David McWilliams predicts further 50% fall in house prices

oceanclub

asdasd wrote: »

Why isnt the rent 21K for you for the period, as that is what you are charging the guy?

Anyway you would have saved the drop in house prices and interest in the meantime. Not buying is useful in many situations.

The renting of the room? What if that dries up? Rent is going to fall and that guy may get his own place for a song soon.

And talk about comparing apples and pears. To compare them equally, you need to either (a) remove the money gained by rent-a-room or (b) remove from the rent the amount you would make by sub-letting or sharing a room.

P.

D3PO

asdasd wrote: »

Why isnt the rent 21K for you for the period, as that is what you are charging the guy?

Anyway you would have saved the drop in house prices and interest in the meantime. Not buying is useful in many situations.

The renting of the room? What if that dries up? Rent is going to fall and that guy may get his own place for a song soon.

1. because i was renting 2 rooms

2. I was referring to long term renting 15-25 years. with a reasonable inflation only increase in house prices over that period house price drop becomes irrelevent

3. Refer to point 2 post was in reference to long term renting. rent in 15-25 years will be higher than it is now

however if I was talking short term renting over a 1 - 5 year period i take you point.

like ive mentioned it depends on circumstances

D3PO

oceanclub wrote: »

And talk about comparing apples and pears. To compare them equally, you need to either (a) remove the money gained by rent-a-room or (b) remove from the rent the amount you would make by sub-letting or sharing a room.

P.

not really. if you can find somewhere with €600 a month rent that has a spare rtoom to sublet your better than most even with the reductions in the past 2 years

oceanclub

D3PO wrote: »

not really. if you can find somewhere with €600 a month rent that has a spare rtoom to sublet your better than most even with the reductions in the past 2 years

The point is that your argument that buying is better than renting, is only supported by living with a lodger for the rest of your life. Most people would see that as deal-breaker.

P.

D3PO

oceanclub wrote: »

The point is that your argument that buying is better than renting, is only supported by living with a lodger for the rest of your life. Most people would see that as deal-breaker.

P.

no my point was not that buying is better than renting,

my point was depending on the individual circumstances buying or renting can be the best option,

the sums were just to add a little more detail to the argument. i never said you would want or need a live in lodger for life the same way i didnt go into the fact rent would rise with inflation over your lifetime.

positron

smccarrick wrote: »

..the public and private sectors a blanket 30-40% cut in gross pay across the board.

I will play along if my bank would reduce mortgage amount by 40% as well.

D3PO

positron wrote: »

I will play along if my bank would reduce mortgage amount by 40% as well.

here here

pipelaser

homme d'affaire wrote: »

No, the cost of construction has to and will probably fall too. Electricians/builders/carpenters/etc should not be earning salaries of 50k+.

Im a Civil Engineer looking for a job, the only companies that will even look at my C.V are the ones that are offering around 65-70% of what i was earning (which wasnt that much compaired to other Civil Engineers my age).
And thats pending an Interview...... with about 50 other c*nts competeing for the position aswell.
They'll keep dropping the saleries aswell, its all business.

The_Conductor

positron wrote: »

I will play along if my bank would reduce mortgage amount by 40% as well.

Well- seeing as the taxpayer is the majority shareholder at this stage, in one guise or another, of all the major financial institutions in the country- I don't see why not. Seems fair enough....

harsea8

smccarrick wrote: »

After the latest levy and PRSI increases on the 1st of May its just over a 19% cut in net take home pay in the public sector (depends on a number of factors though- its higher in many cases, and lower in others). You wouldn't know it from whats reported in the media though!

Instead of playing with tax rates, levies, PRSI etc- wouldn't it make a lot more sense to simply give everyone in both the public and private sectors a blanket 30-40% cut in gross pay across the board. It would restore competitiveness overnight, and position us nicely to make the most of a recovery if/when one is to happen in the international arena.

