Housing Bubble Bursting

London Irish

London Irish wrote: »

....But I won't do this in Ireland. We can't dig stuff out of the ground and sell it. Instead our main resource, and what we sold to the world, was our workforce. Our resource is too expensive for what it produces. It's going to an extremely painful experience to make us competitive again - especially now that Easter Europe, India and China have so established themselves on the scene.

And this is why I don't care if prices start to go up again. The people bidding prices up have largely no idea of how the rest of the world is operating. That's how we got here in the first place. If they bid up again, bid as much as they can, let that make sense, in isolation, to them. But the foundations are not (have never) been there. Don't get sucked in.

TT Bone

big syke wrote: »

100% Agree. Thats why i dont think the prices will level off at a reasonable price. The prices may and probably will drop for the next 18 months but i think that when (and if) banks start giving out credit with less strict lending procedures then the prices will creep back up. They probably wont go up to the shambles of the prices they where during the "boom" :rolleyes: but i think they will indeed creep back up.

We are too obsessed with owning property that, as you said, if many people could only get credit they would buy over the odds for their home. Thats not saying i dont want to own a home, i hate renting but cannot afford a deposit yet and wouldnt get a mortgage of more than 100k.

The only problem with this is that the banks are bust, they've been burned, as they are all over the world, they won't be lending easily to people for at least 10 years, if ever, as to do so will leave them worse off.
So there will be NO rise in prices, drive around Dublin and have a look at the empty/half finished buildings, have a look at the live register, tax takes etc etc. Prices are on their way down, we're in a major recession, the only way is DOWN!

alphamale 1

I agree somewhat with what you are saying but credit and jobs are the big issue in relation to the construction setor. I would expect to see a lot of the unsold property gone within 5 years and assuming very little is built in the meantime then property prices may start to rise again slowly.

I hope it does as i intend to be selling mine around then so hopefully my prdiction is right. If Nama was up and running, then nmaybe the banks could access credit which would help as prices in someplaces are almost as low as they can go and with low interest rates it nearly makes more sense buying than renting

radioactiveman

The only problem with this is that the banks are bust, they've been burned, as they are all over the world, they won't be lending easily to people for at least 10 years, if ever, as to do so will leave them worse off.
So there will be NO rise in prices, drive around Dublin and have a look at the empty/half finished buildings, have a look at the live register, tax takes etc etc. Prices are on their way down, we're in a major recession, the only way is DOWN!

I can't help thinking that there might be some truth in the idea that Irish house prices are only worth 14 times the rental income for one year... going by the American rule of thumb.
It's a very sobering thought.

TT Bone

radioactiveman wrote: »

I can't help thinking that there might be some truth in the idea that Irish house prices are only worth 14 times the rental income for one year... going by the American rule of thumb.
It's a very sobering thought.

I agree, cleverer people than me and you have said this, the people who saw this crash coming. Read david mcwilliam's blogs from 2006 on and you'll see the insight he had. People like that are who we should have been listening to all along, they're who I'll be taking notice of in the future anyway.

jmayo

alphamale 1 wrote: »

I agree somewhat with what you are saying but credit and jobs are the big issue in relation to the construction setor. I would expect to see a lot of the unsold property gone within 5 years and assuming very little is built in the meantime then property prices may start to rise again slowly.

I hope it does as i intend to be selling mine around then so hopefully my prdiction is right. If Nama was up and running, then nmaybe the banks could access credit which would help as prices in someplaces are almost as low as they can go and with low interest rates it nearly makes more sense buying than renting

Can you please tell me where "prices are almost as low as they can go" ?

Also some posters, not saying you, but some around here believe the days of easy cheap credit will be back.
The thing these posters fail to notice is that the days of very cheap credit were not the norm, but an aberation which after the fallout from this credit binge will probably never return.
Most countries are putting in place stricter regulation to ensure the CDOs, etc don't happen again and banks are capitalised enough to ensure that governments don't have to bail them out.
Of course our government who had some of the biggest regulatory faiulures have done diddly squat to tighten regulation :rolleyes:

Also don't bank on low interests rates forever, they are outside our control.
If it makes economic sense for the "real" economies of the Eurozone to increase rates it will happen.

weatherford

I've been told that if you DO want to buy, the thing to do is BYPASS the REAgents/Auctioneers (who, IMHO, are a bunch of crooks!) and go directly to the mortgage holding banks.

HOW or WHERE do you do that?

Treehouse72

big syke wrote: »

100% Agree. Thats why i dont think the prices will level off at a reasonable price. The prices may and probably will drop for the next 18 months but i think that when (and if) banks start giving out credit with less strict lending procedures then the prices will creep back up. They probably wont go up to the shambles of the prices they where during the "boom" :rolleyes: but i think they will indeed creep back up.

We are too obsessed with owning property that, as you said, if many people could only get credit they would buy over the odds for their home. Thats not saying i dont want to own a home, i hate renting but cannot afford a deposit yet and wouldnt get a mortgage of more than 100k.

We're not obsessed with property, we're obsessed with the idea that maybe our property could make us a millionaire while we just sit back and ride the wave.

