Housing Bubble Bursting

DublinWriter

DonJose wrote:

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

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

Jaysus, that's great. The kind of bang-on journalistic insight we have come to expect from RTE..."something might happen...but who knows when!...or where!...or how!...now here's Gerry with the weather..."

Honestly, the pent up demand for property in Dublin is still very high and the capital is predicted to grow outward L.A. style and double its populous by 2020.

I'm not saying we'll still be living in la-la-land in terms of crazy property price growth, but I think that *at worst* property growth will track basic inflation in the next ten years.

After that? Who feckin' knows. A tsunami might engulf the Eastern Dublin Coastal region that will make property in Killiney, Dalkey, Sutton and Howth an absolute steal providing you bring your own under-water breathing apparatus.

But what I do know is this. We've squandered our Celtic Tiger inheritance on short-termism. How so? The various governments have been so focused on creating a tax-friendly corporate haven in order to attract big IT and Manufacturing sweatshops to these isles. "Big American corp move to Ballydehob and creates 500 new jobs!". Wonderful political P.R. and sure to make the six-one news.

But it's only supposed to be a means to an end. They should have carried the plan through and had the same tax breaks for indigenous SME start-ups on the back of the initial success.

In the meantime, Eastern Europe is open for business and so is China. Bye-bye manufacturing. Now in a panic the government are pushing Ireland as an R&D centre. Why? Because there's feck all left anymore.

In summary? This is a pre-election blip, we'll be fine for the next ten years. After 2017, we'll have serious problems.

DonJose

DublinWriter wrote:

Honestly, the pent up demand for property in Dublin is still very high and the capital is predicted to grow outward L.A. style and double its populous by 2020.

If demand is so high why is there a huge number of price reductions in Dublin.

There is a new website called Irish Property Watch which outlines price reductions across myhome.ie and daft.ie.

http://irishpropertywatch.5gbfree.com/report_myhome_050307.html

I clicked on their first report (see link above) and browsed the links to see if there were any new reductions and I came across the following properties which have had to reduce their prices yet again.

http://www.myhome.ie/search/property.asp?id=303393
18 muckross Green, Perrystown, Dublin 12
€650,000 > €585,000 > €525,000

http://www.myhome.ie/search/property.asp?id=306999
Burnell Court, Northern Cross, Malahide Road, Dublin 13
€390,000 > €305,000 > €295,000

http://www.myhome.ie/search/property.asp?id=271113
15 Brighton Place, Foxrock
€2,200,000 > €2,000,000 > €1,800,000

http://www.myhome.ie/search/property.asp?id=301240
1 Auburn Villas, Carrickbrennan Road, Monkstown, Co Dublin
€1,695,000 > €1,550,000 > €1,500,000

http://www.myhome.ie/search/property.asp?id=285899
1 Straide Court, Ailesbury Drive, Donnybrook, Dublin 4
€2,250,000 > €2,100,000 > €1,900,000

http://www.myhome.ie/search/property.asp?id=295511
7 Greenfield Manor, Donnybrook , Dublin 4
€925,000 > €875,000 > €825,000

http://www.myhome.ie/search/property.asp?id=295926
6 Windsor Villas, Fairview, Dublin 3
€670,000 > €635,000 > €610,000

http://www.myhome.ie/search/property.asp?id=296337
3 Kirwan Street Cottages, Stoneybatter, Dublin 7
€460,000 > €440,000 > €417,500

http://www.myhome.ie/search/property.asp?id=305699
163 Charlemont, Griffith Avenue, Drumcondra, Dublin 9
€625,000 > €600,000 > €575,000

DublinWriter wrote:

I'm not saying we'll still be living in la-la-land in terms of crazy property price growth, but I think that *at worst* property growth will track basic inflation in the next ten years.

That's the problem with Irish properties at the moment, they are not keeping in line with inflation and prices are dropping as you can see above.

rsta

Well I'm after reading the past few posts from page 51...

I've just bought a house. Should be getting the keys by next week.

But..I got my mortgage loan approval in January, if I'd waited until this month to get it, I would not get the same amount.

I'd only get 15grand less...


So I guess most of you must think I'm pretty foolish for buying now? At this time of 'uncertainty' and all that.... Some of the comments I've read.. well I just hope my house stays that the price it is or goes up slowly if at all...

miju

rsta wrote:

But..I got my mortgage loan approval in January, if I'd waited until this month to get it, I would not get the same amount.

