Housing Bubble Bursting

miju

Firetrap wrote: »

Why would anyone in their right mind dash out to buy a house when it's clear that prices aren't rising the way they were? Unless you have a burning need to buy a house, surely it wouldn't do any harm to sit back and watch to see if prices fall more?

theres always people who need to buy a house at sometime in the very near future no matter how much it might pain them :mad:

gurramok

mrgaa1 wrote: »

so what do people think of the following scenarios at what price do you think the house would sell:

within reach of & including Dublin:

A house was bought at 450k and is on the market for 440k to sell

new development - houses for sale at 350k

outside of Dublin area

House for sale at 250k

New development - houses for sale at 180k

I know it depends on the area - type of house/apartment etc... but I am talking generally.
There are places throughout the country where houses are for sale at 160-190k - source DAFT.IE - which seem be very realistic - and these are newly built. Of course houses are only worth what people are prepared to pay for them but there is no way a house for sale at, lets say 160k will drop in half - would it not be fair to say that houses at 700-800k are more than likely to drop substantially?

I'll try and answer this

A sub 200k right now, anyone with a job and savings can afford and are either in the middle of nowhere or in no-go areas OR are tiny 1bed apts suitable for only short term use
A 300k-400k hse which comprises hell of alot of stock now than a 200k house has far fewer buyers due to the high prices and are generally located in liveable areas and areas where there are jobs.

At the moment, the housing ladder/chain is broken as FTB's by and large cannot afford to enter due to high prices and secondly due to difficulties raising the finance.
A FTB usually enters at the sub 250k mark(from CSO & IBF stats) and as we know these houses are in short supply due not to shortage of the physical supply but the high price.

When that price falls, it will bring more FTB's in and that will enable the second rung'ers to move up to the 3rd rung and so on up the ladder.

When that price falls even further to entice the majority of FTB's to enter, then you may have the bottom of the market, we ain't there yet by a mile.

luckat

There's already good government help under the Affordable Housing scheme - the income limits are:

* Single income household: If your gross income (before tax) in the last income tax year was €40,000 or less, you are eligible.
* Two income households: Multiply the gross income (before tax) of the higher earner in the last income tax year by 2.5 and add the gross income of the other earner in the last income tax year. If the answer is €100,000 or less, you are eligible.

(http://www.citizensinformation.ie/categories/housing/buying-a-home/help-with-buying-a-home/affordable_housing)

Or you could buy under the shared ownership scheme (which is exempt from stamp duty):

* Single income household: if your gross income (before tax) in the last income tax year was 40,000 euro or less you are eligible. (Before January 2006 the income limit was 36,800 euro).

* Two income households: multiply the gross income (before tax) of the higher earner in the last income tax year by 2.5. Add the gross income of the other earner in the last income tax year. If the answer is 100,000 euro or less you are eligible. (Before January 2006 the income limit was 92,000 euro).

(http://www.citizensinformation.ie/categories/housing/buying-a-home/help-with-buying-a-home/shared_ownership)

More here: http://www.citizensinformation.ie/categories/housing/buying-a-home/help-with-buying-a-home

The_Conductor

luckat wrote: »

There's already good government help under the Affordable Housing scheme -

It beggars the question- should a household on just over 3 times the average industrial wage qualify for affordable housing? That is the situation the politicians have dumped the average citizen of the country in.

luckat

Good point, S, good point.

BendiBus

smccarrick wrote: »

It beggars the question- should a household on just over 3 times the average industrial wage qualify for affordable housing? That is the situation the politicians have dumped the average citizen of the country in.

I'm confused Someone on 3 times the average industrial wage qualifies for affordable housing?

Calina

A double income household I think if I've understood correctly.

I think that affordable housing initiatives need to be reassess and perhaps wound up.

miju

IIRC the government are planning a series of reforms before the years end. This is so people on even lower incomes can afford housing.

It of course is by no means a cynical attempt to tinker with the property market and help out their builder buddies with public cash.

luckat

The limits (which, by the way, allowed me to buy my first house with a Corporation loan, for which I'm deeply grateful) show the level to which house prices have gone beyond the bounds of reality.

SimpleSam06

miju wrote: »

It of course is by no means a cynical attempt to tinker with the property market and help out their builder buddies with public cash.

Of course not, why would the government gouge the public finances in the middle of a recession to give a massive dig out to their golfing pals, crippling the nation for decades to come?

One can hardly credit the notion.

SkepticOne

The original idea was that 20% of estates would be set aside for social and affordable housing. This would ensure a mix of incomes and prevent ghettoization. Arguably, there was a need for some sort of scheme during the boom years when properties were being snapped up by speculators, but during these years builders successfully negotiated opt-outs and very few affordable homes were awarded. Now, during the slump and during a time of vast surplus inventory, it is builders pushing for an expansion of the scheme.

