Housing Bubble Bursting

A Random Walk

miju wrote:

ive heard of and read on some other forums as well of a fair few people trying to back out of buying new builds even to the extent of losing €20,000 deposit but the builder is forcing the sale

I've no love for builders but all I can say is rightly so.

chump

A Random Walk wrote:

I've no love for builders but all I can say is rightly so.

I agree completely. A binding contract is just that. Imagine if the tables were reversed. It's a terrible position for the buyer though, and I do have pity.
Suck it up tho

Mailman

I was also talking to a neighbour and she was talking about a relative, a brickie, who has just been laid off by his developer employer and was one of the last out the door as he had been with the developer longest.
The neighbour was hopeful that the relative would be re-hired after the builders holiday.

Pa ElGrande

Mailman wrote:

Know of one person who is buying two new houses in an new estate in Tullamore. They no longer want to buy them but are being forced to because the contract is too tight to back out of.

Remind them that it is their patriotic duty to buy those houses. If he has any concerns about where the market is headed then he should take heart, IIB Chief economist, Austin Hughes expects that "an improving tone will be established in the second half of the year". Look to the positive glow from Bank of Ireland/Merril Lynch presentation? Irish banks only lend to quality customers.
Besides the banks or governement would never let a crash happen. :rolleyes:

JupiterKid

You should check out the Charlesland (in Regions: Wicklow) thread on the boards here. There's a thread about house prices in the development and it's dominated by those plugging their ears from the emerging realities and going la la la la la. They only ever see the Irish property bubble going on forever and prices going up.:rolleyes: There is a serious denial of the downward trajectory of the Irish property market.

miju

lol just read that , poor oul hammie has their head buried so firmly in the sand its really saddening

nesf

Yeah but a lot of people seem assume that a national decrease (or increase) means a local decrease (or increase) which isn't necessarily true. Not that I think prices are going to rise in Charlestown or anything, I pay no attention to the area.

Ste.phen

Today's Herald AM has the top story: 'Home buyers have been betrayed over prices'

Summary: People (banks, estate agents) who have money to gain from a housing market not-in-decline are insisting the housing market is not in decline to the detriment of the poor plebs buying the houses.

seamus

Igy wrote:

Summary: People (banks, estate agents) who have money to gain from a housing market not-in-decline are insisting the housing market is not in decline to the detriment of the poor plebs buying the houses.

In fairness, anyone who did the smallest bit of research before buying a house in the last 6-12 months would have seen that it wasn't the best time to buy. So I haven't really got a whole pile of sympathy for anyone who did jump in and is regretting it.

After all, you wouldn't go to a car dealership and buy one just because the salesman said it's great. The problem is that some people listened to family, friends and mortgage brokers, instead of going and doing even a tiny bit of research for themselves.

SkepticOne

Article in Indo today:

Thousands in 'serious trouble' on home loans

The full scale of the mortgage debt trap is revealed in a new report on house prices published today by the Department of the Environment. It reveals:

* More than 47pc of all new house mortgages were taken out by first-time buyers aged 30.
* One-third of them are taking 100pc mortgages.
* The typical loan is now over 31-35 years.
* The average price of a new house at the start of the year was €314,087, and €375,577 for a second-hand property.
* The average price of a new house in Dublin was €419,330 (+16.1pc) and for a second-hand house was €517,865 (+8.9pc). Prices have since fallen back.
* A national inventory of residential-zoned serviced land at June 30 shows that there are more than 15,900 hectares of residentially zoned serviced land with an estimated yield of 492,000 housing units.
Despite the predicted "soft landing" for the property market, the report reveals that the value of mortgages for 2006 was 50pc higher than in 2004.

mountainyman

I think that's a bit harsh Seamus. Though it is a bit annoying to be told that rent is dead money by someone who lives in an apartment that is guaranteed to be in negative equity in a couple of years and which has 29 years of a thirty year mortgage left on it.

MM

Calina

Yo'd have to wonder if there is some sort of turf war going on in Independent Group Newspapers given how convinced the Sunday Independent is that things are fine, and the tendancy of the daily to have some sort of more realistic assessment on a Monday.

KingKenny7

Its a war between everyone in the country, you could say a civil war OK thats a bit harsh, but I lost count the amount of times argos were caused over house prices dropping and rising, with my mates. Funny though all those who said everything is fine are people who just bought....mmmmmm interesting

nsn

There is a new website tracking changes in asking prices, the url is http://www.treesdontgrowtothesky.blogspot.com/. They published their first report yesterday where they saw over 500 price drops and also a few price increases.

enjoy

daveirl

This post has been deleted.

ixoy

Well the average house price in Dublin has exceeded .5m - ridiculous, according to RTE here.
Usual figures with lots of percentage increases, but the most interest bit is highlighted:

The average price of an existing house in Dublin has passed the half million mark, according to a new Government survey.

