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Irish property market bound for recovery
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smccarrick wrote: »God, you are optimistic. While I would be thrilled if you're right- I genuinely do believe you are not. You are extrapolating massively in an international context and presuming its valid to apply it to an Irish context. The fact of the matter is that Ireland, while not unique, is in a far worse position than almost any other country.
You are probably unaware of the recent problems in Eastern Europe and Africa, but even there numbers are now on a positive trend and people are upbeat on their economies and property markets. The World is now already on the uptrend.0 -
Last year was the highest baby boom in Ireland, and the young parents, awaiting the last 3 years for the property prices stabilisation, are now eager to buy something to have a place for growing their kids. Thousands of people had to postpone their property purchases for the last 3 years, and now when the bottom is near, it is the right time for them to buy, before the investors flock back into the residential property market, or it would be too late.
Where are all these homeless families putting their head down at night at the moment...?0 -
You are probably unaware of the recent problems in Eastern Europe and Africa, but even there numbers are now on a positive trend and people are upbeat on their economies and property markets. The World is now already on the uptrend.
You're on message alright. Where's the gaff you're currently selling, exactly?
There's a simple reply to all this tosh that you've been peddling - where's all this buyer money going to come from that gets the Irish property market onto an upward trend?
-We have the highest level of personal debt per capita in Europe;
-We are borrowing massively every day to plug the massive public finance gap;
-There is massive oversupply in the domestic housing markets (granted, a lot of it is apartments in 'commuter' locations);
-The ratio of asking prices to average salaries are still well over the long-term average, and salaries are going nowhere but down for both public and private sectors;
-Tough budgets are on their way;
-Interest rates are at historic lows and yet lending is relatively nonexistent, because;
-The Irish banks are technically insolvent.
There will be a while to wait while Ireland watches a global upswing before we follow suit. And that does not include this current 'dead cat bounce' equities rally thanks to current sliding dollar fears. The only thing that can pave the way to your optimistic worldview is debt erosion thanks to hyperinflation - not a target I see on the ECB's charter.0 -
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JupiterKid wrote: »1) The Irish economy is in very serious trouble, much more serious than most of our Eurozone or global neighbours prescicely because of our obscene property and construction bubble that may well go into both history and economics text books as a warning and lesson to future generations of students.
2) Unemployment is still rising - right back to 1980s levels and the housing market was none too healthy during that decade, was it? (it was essentially stagnant for most of the 1980s). People cannot obtain a loan when they do not have a job and those losing their jobs are going into mortgage arrears and worse.
3) Emigration is back. Although most emigrating last year were from the recently joined EU 12 countries (and most of these were male, illustrating the collapse of the construction sector), more and more Irish are emigrating or considering emigration as their only option to find work. A falling population means a shrinking pool of potential house buyers.
4) The sheer overhang of vacant housing built - some of which will never be occupied and may have to be demolished - means that housing supply greatly outstrips demand and will for many years to come.
5) I reckon an ECB interest rate increase in 2010 is a real possibility as the rest of the Eurozone economy recovers and this will damage our fatally wounded housing market even further - leading to further price drops but also, more worryingly, a surge in mortgage arrears as it could be the "straw that breaks the camel's back" for many homeowners in negative equity and struggling to cope with mortgage repayments after a job loss/pay cut.
6) Ireland is so out of kilter with the rest of the Eurozone in terms of the economic cycle that it is frightening. We had interest rate cuts in the early 2000s which fuelled the fire of the property bubble and now face increases when the market is still in a state of collapse. These pro-cyclical interest rate trends are worsening the intensity of the economic cycles.
7) This story is far from over.
1) The Irish economy now is doing well, the only problem is our public finances, which have no direct connection with residential property market. Public finances can be improved by adjusting the public costs, starting from 0-40% salary reduction in the public sector on the case by case method, and reducing costs in other areas (redicing long-term unemployment benefits, etc)
2) The unemployment growth now near its end, balancing at 12.6%
3) Look back to the Irish experience of the early 90s or to the experience from other countries, where small emigration didn't make any serious impact on the property prices (only mass emigration, when at least 10-20% of population emigrates, can make significant impact on the property prices). Moreover, as soon as the companies start to create new jobs many of those emigrants would return back to Ireland.