I'm no lawyer, but I doubt the government has the entitlement to dictate to private companies what they can or cannot pay their staff. Also, as stated above, this would need to be accompanied by a blanket 30-40% reduction in the cost of everything (mortgage, car loans, petrol, food, clothes, a pint...etc.) or else all you'll do is totally f*ck everyone with any kind of debt (which includes a lot of us) and make life extremely difficult for the rest.

The_Conductor

harsea8 wrote: »

I'm no lawyer, but I doubt the government has the entitlement to dictate to private companies what they can or cannot pay their staff. Also, as stated above, this would need to be accompanied by a blanket 30-40% reduction in the cost of everything (mortgage, car loans, petrol, food, clothes, a pint...etc.) or else all you'll do is totally f*ck everyone with any kind of debt (which includes a lot of us) and make life extremely difficult for the rest.

The government does have the right to dictate to the public sector (which accounts for 18.6 billion of expenditure) what its staff can or cannot be paid.

Its simplistic to expect a blanket 30-40% cut in the price of everything. The fact of the matter is we have been living beyond our means for years- by borrowing to our hearts content. It is not a realistic or reasonable assumption that people can expect to maintain the same standard of living they have had for the past few years- it simply isn't.

asdasd

The fact of the matter is we have been living beyond our means for years- by borrowing to our hearts content.

And getting huge pay rises. To put the pay in Ireland into perspective - a single person in ireland can get affordable housing at 58K a year. An English MP earns 60K a year ( before expenses).

A tweak in currency markets and British MPs could be eligable for affordable housing in Ireland.

harsea8

smccarrick wrote: »

The government does have the right to dictate to the public sector (which accounts for 18.6 billion of expenditure) what its staff can or cannot be paid.

Its simplistic to expect a blanket 30-40% cut in the price of everything. The fact of the matter is we have been living beyond our means for years- by borrowing to our hearts content. It is not a realistic or reasonable assumption that people can expect to maintain the same standard of living they have had for the past few years- it simply isn't.

Re-read my post, I was referring to PRIVATE companies. Of course the government has every right to cut public sector salaries by 30-40%, but that would just result in widespread strikes, as they probably cannot impose the same cuts on the private sector.

Also, it may seem simplistic to you to expect a blanket 30-40% cut in the price of everything, but if there wasn't and wages dropped by that amount, many people would be absolutely f*cked. You may be right about us living beyond our means, but I'd be surprised if there are many of us who could simply absorb a 30-40% drop in our income by buying a few less groceries or cutting back on nights out. A drop as big as that would have to be accompanied by a substantial drop in the cost of living

Freddie59

smccarrick wrote: »

The government does have the right to dictate to the public sector (which accounts for 18.6 billion of expenditure) what its staff can or cannot be paid.

Its simplistic to expect a blanket 30-40% cut in the price of everything. The fact of the matter is we have been living beyond our means for years- by borrowing to our hearts content. It is not a realistic or reasonable assumption that people can expect to maintain the same standard of living they have had for the past few years- it simply isn't.

It's not simplistic - it's realistic. I would feel that if they want such a reduction in wages then all other stuff has to be reduced accordingly. How will people afford it otherwise?

The_Conductor

Freddie59 wrote: »

How will people afford it otherwise?

They wouldn't.
Should I be able to afford a Porsche 911- because I used to be able to borrow sufficient money to buy one? No. The vast majority of the country have been living on borrowed means- purchasing goods, taking holidays etc- on credit. My argument is that we couldn't afford these things in the first instance- we borrowed to pay for them. Why should we expect a 30-40% cut in the price of these to reflect reduced means- when our original purchasing power was wholly illusional in the first instance........?

Freddie59

smccarrick wrote: »

They wouldn't.
Should I be able to afford a Porsche 911- because I used to be able to borrow sufficient money to buy one? No. The vast majority of the country have been living on borrowed means- purchasing goods, taking holidays etc- on credit. My argument is that we couldn't afford these things in the first instance- we borrowed to pay for them. Why should we expect a 30-40% cut in the price of these to reflect reduced means- when our original purchasing power was wholly illusional in the first instance........?

