Housing Bubble Bursting

Gurgle

gurramok wrote: »

Care to explain why Nationwide said they went down by 1.3%?

Would that support your point of view?

I haven't read whatever article you're referring to, but at a guess they said it becauase their data show that house prices have gone down by 1.3%.

My point of view (btw) is that I've made my guesses over several years about the future of the housing market, and I'm still waiting to see if I was in the right ballpark.

I'm not going to start pointing to the pattern on every snowflake and claiming its evidence for my arguement.

johnnyskeleton

Gurgle wrote: »

My point of view (btw) is that I've made my guesses over several years about the future of the housing market, and I'm still waiting to see if I was in the right ballpark.

No you're not, you come on here and say "Ha, does anyone really think there is a property crash?" and then when people reply providing evidence to contradict you, you don't respond.

Gurgle

johnnyskeleton wrote: »

you come on here and say "Ha, does anyone really think there is a property crash?"

My prediction, since the beginning of the great property crash debate (around 2001 btw) has been growth, growth, growth, slowdown, overshoot, correction, stability.

My opponents in this debate have been screaming crash crash crash for just as long, while constantly adjusting their definition of a crash.

It used to be a 60% drop in housing prices, banks foreclosing left right and centre.
And has that crash happened?
Don't think so.

But somehow none of those who predicted it were wrong.

As the market overshot(2 years ago) and began the correction, the definition of 'crash' has become softer and softer. Now, it turns out that 'crash' meant a drop of 15% from peak prices and a slump in sales volumes. Even with a massive global recession, the Great Irish Property Crash has failed to materialize.

johnnyskeleton wrote:

and then when people reply providing evidence to contradict you, you don't respond.

Are you joking?
I've responded to every single post directed at me since the beginning of this thread.

JupiterKid

Denial must be a really great little state of mind, Gurgle. Go troll somewhere else.

321654

JupiterKid wrote: »

Denial must be a really great little state of mind, Gurgle. Go troll somewhere else.

I dont think hes trolling.

In general what he is describing is the way economic cycles go.

I do see people pulling figures out of any report they can get their hands on arguing for the apocalypse and just dismissing out of hand any other info that happens to appear. Boards is rife with that.

as i posted in another thread

There are Ups and downs.
At the top of the ups everyone thinks the good times will never end.
At the bottom everyone thinks the good times will never end.

As good as it gets it will eventually turn down.
As bad as it gets it will eventually turn up.

In 2006 people said prices would never fall or wouldnt fall in the meduim term and some who said they would go on rising forever..
Now you have people saying prices will never rise in the medium term and some who say prices will fall forever.

Its the same for ups and downs of house prices, industry, pubs, wages, retail, etc. The entire economy.

It will recover in time. I know it doesnt seem like it, but it will.

Unless of course Ireland is different. Is it?

321654

Deleted User wrote: »

Even more so when you consider the fact that you could build a very nice 4 bed detatched bungalow (excluding land) for less!

Sure if we could get land for nothing we'd all be sorted.

johnnyskeleton

Gurgle wrote: »

My prediction, since the beginning of the great property crash debate (around 2001 btw) has been growth, growth, growth, slowdown, overshoot, correction, stability.

My opponents in this debate have been screaming crash crash crash for just as long, while constantly adjusting their definition of a crash.

Gurgle wrote:

The boom can (and probably will) end without a busting bubble and a crash in house prices. Of course the odd fool will put his money where your mouth is and throw away a few thousand by selling his house below value.

http://boards.ie/vbulletin/showpost.php?p=52121125&postcount=26.

Well it seems to me that you are the one who changes the definition of things. It's almost as though a 15% drop in prices is not a crash, but clearly it is. Are you really saying that drops of this magnitude (and 15% is what the most conservative estimates say we are currently at) is not a crash? In any event, it's certainly not a "slowdown" (reduction in the rate of growth) or "stability" (prices leveling out or rising in line with inflation) but it could be considered a "correction" (readjusting to real value). However there are levels of correction and we are currently seeing a massive correction which shows how wrong house prices have been for the last few years.