4) With the overhang you have to look area by area, as most of the overhang was built in the areas where initially no one would buy. While in the sought after areas with restricted construction opportunities the prices soon would stabilise and go up. This is what I was saying right from the start: Irish residential market soon will follow the global route of property market segmentation. It is normal in other countries when the property market devided into 10-100+ different segments, each of them analysed individually.
5) The ECB rates would go up only when they (the ECB) would see clear signs of recovery in all economies and property markets.
6) I agree with you, however it could be tackled through full privatisation of lending/depositing/and operational facilities of all Irish banks, so the actual morgage rates and availability of credit facilities would be fully in the hands of the State, which then would manipulate them in the interests of the State and the Irish people, rather than in the interests of a small bunch of greedy bank owners.
7) The story is far from over, however now it is on the uptrend. I'm positive.:)0 -
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@ Euroland - this is the multi-quote button:
Learn to use it instead of having 4-7 posts in a row to answer previous comments FFS...0 -
The World is now already on the uptrend.
The small amount of positive information we've had recently is only due to the US/UK/etc. governments pumping billions into their economies. They have now stopped doing this (as they can't afford to continue doing it) so things will return to being negative.
If you combine this with people all around the world losing their jobs and defaulting on their mortgages, things are only going to get worse. And for Ireland specifically, we have a lot more problems than the average country. Certainly Ireland is screwed for at least 5 or 10 years, probably longer.
It seems you want to believe things are getting better. I'm sorry, but you are deluding yourself.0 -
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1) The Irish economy now is doing well, the only problem is our public finances, which have no direct connection with residential property market.
Come on now, you're living in a total fantasy land. I can't debate with people like you.
Believe whatever you want to believe, but be prepared to be disappointed.0 -
Join Date:Posts: 30620
Last year was the highest baby boom in Ireland, and the young parents, awaiting the last 3 years for the property prices stabilisation, are now eager to buy something to have a place for growing their kids. Thousands of people had to postpone their property purchases for the last 3 years, and now when the bottom is near, it is the right time for them to buy, before the investors flock back into the residential property market, or it would be too late.
You are making a lot of assumptions.
Yes- last year was a boom year for babies in Ireland- but this does not mean people have been waiting 3 years of property stabilisation to buy property. Certain property classes are always going to have an inherent demand for young families- notably the 3/4 bed semi with a garden. The fact of the matter is the vast bulk of construction over the past 12 years- has not been in this category. Most people did not wait (3 years or whatever)- you have over 380,000 who bought into the buy an apartment now, trade up later balloney. These people are now in negative equity- unable to trade up- and their apartments which they were supposed to able to offload to firsttime buyers are of little interest to most people.
At present its simply not the case that the vast bulk of people who have not purchased are waiting for the long awaited property stabilisation- most are struggling in their day to day lives, with unemployment, wage cuts, increased taxation, cuts in social welfare entitlements, increases in indirect taxation at every turn- and a lending sector that at long last are beginning to exercise a modicum of common sense with their lending multiples.
People don't have money- and they are going to have even less money- thats why they're not buying.0 -
Join Date:Posts: 30620
Budget deficit and level of public debt have nothing in common with the residential property market. Yes, they should be cured, but they have no direct connection with the property market.
No- they do have an effect on the probable direction of taxation however- which in turn has an effect on people's net income- and while it may be causal in nature- people's net income is going on a rampant downward trajectory......0 -
1) There's a simple reply to all this tosh that you've been peddling - where's all this buyer money going to come from that gets the Irish property market onto an upward trend?
2) -We have the highest level of personal debt per capita in Europe;
3) -We are borrowing massively every day to plug the massive public finance gap;
4) -There is massive oversupply in the domestic housing markets (granted, a lot of it is apartments in 'commuter' locations);
5) -The ratio of asking prices to average salaries are still well over the long-term average, and salaries are going nowhere but down for both public and private sectors;
6) -Tough budgets are on their way;
7) -Interest rates are at historic lows and yet lending is relatively nonexistent, because;
8)-The Irish banks are technically insolvent.
