Housing Bubble Bursting

shoegirl

iguana wrote:

This week I took a look and was surprised to see a variety of houses in Crumlin, Kimmage, Rialto, Stoneybatter and Glasnevin affordable to me at either similar or reduced mortgage repayments. That is even taking into account that I estimated a mortgage on a sale price €20k above the asking. There was even one in Harold's Cross that was very nearly in my price range.

I am actually surprised to see price drops in these areas. Places like Lucan and Santry are no surprise as commuter areas will always become less desirable and see the worst losses when prices drop. But if areas within 2/3k of the city centre are already seeing reductions then it suggests that price drops in Dublin could be pretty severe.

This is exactly what makes me feel the market is in big trouble. When the market started to stagnate last year, the first place to report price drops was South Dublin - yet this is the area of most demand, the highest rises of all over the last 10 years - by a long shot.

The other issues include the fact that such a high proportion (some say as much as 50%?) of landlords not declaring tax (which makes them liable to back tax rates if/when they are caught that would be enough to force them to sell), that 33-50% of the rented sector is entirely dependent on rent-subsidised social welfare recipient tenancies, very poor planning practices that quite honestly make a lot of areas very unattractive for both owner occupiers and tenants (for example, a lot of rural areas outside Dublin are simply impossible for non-car owners which shuts out a lot of potential residents), high petrol prices and rapidly escalating publis transport fares discouraging long distance commuting, not to mention congestion. I would guess that a lot of these factors will only exacerbate the fundamental issue of what the realistic, sustainable values of properties should be as opposed to prices reached by years of "panic buying." I think we are going to be hit very hard indeed, especially as interest rates settle into more traditional norms.

johnnyskeleton

shoegirl wrote:

The other issues include the fact that such a high proportion (some say as much as 50%?) of landlords not declaring tax (which makes them liable to back tax rates if/when they are caught that would be enough to force them to sell), that 33-50% of the rented sector is entirely dependent on rent-subsidised social welfare recipient tenancies, very poor planning practices that quite honestly make a lot of areas very unattractive for both owner occupiers and tenants (for example, a lot of rural areas outside Dublin are simply impossible for non-car owners which shuts out a lot of potential residents), high petrol prices and rapidly escalating publis transport fares discouraging long distance commuting, not to mention congestion. I would guess that a lot of these factors will only exacerbate the fundamental issue of what the realistic, sustainable values of properties should be as opposed to prices reached by years of "panic buying." I think we are going to be hit very hard indeed, especially as interest rates settle into more traditional norms.

I'd just like to say that's a very succinct analysis of the market, and it is much more worrying than anything else I've read so far.

tHE vAGGABOND

for example, a lot of rural areas outside Dublin are simply impossible for non-car owners which shuts out a lot of potential residents

people like me

This is why I think these kind of area's, outside of Dublin will get hit. But I dont think central Dublin, and most cities will get hit anywhere near as hard..

Im in the market right now for, and I have bid on 3 2 bed apartments now, and all have gone for **way** over their listed price. Good places are still generating interest and selling for big money..

Its the crappie places you mention which are not selling. Why would you spend 380 on a tiny 2 bed place, with rubbish fixtures and fittings when you can get a nice sized 2 bed place with nice fixtures and fittings down the road for the same money?

SkepticOne

tHE vAGGABOND wrote:

Its the crappie places you mention which are not selling. Why would you spend 380 on a tiny 2 bed place, with rubbish fixtures and fittings when you can get a nice sized 2 bed place with nice fixtures and fittings down the road for the same money?

If it is anything like London in the early nineties, the really crappy places will just fall out of the market. They won't sell at any price. The better places will just end up being reduced in price substantially in order to sell, but they will sell.

mikemac

I've being following this thread for a long time.

My main fear at this stage is the government will spend hundred of millions (even billions?), buying up propertys from overstretched developers and amatuer investors for social housing.