Obviously the tax-payer is carrying the can for the builders and banks here, but the big losers are the small-time speculators who were sucked in at the peak and whose investment is being undermined by subsidised properties dumped on the market. Bad enough that the bubble burst but these schemes undermine market prices by possibly tens of thousands. Why buy a second hand property when you can get an 'affordable' one at a discount from a builder.

Firetrap

The government should not attempt to interfere with the property market in order to keep prices high and bail out their developer mates. Things will find their own level by themselves and people won't necessarily have to resort to AH in order to buy somewhere. I see that the income limit for AH for a single person is €40K. In an ideal world, €40k would be enough to buy a house without breaking into a sweat.

miju

I think everyone knows the gubberment would be better off leaving the market alone and letting it correct quickly and let normal levels resume ASAP.

But if you expect Fianna Failure not to pander to the wishes of their pay masters in the construction industry and in the process drag the correction out for even longer then your sadly gonna be dissapointed

SimpleSam06

SkepticOne wrote: »

Obviously the tax-payer is carrying the can for the builders and banks here, but the big losers are the small-time speculators who were sucked in at the peak and whose investment is being undermined by subsidised properties dumped on the market.

They are doomed any way you slice it, and truth be told, I find I am hard pressed to spare any pity for them.

miju wrote: »

But if you expect Fianna Failure not to pander to the wishes of their pay masters in the construction industry and in the process drag the correction out for even longer then your sadly gonna be dissapointed

Well the obvious solution to the problem is to oust Fianna Fail, so. This country has tremendous potential, in terms of geographical location, natural resources (yes, we have them), culture and an educated workforce, and to see it drowned while the mé féiners at the top try to cute hoor their way out of the mess they created and the promises they made is frustrating.

When you have very significant portions of local authority budgets going into the property market to the detriment of much needed infrastructure and social programmes, something is badly amiss.

gurramok

And from the Initiative http://www.affordablehome.ie/Getting-Started/Do-I-qualify-for-an-Affordable-Home.aspx

as a guide, earn between €25,000 and €58,000 if you are applying on your own and up to €75,000 between both of you if you are applying with someone else. These are the approximate limits only – lower and higher income limits may apply.

Fingal have huge limits like all the dublin authorities http://www.fingalcoco.ie/Housing/AffordableHousingInitiative/

Income Limits: Single applicant - €60,000 & Joint applicants - €165,000 (based on a multiplier of 2.5 times the principle income plus once the second income).

SDCC http://www.propertypath.ie/

Qualifying for Affordable Housing is based on the applicants’ earnings. If you are a single income applicant and you earned less than €58,000 (during the previous Tax Year), then you are eligible to apply.

If there are 2 people earning an income, then the eligibility is slightly different, as follows: Add 2½ times the larger income plus 1 times the smaller income. If the total does not exceed €145,000, then you are eligible to apply.

SMcCarrick was on the right track which proves the vast majority in urban areas cannot afford to buy housing yet.

johnnyskeleton

SimpleSam06 wrote: »

Well the obvious solution to the problem is to oust Fianna Fail, so. This country has tremendous potential, in terms of geographical location, natural resources (yes, we have them)

There's gold in them there hills.

All those new builds in Virginia, Co. Cavan were by those really in the know who predicted Ireland's goldrush.

SimpleSam06

johnnyskeleton wrote: »

There's gold in them there hills.

All those new builds in Virginia, Co. Cavan were by those really in the know who predicted Ireland's goldrush.

Hahah, the gold is a little further west, as it turns out.

dan_d

I think everyone knows the gubberment would be better off leaving the market alone and letting it correct quickly and let normal levels resume ASAP.

There's a major part of the problem.The market IS returning to normal.The prices of the last few years were far beyond normal, in terms of most of the world's other economies. Unfortunately a large number of people bought in these unusual circumstances; unusual they were,regardless of how good things were, or how long it lasted.Things are returning to normality.The irony is it's happening quite gently, we are lucky in a way...the market could have crashed completely.I'm not saying it's good or bad, I'm just saying it was going to happen sooner or later.You can't build and maintain your entire economy on the construction industry/property market.Really what should have happened when this began to take off is that the Gov should have intervened, and not allowed building to take place everywhere, with very little regulation.The idea of 100% mortgages, and 30-40 year terms should also have been dealt with quickly and sharply.And this term "property ladder", invented by the media, for the good of the estate agents and developers....why weren't they obliged to build a certain number of 3-4 bed houses that people could buy with a view to staying in long-term, as opposed to "getting a foot on the ladder"?Finally everywhere within the M50 should have been designated as development land and bought by the Gov (NOT for crazy money).But every developer in the country is hand in glove with FF, and the deals being struck were all behind closed doors.In the end, the ordinary people lose out.For a good 30-40 years of their lives.
When you have a situation where people like teachers,gardai..people on decent salaries, mostly with good educations..can't afford houses and have to sign up for affordable housing, you've got a serious problem.Of course they're entitled to it, given the situation we've created,but that shouldn't be the case.

ironingbored

Calina wrote: »

A double income household I think if I've understood correctly.

