Housing Bubble Bursting

maninasia

Irish people are very like that alright, up and down like a yo-yo, you'd swear if it was the 1930s Great Depression the way the media and people at home are going on ....only two years ago it was 'the world's greatest little countryTM' and I couldn't fend off the people asking me when I was coming home!

A lot of discussions in Ireland sound almost communist to me, it's all about what the government can do. How the government is going to create 1000s of PhDs and throw money into research and how these PhDs are going to magically run billion dollar companies (the gubberment is completely missing the point that they need the experienced people to bring these products/services to market!). They can also do their bit by cutting costs and taxes but it's up to Irish people individually and collectively to open new enterprises, take risks and work hard.

I think most multi-nationals will stay in Ireland but they won't be a major engine for growth as they will focus their investments in lower cost countries with large markets unless in fairly niche very high tech long term investment sectors like pharmaceutical and biotech.

BendiBus

AARRRGH wrote: »

I am saying we rely so heavily on foreign investment that when that investment leaves (and it definitely will leave at some stage) we won't be left with very much.

I only partly agree with you. Multinational invesement is definitely mobile. Lots of it flows through Ireland. Always did. So while many multinationals will undoubtedly leave (Dell), it's not unreasonable to think others will arrive (Facebook, Google etc.).

johnnyskeleton

asdasd wrote: »

I now feel that the cost of this recession, in Ireland and elsewhere, is being over-exaggerated by the very people who, in real life if not on these forums, were the most optimistic during the boom.

That's odd, because it seems to me that the people who are now talking about the dire state of the economy are also those contrarians who were warning about the problems in the economy which everyone else was ignoring (in the media MK, GL DMW etc, on the internet in this thread and on the pin, in real life the people who rented instead of buying) while the people who were most optimistic during the boom (in the media BOC, TP, AH, on the internet in this thread and on AAM, in real life the people who bought and/or bought several investment properties) are now either stonily silent, in firm denial or, as you so charmingly put it, an mbéal bocht.

I've a few questions for you:
1) do you think the government's finances are sustainable as things stand?
2) do you think unemployment isn't that big a problem?
3) do you think that Ireland won't have to undergo massive changes in order to move from half our people being employed in construction and public service into something more productive?

If you answer yes to any of those three questions, you are not looking at the reality of the situation. If you answer no to all those questions, you are not over-exaggerating the situation, you are just telling it like it is.

maninasia

bobbiw wrote: »

It will end but Ireland is in for a serious housing correction. It wont be good for people at the bottom of the ladder and FTB are not going to be able to buy houses. I estimate most of them unemployed or unqualified for a mortgage.

That will really annoy them, finaly realise that they can afford that house and the banks tell them now way. How Ironic.

Who cares if they can't afford to buy if they can rent cheap, save their money and make good investments somewhere else...not every country is as fubared as Ireland, many countries will bounce back fairly strongly by end of this year.And as the other poster said, young families not affording to buy will be solved by all the empty houses of landlords haemoraghhing money..it will re-shape itself naturally once the government gets out of the business of social engineering.

asdasd

I've a few questions for you:
1) do you think the government's finances are sustainable as things stand?
2) do you think unemployment isn't that big a problem?
3) do you think that Ireland won't have to undergo massive changes in order to move from half our people being employed in construction and public service into something more productive?

1) As things stand? I think that we should run a decficit during a recession and postpone future capital projects. ( If we were to stop them all we would be in the black). So YES.
2) Unemployment is clearly a symptom, not a cause, of recession. So YES.
3) I have no idea is we need to fire Public Servants, or not. I think they should take a haircut but should keep their jobs. The construction sector has lost jobs. They need to go somewhere else, since the boom won't happen again. We've always known that. So, a reluctant YES on the public sector. The ex-construction employees will get back to work when Ireland pulls out of recession.

Two of your questions were about sympthoms, not cause of the recession.

In other news Ireland's exports are growing. Not a trivial feat considering an environment where Japan has seen export falls of 40%, and Germany - blameless in the cause of the problems - will have a GDP fall of 6% because of export contraction.

bobbbb

asdasd wrote: »

1) As things stand? I think that we should run a decficit during a recession and postpone future capital projects. ( If we were to stop them all we would be in the black). So YES.
2) Unemployment is clearly a symptom, not a cause, of recession. So YES.
3) I have no idea is we need to fire Public Servants, or not. I think they should take a haircut but should keep their jobs. The construction sector has lost jobs. They need to go somewhere else, since the boom won't happen again. We've always known that. So, a reluctant YES on the public sector. The ex-construction employees will get back to work when Ireland pulls out of recession.

