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Will we know when it hits bottom?

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  • 01-04-2009 5:30pm
    #1
    Himselfe
    Registered Users Posts: 126 ✭✭


    There are tonnes of threads on this site with people arguing back and forth about the state of the housing market. The general consensus, as far as I can make out, is that most people think the property market has a ways to go before it bottoms out (myself included).

    Obviously so many factors surrounding it make it difficult to say when it will happen, but does anyone here think we will actually know when it has happened?

    What would constitute a 'bottoming out'? There'll always be fluctuations (I've seen the term 'Dead Cat Bounce' bandied about a bit on here).

    Basically what I'm asking is: How will we know it has happened???


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    #2
    whizzbang
    Registered Users Posts: 1,366 ✭✭✭whizzbang


    I think you will only be able to tell in retrospect.

    Keep an eye on things like daftwatch.atspace.com and when you see supply start to seriously retract (down 30% or more from now) then it is possible that the bottom has recently passed. I wouldn't bank on being able to pinpoint it exactly. I'm waiting for a decent recovery before buying, I won't get it at its cheapest, but I won't be fooled by any blips either.


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    #3
    johnnyskeleton
    Moderators, Entertainment Moderators, Politics Moderators Posts: 14,505 Mod ✭✭✭✭johnnyskeleton


    Some say that the general trend for house prices combined with a recession is that house prices tend not to rise until about a year after the general economy has improved.

    While I don't necessarily believe that will happen in Ireland, you might take from it that there is little hope of the property market reaching the bottom until the economy is well on its way to recovery. With unemployment still increasing rapidly (albeit not as rapidly as last month), it makes sense to suggest that the bottom in house prices is a long way off. When unemployment starts to decrease significantly, then look to the housing market.


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    #4
    JuliusCaesar
    Registered Users Posts: 4,882 ✭✭✭JuliusCaesar


    Himselfe wrote: »
    How will we know it has happened???

    because the prices will start rising very slowly or just plain stabilising. But you need a good time of this happening to be able to tell.

    So yes, you only know for sure in retrospect. Or you make a lucky guess. :cool:


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    #5
    Firetrap
    Closed Accounts Posts: 4,442 ✭✭✭Firetrap


    That's about the size of it really. How did we know when the market hit the top?


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    #6
    Agent J
    Registered Users Posts: 1,909 ✭✭✭Agent J


    When tom parlon says that the market hasnt bottomed out yet is probably the best signal.


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    #7
    tedstriker
    Banned (with Prison Access) Posts: 130 ✭✭tedstriker


    Prices for property in Ireland will have to drop about 50-60%. This figure is based on what has happened in other countries in similar situations. Currently the prices are down about 20% on average. We are in for a very prolonged recession in Ireland. Tougher than any other country in the EU. Our tax base is totally all over the shop. Politicians are on the radio talking about taxing everything from driveways to text messages. The reason for this is because way too much of our tax money WAS coming from property sales. The oil of property sales is credit. Banks are not lending FULL STOP. BOI have a first time buyers "pot" of €1billion but to qualify you would want to have just won the lotto and even then they might ask for your kids as a guarantee.

    There are other issues also as to why property is a no go area for at least 3 years, people aren't willing to take the risks either. Unemployment just hit 11%, and that's with a delay of about 6 weeks in getting dole money so the real figure is worse.

    If you want to know how far away from reality the prices remain in ireland there is a simple calculation. An apartment or house is worth at most 14 times what it can be rented for. Also look at other (much prettier) countries/cities and see what the prices are there.

    The bottom will be in 2-3 years and it will be 50-60% from the peak.


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    #8
    SkepticOne
    Closed Accounts Posts: 6,718 ✭✭✭SkepticOne


    One thing is certain. If you correctly call the bottom you will be in the minority. You will be going against the prevailing opinion which will be that prices still have further to drop. At the bottom the majority will be wrong.


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    #9
    who_ru
    Registered Users Posts: 2,033 ✭✭✭who_ru


    tedstriker wrote: »
    Prices for property in Ireland will have to drop about 50-60%. This figure is based on what has happened in other countries in similar situations. Currently the prices are down about 20% on average. We are in for a very prolonged recession in Ireland. Tougher than any other country in the EU. Our tax base is totally all over the shop. Politicians are on the radio talking about taxing everything from driveways to text messages. The reason for this is because way too much of our tax money WAS coming from property sales. The oil of property sales is credit. Banks are not lending FULL STOP. BOI have a first time buyers "pot" of €1billion but to qualify you would want to have just won the lotto and even then they might ask for your kids as a guarantee.

    There are other issues also as to why property is a no go area for at least 3 years, people aren't willing to take the risks either. Unemployment just hit 11%, and that's with a delay of about 6 weeks in getting dole money so the real figure is worse.

    If you want to know how far away from reality the prices remain in ireland there is a simple calculation. An apartment or house is worth at most 14 times what it can be rented for. Also look at other (much prettier) countries/cities and see what the prices are there.

    The bottom will be in 2-3 years and it will be 50-60% from the peak.

    all in all an excellant post.


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    #10
    TheCityManager
    Registered Users Posts: 186 ✭✭TheCityManager


    tedstriker wrote: »
    We are in for a very prolonged recession in Ireland. Tougher than any other country in the EU.

    Agree 100%.............

    Celtic tiger #1 - Multinationals
    celtic tiger #2 - property
    Celtic tiger #3 - ??????????????????????? .... Nothing .......basically we're on the scrap heap..we will, eventually, recover somewhat but we will never be a rich country again (IMO)...house prices (along with all other prices) should reflect this ...


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    #11
    El Stuntman
    Closed Accounts Posts: 4,720 ✭✭✭El Stuntman


    when yields on property investment provide a reasonable return

    this day is a long, long way off

    I expect 50%+ falls from current levels


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    #12
    Himselfe
    Registered Users Posts: 126 ✭✭Himselfe


    El Stuntman wrote: »
    when yields on property investment provide a reasonable return

    Is this not the type of thinking that already has us in the position we're in now?

    Surely property shouldn't be thought of as a commodity to be invested in, like stocks and shares, especially on the housing side? Obviously there will always be landlords who rent thiere properties to make some sort of return, but the economics of such investments were treated the wrong way in the past 10 years. The economics of property are different IMHO.

    Its interesting to get peoples opinions on this. I'm by no means an expert on the subject, but I would be prudent with my money. I've seen people over the past few years who knew nothing about property 'invest' all they had on a 'sure bet' only to be in dire straits now.


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    #13
    El Stuntman
    Closed Accounts Posts: 4,720 ✭✭✭El Stuntman


    Himselfe wrote: »
    Its interesting to get peoples opinions on this. I'm by no means an expert on the subject, but I would be prudent with my money. I've seen people over the past few years who knew nothing about property 'invest' all they had on a 'sure bet' only to be in dire straits now.

    I fully agree and the sad thing is that prudent types like yourself will pick up the tab for these idiots


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