As proof of this, I ask whether we were "obsessed" with property in 1995 or 1985? No, we had a normal relationship with it whereby we paid for it having soberly weighed up the cost/benefit just as we make decisions every day about how much to pay for a Mars bar or a holiday in Benidorm.

At the moment, there is a stand-off while sellers refuse to give up on the dream of their house being worth a fortune. That is a very hard thing to let go of...."suppose prices go back up after I sell and I miss out??!!!" But that will pass and house prices will return to a neutral price such that about 1/3 of the buyers' disposable income is being spent paying for it. IMO it is totally IMPOSSIBLE for this not to happen.

Diarmuid

TT Bone wrote: »

I agree, cleverer people than me and you have said this, the people who saw this crash coming. Read david mcwilliam's blogs from 2006 on and you'll see the insight he had. People like that are who we should have been listening to all along, they're who I'll be taking notice of in the future anyway.

You don't even need to go that far. Just read the first page of this thread (end 2006). It makes for "interesting" reading

Gurgle

Treehouse72 wrote: »

At the moment, there is a stand-off while potential sellers refuse to give up on the dream of their house being worth a fortune.

Fixed that for ya.
Reads a bit different now, doesn't it?

gurramok

Diarmuid wrote: »

You don't even need to go that far. Just read the first page of this thread (end 2006). It makes for "interesting" reading

Exactly. Anyone who was right on the devastation the bubble bursting was going to cause was a doom monger and as one poster said a few pages in...they're carrying 'end is nigh' signs!

Gurgle wrote: »

Fixed that for ya.
Reads a bit different now, doesn't it?

Yeh, let them sit on the house as prices will go up soon :rolleyes:

Some people have patience

gurramok

gurramok wrote: »

Exactly. Anyone who was right on the devastation the bubble bursting was going to cause was a doom monger and as one poster said a few pages in...they're carrying 'end is nigh' signs!



Yeh, let them sit on the house as prices will go up soon :rolleyes:

Some people have patience

Just need to show them this!
http://www.treesdontgrowtothesky.com/cache/daft_listing_age.png

Many have been waiting two years for prices to "revive".

Gurgle

gurramok wrote: »

Yeh, let them sit on the house as prices will go up soon :rolleyes:

Or they could just live in the house and put their trading up plans on hold until the market suits them better. Whether thats a year or a decade, it would make more sense than selling at a loss.

ronbyrne2005

Gurgle wrote: »

Or they could just live in the house and put their trading up plans on hold until the market suits them better. Whether thats a year or a decade, it would make more sense than selling at a loss.

Prices are set at margin. Just because you dont sell your home doesnt stop the price it can achieve dropping. People can put their head in sand but there will always be forced sales from deaths/divorces/job loss etc.

gurramok

Don't know many people who would wait a decade trying to sell their house at their suggested price!
Lower prices benefit trade-uppers, don't think you noticed that Gurgle.

Firetrap

Gurgle wrote: »

Or they could just live in the house and put their trading up plans on hold until the market suits them better. Whether that's a year or a decade, it would make more sense than selling at a loss.

A decade can be a long time in a person's life - circumstances can change massively in that time.

sadista

weatherford wrote: »

I've been told that if you DO want to buy, the thing to do is BYPASS the REAgents/Auctioneers (who, IMHO, are a bunch of crooks!) and go directly to the mortgage holding banks.

HOW or WHERE do you do that?

Would also like to know how this is possible?
If you knew someone that knew the developer of an estate, could you get a more decent price than off an esate agent?

Salvelinus

Diarmuid wrote: »

You don't even need to go that far. Just read the first page of this thread (end 2006). It makes for "interesting" reading

There are alot of old threads that provide interesting reading (face palms at the ready).

Dob74

Salvelinus wrote: »

There are alot of old threads that provide interesting reading (face palms at the ready).

To be fair to Morgan kelly he predicted what was going to happen along way off. Everyone else was saying it would be a hic-up in the market like 2001.
He had a program on RTE which led to Bertie's famous comment " they should kill themselves".

Salvelinus

Dob74 wrote: »

To be fair to Morgan kelly he predicted what was going to happen along way off. Everyone else was saying it would be a hic-up in the market like 2001.
He had a program on RTE which led to Bertie's famous comment " they should kill themselves".

Have a look for some of the rent v dead money threads, some serious assumptions flying around.

BobbyD10

What I am trying to fathom, is how the country is going to get back on its feet.

With people struggling with the mortgage repayments, and with AIB latest results, to which 25% are now bad where is the light.

http://www.finfacts.ie/irishfinancenews/article_1017324.shtml

Some say introduce a property tax on homes, water charges and carbon tax.

Do people have the money to pay these extra charges - not to mention possible income tax increases. Is this the best alternative.

This would leave less money out there and must lower the house prices even further as most money would be used by trying to maintain repayments, food, clothing..etc..

There is talk of green shoots and that it is levelling off, but how are over 400,000 probably more by year end going to get employment.

Well, that's my ramblings over for another month - just had to get that off my chest

BobbyD10

BobbyD10 wrote: »

What I am trying to fathom, is how the country is going to get back on its feet.

