When will the property market bottom out?

Gurgle

spockety wrote: »

I would ask now, to those who are being more bullish here, do you think the market has actually bottomed now?

Nope, not yet.

spockety wrote: »

If not, how long more do you think it will continue to fall?

As most of the houses on the market are new estates owned by construction companies, it depends on how the banks / builders / government proceed. They could possibly stretch it out over the next couple of years, or they could offload the over-financed stock at firesale prices before the end of 2009 and let the market settle.

spockety wrote: »

And if you believe it will continue to fall (and you must if you don't think it has already bottomed), what are the factors that will force it to continue falling?

Slowly offloading this over-financed new housing stock.

spockety wrote: »

And of those factors, what will make them "go away" in a short period which will enable the market to truly bottom and level off or even pick up again?

Offloading this over-financed new housing stock.

Gurgle

D3PO wrote: »

the rate will creep towards 5 - 6% thats for sure its ony a matter of when.

I predict that after this recession is over, there will be another one.
Its only a matter of when.

gurramok

dapo1981 wrote: »

I don't know that Rent Allowance really has that much impact, most landlords wont accept it (though that is changing in straitened times admittedly).

80,000 people recieve Rent Allowance. Compare that to the 200,000+ who rent privately out of their own means.

Someone else mentioned interest rates and that's surely a far more pressing concern. Given that recent first-timers typically have 250-300k mortgages a 1% rise means around 250euro a month (and don't forget all the high-fliers with far higher mortgages), so if rates creep up towards 5 or 6% base rate I'd expect to see all hell breaking lose, mass repossessions and subsequent fire-sales. I'm not sure if the country could sustain something like that, it'd place an incredible strain on our society as a whole.

Yes, its the sh1tstorm down the line. Thing is, Ireland won't be recovered when rates going up to cushion the blow, its that serious.

D3PO

Gurgle wrote: »

I predict that after this recession is over, there will be another one.
Its only a matter of when.

true :cool:

NewFrockTuesday

gurramok wrote: »

80,000 people recieve Rent Allowance. Compare that to the 200,000+ who rent privately out of their own means.




Yes, its the sh1tstorm down the line. Thing is, Ireland won't be recovered when rates going up to cushion the blow, its that serious.

I think this is an inevitable senario. This is what scares the hell out of me. Whatever has happenned so far, its nothing in comparison to whats waiting for us down the line. The mire of public debt is at breaking point already so I think we can look forward to a financial arrmegadon within the next three - four years. A bubble of negativity is well under way. Im busy wondering now how much Ill be hit for in the next budget - December isint it?.

Isint there any good news on the horizon at all?

Senna

D3PO wrote: »

im going with 6 quarters more of a fall 3 quarters of stabilisation before gradual recovery if you want to use that word in terms of house priceses a lot more index linked to inflation which I expect to be somewhere in the 3.5 - 4% range

I would say q4 2010/q1 2011 will be just about when ECB interest rates start to rise. By then we'll have had 2/3 budgets, with about a further 15% taken off everyones take home pay. Any gov incentives will be gone, like TRS. Property tax will be firmly in place. The second property tax (200e now, more like 1000e then) will result in a steady stream of properties onto the market.

I would hope the property market will be bottomed out in 2010, as the bottom of an asset bubble is a sustainable price, not a point in time. If the market was to bottom out in 2010, we would need prices to drop by about 5% every month till then. Unfortunately thats wishful thing, with the current 1% drops per month and the enviable slow down towards the bottom, it pushes the bottom to 2013-15.

TaxiManMartin

Id say around Q3 2020 things should start to turn around. And then in Q1 2023 we'll be in for another bust.

My crystal ball is just as good as anyone elses

gurramok

TaxiManMartin wrote: »

Id say around Q3 2020 things should start to turn around. And then in Q1 2023 we'll be in for another bust.

Based on your judgment of economic indicators or on your crystal ball?

blast05

the rate will creep towards 5 - 6% thats for sure its ony a matter of when.

Why did it not happen in Japan in the early 90's then ?
Why is everybody taking it as a done deal that interest rates will shoot back up to 5 or 6% ?
If rates went up to those figures sure the country would be completely goosed as would Spain, Greece, etc.

Ultimately there are far far too many unknowns for people to be predicting that interest rates will shoot up in the next 1-3 years or indeed predicting anything

gurramok

Because Japan was an entity in its suffering of the busting of their bubble.

The eurozone has different parts with a bubble and other parts bubble free.

