Advertisement
If you have a new account but are having problems posting or verifying your account, please email us on hello@boards.ie for help. Thanks :)
Hello all! Please ensure that you are posting a new thread or question in the appropriate forum. The Feedback forum is overwhelmed with questions that are having to be moved elsewhere. If you need help to verify your account contact hello@boards.ie
Housing Bubble Bursting
Comments
-
Think of it like a slow moving train crashing versus a high speed car. Destruction is the same, it just happens slower.
Banks, Government, agents all seem to be doing their best to prob up the market through various methods as you just mentioned. It's just slowing down the inevitable.
Some value in lower end of market but that seems to be it (<200k).
Keeping it simple, about 50% still to go on most properties.
Mad time to buy at the moment as interest rates are still relatively low and only going one direction.
As for building. Hard to say. Material costs are creeping up as they have a correlation to oil costs. Labour costs are way down already albeit propped up by wage agreements in the sector. Land costs rumored to be 80% down on peak but that's likely EA propaganda. Council levies unlikely to reduce.0 -
Think of it like a slow moving train crashing versus a high speed car. Destruction is the same, it just happens slower.
Banks, Government, agents all seem to be doing their best to prob up the market through various methods as you just mentioned. It's just slowing down the inevitable.
Some value in lower end of market but that seems to be it (<200k).
Keeping it simple, about 50% still to go on most properties.
Mad time to buy at the moment as interest rates are still relatively low and only going one direction.
As for building. Hard to say. Material costs are creeping up as they have a correlation to oil costs. Labour costs are way down already albeit propped up by wage agreements in the sector. Land costs rumored to be 80% down on peak but that's likely EA propaganda. Council levies unlikely to reduce.
If you'd actually get 20% of the peak.
I remember reading an epic thread about 4 years ago on Boards, think it's till going and a poster put up what happens in a property crash.
I though he was mad and we'd see a small drop at worst. Everything he said is coming true, including the above.
As for prices in Leitrim, yep that's cheap but would you buy that for rental. Leitrim is probably the worst county in Ireland for over supply.
It comes back to location. If that was a decent location in Dublin, a bargain, not in Leitrim or many other areas.Mad Men's Don Draper : What you call love was invented by guys like me, to sell nylons.
0 -
Think of it like a slow moving train crashing versus a high speed car. Destruction is the same, it just happens slower.
Banks, Government, agents all seem to be doing their best to prob up the market through various methods as you just mentioned. It's just slowing down the inevitable.
Some value in lower end of market but that seems to be it (<200k).
Keeping it simple, about 50% still to go on most properties.
Mad time to buy at the moment as interest rates are still relatively low and only going one direction.
As for building. Hard to say. Material costs are creeping up as they have a correlation to oil costs. Labour costs are way down already albeit propped up by wage agreements in the sector. Land costs rumored to be 80% down on peak but that's likely EA propaganda. Council levies unlikely to reduce.
Did you mean bad there or mad good?
If the interest rates are low and only going to go up and up. Wont this offset the value on getting a house for a good price once they do?
Like the slow train wreck metaphor...or is it analogy.0 -
Ah got some good advice here on this site. See attached thread:
http://www.thepropertypin.com/viewtopic.php?f=10&t=36229&p=482989#p4829890 -
As for prices in Leitrim, yep that's cheap but would you buy that for rental. Leitrim is probably the worst county in Ireland for over supply.
I wasn't even considering Leitrim. Probably should have qualified my statement more. I'm talking about Dublin. Specifically I have secondary areas such as Donnecarney (which are 2-3 km from city centre) in mind. I don't mean I want to buy there, just that there appears to be some value at that end of that market. In comparison to 4 beds in Clontarf (a primary area) next door to them, asking 750k.
As for Leitrim, yes you are absolutely correct. No market there at all.
I see places in Dublin down about 40% from peak. So 50% on that would leave 70% down, which is in line with Morgan Kelly's article that you referred to indirectly.0 -
Advertisement
-
Did you mean bad there or mad good?
If the interest rates are low and only going to go up and up. Wont this offset the value on getting a house for a good price once they do?
Like the slow train wreck metaphor...or is it analogy.
Mad as in bad.
Nope it won't offset because you can't fix a mortgage at a low rate for the lifetime of the mortgage. Most fixed rates are a good bit higher and only available for up to 10 years if at all. So you'll pay the higher rate that they're going to in the future anyhow.0 -
I think its TSB that now wont offer anything over 3 years for fixed rate, and you cant blame them! god knows what things will be like in 1 year, never mind 3!0
-
Mad as in bad.