The Department of Housing, Urban Renewal and Developing Areas' Annual Housing Statistics Bulletin shows the average second-hand house price in Dublin reached €517,865 at the end of last year, up almost 9%.

New homes in Dublin cost an average of €419,330, up 16%.
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Nationally, the average new house price in the last quarter of 2006 increased by 9% to €314,000.

Existing home price averaged €375,000, up nearly 7%.

Minister for Housing Batt O'Keeffe says people should buy now, rather than later.

The survey also shows that 14,686 households were assisted through various housing supports funded by the Department last year.

However, the building industry criticised the report and said it was out of date.

The Construction Industry Federation is strongly critical of a statement in the report that there is sufficient zoned land in the Dublin area.

Meanwhile, the Ulster Bank Construction Purchasing Managers' Index published today shows activity in the construction sector fell in June for the first time in almost four years.

Ulster Bank's Chief Economist Pat McArdle said all three components - housing, commercial and civil - were weaker, but housing output was 'particularly anaemic'.

So is this a particularly poor move on the Minister's part, designed to stimulate the flagging building sector (and the influx of brown envelopes at the races) or is the minister being responsible and doing the right thing?

bugler

I for one am very grateful that the Minister is so concerned that he is now advising citizens when they should buy property. I'm convinced....I mean the Government should be trusted, right?

Is he available for one-to-one consultations, I wonder?

gurramok

Well, he would say buy now.

They ARE losing revenue from property transactions and need you to buy an overpriced house to save their face over the impending economic crisis. (not exxagerating here)

patrickolee

gurramok wrote:

They ARE losing revenue from property transactions and need you to buy an overpriced house to save their face over the impending economic crisis. (not exxagerating here)

'They'... who are 'They' ? The big bad government maybe. Would 'We' be more appropriate?

seamus

ixoy wrote:

Well the average house price in Dublin has exceeded .5m

I'm skeptical about this figure because it popped out last week. I'd like to know where it comes from - is this average price of houses for sale, or the average price of hosues sold? Daft.ie claimed that the average asking price for Dublin homes also increased in Q2, but I suspect that the average asking price has increased as more of the mid-range houses get dumped onto the market by the mid-end speculators.

nesf

seamus wrote:

In fairness, anyone who did the smallest bit of research before buying a house in the last 6-12 months would have seen that it wasn't the best time to buy. So I haven't really got a whole pile of sympathy for anyone who did jump in and is regretting it.

In fairness, anyone who did the smallest bit of research before buying a house in the past 5-6 years could have (easily) concluded that it was a bad time to buy. It's easy in retrospect to say that 12-18 months ago people should have realised that the bubble was about to burst but it would be equally easy to say that if the cool off in house prices happened 4 or 5 years ago tbh. There have been plenty of bulls and bears in the market for a long time and depending on which indicators you wanted to look at you could come up with a convincing argument to either buy or not buy at any of those times.

nesf

Calina wrote:

Yo'd have to wonder if there is some sort of turf war going on in Independent Group Newspapers given how convinced the Sunday Independent is that things are fine, and the tendancy of the daily to have some sort of more realistic assessment on a Monday.

They are both just targeting different groups of consumers. There are plenty of people who want to hear that the market's falling and plenty of people who want to hear that the market is steady. They're just pitching to both audiences with two different papers. Nothing too unusual in that tbh.

gurramok

patrickolee wrote:

'They'... who are 'They' ? The big bad government maybe. Would 'We' be more appropriate?

Yes they are the big bad govt.

They desire young people to keep buying an overpriced house(more like apt's now) hence the buyers are to be straddled with debt on a depreciating asset for the next 35 years.

Unfortunately, some will fall for the con advice of the 'get on ladder' mania from the govt/banks/builders/estate agents/economists employed by them.

Why would it be a we?...I myself and thousands like me refuse to buy into a housing bubble, its the govt's responsibility to make up any shortcomings in tax revenue by diversifying the economy away from dependency on construction.

'We' still have enough dosh to spend on everyday essential stuff that won't crash the economy, buying a house is not part of that plan for the short-term.

There is more to life than nosediving in six figure debt for 35 years.

patrickolee

gurramok wrote:

Why would it be a we?

Because that big bad government you're talking about are the ones that 'we' voted in to manage the resources gathered from us, for our use. We are also the ones who will suffer, in terms of unemployment and higher tax burden, if the whole thing does go pear shaped! So where you say "They ARE losing revenue from property transactions " I would say, "We ARE losing revenue from property transactions". The government are just a group of people who, for a period of time, have been entrusted with managing the economy. The revenue been lost, is ours.