9) There will be a while to wait while Ireland watches a global upswing before we follow suit. And that does not include this current 'dead cat bounce' equities rally thanks to current sliding dollar fears.
10) The only thing that can pave the way to your optimistic worldview is debt erosion thanks to hyperinflation - not a target I see on the ECB's charter.
1) From people's savings, lending and investors (local and foreign)
2) We also have one of the highest salary/income levels in EU and the world
3) Irrelevant, explaned in my previous post
4) The overhang situation was explained in my previous post
5) These ratios (both locally and globally) aren't fixed and have a long-term growth trend due to the increased demand for residential properties (fast growing population, increased standards of living, etc) from one side and limited supply fom the other side (lack of zoned land in cities and towns, building restrictions, etc), so, please, don't stick to the ratios of the 50s or 70s
6) Irrelevant, explaned in my previous post
7) Just wait a litlle bit and you would see the uptrend on the number of given new morgages
8) I agree, but with the help of NAMA (or other similar actions: i.e. bank privatisation after previous bancruptcy) the situation soon would be improved
9) Ireland is already on the upswing, following the others
10) There is no need for hyperinflation, current injections would be enough to improve the situation0 -
smccarrick wrote: »No- they do have an effect on the probable direction of taxation however- which in turn has an effect on people's net income- and while it may be causal in nature- people's net income is going on a rampant downward trajectory......
Yes, however a few percentage point increase in taxation would not divert majority of people from buying so much awaited own home. Such increase in taxation more likely would just slightly decrease their spending habits, i.e. going less to pubs/restaurants or buying less expensive food/clothing, less alcohol, etc0 -
1) From people's savings, lending and investors (local and foreign)
2) We also have one of the highest salary/income levels in EU and the world
3) Irrelevant, explaned in my previous post
4) The overhang situation was explained in my previous post
5) These ratios (both locally and globally) aren't fixed and have a long-term growth trend due to the increased demand for residential properties (fast growing population, increased standards of living, etc) from one side and limited supply fom the other side (lack of zoned land in cities and towns, building restrictions, etc), so, please, don't stick to the ratios of the 50s or 70s
6) Irrelevant, explaned in my previous post
7) Just wait a litlle bit and you would see the uptrend on the number of given new morgages
8) I agree, but with the help of NAMA (or other similar actions: i.e. bank privatisation after previous bancruptcy) the situation soon would be improved
9) Ireland is already on the upswing, following the others
10) There is no need for hyperinflation, current injections would be enough to improve the situation
Your position can be summed up in one - the current crisis we find ourselves in that was caused by cheap credit can be solved by: more credit.
At some point the lenders will be looking for their savings back. And we're already far too much in hock.
Our economic situation won't be fixed by a 'recovery' in the property market. It'll be fixed by a downwards 'recovery' to realistic levels, when we as a nation realise that diverting capital that could be used for productive purposes instead to uselessly pumping up the price of shelter purely for a feelgood factor, might not actually be a good idea.
This is understandably hard for people who have bought during the last 10 years, who naturally do not want to think of themselves as being in negative equity.
Low property prices = recovering economy, as people have more money to spend and invest.
Trying to extrapolate a link between a rise in property prices from current levels to a more productive economy is bubble thinking. Hopefully we are past bubble.0 -
Euroland, you're a shill.
You need to read Calina's excellent post, or if that is too much you need to find three small pieces of data and do a simple sum.
1) What is the total housing stock in the country?
2) What is the average occupancy per dwelling?
3) What is the total population?
I suspect you are in a business which will have that information readily to hand but if not, play this clip from a recent Late Late show. Skip to 19 minutes in.
