Housing Bubble Bursting

Fr0g

Fr0g wrote: »

Two things:

1. Blaming the banks is no longer an option. We ARE the banks. Thanks to the disastrous blanket bank guarantee the banks cant fail. If they lose the taxpayer borrows money to make up the shortfall. As yer man said "we're all monkeys now".

2. High house prices are a BAD THING.
High house prices wrecked our economy.
High house prices means higher mortgage repayments means more money to the banks and less money spent in the economy. (Unless you can borrow more and more for ever and ever).
High house prices means higher wages which makes us uncompetitive in the global jobs marketplace (we have been losing manufacturing jobs since 2000).
People associate high house prices with a thriving economy. This is wrongful thinking it only works short term when there is a glut of cheap easy credit available.

So to those who think of rising or falling prices in terms of who gains and who loses out the truth is we all lose out with high house prices.

The recent docu. by richard curran was perpetuating the myth that recovery is tied into a "recovery" of house prices. IMO house prices ARE recovering to normal sustainable levels.

+1
But I would add,
We may be the banks, but we have not taken responsibility for issuing currency from the banks yet, they are still lending it to us to give to them! :rolleyes:

nxbyveromdwjpg

Monty Burnz wrote: »

If you don't mind me answering - I of course think that people should be able to rent. I've rented all my adult life. The issue is with BTL investors looking for bailouts or hoping that market manipulation will hold up the value of their assets at the expense of the taxpayer, the next generation of first time buyers, and the standard of living of everyone in the state.

I'm very glad that there are good landlords out there (along with plenty of bad ones) providing a service to those who don't want to buy (yet or ever). Of course, we do need to revolutionise the laws around renting here - a copy and paste from the German model should work fine - but that's another discussion.

That was the obvious answer, however what I was really trying to understand was what it was that called for this comment from spiritofthekop -

"He has no problem with good honest people paying for his own personally greedy life. When did it change that one house was not enough for some people. Then when it goes tits up they want their money back and "daddy" to help them."

TKline

jmayo wrote: »

A big reason for our property bubble was the fact that property investment/speculation was made too attractive due to lack of ongoing taxes.

I put the blame squarely on the real estate industry and their constant spin and propaganda, anything to pump up the bubble.

They've recently been exposed as engaging in 'astroturfing' which is basically paying shills and spruikers to come on to forums and message boards pretending to be normal punters, and pumping up the market with RE spin. Check this out...

On the Internet, nobody knows you're a dog, or a paid property spruiker

Bottom line is you can't trust anyone in the RE game!

Caoimhín

TKline wrote: »

I put the blame squarely on the real estate industry and their constant spin and propaganda, anything to pump up the bubble.

Bottom line is you can't trust anyone in the RE game!

While I dislike them as much as anyone, to be fair, they were just doing their job, playing the game as such. Sure, many of them were dishonest and some were out right crooks but they were only making the most of the opportunity that was presented to them by bad governance, planning and financial regulation.

gurramok

TKline wrote: »

I put the blame squarely on the real estate industry and their constant spin and propaganda, anything to pump up the bubble.

They've recently been exposed as engaging in 'astroturfing' which is basically paying shills and spruikers to come on to forums and message boards pretending to be normal punters, and pumping up the market with RE spin. Check this out...

On the Internet, nobody knows you're a dog, or a paid property spruiker

Bottom line is you can't trust anyone in the RE game!

Sure don't i know, myself and others battled them in this thread a few years ago. Sadly such shills have disappeared

nxbyveromdwjpg

Spiritofthekop - I'm still waiting on that explanation, the silence is deafening

Spiritofthekop

nm wrote: »

Spiritofthekop - I'm still waiting on that explanation, the silence is deafening

In short.

Many many people right now would gladly see the people who stayed & lived by what they obviously knew they could only afford.... pay for there own bad investment in properties & lifestyles...in other words its asking "daddy" for a bailout.


To quote...

"I love the way no one wants to share positive equity on the way up but are so eager to share neg equity on the way down!"



But to be honest Im done talking about it now as this country is run by back scratching greedy scumbags which includes most of the media.

The fact that a dragons den (rte's tv show) business chancer who has allegedly taken on dodgy loans & is allegedly in bad debt is running for president says it all really.

Good luck!

Heisenberg1

Spiritofthekop wrote: »

In short.

