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Collapse in house prices will be good for economy

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    #62
    harsea8
    Closed Accounts Posts: 238 ✭✭harsea8


    Quote:Originally Posted by grahamo
    Yes I agree but the point I'm trying to make is that the fact that people will be spending the next 20 odd years paying out the best part of their income on a mortgage, that will mean that they will have less spending power which will mean it will be that much harder for the economy to recover.

    gurramok wrote: »
    Only a small minority are affected by that scenario, the vast vast majority of the population did not buy in 2006 :).

    Its their responsibility to get themselves out of that hole created by a reckless decision to buy at a high price.

    If this report in the Indo is to be believed, it is no small minority, but more like 20% of homeowners. And that is now....if there is a further 50% drop in prices, who knows what proportion of homeowners are going to end up in negative equity..30%, 40%??
    http://www.independent.ie/business/personal-finance/property-mortgages/home-debttrap-hits-340000-1743497.html


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    #63
    gurramok
    Closed Accounts Posts: 13,992 ✭✭✭✭gurramok


    harsea8 wrote: »
    If this report in the Indo is to be believed, it is no small minority, but more like 20% of homeowners. And that is now....if there is a further 50% drop in prices, who knows what proportion of homeowners are going to end up in negative equity..30%, 40%??
    http://www.independent.ie/business/personal-finance/property-mortgages/home-debttrap-hits-340000-1743497.html

    Strip out the multiple mortgage holders(investors) and it will reduce it a bit.

    I have no idea how many investor mortgages there were in the period but i believe 40% of new builds in a given year at its peak were bought by investors for profit.


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    #64
    rugbyman
    Registered Users Posts: 1,783 ✭✭✭rugbyman


    Well blow me down,
    I just wandered into this thread as I liked the subject and find my old friend Sponge Bob in full flow.
    Also known as Mr Broadband, there seems to be no end of your expertise Bob.

    have you any plans to take over the world? I will join you.
    regards, Rugbyman


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    #65
    Sponge Bob
    Banned (with Prison Access) Posts: 25,234 ✭✭✭✭Sponge Bob


    I am merely repeating what I basically said in 2006 Rugbyman :(

    As for the poster who thinks 40% will end in negative equity, that is impossible.

    Over 50% own their homes outright and many mortgages are tiny , a few 10s of 1000s . Negative equity is simply where the value of your home at a moment in time is less than your mortgage and not where the value of what you own outright fluctuates a tad .

    25% in negative equity would be bad , it would mean that 25% of homes often cannot be sold because banks do not allow the seller to sell without clearing the mortgage which is greater than the value of the property and that a high proportion of the workforce cannot afford to follow the work .

    Once NAMA is set up the issue of negative equity must also be tackled but not with large scale write offs , maybe a special tax allowance if you prove you have to move and cannot live where you did . Let NAMA buy the shortfall (up to a point) and receive the entire benefit from the tax allowance .

    You leave the country without permission and the full amount becomes due :p


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