Answers a)1.94 million b) 2.8 persons c) 4.4million
ie we have enough housing for an extra million people. You want prices to go up? Get breeding!!!!0 -
Join Date:Posts: 30620
1) From people's savings, lending and investors (local and foreign)
The public at large do not have savings- on the contrary- we have one of the highest level of private indebtedness in Europe. We went on a major credit splurge, which now has to be paid back. Investors have gotten burnt- and don't see value in Ireland- even after NAMA- our 2 major banks need another 17 billion just to repair their capital ratios, never mind get lending again (source this weeks Economist). The money is not out there.2) We also have one of the highest salary/income levels in EU and the world
Its falling rapidly. Also- while we may have high headline salary/income levels- our purchasing power is only marginally above the EU average on a parity scale (source Economist again)3) Irrelevant, explaned in my previous post
How is the fact that we're borrowing 410 million a week irrelevant? Public expenditure is going to be cut- and taxes are going to rise. People are going to have a lot less money to spend on everything- including housing.4) The overhang situation was explained in my previous post
You may have given 'an explanation'- however its only valid if you have an incredibly rose tinted view of where the economy is going.5) These ratios (both locally and globally) aren't fixed and have a long-term growth trend due to the increased demand for residential properties (fast growing population, increased standards of living, etc) from one side and limited supply fom the other side (lack of zoned land in cities and towns, building restrictions, etc), so, please, don't stick to the ratios of the 50s or 70s
Ireland's population is not growing. Our birth rate may have increased- but at a slower rate than net outward migration in 2008 (source CSO). If you imagine we are going to have increased standards of living for a considerable period of time- I think you're dreaming. Things are going to get a lot worse for all of us before they get better. Also regarding a lack of zoned land- its simply not true- in some parts of the country there are sufficient landbanks zoned to last over 100 years......6) Irrelevant, explaned in my previous post
How are tough budgets irrelevant- people are going to have less money- and the tax incentives that drove a lot of development over the past 15 years- are most certainly a thing of the past.7) Just wait a litlle bit and you would see the uptrend on the number of given new morgages
Compared to what? Boom years- or current depressed figures? Its easy to show an increase from a depressed base- but its far better to compare it to a historic set of data, rather than an appalling quarter. Even the most pessimistic people expect there to be some sort of a 'dead-cat-bounce' possibly even a series of them- this doesn't infer a recovery though- simply the establishment of a series of support levels at which relative affordability is reached at different periods of time. As people's incomes fall- so too will their ability to pay any given asking price- and so ad infinitum.8) I agree, but with the help of NAMA (or other similar actions: i.e. bank privatisation after previous bancruptcy) the situation soon would be improved
Even after NAMA- AIB and BOI require another 17 billion to repair tier 2 capital ratios (before they even get lending again). Under state aid rules- the government are not going to be allowed simply subvent these funds- they will have to go to the open market for them. With the best of will in the world- the only reason for investing- is if the return is high enough and if the investment is guaranteed. The Irish government guarantee is being renegotiated at present based on the template supplied by the Commission- this is far less favourable to the banks than the original guarantee. The lending sector have already signalled that this means they will have to increase their lending margins to offset their increased costs- which is going to hurt mortgagees even further- and make it less likely that new mortgages are going to issue- or when they do- they will be for lower amounts. One thing feeds into another.9) Ireland is already on the upswing, following the others
Ireland is not on an upswing. The rate of our decline is slowing- there is a difference between an upswing and things not disimproving at the same rate. Our Central bank is currently forecasting a GDP contraction of 4.8% in 2010 (ontop of the circa 16% in 2009). They've not been the best with their forecasts in the past- given, but even with the best of will in the world we're looking at stabilising sometime in 2011- with a GPD possibly 35-40% down on peak figures, and when growth does return- its likely to be in the very low single digits, the 'tiger growth' is very much a thing of the past.10) There is no need for hyperinflation, current injections would be enough to improve the situation
Current injections are helping the situation- to the extent that low levels of growth are already being recorded in France and Germany. This however means that the tap is going to be turned off- and then the excess liquidity brought back in by higher interest rates. Stated ECB policy is a normalisation of interest rates over a 3-4 year period (where normalisation is said to be overnight rates of 4.25-5% rates). Wonder what rates like this, along with a normal margin (which is not being charged by Irish institutions for political reasons at present) will do to the Irish consumer and their demand for housing?0 -
Join Date:Posts: 30620
Yes, however a few percentage point increase in taxation would not divert majority of people from buying so much awaited own home. Such increase in taxation more likely would just slightly decrease their spending habits, i.e. going less to pubs/restaurants or buying less expensive food/clothing, less alcohol, etc
People have already cut these discretionary spending habits to the bone- I've seen the Chambers Ireland figures- they make incredibly depressing reading. A few percentage points increase in taxation (and a few percentage points cuts in gross pay across the board in the public sector) will make a big difference for most people- because they have already chopped things to the bone. Something has to give. Add increased interest rates into the equation- and you will have half the population suicidal, never mind thinking about purchasing housing and cars........0 -
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Snickers Man wrote: »Euroland, you're a shill.
