Prices of houses need to fall to 2005 level - AIB

mastermind2005

"House prices need to retreat to their 2005 levels to restore momentum to the market, according to Ireland's biggest bank.

An AIB Global Treasury market update, published yesterday, says that overall house prices were down 7.3 per cent year-on-year in December, with further drops anticipated"

The pyramid scheme that was the irish property market... has finally lost its momentum and is now falling to pieces, the fun is only starting.

beattie

Well according to the last PTSB/ESRI report prices are now at Jan 06 levels so I imagine that when they publish the figures for January they will have retreated back into 05 territory.

I can't see the market moving unless there are further drops in the region of 10%.

kippy

Falling to pieces?
Please. Get a grip.
As much as some people thrive on the "talking up" of the market, there appears to be a lot out there now who are thriving on the slippage in house values, with the whole "I told ya so" attitude. (If you keep saying something, eventually you'll get it right)

House prices are going down in certain situations and may be going down a lot in a few situations, but as long as people can afford pay their mortgage and dont need to sell their houses in a rush, the majority of buyers from the past few years arent seeing a "market fall to pieces".
Their houses were a good investment for the long term.

punchestown

kippy wrote: »

Falling to pieces?
Please. Get a grip.
As much as some people thrive on the "talking up" of the market, there appears to be a lot out there now who are thriving on the slippage in house values, with the whole "I told ya so" attitude. (If you keep saying something, eventually you'll get it right)

House prices are going down in certain situations and may be going down a lot in a few situations, but as long as people can afford pay their mortgage and dont need to sell their houses in a rush, the majority of buyers from the past few years arent seeing a "market fall to pieces".
Their houses were a good investment for the long term.

What about the 40% of purchases last year that were for investment?

punchestown

punchestown wrote: »

What about the 40% of purchases last year that were for investment?

Yeah that leave us with 300,000+ vacant properties, 250,000 of which are estimated to have been bought with special investor INTEREST ONLY loans?

hmmmm.....


fall to pieces is right

kippy

kippy wrote: »

the majority of buyers from the past few years arent seeing a "market fall to pieces".
Their houses were a good investment for the long term.

A PPR is a home not an investment.

kippy wrote: »

but as long as people can afford pay their mortgage and dont need to sell their houses in a rush

Your right - unless these people believed the hype and bought "starter homes".
Negative equity is now a fact - lets hope these people dont need to trade up.
Unfortunately repossessions are already on an upward trend.

Lets have a look at AIBs report they released this week....


http://www.fxcentre.com/monthly/200801_IrishHousingMarketMonthly.pdf
^^^^ there it is for all to see


hmmmn Bank isnt lending as much money - less buyers


hmmmn prices on a downward trend, steep too



Completions projected for the future.....
See where it drops and picks up again - thats where they are all saying the economy will pick up again. For all intents and purposes its an admission that our economy is CONSTRUCTION.
Now how many builders do you need to build nearly 90,000 houses? and how many you need to build 45,000?

Its not the same is it.
Recession is unavoidable. oh dont be so dramatic I hear you say! Sure all the foreign workers will go back home and the unemployment wont rise, sure it`ll be grand.

Maybe they will go home. But IF thats the case then we WILL lose the consumer spending power of all those people.
Again....recession is unavoidable

kippy

As I said,
People who bought a house as a short term investment may need to push out their investment period in order to actually make money on it. People who bought their houses to live in have little to worry about in the short term, that is for sure.
Negative equity? For the short term in my opinion.

Either way it is funny to see all the posters who've been predicting a "slump" getting back with the "I told you so" type of attitude. Funny.

I predict a rise in property prices.
There I said it....

mastermind2005

Kippy, whats this i hear about good investments in the last few years, wakeup... irish property is shockingly over valued and has been for the last few years.... :eek:

martian1980

kippy wrote: »

As I said,
People who bought a house as a short term investment may need to push out their investment period in order to actually make money on it. People who bought their houses to live in have little to worry about in the short term, that is for sure.
Negative equity? For the short term in my opinion.

