Housing Bubble Bursting

steve9859

But there's no harm in being a little bit positive occasionally. The constant wingeing and hand wringing by the press and public is one of the reasons that I left Ireland kast year. There are many things about the UK that are not so good, but the one great thing is that everyone is getting on with it, and the environment is so much more positive!

Niallers1 is bang on, in my opinion

MOC1972

www.youtube.com/watch?v=rPILhiTJv7E I think we will be fine compared to these guys

UrsCanB

I reckon they will fall another 20% for sure. That means if you buy today you lose 20% of what you've spent.

steve9859

MOC1972 wrote: »

www.youtube.com/watch?v=rPILhiTJv7E I think we will be fine compared to these guys

Thanks for posting that. Fascinating stuff. $300,000 for that last apartment. God knows what that would translate into if you compared it by average consumer purchasing power to Ireland. Crazy!

Treehouse72

steve9859 wrote: »

But there's no harm in being a little bit positive occasionally. The constant wingeing and hand wringing by the press and public is one of the reasons that I left Ireland kast year. There are many things about the UK that are not so good, but the one great thing is that everyone is getting on with it, and the environment is so much more positive!

You think maybe the UK is a bit more positive than Ireland because it isn't insolvent with 15% unemployment and the IMF running the shop? Maybe? Come on for crying out loud.

Appeals for positivity belong to the Bertie Ahern playbook of political bolloxology and nothing more. If you're not pessimistic about Ireland it's only because you're not paying enough attention.

niallers1

oceanclub wrote: »

That's a website by a recruiter. Getting your news about jobs from there is like getting your news about the property market from an estate agent.

P.

The news on it is still true and correct..

http://www.jobsnews.ie/

http://www.independent.ie/business/irish/100-jobs-for-former-pfizer-cork-plant-2804221.html

steve9859

Treehouse72 wrote: »

You think maybe the UK is a bit more positive than Ireland because it isn't insolvent with 15% unemployment and the IMF running the shop? Maybe? Come on for crying out loud.

Appeals for positivity belong to the Bertie Ahern playbook of political bolloxology and nothing more. If you're not pessimistic about Ireland it's only because you're not paying enough attention.

If that's the way you want to play it, fine! Im a glass half full kind of guy

oceanclub

niallers1 wrote: »

The news on it is still true and correct..

http://www.jobsnews.ie/

http://www.independent.ie/business/irish/100-jobs-for-former-pfizer-cork-plant-2804221.html

Yes, the point is its half the news. No good just reporting on jobs created when you don't report on jobs lost and people emigrating.

P.

djmcr

niallers1 wrote: »

The news on it is still true and correct..

http://www.jobsnews.ie/

http://www.independent.ie/business/irish/100-jobs-for-former-pfizer-cork-plant-2804221.html

Also in relation to getting a mortgage banks are looking for a period of continuous employment minimum 1 year so all those people getting jobs now could not enter mortgage market till next year on that basis and thats before they even save for a deposit

Unrealistic

UrsCanB wrote: »

I reckon they will fall another 20% for sure. That means if you buy today you lose 20% of what you've spent.

Even if house prices do fall a further 20% whether you lose 20% by buying now depends on whether you by for cash or take out a mortgage. There is a real chance that inflation will become the way out for the Eurozone from the crisis it is in now. In that case you could lose by staying in cash waiting for house prices to drop as well. It will all depend on whether inflation is slower or faster than house price drops.

fontanalis

Treehouse72 wrote: »

You think maybe the UK is a bit more positive than Ireland because it isn't insolvent with 15% unemployment and the IMF running the shop? Maybe? Come on for crying out loud.

Appeals for positivity belong to the Bertie Ahern playbook of political bolloxology and nothing more. If you're not pessimistic about Ireland it's only because you're not paying enough attention.

Probably more like the Liz O'Kane playbook.

Treehouse72

steve9859 wrote: »

If that's the way you want to play it, fine! Im a glass half full kind of guy

Yeah, I was pretty rude there. Apologies. I'll leave it now.

jmayo

niallers1 wrote: »

I think the only people that will sell in this climate are distressed sellers or property owners who are highly motivated to sell.

And add that to all the glut of unsold properties that are owned by banks and NAMA.
Also there are a lot of would be distressed sellers, they just haven't been pushed as the banks have had to have a moratorium on repossessions.

niallers1 wrote: »

I think people will hang in there until prices return ...whether they will return or not has to be seen,

Oh dearey me.
I presume you are young.
Our prices from late 90s, especially 2002 onwards to 2007 were bubble prices.
They were over inflated prices not based on any reality.
FFS prices per sq metre were more expensive in Dublin than the likes of Paris or London.
So real prices will never return to 2007.
Wait long enough and they will return to those numbers, but so will the value of money have decreased.

BTW check out the Japanese property bubbnle of the late 80s, early 90s and notice how their prices have not recovered even though we have two world bubbles (including cheap credit fueled global property bubble) in the interveening years.

niallers1 wrote: »

but as long as people are paying their mortgage and believe that things will get better you will not see the mass firesale that some people are expecting and hoping for..