Gurgle wrote: »

It used to be a 60% drop in housing prices, banks foreclosing left right and centre.
And has that crash happened?
Don't think so.

For my part, I was predicting 30% nominal, and by most accounts we have already reached that stage.

Just to give some random examples (I'd give better examples, but you would just ignore them anyway, so why waste my time?):
http://www.irishtimes.com/newspaper/property/2009/0108/1230936758154.html
http://www.thepropertypin.com/viewtopic.php?f=23&t=4875
http://www.irishtimes.com/newspaper/ireland/2009/0203/1232923384109.html

But in any event these could only be the start of the crash.

Gurgle wrote:

But somehow none of those who predicted it were wrong.

As the market overshot(2 years ago) and began the correction, the definition of 'crash' has become softer and softer. Now, it turns out that 'crash' meant a drop of 15% from peak prices and a slump in sales volumes. Even with a massive global recession, the Great Irish Property Crash has failed to materialize.

The last time you mentioned this, most people responded to the effect that 15% was the most conservative estimate and in any event a 15% drop in nominal terms is a crash. At least, anyone who has lost 15% on a several hundred thousand euro leveraged bet would say its a crash.

Gurgle wrote:

Are you joking?
I've responded to every single post directed at me since the beginning of this thread.

Ok, let's look at your most recent contributions:

4/01/09 - http://boards.ie/vbulletin/showpost.php?p=58460060&postcount=5479

Gurgle wrote:

Given that this thread has been going for just over 2 years, during which time the average house price has fallen by less than 15%, is everyone at last ready to concede that it was in fact a soft landing ?

And of course, any further reductions are due to the global recession, not that houses were really that much over-priced for the times and circumstances (i.e. the boom) ?

to which 7 posters replied and you never responded.

20/01/09 - http://boards.ie/vbulletin/showpost.php?p=58679218&postcount=5551

Gurgle wrote:

I've been laughing at most of the comments all the way through the last 2 years and 370 pages.

And still - the total drop in the national average house price since the peak 2 years ago is less than 15%.

And still - the crash predictors are trying to find a way to prove they were right.

Still laughing

To which 8 posters replied and you never responded.

They were your only posts prior to yesterday. You didn't engage with anyone's views other than your own.

I live in a rural part of south Roscommon near the N6 Athlone - Ballinasloe road.
Walking along 4km of local road the other day I counted five houses under construction (one started two weeks ago) and three "live" planning applications, the same roads current have about 50-60 houses already build. All one off owner self builds.

Goes completely against any trends.

Do I live in a unique part of the country, or are there other "hotspots" around?

It also goes to prove that developers have been building the wrong type of houses iin recent years.

321654

321654 wrote: »

Sure if we could get land for nothing we'd all be sorted.

It also proves that one of the root causes of inflated house prices is inflated land prices, a tylical site in this area used to fetch €150k a couple of years ago, now the asking prices are below €100k.

Firetrap

Deleted User wrote: »

I live in a rural part of south Roscommon near the N6 Athlone - Ballinasloe road.
Walking along 4km of local road the other day I counted five houses under construction (one started two weeks ago) and three "live" planning applications, the same roads current have about 50-60 houses already build. All one off owner self builds.

Goes completely against any trends.

Do I live in a unique part of the country, or are there other "hotspots" around?

It also goes to prove that developers have been building the wrong type of houses iin recent years.

Interesting. I think there will always be demand for one-off houses out the country. People either buying a site or getting a bit of land off a family member. At least then you can control what sort of house you're getting and get better value for money. Especially now with builders with time on their hands.