Either way it is funny to see all the posters who've been predicting a "slump" getting back with the "I told you so" type of attitude. Funny.

I predict a rise in property prices.
There I said it....

Right. What about the enormous oversupply that has to clear? They're not going to be snapped up in the short to medium term. Over a long enough period of time things will level off and start to rise, but that won't suit people who bought a 1-bed shoebox to "get on the ladder"? Plenty of these sorts have borrowed to the hilt and are now trapped there. They'd better hope they don't get pregnant, that's for sure

kippy

A home is ALWAYS a good investment.
If you've bought a house with the intention to make a profit in the short term then you're in for a nasty surprise. If you can afford to hold onto the property you'll find that you'll eventually make your money on it.
There have been people over the last few years who've made a lot of money on property.
Again, I have a nice chuckle every now and again about the "I told you so" artists.

martian1980

kippy wrote: »

A home is ALWAYS a good investment.
If you've bought a house with the intention to make a profit in the short term then you're in for a nasty surprise. If you can afford to hold onto the property you'll find that you'll eventually make your money on it.

Tell that to the people in Japan who bought in the late '80s. But wait! Ireland is different!

kippy

martian1980 wrote: »

Tell that to the people in Japan who bought in the late '80s. But wait! Ireland is different!

10 years later prices were back up at what they were when the "Bubble" burst. Guess what, they are A LOT more expensive now.
Again if you can afford to pay your mortage back and live in your home, you wont really give a toss about the "negative equity". Long term your home (if you ever decide to sell it) is a good investment.

Not everyone in this country is mortgaged up to their neck in a one bed apt in Dublin city center that they cant get out of.
Very few I would reckon,
Kippy

mastermind2005

Kippy,


Im afraid your talking a load of rubbish...

"if you can afford to pay your mortage back and live in your home, you wont really give a toss about the "negative equity"."

The level of bull$hit your talking should warrant some sort of criminal offence...

kippy

mastermind2005 wrote: »

Kippy,


Im afraid your talking a load of rubbish...

"if you can afford to pay your mortage back and live in your home, you wont really give a toss about the "negative equity"."

The level of bull$hit your talking should warrant some sort of criminal offence...

Sorry my friend, but you'll have to forgive me if I don't agree with the sentiment of the majority on this board.
If you read over my posts in full and stop cherry picking the comments its far easier to see my opinion.
1. Not everyone is up to their necks in debt that they cannot afford.
2. Not everywhere is like Dublin (House prices have remained relatively static on the West coast and in some areas (holiday areas) have gone up in the past 12 months.
3. So long as I didnt buy a property intending to make a profit in the short term then I amn't too bothered to be honest. Most people, I believe would be of this opinion.

I do believe that there are parts of this country where property is and always has been overvalued and built to a poor quality, however that doesnt mean that the people living in these places cant afford to pay for them.
Either way mortage interest rates as still extremely low, as are income tax rates, employment is high and wages are in general good. A far far better situation than we had in this country in the 80's, no matter what anyone says or tries to spin.
Kippy

kippy

kippy wrote: »

A home is ALWAYS a good investment.
.

no a home is NEVER an "investment" good or bad. Its a home.
Any subsequent property can be viewed as an investment.

mastermind2005

No kippy, sorry mate.... property in this country is extortsion...... Period.

And its about time Honest people can reasonably afford a decent home. :mad:

patrickolee

mastermind2005 wrote: »

No kippy, sorry mate.... property in this country is extortsion...... Period.

And its about time Honest people can reasonably afford a decent home. :mad:

No no no, kippy, I have my fingers in my ears and i can't hear...

kippy

So a home isnt an investment? Is it a necessity then?

Lots of honest people in this country have bought decent homes in the past 10-15 years and have benefited from the points I made above about taxes etc.
The few that haven't have been waiting for the prices to drop (never having actually done so till now) and when the price appears to be dropping they probably wont buy anyway as its a "volitile" market. Until the cycle goes round again and they start to rise again....


