Housing Bubble Bursting

asdasd

I cant believe there are still people around saying Ireland is different. Did you not learn that lesson after the housing bubble?

I can't believe that you cannot read. . YOu publish statistics on the UK and the US. not Ireland. Ireland is different - it will be worse here.

Anyway the UK statistics show that this is the worst recession, there, since 1919, disproving your point. Thats pretty dumb.

\Now that we are deep into this recession do you think life is worse than it was in the 80s recession?

Clearly, and evidentially, this recession will be worse than the 80's.

I am tired of this nonsense. What 80's recession are you taliking about. Publish the GDP per capita growth or decline for all the the year 1980-1989.

We already know the Economists predicition for IReland. 2.8% decline last year, 6.8% this year, and two more years of negative growth. And they say this optomistic.

Did that happen in the 80's

I have really never argued with someone so impervious to logic, statistics, or sense.

bobbbb

asdasd wrote: »

I can't believe that you cannot read. You keep harping on about the 1980's, where there was no recession in the US and the UK ( except at the start). The UK was in boom. YOu then publish statistics on the UK and the US.

The UK statistics show that this is the worse recession, there, since 1919, disporiving your point. Thats pretty dumb.



Clearly, and evidentially, this recession will be worse than the 80's.

I am tired of this nonsense. What 80's recession are you taliking about. Publish the GDP per capita growth or decline for all the the year 1980-1989.

We already know the Economists predicition for IReland. 2.8% decline last year, 6.8% this year, and two more years of negative growth. And they say this optomistic.

Did that happen in the 80's

I have really never argued with someone so impervious to logic, statistics, or sense.

You are so full of it its unbelievable.
Just because you found a link somewhere on the web does not mean you know the future. Do you?

Obviously you just dont get the message about the 80s.
Maybe some more mature people here will remember the 80's. And the early 90's for that matter.

Theres no point talking to you. You need a good recession to teach you about hard times for the next one.

asdasd

Are you going to post the statistics about the "recession" in the 1980's or not?

You keep harping on about it

bobbbb

asdasd wrote: »

Are you going to post the statistics about the "recession" in the 1980's or not?

You keep harping on about it

Im not trawling through the internet looking for threads on the 80s for you just to trawl through more and ignore what suits you. You know how to use google. Use it. Believe what you want from that, discard what you dont want to believe. Thats how the internet works.

Ask anyone who was working in the 80s who
you know too. There is a wealth of real world experiences there.

Heres a radical suggestion.
Read some books. There are loads on economics and life in the 80's in your local library. You can find out all the info you need from them.

You are young. You will learn.

bangersandmash

bobbbb wrote: »

More cars on the road Going to work, compared to the eighties as more workers can afford cars.
More people in Ireland.
Flights are much cheaper in real terms.

Exactly. People are much better off arent they.

I think you may be mistaking personal debt for wealth. If there's only one lesson to be learned from the last decade, it's that the two shouldn't be confused. An abundance of cars/holidays/houses bought on credit isn't a sign that we're really better off. The cost of that debt is only now becoming apparent for many people.

I don't think anyone is arguing that the recession won't end or that boom/bust cycles will not be consigned to history. On the other hand it's not unlikely that things will continue to get worse for Ireland before they get better. Which is the gist of the comments made by the IMF during the week.

bobbiw

Strange thing about this board is that is seems people want the recession to get a lot worse. Not realising that if it does it will inevitably hurt them as well. Because you are working now does not mean you will be if things get worse.

Its also bad on your fellow man but I know that the Irish as a whole have become a jealous bunch of begrudgers who fell that it is their God given right to own property.

The 80s was not a recession, Ireland never had a boom before, it was permanantly in recession so its not a great comparison.

Also the world is more truely global now and it is likely that Ireland will emerge out of the recession on the tail end of the US.

As for house prices they will continue to fall but they will stop falling.