The build quality of many of the houses thrown up over the last few years is horrendous. This came back to me the other week. I was visiting a friend of mine who's renting a semi-d that would have cost about €400k at the peak of the bubble. You can hear almost everything that's going on next door, down to press doors opening and their radio. In contrast, I rent a semi-d of a similar size that was built in the 70s. I rarely hear anything from next door.

It's also startling how small houses have become. I know we can't all live in mansions but I've stood in a lot of houses where you can almost touch the back wall with your arm when you walk in the door. And as for apartments...:rolleyes:

321654

Deleted User wrote: »

It also proves that one of the root causes of inflated house prices is inflated land prices, a tylical site in this area used to fetch €150k a couple of years ago, now the asking prices are below €100k.

So thats only 100k you took out of the price of a house then

oceanclub

Gurgle wrote: »

It used to be a 60% drop in housing prices, banks foreclosing left right and centre.
And has that crash happened?
Don't think so.

A 30% crash has already happened. This is a fact. Even the vested interests say this:

http://www.sherryfitz.ie/aboutus/NewsItem.aspx?ID=506

House prices down 30% from peak

Sherry FitzGerald, Ireland's largest estate agents announced today (Monday) that the average price of a second-hand property in Ireland fell by 7.1% during the final quarter of 2008. This brings the level of price deflation for the calendar year to 18.1%, which is the highest level of price deflation ever recorded in the Irish market.

[...] Assuming the market peak occurred in June 2006, this suggests a market correction in Dublin of approximately 30% in nominal terms over the 30 month period.

This statement is from January, before the spiral of unemployment we are about to see had even started. Are you suggesting that house prices will level off now?

Sorry, but you're completely in denial. Hopefully you move onto the second phase, anger, as quickly as possible.

P.

321654

321654 wrote: »

So thats only 100k you took out of the price of a house then

I did specify the local area, commuter areas near dublin were fetching at least double that - for smaller sites.

PullMyFinger!

pearcider wrote: »

Yep, lovely apartments...horrendous location. 190k for a 1-bed in one of the worst areas of the city is still a lousy deal.

Where?

Gurgle

johnnyskeleton wrote: »

http://boards.ie/vbulletin/showpost.php?p=52121125&postcount=26.
Well it seems to me that you are the one who changes the definition of things.

Have I?
More detail please.

johnnyskeleton wrote:

It's almost as though a 15% drop in prices is not a crash, but clearly it is.

Dot com bubble burst - NASDAQ lost 70% in two years.
Wall street crash 1929 - 12.8% in one day (black tuesday), 40% in 6 weeks.
Financial crisis 2008 - Drop of 40% from the peak in October 2007 to October 2008.

These are crashes.

johnnyskeleton wrote:

Are you really saying that drops of this magnitude (and 15% is what the most conservative estimates say we are currently at) is not a crash?

Yes.

johnnyskeleton wrote:

In any event, it's certainly not a "slowdown" (reduction in the rate of growth) or "stability" (prices leveling out or rising in line with inflation) but it could be considered a "correction" (readjusting to real value).

Yes.

johnnyskeleton wrote:

However there are levels of correction and we are currently seeing a massive correction which shows how wrong house prices have been for the last few years.

No, its not a massive correction. Just a correction.

johnnyskeleton wrote:

For my part, I was predicting 30% nominal, and by most accounts we have already reached that stage.

'Most accounts' can kiss my hairy white arse.

johnnyskeleton wrote:

Just to give some random examples (I'd give better examples, but you would just ignore them anyway, so why waste my time?):
http://www.irishtimes.com/newspaper/property/2009/0108/1230936758154.html
http://www.thepropertypin.com/viewtopic.php?f=23&t=4875
http://www.irishtimes.com/newspaper/ireland/2009/0203/1232923384109.html

Those aren't financial reports. I'll wait for data.

johnnyskeleton wrote:

But in any event these could only be the start of the crash.