Two of your questions were about sympthoms, not cause of the recession.

In other news Ireland's exports are growing. Not a trivial feat considering an environment where Japan has seen export falls of 40%, and Germany - blameless in the cause of the problems - will have a GDP fall of 6% because of export contraction.

Sure when the recession is over everyone will have forgotten about unemployment, Public sector and the deficit will be reversed.

People have short memories.

Iristxo

bobbbb wrote: »

Sure when the recession is over everyone will have forgotten about unemployment, Public sector and the deficit will be reversed.

... and we'll all go back to spending well above our means

bobbiw

bobbbb wrote: »

Sure when the recession is over everyone will have forgotten about unemployment, Public sector and the deficit will be reversed.

People have short memories.

Your baseing a lot of this on the premise that Ireland is in a recession that it is going to emerge from. Unlike other countries that have had cyclical economies Ireland never has.

It was permanantly in a resession until the early 90s where it experiences a boom based on european subsidies (europe hates ireland over lisbon) and american investment, this had a knock on to other industries.
And of course the booming construction sector and the associated industries.

Ireland might have to settle into a negative GDP for well forever, you never know.

bobbiw

bobbiw wrote: »

It was permanantly in a resession until the early 90s where it experiences a boom based on european subsidies (europe hates ireland over lisbon) and american investment, this had a knock on to other industries.
And of course the booming construction sector and the associated industries.

Ireland might have to settle into a negative GDP for well forever, you never know.

Ireland has a stagnant economy, not "permanent resession" and the last few years were a period of mad drunkeness brought about by cheap money!

The next decade or two will (hopefully) be of modest sustainable growth that benifits the citizen rather than the moneylender, aka bankers

bobbbb

bobbiw wrote: »

Ireland might have to settle into a negative GDP for well forever, you never know.

Ok ... right. :rolleyes:

Iristxo wrote: »

... and we'll all go back to spending well above our means

Yes we will.
Its the way of the world.
You dont seriously think that people will learn any lessons from this do you.
If they did it would never happen again, and yet boom, bust, boom, bust boom, bust .......

Caoimhín

bobbbb wrote: »

Its the way of the world.
You dont seriously think that people will learn any lessons from this do you.
If they did it would never happen again, and yet boom, bust, boom, bust boom, bust .......

Such a supply of easy credit to the (almost) entire population on the scale seen in the last 10 years has never been seen before.

I will try to find a link, and it has been mentioned here before, but the difference between this recession/depression is the massive amounts of personal debt out there.
This often, but not always, includes mortgages owed on artificially high property prices, people on the average industrial wage buying high end German cars and general unsecured personal debt.

I dont blame people for clinging onto the notion that their shoebox apartment/houses are "really" worth what they paid for them and that property prices will rise again, lifting them out of debt.

In my opinion though, at this stage, this is as absurd as playing the Lotto with the hope that it will save your bacon.

Also, some people in secure, safe jobs like the civil service, are utterly blind to the reality of unemployment and crippling debt. I would love for some of the recession deniers and striking public servants to sit in with me and answer the phones in the St V de P on any given evening. Honestly, some of the stories are harrowing and upsetting. Some of the people calling for help are people who actually donated money 2 years ago, middle class people with 2.4 kids, no jobs and massive debt.

johnnyskeleton

asdasd wrote: »

1) As things stand? I think that we should run a decficit during a recession and postpone future capital projects. ( If we were to stop them all we would be in the black). So YES.
2) Unemployment is clearly a symptom, not a cause, of recession. So YES.
3) I have no idea is we need to fire Public Servants, or not. I think they should take a haircut but should keep their jobs. The construction sector has lost jobs. They need to go somewhere else, since the boom won't happen again. We've always known that. So, a reluctant YES on the public sector. The ex-construction employees will get back to work when Ireland pulls out of recession.

Way to dodge my questions.
1) it's not the fact of a deficit, it's the sheer scale of it that is frightening
2) You honestly think unemployment is not a big problem at the moment?
3) The point here was that half our economy was consumed by PS and construction, which is no longer sustainable, and we need to switch to more productive uses, but there's very little there.

asdasd wrote: »

Two of your questions were about sympthoms, not cause of the recession.