It does make me laugh thought that we do have some dim wit minimum wage people on her who have the attitude

"prices will fall until its 2.5 x my wages then I will get a nice house and all the time keep my job, then as soon as I have bought it they will go back up"

And they say the Irish have a good system of education (also complete crap)

bangersandmash

bobbiw wrote: »

Strange thing about this board is that is seems people want the recession to get a lot worse. Not realising that if it does it will inevitably hurt them as well. Because you are working now does not mean you will be if things get worse.

It's interesting that you interpret posts this way. Aside from the occasional socipoath, I'm not sure anyone here actually wants the economic situation to deteriorate further. But what we wish for and what will actually happen are two very different things.

bobbiw wrote: »

As for house prices they will continue to fall but they will stop falling.

It does make me laugh thought that we do have some dim wit minimum wage people on her who have the attitude

"prices will fall until its 2.5 x my wages then I will get a nice house and all the time keep my job, then as soon as I have bought it they will go back up"

And they say the Irish have a good system of education (also complete crap)

Perhaps you are right on this point. Some people here seem to lack the ability to form coherent sentences.

asdasd

The 80s was not a recession, Ireland never had a boom before, it was permanantly in recession so its not a great comparison.

Also the world is more truely global now and it is likely that Ireland will emerge out of the recession on the tail end of the US.

As for house prices they will continue to fall but they will stop falling.

It does make me laugh thought that we do have some dim witminimum wage people on hee who have the attitude

I hilighted the inconsistencies, and misspellings in your post. Besides all that it does not parse very well. So I am not sure who you are calling a dimwit.

The dumbest posters on here are the "this is not a very big recession " or "The Eighties were worse" goobers. In general statements like that need to backed up with sources, but it seems we are to source them ourselves. The other side links to the Economist Intelligence Unit, the IMF etc. All we get from your side in anecdotes.

The people on here on minimum wage will be able to buy a house when this is over since prices will have to fall that much. People who depend on rent will be entirely bankrupted unless they have equity going back years - the cash flow will fall dramatically. This is particularly true because if we nationalise the banks ( or even if we dont), NAMA will own the assets of the developers. That will be converted into either full on social housing, or sold as cheap on the market. It won't be buy to let.

And in the interests of full disclosure I am in the top 10% of earners.

Freddie59

We bought two houses in the 1980s, and YES - times were bad. But this looks like it's going to be oh so much worse.

In the 1980s, Irish people did not have to compete with migrant workers for jobs. That will also skew things considerably.

I must express disgust at the 'dimwit minimum wage people' comment. It's beneath contempt.

Firetrap

+1 on the minimum wage comment.

As an aside, there's a poster (can't remember who) who has mentioned on here that their binman dad was able to afford to buy a house in the 80s and rear a family on his wage. Somewhere between then and now, something went seriously awry.

Firetrap

Firetrap wrote: »

+1 on the minimum wage comment.

As an aside, there's a poster (can't remember who) who has mentioned on here that their binman dad was able to afford to buy a house in the 80s and rear a family on his wage. Somewhere between then and now, something went seriously awry.

Agree!

I think what happened was that the moneylenders (banks) saw an opportunity to increase their ability to harvest money from the general population by taking into account a second income when lending for mortgages.

Soon it became necessary for there to be two incomes to buy a house as prices were engineered up to use up this extra available money (It didn't realy exist in the first place), speculators drove up prices to the new limits.

Now the bottom has fallen out of this market!

bobbbb

bobbbb wrote: »

So you can see the amount of people at work then. Good.

It's true that there are more in employment than ever before, but many are families that are forced to have both parents working to service their debts!

A two income household loses one income is screwed, a one income household is of course also screwed but there is a chance of the partner finding a lower paid job to keep the wolf at bay!

bangersandmash

bangersandmash wrote: »

I think you may be mistaking personal debt for wealth. If there's only one lesson to be learned from the last decade, it's that the two shouldn't be confused. An abundance of cars/holidays/houses bought on credit isn't a sign that we're really better off. The cost of that debt is only now becoming apparent for many people.

Here is one of the key reasons why this recession will be worse than the 80's, personal debt!

In the 80's people were generally poorer than now, but critically they also often had few debts as well.

Now many have huge debts that will cripple them if there is any drop in income.