I think that affordable housing initiatives need to be reassess and perhaps wound up.

I have just been told that I am no longer eligible for the AH Scheme due to the fact that I just went over the 40K limit. My application is a joint one with my wife, who is a housewife.

Paradoxically, a couple earning 30K and 20K respectively will be eligible (30 x 2.5 = 75K + 20K = 95K) for the scheme whereas my 40K (dependent wife and two kids) is not. Surely this cannot be fair. A single guy earning €39,999 is in whereas a married person with kids on €40,001 is out.

Mailman

ironingbored wrote: »

I have just been told that I am no longer eligible for the AH Scheme due to the fact that I just went over the 40K limit. My application is a joint one with my wife, who is a housewife.

Paradoxically, a couple earning 30K and 20K respectively will be eligible (30 x 2.5 = 75K + 20K = 95K) for the scheme whereas my 40K (dependent wife and two kids) is not. Surely this cannot be fair. A single guy earning €39,999 is in whereas a married person with kids on €40,001 is out.

Is that shown on your P60? P60 from the last year is what they usually work off.

robd

ironingbored wrote: »

I have just been told that I am no longer eligible for the AH Scheme due to the fact that I just went over the 40K limit. My application is a joint one with my wife, who is a housewife.

Paradoxically, a couple earning 30K and 20K respectively will be eligible (30 x 2.5 = 75K + 20K = 95K) for the scheme whereas my 40K (dependent wife and two kids) is not. Surely this cannot be fair. A single guy earning €39,999 is in whereas a married person with kids on €40,001 is out.

No, it's not fare. Fianna Fail's great individualization of taxation showing up here I'm afraid. Only way around it is to get your salary down I'm afraid. AF is a complete crock.

ironingbored

Mailman wrote: »

Is that shown on your P60? P60 from the last year is what they usually work off.

Yes. Recently sent in my P21 and P60 for 2007 to reapply cos i've been on the list for nearly 12 months.

Now I'm told you can go on the AH Initiative. Yippee, a microscopic two-bed apartment is what me and my family need!

KhanTheMan

Firetrap wrote: »

The government should not attempt to interfere with the property market in order to keep prices high and bail out their developer mates. Things will find their own level by themselves and people won't necessarily have to resort to AH in order to buy somewhere. I see that the income limit for AH for a single person is €40K. In an ideal world, €40k would be enough to buy a house without breaking into a sweat.

yippee, most people could by a house every year or so

miju

buy one house on 40k not a whole estate :rolleyes:

Toosey

I was always a pessimist when it came to the housing market...I always remember reading an article in a newspaper that coined it perfectly around jan 07

"the dogs in the streets and the dogs in the houses can see what is coming"...referring of course to the bubble burst that we are in the middle of...

I really feel sorry for people who bought at the end .... ouch ..

20goto10

Toosey wrote: »

I was always a pessimist when it came to the housing market...I always remember reading an article in a newspaper that coined it perfectly around jan 07

"the dogs in the streets and the dogs in the houses can see what is coming"...referring of course to the bubble burst that we are in the middle of...

I really feel sorry for people who bought at the end .... ouch ..

Woof woof.
Inflated wages + deflated house prices = another bubble. 'member I told you. I'll let you quote me in 2017 when the next crash comes.

SimpleSam06

20goto10 wrote: »

Inflated wages + deflated house prices = another bubble. 'member I told you.

Wages have little effect on house prices. The availability of credit has a huge effect on house prices, so 'member I told you that when you're on 2000 prices and still losing equity in 2017.

whizzbang

20goto10 wrote: »

Woof woof.
Inflated wages + deflated house prices = another bubble. 'member I told you. I'll let you quote me in 2017 when the next crash comes.

I'd be interesting in hearing where these inflated wages will be coming from?!

20goto10

SimpleSam06 wrote: »

Wages have little effect on house prices. The availability of credit has a huge effect on house prices, so 'member I told you that when you're on 2000 prices and still losing equity in 2017.

Yes I know. And the amount of credit is based on wages. When the credit markets return to normal, and they will, we'll have high wages (coupled with available credit) and low property prices.

20goto10

whizzbang wrote: »

I'd be interesting in hearing where these inflated wages will be coming from?!

Will be coming from? They're here already.

Basically what I'm saying is the housing market will correct itself against an abnormal credit crunch. Once the credit crunch subsides we're left with under priced houses. And in an economy that only knows booms and busts the outcome is inevitable.