I'd only get 15grand less...

and you would have got 15 less from june as well. to be honest if you bought your house to live in and not an investment and not as the bottom rung on the "property ladder" then no your not foolish

DublinWriter wrote:

Honestly, the pent up demand for property in Dublin is still very high and the capital is predicted to grow outward L.A. style and double its populous by 2020.

thats based on a constantly growing economy and increasing immigration , given the first bout of construction lay offs due to a large drop in housing tarts are due to affect unemployment figures in the next few months this wont be the case.

migrant workers will move on , people will stop spending (as shown by recent excheqeur figures being down €51m) and so on

is_that_so

DonJose wrote:

If demand is so high why is there a huge number of price reductions in Dublin.

There is a new website called Irish Property Watch which outlines price reductions across myhome.ie and daft.ie.

http://irishpropertywatch.5gbfree.com/report_myhome_050307.html

I clicked on their first report (see link above) and browsed the links to see if there were any new reductions and I came across the following properties which have had to reduce their prices yet again.

http://www.myhome.ie/search/property.asp?id=303393
18 muckross Green, Perrystown, Dublin 12
€650,000 > €585,000 > €525,000

http://www.myhome.ie/search/property.asp?id=306999
Burnell Court, Northern Cross, Malahide Road, Dublin 13
€390,000 > €305,000 > €295,000

http://www.myhome.ie/search/property.asp?id=271113
15 Brighton Place, Foxrock
€2,200,000 > €2,000,000 > €1,800,000

http://www.myhome.ie/search/property.asp?id=301240
1 Auburn Villas, Carrickbrennan Road, Monkstown, Co Dublin
€1,695,000 > €1,550,000 > €1,500,000

http://www.myhome.ie/search/property.asp?id=285899
1 Straide Court, Ailesbury Drive, Donnybrook, Dublin 4
€2,250,000 > €2,100,000 > €1,900,000

http://www.myhome.ie/search/property.asp?id=295511
7 Greenfield Manor, Donnybrook , Dublin 4
€925,000 > €875,000 > €825,000

http://www.myhome.ie/search/property.asp?id=295926
6 Windsor Villas, Fairview, Dublin 3
€670,000 > €635,000 > €610,000

http://www.myhome.ie/search/property.asp?id=296337
3 Kirwan Street Cottages, Stoneybatter, Dublin 7
€460,000 > €440,000 > €417,500

http://www.myhome.ie/search/property.asp?id=305699
163 Charlemont, Griffith Avenue, Drumcondra, Dublin 9
€625,000 > €600,000 > €575,000



That's the problem with Irish properties at the moment, they are not keeping in line with inflation and prices are dropping as you can see above.

A quick scan through those prices shows up a couple of interesting things

Price reductions in those examples are averaging about 10%.
Location is key - the Dublin 12 house and Northern Cross(At The Darndale Hilton) jump out off that list as places that were most probably overpriced for their location, especially Northern Cross.
Much higher priced house are always volatile and more often than not they end up in auctions - I guess these days that means anything in the order of €1 million or so. This happened in the 90s as well, IIRC, where dips in more expensive houses were due to people not getting auction prices and pulling them to sell privately.

Off topic a bit.

I was recently told of an auctioneer , based in the South East who is still shifting properties at a fairly fast rate. He advises clients to settle for a much lower price for a quick sale. Properties sitting on the books make no commission.

l3rian

DonJose wrote:

http://www.myhome.ie/search/property.asp?id=306999
Burnell Court, Northern Cross, Malahide Road, Dublin 13
€390,000 > €305,000 > €295,000

That's a 95k or ~25% drop :eek:

rsta

miju wrote:

and you would have got 15 less from june as well. to be honest if you bought your house to live in and not an investment and not as the bottom rung on the "property ladder" then no your not foolish

Yep, bought the house to live in. In Portarlington, Co. Laois. Commuter town.

Its a 2 bed house, about 3 years old, since i put the deposit down I've seen 2 bed apartments up for sale for only 10 grand less. I mean thats only 10 grand in the difference between a house or an apartment.... madness.

Oh yeah but Miju.. What did you mean by

miju wrote:

not as the bottom rung on the "property ladder"

?? thanks

johnnyskeleton

l3rian wrote:

That's a 95k or ~25% drop :eek:

I think that €390,000 was an insane price for a 1 bed outside the city centre to begin with. Even at the height of property prices this might have been wishful thinking.

miju

what i meant rsta was that the house wasn't a crappy built or small place bought with the intention of getting your foot on the ladder and then trading up to a proper house using the capital / price appreciation in your current house

Gurgle

l3rian wrote:

That's a 95k or ~25% drop :eek:

Its also a tiny 1 bedroom apartment in Malahide.

