Housing Bubble Bursting

blah

I like looking at that graph. It says "When you decided that the 1 bedroom apartment in the middle of nowhere wasn't worth the asking price, while others said 'Renting is dead money', 'You have to get on the ladder', 'You can't lose', you made the right decision.

I think that this will continue for a few more years yet, and people are definitely in denial.

jmcwobbles

blah wrote: »

I like looking at that graph. It says "When you decided that the 1 bedroom apartment in the middle of nowhere wasn't worth the asking price, while others said 'Renting is dead money', 'You have to get on the ladder', 'You can't lose', you made the right decision.

I think that this will continue for a few more years yet, and people are definitely in denial.

Yeah, myself and my boyfriend are holding off on buying for the mo, partly to get rid of existing debt first and partly cos prices haven't stopped falling by a long shot yet - and I still hear the "rent is dead money" spiel from everyone, it's ridiculous! I just tell them dead money would be the money we'd lose in the value of the house if we bought now :rolleyes:

bobbiw

Suddenly everyone in Ireland is a genius.

Renting makes more sense than buying, you get better yeilds in the market that with property. Unless you buy before a bubble.

And I say that as someone who made money from property.

It is not the right for unskilled labour to own property or land, if anything a country is succeeding if these people cant.

Prices will fall, but I tell you unskilled people will not be buying, they wont have jobs,

It is extreemly possible that Ireland could end up going the way of Iceland and be bankrupt, bailed out by the UK and owned by them.

Ironic heh

I wouldnt buy in Ireland for the next few years,

bobbbb

Why do people think that everyone should be able to afford property?

Its always been hard to own property. The more well off you are the easier it is. Some people will just never earn enough money to be able to buy property. Thats just the way it is.

ntlbell

bobbbb wrote: »

Why do people think that everyone should be able to afford property?

Its always been hard to own property. The more well off you are the easier it is. Some people will just never earn enough money to be able to buy property. Thats just the way it is.

There will probably never be a time when _everyone_ can

but surely someone who is on the avg ind wage in a country should be able to buy _something_ ?

quozl

bobbiw wrote: »

It is extreemly possible that Ireland could end up going the way of Iceland and be bankrupt, bailed out by the UK and owned by them.

Hah, there's more chance of the UK being bailed out themselves than them bailing us out.

It'd be germany for us most likely

Not that I actually think that'll happen to Ireland, but people need to remember it's a possibility if we don't get things in hand.

We're now going to be running a 10% GDP deficit this year. Impressive

Amberman

bobbiw wrote: »

Suddenly everyone in Ireland is a genius.

Renting makes more sense than buying, you get better yeilds in the market that with property. Unless you buy before a bubble.

And I say that as someone who made money from property.

It is not the right for unskilled labour to own property or land, if anything a country is succeeding if these people cant.

Prices will fall, but I tell you unskilled people will not be buying, they wont have jobs,

It is extreemly possible that Ireland could end up going the way of Iceland and be bankrupt, bailed out by the UK and owned by them.

Ironic heh

I wouldnt buy in Ireland for the next few years,

I think Ireland going bankrupt is a foregone certainty at this stage. Id bet everything I have on it.

As for teh rest of your rant...I dont know where to start! How does a country "suceed" when many of its citizens cant have security?

Amberman

bobbbb wrote: »

Why do people think that everyone should be able to afford property?

Its always been hard to own property. The more well off you are the easier it is. Some people will just never earn enough money to be able to buy property. Thats just the way it is.

Big houses for high earners...little houses for smaller earners. See how that works?

FWIW...I see a lot of unskilled labour keeping their houses, while specualtive solicitors and accountants loose theirs. Whose the clown now?

K-9

Amberman wrote: »

I think Ireland going bankrupt is a foregone certainty at this stage. Id bet everything I have on it.

YEP, land never goes down in price either. Go ahead, bet your house on Ireland going bankrupt.


Nothing is certain at the minute, including Ireland going bankrupt. We have a chance with the Euro, though 5 years at most.

Amberman wrote:

Big houses for high earners...little houses for smaller earners. See how that works?

FWIW...I see a lot of unskilled labour keeping their houses, while specualtive solicitors and accountants loose theirs. Whose the clown now?

Wait till the year stays are over. We'll see the evictions in about 9 months or so.

If you can't pay, nobody cares.