The government has a responsibilty for social housing but if our tax money is to be spent, I'd like value for money if possible.
Don't buy up estates of poor quality housing for overflated values. Why not bargain hard and buy at the lowest possible price. Or build local authority homes if the existing housing stock is not good value.

I'm thinking of my own small village of 600 people in the lovely area of North Tipp. 2 estates of damn ugly Section 23 houses springing up at €250,000 each. Locals wouldn't touch them and it'd be a foolish investor to buy them. Yes there is tax relief but they sure ain't worth the asking price. I don't want my taxes spent on buying these at €250,000 each despite the long waiting list for local authority housing.

I don't ask for much from the government, just value for my hard earned money please.

Me, I'm working in the big smoke, can spin into work from my rented flat on my moped in 4 minutes and central to everything I want.
Hope to build an an inherited site in Tipp in 2-3 years time and no plans to buy in commuter land in the meantime like all my colleagues and friends. Must start saving harder:)

ronbyrne2005

micmclo wrote:

I've being following this thread for a long time.

My main fear at this stage is the government will spend hundred of millions (even billions?), buying up propertys from overstretched developers and amatuer investors for social housing.

The government has a responsibilty for social housing but if our tax money is to be spent, I'd like value for money if possible.
Don't buy up estates of poor quality housing for overflated values. Why not bargain hard and buy at the lowest possible price. Or build local authority homes if the existing housing stock is not good value.

I'm thinking of my own small village of 600 people in the lovely area of North Tipp. 2 estates of damn ugly Section 23 houses springing up at €250,000 each. Locals wouldn't touch them and it'd be a foolish investor to buy them. Yes there is tax relief but they sure ain't worth the asking price. I don't want my taxes spent on buying these at €250,000 each despite the long waiting list for local authority housing.

I don't ask for much from the government, just value for my hard earned money please.

Me, I'm working in the big smoke, can spin into work from my rented flat on my moped in 4 minutes and central to everything I want.
Hope to build an an inherited site in Tipp in 2-3 years time and no plans to buy in commuter land in the meantime like all my colleagues and friends. Must start saving harder:)

Hopefully enough people will be aware of the real value of properties when they have crashed and stop government from wasting millions/billions on paying over the odds, but the government is already spending 13billion a year on health alone and im sure the job could be done for a few billion less if the system was efficient(people in the system can be individually working hard but not neccesarily efficiently) but the government seems incapapble of getting value for (taxpayers)money.

Zambia

Link to predictions on the UK Market

Nothing to new http://news.bbc.co.uk/1/hi/business/6549299.stm

gurramok

Zambia232 wrote:

Link to predictions on the UK Market

Nothing to new http://news.bbc.co.uk/1/hi/business/6549299.stm

To quote from 'Have your say' section of that..

'If the average UK salary is £25k and the average UK house price is £175k, that gives an average salary/house price of 7:1. That means all average income earners, not just so called key workers, cannot afford to buy a house,'


Assuming avergae wage here is 34k which is optimistic and Irish house prices summarised from http://www.finfacts.com/biz10/irelandhouseprices.htm...

The UK think they have it bad when affordability is at 7:1 on their overpopulated island, here the ratio is at least 9:1 nationally, 12.6:1 in Dublin which throws us in a hell of a lot worse light as they have higher interest rates and we have no housing shortage.

whizzbang

gurramok wrote:

The UK think they have it bad when affordability is at 7:1 on their overpopulated island, here the ratio is at least 9:1 nationally, 12.6:1 in Dublin which throws us in a hell of a lot worse light as they have higher interest rates and we have no housing shortage.

Dont' fortget they actually control their own interest rates! We are at the mercy of the ECB who are not goign to take our needs into account when they decide on any interest rate hikes!

jimmycrackcorm

whizzbang wrote:

Dont' fortget they actually control their own interest rates! We are at the mercy of the ECB who are not goign to take our needs into account when they decide on any interest rate hikes!