Okay, so we are getting ripped off for houses.
What is the "Correct" price for a house in your opinion?
Kippy

johnnyskeleton

kippy wrote: »

1. Not everyone is up to their necks in debt that they cannot afford.
2. Not everywhere is like Dublin (House prices have remained relatively static on the West coast and in some areas (holiday areas) have gone up in the past 12 months.
3. So long as I didnt buy a property intending to make a profit in the short term then I amn't too bothered to be honest. Most people, I believe would be of this opinion.

But there are a lot of people who:
1) Borrowed as much as they could afford on two salaries to afford to buy a house (and who could blame them, needing a home)
2) One of them looses their job, gets sick, has a child etc
3) Whereas traditionally people had paid at least 8% as a deposit and who had paid for a few months as well, so even if the price went down a little bit, they could sell up and take the hit.
4) Now, with negative equity if these people have to sell up they take a massive hit.

So while you are right in that not everybody is up to their necks in debt, there are a lot of people who are, and for them there are going to be some very tough times ahead.

In any event, most people with a mortgage on a tight budget i.e. most young working property owners are bothered by the interest hikes and continuously rising prices provided a safety net which has now been taken away.

kippy

johnnyskeleton wrote: »

But there are a lot of people who:
1) Borrowed as much as they could afford on two salaries to afford to buy a house (and who could blame them, needing a home)
2) One of them looses their job, gets sick, has a child etc
3) Whereas traditionally people had paid at least 8% as a deposit and who had paid for a few months as well, so even if the price went down a little bit, they could sell up and take the hit.
4) Now, with negative equity if these people have to sell up they take a massive hit.

So while you are right in that not everybody is up to their necks in debt, there are a lot of people who are, and for them there are going to be some very tough times ahead.

In any event, most people with a mortgage on a tight budget i.e. most young working property owners are bothered by the interest hikes and continuously rising prices provided a safety net which has now been taken away.

Fair enough but I dont think that many people will find themselves in this situation as is being bandied about on threads like this and if they do, they may be able to renegotiate their mortgage and/or employment terms.
The danger has always been there of the situations you speak off that people find themselves in and there is no doubt that some people will struggle, but I tell you one thing, people in this country will never again struggle like the people who have gone before us.
Kippy

Firetrap

It depends what you mean by struggling. In the past, people didn't have jobs and that was a struggle. Now, they're paying horrendous amounts of money just to have a roof over their head. Obviously you have loads of money and paying your mortgage doesn't take out an enormous chunk of your monthly wage.

SimpleSam06

kippy wrote: »

As much as some people thrive on the "talking up" of the market, there appears to be a lot out there now who are thriving on the slippage in house values, with the whole "I told ya so" attitude. (If you keep saying something, eventually you'll get it right)

Enough with this. For years on this board several posters have been saying that property in this country was seriously overvalued, and had to deal with an overwhelming amount of bullish individuals/interests who stood to make money coming in and laughing at them. The Central Bank released a report saying houses were dangerously overvalued back in 2000.

Revisionism about a stopped clock being right twice a day is not welcome. It took longer than it should have, and the resultant damage will be much greater, but now that the market has finally lost momentum from the drop in rates back in 2001, the birds are coming home to roost. It doesn't make the points raised at the time less valid.

kippy wrote: »

Fair enough but I dont think that many people will find themselves in this situation as is being bandied about on threads like this and if they do, they may be able to renegotiate their mortgage and/or employment terms.

Thats one hell of a big "may". When you are stretched to your viable limit you don't have much room to maneuver. Tens of thousands of people (more?) bought in the last two or three years, and every single one of them is in a worse situation than if they had not bought.

True, not everyone is going to be bankrupt or in serious financial difficulty, but its safe to say a significant proportion of the population is going to be spending their evenings in for the foreseeable future, which leads us straight into a recession, not to mention the knock on effects of the job losses in the enormous construction sector and the tax shortfall brought on by the slowdown in housing sales.

kippy

Points taken.
However, of the 10-15 people I know who have bought houses in the past 7 years, I can safely say none of them will be overstretched should the value of their house fall. Why, because they dont intend selling the thing in the short to medium term.
The issue occurs if, as mentioned above, they lose their job.