Nope it won't offset because you can't fix a mortgage at a low rate for the lifetime of the mortgage. Most fixed rates are a good bit higher and only available for up to 10 years if at all. So you'll pay the higher rate that they're going to in the future anyhow.
Just got back from cycling so my mind is working better. Seriously! Never thought about the long term rate. Kept thinking 3,4,5 or seven yrs lasted the lifetime of the mortgage for some reason! Gonna save big time and hold out.
Thanks Rob!0 -
Seriously! Never thought about the long term rate. Kept thinking 3,4,5 or seven yrs lasted the lifetime of the mortgage for some reason! Gonna save big time and hold out.
Thanks Rob!
Higher interest rates are only part of the equation. You should also include property/site valuation tax. Added to that you should include water rates, ESB, life assurance and house insurance. Many people have gotten into bother by comparing their monthly rent to the monthly repayments on a mortgage with teaser interest rates and tax rebates, there are several other unavoidable costs involved in owning a house. Be sure to calculate a "worst case scenario" when figuring out how much of your monthly income you can afford.0 -
If the interest rates are low and only going to go up and up. Wont this offset the value on getting a house for a good price once they do?
It is generally accepted that the best time to buy a house is when interest rates are high, not low. That seems counter-intuitive, but the idea is that when rates are at the top of their cycle it means houses are expensive to finance, and thus the price of those houses falls. The opposite is also true: when rates are low it is easy to finance a mortgage, thus pushing prices of the houses themselves higher.
There is also the fact that when you buy at the top of the IR cycle, you know that all your repayments will be lower in future than they are now, and also that the next move in the cycle may be a prolonged low period. When you do it the other way around, rates can only rise and a period of higher rates is always a worrisome threat just around the corner.0 -
Advertisement
-
Treehouse72 wrote: »It is generally accepted that the best time to buy a house is when interest rates are high, not low. That seems counter-intuitive, but the idea is that when rates are at the top of their cycle it means houses are expensive to finance, and thus the price of those houses falls. The opposite is also true: when rates are low it is easy to finance a mortgage, thus pushing prices of the houses themselves higher.
There is also the fact that when you buy at the top of the IR cycle, you know that all your repayments will be lower in future than they are now, and also that the next move in the cycle may be a prolonged low period. When you do it the other way around, rates can only rise and a period of higher rates is always a worrisome threat just around the corner.
Okay. Let's follow your advice and see what happens:
Looking at the histograms of interest rates (http://mortgage-x.com/general/historical_rates.asp), if we followed the trend of peaks (at 1993/1994, then at 2000, then at 2007) you could clearly see a 7-year gap (or cycle) between the peaks. You can then predict that the next "peak" will be in 2014. It being 2011, we can surmise that we are at the trough, the very middle between the last peak and the next one, and interest rates are so low now that they can only go up. So, as far as this cycle is concerned, it would be a very bad time to buy right now because you will eventually end up paying more per month than if you waited until 2014 (the next peak).
Having said that, house prices are now near 2002/2003 levels.
Result: I'm gonna buy a house now. Don't want to wait until 2014. The world could be over by then. Rather be have tried and died than be caught dead renting.0 -
doggy Bear wrote: »Okay. Let's follow your advice and see what happens:
Looking at the histograms of interest rates (http://mortgage-x.com/general/historical_rates.asp), if we followed the trend of peaks (at 1993/1994, then at 2000, then at 2007) you could clearly see a 7-year gap (or cycle) between the peaks. You can then predict that the next "peak" will be in 2014. It being 2011, we can surmise that we are at the trough, the very middle between the last peak and the next one, and interest rates are so low now that they can only go up. So, as far as this cycle is concerned, it would be a very bad time to buy right now because you will eventually end up paying more per month than if you waited until 2014 (the next peak).
Having said that, house prices are now near 2002/2003 levels.
Result: I'm gonna buy a house now. Don't want to wait until 2014. The world could be over by then. Rather be have tried and died than be caught dead renting.[/QUOTE]
Your post made sense and I was in complete agreement until you dropped that clanger at the end. You would rather buy at completly the wrong time (as you stated yourself) than have the carefree exsistence of renting. And if it all comes to an end in the next few years you would rather have blown your lump sum/deposit on a worthless pile of bricks than enjoy it??