Exactly. Your point was about people over-exaggerating the recession. To exaggerate something, you need to point to aspects of it (i.e. symptoms) and talk about them as worse than they are. I don't think I am over-exaggerating the scale of the public finances problem when I say that we are spending twice or more than we are taking in in tax, which is madness, our unemployment rate is heading towards 15% (17% according to ERSI) and we are in a very bad position for a recovery as there is little scope for new job/wealth creation in the short to medium term. I don't think any of that is exaggerated, but it is very, very bad, and coming back to the topic in hand, I can't see house prices rising back to 2006 for a long time (or rising at all for that matter).

asdasd wrote: »

In other news Ireland's exports are growing. Not a trivial feat considering an environment where Japan has seen export falls of 40%, and Germany - blameless in the cause of the problems - will have a GDP fall of 6% because of export contraction.

Can you post a link, as I haven't been keeping up to date over the last few days. The last I heard, exports were remaining steady as a % of GDP.

johnnyskeleton

Caoimhín wrote: »

Also, some people in secure, safe jobs like the civil service, are utterly blind to the reality of unemployment and crippling debt. I would love for some of the recession deniers and striking public servants to sit in with me and answer the phones in the St V de P on any given evening. Honestly, some of the stories are harrowing and upsetting. Some of the people calling for help are people who actually donated money 2 years ago, middle class people with 2.4 kids, no jobs and massive debt.

This is it. What happens when the "coping classes", who are relied upon as a mainstay of tax income, can no longer cope or pay taxes?

ionapaul

johnnyskeleton wrote: »

This is it. What happens when the "coping classes", who are relied upon as a mainstay of tax income, can no longer cope or pay taxes?

The country is recognised as bankrupt and the IMF come in to 'slash-and-burn'. End of the year?

johnnyskeleton

ionapaul wrote: »

The country is recognised as bankrupt and the IMF come in to 'slash-and-burn'. End of the year?

I think it will more likely be the EU to step in (despite previous comments by the Germans) and will come when we are no longer able to raise further funding other than at punitive rates (i.e. more punitive than at present).

blast05

johnnyskeleton wrote: »

I think it will more likely be the EU to step in (despite previous comments by the Germans) and will come when we are no longer able to raise further funding other than at punitive rates (i.e. more punitive than at present).

I haven't time to check up on this but i thought our rates at the moment, while a couple of percentage points higher that Germany as we all know, are still a couple of more point slower that previous highs of the 80's

And as for this whole EU stepping in ...... yes it may happen, but not as soon as people think.
We've heard how the recent paper issue by the NTMA was not not very heavily subscribed and that that issue means "the NTMA had rose enough money for half of the year" ...... what these headlines really mean is that in 2009 to date, the NTMA has rose enough money to keep the country going for half a year. What is never mentioned though is that the NTMA had over 20billion in cash sitting on the ready at end 2008 ..... so by my maths then without borrowing another cent, the government has enough cash for 12-14 more months minimum at current projected over spending rates.
Caveat ...... i have no idea how the proposed NAMA would impact on all this .... but there is still a hell of a lot of easily liquifiable assets sitting in the pension reserve fund.

gurramok

Ah come on blast05, we're suppose to throw away the reserves thats in there for the next generation just to keep the place running for a year? :eek:

After when that runs out, then what's next for May 2010?! :eek:

blast05

gurramok wrote: »

Ah come on blast05, we're suppose to throw away the reserves thats in there for the next generation just to keep the place running for a year? :eek:

After when that runs out, then what's next for May 2010?! :eek:

No, not suggesting its ok at all.
Just saying that if we could not raise another cent on the bond markets it would be at least 15 months before we would be bankrupt.

Calina

ionapaul wrote: »

The country is recognised as bankrupt and the IMF come in to 'slash-and-burn'. End of the year?