It just so happens the majority of the eurozone was bubble free and the ECB can hike rates to suit the bigger and smaller non-bubble countries at the detriment of Ireland & Spain. (Greece did not have a bubble, theirs is just a badly managed economy not based on property)

Senna

blast05 wrote: »

Why is everybody taking it as a done deal that interest rates will shoot back up to 5 or 6% ?

ECB set the interest rate to keep inflation at 2%, its not set low to keep homeowner happy (although it does) it is purely a inflation control tool. Inflation will return to german and france, when it does rates will rise. To keep inflation at 2%, an average interest rate of 4% is needed by the ECB, should inflation rise over 2%, then the 4% increases. If the ECB do manage to keep inflation at 2%, the ECB rate will be 4% and so the average irish customer on a variable rate will pay 5.5%+. (or as i believe, more like 7% as banks look to recoup all the money lost)

Once manufacturing increase (in other countries, not here) after the recession, the first thing to increase in price is oil, its already slowly moving up and will probably be back up over $100 per barrel by the end of the year. That will have a huge affect on inflation, as its a vital part of so many industries.

blast05

Yes, i know all that re Japan and the cycle that will lead to higher interest rates. However, i just feel that no one can come on here and give anything other than a guess as to the when or the 'how much'. Who knows, we might have hyper-inflation. On the other side, current inter-bank loan rates have dropped fairly sharply in the last few weeks suggesting a longer stint at lower rates than may have been thought only a month ago .... but again, sure who knows.

... and looking at the bigger picture ..... if the ECB has to raises interest rates and it cripples the likes of Ireland and Spain and 1 or 2 others then it really would put the whole European project under serious pressure. If the rate increases end up costing the average mortgage holder say €500 per month extra then the Livelines and every other media outlet in Ireland will be blabbing on about why are we allowing Brussels to put so many people under so much financial pressure and with that will come a mood swing against Europe etc etc etc (regardless of what the correct fiscal policy for Ireland in isolation would be)

There has never been a level of personal indebtedness in the few countries that would be impacted by rate increases as there is now and thus who knows what the reaction will be in the different affected countries when the ECB decides to increase the rates.

D3PO

blast05 wrote: »

... and looking at the bigger picture ..... if the ECB has to raises interest rates and it cripples the likes of Ireland and Spain and 1 or 2 others then it really would put the whole European project under serious pressure. If the rate increases end up costing the average mortgage holder say €500 per month extra then the Livelines and every other media outlet in Ireland will be blabbing on about why are we allowing Brussels to put so many people under so much financial pressure .

Well given that the ECB are 100% independent to the European Comission and Trichet has a track record of hitting out at any critisism made about the ECB by the European Parliment it will make no difference to their monetary policy thats almost gauranteed.

Would it impact the eurozone in general ? I doubt it certainly FF dont have the balls to pull out of Europe and I dont see anybody else pulling out.

gurramok

That 500quid a month 'windfall' was only temporary since Oct '08(http://www.ecb.int/stats/monetary/rates/html/index.en.html) which is Nov '08 for when it was passed on by banks so thats 8 months so far of breathing space.

When rates return to a normal of 4%+, the mortgage holders who would not be able manage these prospected rate rises whilst still in decent paying jobs need to seriously look at what they have been financially doing in the last 8 months before the rates rise again within the year.

blast05

That 500quid a month 'windfall' was only temporary since Oct '08(http://www.ecb.int/stats/monetary/ra.../index.en.html) which is Nov '08 for when it was passed on by banks so thats 8 months so far of breathing space.

When rates return to a normal of 4%+, the mortgage holders who would not be able manage these prospected rate rises whilst still in decent paying jobs need to seriously look at what they have been financially doing in the last 8 months before the rates rise again within the year.

You're forgetting about all the tax hikes. Nett pay from 12 months ago compared to what it will be in say 12 months time - i'd hazard an estimation it will be around 20% difference for the average punter. Plus not all banks have passed on all rate cuts in full .... but you can be sure they will pass on all rate increases so that even when rates go back to Oct '08 levels the average punter will end up paying more (off a much lower nett income)

spockety

blast05 wrote: »

You're forgetting about all the tax hikes. Nett pay from 12 months ago compared to what it will be in say 12 months time - i'd hazard an estimation it will be around 20% difference for the average punter. Plus not all banks have passed on all rate cuts in full .... but you can be sure they will pass on all rate increases so that even when rates go back to Oct '08 levels the average punter will end up paying more (off a much lower nett income)

In that case you have to hand it to Cowen and Lenihan, they have played an absolute blinder by bringing in tax hikes and spending cuts at a time of historically low interest rates. So while the ECB/banks have been giving, the Govt have been taking, so there hasn't been riots or anything. However, when interest rates go up, the banks will take the blame for hitting people in the pocket, not the Govt.

gurramok

blast05 wrote: »

You're forgetting about all the tax hikes. Nett pay from 12 months ago compared to what it will be in say 12 months time - i'd hazard an estimation it will be around 20% difference for the average punter. Plus not all banks have passed on all rate cuts in full .... but you can be sure they will pass on all rate increases so that even when rates go back to Oct '08 levels the average punter will end up paying more (off a much lower nett income)

Agree but 20%?