Many many people right now would gladly see the people who stayed & lived by what they obviously knew they could only afford.... pay for there own bad investment in properties & lifestyles...in other words its asking "daddy" for a bailout.


To quote...

"I love the way no one wants to share positive equity on the way up but are so eager to share neg equity on the way down!"



But to be honest Im done talking about it now as this country is run by back scratching greedy scumbags which includes most of the media.

The fact that a dragons den (rte's tv show) business chancer who has allegedly taken on dodgy loans & is allegedly in bad debt is running for president says it all really.

Good luck!

Excellent post you hit the nail on the head.

fontanalis

Spiritofthekop wrote: »

In short.

Many many people right now would gladly see the people who stayed & lived by what they obviously knew they could only afford.... pay for there own bad investment in properties & lifestyles...in other words its asking "daddy" for a bailout.


To quote...

"I love the way no one wants to share positive equity on the way up but are so eager to share neg equity on the way down!"



But to be honest Im done talking about it now as this country is run by back scratching greedy scumbags which includes most of the media.

The fact that a dragons den (rte's tv show) business chancer who has allegedly taken on dodgy loans & is allegedly in bad debt is running for president says it all really.

Good luck!

The fact he's in FF makes it worse.

kleefarr

To quote...

*"I love the way no one wants to share positive equity on the way up but are so eager to share neg equity on the way down!"*

Head - Nail.

Zamboni

The property market has bottomed out.

Well according to Minister Michael Noonan on Matt Cooper last night.

25% mortgage interet relief for FTBers in 2012.

There has never been a better time to buy etc...

Is this like using a defibrillator on a person who has been dead for a couple of says?

Treehouse72

Zamboni wrote: »

Is this like using a defibrillator that isn't plugged in on a person who has been dead for a couple of days?

Revised.

Villa05

Zamboni wrote: »

The property market has bottomed out.

Well according to Minister Michael Noonan on Matt Cooper last night.

Well when NAMA are being forced to sell their stock to generate some cash for the troika, you can't blame a man with a massive vested interest from talking up the market.

Unfortunately there will be a few fools who will believe him and jump head first into this trap judging by some of the posts around here.

I'm glad I never voted FG, there worse than the last shower. After what we have been through in this country, giving incentives to buy property is completely unforgivable.

Vote for change, we were told. Shame on you FG FF & Lab. I hope when the history books are written that you are held up as the SCUM that have destroyed this country. :mad:

Spiritofthekop

Copied from another forum*

Disastrous budget for the property market.

Michael Noonan has just laid out a series of budget measures on the residential property market that show a few things:

1. That this crowd have not learnt from the mistakes on property of the last crowd
2. That this government thinks that cheap property is a bad thing and expensive property a good thing
3. That it is not desirable to find a floor on the property market
4. That transfer payments in the direction of "home-owners" from other citizens are ok

The personal insolvency legislation in train and the new property price database were signals maybe the government finally got it on property. Today shows they're clueless. A series of proposals to keep BTL investors in business, to stimulate property investment and property purchase in general, and no indication they want a natural floor to be found on the market.

They are so far off track here I'm almost in shock at it.


(I'm making no mention of measures on commercial property, which I didn't fully take in at the time).

spockety

I suspect there are very influential vested interests pulling these strings, not tied to any particular party or govt.

Conspiracy? Yes.

More like desperation and giving lip service to the VI's, they know that nothing is going to change until the whole economic outlook improves.

Dan133269

How would a collapse of the euro affect Irish property prices?

We can presume there would be devaluation of the new punt and possible inflation. Would house prices be affected strongly?

Tigger

Dan133269 wrote: »

How would a collapse of the euro affect Irish property prices?

We can presume there would be devaluation of the new punt and possible inflation. Would house prices be affected strongly?

punt nua would devaalue by 20-30% imho so house asking prices would drop in real terms

house prices are however much lower than the dreamer asking prices that people aren't getting

jmayo

Villa05 wrote: »

Well when NAMA are being forced to sell their stock to generate some cash for the troika, you can't blame a man with a massive vested interest from talking up the market.

Unfortunately there will be a few fools who will believe him and jump head first into this trap judging by some of the posts around here.

I'm glad I never voted FG, there worse than the last shower. After what we have been through in this country, giving incentives to buy property is completely unforgivable.