Fair enough it might have gone for a silly price like 390k at the absolute peak of the market last year sometime, but these types are the very definition of over-priced investor property.

-edit- which hasn't even been completed yet.

mikemac

Gurgle wrote:

Its also a tiny 1 bedroom apartment in Malahide.

It's at least 8km from Malahide. It's beside the infamous Darndale and a halting site. Convienantly left this information from the website.

Good points are excellent bus service and Clarehall Shopping Centre.
Still way overvalued despite the 25% drop

gurramok

DublinWriter wrote:

Honestly, the pent up demand for property in Dublin is still very high and the capital is predicted to grow outward L.A. style and double its populous by 2020.

I'm not saying we'll still be living in la-la-land in terms of crazy property price growth, but I think that *at worst* property growth will track basic inflation in the next ten years.

There is a HUGE hole in your argument.

The demand as you say may be there but they cannot afford the high prices being charged hence prices will come down to a level the average buyer(s) can afford, who knows what level that is, is anyone's guess.

At present a 'starter' home/apt can only be afforded by a dwindling minority of the 34% of the workforce that earn over 34k p.a, this dwindling minority are the FTB who hold up the housing ladder, once it falls, its all snakes

gurramok

gurramok wrote:

At present a 'starter' home/apt can only be afforded by a dwindling minority of the 34% of the workforce that earn over 34k p.a, this dwindling minority are the FTB who hold up the housing ladder,

75% of FTBs purchase a dwelling between 100,000euros and 250,000euros.
SOURCE: http://www.esri.ie/irish_economy/permanent_tsbesri_house_p/HPI2007Feb_report.pdf

It was never about the First Time Buyers (hence the stamp Duty issue is bull - prices are the problem) it was all about the investors!!! The Quarter of a million empty houses - not rented out to avoid capital gains tax - bought for capital appreciation (alarm bells ringing)

40% Of Mortgages Drawn Down were for INVESTMENTS in 2006 (alarm bells again)
SOURCE:
http://www.ibf.ie/pdfs/ibf_pwc_mortgage_q3.pdf

The Market is due for a hell of a "soft landing"!!!!!
Source:http://www.finfacts.com/irelandbusinessnews/publish/article_10009764.shtml


SIDE NOTE : Alot of commuting leaving us exposed to oil prices and cutting down on our time at home:
It also says 39.9% of FTBs buy a 3 bed semi and 36.1% buy detached and that a very small % buy apartments (5.4%).

The_Conductor

Deleted User wrote:

75% of FTBs purchase a dwelling between 100,000euros and 250,000euros.
SOURCE: http://www.esri.ie/irish_economy/permanent_tsbesri_house_p/HPI2007Feb_report.pdf

It also says 39.9% of FTBs buy a 3 bed semi and 36.1% buy detached and that a very small % buy apartments (5.4%).

Seems to be a bit of a contradiction here......
Where on earth are the FTBers getting 3 bed semis/detached for between 100,000 and 250,000?
The vast majority of FTBers that I know, are either buying apartments or doing their utmost to get on the affordable housing programmes (which probably would account for the 3 bed semi/detached brigade- but not the almost 80% of them.....)

Hmmmmm

Calina

smccarrick wrote:

Seems to be a bit of a contradiction here......
Where on earth are the FTBers getting 3 bed semis/detached for between 100,000 and 250,000?
The vast majority of FTBers that I know, are either buying apartments or doing their utmost to get on the affordable housing programmes (which probably would account for the 3 bed semi/detached brigade- but not the almost 80% of them.....)

Hmmmmm

They're not all buying in Dublin...

DublinWriter

gurramok wrote:

There is a HUGE hole in your argument...The demand as you say may be there but they cannot afford the high prices being charged hence prices will come down to a level the average buyer(s) can afford, who knows what level that is, is anyone's guess.

FTB'ers earning the average industrial wage haven't been able to afford the average 3-bed semi in Dublin for the past 5 years. That fact in itself has not caused any property crash so far.

There is no hole in my argument because you neglect to take into consideration that FTB'ers aren't the only ones looking for cheap entry-level property.