You need to read Calina's excellent post, or if that is too much you need to find three small pieces of data and do a simple sum.
1) What is the total housing stock in the country?
2) What is the average occupancy per dwelling?
3) What is the total population?
I suspect you are in a business which will have that information readily to hand but if not, play this clip from a recent Late Late show. Skip to 19 minutes in.
Answers a)1.94 million b) 2.8 persons c) 4.4million
ie we have enough housing for an extra million people. You want prices to go up? Get breeding!!!!
Are you so naive to believe that residential properties are bought for the acommodation purposes only? Residential property in almost every contry in the world, apart from its accomodation/dwelling function, is also seen as a valuable investment. Moreover, do you believe that in all coutries in the world people don't have a second or third home (i.e. a large familyhouse in the Dublin commuter belt + an apartment in the Dublin City Centre area + a holiday apartment (here or abroad))?0 -
Are you so naive to believe that residential properties are bought for the acommodation purposes only? Residential property in almost every contry in the world, apart from its accomodation/dwelling function, is also seen as a valuable investment. Moreover, do you believe that in all coutries in the world people don't have a second or third home (i.e. a large familyhouse in the Dublin commuter belt + an apartment in the Dublin City Centre area + a holiday apartment (here or abroad))?
So you base your analysis on speculators!
We know what happened when they were flipping.
Sorry, must get down to the bank and buy that house with easy credit before the rush you predict:rolleyes::D0 -
I'm going to regret this.Noncense. Analysing the national statistics trends you would immediately notice that Irish GDP will resume its growth at the end of 2009, while GNP growth will resume in Q1 2010.
That doesn't matter unless it brings with it falls in unemployment. Typically, unemployment lags - that means it turns around later than most other indicators. Presuming the trends are correct, unemployment will still be problematic and these are the entrants to the market. If they have no money, they will not buy.I am just saying that the Irish residential property market has had enourmous fall over the last 3 years (between 30 and 60%), and now, on the global uptrends in the economy and property markets, It won't escape the uptrend and would follow it too.
My issue is that you are overly optimistic on when this upturn will come about. Let me explain something simple to you. A lot of people are still losing their jobs and anyone who is far from certain about their jobs will be unwilling to take on large loans or mess around with what they've got right now. The falls in the Irish property market are almost impossible to quantify for the simple reason that the statistics are hugely skewed by a collapse in sales volume, and the fact that we do not publish real prices anywhere. The supposedly most reliable indicator, the PTSB/ESRI report has been wholly discredited; the DAFT reports are based on asking prices and there is a monumental problem with that in that up to 2005 or early 2006, asking prices were below actual sale prices. Now they are above actual sale prices. So percentage falls are very hard to quantify.
In any case, no one with any brains denies that there will be an upturn. I doubt it will be in early 2011, that's all.Budget deficit and level of public debt have nothing in common with the residential property market. Yes, they should be cured, but they have no direct connection with the property market.
Actually, while directly this is true, they do however have to be plugged with an increased tax take. This means lower disposable income for the average purchasers. As salary deflation is a fact of life here right now, tax take is a major problem right now and as long as increased taxes are threatened to plug budget deficit and public debt issues, the latter remain a key issue for growth in the property market.Last year was the highest baby boom in Ireland, and the young parents, awaiting the last 3 years for the property prices stabilisation, are now eager to buy something to have a place for growing their kids. Thousands of people had to postpone their property purchases for the last 3 years, and now when the bottom is near, it is the right time for them to buy, before the investors flock back into the residential property market, or it would be too late.