Having your own central bank doen't necessarily mean you have much more control over interest rates either especially in such an open economy as ours. It's easy to put up the rates - not so easy to bring them down.

whizzbang

jimmycrackcorm wrote:

Having your own central bank doen't necessarily mean you have much more control over interest rates either especially in such an open economy as ours. It's easy to put up the rates - not so easy to bring them down.

Well even some control is better than no control at all!

tHE vAGGABOND

The UK think they have it bad when affordability is at 7:1 on their overpopulated island, here the ratio is at least 9:1 nationally, 12.6:1 in Dublin which throws us in a hell of a lot worse light as they have higher interest rates and we have no housing shortage.

I lived in London for 6 years and believe me when I say that you could not buy a car parking space in much of London for 175 K TB..

Anywhere inside M25 things start at 350-400, and rise very quickly indeed. Just like Dublin. Its just as bad, if not worse than here TBH..

In the crappie parts of Liverpool and Birmingham [and such northern cities] you can get an ex-council house/flat for less than a 100K - which brings the average down I would bet. [ex-house mates mum bought a house in a horrible estate right beside John Lennon Airport in Liverpool for 30 grand 3 years ago!]

whizzbang

tHE vAGGABOND wrote:

I lived in London for 6 years and believe me when I say that you could not buy a car parking space in much of London for 175 K TB..

Anywhere inside M25 things start at 350-400, and rise very quickly indeed. Just like Dublin. Its just as bad, if not worse than here TBH..

In the crappie parts of Liverpool and Birmingham [and such northern cities] you can get an ex-council house/flat for less than a 100K - which brings the average down I would bet. [ex-house mates mum bought a house in a horrible estate right beside John Lennon Airport in Liverpool for 30 grand 3 years ago!]

To be fair the UK has had a huge increase in prices as well and some think it is ready to pop. On top of that is London, center of global business and industry, this is Dublin, center of, erm, pannini and beer.

TheBigLebowski

whizzbang wrote:

To be fair the UK has had a huge increase in prices as well and some think it is ready to pop. On top of that is London, center of global business and industry, this is Dublin, center of, erm, pannini and beer.

Pannini and beer? I'm not sure if you've heard some facts about Ireland and its growth in the last 20 years. Our economy has grown faster than any other in Europe. Our GDP is 2nd only to Luxembourg. We have one of the lowest unemployment rates in the world. Don't let your obsession with trying to prove yourself right on falling house prices cloud your judgement. Obviously you dont own a house or possibly sold before you should have and now you feel the need to make yourself feel better about it?

whizzbang

TheBigLebowski wrote:

Pannini and beer? I'm not sure if you've heard some facts about Ireland and its growth in the last 20 years. Our economy has grown faster than any other in Europe. Our GDP is 2nd only to Luxembourg. We have one of the lowest unemployment rates in the world. Don't let your obsession with trying to prove yourself right on falling house prices cloud your judgement. Obviously you dont own a house or possibly sold before you should have and now you feel the need to make yourself feel better about it?

ooops! hit a nerve there!

You are right we have grown a lot in 20 years, but I think the last 6 or so years have seen us stop growing in value. The last 6 years have all been based on cheap money and not on a sound growing economy. Its a great place to live don't get me wrong, but there is no where near the same amount of money generation in Dublin as there is in London. Also, isn't our GDP completely skewed by international companies funneling profits through Ireland to get our low corporation tax rate? This is money that comes and goes in a blink of an eye and in no way represents value being generated in this country.

We seem to be a country of people borrowing German money to build houses and sell them to each other! What do we export? What are we doing that bring money into the country? What do we manufacture? What justifies all the money sloshing around in the economy these days? We are living in a dream land of debt.

iguana

tHE vAGGABOND wrote:

I lived in London for 6 years and believe me when I say that you could not buy a car parking space in much of London for 175 K TB..

Anywhere inside M25 things start at 350-400, and rise very quickly indeed. Just like Dublin. Its just as bad, if not worse than here TBH..

