The Property market has reached the bottom!

beeno67

daltonr wrote: »

As for whether mortgage arrears are huge. I guess you're right. It's subjective.

Arrears doubled in a year at a time when many who have lost their jobs would be keeping things going using redundency payments (won't last). Another bunch of people are getting temporary mortgage help from social welfare which will last no more than a year.

Under those circumstances I consider the amount of arrears to be huge.

But if it will make you happy I'll pretend it's all under control.

-Rd

It is very hard to tell what the amount of arrears is. I suppose it depends on what your definition of huge is.

On the positive side. Over 90% of people who were in employment at the peak of the boom are still in employment (based on raw figures of previous & current unemployment rates) and probably even more when you consider those with mortgages were more likely to have more secure jobs. Yes many have taken pay cuts but not nearly as much as interest rates have fallen and are likely to stay low for next 6-12 months. We also have deflation of 5% thus easing the effects of the pay cuts.

Gurgle

daltonr wrote: »

Don't know where you get the idea that the worst off houses are still worth at least 50% of peak.
Off the top of my head I know two places that have fallen by more than 50% and still no takerd
Large parts of Dublin are down more than 50%

I'm talking about current value Vs ourstanding mortgage.
There will be shortfall, obviously, or people wouldn't be letting their houses to go to repossession.

The residential mortgage market is still profitable. Enough people (~98%) are still paying their mortgages to cover the losses on repossessions with negative equity.

You're (presumably) talking about asking price drops.
These are irrelevant to the issue.

daltonr wrote: »

But if it will make you happy I'll pretend it's all under control.
-Rd

Yes, I appreciate that.
Thank you

Its always sweet when someone is asked to back up some stupid claim they've made with figures / evidence and instead they produce some 'everybody knows' crap & condescending drivel.

oceanclub

beeno67 wrote: »

It is very hard to tell what the amount of arrears is. I suppose it depends on what your definition of huge is.

On the positive side. Over 90% of people who were in employment at the peak of the boom are still in employment (based on raw figures of previous & current unemployment rates)

When Ireland was completely in the toilet in the 1980s, the sentence "over 84% of people were still in employment" would not have cheered anyone up.

P.

Angry Troll

think somebody here mentioned this article before...interesting stuff... www.economist.com/businessfinance/displaystory.cfm?story_id=15179388

beeno67

oceanclub wrote: »

When Ireland was completely in the toilet in the 1980s, the sentence "over 84% of people were still in employment" would not have cheered anyone up.

P.

We were talking about the number of mortgage arrears. I am pointing out the fact that about 90%+ people still have employment and for most of those people mortgage repayments take up significantly less of their disposable income than 3 years ago at the peak of the boom. I am simply trying to balance out previous comments.

bangersandmash

beeno67 wrote: »

I am pointing out the fact that about 90%+ people still have employment and for most of those people mortgage repayments take up significantly less of their disposable income than 3 years ago at the peak of the boom. I am simply trying to balance out previous comments.

But it's also quite possible that their disposable income is significantly lower than 3 years ago due to tax increases, wage cuts, cancellation of bonuses and so on.

beeno67

bangersandmash wrote: »

But it's also quite possible that their disposable income is significantly lower than 3 years ago due to tax increases, wage cuts, cancellation of bonuses and so on.

Sure. I am not trying to say things are rosy. But as I said, most still have a job, interest rates will have dropped 50%+ in most cases (ECB rate dropped 75%) and their disposable income will have benefited from deflation in the ecconomy.

daltonr

Gurgle wrote: »

You're (presumably) talking about asking price drops.
These are irrelevant to the issue.

No. I'm talking about the actual price at which houses are changing hands.
Asking prices in Dublin are down about 40% (see recent Daft Report).
Since houses sold for more than the asking at peak, and much less than the asking now then actual house values ae down more than 50%.

And if you need a link then Here

You claim they're making enough from the performing mortgages to cover all the losses. Perhaps they are.
However considering that they're losing money on some of the performing mortgages (trackers), they also need to make enough
to cover the losses on those.

Oh, sorry ... Link

Not that any of that matters since I never mentioned how profitable or otherwise they are, I just said there's a huge number of
mortgages going unpaid.

And to the 26000 in arrears, you can add another 17000 getting help paying their mortgage.
I'm sure there's some overlap there, but it's still a lot of people who'll be running out of help within 12 months.