You can't say for certain that the bottom is near; it's wishful thinking. Nor can you be certain that those young parents have not already bought. IN other words, this is pie in the sky rubbish.So, would you dismiss the American official statistics?
I don't care how official they are, the fact remains that the market moves differently in the States because they dealt with foreclosures, have different bankruptcy and tax regulations. You have not addressed this point.1) The Irish economy now is doing well, the only problem is our public finances, which have no direct connection with residential property market. Public finances can be improved by adjusting the public costs, starting from 0-40% salary reduction in the public sector on the case by case method, and reducing costs in other areas (redicing long-term unemployment benefits, etc)
I've addressed this point above. Costs have to come down but tax take has to come up. Also, salary deflation in the public sector will have monumental and negative consequences for the property market as you wipe out a lot of potential purchasers.2) The unemployment growth now near its end, balancing at 12.6%
I am far from certain that this is the case, and you have provided no basis for this figure. Either way, you need to look at the demographics of the huge increase in unemployment which stood at under 5% a very short time ago and tell me what all those construction workers are going to do and more specifically, where they are going to do it? There are huge social issues relating to what happened to employment here.3) Look back to the Irish experience of the early 90s or to the experience from other countries, where small emigration didn't make any serious impact on the property prices (only mass emigration, when at least 10-20% of population emigrates, can make significant impact on the property prices). Moreover, as soon as the companies start to create new jobs many of those emigrants would return back to Ireland.
We haven't had mass emigration, and yet there's been a serious trashing of property prices. There was a property crisis here in the early 90s - developers couldn't sell new property for love nor money in Dublin and these were houses, not even the lousy apartments we've been foisted with.4) With the overhang you have to look area by area, as most of the overhang was built in the areas where initially no one would buy. While in the sought after areas with restricted construction opportunities the prices soon would stabilise and go up. This is what I was saying right from the start: Irish residential market soon will follow the global route of property market segmentation. It is normal in other countries when the property market devided into 10-100+ different segments, each of them analysed individually.
Which would be fine if some of the biggest falls in prices - such as we know about them - hadn't happened in the most desirable areas. Dublin has a significant overhang of properties, particular in the starter sector. You are clinging to this "Ireland will be the same as other countries blah blah blah". Use Japan as an example if you need an international example; it's the closest we've got.5) The ECB rates would go up only when they (the ECB) would see clear signs of recovery in all economies and property markets.
The ECB has a mandate to fight inflation. They will also favour the greater benefit. That means as Germany and France start to climb out of recession - oh wait, that's what they are doing right now, ahead of us - and not waiting around for us to sort out our mess. They don't care so much about property markets either.6) I agree with you, however it could be tackled through full privatisation of lending/depositing/and operational facilities of all Irish banks, so the actual morgage rates and availability of credit facilities would be fully in the hands of the State, which then would manipulate them in the interests of the State and the Irish people, rather than in the interests of a small bunch of greedy bank owners.
Based on this I actually can only conclude you don't have a clue what you are talking about.7) The story is far from over, however now it is on the uptrend. I'm positive.:)
Then you are utterly disconnected from reality.0 -
Are you so naive to believe that residential properties are bought for the acommodation purposes only? Residential property in almost every contry in the world, apart from its accomodation/dwelling function, is also seen as a valuable investment. Moreover, do you believe that in all coutries in the world people don't have a second or third home (i.e. a large familyhouse in the Dublin commuter belt + an apartment in the Dublin City Centre area + a holiday apartment (here or abroad))?
Then please take the following into consideration.
1) rental yield
2) transactional costs
3) available rental market
For the most of the boom, rental yields in Ireland were close to negative. They were below the rate of general inflation and could only be justified on significant and ludicrous asset appreciation. As noted all over the shop now, that asset appreciation was based on sand.
The rental market is contracting. The numbers of tenants available is plummeting. Rents are dropping as well as property prices. Yields are still around 3% or so. This is not a long term viable investment.