Mad - but I supposed it is this attitude towards renting vs purchasing that added fuel to the fire.0 -
doggy Bear wrote: »You can then predict that the next "peak" will be in 2014.
Result: I'm gonna buy a house now. Don't want to wait until 2014. The world could be over by then. Rather be have tried and died than be caught dead renting.
I hope you are right, in a way, because that would mean that the economy would pull out of its current bankruptcy, emigration would stop, the 450,000 unemployed people would find work and all the empty houses will sell in the next 3 years.
However, I believe we are more likely to end up like the Japanese house price trend;
http://efinancedirectory.com/articles/The_Dangerous_Disconnect_Between_Home_Prices_and_Fundamentals.html
Buy a house by all means, just dont complain in 3 years time that your house is worth less than you paid and ask the taxpayer to make up the difference.0 -
However, I believe we are more likely to end up like the Japanese house price trend;
http://efinancedirectory.com/articles/The_Dangerous_Disconnect_Between_Home_Prices_and_Fundamentals.html
[sarcasm]But this is Ireland, we can be different from every other country.
We are in for a soft landing.
We are returning to normal now, the slide was just a blip.
Etc Etc etc[/sarcasm]0 -
norrie rugger wrote: »But this is Ireland, we can be different from every other country.
We are in for a soft landing.
We are returning to normal now, the slide was just a blip.
Etc Etc etc
No chance.
House prices are going to have to drop by at least a further 50% in most cases before things start leveling out.
The country as a whole & houses prices are still a complete disgrace.0 -
Spiritofthekop wrote: »No chance.
House prices are going to have to drop by at least a further 50% in most cases before things start leveling out.
The country as a whole & houses prices are still a complete disgrace.
Edited for clarity:P0 -
doggy Bear wrote: »Okay. Let's follow your advice and see what happens:
Looking at the histograms of interest rates (http://mortgage-x.com/general/historical_rates.asp), if we followed the trend of peaks (at 1993/1994, then at 2000, then at 2007) you could clearly see a 7-year gap (or cycle) between the peaks. You can then predict that the next "peak" will be in 2014. It being 2011, we can surmise that we are at the trough, the very middle between the last peak and the next one, and interest rates are so low now that they can only go up. So, as far as this cycle is concerned, it would be a very bad time to buy right now because you will eventually end up paying more per month than if you waited until 2014 (the next peak).
Having said that, house prices are now near 2002/2003 levels.
Result: I'm gonna buy a house now. Don't want to wait until 2014. The world could be over by then. Rather be have tried and died than be caught dead renting.[/QUOTE]
Your post made sense and I was in complete agreement until you dropped that clanger at the end. You would rather buy at completly the wrong time (as you stated yourself) than have the carefree exsistence of renting. And if it all comes to an end in the next few years you would rather have blown your lump sum/deposit on a worthless pile of bricks than enjoy it??
Mad - but I supposed it is this attitude towards renting vs purchasing that added fuel to the fire.
Sorry mate. Clangers are my style. :E
Point is: I'm not interested in investment. A family home is forever (until the end of the world). In terms of monthly payments, I've covered myself in case of any interest rate increase up to 10%. If it climbs more than that, then I'll be screwed, but so will a hell of a lot of people. When the rates rise (and they will) and I find myself paying more per month than I originally started, I will be sitting comfy in my own home knowing that when the cycle comes back around, I shall be paying less again. And then more again... And then less again...
I think this is the point of the original article of this thread. If you can predict the future, then you'd be a billionaire. Unfortunately, like so many in NAMA, they couldn't, and didn't, and now we're screwed because of them.0 -
doggy Bear wrote: »Point is: I'm not interested in investment
I have made the point several times on this board: practically NOBODY on this forum is discussing property investment. Discussion of notional savings you might make on a house purchase is simply a proxy for the opportunity cost in quality of life terms - holidays, kids' education, new cars regularly - that you suffer by not buying prudently. Absolutely nothing whatsoever to do with property investment.0 -
Treehouse72 wrote: »I have made the point several times on this board: practically NOBODY on this forum is discussing property investment. Discussion of notional savings you might make on a house purchase is simply a proxy for the opportunity cost in quality of life terms - holidays, kids' education, new cars regularly - that you suffer by not buying prudently. Absolutely nothing whatsoever to do with property investment.
Agreed, it is very odd how normally intllligent, reasonable and sensible people seem to lose all their wits when it comes to owning property in Ireland.
