Housing Bubble Bursting

Caoimhín

robd wrote: »

Unfortunately the general case at the moment is the more you borrowed the deeper the hole you're now in.

The more someone borrowed, the more the banks/tax payer are in trouble unfortunately.

jmayo

Eglinton wrote: »

That sort of house could easily get 1.5 - 2 million even today. It's just in a different league and there will always be the few who can throw money at something as exclusive as that. I don't really think that sort of house is what this thread is for. The effect of the bubble caused couples and singletons in the 25K to 100K earnings bracket the most grief; not Joe Millionnaire.

Yes there are people who actually do have money, either through the likes of profitable business or professions, but I sill believe people are not now willing to pay the inflated prices of the bubble years because they reckon prices still have a way to fall.

My opinion is that all property has already fallen and indeed has to fall further in the future.
Remember the old adage about a rising tide lifting all boats, well I hold the same true of a falling tide.
There will be a degree of relativity, but nevertheless I cannot see why someone selling a bungalow out in the Wicklow mountains or a house in Dalkey thinks there house is immune and should still garner 2005 prices when all around them is back at 2000 prices.

robd wrote: »

Plenty of Joe Millionaires in the 25k to 100k earnings bracket now. Some in the 0 earning bracket too. This recession has affected all brackets. Anyone with a golf club or yacht club membership will be well aware of the pain being felt by those thought to be in the money. Up to half of the boats in Dublin marinas are for sale. Memberships being hemorrhaged.

The reality is that money in this country was an illusion. Those who borrowed the most were thought to be the richest. Unfortunately the general case at the moment is the more you borrowed the deeper the hole you're now in.

Another one to watch is the horsey set.
A lot of our "millionaries" invested in a little pad in the country with a few acres and stables.
They helped push farmland way out of the price reach of real farmers in the commutter belt counties of the likes of Dublin.
Watch how some of these have been slowly appearing on the market and watch how the market for horses has collapsed over the last few years as the "millionaries" can no longer afford to keep the nags out back.

A lot of people were living on borrowed money and those chickens haven't really come home to roost yet, but once interest rates hike up real pain will be visible.

AstonMartin

AstonMartin wrote: »

This is a €2.5m house in Dalkey.

Granted the view is amazing but the price seems far too high and I think this property has been on the market for quite a while.

What would you value this house at?

http://www.myhome.ie/residential/brochure/hill-house-torca-road-dalkey-co-dublin/112800

This house has been on the market for two years and this time last year was valued at €2m. Strange.

maninasia

Sometimes valuations are for things because of NAMA assesors, you will see this quite often in 2010.

Blackjack

maninasia wrote: »

Sometimes valuations are for things because of NAMA assesors, you will see this quite often in 2010.

There's a difference between the Valuation and the Asking price, or at least should be.

This is part of the problem, and one of the reason the Country is in the mess it's in....

Warrior Saint

Daft have a rental report out this morning showing rents stabilising here. What effect will this have on the price of houses?

seamus

Warrior Saint wrote: »

Daft have a rental report out this morning showing rents stabilising here. What effect will this have on the price of houses?

Hard to say. "Stabilising" is a typical word; Rents are still dropping, just not quite so much. Yields are on the up, but that's because house prices are dropping moreso than rents are increasing.

Rental outflow has been increasing since 2007, but inflow has been keeping up. It's only since April, we saw a sharp increase in the number of homes being rented and a subsequent drop in the rental stock. The Q3 survey will tell us better whether this is just a blip or an indication that the rental market is swinging back.

spockety

The taxpayer funded Rental Supplement is an artificial distortion of the rental market. Once that is drastically reduced (we are going bankrupt and spending way more than we have coming in) then rents will fall again.

jmayo

Warrior Saint wrote: »

Daft have a rental report out this morning showing rents stabilising here. What effect will this have on the price of houses?

Please read following post for a truer picture of how our rental market is artifically sustained by the taxpayers of the country.

spockety wrote: »

The taxpayer funded Rental Supplement is an artificial distortion of the rental market. Once that is drastically reduced (we are going bankrupt and spending way more than we have coming in) then rents will fall again.

Bingo.
The sooner the rent supplements are chopped the sooner the rental market will reach a more realistic level.

Isn't it nice that the taxpayers of the state are helping pay property investors' mortgages ?

TwoShedsJackson

The crsh is over folks: http://www.independent.ie/national-news/dilapidated-chalet-tops-asking-price-in-positive-sign-for-market-2313744.html

Since May there have been positive signs. People are seeing the affordability out there," he said. "There's realism in the market prices now. They're coming back to a stable manner and people are reacting."

oceanclub

I'm glad to see that the fact that three people were interesting in buying a shack means that the crisis is over, 400K people will be employed tomorrow and the banking-related debts will wipe themselves out overnight. Thank you, Irish Independent.

P.

