Will the property market pick up within the next 2 years

niamh4626

Hey,


I have a project due in for college entitled

"The property market cannot recover within the next 2 years."

I would appreciate sone opinions on this statement which will aid me in my project!!


Thanks

Niamh

Lemming

Instead of asking boardsies to do your homework for you, why not do some research, give your thoughts/impressions and then ask for inputs.

Assuming of course the moderators approve of this.

whizzbang

No

I leave it as an exercise to the reader to figure out why.


clue: http://daftwatch.atspace.com/

El Stuntman

another clue as to why Whizzbang is right

that number is going into two digits, how do you think that impacts abaility to repay mortgages?

also consider the ludicrous oversupply of gaffs (+300k empties)

stevedublin

Stuntman, I think Whizzbag is trying to say that the property market will recover within the next two years because interest rates are coming down, increasing peoples ability to borrow/make repayments.

ZYX

niamh4626 wrote: »

Hey,


I have a project due in for college entitled

"The property market cannot recover within the next 2 years."

I would appreciate sone opinions on this statement which will aid me in my project!!


Thanks

Niamh

Obviously the market can recover within the next 2 years. Whether it will or not is a different question. Also what do you mean by recover.

whizzbang

stevedublin wrote: »

Stuntman, I think Whizzbag is trying to say that the property market will recover within the next two years because interest rates are coming down, increasing peoples ability to borrow/make repayments.

Sorry Stevedublin, but Stuntman had it right. I dont' think we will recover within the next 2 years as there is a huge oversupply of properties on the market. This massive backlog needs to be sold or removed from the market before prices will stop falling, let along start to recover.

Even if they dropped interest rates to zero there is so much supply of housing that it will take a long time before enough are sold to offer an price support.

El Stuntman

stevedublin wrote: »

Stuntman, I think Whizzbag is trying to say that the property market will recover within the next two years because interest rates are coming down, increasing peoples ability to borrow/make repayments.

I'm sure Whizzbang would contradict your assertion!

but let's try a quick argument as to why house prices are going to 'recover within the next two years'

pros:

1. interest rates are coming down. True!

er, that's it. There are no other possible price supports.

cons:

1. banks lending criteria have tightened massively - meaning that mortgages are much, much harder to get than during the years of the FF credit bubble

2. unemployment is going up. Way Up. The most optimistic forecast is that it will hit 8% next year. Personally, I think it will go through 10% and stay there for a long time (5 years+).

3. there are already 300,000 empty dwellings in the state. i.e. massive oversupply. Another reason (the biggest one of all) as to why prices will continue to fall.

4. a resumption of net emigration trends. The East Europeans are going home as our ecomony deteriorates. Many Irish are following them.

5. The Government finances are screwed irredemably (even though they don't seem to have realised this yet). There is no more money available for artifical price supports to the housing market inthe guise of mortgage interest relief etc. The builders bailout of 1.65bn proposed in the budget may very well be ruled illegal by Brussels.

6. The International economy, and particularly that of the US, is entering a huge downturn. Protectionist winds are blowing everywhere. The prospects for FDI into Ireland are terrible - we have thrown away almost all of our competitive advantages over the last ten years.

7. We have a uniquely incompetent government. Our Finance Minister is clueless beyond belief (in the realm of economics anyway, he was a good Justice Minister in fairness) as is our Tanaiste. Our Taoiseach appears totally out of his depth.

I could think of more but you get the jist.

Further heavy price falls (another 40%+ on top of the current falls from peak) are (a) inevitable, (b) necessary and (c) desirable.

whizzbang

It definitely wouldn't be wyse to buy now anyway.

niamh4626

I absolutly agree whizzbang, renting or living at home with the mammy is the only way to go for the foreseeable future.....!!!!!

Theboinkmaster

El Stuntman wrote: »

I'm sure Whizzbang would contradict your assertion!

but let's try a quick argument as to why house prices are going to 'recover within the next two years'

pros:

1. interest rates are coming down. True!

er, that's it. There are no other possible price supports.

cons:

1. banks lending criteria have tightened massively - meaning that mortgages are much, much harder to get than during the years of the FF credit bubble

2. unemployment is going up. Way Up. The most optimistic forecast is that it will hit 8% next year. Personally, I think it will go through 10% and stay there for a long time (5 years+).

3. there are already 300,000 empty dwellings in the state. i.e. massive oversupply. Another reason (the biggest one of all) as to why prices will continue to fall.