The power of positive thinking eh ?

niallers1 wrote: »

The only way we will see the massive firesale is if interest rates start hitting double digits..

I can't see house prices ever increasing to the same levels either but that's not to say they won't stablise at a higher level from todays prices when the depression is over...

Again check out Japan please.

oceanclub

niallers1 wrote: »

I think people will hang in there until prices return

I didn't even think Bertie would say things like that anymore.

P.

niallers1

It's not what people say it's the way they think and act..If they think their property will bounce back in value then they will not sell to you for the price of a mars bar no matter how much you want them too..


They will not make their paper loss into a real loss unless they really have no option..as long as they can pay the mortgage then there will be no fire sale apart from the nama property out in the middle of nowhere without amenities and public transport.

Godge

Unrealistic wrote: »

Even if house prices do fall a further 20% whether you lose 20% by buying now depends on whether you by for cash or take out a mortgage. There is a real chance that inflation will become the way out for the Eurozone from the crisis it is in now. In that case you could lose by staying in cash waiting for house prices to drop as well. It will all depend on whether inflation is slower or faster than house price drops.

I would like to think so but the German Central Bank has a morbid fear of inflation. If we had inflation of 5% with house prices and wages remaining static, the domestic mortgage and debt issue would solve itself so long as people could pay the interest rates of 9-10%.

Would have to be eurozone-wide inflation and we would have to undershoot the average to remain competitive.

Godge

Godge wrote: »

I would like to think so but the German Central Bank has a morbid fear of inflation.

Plus the fact that the country has built up quite a lot of wealth over the past 40 years or so and have a large retired or soon to be retired.

They would be very hostile to inflating away the debts, it would be better for them to probably write off those foreign debts than to allow inflation to take hold.

OMD

I got the link to this from the property pin. No one really criticised it so I presume is is reasonably accurate. It compares average house price to average wage for each year. The guy who posted it said "the figures for 1986 to 1990 are a bit out, as I couldn’t get average industrial wage figures for those years and had to use 1985 and 1991 figures instead".

I find it interesting for a number of reasons. Firstly it shows that over the last 40 years house prices in Ireland have averaged a bit over 5 times average income, have hardly ever gone below 4 times average income and never reached the fabled 3 times average income that is spoken about so often.

1973 avnhp: €9,009.00 , avindw: €1,599.9 , ratio: 5.631
1974 avnhp: €10,836.00 , avindw: €1,950.4 , ratio: 5.556
1975 avnhp: €13,254.00 , avindw: €2,520.7 , ratio: 5.258
1976 avnhp: €15,564.00 , avindw: €2,921.5 , ratio: 5.327
1977 avnhp: €18,754.00 , avindw: €3,385.0 , ratio: 5.540
1978 avnhp: €24,082.00 , avindw: €3,937.2 , ratio: 6.117
1979 avnhp: €29,387.00 , avindw: €4,624.2 , ratio: 6.355
1980 avnhp: €34,967.00 , avindw: €5,506.3 , ratio: 6.350
1981 avnhp: €40,167.00 , avindw: €6,387.7 , ratio: 6.288
1982 avnhp: €44,060.00 , avindw: €7,326.9 , ratio: 6.013
1983 avnhp: €44,448.00 , avindw: €8,286.2 , ratio: 5.364
1984 avnhp: €45,419.00 , avindw: €9,261.5 , ratio: 4.904
1985 avnhp: €46,542.00 , avindw: €10,048.1 , ratio: 4.632
1986 avnhp: €48,256.00 , avindw: €10,048.1 , ratio: 4.803 **
1987 avnhp: €48,151.00 , avindw: €10,048.1 , ratio: 4.792 **
1988 avnhp: €52,450.00 , avindw: €13,707.5 , ratio: 3.826 **
1989 avnhp: €58,178.00 , avindw: €17,293.7 , ratio: 3.364 **
1990 avnhp: €65,541.00 , avindw: €17,293.7 , ratio: 3.790 **
1991 avnhp: €66,914.00 , avindw: €17,293.7 , ratio: 3.869
1992 avnhp: €69,264.00 , avindw: €18,183.7 , ratio: 3.809
1993 avnhp: €69,883.00 , avindw: €18,841.7 , ratio: 3.709
1994 avnhp: €72,732.00 , avindw: €19,481.6 , ratio: 3.733
1995 avnhp: €77,994.00 , avindw: €19,879.2 , ratio: 3.923
1996 avnhp: €87,202.00 , avindw: €20,692.2 , ratio: 4.214
1997 avnhp: €102,222.00 , avindw: €21,377.6 , ratio: 4.782
1998 avnhp: €125,302.00 , avindw: €22,868.6 , ratio: 5.479
1999 avnhp: €148,521.00 , avindw: €24,165.5 , ratio: 6.146
2000 avnhp: €169,191.00 , avindw: €25,786.0 , ratio: 6.561
2001 avnhp: €182,863.00 , avindw: €27,919.0 , ratio: 6.550
2002 avnhp: €198,087.00 , avindw: €29,872.1 , ratio: 6.631
2003 avnhp: €224,567.00 , avindw: €31,513.5 , ratio: 7.126
2004 avnhp: €249,191.00 , avindw: €33,338.3 , ratio: 7.475
2005 avnhp: €276,221.00 , avindw: €35,277.5 , ratio: 7.830
2006 avnhp: €305,637.00 , avindw: €37,477.1 , ratio: 8.155