Now, I am not 100 percent sure on this but I believe that those who were able to get work in the 80's we taxed at rates of circa between 40 and 62% on almost everything they earned and the mortgage interest rates were up over 12%. Surely the fact that we arent paying anywhere near as much tax or anywhere near as much interest on mortgages would in itself lead to use being able to afford dearer houses and as such push house prices to the level that they are at now.

There are still lots of people out there who wont be stretched by house price drops/rate rises (The rates look set to go down again in the short term) and the people who continue to wait for prices to fall will continue to wait.

What you mention about the clock being right twice a day, well thats exactly what I am talking about whether the sentiment is liked or not.

Kippy

EDIT: Right, this is my last post on this thread. Things arent as bad as being made out nor are people worse off than they were in the 80's. We have a better life and in general a better lifestyle than we had they and it would take an awful lot to return to those days. Not as many people will "Struggle" in the market as being hyped by various posters. I'll return to this thread in 7 years or so and we'll review the price of houses/economic climate then and I'll let you know if anyone I know has gone bankrupt or is living on the street.

seamus

martian1980 wrote: »

Tell that to the people in Japan who bought in the late '80s. But wait! Ireland is different!

Ireland isn't different. Japan is. The Japanese situation is a specific set of circumstances. The UK had a crash around the same time as Japan and now property prices are back up way above what they were then. Other countries have boomed and bust and boomed again while Japan has dropped, so you can't exactly point to Japan as what *will* happen, just as an unlikely worst-case scenario.

Again, the 300,000+ empties figure has been trotted out. Can anyone actually give me a link for this figure or is just something that some pundit threw out there unchecked and now all the bears are using it as gospel?

eirmail

I think a house prices crash can be quite serious for a lot of people . I think Kippys attitude is a bit flippant.

A lot of people went backrupt in previous house price crashess , UK and Japan. It even contributed to peoples health through stress and it was enough to push some people over the edge. The stress also contributed to many marriage break ups.These things are serious and should be treated seriously and not just dismissed .


Japanese house prices are not back to the early 1990s level . They have just stopped coming down about a year ago after 14 years.

FergusF

seamus wrote: »

Again, the 300,000+ empties figure has been trotted out. Can anyone actually give me a link for this figure or is just something that some pundit threw out there unchecked and now all the bears are using it as gospel?

The figure is based on CSO figures from the Census 2006 report, released last August.

Some analysis of the report from IrishElection.com.

Hope this helps.

Sligored

have to agree with kippy on this one. There is no doubt house prices are down by 7-10% but anyone who stays in for the long term will not suffer.

The level of gains in prices in the last number of years was unsustainable.

Short term investors who expected to make a quick killing were caught but that is the possibility of the majority of investments.

This downward turn is the best thing that can happen because it will give a lot more people access to the ladder.

A few people got there fingers burnt on a short term basis but anyone who rides out their losses will be rewarded in the long term

Afuera

Sligored wrote: »

This downward turn is the best thing that can happen because it will give a lot more people access to the ladder.

How exactly does the property ladder idea work in a falling or stagnant market though? Surely, in that kind of environment people will be more motivated to wait it out until they can afford something that they are 100% happy with rather than sign up for the first starter property that falls within their reach.

uberwolf

SimpleSam06 wrote: »

Tens of thousands of people (more?) bought in the last two or three years, and every single one of them is in a worse situation than if they had not bought.
QUOTE]

I bought, I'm not worse off.

seamus

FergusF wrote: »

The figure is based on CSO figures from the Census 2006 report, released last August.

Some analysis of the report from IrishElection.com.

Hope this helps.

Thanks, puts it in a much more sensible light. So 266,000 (15% of total stock) dwellings assumed unoccupied. Probably close enough to the actual figure - there would be a certain amount of dwellings where people actively avoided entering census figures and others where people just never encountered the census takers but I doubt that would amount to more than 20,000.