4. a resumption of net emigration trends. The East Europeans are going home as our ecomony deteriorates. Many Irish are following them.

5. The Government finances are screwed irredemably (even though they don't seem to have realised this yet). There is no more money available for artifical price supports to the housing market inthe guise of mortgage interest relief etc. The builders bailout of 1.65bn proposed in the budget may very well be ruled illegal by Brussels.

6. The International economy, and particularly that of the US, is entering a huge downturn. Protectionist winds are blowing everywhere. The prospects for FDI into Ireland are terrible - we have thrown away almost all of our competitive advantages over the last ten years.

7. We have a uniquely incompetent government. Our Finance Minister is clueless beyond belief (in the realm of economics anyway, he was a good Justice Minister in fairness) as is our Tanaiste. Our Taoiseach appears totally out of his depth.

I could think of more but you get the jist.

Further heavy price falls (another 40%+ on top of the current falls from peak) are (a) inevitable, (b) necessary and (c) desirable.

Great post - agree with everything

DennisSabre

Maybe add a subtitle to your project:

"A property is not just for profit, it's a home for life"

EnoughSaid

niamh4626 wrote: »

Hey,


I have a project due in for college entitled

"The property market cannot recover within the next 2 years."

I would appreciate sone opinions on this statement which will aid me in my project!!

You will find plenty of information at:

www.thepropertypin.com

Oshare Bones

I don't think property prices will pick up within the next 2 years.

jetski

OP - Did you give the project the title?

Kinda shallow if you did or not.... no body can say whats 2 years down the line never mind 6 months....

If you want to know what i would....

Look at other property booms worldwide that have happened over the years and avoid making any predictions based on what you find.

3 observations ive made counter your projects title....

1. The budget announcement of increased mortgage interest relief.

2. Interest rates are seriously plummeting

3. possibly coincidence but the last few reports on irishpropertywatch.com have seen consecutive slowing in the amounts of people dropping asking price and also the stock of unsold propertys has dropped quite significantly.


Wouldnt mind a look at the finished product

El Stuntman

jetski wrote: »

3. possibly coincidence but the last few reports on irishpropertywatch.com have seen consecutive slowing in the amounts of people dropping asking price and also the stock of unsold propertys has dropped quite significantly.

that's odd as daftwatch is showing the for sale total as being flat at around 73k since July. Not doubting your stat but it seems odd in the light of this?

jetski

I think thats because daftwatch is based only on daft and irishpropertywatch.com is on more than one site

KhanTheMan

noone really know what going to happen. Anyone telling you they do know are talking through their arse. All people can do is guess.

Cant wait though, to see what happens when interest rates go down, mortgage interest relief goes up and couples find that its actually a hell of a lot cheaper to buy than to rent.

Or what will happen when noone has a job to even get a salary to get a mortgage. It could go anyway at the moment.

bangersandmash

KhanTheMan wrote: »

Cant wait though, to see what happens when interest rates go down, mortgage interest relief goes up and couples find that its actually a hell of a lot cheaper to buy than to rent.

If you're talking about anything larger than a 2 bed in Dublin, things have an awfully long way to go before it'll be "a hell of a lot cheaper".

KhanTheMan

bangersandmash wrote: »

If you're talking about anything larger than a 2 bed in Dublin, things have an awfully long way to go before it'll be "a hell of a lot cheaper".

Talking about starter homes in Dublin.

bangersandmash

KhanTheMan wrote: »

Talking about starter homes in Dublin.

At current price levels, 1-2 bed apartments are only occasionally cheaper in new developments in less desirable areas where BTL landlords often have unrealistic expectations about rents. For 3+ beds in decent locations with amenities we still have a long way to go before it's substantially cheaper to buy than rent.

gurramok

bangersandmash is bang on.

One thing is forgetten. Non-ftb relief is going down in Jan by 5%. We have an income levy being imposed next month so that extra cash for existing and new holders has just evaporated.
And we have not yet discussed the impending bad debts at the banks. They cannot afford to give out 'cheap' mortgages.
http://www.rte.ie/news/2008/1105/aib.html

The bank said it does not expect a 'meaningful' recovery in the residential market until 2011.

AIB Group, Ireland's biggest bank, said bad debts, largely because of loans to residential property developers in Ireland, would increase this year and next, well beyond the bank's and analysts expectations.

Worries over loans to property developers lead the group to reduce its earnings forecast for the rest of the year to €1.20.