Property is bought and sold as a commodity, and like all commodities, there is usually a difference between what a commodity is worth (derived by market demand) and its value.

The key to what will happen will what the small-time investors with a second residential property will do. Historically, the lack of a rental income on a vacant property historically wasn't a consideration as the capital appreciation on their investment made up for it.

What is happening at the moment is all down to, and originates from, the comments by Enda Kenny that FG will abolish Stamp Duty for first time buyers if elected. Because of this, everyone about to step on the bottom rung of the housing ladder have decided to wait, causing a ripple effect upwards through the chain.

(Well done Enda, not even in office yet and he's managed to balls it up).

Now back to small-time investors. Once the growth in the market slows up to the point that the capital appreciation is no longer as attractive as other, safer, financial investments, they will begin to sell, sell, sell, and that's exactly what they are starting to do right now.

This, coupled with the actions of greedy Estate Agents/Auctioneers advising their clients to sell for less so they can shift volumes of property off their books is driving an entire herd-mentality.

All things being equal, I'd put folding money on the market bouncing back post the general election. But all things are not equal, and what would put a match to a can of petrol right now are the 2 to 3 hikes to the interest rates that the ECB have roumoured to be on the cards for this year.

I still by my original argument that there will be no crash in Ireland. The worse case scenario is a six-month 'blip' followed by the rate in property growth tracking inflation in the long term.

DonJose

DublinWriter wrote:

What is happening at the moment is all down to, and originates from, the comments by Enda Kenny that FG will abolish Stamp Duty for first time buyers if elected. Because of this, everyone about to step on the bottom rung of the housing ladder have decided to wait, causing a ripple effect upwards through the chain.

(Well done Enda, not even in office yet and he's managed to balls it up).

LOL the blame game again. Last year it was Michael McDowell fault, now this year its Enda Kenny. The housing market was already in freefall last summer.

A Random Walk

DublinWriter wrote:

I still by my original argument that there will be no crash in Ireland. The worse case scenario is a six-month 'blip' followed by the rate in property growth tracking inflation in the long term.

You had an argument? Sorry I must have missed it, what was it again? I don't see any arguments from housing bulls other than "I think" or "we have lots of immigrants" or "it always go up".

chump

DublinWriter wrote:

FTB'ers earning the average industrial wage haven't been able to afford the average 3-bed semi in Dublin for the past 5 years. That fact in itself has not caused any property crash so far.

There is no hole in my argument because you neglect to take into consideration that FTB'ers aren't the only ones looking for cheap entry-level property.

Property is bought and sold as a commodity, and like all commodities, there is usually a difference between what a commodity is worth (derived by market demand) and its value.

The key to what will happen will what the small-time investors with a second residential property will do. Historically, the lack of a rental income on a vacant property historically wasn't a consideration as the capital appreciation on their investment made up for it.

What is happening at the moment is all down to, and originates from, the comments by Enda Kenny that FG will abolish Stamp Duty for first time buyers if elected. Because of this, everyone about to step on the bottom rung of the housing ladder have decided to wait, causing a ripple effect upwards through the chain.

(Well done Enda, not even in office yet and he's managed to balls it up).

Now back to small-time investors. Once the growth in the market slows up to the point that the capital appreciation is no longer as attractive as other, safer, financial investments, they will begin to sell, sell, sell, and that's exactly what they are starting to do right now.

This, coupled with the actions of greedy Estate Agents/Auctioneers advising their clients to sell for less so they can shift volumes of property off their books is driving an entire herd-mentality.

All things being equal, I'd put folding money on the market bouncing back post the general election. But all things are not equal, and what would put a match to a can of petrol right now are the 2 to 3 hikes to the interest rates that the ECB have roumoured to be on the cards for this year.

I still by my original argument that there will be no crash in Ireland. The worse case scenario is a six-month 'blip' followed by the rate in property growth tracking inflation in the long term.

such an amount of nonsense here. Do you even know which way you're arguing? Please explain those points highlighted above, as it seems to me you've pulled them out of thin air and somehow concluded from these 'nuggets' that there will be no crash.

The_Conductor

Programme entitled "Future Shock: Property Crash" on RTE1 this evening after the news, before Prime Time..... Hmmmmm.....

Documentary following business journalist Richard Curran as he assesses the likelihood of a major price correction to Ireland's housing market

tHE vAGGABOND

First - we have great debate on this thread from people with polarised views on this subject. But If you dont agree with someone, fair enough, disagree - but please dont post abusive rubbish like children, as some folks have been over the last few posts.