Vote for change, we were told. Shame on you FG FF & Lab. I hope when the history books are written that you are held up as the SCUM that have destroyed this country. :mad:

I think you need to bear in mind what you said in your first sentence.
You cannot trust someone to tell you what a good investment something is if they have a huge vested interest in selling it.
The government, and by extension us taxpayers, have become the biggest landlord in the world and it would be in our interests that we get good prices for our worthless stockpile of crud.
On the other side it is always bad to have overly high property prices.

Even though I am an avid champion of realistic property prices (check my posts around here and elsewhere), I sometimes would like prices back at 2006 levels so that us taxpayers could get back some of the money spent on NAMA and bank recapitalisation.
I know it is unrealistic, but sometimes I wish I as a taxpayer was not sitting on a wad of deeds of worthless sh**.

When noonan or any financial related government minister speaks about property prices, they must also be thinking how the feck do we offload all the cr** in NAMA, make some money back and move on.

As many of us have often pointed out, high house prices does not equate to high performing economy.
It is usually the other way around.
Sadly in Ireland we turned this truism on it's head and anything involved with property was equated to entrepreneurship, investment, etc.

noxqs

Allsop auctions value properties in Ireland at 70% below peak.

Is this the bottom? Maybe not - even if - will we see prices go up in the next five years? Doubtful.

How long would it take for a property bought in 2007 to get back to 2007 prices assuming 70% was the bottom and 5 years flatline with a 3% p.a. increase in prices after that?

46 years according to my calculations.

People can try to talk up the market all they want - but 2006 prices won't return in our life times (well maybe if I give up smoking and drink and exercise more).

Also keep in mind there's more austerity budgets on the horizon, the eurozone is highly unstable at this time and in the near future, property taxes will rise, mortgage interest relief will end in 5 years (2017 budget), real income down nationally due to unemployment/no salary increase or cuts/inflation, very high personal debt levels among core demographics, etc.etc.

Given such an outlook - regardless of current house prices - it would be madness to buy now. IF for no other reason than to maintain social movability (emigration, moving counties, across town, whatever). I think the general public is copping on and I read the comments on irish times etc on these 'talk up the market' pieces and no one is listening. It is a bad move to try to get the property circus running at full speed again - better to bite the bullet now and do whats necessary. Japan tried the same strategy as Ireland and it didn't work - and why should it be different in an economy the size of a suburb of Tokyo?

Ireland has to find a sustainable economy - selling houses to each other in a great ponzi scheme is hardly future proof.

Take away all the MNC in Ireland - whats left? Agriculture only makes up 6% of GDP by the way, so we can't even rely on that. Where is the support for entrepreneurs in Ireland given that bank funding is a no-go? If the MNCs leave - and why wouldn't they go to Poland or whatever tomorrow? Then its well and truly lights out because not enough has been invested in building home grown companies.

amacachi

noxqs wrote: »

Allsop auctions value properties in Ireland at 70% below peak.

Is this the bottom? Maybe not - even if - will we see prices go up in the next five years? Doubtful.

How long would it take for a property bought in 2007 to get back to 2007 prices assuming 70% was the bottom and 5 years flatline with a 3% p.a. increase in prices after that?

46 years according to my calculations.

People can try to talk up the market all they want - but 2006 prices won't return in our life times (well maybe if I give up smoking and drink and exercise more).

My complete guess is that whatever actual prices property is at now is where it'll be again in 10 years time. Plenty more falls in take-home-pay to come, no abating in the unemployment rate coming around the corner, still a decent surplus of property waiting to be dumped. The lack of reliable statistics makes everything a lot harder to judge obviously but I think we're nearing the bottom. Few years stagnation, few years slow growth then the bubble starts getting blown properly again around 2020.

noxqs

amacachi wrote: »

Few years stagnation, few years slow growth then the bubble starts getting blown properly again around 2020.

I highly doubt we will see a bubble in Irish property prices in our life times. Again, people who will be FTBs in 2020 are teenagers now witnessing what happened. I'd expect them to be more realistic. I'd also expect 8 years from now situation hasn't changed too much for the better. The Eurozone is in deep crisis and this isn't something thats resolved in less than 10 years.

In the last 100 years we've had some big depressions/recessions. Those who lived through them are generations known for their frugality. Curiously the asset bubbles of our time seems to correspond with the expected mortality rates of people born in 1900, 1920, 1930, 1940. But I will entertain that hypothesis another time .

