand is increasing with our increasing population.

Your right there, its a sellers market at the minute, demand greatly outweighs supply. But when you force half of the population of the market, you'll have serious problems. Which is what is happening at the moment.

If you think about a standard couple buying a house, not buying two cars but one, not going on holidays during the summer, basically not having any disposable income. What happens then to the econamy?

Calina

KingKenny7 wrote:

Your right there, its a sellers market at the minute, demand greatly outweighs supply. But when you force half of the population of the market, you'll have serious problems. Which is what is happening at the moment.

If you think about a standard couple buying a house, not buying two cars but one, not going on holidays during the summer, basically not having any disposable income. What happens then to the econamy?

Supply is rising faster than properties are getting sold and there is increasing evidence of asking prices falling. This would lead me to feel that in fact it's not really a sellers market any more but the fact of it changing hasn't really sunk in fully sellers side. The number of buyers is starting to dry up.

To be honest, your analysis doesn't make much sense. From a consumer point of view, one of the big issues is that if property values fall, the sense of feeling wealthy will dissipate...leading to a knock on in the amount of money spent on frivolous items such as holidays and clothes in BTs. For an economy based purely on consumer spending as the Irish economy increasingly is, this is bad, and it will hit employment, which will have a further knock on.

The truth is many people have been priced out of the property market for ages but either they have gone consumer spending or the banks have bent over triple backwards with very long term IO mortgages...

soma

KingKenny7 wrote:

Your right there, its a sellers market at the minute, demand greatly outweighs supply.

You've got to be kidding. There's a hell of alot of second-hand supply all over the country & many new builds continue to come onstream.

Not only that, but a huge aspect of the demand is simply speculative demand, i.e. fake demand. These people have been viewing houses as very large gambling chips (they are not "investors") and not as homes.

miju

and to add to Soma's post (and as the risk of repeatnig whats been said before) when speculative investors are taken out of the equation due to no more capital appreciation you then have a very large chunk of that demand completely disapearing

cant put my finger on the exact figure but last year it was around 30% of buyers who were investors and indeed anecdotally you could say this 30% has already evaporated causing the current large build up of housing stock

KingKenny7

Calina, you missed understood what I said. At the moment house prices are still rising, slowly but still rising. In an ecomonic sense it seens supply is less then demand. Realistically we know thats not the case, and there are only a few sections of society pushing up prices. And that cannot continue.

In realation to disposable income, I see your point about "being wealthy". But think of a person's everyday sitution. You earn 2200 a month, you have a mortage of 1300 a month, youve got bills, where is the money coming from to "live". My live I mean enjoy live, we are not here for a long time, you have to enjoy life. No one will be able to spend and this economy is based on spending. Therefore you know the rest..............

Calina

KingKenny7 wrote:

Calina, you missed understood what I said. At the moment house prices are still rising, slowly but still rising. In an ecomonic sense it seens supply is less then demand. Realistically we know thats not the case, and there are only a few sections of society pushing up prices. And that cannot continue.

In realation to disposable income, I see your point about "being wealthy". But think of a person's everyday sitution. You earn 2200 a month, you have a mortage of 1300 a month, youve got bills, where is the money coming from to "live". My live I mean enjoy live, we are not here for a long time, you have to enjoy life. No one will be able to spend and this economy is based on spending. Therefore you know the rest..............

Asking prices have fallen across the board for most of Dublin with the exception of north Dublin City and parts of north Dublin County. This suggests that realised prices are falling. If I recall correctly, the last house price survey came up with a 0.1% increase in prices for the end of 2006 which is negligible and quite a bit below the rate of inflation. In real terms house prices are starting to fall, not slow down.

A person on 2200 a month is not going to paying out 1300E a month in mortgage. This is because affordability is capped at 45% of net income. If there are people on 2200E a month net paying out 1300E a month in a mortgage they and their bank have been horrifically reckless.

Economically, supply has been rising constantly for the past six months. This suggests an excess of supply over demand, particularly in certain parts of the country. The housing market in Ireland is on a precipice.

KingKenny7

Calina,

A quick question, in relation to a our I was looking at that jumped from 290k to around to 420k in the space of a year.
Would it be realistic for me to believe that the price of those whouses will fall back to the 300k mark????

Calina

You're missing the point. No one can foretell that. It is very likely that no one could have foretold the increase that came because it is so totally irrational. Was that realistic as an increase? I wouldnt' have said so, but hey, you saw it.

What people want is for things to be simple. They want to be told that if they wait 18 months, the property will cost x amount less. Because the market is not rational, not built on common sense you cannot do anything other than guess...

The only call I will make is that the market as it has existed for the past five or six years cannot continue to exist. Looking for specificities in terms of "what" exactly will happen is a waste of time. Life is not that simple, and that's the way it goes.

SkepticOne

KingKenny7 wrote:

Isnt it the speculators that has the prices the way they are

Speculators can only have a temporary effect on the market. At the end of the day they have to take profit by selling to non-speculators. I think there's a recent breed of unsophisticated speculator who has forgotton this important fact. They have been assuming that rising prices are an intrinsic characteristic of the market.

Raskolnikov

http://www2.myhome.ie/search/property.asp?id=267106&np=&rt=search&searchlist=

This house has had its asking price dropped from €2.25 million to €1.695 million.