In the demolition business, you need to clear the debris away before you rebuild!

Cleaning up the subprime lending business and other get rich quick schemes will take some time.

Sensible lending and borrowing is the slow but safer path to recovery.

johnnyskeleton

gurramok wrote: »

Exactly. Anyone who was right on the devastation the bubble bursting was going to cause was a doom monger and as one poster said a few pages in...they're carrying 'end is nigh' signs!

Rorschach?

gurramok

johnnyskeleton wrote: »

Rorschach?

Yeh, & Bertie!

Tech3

House prices ‘will fall by 50%’
Sunday, August 09, 2009 By David Clerkin, Markets Correspondent
House prices will fall to half of their peak levels, according to the chief executive of one of the country’s biggest mortgage lenders.

Cormac McCarthy, chief executive of Ulster Bank, said prices were already down by at least 30 to 35 per cent from their peak in early 2007 and that a further 10 per cent fall was likely this year.

‘‘I think we’re going to see falls of 45 to 50 per cent, peak to trough,” he said.

McCarthy was speaking after Ulster Bank, which recently subsumed its First Active mortgage lending subsidiary in response to falling volumes, reported operating losses of stg£8 million (€9 million) for the six months to June last week.

http://www.sbpost.ie/post/pages/p/story.aspx-qqqt=MARKETS-qqqm=nav-qqqid=43593-qqqx=1.asp

Many places outside Dublin havnt dropped by 30% yet.

bangersandmash

Interesting Tech2. How quickly things change.

Bank boss: No property bubble
Sunday, April 02, 2006

Cormac McCarthy, group chief executive of Ulster Bank Group, said there was no price bubble building up and that normal market forces would see a stabilisation in the property market in due course.

‘‘You have to respect someone like Denis Casey, but the current rate of house price growth is not a problem at the moment,” McCarthy said. ‘‘It depends on how far and how long current growth rates continue.

‘‘It’s a question of supply and demand at the moment. Issues such as location, density and land supply are other factors.

“But normal market forces will take over. We don’t see any stretch in the ability of people to repay their mortgages, and there is plenty of money on deposit.”

http://archives.tcm.ie/businesspost/2006/04/02/story13124.asp

weatherford

I noticed a fancy 4 BR in the Tuam area that was originally listed at 365 (or something like that) that is now down to... 150.... and still hasn't sold...

People simply are not buying, and bankd are not giving money. Prices HAVE to come down and match incomes.

The idea (that I read somewhere) of increasing TAXES to make up for government greed.. I mean shortfall... is ridiculous when no one has any money with which to pay them. Oh, right, tax the rich? What rich? Most of the so-called rich were riding the bubble and are as broke as the rest of us. Those who aren't will leave the country in a heartbeat. (As "Saint" Bono did when they re-started taxes on artists making over 500K per year.)

We all need to make our own gardens, hunker down, and ride it out. Though, personally, I hate paying rent!

jmayo

weatherford wrote: »

I noticed a fancy 4 BR in the Tuam area that was originally listed at 365 (or something like that) that is now down to... 150.... and still hasn't sold...

People simply are not buying, and bankd are not giving money. Prices HAVE to come down and match incomes.

The idea (that I read somewhere) of increasing TAXES to make up for government greed.. I mean shortfall... is ridiculous when no one has any money with which to pay them. Oh, right, tax the rich? What rich? Most of the so-called rich were riding the bubble and are as broke as the rest of us. Those who aren't will leave the country in a heartbeat. (As "Saint" Bono did when they re-started taxes on artists making over 500K per year.)

We all need to make our own gardens, hunker down, and ride it out. Though, personally, I hate paying rent!

And prices won't come down if the government and their NAMA plan has it's way. They will sit on loads of unsold property hoping that the market will bounce back to the good ould days of 2006.
This is one of the premises of NAMA making any money or even coming close to getting the investors (i.e. you, me and our kids) back what was paid for the loans.
This is where the cockeyed plan to pay some future value for the secured assets comes from.
The government plans to limit the supply thus keeping the value up.
Could the NAMA proponents and our government please look up what happened to the Japanese market ?

Even if you had wads of cash to spend, why should people buy when they know that property is still at an inflated unsustainable price and is on a downward spiral ?
Sellers are still living in some alternatre reality where they believe that their house is till worth 70-85% of what their neighbour paid or got in 2006.
Some asking prices for land is also ridiculous and this becomes quiet apparent to the vendors the day of the auction.

AARRRGH

jmayo wrote: »

Could the NAMA proponents and our government please look up what happened to the Japanese market ?

They don't care. They just want some sort of short term solution to help them get re-elected. They have no interest in what's best for Ireland.

oceanclub

AARRRGH wrote: »

They don't care. They just want some sort of short term solution to help them get re-elected. They have no interest in what's best for Ireland.

Actually Fianna Fail don't even want to get re-elected, I imagine. They want to bail out their developer friends knowing that, even if they ditched at the next election, they'll still have someone to fund them for the election after that, knowing that by then the fickle public will forget whoever got the country into trouble in the first place and, with a few paid-for Sunday Independent editorials, will vote FF in again.

P.