Link

Gurgle wrote: »

Last I heard there were only a few hundred repossessions on the cards for mortgage defaulters, amongst the hundreds of thousands of homes.

What possible relevance does the number of repossessions have?
Are you not aware that the banks have been asked to hold off on repossessions for a year?

We're storing up a years worth of trouble on a couple of fronts.
That's a huge problem to me.

Link

Gurgle wrote: »

Its always sweet when someone is asked to back up some stupid claim they've made with figures / evidence and instead they produce some 'everybody knows' crap & condescending drivel.

Hmmm Nice attitude.

My link would have been the same one you posted so I didn't bother re linking to it. Arrears have doubled in a year at a time when the government is pumping money into avoiding arrears and at a time when redundancy money is still around.

We can disagree on whether that's a huge problem or an insignificant one but my claim wasn't stupid and my reply wasn't condescending.

In 2006 some people looked at double digit growth in house prices and saw it as a big problem.
Some people saw the same increase and saw it as proof that there was no problem.

Everyone agreed on the figures, but disagreed on their significance. That's what's happening here too.

-Rd

daltonr

beeno67 wrote: »

interest rates will have dropped 50%+ in most cases (ECB rate dropped 75%) and their disposable income will have benefited from deflation in the ecconomy.

Ah, but which is more likely to get back to it's former level, Interest Rates, or their income.

Therein lies the rub.

You are right though. Overall those who've kept jobs, even with pay cuts are better off. If you don't have a lot of debt you'll hold on to a lot of those gains even if interest rates increase.

Hopefully, if rates do increase those with debts will make enough savings elsewhere to be not too much worse off. But it doesn't take a lot to make a mortgage very expensive. Particularly if you bought when rates were low.

-Rd

Gurgle

daltonr wrote: »

No. I'm talking about the actual price at which houses are changing hands.
Asking prices in Dublin are down about 40% (see recent Daft Report).
Since houses sold for more than the asking at peak, and much less than the asking now then actual house values ae down more than 50%.

I am aware of the faults in the ESRI reports, but at least their reports are based on sales data / mortgage data.

http://www.esri.ie/irish_economy/permanent_tsbesri_house_p/

As of October 2009, prices in Dublin were down 30% from peak.
Maybe there are particular estates where one house sold for €1,000,000 in December '06 and another for €500,000 in December '09 but these are the outliers on the graph, they are not representative of the average house.

daltonr wrote: »

And if you need a link then Here

This data is from the mouths of estate agents and IAVI.
Think of their position - business has stopped.
How does any business get going again - have a big sale, drop prices.

Its in their interests to convince potential sellers that their house is worth less, as a lower asking price increases their chance of getting it sold.

An estate agent makes more cash by selling 2 houses at 50% of peak prices than 1 house at 70%.

Do you think for a second that their customers are more important to them than their bank balance?

daltonr wrote: »

You claim they're making enough from the performing mortgages to cover all the losses. Perhaps they are.
However considering that they're losing money on some of the performing mortgages (trackers), they also need to make enough to cover the losses on those.

Oh, sorry ... Link

They are not losing money on tracker mortgages, they have a guaranteed margin. They just aren't making as much profit on this sector as they would like.

daltonr wrote: »

Not that any of that matters since I never mentioned how profitable or otherwise they are, I just said there's a huge number of mortgages going unpaid.

Then our arguement comes down to the definition of 'huge'.

daltonr wrote: »

And to the 26000 in arrears, you can add another 17000 getting help paying their mortgage.
I'm sure there's some overlap there, but it's still a lot of people who'll be running out of help within 12 months.

Link

We'll see.

daltonr wrote: »

What possible relevance does the number of repossessions have?
Are you not aware that the banks have been asked to hold off on repossessions for a year?

We're storing up a years worth of trouble on a couple of fronts.
That's a huge problem to me.

Repossessions are the only cases where the banks lose money on residential mortgages. This is pretty relevant.

daltonr wrote: »

Everyone agreed on the figures, but disagreed on their significance. That's what's happening here too.

It would be a pretty empty 26 pages of discussion if we all thought the same way

ei.sdraob

Gurgle wrote: »

This data is from the mouths of estate agents and IAVI.
Think of their position - business has stopped.
How does any business get going again - have a big sale, drop prices.