I thought we agreed that the peak was in 2006?

johnnyskeleton wrote:

The last time you mentioned this, most people responded to the effect that 15% was the most conservative estimate and in any event a 15% drop in nominal terms is a crash. At least, anyone who has lost 15% on a several hundred thousand euro leveraged bet would say its a crash.

This "most people" character can queue up behind "most accounts".

johnnyskeleton wrote:

Ok, let's look at your most recent contributions:
4/01/09 - http://boards.ie/vbulletin/showpost.php?p=58460060&postcount=5479
to which 7 posters replied and you never responded.

There was nothing to respond too - just the usual shouting about price drops.

johnnyskeleton wrote:

20/01/09 - http://boards.ie/vbulletin/showpost.php?p=58679218&postcount=5551
To which 8 posters replied and you never responded.

Sure, 8 replies but none of them had anything to say.

johnnyskeleton wrote:

They were your only posts prior to yesterday. You didn't engage with anyone's views other than your own.

Been busy, and learned years ago not to bother with people's "views". Link to data or be ignored, I'm making a special exception for you since you went to so much trouble.

Now, on to your "analysis" of the housing market:

johnnyskeleton wrote:

Common sense dictates that the higher your income the better the property you should be able to afford. So someone on average wages should be able to afford the average property, someone on above average wages should be able to afford an above average property.

http://www.boards.ie/vbulletin/showthread.php?t=2055481947&highlight=average+wage&page=2
Your logic is seriously flawed.

You assume that a single person on an average wage should be able to buy an average-priced property, and that it should be priced at 3-5 times their salary.
So by extension you are saying that a single person at the low end of the pay scale should be able to buy a property at the cheap end of the scale.

This is not the case, this has never been the case. At best, a single person on average wage would be able to buy a property at the cheapest end of the scale.

A person at the low end has never been in a position to buy property at all.

The working climate in Ireland has changed since the 1980s, so historical 'norms' do not apply.

Now the average family who buys the average house has two average incomes. The average 2-income family earns approx 70k (on 2 average wages), 3 to 5 times this would predict an average house price of €210k to €350k.

Split that down the middle and you get an average house price of €280k.

National average prices peaked at ~€320k in 2006.

See where I'm getting 15%?

oceanclub

Gurgle wrote: »

Dot com bubble burst - NASDAQ lost 70% in two years.
Wall street crash 1929 - 12.8% in one day (black tuesday), 40% in 6 weeks.
Financial crisis 2008 - Drop of 40% from the peak in October 2007 to October 2008.

These are crashes.

Those are stock market crashes. We're talking about property crashes. So, well done, you've compared apples to oranges.

The working climate in Ireland has changed since the 1980s, so historical 'norms' do not apply.

It's a new paradigm.

Ireland is different.

P.

Gurgle

oceanclub wrote: »

A 30% crash has already happened. This is a fact. Even the vested interests say this:
http://www.sherryfitz.ie/aboutus/NewsItem.aspx?ID=506
P.

Can anyone who has left primary school possibly be naieve enough to believe anything that comes from the pen of the 'communications director' of an estate agency?

Estate agents ultimately do not care how much houses sell for, their money is made from the process of buying and selling.

This so-called report could be summed up in 2 lines:

"Cut your prices people, our books are hurting. Take the hit so we don't have to."

Gurgle

oceanclub wrote: »

Those are stock market crashes. We're talking about property crashes.

I am so glad you brought that up.

Lets look at the big one, Tokyo.
In some areas (Ginza district): $1,000,000 per square metre at the peak.
They lost 90% of value over 15 years - and when the burst was finished (2004) were still among the most expensive properties in the world.

Is that a closer match to the Irish property bubble?

Or do you want figures from Welsh mining towns post-Thatcher?
Would that be a better match?

Go on, tell me what history you think will show us all the light.

gurramok

So lets see. The UK housing crash which took over a number of years in the last 80's/early 90's was not a crash in your view, just a correction.
Funny that every offical agency in the UK called it a crash but you.