It's not quite that simple. People have achieved a certain level of income over the past ten years - whatever your earnings are. Your disposable income is directly related to that increase.

I don't know how many bought Porsches. But many found it hard to keep their head above water (financially) in Rip-Off Ireland. Are those misfortunates now to be punished while banksters and developers get off scot-free?

Retailers, utilities, etc jumped on that bandwagon. So there would have to be the inevitable domino effect. It's unsustainable otherwise.

harsea8

smccarrick wrote: »

They wouldn't.
Should I be able to afford a Porsche 911- because I used to be able to borrow sufficient money to buy one? No. The vast majority of the country have been living on borrowed means- purchasing goods, taking holidays etc- on credit. My argument is that we couldn't afford these things in the first instance- we borrowed to pay for them. Why should we expect a 30-40% cut in the price of these to reflect reduced means- when our original purchasing power was wholly illusional in the first instance........?

I really don't know where you get this idea that everyone bar those who bought a porsche 911 during the boom has the capacity to loose 30-40% of their salary and still survive without a comparable cut in the cost of living. In reality a lot of people who didn't overspend during the boom would be right royally f*cked if they lost that much disposable income, nd prices stayed as they are...and we are not talking loosing holidays or having to return the 08 BMW, we talking not being able to afford food, clothes, school uniforms, oil/gas (come winter time), etc..

The_Conductor

harsea8 wrote: »

I really don't know where you get this idea that everyone bar those who bought a porsche 911 during the boom has the capacity to loose 30-40% of their salary and still survive without a comparable cut in the cost of living. In reality a lot of people who didn't overspend during the boom would be right royally f*cked if they lost that much disposable income, nd prices stayed as they are...and we are not talking loosing holidays or having to return the 08 BMW, we talking not being able to afford food, clothes, school uniforms, oil/gas (come winter time), etc..

Look- for the most part- people have already had a ~20-~30% cut in the *net take home pay*- between the changes in the tax regimes, income levies, increased PRSI, Pension levies, lack of overtime, cuts in allowances/bonuses etc- the average person has already had a massive cut in their take home pay.

I am not suggesting that people have the capacity to 'loose' 30-40% of their salary and survive without 1. a change in their standard of living (which is already happening) or 2. a cut in the cost of living (in Ireland it may very well hit 10% this year).

People are going to have cut back massively. People are already changing their shopping habits, enrollment at fee paying schools is plummeting, new car sales have been decimated, people are making informed choices when seeking goods and services (for the first time for many), holidays are being cutback on or cancelled (as evidenced by the massive reduction in seat numbers flying in and out of our airports), etc.

It is not that there is a comparable cut in the cost of goods and services happening- there isn't. There are cuts happening- long overdue cuts- however the reductions in people's net take home pay are being reduced by an even larger amount.....

Our standards of living are falling- significantly- because our incomes are falling even faster than than our costs of living are falling. It doesn't matter how we try to look at it- the simple fact of the matter is we can allow this to chase us over a 2-3 year period, or we can bite the bullet and take a harsh dose of realism and take the pain now- rather than a long drawn out process- and better position ourselves for when stability does return to the international economic arena.

We are all going to hurt badly before we see the other side of this- I am not suggesting we have the capacity to take this without pain- I am suggesting that it is going to happen- be it sooner or later- people are going to have to be realistic about the medicine the Irish economy needs if it is ever to get back on an even keel again. I don't think this realism has crept into the public consciousness as yet........

With respect of people not being able to buy clothes, pay for oil/gas/food etc- people are going cold, there are people who *are* employed queuing for food parcels, clothes sales are down the tubes (there are second hand clothes shops opening all over the place- even in D2 and D4- former bastions of the economic boom.....

People- even those in employment, are in big trouble now, and its only going to get worse before it gets better....... Ignoring cuts in take-home-pay- what will happen as soon as interest rates return to 'normality' (defined by the ECB as long term rates averaging between 4 and 5%). The big difference between the economic mess here in the 1980s and the current mess- is in the 1980s- privately people had little- however they didn't have significant debt. The public purse was bankrupt by late 1985 we were actually unable to borrow on the international market). As soon as interest rates rise- the average person on the street is going to be in far deeper trouble than his/her cut in pay will ever cause them......