Its in their interests to convince potential sellers that their house is worth less, as a lower asking price increases their chance of getting it sold.

An estate agent makes more cash by selling 2 houses at 50% of peak prices than 1 house at 70%.

Do you think for a second that their customers are more important to them than their bank balance?

Gurgle good points

but note that IAVI data is based on selling prices not asking prices like every other report out there

since our market is very opaque, thats a 20% discrepancy there

whizzbang

There is no timely, reliable index on Irish house prices available to the public. They are all either based on asking prices, A basket of massaged selling prices, or 6 month old Dept of the environment price reports.

Just pick the one that best suits your argument today.

bangersandmash

Gurgle wrote: »

As of October 2009, prices in Dublin were down 30% from peak.
Maybe there are particular estates where one house sold for €1,000,000 in December '06 and another for €500,000 in December '09 but these are the outliers on the graph, they are not representative of the average house.

I'm somewhat inclined to agree with this. While at the top end of the market you can clearly see cases of of 50%+ price drops, looking at asking prices for 3/4 bed houses in many middle-class Dublin suburbs I'm generally seeing 30-40% drops in asking prices at most. That said, I'd be wary of backing this up with TSB/ESRI reports since the volume is so low.

It's interesting that VIs have suddenly become so vocal in claiming that prices are definitely down 50% in Dublin. Their rationale seems to be that "doom mongers" predicted 50% drops, now apparently this has happened, so we've reached the bottom and we can all start buying again at current asking prices.

ei.sdraob

whizzbang wrote: »

There is no timely, reliable index on Irish house prices available to the public. They are all either based on asking prices, A basket of massaged selling prices, or 6 month old Dept of the environment price reports.

Just pick the one that best suits your argument today.

of course, there should be a registry with all sales prices (info available to revenue) available to public

in every other market (take stock market) the data is available for all to base decisions on, not here

whatever the figures are, the prices have fallen alot and are still on a negative trajectory

daltonr

I don't trust the IAVI, but I do trust DAFT, not least because I can actually verify what DAFT says.

If asking prices are down 42 percent then by definition sale prices are down more than that.

The fact that the IAVI report tallies with the DAFT report makes me thing that 50 percent falls aren't merely outliers.

If you rely on the ESRI report you're about 3 to 6 months behind the curve.

Also, re: trackers. If the banks cost of borrowing goes up as it has, but the rate they can charge is pegged to the ECB rate, then it appears you can lose money on trackers.

Someone who knows for sure might correct me on that.

-Rd

MG

This crash has more bottoms than a Rik Mayell DVD boxset

oceanclub

MG wrote: »

This crash has more bottoms than a Rik Mayell DVD boxset

http://quotesfromthebubble.blogspot.com/search/label/calling%20the%20bottom

(If you know of any more bottom-spotting quotes, please msg them to me...)

P.

SoupyNorman

oceanclub wrote: »

http://quotesfromthebubble.blogspot.com/search/label/calling%20the%20bottom

(If you know of any more bottom-spotting quotes, please msg them to me...)

P.

Great Idea, I'm onboard.

The_Conductor

daltonr wrote: »

Ah, but which is more likely to get back to it's former level, Interest Rates, or their income.

Therein lies the rub.

You are right though. Overall those who've kept jobs, even with pay cuts are better off. If you don't have a lot of debt you'll hold on to a lot of those gains even if interest rates increase.

Hopefully, if rates do increase those with debts will make enough savings elsewhere to be not too much worse off. But it doesn't take a lot to make a mortgage very expensive. Particularly if you bought when rates were low.

-Rd

The only issue with this- is that inflation which has occurred in the intervening period isn't factored in. If you go on a little exercise and factor it in- you can get some very interesting results....... The average salary in Ireland post the additional levies (and for the public sector the pensions levy and paycuts), is already back at 2001 in real terms. By rights- if we want to measure international competitiveness- this implies we need a further contraction to roll ourselves back to a 1996-1997 position.

Of course it suits the politicians to pretend our economy is now a 'Knowledge Economy'- and the constraints which previously defined us, no longer apply. Perhaps someone should explain this to the almost half million out of work?

oceanclub

smccarrick wrote: »

Of course it suits the politicians to pretend our economy is now a 'Knowledge Economy'- and the constraints which previously defined us, no longer apply. Perhaps someone should explain this to the almost half million out of work?