Tigger

when its good its good forever and when its bad its bad forever

not

it will come around but not till we hit bottom

Zamboni

noxqs wrote: »

I highly doubt we will see a bubble in Irish property prices in our life times. Again, people who will be FTBs in 2020 are teenagers now witnessing what happened. I'd expect them to be more realistic.

You have greater faith in the Irish than I do!
I reckon we'd have a bubble starting tomorrow if banks began offering 100% mortgages.

ronan45

Just wondering, Has Ireland ever taken such Property Crash Before or is this Irelands first full Scale Property Crash?
In the reccession of the 80s or even before did house prices go up or down or have we allways been on an upward slope as regards property prices?

Bigcheeze

ronan45 wrote: »

Just wondering, Has Ireland ever taken such Property Crash Before or is this Irelands first full Scale Property Crash?
In the reccession of the 80s or even before did house prices go up or down or have we allways been on an upward slope as regards property prices?

There were years of stagnation and some downward movement in the eighties (maybe 10-15% drop) but you would never have called it a crash.

robd

Bigcheeze wrote: »

There were years of stagnation and some downward movement in the eighties (maybe 10-15% drop) but you would never have called it a crash.

Exactly. This was one of the catalysts for the property boom/crash. Most people who remembered the eighties and where home owners would say Irish property never went down like in Britain. They try believed this would support the current boom too.

ronan45

http://www.dailymail.co.uk/money/mortgageshome/article-2071640/The-worlds-distressed-property-markets--grab-bargain-house.html

Ireland
Property prices are still falling in Ireland with and declined 8.5 per cent in the first six months of the year. This means prices even in Dublin are more than 50 per cent below their peak in 2007.
In fact the latest research from the Global Property Guide found the Irish housing market to be the world’s weakest performer. It says house prices are down 15.61 per cent year-on-year, the steepest decline since 2008. Quarter-on-quarter, Ireland’s house prices slid 4.25 per cent.

IPS spokesperson Brett Tudor says: ‘Falling rental yields and distressed sale auctions are now commonplace in Ireland so now could be the time to pick up some real bargains, but how low can property prices go in a background of such deep economic uncertainty?’
James Hickman, managing director of currency specialists Caxton FX, warns that Ireland’s economic outlook is inevitably tied to what’s happening in the troubled eurozone.
‘Additionally, if worst came to worst and Ireland did drop out of the eurozone, we would see inflation soar, further economic contraction and a falling housing market,’ he says, While, property prices might be cheap at the moment, it is too early to say whether the country’s economic fortunes will improve and that’s why investing in an Irish property might not be the wisest choice.’


Read more: http://www.thisismoney.co.uk/money/mortgageshome/article-2071640/The-worlds-distressed-property-markets--grab-bargain-house.html#ixzz1g23Pren2

jmayo

ronan45 wrote: »

Just wondering, Has Ireland ever taken such Property Crash Before or is this Irelands first full Scale Property Crash?
In the reccession of the 80s or even before did house prices go up or down or have we allways been on an upward slope as regards property prices?

We did not have a property bubble to have a crash.
Although there had been increases in agricultural land prices in late 70s/early 80s and then it flatlined for years really until the last decade.

The recession in the 80s was not down to us having a bubble.
We did have increased public spending and a screwed up budget deficit after another ff government led by lynch bought the 1977 election.
Also the 70s had a serious of oil crisis culminating in the problems of 1979 due to Iran and this did not help developed world economies.

robd wrote: »

Exactly. This was one of the catalysts for the property boom/crash. Most people who remembered the eighties and where home owners would say Irish property never went down like in Britain. They try believed this would support the current boom too.

But Irish property never went up like British property for it to go down.
AFAIK we never had a property bubble like the one post 2002 and thus never had a property crash.
Remember how some people said we would be different because we never had house prices drop.
Well we were different because we never had a bubble either.
How anyone could reason that our bubble (one of the worse anywhere) would be immune from the normal fallout beggars belief.

Ray Palmer

People seem to be blaiming the property bubble for everthing in Ireland. That kind of misses what actually happened and is happening. THis is a world wide issue with banking that the property bubble in Ireland was an is a minor symptom. The world banks crashed which casued our bubble to pop. It didn't happen on its own.
Controls on our banks were missing due to Euro banking. People sem to think we were able to control a lot of things that we had not control of. The government did fail but not in the way people are saying. We were a small finh in a big bond and we pretty much rode the waves.

Generations do not learn from each other and a property bubble will happen again.