Remember the AIB. BOI etc. don't own the mortgage, they don't dictate the terms.

bobbbb

Amberman wrote: »

I think Ireland going bankrupt is a foregone certainty at this stage. Id bet everything I have on it.

LOL
Are you a teenage keyboard warrior by any chance?
Just a guess.

Amberman

bobbbb wrote: »

LOL
Are you a teenage keyboard warrior by any chance?
Just a guess.

Actually, no...I am an investment broker who sold property in 2005/6 and bought gold.

Amberman

K-9 wrote: »

YEP, land never goes down in price either. Go ahead, bet your house on Ireland going bankrupt.

Lands good for growing food on. I love agri land. I invest in it.

Hmmm...

what price is farmland in Canade compared to Ireland....

I'll wait till you get back to me.

ronbyrne2005

Amazing that few if any big deveopers have gone bust despite this country having one of worst house price/economic collapses in world. No firesales like you see in other countries when much milder recessions occur. Anyone would think that big developers are being protected by political friends in government or something!

meditraitor

The indo is doing its best to fool any prospective buyers


Todays Indo
http://www.independent.ie/national-news/836416m-house-is-first-auction-sale-of-year-1688458.html

Auctions are the best way of gauging the market and when a property like this sells at €1.6m, it indicates we are at or close to the bottom of the market.

Im sure they are just angling for the auctioneer/developers advertising budgets

blah

meditraitor wrote: »

The indo is doing its best to fool any prospective buyers


Todays Indo
http://www.independent.ie/national-news/836416m-house-is-first-auction-sale-of-year-1688458.html



Im sure they are just angling for the auctioneer/developers advertising budgets

I read that this morning, it's a complete con. She (Yvonne Hogan, Property Editor) just lists the sale price of properties in Eglinton Road over the last few years and arbitrarily declares this to be the bottom of the market, with no logic or reason. :rolleyes:

johnnyskeleton

meditraitor wrote: »

The indo is doing its best to fool any prospective buyers


Todays Indo
http://www.independent.ie/national-news/836416m-house-is-first-auction-sale-of-year-1688458.html



Im sure they are just angling for the auctioneer/developers advertising budgets

Well, houses on that street were asking €2.5-6m in 2006 according to the article, so if we take a €6m peak and €1.6 trough, that's a 73% drop. The indo are big fans of Morgan Kelly's predictions, that's why they are saying the bottom isn't far off - 7% to be precise.

blast05

I think Ireland going bankrupt is a foregone certainty at this stage. Id bet everything I have on it.

Strong words ..... when does your crystal ball say this will happen ?

Amberman

blast05 wrote: »

Strong words ..... when does your crystal ball say this will happen ?

When is much more harder to predict than if.

There are a lot of things that can be done to put off the inevitable...they could succeed for long time in putting it off...but it will happen IMO.

bangersandmash

johnnyskeleton wrote: »

Well, houses on that street were asking €2.5-6m in 2006 according to the article, so if we take a €6m peak and €1.6 trough, that's a 73% drop. The indo are big fans of Morgan Kelly's predictions, that's why they are saying the bottom isn't far off - 7% to be precise.

The prices aren't necessarily comparable. There is a huge variation between the size and condition of the properties on Eglinton Road. This house is one of the more modest ones as the Herald says:

This house and its neighbour, No 47, were built in 1928 and were probably considered modest homes at the time in comparison to the huge neighbouring red-bricks. The identical house next door was on the market in early 2002 and sold after auction for close to the guide price of €950,000.

There's no doubt that at €1.3m AMV Number 48 was ahead of the curve in terms of pricing. But it's still one house which sold in excess of what it would have made before the peak. And there are still many smaller properties in areas like Rathfarnham and Malahide asking those kinds of prices. If the rest of Dublin was priced in a line with this property then the article might have some basis.

Amberman

johnnyskeleton wrote: »

Well, houses on that street were asking €2.5-6m in 2006 according to the article, so if we take a €6m peak and €1.6 trough, that's a 73% drop. The indo are big fans of Morgan Kelly's predictions, that's why they are saying the bottom isn't far off - 7% to be precise.

Interesting article. Obviously biased though. The better figure to focus on is the 18% from the peak of average prices. Not half way through correction yet IMO.

Focusing on % off prices since peak is a silly past time. You should be focusing on average prices as a multiple of average earnings...or on rental yields....and comparing them to historical norms.