Provide a link for that one please. The bit that says we're recognised as bankrupt.

tattoodublin

I 'came home' in 2003, I had left here at a very young age as my parents were looking for work. Grew up in Canada, and have travelled extensively most of the known world (not flying, on a motorbike!) I've seen it all and then some.
Coming here in '97 to try find my folks a place, I was absolutley stunned at what I found. The archaic closed doors system of listings and the attitude of the property agents absolutley shocked me. what really enraged me was that the people of Ireland, my country, my people, just seemed to accept it all as normal. I left late in '97 travelling to africa, all of russia, asia, australia, nz, and the americas.
In 2004 after living here a year and really seeing what was happening here, I started telling people, this stuff is going to crash. everybody told me i was a miserable basterd ( maybe i am ), I had a terrible time with the banks for any kind of a loan, despite them throwing money at any big price homebuyers, and despite those stupid adds with the students, you rememebr those? I was REFUSED a 90% mortgage on a home BECAUSE THE HOME VALUE WAS LESS THAN 100,000 EUROS! << BOI policy....shocking, they actually discouraged sensible buying.

To the present:
What this country desperatley needs to restart confidence in the property market is:
1. Total transparencey to the public on all figures.
2. MLS ( multiple listing system ) listings so EVERY agent has EVERY home in the country available for the purchaser to mull over- their commission is kept by listing agent when listing agent sells, split 50/50 when one agent lists but another sells. This gets rid of the dredge of having to visit so many agents.
3. Contractual non-retractable offers that MUST be filled out by agent regardless of 'his opinion' on the buyers offer, and MUST BY LAW be presented to the vendor, with a stipulated accept/ decline time limit indicated ( ie. 24, 48 or 72 hours)... acceptance or decline must be returned signed by vendor!
4. Pre-approved mortgages to enable buyers to look and bargain more effectively.
5. Options of monthly, bi-weekly, or weekly payments (enabling paying down principal earlier)
6. Banks must provide amortization tables, and online amortization calculators for all loans, most especially including mortgages (I was shocked about the lack of this, canadian banks had 25 years ago).

Leadership are like sheppards, put in place by vote, in trust to guide 'the sheep', the people, who need not concern themselves with having to learn everything, trusting in their sheppards to guide them.
Our sheppards have mistaken us for lemmings, running us off the edge of a cliff.
They are not sheppards, they are pied pipers leading us like rats to our doom.
The leadership of this country has grossly failed the people of Ireland.
Its time for solid and honest changes in this country.
The quicker we make these changes, the faster the market will adjust to level, and we can all 'get on with it'.

AARRRGH

tattoodublin wrote: »

What this country desperatley needs to restart confidence in the property market is...

Why do we need to restart confidence in the property market?

Houses are still incredibly overpriced.

We should let the correction continue, and learn our lesson that our economy needs to rely on proper industry instead of selling houses to each other.

K-9

ionapaul wrote: »

The country is recognised as bankrupt and the IMF come in to 'slash-and-burn'. End of the year?

Think Poland had to request a loan from the IMF last week. I'd say the only reason we aren't at that stage is the Euro and us getting 5 years to get things in order.

yankinlk

tattoodublin wrote: »

What this country desperatley needs to restart confidence in the property market is:
1. Total transparencey to the public on all figures.
2. MLS ( multiple listing system ) listings so EVERY agent has EVERY home in the country available for the purchaser to mull over- their commission is kept by listing agent when listing agent sells, split 50/50 when one agent lists but another sells. This gets rid of the dredge of having to visit so many agents.
3. Contractual non-retractable offers that MUST be filled out by agent regardless of 'his opinion' on the buyers offer, and MUST BY LAW be presented to the vendor, with a stipulated accept/ decline time limit indicated ( ie. 24, 48 or 72 hours)... acceptance or decline must be returned signed by vendor!
4. Pre-approved mortgages to enable buyers to look and bargain more effectively.
5. Options of monthly, bi-weekly, or weekly payments (enabling paying down principal earlier)
6. Banks must provide amortization tables, and online amortization calculators for all loans, most especially including mortgages (I was shocked about the lack of this, canadian banks had 25 years ago).

Some really good ideas there... +1

tattoodublin wrote: »

I was REFUSED a 90% mortgage on a home BECAUSE THE HOME VALUE WAS LESS THAN 100,000 EUROS! << BOI policy....shocking, they actually discouraged sensible buying.

Location, location location??

gurramok

5 years depending on FF to get the deficit under control!

Was watching a RTE Prime Time piece on the Finnish bubble (http://www.rte.ie/news/2009/0430/primetime.html)

Listen to this, it took Finland 17 years to get unemployment from about 17% post-bubble to about 4% pre-bubble.