I bought a 3 double bed, 2 livingroom, 20ft kitchen-diner, 1 & 1/2 bath victorian house, with a back garden big enough for 2 springer spaniels for £250k in zone 3(15 mins to Oxford Circus) last year. There are plenty of pockets of London with relatively reasonable house prices, as long as you are willing to forego immediate proximity to decent cafes and pubs anyway.

This 2-bed flat in a 1930's block is £150k and overlooks a 16th century castle and park and is in zone 3.

London is much more reasonable than Dublin to buy in, despite the bigger population density. Partly because the transport system means that places 10 miles from the city can be 20 minutes from central London. So desirabilty based on proximity to the city is slightly less of a factor. In Dublin I would never have considered a house 7 miles from the city because I neither drive nor have a raging desire to sit in a car for three hours each day.

babytooth

TheBigLebowski wrote:

Pannini and beer? I'm not sure if you've heard some facts about Ireland and its growth in the last 20 years. Our economy has grown faster than any other in Europe. Our GDP is 2nd only to Luxembourg. We have one of the lowest unemployment rates in the world. Don't let your obsession with trying to prove yourself right on falling house prices cloud your judgement. Obviously you dont own a house or possibly sold before you should have and now you feel the need to make yourself feel better about it?

so what do we do mr lebowski...apt name for such a topic.

as far as i can see, is that we are a glorified tax haven that trys and pulls the patina of a tech industry over all of our eyes..

dublin is absurdly over-priced and there is no one we can blame excpt ourselves and the typical irsh get rich cute hoor syndrome...looking for everything without having to do anyhything.


finanace industry is here for low tax rates, and that only...
look at citibank, what they save on cheap tax is now being erroded away...

property, well we all know about that and cheap crdit.

tech industry....hmm,,,there is some, but again tax reasons, such as SanDisk, 1 billion profit for 4 irish employees...hmmm...some xmas bonus there...

UK is where its at when it comes to finance, and has massive heavy industry and far far superior infrastructure....

dublin has two have arsed trams and one light rail line...ohh did i mention the m50.

even our vaunted agri business is suffering, as well as our city and town atmospheres as we are becoming a country of apartments and suburban shoppping centres (for eg: how many petrol stations have sold up in dublin in the last 5 years)...(or pubs sold for apartments).., looking forward expectantly to that new dior handbag or boss shirt, all one credit..

so when will the doha trade agreement come through, with the removal of the massive eu agri trade subsidys...does rte report on this??..

whizzbang

babytooth wrote:

s (for eg: how many petrol stations have sold up in dublin in the last 5 years)...(or pubs sold for apartments)..,

about 600 apparently....

I've been having to remove them from www.pumps.ie !

babytooth

whizzbang wrote:

about 600 apparently....

I've been having to remove them from www.pumps.ie !

more like over a 1000..

over 50% in the greater dublin area...

TheBigLebowski

babytooth wrote:

so what do we do mr lebowski...apt name for such a topic.

as far as i can see, is that we are a glorified tax haven that trys and pulls the patina of a tech industry over all of our eyes..

dublin is absurdly over-priced and there is no one we can blame excpt ourselves and the typical irsh get rich cute hoor syndrome...looking for everything without having to do anyhything.


finanace industry is here for low tax rates, and that only...
look at citibank, what they save on cheap tax is now being erroded away...

property, well we all know about that and cheap crdit.

tech industry....hmm,,,there is some, but again tax reasons, such as SanDisk, 1 billion profit for 4 irish employees...hmmm...some xmas bonus there...

UK is where its at when it comes to finance, and has massive heavy industry and far far superior infrastructure....

dublin has two have arsed trams and one light rail line...ohh did i mention the m50.

even our vaunted agri business is suffering, as well as our city and town atmospheres as we are becoming a country of apartments and suburban shoppping centres (for eg: how many petrol stations have sold up in dublin in the last 5 years)...(or pubs sold for apartments).., looking forward expectantly to that new dior handbag or boss shirt, all one credit..

so when will the doha trade agreement come through, with the removal of the massive eu agri trade subsidys...does rte report on this??..