For example, a friend of mine has a masters degree from London University in Economics and currently works for a large European bank. I had to talk her out of buying a house in a ghost estate in Leitrim. She had convinced herself that the asking price was astonishing low compared to prices last year.
Her main motivation for buying was that she saw everyone else with houses, rent was dead money and that if she owned the house she could paint the walls whatever colour she wanted.
I had to show her the census, the County council figures for unoccupied houses, the emigration figures and the unemployment figures. Basically, county Leitrim (and most other counties in the BMW region) have enough houses to supply demand for 30 years (this did not include houses being built, one off houses and is bases on houses being occupied by 2.5 people).
My point is, many people think with their hearts rather than their heads when considering the purchase of a house. True i admit, many are buying not for an investment but to have a home to raise a family. Still, there is no need to leave logic, intelligence and critical thinking0 -
doggy Bear wrote: »
Sorry mate. Clangers are my style. :E
Point is: I'm not interested in investment. A family home is forever (until the end of the world). In terms of monthly payments, I've covered myself in case of any interest rate increase up to 10%. If it climbs more than that, then I'll be screwed, but so will a hell of a lot of people. When the rates rise (and they will) and I find myself paying more per month than I originally started, I will be sitting comfy in my own home knowing that when the cycle comes back around, I shall be paying less again. And then more again... And then less again...
I think this is the point of the original article of this thread. If you can predict the future, then you'd be a billionaire. Unfortunately, like so many in NAMA, they couldn't, and didn't, and now we're screwed because of them.
I'm not looking for an investment or a family home, just a home to call my own! At the best price at the right time!0 -
Advertisement
-
I wonder how this flipper's 'investment' (actually, a gamble, not an investment) played out? Post made in January 2007, when evidence for the bust was unavoidable...Deleted User wrote: »But for the record, if I come back in 6 months or a year (ideally will flip it quickly, maybe subsale even before the stamp duty falls due) and and say I have made a profit which exceeds all the negative predictions here, you will endorse my 'infinite wisdom'?
You're on...will revert with the figures when the engineer tells me how much I need to sink into the place.0 -
Monty Burnz wrote: »I wonder how this flipper's 'investment' (actually, a gamble, not an investment) played out? Post made in January 2007, when evidence for the bust was unavoidable...
Well that poster is still active, so he might respond, or not, depending on the outcome! :P0 -
Deleted User wrote: »Well that poster is still active, so he might respond, or not, depending on the outcome! :P
Some of the people, flippers, auctioneers and investors, were irrational to the extent that any reasonable argument was lost on them.
Anyone remember the lad who was on this thread last year who accused the naysayers as begrudging idiots and how he was in the clover wi ith his 4 rental properties?0 -
doggy Bear wrote: »
Sorry mate. Clangers are my style. :E
Point is: I'm not interested in investment. A family home is forever (until the end of the world). In terms of monthly payments, I've covered myself in case of any interest rate increase up to 10%. If it climbs more than that, then I'll be screwed, but so will a hell of a lot of people. When the rates rise (and they will) and I find myself paying more per month than I originally started, I will be sitting comfy in my own home knowing that when the cycle comes back around, I shall be paying less again. And then more again... And then less again...
I think this is the point of the original article of this thread. If you can predict the future, then you'd be a billionaire. Unfortunately, like so many in NAMA, they couldn't, and didn't, and now we're screwed because of them.
Wish I coulld try the clock back to 2006, when I too was buying my family home. I should have held on to my 200,000plus savings instead of topping it up with a 100.000plus mortgage. Of course, I too thought I had myself well covered. Now working around the clock to pay off mortgage and properties similar not selling at 250,000 so have no wish to let mine end up on the market..although this is looking increasingly likely. Still love my home but would be equally glad to make a home somewhere else right now without the pressures of knowing every cent earned has to be accounted for. Why do the government pay huge amounts in rent supplements when there are so many empty properties that they should be able to take over.0 -
Why do the government pay huge amounts in rent supplements when there are so many empty properties that they should be able to take over.
It has nothing to to with a social or ethical requirement to provide housing to the less well and everything to do with subsidising the middle/professional class who bought property as an investment/get rich quick scheme.
Oddly enough, id bet that the majority of these voted Finna Fail.0 -
It has nothing to to with a social or ethical requirement to provide housing to the less well of and everything to do with subsidising the middle/professional class who bought property as an investment/get rich quick scheme.
Oddly enough, id bet that the majority of these voted Finna Fail.