Anyway..

40% Of Mortgages Drawn Down were for INVESTMENTS in 2006 (alarm bells again)
SOURCE:
http://www.ibf.ie/pdfs/ibf_pwc_mortgage_q3.pdf

Maybe Im blind, but I dont see where your 40% figure comes from in that report? But I'm not a financial person..

To be fair, that report you quote says total mortgages given to FTB in the market are quite static since 2005, when data collection started. In every quarter, bar one [Q4 2005 - where it jumped to 20%], FTB have been in and around 18% of total mortgages given in Ireland. Its not like they have rocketed or crashed.

The problem with reports like these is that anyone can pick any section of them and use them to back up their argument

Interested to see this TV show on RTE in a while, but from the title I'm doubtful it will be all that balanced..

tHE vAGGABOND

They're not all buying in Dublin...

Fair enough - but I just went onto myhome.ie and searched for all places [all locations, any bedroom size] in Dublin for under 250k - and there are 7 for sale right now

Now go onto daft.ie, and search same criteria for all Ireland and we get 1700 odd - now that makes sense..

But I don't care who says it to me, I just don't believe that the average FTB is paying 100k-250k for a place. I know folks in Galway, Cork and Sligo who have bought in last couple of years for the first time, and all have paid more than 300k..

IMHO the majority of FTB's are living in county towns and in the dublin commuter belt, where its quite pricey, where you dont get a whole lot for under 250k.

Now if you had made your range 250k to 317k it would look more realistic imho....

But you know these reports, you cant trust them. [I lived with a fella in London, and he worked for the department of employment over there, and he was part of the team who did the db queries that eventually returned the employment figures for the government, and he was always told what to make the figures say, before he even started work on them!!!]

uberwolf

With respect to the media coverage, there is no middle ground. To sell their medium they have to take one perspective or take polar views and scare.

The papers have relied on property adverts for a long time, and have been loath to contradict the hype. Some estate agencies have been furious about the concept of editorial independence. Which is their perogative as advertisers. But I'm certain it has been an influence editorially up until now.

So I would take it all with a pinch of salt. "Everything is fine" is not a headline.


I was at a talk recently, where the economist said he had portrayed 5 potential avenues for the property market. The gloomiest was the headline, and no reference to the other 4 in the report. In fact his outlook was for the much desired slowdown.

And it remains possible for those on the average industrial wage to buy a property in Dublin. I bought a 3 bed, on the luas, 30 mins walk from the city centre 8 months ago and haven't struggled with the mortgage at all. Rent a room.

DublinWriter

tHE vAGGABOND wrote:

Interested to see this TV show on RTE in a while, but from the title I'm doubtful it will be all that balanced..

Of course it won't! RTE is interested only in sensationalism and ratings. This has been a very hyped show (watching it now, and economists backing up my ripple-effect argument about investors), but RTE really want you to change your underwear after watching this.

Basically my original argument to the last few posters is this....

1) Short blip this year
2) Market bounces back after General Election combined with one to three potential ECB interest rate hikes
3) Business as usual after 2008, but with property rates *at the least* tracking inflation rates as worst possible scenario

miju

yeah we all understand your arguments what no-one understands is your reasoning for them ..... as someone said above you just pulled them out of your ass with no actual solid basis

l3rian

that tv show was excellent, will it be on rte.ie?

miju

TBH i would have liked to see a bit more balance to it , but suppose the problem there is the bulls dont have much in their way of arguments

babytooth

DublinWriter wrote:

I still by my original argument that there will be no crash in Ireland. The worse case scenario is a six-month 'blip' followed by the rate in property growth tracking inflation in the long term.

WHY?

whats the basis of this....is ireland special or different.

nesf

smccarrick wrote:

Programme entitled "Future Shock: Property Crash" on RTE1 this evening after the news, before Prime Time..... Hmmmmm.....

Documentary following business journalist Richard Curran as he assesses the likelihood of a major price correction to Ireland's housing market

Some decent economists giving opinion on both sides but it degenerated into populist scaremongering by the end tbh. Interesting at times but a bit too much like Prime Time for my tastes personally.

Do-more

DublinWriter wrote:

but RTE really want you to change your underwear after watching this.

If that was the case they wouldn't have beaten around the bushes when they were interviewing the Dell workers. They would have just come out and asked them how long before their jobs are transferred to Dell's new factory in Poland?