Freddie59

Deleted User wrote: »

Here is one of the key reasons why this recession will be worse than the 80's, personal debt!

In the 80's people were generally poorer than now, but critically they also often had few debts as well.

Now many have huge debts that will cripple them if there is any drop in income.

Spot on. Great post. And a lot of this personal debt was fueled by the property bubble.

Iristxo

Firetrap wrote: »

+1 on the minimum wage comment.

As an aside, there's a poster (can't remember who) who has mentioned on here that their binman dad was able to afford to buy a house in the 80s and rear a family on his wage. Somewhere between then and now, something went seriously awry.

Yes but things were different back then in a different way too. There was no keeping up with the jones's. There was no holidays abroad, no branded goods, no suvs, no plasma tvs and not a lot of the stuff that we have grown to believe that we are entitled to just as much as we are entitled to own our own house. You guys talk about getting a house using some 40% or less of your salary to service the mortgage, 2.5 times your yearly salary etc. The binman that bought a house would have used over 40% of his disposable income to service the mortage, he would not have bought a house that cost him 2.5 times his yearly salary and certainly he would not have been able to afford a plasma tv and a Wii like many people here think we should be able to do. Don't get me wrong, I am not saying that this is not the way it should be, I am merely pointing out that this is not certainly the way it was then.

Iristxo

Iristxo wrote: »

Yes but things were different back then in a different way too. There was no keeping up with the jones's. There was no holidays abroad, no branded goods, no suvs, no plasma tvs and not a lot of the stuff that we have grown to believe that we are entitled to just as much as we are entitled to own our own house. You guys talk about getting a house using some 40% or less of your salary to service the mortgage, 2.5 times your yearly salary etc. The binman that bought a house would have used over 40% of his disposable (disposible income is what you have after the essentials have been paid for) income to service the mortage, he would not have bought a house that cost him 2.5 times his yearly salary and certainly he would not have been able to afford a plasma tv and a Wii like many people here think we should be able to do. Don't get me wrong, I am not saying that this is not the way it should be, I am merely pointing out that this is not certainly the way it was then.

Good point, in the "good old days", after food & shelter had been paid for, there was little left over for "luxuries" of any kind for the average working family.

Luxuries inclided things like cars, fridges, washing machines etc, clothes could be included in that list for lower income families.

johnnyskeleton

bobbbb wrote: »

Answer this.
Would you prefer to live now or back in the 80s?

Now, because we have better television and sports teams. However, in terms of the economic difficulties, I think now are the more difficult years of the 80s are broadly comparable - dire public finances which could lead to the IMF coming in, continually rising unemployment and an overall lack of opportunities or innovation. What was better about the 80s though was that we had a low cost base so were poised to encourage FDI into the country. We now have a very high cost base.

bobbbb wrote: »

Recessions end. Economies recover. House prices are not all there is to a recession.

All true and I agree with those things. But it's the rest of what you are saying that I don't agree with.

bobbbb wrote: »

Recession, house price crash or whatever, people are still very well off in Ireland right now. over €1000 a month plus rent allowance for those unfortunate enough to not be able to get a job. When we all go back to meeting all our mates (not just 1 or 2 of them) on a Tuesday in the dole office, then we can say its a bad recession.

The dole payments are unsustainable, as is a lot of the rest of the economy. We are, let's not forget, only at the start of the recession/depression.

bobbbb wrote: »

I'll say it again.
During recessions there is a tendency for people to think it will never end and this one is the worst one ever.
Its not your fault you feel this way. Its just how people feel during recessions. They feel the opposite in a boom.

I don't feel that way. I think it will end and I also don't think it's the worst recession in history. It is however pretty bad, and it's a damn sight worse than a lot of people are making it out to be. So just because in general recessions end and economies recover doesn't mean that everything is peachy.

bobbiw wrote: »

Strange thing about this board is that is seems people want the recession to get a lot worse. Not realising that if it does it will inevitably hurt them as well. Because you are working now does not mean you will be if things get worse.

