Housing Bubble Bursting

Diarmuid

Euroland wrote: »

No, I mean slightly ( a few percent) above the inflation

which is it? Slightly or a few percent?

oceanclub

20goto10 wrote: »

Inflation is good for everyone. Overinflation is not. Ireland has a rip off culture. It comes from the top down and it's still around in the recession only now it's turned on it's head. Just because the rip off now fabours the purchaser does not make it right and in no way can it be called a good thing.

I really cannot follow your train of thought there. Do you consider lowering prices a rip off? By this logic, the brewers are currently being ripped off by consumers.

P.

bangersandmash

20goto10 wrote: »

It comes from the top down and it's still around in the recession only now it's turned on it's head. Just because the rip off now fabours the purchaser does not make it right and in no way can it be called a good thing.

Even when negative inflation is correcting for massive price inflation during the boom?

Oceanclub's example points out how ridiculous this notion is. Is the consumer really ripping off the publican now that he/she is paying "only" €5 for a pint instead of €6? The same applies to property prices and rental levels. Ireland still has an unjustifiably high cost of living.

20goto10

oceanclub wrote: »

I really cannot follow your train of thought there. Do you consider lowering prices a rip off? By this logic, the brewers are currently being ripped off by consumers.

P.

It works both ways. You wouldn't buy something for more than it's worth and likewise you wouldn't sell something for less than it's worth. Unless you're being ripped off.

oceanclub

20goto10 wrote: »

It works both ways. You wouldn't buy something for more than it's worth and likewise you wouldn't sell something for less than it's worth. Unless you're being ripped off.

I guess all the major supermarkets are being ripped off by consumers, then.

I doubt most people would agree that your usage of the term "rip off" is the norm.

P.

20goto10

oceanclub wrote: »

I guess all the major supermarkets are being ripped off by consumers, then.

I doubt most people would agree that your usage of the term "rip off" is the norm.

P.

what computer are you using? Let's say you were trying to sell it and it's worth about 500 euro. I come along and offer you 100 euro, give you a cock and bull story and convince you that's all it's worth. I the buyer, have just ripped off you the seller.

And the fact that the computer is going to be worth only a fraction of 500 euro in 2 years time has nothing to do with it's current value.

oceanclub

20goto10 wrote: »

what computer are you using? Let's say you were trying to sell it and it's worth about 500 euro. I come along and offer you 100 euro, give you a cock and bull story and convince you that's all it's worth. I the buyer, have just ripped off you the seller.

So let's use that example. I bought the PC 10 years ago for €500. That's what its worth to me. You convince me it's only worth €100 now, and you could buy a new computer off the shelf with the same specs for that amount.

Have I been ripped off?

P.

20goto10

oceanclub wrote: »

So let's use that example. I bought the PC 10 years ago for €500. That's what its worth to me. You convince me it's only worth €100 now, and you could buy a new computer off the shelf with the same specs for that amount.

Have I been ripped off?

P.

no obviously not. I can't believe I'm having this debate. It's a commonly used phrase with a clear definition and can clearly go both ways as I have just pointed out.

oceanclub

20goto10 wrote: »

no obviously not.

"Obviously not"? But I paid 500! You're offering me 400 less. I'm being ripped off to the tune of 400.

So if you're trying to sell a house for €500K, and I offer €100K because equivalent houses are selling for that amount at the moment, I'm sure you'll agree that isn't a rip-off either.

P.

20goto10

oceanclub wrote: »

"Obviously not"? But I paid 500! You're offering me 400 less. I'm being ripped off to the tune of 400.

So if you're trying to sell a house for €500K, and I offer €100K because equivalent houses are selling for that amount at the moment, I'm sure you'll agree that isn't a rip-off either.

P.

LOL are you on crack? You're the one trying to sell me a 10 year old pc for what you paid for it when I can get a brand new one for the same price. So your the one trying to rip me off.

asdasd

1) It is far from the true and depends on a particular country

I have never seen a country where this was not true over the long term.

2) They are always cancelled only partially, not fully, and after such partial cancellation a new wave of growth begins

Wrong. Property overshoots on the way down. If Ireland's property is stil high bt normal standards then it has a way to go, to overshoot. Then buying would be an idea.

3) In the world there are plenty of countries with much higher level of oversupply but even they now start showing positive signs. Please, don't always rely on the Japanese case alone, as it was highly specific and won't be replicated in Ireland.

I doubt if there are countries with larger oversupply than Ireland, which was building 100K houses a year during the boom. That would be the equivalent of the UK building 1.5M houses a year - they built about 200K. Less.

4) Wait for the Q3-Q4 quarterly results

Be surprised if they show anything. But it doesnt matter for house prices.

5) Reductions in construction sector have been already reflected in the unemployment figures and have limited room for further reductions.

True but irrelevent. Houses prices are generally a lagging indicator, i.e. the fall happens afgter the unemplyment because people will use up their savings to pay the mortgage.