Treehouse72

These cretins seem to think that the housing market is separate and distinct from the wider economy. An autonomous beast with a life of its own, governed by its own hermetically sealed series of variables, such that it is merely a matter of, oh, let's have a look and see if it's up or down today....it's up, cool! Awwwww, back down today...Yay! Signs of stability again!

What on earth do they think governs these shifts? I swear to God I think many of them think it's just, you know, sentiment wobbling to and fro before the inevitable uptick back to 2005 levels. Boy are they thick and boy are they in for a surprise.

spockety

I can't f***ing stand it when EAs and Property Journalists say "out there"..

"Great value to be had out there" etc. Like the rush of adrenalin you get from going 'out there' is akin to shoving your 500k on the black in a Las Vegas casino or something.

tara73

TwoShedsJackson wrote: »

The crsh is over folks: http://www.independent.ie/national-news/dilapidated-chalet-tops-asking-price-in-positive-sign-for-market-2313744.html

thanks for posting this up twoshedjackson, it actually gave me the laugh of the week...

I ask myself what kind of clowns are behind this newspaper??

and they seem to have developed a routine writing weekly one of those nonsense -property is back on track to 2006 value- articles. these smart writers thinking: we just have to repeat our nonsense and sooner or later people believe it. would be interesting to talk to somebody of them if they believe it themselves. maybe they do:eek:

think I see it as my weekly comedy story:D:D:D

norrie rugger

tara73 wrote: »

thanks for posting this up twoshedjackson, it actually gave me the laugh of the week...

I ask myself what kind of clowns are behind this newspaper??

and they seem to have developed a routine writing weekly one of those nonsense -property is back on track to 2006 value- articles. these smart writers thinking: we just have to repeat our nonsense and sooner or later people believe it. would be interesting to talk to somebody of them if they believe it themselves. maybe they do:eek:

think I see it as my weekly comedy story:D:D:D

They could al be stuck in big negative equity and be trying to get everyone to believe that the prices are on the rise again

blast06

446 pages later and people still feel the need to react to stuff like that in the Indo !
Put that quote from the Indo in the context of the following ..... if 400K of those that are unemployed got a job on 50K a year (which would bring us to effective full employment) and decided to give 100% of their income to the government, then that would cover the entire borrowing costs of the state for this year.

Zynks

blast06 wrote: »

446 pages later and people still feel the need to react to stuff like that in the Indo !
Put that quote from the Indo in the context of the following ..... if 400K of those that are unemployed got a job on 50K a year (which would bring us to effective full employment) and decided to give 100% of their income to the government, then that would cover all of our borrowing costs for this year.

That is a damn good post, so why did it make me feel like crying?!?!

tara73

blast06 wrote: »

446 pages later and people still feel the need to react to stuff like that in the Indo !

yeah, and I always will react to stuff where I feel the need to react. what's your suggestion? not reacting to anything? if it works for you, fine, but it's no lifestyle for others. btw, you reacted with this post as well.

blast06 wrote: »

Put that quote from the Indo in the context of the following ..... if 400K of those that are unemployed got a job on 50K a year (which would bring us to effective full employment) and decided to give 100% of their income to the government, then that would cover the entire borrowing costs of the state for this year.

this is very weird, doesn't make any sense at all.
anyway...

blast06

this is very weird, doesn't make any sense at all.
anyway...

I'm trying to put the level of borrowing that the government needs to keep us afloat this year into context ..... 400,000 people x €50,000 = €20 billion ..... people hear the 20 billion figure being bandied about but don't consider how ridiculously big a figure it is.
To get the 20 billion figure down to a sustainable level will require serious levels of pain for everyone (enevitably implemented by the IMF i feel) and yet in this context (never mind interest rate rises to come) we have newspapers saying the signs are good for the property market despite them still being over-priced

jmayo

blast06 wrote: »

I'm trying to put the level of borrowing that the government needs to keep us afloat this year into context ..... 400,000 people x €50,000 = €20 billion ..... people hear the 20 billion figure being bandied about but don't consider how ridiculously big a figure it is.
To get the 20 billion figure down to a sustainable level will require serious levels of pain for everyone (enevitably implemented by the IMF i feel) and yet in this context (never mind interest rate rises to come) we have newspapers saying the signs are good for the property market despite them still being over-priced

AS is often said around here some people in this country have a huge disconnect from reality.

We have it from government, bankers, public servants and indeed general public.

Lots of people are living in in cloud cuckoo land, because reality is far too scary a place.
Then we have the ones (including the ones listed above) who know damm well how bad things are, but they still put a positive over optimistic unrealistic spin on things because they have a vested interest and it is for their own particular gain.

tara73

blast06 wrote: »

Put that quote from the Indo in the context of the following ..... if 400K of those that are unemployed got a job on 50K a year (which would bring us to effective full employment) and decided to give 100% of their income to the government, then that would cover the entire borrowing costs of the state for this year.