There is no point in everyone owning several properties; otherwise they have no one to rent to. This is why we had a property bubble - no one understood this. IN 2006, 40% of mortgages on new properties went to investors. There are investors taking haircuts on property investment all over this country because they paid attention to someone who pedalled the simplistic trash mentioned above to them.0 -
Snickers Man wrote: »
I suspect you are in a business which will have that information readily to hand but if not, play this clip from a recent Late Late show. Skip to 19 minutes in.
Answers a)1.94 million b) 2.8 persons c) 4.4million
ie we have enough housing for an extra million people. You want prices to go up? Get breeding!!!!
Where did you get the figure of 1.94 million houses in country? According to ESRI it is about 1.6million.
Just checked CSO. In 2006 there were 1.77 million properties in state of which 80,000 were either temporarily unoccupied or holiday homes. Also occupancy rates are falling for last 50 years and are probably less than 2.8 at present0 -
Yes, however a few percentage point increase in taxation would not divert majority of people from buying so much awaited own home. Such increase in taxation more likely would just slightly decrease their spending habits, i.e. going less to pubs/restaurants or buying less expensive food/clothing, less alcohol, etc
Sorry. I have to dispute this.
The increase in taxation which I have been subject to in the last year is approximately 10% of my monthly income. Now I'd consider that as worth it if I had an improved health system, a reasonable public transport system in Dublin. What I have, however, is a banking sector that's swallowing all that and THEN some.
It may be "a few percentage points" to you but it has had a monumental impact on my lifestyle. And I still won't be buying for one simple reason. I'm considering emigrating. And I am not alone. Every person I know who does not own a house is considering emigration. All of them. I wouldn't be relying on me or people like me who are in the position described here to shore up either the economy or the housing market.0 -
smccarrick wrote: »1) The public at large do not have savings- on the contrary- we have one of the highest level of private indebtedness in Europe.
2) Investors have gotten burnt- and don't see value in Ireland
3) Also- while we may have high headline salary/income levels- our purchasing power is only marginally above the EU average on a parity scale (source Economist again)
4) How is the fact that we're borrowing 410 million a week irrelevant? Public expenditure is going to be cut- and taxes are going to rise. People are going to have a lot less money to spend on everything- including housing.
5) You may have given 'an explanation'- however its only valid if you have an incredibly rose tinted view of where the economy is going.
6) Ireland's population is not growing. Our birth rate may have increased- but at a slower rate than net outward migration in 2008 (source CSO).
7) If you imagine we are going to have increased standards of living for a considerable period of time- I think you're dreaming. Things are going to get a lot worse for all of us before they get better.
8) Also regarding a lack of zoned land- its simply not true- in some parts of the country there are sufficient landbanks zoned to last over 100 years......
9) How are tough budgets irrelevant- people are going to have less money- and the tax incentives that drove a lot of development over the past 15 years- are most certainly a thing of the past.
10) Compared to what? Boom years- or current depressed figures? Its easy to show an increase from a depressed base- but its far better to compare it to a historic set of data, rather than an appalling quarter. Even the most pessimistic people expect there to be some sort of a 'dead-cat-bounce' possibly even a series of them- this doesn't infer a recovery though- simply the establishment of a series of support levels at which relative affordability is reached at different periods of time.
11) As people's incomes fall- so too will their ability to pay any given asking price- and so ad infinitum.
12) Ireland is not on an upswing. The rate of our decline is slowing- there is a difference between an upswing and things not disimproving at the same rate. Our Central bank is currently forecasting a GDP contraction of 4.8% in 2010 (ontop of the circa 16% in 2009). They've not been the best with their forecasts in the past- given, but even with the best of will in the world we're looking at stabilising sometime in 2011- with a GPD possibly 35-40% down on peak figures, and when growth does return- its likely to be in the very low single digits, the 'tiger growth' is very much a thing of the past.
13) Current injections are helping the situation- to the extent that low levels of growth are already being recorded in France and Germany. This however means that the tap is going to be turned off- and then the excess liquidity brought back in by higher interest rates. Stated ECB policy is a normalisation of interest rates over a 3-4 year period (where normalisation is said to be overnight rates of 4.25-5% rates). Wonder what rates like this, along with a normal margin (which is not being charged by Irish institutions for political reasons at present) will do to the Irish consumer and their demand for housing?