Jaysus, thats a bit doom and gloom isn't it. At the end of the day we are only a country of 4.5 million or so. A workforce of 2 million or so. We can't compare to the UK with a population of their size and the long headstart they've had but for a small population like ours, there's plenty to go round.
All my friends, everyone I went to school with all have fairly good jobs and are fairly well paid. They are all buying houses and apts. They can afford it easy enough. Of the people I know, couples are earning on average 70,000 between them and buying places for 350k to 400k. Still plenty of money for beer at the weekend. They are not builders and are not all dependant on the building sector. Surely, if it was all as gloomy as you make out, there would be high unemployment and no economic migrants coming here in their thousands.
And I dont really understand when you say Dublin is over priced. Surely it is worth what someone is willing to pay? If someone is willing to pay 400k for a studio apt in D24 then that is what it is worth to them. It may only be a few years salary.
The country is not perfect but anybody who has travelled much and I don't mean to Barcelona or Frankfurt on a weekend trip. I mean furher afield, Asia, South America, Africa, big parts of Europe, in fact most of the world, they'd know were not doing half bad.

babytooth

TheBigLebowski wrote:

Jaysus, thats a bit doom and gloom isn't it. At the end of the day we are only a country of 4.5 million or so. A workforce of 2 million or so. We can't compare to the UK with a population of their size and the long headstart they've had but for a small population like ours, there's plenty to go round.
All my friends, everyone I went to school with all have fairly good jobs and are fairly well paid. They are all buying houses and apts. They can afford it easy enough. Of the people I know, couples are earning on average 70,000 between them and buying places for 350k to 400k. Still plenty of money for beer at the weekend. They are not builders and are not all dependant on the building sector. Surely, if it was all as gloomy as you make out, there would be high unemployment and no economic migrants coming here in their thousands.
And I dont really understand when you say Dublin is over priced. Surely it is worth what someone is willing to pay? If someone is willing to pay 400k for a studio apt in D24 then that is what it is worth to them. It may only be a few years salary.
The country is not perfect but anybody who has travelled much and I don't mean to Barcelona or Frankfurt on a weekend trip. I mean furher afield, Asia, South America, Africa, big parts of Europe, in fact most of the world, they'd know were not doing half bad.

yes, i agree with alot of what you say, ppl are doing very well...the country has made some inroads and established good employment, albeit by using an attractive tax regime and clever marketing,

BUT THIS ONLY GETS OUR FOOT IN THE DOOR....we need to keep pushing ourselves forward. don't think for a second that alot of jobs can't just go in a blink of an eye....

we are siting on our laurels, the public service, and thier collassal pension bill is going to start sucking us dry...we have over priced staff for an undervalue service.

Take health care, deplorable
galway...no clean drinking water, so this large city, with house prices touching 500k for 3 bed apartments can't even provide clean water.
Take transport, for me to travel 6 miles morning and evening via public transport would take me 1hr and 20 minutes, thats 6 miles, and thats average.
The M50 is offically the slowest motorway in the world, the whole world.
Planning and infrastructure, Rathoath, no school places, same for maynooth, greystones, navan, nass, etc....basically no planning, all from the richest country in the western world second to japan.

We are slipping from competitiveness faster and faster,we are losing what we had for so long and what made us special, and what are we doing, seems to be nothing to stop this, all we seem fixated on is bloody houses, designer fixtures and big black suv's.

we have alot of good, but we are losing sight of it and this insidious public sense of righteousness or expectation that the world owes us will be our downfall....and someone will have to close the barn door once the tiger has fled the scene...