I was being flippant with the example of being able to borrow for a Porsche- though I have little doubt that I could have done. Nowadays I can't even convert credit card debt into a more manageable term loan.......

The_Conductor

Freddie59 wrote: »

It's not quite that simple. People have achieved a certain level of income over the past ten years - whatever your earnings are. Your disposable income is directly related to that increase.

I don't know how many bought Porsches. But many found it hard to keep their head above water (financially) in Rip-Off Ireland. Are those misfortunates now to be punished while banksters and developers get off scot-free?

Retailers, utilities, etc jumped on that bandwagon. So there would have to be the inevitable domino effect. It's unsustainable otherwise.

People did achieve a certain level of income over the past 10 years. These incomes were wholly unsustainable. The guy who tiled my bathroom bragged how his take home pay was over 6 times mine- and I a reasonably successful graduate working in an area I was qualified to work in......

People's income is going to fall- and their standard of living is going to have to reflect what a normal income for someone in a particular profession represents (note: this will happen- after the massive problem with private sector debt is sorted- which could take 15-20 years).

Ireland has serious societal structural problems that are not going to be brought to bear for many many years.

What I am saying is harsh, and is going to hurt a lot of people- we have been living beyond our means, on borrowed money- and our house(s) of cards have come crashing down.

Its all well and good to argue that structually our major banks cannot be allowed to fail- structually we cannot allow development land to fall below 40% of the price originally paid for it- etc. This has the public at large seething. The perception is there are double standards being applied. One set of rules for our golden boy bankers and developers- another set of rules for Joe and Jill walking down the street, worried about whether they can pay for their groceries on Saturday, or whether their credit card will be maxed out.........

There aren't easy solutions out there. I disagree with giving preferential treatment to any group of people. The perception everyone has is that the bankers and developers are being bailed out. The perception among the employed is that social welfare recipients have it easy and the average worker is bearing the brunt of the hurt that has occurred thus far. The perception among the social welfare recipients, particularly those newly unemployed- is a betrayal by our politicians and that we have all been lied to by the media- and their social welfare payments are a massive drop on the types of money they were used to (brickies could well expect over 120k per annum ffs......)

We are all hurting- and there is a hell of a lot more hurt on the horizon......

I know what I'm saying is not popular- its realistic though.........

johnnyskeleton

smccarrick wrote: »

Look- for the most part- people have already had a ~20-~30% cut in the *net take home pay*- between the changes in the tax regimes, income levies, increased PRSI, Pension levies, lack of overtime, cuts in allowances/bonuses etc- the average person has already had a massive cut in their take home pay.

Just to point out one thing - a cut in net pay due to increased tax is not the same as a cut in gross pay. For the purposes of regaining competitiveness, an employer is paying the same amount whether someone is paying 20% tax or 25% tax. I think most people accept that prices, costs and wages have to go down, thus the extra tax increases are not only hitting people badly, but they are also preventing us from regaining competitiveness (as the increased taxes increase wage demands, thus staff at luftansa reject paycuts and lose their jobs).

I know what I'm saying is not popular- its realistic though.........

A more popular and more realistic approach (which you touched upon earlier) would be massive cuts in public sector wages and allowing the private sector to correct through market forces. In addition to the factors above, cuts in private sector wages help to increase competitiveness (by comparison with private sector wages), reduce the government deficit and restore people's confidence in their government. But instead we are going the other way.

The_Conductor

johnnyskeleton wrote: »

A more popular and more realistic approach (which you touched upon earlier) would be massive cuts in public sector wages and allowing the private sector to correct through market forces. In addition to the factors above, cuts in private sector wages help to increase competitiveness (by comparison with private sector wages), reduce the government deficit and restore people's confidence in their government. But instead we are going the other way.