If you take average industrial wage (as distinct from average wage) at €36,000 that means based on the last 40 years, house price should settle somewhere between 4 and 5 times this or €144,000 to €180,000. Using the latest CSO data average prices are now about €178,000 according to Goodbody Stockbrokers
http://www.independent.ie/national-news/surprise-rise-in-house-prices-sign-of-capital-bottoming-out-2803480.html

Godge

jmayo wrote: »

So we have reached the bottom in Dublin?

It is a brave man who would call the bottom of the market (not me:)). The figures suggested a small rise in Dublin. I said that at best, prices would bump along the bottom for four or five years. At worst, there is another 20-30% to go (mostly as a result of significant interest rate rises).

It's the infamous "average" that's the problem, stick a few trophy houses in there and the average is out of kilter.

A more realistic method would have been to define an average house (3-4 bed semi 12-1600ft2) and match that to the average wage.

OMD

Deleted User wrote: »

It's the infamous "average" that's the problem, stick a few trophy houses in there and the average is out of kilter.

A more realistic method would have been to define an average house (3-4 bed semi 12-1600ft2) and match that to the average wage.

Well we are talking the average over 40 years so you would want a hell of a lot of trophy homes to put the average out of kilter. The average also includes total wrecks that need to be completely renovated which would bring the average down. Also you seem to be assuming there was many more "trophy homes" sold in the past 40 years than have been sold this year. Have you any way of backing this up? It is swings and roundabouts really. But, hey if you have better figures then I have no poblem accepting them.

OMD

Just to add, with regards Dublinprices. Rental yields are also improving in Dublin. The last Daft report said Dublin yields varied from 4.3% to 6.2% depending on area

Spiritofthekop

Godge wrote: »

It is a brave man who would call the bottom of the market (not me:)). The figures suggested a small rise in Dublin. I said that at best, prices would bump along the bottom for four or five years. At worst, there is another 20-30% to go (mostly as a result of significant interest rate rises).

I know loads of people in the industry and ALL of them say its not bottomed out & is no where near it. They laugh at that news of a small rise in Dublin you mentioned when i said it. They say its complete rubbish. And this is coming from people who jobs depend on it rising again.

Spiritofthekop

OMD wrote: »

Just to add, with regards Dublinprices. Rental yields are also improving in Dublin. The last Daft report said Dublin yields varied from 4.3% to 6.2% depending on area

Again i cant understand it...two of my friends have only just recently had a rent reduction in said to be good areas.

Daft is pointless to go on for realistic house prices, rents etc...its the worst "go for stats" out there.

Again im only going of recent information from people who work in the industry and have done for a long time.

OMD

Spiritofthekop wrote: »

Again i cant understand it...two of my friends have only just recently had a rent reduction.

Daft is pointless to go on for realistic house prices, rents etc...its the worst "go for stats" out there.

2 friends, really. Ah well. That must be correct. Sorry for posting statistics in the face of such over-whelming evidence

Spiritofthekop

OMD wrote: »

2 friends, really. Ah well. That must be correct. Sorry for posting statistics in the face of such over-whelming evidence

What Daft.ie???..fair enough then.

I like to listen to people in the know & people who are actually affected by it, not Daft.ie who are well known to have 100's idle overpriced/rently properties sitting empty on their site for months/years which dictate their stats.

OMD

Spiritofthekop wrote: »

What Daft.ie???..fair enough then.

I like to listen to people in the know & people who are actually affected by it, not Daft.ie who are well known to have 100's idle overpriced/rently properties sitting empty on their site for months/years which dictate their stats.

You obviously don't know how daft produces its rental report.

Zamboni

OMD wrote: »

If you take average industrial wage (as distinct from average wage) at €36,000 that means based on the last 40 years, house price should settle somewhere between 4 and 5 times this or €144,000 to €180,000. Using the latest CSO data average prices are now about €178,000 according to Goodbody Stockbrokers
http://www.independent.ie/national-news/surprise-rise-in-house-prices-sign-of-capital-bottoming-out-2803480.html

I take your point but you also have to account for the availability of cash.
We have an unprecedented banking collapse and these banks are not in a position to provide mortgages even if house prices are between 4 and 5 times the average wage.

OMD

Zamboni wrote: »

I take your point but you also have to account for the availability of cash.
We have an unprecedented banking collapse and these banks are not in a position to provide mortgages even if house prices are between 4 and 5 times the average wage.

I agree about the credit shortage and that will obviously depress prices but, in the medium term, if we consider where are prices going to settle? Well we don't seem to be too far off the historical average price (in relation to incomes).

Caoimhín

OMD wrote: »

Well we don't seem to be too far off the historical average price (in relation to incomes).

We are in new territory when it comes to economic disaster and financial meltdown though.