KhanTheMan

bangersandmash wrote: »

At current price levels, 1-2 bed apartments are only occasionally cheaper in new developments in less desirable areas where BTL landlords often have unrealistic expectations about rents. For 3+ beds in decent locations with amenities we still have a long way to go before it's substantially cheaper to buy than rent.

Im havent time to write out the figures for you here but its easy to work out for yourself.
Go look up some starter homes in reasonable areas and then work out how much a couple will pay on a 90% mortgage or less including all of their interest relief.

ZYX

gurramok wrote: »

bangersandmash is bang on.

One thing is forgetten. Non-ftb relief is going down in Jan by 5%. We have an income levy being imposed next month so that extra cash for existing and new holders has just evaporated.

Both these points are pretty irrelevant except for the "mood" they create around the property market. We are realistically looking at at least a 1% drop in interest rates in next 12 months and more likely 2%.

El Stuntman

I like to put my money where my mouth is...so I'm more than happy to book a spread bet with anybody who wishes to bet that house prices are going up in the next two years.

We take the PTSB\ESRI Index (by no means perfect but the only measure we have) as the base and book the action at €€€ per percentage point increase\decrease.

Thus if we take a base of 100 as the starting index and prices increase by 10% over the next two years, say we agreed the bet at €100 per point, I would pay you €1,000

v.v. for a decrease.

we would have to arrange to escrow monies with a reputable third party.

Any takers?

punchestown

El Stuntman wrote: »

I like to put my money where my mouth is...so I'm more than happy to book a spread bet with anybody who wishes to bet that house prices are going up in the next two years.

We take the PTSB\ESRI Index (by no means perfect but the only measure we have) as the base and book the action at €€€ per percentage point increase\decrease.

Thus if we take a base of 100 as the starting index and prices increase by 10% over the next two years, say we agreed the bet at €100 per point, I would pay you €1,000

v.v. for a decrease.

we would have to arrange to escrow monies with a reputable third party.

Any takers?

Are you betting on them going up or down?

travellerI

OP

I dont know what you are studying and who set you this assignment but if you look at property in this country as a market then it is a question of economics.

Economic analysis is based inter alia on the principles of supply and demand.

Lets look at the supply side. Depending on who you believe there are between 100,000 and 300,000 empty properties in Ireland.

Look at the demand side.

I dont know how many First Time buyers or trader uppers there are out there but I seriously doubt if the number comes any where close to the supply figures. Given that some of these unoccupied houses are on the side of mountain in the middle of nowhere - it is arguable that many of these properties are unsellable. Add in one bed apartments in cities to that equation and you have a big problem.

In my view a better economic question would be when will the irish property market return to equilibrium and at what cost to the country and its people?

The above argument is a simple one, I havent mentioned interest rates, unemployment levels, inflation, property investment etc., etc. but you have to do some work yourself.


regards


travellerI

KhanTheMan

El Stuntman wrote: »

I like to put my money where my mouth is...so I'm more than happy to book a spread bet with anybody who wishes to bet that house prices are going up in the next two years.

We take the PTSB\ESRI Index (by no means perfect but the only measure we have) as the base and book the action at €€€ per percentage point increase\decrease.

Thus if we take a base of 100 as the starting index and prices increase by 10% over the next two years, say we agreed the bet at €100 per point, I would pay you €1,000

v.v. for a decrease.

we would have to arrange to escrow monies with a reputable third party.

Any takers?

are there property bulls here?

good luck getting someone to bet a grand with a random person on the internet. Surley a bookie will take a bet with you on anything you choose.

KhanTheMan

travellerI wrote: »

Given that some of these unoccupied houses are on the side of mountain in the middle of nowhere - it is arguable that many of these properties are unsellable.

Good point.
I'd love to get an actual figure on the amount of properties above. They might as well just take them out of the supply list because im thinking that all of these in the like of leitrim, roscommon etc cant even be given away.

El Stuntman

punchestown wrote: »

Are you betting on them going up or down?

lol, down obviously!

El Stuntman

KhanTheMan wrote: »

are there property bulls here?

good luck getting someone to bet a grand with a random person on the internet. Surley a bookie will take a bet with you on anything you choose.

I do have nearly 5k posts on Boards and have engaged in lots of prop bets with people on the poker forum in the past. They have all been paid in full on losing bets (and I've always been paid on winning ones). References available on request if you are genuinely interested.

(btw, not sure how much you know about gambling but this is a better proposition than betting with a bookie)