7) The negative impact from tax increases and salary reductions was easily outstripped by the fall in mortgage payments and price reductions, so overall impact is positive (people ON AVERAGE are now better off than 3-4 years ago) and together with sharp decline in residential property prices it indicates much better affordability of housing now than it was in 2005-2006.

That is true for some employed people only. Long term the increase in taxes and the increase in interest rates will massively curtail affordibility.

8) You should refer to the historic Euro interest rates only and ignore interest rates during the Irish Punt era, as Euro is a much stronger currency than the Irish Punt was.

I am sure that Callina was refering to the historic Euro interest rates ( i.e the Bundesbank rates) not the Irish rates which, on average would be close to 10%.

9) So the actual reduction by 30-60% for you is not monumental? What would be for you a monumental snap back? When the 1-bed apartments in Dublin would sell at a price of 1K euro? Or when the large houses on the Angelsea Road would go on sale at a price tag of 5k euro?

I actually think the real value of some 1-bed houses in Dublin is close to zero. Presumably that is the actual value of anything that cant sell, however we wont know since NAMA is taking them off the market. The fall so far has been cramatic, there is more to come. In the long run this will ensure that growht begins again ( you are right about that, just not when).

10) Relatively to many other countries the number of repossession proceedings and the number of non-performing mortgages in Ireland is near to nothing.

Thats not very relevent though. All that repossessions mean is that more houses are released onto the market. Thats it. But we have an over-supply. And the banks just need to get the taxpayers money before they turf the taxpayer out of their houses.

asdasd

LOL are you on crack? You're the one trying to sell me a 10 year old pc for what you paid for it when I can get a brand new one for the same price. So your the one trying to rip me off.

But that logic goes out the window when it comes to housing?

oceanclub

20goto10 wrote: »

LOL are you on crack? You're the one trying to sell me a 10 year old pc for what you paid for it when I can get a brand new one for the same price. So your the one trying to rip me off.

Yes.

That was sarcasm.

So I'll ask again:

If you're trying to sell a house for €500K, and I offer €100K because equivalent houses are selling for that amount at the moment, I'm sure you'll agree that isn't a rip-off either?

P.

whizzbang

20goto10 wrote: »

Inflation is good for everyone. Overinflation is not.

Why do you think inflation is good for everyone? If I can buy less with my €100 note this year than last year how do I benefit from that?

Sure, I may feel good if the one asset I buy and hold goes up in paper value, but what does it matter if every other asset or resource I buy is costing me more as well?

asdasd

Why do you think inflation is good for everyone? If I can buy less with my €100 note this year than last year how do I benefit from that?

The alternative, deflation, is worse, or so we are told. Given that 0% is impossible mild inflation is probably the best to aim for.

( For debtors it is an unequivocally good thing).

Calina

asdasd wrote: »

I
I am sure that Callina was refering to the historic Euro interest rates ( i.e the Bundesbank rates) not the Irish rates which, on average would be close to 10%.

I was referring to European rates, yes. Not local Irish rates.

20goto10

oceanclub wrote: »

Yes.

That was sarcasm.

So I'll ask again:

If you're trying to sell a house for €500K, and I offer €100K because equivalent houses are selling for that amount at the moment, I'm sure you'll agree that isn't a rip-off either?

P.

That's the seller ripping off the buyer. You're talking as if that's the norm. My experience is it's the opposite. I'm trying to move so I'm seeing both sides. There are of course some sellers still in cookoo land looking for ridiculous prices but I find most properties priced right with a bit of room for downward movement. The rip off merchants I see are the ones making ridculous offers.

gurramok

Euroland wrote: »

5) Reductions in construction sector have been already reflected in the unemployment figures and have limited room for further reductions.

Very wrong on this point, see todays news. http://www.rte.ie/news/2009/1020/construction.html

Another 100,000 workers for the chop in this sector.

SLUSK

20goto10 wrote: »

That's the seller ripping off the buyer. You're talking as if that's the norm. My experience is it's the opposite. I'm trying to move so I'm seeing both sides. There are of course some sellers still in cookoo land looking for ridiculous prices but I find most properties priced right with a bit of room for downward movement. The rip off merchants I see are the ones making ridculous offers.

Irish houses are of very low quality compared to normal countries like Sweden. Why anyone would pay even €80k for a ****ty 3 bed semi in Finglas is beyond me.

Overpaying for crap is something truly Irish.

Gurgle

oceanclub wrote: »

So if you're trying to sell a house for €500K, and I offer €100K because equivalent houses are selling for that amount at the moment, I'm sure you'll agree that isn't a rip-off either.

Ah, so houses from the 2005 era have been superseded by new technology?

nellumr

Gurgle wrote: »

Ah, so houses from the 2005 era have been superseded by new technology?

No, 2005 prices have been superceded by common sense.

oceanclub

Gurgle wrote: »

Ah, so houses from the 2005 era have been superseded by new technology?

No, because that's what the houses are now worth. "Worth" is simply a measure of how much people are willing to pay. It is not an objective concept.

P.

oceanclub

oceanclub wrote: »

No, because that's what the houses are now worth. "Worth" is simply a measure of how much people are willing to pay. It is not an objective concept.