While there are few if any who have actually said that (rather, you seem to infer that anyone who doesn't think house prices are great value now wants the economy to be destroyed) I would be in favour of a painful crash now rather than a decade or more of slow painful stagnation. So if I seem to want things to "get a lot worse" it is because I want them to get better sooner rather than later.

bobbiw wrote: »

Its also bad on your fellow man but I know that the Irish as a whole have become a jealous bunch of begrudgers who fell that it is their God given right to own property.

It's a pretty ****in basic need of man to have accomodation and shelter; we're not talking vast estates here but modest houses and basic apartments should be within reach of everybody. Equally though, nobody should have to break their back working just to put a roof over their heads at the expense of other needs.

bobbiw wrote: »

The 80s was not a recession, Ireland never had a boom before, it was permanantly in recession so its not a great comparison.

Growth = economic output increasing
recession = economic output decreasing
stagnation = economic output staying flat

In the 80s, there was stagnation, not recession, although there was a recession at the start of the 80s.

bobbiw wrote: »

Also the world is more truely global now and it is likely that Ireland will emerge out of the recession on the tail end of the US.

How? Explain that one please. Are US firms going to invest in our overpriced economy, or are we going to sell them our...well?

bobbiw wrote: »

As for house prices they will continue to fall but they will stop falling.

Soon it is going to rain but it will stop raining.

bobbiw wrote: »

It does make me laugh thought that we do have some dim wit minimum wage people on her who have the attitude

"prices will fall until its 2.5 x my wages then I will get a nice house and all the time keep my job, then as soon as I have bought it they will go back up"

The problem with your posts is that you don't quote other people, you just invent straw man arguments. Please quote some of these dim wit minimum wage people, as I haven't seen any, unless you'd care to make any admissions in that regard.

MG

Deleted User wrote: »

Here is one of the key reasons why this recession will be worse than the 80's, personal debt!

In the 80's people were generally poorer than now, but critically they also often had few debts as well.

Now many have huge debts that will cripple them if there is any drop in income.

Spot on. Believe that if you add personal debt and state debt, we are more indebted now than in the 80s.

blast05

OK, first a disclaimer: I'm not an economist!

Firstly, unemployment is still rapidly rising, part of the knock-on effect of the reduction of the construction industry.
Government revenue has been heavily skewed to "milking" the housing market - there is now a huge hole in their finances.
Taxes are rising and will continue to rise, reducing the money in peoples pockets.
Wages are falling (for many) as well as overtime bonuses etc, even less money in peoples pockets.

Prices of (moter) fuel have NOT fallen and look like increasing, even less money in peoples pockets.
Interest rates are at an all time low, this cancels out most of the loss of income for people with large mortgages.

Banks are unwilling to lend as freely as they did in the past, less money available to purchase a house.

Unemployment will continue to rise as foreign companies take their "work home" or find somewhere cheaper to get it done.

All of this means a period of deflation until the country is competative again.

Final sting in the tail is that when interest rates start to rise, many homeowners (with huge mortgages) will be unable to pay the mortgage at all.

Then prices will crash!

Have to pick up on this one DB. I am not an economist either but in your model above, the economy would just continue to get smaller and smaller until we don't have one. Some trigger - either external or internal - will be the catalyst to get us out of this one. In the late 80's and 90's it was the IFSC, the lower corporation tax & free 3rd level education imho. I suspect on this occassion it will be a case of us benefiting from the money being pumped into the US and UK economies.

Growth = economic output increasing
recession = economic output decreasing
stagnation = economic output staying flat

In the 80s, there was stagnation, not recession, although there was a recession at the start of the 80s.

Yes, in the 1980's there was stagnation but there was also high inflation and high interest rates with a very high public debt to service. And of course we have a fantastic government at the time - to counteract inflation there was the brilliant initiative to pay the public sector an approx 25% pay increase in the early 80's :rolleyes: All in all - yes, the 80's was a stagnant period but if we can avoid a major bump in interest rates (which is an almost certainty for the next couple of years) and public sector reform is properly tackled (even if it requires IMF intervention) then i just can't see the 80's being as bad, miserable (and 101 other negative adjectives) as the next few years will be

blast05

blast05 wrote: »

Have to pick up on this one DB. I am not an economist either but in your model above, the economy would just continue to get smaller and smaller until we don't have one. Some trigger - either external or internal - will be the catalyst to get us out of this one.