The Japanese one took best part of a decade, so no crash there it seems!

And to add, we bring up international norms of the definition of a housing crash as you cannot seem to grasp the difference between a stock market crash and a housing crash, pretty poor view of your take on things there.

Victor

Um, its burst, I'm going to close this thread.

Caoimhín

Victor wrote: »

Um, its burst, I'm going to close this thread.

Ahh dont, its fun to see the "property investors" grasping at straws.

jmayo

Victor wrote: »

Um, its burst, I'm going to close this thread.

Yeah but have we reached the bottom ?
I would opinion No.
We could take a vote but I bet most people would agree.
Thus technically the housing bubble is still bursting, so thread title is apt and thus should remain open.
QED.

And as last poster stated some of us may have no other form of entertain bar watching property investors/speculators grasping at straws

southofdub

The Bust is getting Bustier.
jaysus I love BIG BUSTS:)

johnnyskeleton

Gurgle wrote: »

Have I?
More detail please.

http://www.boards.ie/vbulletin/showpost.php?p=54976372&postcount=4179

Gurgle wrote:

I think the overshoot is done.
We are now into the 'settling' stage.
That does not mean they are going to settle right now at current values.
I expect prices to oscillate as they settle.
This could take some time.

http://www.boards.ie/vbulletin/showpost.php?p=54391994&postcount=3735

Gurgle (In re: how much prices will fall) wrote:

I expect ~10% based on guesswork.

http://www.boards.ie/vbulletin/showpost.php?p=54277857&postcount=3584

Gurgle wrote:

The true 'prime' areas will probably keep most of their their value; places like Dalkey, Killiney, Foxrock etc, where prices were over the €1m mark long before the boom.

http://www.boards.ie/vbulletin/showpost.php?p=53371825&postcount=1950

Gurgle wrote:

Explanation for what?
The fact that the bubble hasn't burst?

I'll explain my reasoning again then:
1. People need somewhere to live.
2. People aren't going to sell a property for less than they paid for it, if theres any possible way they can avoid it.

A bubble bursts when people offload holdings because they realise they are worthless and not going to gain any value. Ever.

Example - dotcom bubble

Houses failing to sell are houses which are priced as though there has been no slowdown. Estate agents check the sale price for a similar house last year and add 10%-15%. House doesn't sell, so they slowly bring the price down until either it sells or the vendor says they'll take it off the market.

As for the soft landing - My understanding of this term is that there will be no catestrophic decrease in prices. The prices peak, drop a bit and level off.

You want mathematical theory?

Basic system dynamics show that any underdamped system overshoots its steady-state value, oscillates a bit and then levels off. The rate of rise in the last 10 years is a classic underdamped system.

I believe the peak of the overshoot was last year, and we're currently in the oscillations.

As for a bursting bubble - if it started to burst last year, then its gone now. A bubble doesn't take years to burst.

http://www.boards.ie/vbulletin/showpost.php?p=53363921&postcount=1914

Gurgle wrote:

A soft landing is correction of inflated prices by stagnating or slow falling until inflation catches up. If growth continues to exceed inflation, thats not a landing of any kind.

What we're seeing now is a soft landing. Predictably though, lots of people who expected a bubble burst are claiming that this is what they meant

http://www.boards.ie/vbulletin/showpost.php?p=53360158&postcount=1909

Gurgle wrote:

The way the market has gone here over the last year will be the textbook definition of a soft landing for years to come.

http://www.boards.ie/vbulletin/showpost.php?p=53113142&postcount=1452

Gurgle wrote:

A 5% to 15% inflation-corrected drop over 3 to 5 years is a soft landing.

I'd call 20%+ a major slump, 50% a bursting bubble.