If you are going down that road- which is something that has to be explored, the minimum wage must be severely cut, or even abolished- along with triple time for Sunday work etc. The reason none of the sandwich bars open on a Sunday- and most pubs cut back on bar food etc- is staff costs......

We have the highest minimum wage in the entire world- this is underpinning a wholly unrealistic social welfare structure- and the basis on which many people (including those in the public sector) justify the salaries they are on.

Market forces cannot determine the 'going rate' for a job (whatever that job may be), when its hands are tied with a wholly inappropriate minimum wage level........

?

ronbyrne2005

A reduction in min wage wont work unless social welfare is reformed too. basic dole is 200euro here and 70euro in uk , now cost of livning isnt that different.

SoupyNorman

smccarrick wrote: »

If you are going down that road- which is something that has to be explored, the minimum wage must be severely cut, or even abolished- along with triple time for Sunday work etc. The reason none of the sandwich bars open on a Sunday- and most pubs cut back on bar food etc- is staff costs......

I really agree with minimum wage reform, although I dont agree with abolishing it as I worked in California for $3.25/hr, an impossible sum of money to live on but I earned a fine living from my Tips. Ireland never had nor ever will have a tipping culture so the wage needs to be adjusted.

There is imbalance everywhere currently...social welfare is too high, taxes are slightly too low, minimum wage is way too high. The sooner these 'controllable' elements are brought into line the sooner the property sector can adjust itself to it's actual true value.

SkepticOne

Reducing minimum wage and basic social welfare. Politically, that is going to be very interesting.

ronbyrne2005

SkepticOne wrote: »

Reducing minimum wage and basic social welfare. Politically, that is going to be very interesting.

Fianna FAIL wont tackle it, they wont grasp a nettle. End up with imf/eu doing it for us through onerous loan conditions.

Freddie59

smccarrick wrote: »

The perception everyone has is that the bankers and developers are being bailed out. The perception among the employed is that social welfare recipients have it easy and the average worker is bearing the brunt of the hurt that has occurred thus far.

50 people have been loaned some €90bn by banks. That is the reality.

They have been allowed to renege on the payments and nothing is being done, save a few shapes being thrown about NAMA. That is the reality.

While Social Welfare recipients do not have it easy, MANY of those people have been milking the system for years. It is common knowledge - the dogs in the street know it.

Bankers have been rewarded - not punished. If you or I do not perform in our jobs we will not be sent on our way with a golden handshake. That is the reality.

Finally, if someone has a take - home wage of, say, €700 per week and their outgoings, including mortgage, expenses, etc are €500, how do you reconcile a 40% cut in pay for someone like that? While expecting them to continue to pay inflated and profiteering prices for necessities?

Gurgle

Freddie59 wrote: »

50 people have been loaned some €90bn by banks. That is the reality.

50?
People?

I don't believe either part.
More likely hundreds of corporate entities.

Dob74

Gurgle wrote: »

50?
People?

I don't believe either part.
More likely hundreds of corporate entities.

The figure from anglo was 15 owed over 500 million each.
We are never going to see that money again.
I am sure they have spent the last few months sending what money they had left into off shore accounts.
The tax payer will end up getting screwed, as per usual

The_Conductor

ronbyrne2005 wrote: »

A reduction in min wage wont work unless social welfare is reformed too. basic dole is 200euro here and 70euro in uk , now cost of livning isnt that different.

I agree with you big time- the two *have* to go hand-in-hand.

dny123456

All the non exporting sections of society will need to experience cuts in pay. services (public & private) who are serving the domestic market (i.e teachers, doctors, nurses, hsc workers, insurance companies, civil service), social welfare etc. This will mean house prices will continue to fall. 50%, i'm not so sure, but certainly fall.

Primary producers, public & private (farmers, fishermen r&d, pharmaceutical, Enterprise Ireland, IDA, high tech, S/w dev, etc, innovators and exporters need to be supported and given tax cuts.

It's not a public/private thing, nor a beat up the social welfare recipients posting, before anyone thinks it... its an export/indigenous service/non productive sector, mis-balance. Our economy needs to focus more on servicing internationally rather than nationally.