I was referring mostly to this bit. I mean, I like people having ideas, but giving 100% of your income to the government is utter nonsense. How should that work? From what should people live?

And I believe people do realise the figures. And everybody is already suffering pain with job losses, liquidations, cut backs etc., nothing new.

catbear

Tara, he's using figures in that manner to illustrate what €20 billion looks like in the Irish context; you're taking it literally as a lifestyle suggestion.

But then again that has been the problem, people seeing things as they'd like them to be and not as they really are.

Calina

tara73 wrote: »

And I believe people do realise the figures. And everybody is already suffering pain with job losses, liquidations, cut backs etc., nothing new.

While everyone is suffering pain, I do not believe that people do realise the absolute extent of the figures. If they did, they'd never have spent the money they spent on property over the years. If you cannot understand what 400,000E is in the context of your own salary - which a lot of people didn't deal with because they dealt with the monthly repayment instead, then it's unlikely that you'll understand the impact of what sort of inflation we need for a debt like the money pouring into the banks to go away.

There are a lot of people who borrowed up to 8-10 times their annual salary to buy property. It is hard to believe that people who did that understand the extent of the badness now. They didn't understand the extent of what they were getting into personally on much, much smaller scales.

Treehouse72

blast06 wrote: »

if 400K of those that are unemployed got a job on 50K a year (which would bring us to effective full employment) and decided to give 100% of their income to the government, then that would cover the entire borrowing costs of the state for this year.

Blast, this is one of the most illuminating things I've read anywhere on the Irish economy this year. An awesome way of conceptualising the figure. Hats off.

tara73

catbear wrote: »

Tara, he's using figures in that manner to illustrate what €20 billion looks like in the Irish context; you're taking it literally as a lifestyle suggestion.

alright, very sorry for misunderstanding blast 06. but think it's a bit written to misunderstand...

Calina wrote: »

While everyone is suffering pain, I do not believe that people do realise the absolute extent of the figures. If they did, they'd never have spent the money they spent on property over the years. If you cannot understand what 400,000E is in the context of your own salary - which a lot of people didn't deal with because they dealt with the monthly repayment instead, then it's unlikely that you'll understand the impact of what sort of inflation we need for a debt like the money pouring into the banks to go away.

There are a lot of people who borrowed up to 8-10 times their annual salary to buy property. It is hard to believe that people who did that understand the extent of the badness now. They didn't understand the extent of what they were getting into personally on much, much smaller scales.

maybe you're right.:eek: but that's bitter. how can anything get bettter then? think the extend of stupidity of people is a bit beyond my horizon...:rolleyes:

my thoughts on this was, as long as things go well, people jump into the boat but I believe people will learn their lesson when they ecperience such a bad extreme as we have now. I think many do.

Caoimhín

tara73 wrote: »

but I believe people will learn their lesson when they ecperience such a bad extreme as we have now. I think many do.

Sadly Tara I disagree with you. People have always and always will be blinded by greed. Also, many people are either financially illerate or just plain feckless.

I cant be bothered giving a link, it is on the propertypin, but Frank Fahy TD, (FF) was on the radio only last month encouraging people to go out and buy houses, that there is great value out there.

It is on public record that Fahy owns 40 houses himself.

oceanclub

It is on public record that Fahy owns 40 houses himself.

http://quotesfromthebubble.blogspot.com/2009/07/frank-fahey-fianna-fail-td-property.html

P.

maninasia

tara73 wrote: »

yeah, and I always will react to stuff where I feel the need to react. what's your suggestion? not reacting to anything? if it works for you, fine, but it's no lifestyle for others. btw, you reacted with this post as well.



this is very weird, doesn't make any sense at all.
anyway...

Makes perfect sense. Something is not 'weird' if you can't understand it, maybe you can say, 'it's challenging for me to do maths in my head'.

tara73

Caoimhín wrote: »

Sadly Tara I disagree with you. People have always and always will be blinded by greed. Also, many people are either financially illerate or just plain feckless.

yes, I agree with this, caoimhín. the majority seems to be driven by greed.

the never ending build up of bubbles in many countries all over the world is showing that. but I still hope and think that the generation who experienced a crash like this is learning...maybe that's my positive thinking, the believe in a bit of sanity, but seems I'm alone with it..:P:rolleyes:

tara73

tara73 wrote: »

yes, I agree with this, caoimhín. the majority seems to be driven by greed.

the never ending build up of bubbles in many countries all over the world is showing that. but I still hope and think that the generation who experienced a crash like this is learning...maybe that's my positive thinking, the believe in a bit of sanity, but seems I'm alone with it..:P:rolleyes:

Most prople do not take onboard the mistakes of the previous generation, since the middle of the 20th century housing bubbles have come along about once every 20 years or so, the last one dwarfing all before it!

I believe it will be the last one ever (bold prediction) the future economic landscape being mapped by hard limits on growth caused by the physical limits on the supply of oil and other sources of energy.