Much more accurate, established and scientific.

johnnyskeleton

Amberman wrote: »

Interesting article. Obviously biased though. The better figure to focus on is the 18% from the peak of average prices. Not half way through correction yet IMO.

Focusing on % off prices since peak is a silly past time. You should be focusing on average prices as a multiple of average earnings...or on rental yields....and comparing them to historical norms.

Much more accurate, established and scientific.

I was going to put a smily face in, but I thought "The indo are big fans of Morgan Kelly's predictions" would have been a dead giveaway.

ambro25

Jeez, it's been some months since I visited this thread :eek:

Last time I did, we were still in Dublin (July'08), renting in Rathfarnham, and still the property bulls in this thread weren't having it. It would still have taken me an 8 x salary multiple to buy the 3-bed semi we were renting. Over €700k for a 3-bed semi with a postage stamp of a garden!

Fast forward 8 months... we've been back in the UK since then, in sunny Yorkshire, and I've just put an offer on 'twice the house and land' at -20% of the asking, which will take me a 2 x salary multiple to buy after deposit of 40%. Salary is more or less the same, accounting for current £/€.

The Chinese had it right some millenia ago: "May you live in interesting times!"

karen3212

ambro25 wrote: »

2 x salary multiple to buy after deposit of 40%. Salary is more or less the same, accounting for current £/€.

[/I]"

So, if you don't mind me asking, how many times salary is it for the house?

Well done by the way, if I had gold stars I'd be sending them on.:D

MG

I would imagine the budget will knock another few percent off house prices. The end just got that bit further away and that bit lower.

MG

MG wrote: »

I would imagine the budget will knock another few percent off house prices. The end just got that bit further away and that bit lower.

Hopefully it'll speed up the endgame! Get prices back to a realistic level and keep them there! but that needs a government with balls that will keep the moneylenders (banks) under tight control, can't see that heppening somehow.

MG

If the budget takes 200 Euro from a household (and that seems to be a reasonably typical first time buyer from what i read in the Sunday Papers), then i reckon that could knock an additional 40k off house prices. (40k being the loan that €200 per month would finance at 3.5% over 25 years).

Correct me if I'm wrong but I think this paints a reasonable picture of the knock on effect of the budget on house prices (without taking into account next December's budget!)

gurramok

Correct MG, many people do not realise how much money has been taken out of take home pay.
Fast forward a year or so when the Euro zone recovers(not Ireland) and rates start going up again, that will be a double whammy for tracker/var mortgage holders where the budget tax increases are permanent. This will be the toughest period of the Irish housing market imho.

To date from the 2 budgets, i reckon about 6% has been taken out of peoples pockets so far as an average, thats a lot.

And to the bulls out there, everyone is in the same boat regarding tightening belts so prices will come down across the board to reflect this.

Firetrap

Yes. Heaven knows how much more will be taken out of our pockets in the next couple of budgets. Aside from taxes/levies, a lot of people have taken pay cuts as well.

Freddie59

http://www.independent.ie/national-news/states-bad-bank-is-doomed-to-fail-says-builders-chief-1713453.html

"Nama will only work if we get the best price for each site. But we will have a fire sale. We will have a flooding of the market. Then you will have a situation of foreign vulture capitalists coming in and making profits off the back of Irish sites and taking the money overseas".

Shoe......other......foot.

SkepticOne

Freddie59 wrote: »

http://www.independent.ie/national-news/states-bad-bank-is-doomed-to-fail-says-builders-chief-1713453.html

"Nama will only work if we get the best price for each site. But we will have a fire sale. We will have a flooding of the market. Then you will have a situation of foreign vulture capitalists coming in and making profits off the back of Irish sites and taking the money overseas".

Personally, I don't buy the idea that NAMA is about getting tough with developers as the Sunday Independent makes out. If that were the case, why would the State take on the debts in the first place. Why not simply force the banks to dispose of the assets on the open market for whatever they can get then have the government recapitalize the banks appropriately.

This approach would be a lot more transparent. We would know exactly how much we are handing over to the banks and the country would not be forced to take a punt on the future value of building sites. Unfortunately there is still a view out there that, with land, it is simply a matter of holding on long enough for your investment pay off.

Now we will have a situation with Tom Parlon (quite reasonably in many people's eyes) arguing that it is now in the State's interest to prop up the builders with subsidies and government schemes since, if they builders fail, it will be the tax payer picking up the pieces and holding worthless development land in the middle of nowhere.