P.

It's not quite that either, it's how much the banks are allowing you to enslave yourself for the next 25 - 40 years.

Recently of course they have pushed the limits and prices followed on up.

By reducing the amount available, prices will be forced down (cash buyers excepted).

Gurgle

nellumr wrote: »

No, 2005 prices have been superceded by common sense.

Ah, good old common sense.
The last bastion of a position that can't be justified

jmayo

I haven't been on this thread for a while,mainly because I thought there wasn't much more to say since the bulls had stopped pedalling their sh**e.
Also it appeared people had actually copped on that property prices were on the way down form their bubble levels and it was good for the economy in general, but of course could be bad for individuals who had overspent foolishly.
And voila what do I find when I come back ? :eek:

Euroland wrote: »

IMHO, NAMA would set up the protective flooring and act as a benchmark for stabilising property prices. There is no room for further property prices fall as in many countries of the world the property markets begin to recover and prices start rising up again. Now (in the next 0-12 months) is a very good time for picking up bargains in Ireland.

It doesn't matter a f*** what the property prices are in other countries.
Prices in Manhattan NY are dearer per sq meter and prices in Hairi Zibmabwe are cheaper per sq meter.
So what ?

There aren't bargains at the moment, because the prices are still over inflated and the only they apepar ot be going is down.
They may be down on 2005/2006 levels, but that doesn't make them good value or bargains.

Euroland wrote: »

As I said before they have fallen around 30-60% (depending on the area and particular development). Here is an example: in early 2006 the 1-bed apartments in the new Priorsgate development in Tallaght were selling at 320K, now they are advertised at 149K, which constitutes the fall of 53.44%. Now this apartment price looks very attractive relatively to the similar apartments in other countries (especially if we judge it on the income affordability ratio (property price/average annual salary).

What other countries are you in about ?

Euroland wrote: »

The price crash already happened and is near its end, now it is time for stabilization and recovery. For keeping the prices falling further, the Irish economy should dive again, the unemployment should continue to grow, the salaries should be slashed at least by half (or in 3-5 times),

Time for stabilization and recovery

House prices do not, I repeat do not, dictate the state of a normal economy.
It is usually the other way around.
It seems some of us still haven't copped on that we shouldn't base our economy on the price of property.
Ah will somuch for you live and learn :rolleyes:

Property's poor value can be a sympthom of a poor economy and not the other way around.

Euroland wrote: »

1) I'm saying that all over the world from year to year (despite periodic adjustments) property becomes more and more valuable thing and Ireland wouldn't escape this too. So, in Ireland over long term the property prices would continue to grow and would again overgrow the 2006 price levels. And therefore the prices would grow in spite of your accusations in inhumanity.

One word - Japan.

Euroland wrote: »

2) Irish economy was in deep trouble, but now it is on the way out.

Ah sure we alright so if you say so ...

tedstriker

The previous post references Japan so I thought I would post a link to show land prices in Urban areas there:
http://www.statusireland.com/statistics/property-house-price-statistics-for-ireland/26/Japan-Urban-Land-Index.html

I hope that people who think that the market has bottomed out are out there buying because in about 3 years you'll be selling again for half the price. You'd have to be pretty stupid to think that there is value out there right now.

maninasia

asdasd wrote: »

The alternative, deflation, is worse, or so we are told. Given that 0% is impossible mild inflation is probably the best to aim for.

( For debtors it is an unequivocally good thing).

Inflation would kill what's left of the industrial sector in Ireland leading to further hollowing of economy (lack of competitiveness with Asia/US/UK). There's no way for inflation to happen in Ireland because the Euro is set outside of Ireland. The Euro is already too strong compared to other countries such as UK/US and Asian exporters. It will a long drawn out deflation. I thought it would be obvious now, in the end economies depend on productive industries, a small resource poor country like Ireland needs to export goods/services to create higher incomes let alone pay for debt and social welfare.

It all comes down to the real economy in the end, we don't have the ability to hide from our problems, even the Americans can't put it off forever...watch the dollar drop and drop....

asdasd

yeah, I said mild inflation. Nowhere gets 0%.

bangersandmash

The back page of today's Irish Times property advertorial contains a large advert from a well-known agency stating that "The market is surprisingly active and we urgently need more properties". It goes on to provide a list of South Dublin properties with vague descriptions (area and type) that have gone sale agreed recently, together with the apparent number of under-bidders who failed to buy each property.

A desperate attempt to instil urgency in potential buyers, or a genuine recovery in the market? Make of it what you will.

whizzbang

bangersandmash wrote: »

The back page of today's Irish Times property advertorial contains a large advert from a well-known agency stating that "The market is surprisingly active and we urgently need more properties". It goes on to provide a list of South Dublin properties with vague descriptions (area and type) that have gone sale agreed recently, together with the apparent number of under-bidders who failed to buy each property.

A desperate attempt to instil urgency in potential buyers, or a genuine recovery in the market? Make of it what you will.

They aren't even sold, just sale agreed. they are scraping the bottom of the barrel alright!