Missed your point here - what has nothing to do with a social or ethical requirement to provide housing to the less well of? Surely we should be looking at ways of saving money. Also not sure about the get rick quick scheme, the majority of people buying family housing did not buy for this reason. And as for your last bet, not sure there either.0 -
On a point of the last election('07), it was the said commuter classes who voted en masse for FF. Those same people since turning heavily into negative equity territory switched to FG. Point being, a large section of Irish people have looked only for their own pockets when to vote for.
On the point of 2006 which I see mentioned, I think it was in this thread that I had mentioned at the time that I was close to going for 'Affordable Housing' in Dublin(Fingal) from which I was offered a 2bed apt at 156k which was 50% reduction on the market price of 318k with the 20yr clawback if I had sold.
A similar property in said estate is now going for about 122k. http://www.daft.ie/searchsale.daft?id=576541 .I had dodged a financial\social* bullet by doing some research of the biggest financial decision of my life. ( I did not buy, I am renting)
*been stuck there for many years!0 -
Missed your point here - what has nothing to do with a social or ethical requirement to provide housing to the less well of? Surely we should be looking at ways of saving money. Also not sure about the get rick quick scheme, the majority of people buying family housing did not buy for this reason. And as for your last bet, not sure there either.
My point is the government is subsidising the property investment portfolios of middle class investors, speculators and gombeen landlords through the HSE rent allowance.
Naturally this is also keeping rent artificially high. For example, im renting in Leitrim, the ground zero of the property crash and full of vacant houses. However, because of the HSE rent allowance, rent is kept at the €500 per month range because of the rent supplement.
If left to the free market, both rent and house purchase price would find its natural lever. But that is one thing the political classes will never allow to happen.
Maybe the IMF will sort this issue out.0 -
doggy Bear wrote: »
Wish I coulld try the clock back to 2006, when I too was buying my family home. I should have held on to my 200,000plus savings instead of topping it up with a 100.000plus mortgage. Of course, I too thought I had myself well covered. Now working around the clock to pay off mortgage and properties similar not selling at 250,000 so have no wish to let mine end up on the market..although this is looking increasingly likely. Still love my home but would be equally glad to make a home somewhere else right now without the pressures of knowing every cent earned has to be accounted for. Why do the government pay huge amounts in rent supplements when there are so many empty properties that they should be able to take over.
I won't presume to know your financial situation; only that I fear to go through what you are currently. And for that I feel for you. And as they say, hindsight is 20/20 vision.
But for the very same reason you won't sell your home (low prices), I find myself finally capable of affording one. I've put in a bid and looks like it will be accepted (around €230,000 in North Dublin Central). And now that things are getting real, I'm slightly nervous. Questions are circling around my head, such as: Are prices going to continue to fall? Am I buying too early? Is the economy going to improve as to provide me with more job security? Right now, my monthly repayments will be less than rent due to low interest rates. How long will that last for?
As for the rent supplements, I believe that is going to be scrapped. It doesn't make any more sense to keep it up because it is expensive. Nice idea during the boom years, but there are a lot of empty houses out there and rent has dropped considerably. Having said that, I don't think the gov's plans for these NAMA homes are prudent (much like most of their decisions). There was a huge waiting list for affordable housing back in 2006. Is that still the case? If so, uh... why?0 -
Advertisement
-
If left to the free market, both rent and house purchase price would find its natural lever. But that is one thing the political classes will never allow to happen.
Maybe the IMF will sort this issue out.
Yes, the IMF is well-known for not giving a f*ck about what it does internally to a country's economy. As long as they get paid back, that's all they care about. So, in that way, I think the IMF would benefit Ireland in terms of weeding these things out (subsidies and what-not). Only problem with them is that they tend to dictate where the cut-backs should be to be able to pay them back, such as cutting budgets on education, health, and maintaining the infrastructure.
As for the rent allowances and other subsidies, they are definitely on their way out. I've heard rent allowance is just about gone. Fine Gael want to abolish the first-time buyers mortgage allowance by June of this year. That's one of the reasons I'm purchasing a home now. (call me a vulture if you will)
Speaking of gombean landlords, I remember in 2005, looking for a flat in Rathmines, Dublin, and viewing a "room" that this guy was flogging for €400 a month. It was a 7 square-foot room, no toilet, no kitchen. To quote, he said, "It's a room where you can just, you know, hang out, like." I could have (and should have) punched him in the face then and there. Long may those feckers suffer now...0
![[Deleted User]](/applications/dashboard/design/images/defaulticon.png)
This discussion has been closed.
Advertisement