Or my favourite:

http://www.boards.ie/vbulletin/showthread.php?p=52873462#post52873462

Gurgle wrote:

Banks don't give loans to people without the ability to pay them back.

http://www.boards.ie/vbulletin/showpost.php?p=52760449&postcount=559

Gurgle wrote:

Up until now, a soft landing was a situation where the actual sale prices didn't drop by more than a few percent from previous sale prices of similar houses. This would allow correction of an over-valued property market without negative equity situations becoming commonplace.

As regards the rest, it seems to boil down to this:
a) dispute as to what the definition of a crash is as opposed to a mere correction

b) the absence of reliable information on the property market

c) what stage of the cycle we are at.

Re: my views on what an average person can afford - your point is that:

Gurgle wrote:

Now the average family who buys the average house has two average incomes. The average 2-income family earns approx 70k (on 2 average wages), 3 to 5 times this would predict an average house price of €210k to €350k.

Split that down the middle and you get an average house price of €280k.

National average prices peaked at ~€320k in 2006.

See where I'm getting 15%?

We are now seeing massive unemployment. This most likely means that we will revert to the single income household (or possibly 2 half incomes). The other alternative is that the unemployed people will leave the country or live in social housing. In either event it augers for massive reductions in house prices.

And yes, as a general rule, I believe the type of house you can afford should be in line with the rest of your standard of living. I find the property market of the last few years where you might have a couple of top professionals able to afford the best cars, food and holidays, but living in a former corpo 3 bed or a small apartment. It just doesn't make sense to me.

johnnyskeleton

Victor wrote: »

Um, its burst, I'm going to close this thread.

Awh, don't do that - we'll be good from now on.

By the way, congrads on the 40,000th post

gurramok

Second that. (good research JK!)

Its in the process of bursting(deflating) so when it hits the floor(deflated, bottomed out) then maybe close the thread as there will be a new thread called 'Housing Bubble Ballooning' when Bertie becomes President

Blackjack

JohnnySkeleton - well researched there.

Victor - please don't close- there's more bursting to go in this market yet!.

The housing bubble is still in mid-burst!

Give this thread another couple of years, then we can follow it up with a thread called " Will there be another bubble" or "we're forever bolwing bubbles"

ZYX

johnnyskeleton wrote: »

http://www.boards.ie/vbulletin/showpost.php?p=54976372&postcount=4179



http://www.boards.ie/vbulletin/showpost.php?p=54391994&postcount=3735



http://www.boards.ie/vbulletin/showpost.php?p=54277857&postcount=3584



http://www.boards.ie/vbulletin/showpost.php?p=53371825&postcount=1950



http://www.boards.ie/vbulletin/showpost.php?p=53363921&postcount=1914



http://www.boards.ie/vbulletin/showpost.php?p=53360158&postcount=1909



http://www.boards.ie/vbulletin/showpost.php?p=53113142&postcount=1452



Or my favourite:

http://www.boards.ie/vbulletin/showthread.php?p=52873462#post52873462



http://www.boards.ie/vbulletin/showpost.php?p=52760449&postcount=559



As regards the rest, it seems to boil down to this:
a) dispute as to what the definition of a crash is as opposed to a mere correction

b) the absence of reliable information on the property market

c) what stage of the cycle we are at.

Re: my views on what an average person can afford - your point is that:



We are now seeing massive unemployment. This most likely means that we will revert to the single income household (or possibly 2 half incomes). The other alternative is that the unemployed people will leave the country or live in social housing. In either event it augers for massive reductions in house prices.

And yes, as a general rule, I believe the type of house you can afford should be in line with the rest of your standard of living. I find the property market of the last few years where you might have a couple of top professionals able to afford the best cars, food and holidays, but living in a former corpo 3 bed or a small apartment. It just doesn't make sense to me.

Hats off to you Gurgle. You are great at getting reactions on this thread but this is the best ever. Jonnyskeleton must have spent hours on this. Eventually they are all going mad. It's like Vanessa Feltz on Big Brother.

Gurgle

Victor wrote: »

Um, its burst, I'm going to close this thread.

Please just 2 more years?
its fun