Yes I accept that, I was just looking to the next couple of years or so!
A point will be reached when investors will see Ireland as an "attractive" place to invest in.

Especially if the infrastructure projects currently in progress are completed and there remains a skilled and (relatively) cheap workforce available to operate such an enterprise.

Before that happens, the issue of overpriced property mortgages & rents both private & commercial needs to be addressed (this deflation is doing just that).

SouperComputer

bobbbb wrote: »

Exactly. People are much better off arent they.

No, they are in more debt for stuff they didn't need and bought to impress people they don't like

SouperComputer

Deleted User wrote: »

Soon it became necessary for there to be two incomes to buy a house as prices were engineered up to use up this extra available money (It didn't realy exist in the first place), speculators drove up prices to the new limits.

Same thing over here, mortgages were based on two incomes. Big mistake, and not necessarily on the banks part, people need to educate themselves and do the math.

In our case we based what we actually borrowed based on not only a single income, but a paycut at that. I'm glad we did that, within 4 days of moving into our home my wife became pregnant and lost her job. Now I accept that this would be optimistic in recent times in Ireland, but a few years ago, had people been thinking this way......

This stuff needs to be taught in school, might have taken some of the sting out of the situation right now.

gurramok

http://www.breakingnews.ie/ireland/eyauidgbidid/rss2/

"Irish economy fastest shrinking in developed world"

esri wrote:

On the other hand the ESRI’s dismal forecasts for Ireland warn the economy will this year shrink twice as fast as initially thought and between 2008 and 2010 GDP will plummet by 11.6%.

Only Finland came close to this figure when it dropped by 11% between 1990 and 1993.

Dr Barrett said, however, that thanks to years of huge growth in the Celtic Tiger of the late 1990s Ireland’s average economic growth for the last decade will be around 4%.

Even though there has been talk of ’green shoots’ elsewhere, Dr Barrett warned they may not bear fruit in Ireland for several years.

I agree with the several years. Govt policy will shape it better if we get out of this sooner, the golbal upturn is not enough as we have a structural deficit and ahem domestic housing bubble.

Notice the link here between Finland and Ireland?

Finland had a devastating housing bubble too that burst between 1990 and 1993. Not a coincidence.

spockety

One of the key points that you didn't quote in the ESRI article.. 17% unemployment next year! The property crash just got.. crashier.

gurramok

Oh yeh. That 17% seems optimistic as its 11% now and there will be 300,000 jobs shed according to the ESRI by the end of next year. :eek:

blast05

"Irish economy fastest shrinking in developed world"

I was listening to this on the radio this morning and thought of Japan - year on year contraction in Q4 2008 of greater than 10% ...... thats wrose than us.

On thing re unemployment - at least the rate of increase seems to be slowing a bit, including seasonal adjustments.
36,500 increase in Jan
26,700 in Feb
20,000 in March
15,800 last month which was the lowest total increase since last September

asdasd

TBH I think that we need to take the shock, and then recover with the world economy. What we dont need is the long term stagnation that Japan had in the 90's.

AARRRGH

blast05 wrote: »

I was listening to this on the radio this morning and thought of Japan - year on year contraction in Q4 2008 of greater than 10% ...... thats wrose than us.

Yeah but the difference is the Japanese economy is absolutely huge and they have an enormous amount of home grown industry. They actually produce stuff.

We, on the other hand, have very little.

asdasd

We, on the other hand, have very little.

I am pretty sure Ireland has an export surplus.

gurramok

blast05 wrote: »

I was listening to this on the radio this morning and thought of Japan - year on year contraction in Q4 2008 of greater than 10% ...... thats wrose than us.

On thing re unemployment - at least the rate of increase seems to be slowing a bit, including seasonal adjustments.
36,500 increase in Jan
26,700 in Feb
20,000 in March
15,800 last month which was the lowest total increase since last September

Seasonal stuff. The summer will tell a truer picture with students looking for their first job as well as those that were working in the education sector will affect it.