A friend of mine works with a French guy who, every time he hears yet another example of how this country is screwed, says deadpan "Ah, that would be the knowledge economy". Supposedly it's become the office catchphrase.

P.

fontinalis

smccarrick wrote: »

The only issue with this- is that inflation which has occurred in the intervening period isn't factored in. If you go on a little exercise and factor it in- you can get some very interesting results....... The average salary in Ireland post the additional levies (and for the public sector the pensions levy and paycuts), is already back at 2001 in real terms. By rights- if we want to measure international competitiveness- this implies we need a further contraction to roll ourselves back to a 1996-1997 position.

Of course it suits the politicians to pretend our economy is now a 'Knowledge Economy'- and the constraints which previously defined us, no longer apply. Perhaps someone should explain this to the almost half million out of work?

Do you think the mass ignorance of basic financial common sense that was displayed does away with hopes of a knowledge economy?

The_Conductor

fontinalis wrote: »

Do you think the mass ignorance of basic financial common sense that was displayed does away with hopes of a knowledge economy?

Not at all. I do think that the term 'knowledge economy' has developed spin of Alister Campbell proportions though- no-one even knows what its supposed to mean. If they mean a massive investment in research and development- we'll the politicians have already destroyed that one- Enterprise Ireland, the SFI and 4 or 5 other organisations routinely chase the same contracts- its a battle of the quangoes! Even the organisations who should know better (UCD and TCD for example) habitually poach each others lead researchers (though regardless of who TCD poach from UCD- they are not going to rival UCC in the food science arena etc)

If it were a simple mass ignorance of basic financial common sense- it wouldn't be so bad- however once again, its the old bugbear of parochial politics and a total lack of understanding that we are a small relatively insignificant country, with an incredibly open economy, on the global stage. We are incapable of doing something for the good of the country- its every little quango, every little organisation, every politician, every village, town, city- for themselves, and whats good for the country as a whole be damned........

Blackjack

daltonr wrote: »

Also, re: trackers. If the banks cost of borrowing goes up as it has, but the rate they can charge is pegged to the ECB rate, then it appears you can lose money on trackers.

Someone who knows for sure might correct me on that.

-Rd

Securitisation.

crocro

smccarrick wrote: »

The only issue with this- is that inflation which has occurred in the intervening period isn't factored in. If you go on a little exercise and factor it in- you can get some very interesting results....... The average salary in Ireland post the additional levies (and for the public sector the pensions levy and paycuts), is already back at 2001 in real terms. By rights- if we want to measure international competitiveness- this implies we need a further contraction to roll ourselves back to a 1996-1997 position.

Taxes and levies disimprove international competitiveness in labour costs. When employment taxes increase, the employer must pay a slightly higher wage to partly compensate the employee for reduced earnings. The employee doesn't take all the hit from the new tax. Supply of labour is not price inelastic- employees can choose to go on welfare or emigrate or go back to college if they deem their new salary too low.

Now gross wage cuts, on the other hand, do improve competitiveness - but they also make welfare and education more attractive.

As for wage costs returning to 2001 levels...
I pulled out avg weekly wage data for civil servants from the CSO for 2001-2008 and factored in inflation to find real salaries during this time..

Year	CPI	nominal	real
2001	98.2	633	644
2002	102.7	656	638
2003	106.3	681	640
2004	108.6	744	685
2005	111.3	795	715
2006	115.7	838	724
2007	121.3	877	723
2008	126.3	916	725

(inflation base is dec 2001=100)
That's a real increase of 12.5%. No data is given for 2009 but we know that inflation was about -5.9 while civil servants presumably increased average pay through increments, so their gross real pay has strengthened further. 2010 will see a big drop in real wages.

Civil servants are of course a special case because all the employment taxes go straight back to base.

Average industrial wage increased by only 4.7% for the same period in real terms.

Take home pay is right down though for everyone, public and private, to levels of about a decade ago so that has to feed into lower amounts lent for mortgages and hence further falls in house prices.

oceanclub

jmayo wrote: »

Ehh he/she always claims they are not but that they are an investor.
Hell mrgaa1 was on boards mid 2009 telling people there were great inventment bargains to be had out there. :rolleyes:

He hasn't posted since my Comical Ali wisecrack; I guess I did hit a nerve.

P.