Mine is 4% i think on a pay freeze(might be cut by 3% in the future though)

You see what the govt did, hike taxes in the low interest rate cycle so the consumer is cushioned and won't feel as hard done by.

A false dawn looms for those who think the cushion is made of stone

Anyway, all these hikes(tax and interest rates when it happens) will mean further erosion of affordability for housing hence that bottom will not arrive anytime soon.

blast05

4% :eek:
There have been 2 hikes to date .... i can't recall the first one but the more recent ones has cost me ~4.5% alone and i ain't on any huge salary....

gurramok

Oh yeh, the previous budget chopped off another bit as well so its more than 4%, probably 6-7% then.

blast05

In that case you have to hand it to Cowen and Lenihan, they have played an absolute blinder by bringing in tax hikes and spending cuts at a time of historically low interest rates. So while the ECB/banks have been giving, the Govt have been taking, so there hasn't been riots or anything. However, when interest rates go up, the banks will take the blame for hitting people in the pocket, not the Govt.

To say you are giving FF too much credit there would be a vast understatement........

Senna

blast05 wrote: »

To say you are giving FF too much credit there would be a vast understatement........

I suppose you just have to wonder, there's another budget coming up in Dec and i guess another 5% off people take home pay, will there be riots in the streets?? not a chance. But if interest rates were high before the budget, would there be riots at 5% taken off? maybe.
If interest rates were high, would FF be pursuing the taxation method of increasing revenue as quickly? I would say no. They are using this cushion, to get as much taxation on the books before external changes to rates.
When rates do go up, FF might even be in a position to have a soft budget and then its another term in office for the FFeckers.

TaxiManMartin

gurramok wrote: »

Based on your judgment of economic indicators or on your crystal ball?

Crystal ball. Probably bought it in the same shop as your one.
Along with everyone else here.

gurramok

TaxiManMartin wrote: »

Crystal ball. Probably bought it in the same shop as your one.
Along with everyone else here.

You've just proved your posts are nothing based on economics but wishful thinking.

Gurgle

gurramok wrote: »

You've just proved your posts are nothing based on economics but wishful thinking.

same as everybody elses

gurramok

Gurgle wrote: »

same as everybody elses

Nope, the bulls base their predictions/rant analysis on a crystal ball, on the other hand the bears use economic analysis.

Wouldn't fancy any of those bulls teaching my kids in class

NewFrockTuesday

Everyone is saying what they think might happen on the information they have garnered along the way. Nobody is saying its accurate ...or in my case even based on anyting other than my own forecast on what Ive picked up - its purely my own opinion. I like hearing others opinions - but I see I am lacking a smart arsed, snide comment at the end of my posts.

Ill have to work on that.

Victor

OK folks, stick to the topic.

20goto10

Interest rates will not go back up until the economy has improved, so why would the government need to increase taxes at the same time? Oh yeah sorry, things are different for Ireland. We have our own little thing going on thats different to the rest of the world :rolleyes: We have a lot more bullsh!t being spouted about than the rest of the world thats for sure.

spockety

20goto10 wrote: »

Interest rates will not go back up until the economy has improved, so why would the government need to increase taxes at the same time? Oh yeah sorry, things are different for Ireland. We have our own little thing going on thats different to the rest of the world :rolleyes: We have a lot more bullsh!t being spouted about than the rest of the world thats for sure.

Ireland does not control it's own interest rates.

Ireland's interest rates are not adjusted based on Ireland economic performance.

The economic performance of the rest of Europe does not necessarily correlate with the economic performance of Ireland.

Interest rates in Ireland can conceivably go up no matter what state the Irish economy is in.

20goto10

spockety wrote: »

Ireland does not control it's own interest rates.

Ireland's interest rates are not adjusted based on Ireland economic performance.

The economic performance of the rest of Europe does not necessarily correlate with the economic performance of Ireland.

Interest rates in Ireland can conceivably go up no matter what state the Irish economy is in.

You're right, it's possible. And its possible I might win the lotto or get struck by lightening. Pigs might fly too.