We are in for one of a hell of a sh1tstorm as whats happening now is so identical to what happened to Finland in 1990.

K-9

gurramok wrote: »

5 years depending on FF to get the deficit under control!

Was watching a RTE Prime Time piece on the Finnish bubble (http://www.rte.ie/news/2009/0430/primetime.html)

Listen to this, it took Finland 17 years to get unemployment from about 17% post-bubble to about 4% pre-bubble.

We are in for one of a hell of a sh1tstorm as whats happening now is so identical to what happened to Finland in 1990.

LOL, Can't see FF getting 5 years, though the scale of cuts that have to made makes me wonder can any party do it.

Seen that on Finland, scarey stuff! Hopefully our open economy etc <insert cliche here> will lessen the time. That's all we can hope for.

gurramok

Well, that depends on govt policy, they did mention that in the program!

Still 17 years is a very long time to recover, its bloody horrendous.

tattoodublin

AARRRGH wrote: »

Why do we need to restart confidence in the property market?

Houses are still incredibly overpriced.

We should let the correction continue, and learn our lesson that our economy needs to rely on proper industry instead of selling houses to each other.

Absolutley, If you read the whole post, at the end I stated,

The quicker we make these changes, the faster the market will adjust to level, and we can all 'get on with it'.

The housing market here is way over the top and in my opinion needs to come down to 96 / 97 levels at the minimum before leveling, however, are we going to put up with the same **** all over again? mystery bidders, 'gazumping', a total lack of transparency, a total lack of respect from all angles for the consumer? nahhhhh

At some point in the future the market needs to reach that bottoming out point, and needs to somehow start moving again. The changes I suggest will not only invoke greater confidence in real estate transactions and banks, BUT are also, in one man's opinion, necessary and very fair changes.

SouperComputer

tattoodublin wrote: »

1. Total transparencey to the public on all figures.
2. MLS ( multiple listing system ) listings so EVERY agent has EVERY home in the country available for the purchaser to mull over- their commission is kept by listing agent when listing agent sells, split 50/50 when one agent lists but another sells. This gets rid of the dredge of having to visit so many agents.
3. Contractual non-retractable offers that MUST be filled out by agent regardless of 'his opinion' on the buyers offer, and MUST BY LAW be presented to the vendor, with a stipulated accept/ decline time limit indicated ( ie. 24, 48 or 72 hours)... acceptance or decline must be returned signed by vendor!
4. Pre-approved mortgages to enable buyers to look and bargain more effectively.
5. Options of monthly, bi-weekly, or weekly payments (enabling paying down principal earlier)
6. Banks must provide amortization tables, and online amortization calculators for all loans, most especially including mortgages

+1

Even in these times, these things need to be made a priority. There needs to be transparency. Have any of these items come up the the Dail at all?

bangersandmash

AARRRGH wrote: »

We should let the correction continue, and learn our lesson that our economy needs to rely on proper industry instead of selling houses to each other.

The media are still doing their best to prevent that happening with the new mantra of "there's value out there" which is regularly being pushed in their advertorials...

"There is always concern at a time like this" she says, "but for first-time buyers in secure employment there really is value to be had out there and this is an opportunity for those buyers to get on the first rung of the property ladder."

Nor is he concerned about forecasts that prices will fall further.

"They may well go down a little bit more but with fewer homes being built it won't be long before supply and demand picks up. In any case I'm not buying this house just as an investment. "

http://www.independent.ie/lifestyle/property-plus/why-its-my-time-to-buy-1771015.html

oceanclub

bangersandmash wrote: »

The media are still doing their best to prevent that happening with the new mantra of "there's value out there" which is regularly being pushed in their advertorials...


http://www.independent.ie/lifestyle/property-plus/why-its-my-time-to-buy-1771015.html

this is an opportunity for those buyers to get on the first rung of the property ladder

It's like she's a walking cliche machine; perhaps some AI invented by an estate agent.

However, for most vacuous article in that supplement, I give you this:

http://www.independent.ie/lifestyle/property-plus/need-to-know-city-centre-dublin-2-1771021.html

It contains gems such as:

Who lives there: International fashion designer Lainey Keogh works from her design studio on Dawson Street while the Carmelite Church on Whitefriar Street claims to hold the remains of St Valentine since they were transferred there in 1836 from Rome.

I'm not sure what this means - a dead dude lives there?

P.