The_Conductor

gurramok wrote:

Yes they are the big bad govt.

Yes, however they are our government, and are representatives of the people- not a nameless entity that exists behind our backs.

gurramok wrote:

its the govt's responsibility to make up any shortcomings in tax revenue by diversifying the economy away from dependency on construction.

I disagree. Its the governments job to manage the economy as best they can. If there is a revenue shortfall, it must be met by raising revenue in other areas, cutting expenditure or borrowing the money. We have had ample experience during the 1980s of borrowing the money to fund day-to-day expenditure. Last year, at the height of our economic boom, when everyone thinks we were doing so well with a massive surplus on our current account, we still managed to borrow billions. The government patted itself on the back because it borrowed less than it intended to, not because it had a surplus. This was well known, and is probably why they included the Greens in government imho, so that they would have a scapegoat when things really go out of kilter badly in the near future.

gurramok wrote:

There is more to life than nosediving in six figure debt for 35 years.

Funny that you should say that. 25 years ago at the height of our economic depression public debt stood at 145% of GDP, and private debt at less than 40% of GDP. Those figures have now comfortably exchanged places. The government has managed to move its public debt onto its private citizens, by a variety of manners, such as excessive stamp duty and charges for public services. Increasingly its the younger people, aged 18 to 35, who carry a large portion of this burden. Why? Simply because increasingly they are the age group least likely to vote, and the age group least represented in the houses of the Oireachtais. Old people religiously vote in every election- and hence have a beauty parade of goodies from the various parties. A 20 year old with a 35 year mortgage means nothing to them. Hell- he or she will still be younger than they currently are, when they finish paying off their mortgage monstrosity.

Hard times are coming. Its increasingly difficult for young people to both have the lifestyles we have become accustomed to, and accept our financial obligations imposed by credit card and mortgage debt. A lot of people are going to hurt badly- and thats before we even consider that a lot of the cardboard box apartments that people were pressurised into buying are simply unsellable at any price whatsoever.

I don't know if there is a solution- short term any hint of trying to mitigate difficulties for people simply acts as a market support for housing, before it too looses its value.

We have a long term mess that is going to take a long time, if ever, to resolve itself.

gurramok

Patrick, we have to disagree on that one, i hold them responsible as it goes pear shaped as they manage the economy, they are supposed to encourage startups that create long term jobs, not jobs based on how many houses sell in a small country...and no, i was not part of 'we' that voted them in.

About the economy, pity its not like other responsible countries with a real exporting type industry to pick up any rise in unemployment from any sector that faces difficulty.

About that six figure debt thing, a young couple(not counting singletons as vast majority of singles cannot afford to buy in the market) should not have to face paying upto 50% of their joint salary on a shoebox apt for next 35 yrs without even taking into account of starting a family.

Thats why i had to react to our so called responsible advice rep, the housing minister encouraging young people to buy in this climate.

I just wouldn't fancy myself for example in this persons shoes being 'forced to sell after one year' due to crippling payments. http://www.askaboutmoney.com/showthread.php?t=58813

Sadly, there is going to be more like these as times get harder.

indiewindy

Those posts make very grim reading, coupled with the dept. of Environment report ( http://www.environ.ie/en/PublicationsDocuments/FileDownLoad,14648,en.pdf )
there must be a lot of people in trouble, banks should never have been allowed to give out 100% mortgages, I think that they were a major factor in the surge in prices over the past 2 years

regi

Is it really fair to blame the government (or any government that happened to be in power during a property boom) for this? I see a lot of people putting the boot into Fianna Fail / government in general.

Does much of this actually lies at the feet of the pathological need of so many here to own property and the insane belief that property prices were going to rise indefinately?

I don't particularly blame the government for causing this. I do feel that they should have acted some time ago to cool the housing market down (maybe back in 2002/2003), but I feel that the cause of the bubble itself is firmly with the people.

A Random Walk

The public are like shareholders in a company who appoint the board (the government) to run the country. The shareholders are quite right to give out about the performance of the board, but similarly as a group cannot complain if they don't vote out the board at the AGM.

SimpleSam06

indiewindy wrote:

Those posts make very grim reading, coupled with the dept. of Environment report ( http://www.environ.ie/en/PublicationsDocuments/FileDownLoad,14648,en.pdf )
there must be a lot of people in trouble

I agree, and I'm sure I'm not the only one getting a whiff of some of the ugliness in the atmosphere. The Taoiseach talking about people committing suicide for talking down the property market, and "patriotism" in the same speech, gives me cause for concern. I'll be shocked if builder bertie makes it through the full term, to be honest...