SkepticOne

TheBigLebowski wrote:

And I dont really understand when you say Dublin is over priced. Surely it is worth what someone is willing to pay? If someone is willing to pay 400k for a studio apt in D24 then that is what it is worth to them. I

The problem with this is that it fails to distinguish between market price and fundamental value. If you don't make this distinction then you can't spot bubbles.

miju

i see today that Davy's stockbrokers are expecting unemployment figures to breach 160,000 by the summer as the first effects of the large drop pin ho0using starts begins to show

Do-more

Just heard a mention on the Sunday Business Show on Today FM of reported drops in the price of development land of 25% whilst they didn't mention the specific area, I got the impression they were talking about greater Dublin...

DonJose

Essential viewing.

Future Shock: Property Crash is on RTE One, April 16 at 9.35pm

"HOUSE prices in Ireland could drop by a third in the coming years, leading economists have warned.

The gloomy forecast is worse for first-time buyers who could see the typical €350,000 apartment they bought at the height of the market slashed to just €245,000.

Couples in the commuter belt living in €450,000 homes are also at high risk with warnings that their houses could drop to €315,000 in value within years.

The predication comes in the wake of warnings about an economic downturn unless rising costs are controlled.

Inflation rates have again risen above 5 per cent and experts say that we are in danger of losing competitiveness on the world stage.

Now fresh fears have been issued with news that mortgage debt in Ireland has topped €100bn after a decade of frenzied house buying.

A new RTE documentary examines the state of our housing market with experts warning that first-time buyers of the past 18 months have most to fear.

Interest rate hikes over the past year have taken €1.5bn out of householders' pockets with further rises to come.

Economists are warning that negative equity could be on the way just like the drop in house prices that saw 350,000 Britons have their homes repossessed in the Nineties.

Future Shock - Property Crash to be screened this week will put forward the theory that our economy is wide open to a house price crash.

"It could start tomorrow or take another two or three years but it has got to happen sometime," it warns.

Figures reveal that we are set to inherit €3bn worth of property every year for the next 10 years.

While experts and bank bosses talk about a soft landing the documentary warns that out of 52 global property booms since the First World War, each has ended badly.

"What has been driving the Irish property market particularly over the last few years has been expectations of sentiment. Interest rates increased in 2006 yet house prices rose by 12 per cent. How can one justify a big increase in the prices in an environment where interest rates are increasing? It has got to be sentiment. Once that changes it goes downhill very quickly," warns Dr Alan Ahearne, economist from NUI Galway.

"The housing market is an asset market and asset markets, be it stocks or houses, are very volatile and you don't get nice smooth adjustments.

Future Shock: Property Crash is on RTE One, April 16 at 9.35pm."

http://www.unison.ie/stories.php3?ca=9&si=1812614&issue_id=15510

johnnyskeleton

If there was a property crash, and banks foreclosed on a lot of mortgages, does anyone know the likely route they would take to dispose of these properties?

Would they sell them at any price, hold on until they got their money's worth back, or is it possible that they might hang onto the property long term?

Do-more

If it happens the same as it did in the UK, they will be sold at auction.

whizzbang

There is also a chance that they may reduce the people's repayments but add the unpaid portion of the mortgage to the outstanding value on the loan. I think they will try their best to not take on ownership of the property as it is a load of hassle. They are in the business of selling money, not houses.

is_that_so

DonJose wrote:

Essential viewing.

Eh why? Not knocking the programme or anything it may say but there really is some abysmal journalism on the whole thing.

DonJose wrote:

Inflation rates have again risen above 5 per cent and experts say that we are in danger of losing competitiveness on the world stage.

Gotta love the word "experts" :rolleyes:

DonJose wrote:

Economists are warning that negative equity could be on the way just like the drop in house prices that saw 350,000 Britons have their homes repossessed in the Nineties. Future Shock - Property Crash to be screened this week will put forward the theory that our economy is wide open to a house price crash.

We are in a very different scenario, and whether we are in for a bad knock or not, using the 90s UK crash as an example is extremely misleading, scare mongering and very lazy journalism.

But again back to my question. If, god forbid, I was one of the affected people why would I want to have my blood pressure raised?

miju

mayeb to scare you into at least thinking about "battoning down the hatches" so the speak