1) Please don't mix these 2 things up and better look at the national statistics on the savings figure. And our high indebtedness levels just reflect our leading salary/income levels in the EU
2) There was no value in Irish residential property market just 3 years ago, but now it is, as the residential property prices went down by 30-60%, making Irish residential property market again attractive to the local and foreign investors.
3) Are you paying your mortgage in the PPP-based figures or in the nominal ones? The PPP factor is irrelevant when it comes to the property prices or mortgage payments. It only makes impact on your cost of living (excluding mortgage payments). Please don't count it twice.
4) As explained before, marginal tax increase doesn't affect people's decisions to buy residential property, it can only affect their spending habits.
5) Yes, I'm upbeat, at least for the next few years
6) Look over a decade rather than a one off result
7) For those who at work, the standards of living are already improving as the average prices went down and interest payments too, well above of the average salary/income reductions
8) I'm talking about lack of zoned land within the cities/towns (areas popular for living), but not elsewhere on the countryside
9) You're contradicting yourself: less new construction/development simply means less accomodation supply, which in turn would drive the property prices up
10) Of course relatively to the bottom, not to the high .
11) While residential property prices went down by 30-60%, the average income/salary levels went down only by a few %. So now, most of the people better of for buying residential accomodation than they were just 3-4 years ago.
12) It is already on the uptrend, just look at the latest statistical figures and positive GDP growth would be achieved before the end of this year. The Central Bank now revised its forecast for this year's GDP contraction from 8.3% down to 7.8%. And the next year we should expect to see the GDP growth of 1-2%, while in 2011 it would grow at 3-5%
13) ECB would increase the interest rates only when the EU economies and property markets recover0 -
1) Please don't mix these 2 things up and better look at the national statistics on the savings figure. And our high indebtedness levels just reflect our leading salary/income levels in the EU
If the savings are held by those who a) own property and b) remember when it didn't cost 10 times the average salary you can forget about them.
Debts have to be paid back and salaries are falling. Trust me on that, they are falling.2) There was no value in Irish residential property market just 3 years ago, but now it is, as the residential property prices went down by 30-60%, making Irish residential property market again attractive to the local and foreign investors.
No. There still is no value in Irish residential property as outlined in at least one of my previous posts. Yields are still below attractive levels and capital appreciation is not guaranteed.4) As explained before, marginal tax increase doesn't affect people's decisions to buy residential property, it can only affect their spending habits.
As explained before, it does however have an impact on the price they are willing to pay for that property.7) For those who at work, the standards of living are already improving as the average prices went down and interest payments too, well above of the average salary/income reductions
I'm speechless.8) I'm talking about lack of zoned land within the cities/towns (areas popular for living), but not elsewhere on the countryside
Talk about the apartments that aren't selling while you're at it, please.9) You're contradicting yourself: less new construction/development simply means less accomodation supply, which in turn would drive the property prices up
Yep...when we run out of current supply which we are nowhere close to doing except possibly in one or two sectors in Dublin. That "close" is relative to other sectors. As for the rest of the country...11) While residential property prices went down by 30-60%, the average income/salary levels went down only by a few %. So now, most of the people better of for buying residential accomodation than they were just 3-4 years ago.
Bar complete and utter uncertainty around their jobs and the fact that you've suggested we decimate salaries in the public sector.0 -
1) Then please take the following into consideration.
1) rental yield
2) transactional costs
3) available rental market
For the most of the boom, rental yields in Ireland were close to negative. They were below the rate of general inflation and could only be justified on significant and ludicrous asset appreciation. As noted all over the shop now, that asset appreciation was based on sand.
The rental market is contracting. The numbers of tenants available is plummeting. Rents are dropping as well as property prices. Yields are still around 3% or so. This is not a long term viable investment.
2) There is no point in everyone owning several properties; otherwise they have no one to rent to. This is why we had a property bubble - no one understood this. IN 2006, 40% of mortgages on new properties went to investors. There are investors taking haircuts on property investment all over this country because they paid attention to someone who pedalled the simplistic trash mentioned above to them.
1) I'm well aware of that, but it is common for many countries. However now, when most of the economies are already on the uptrend all previously falling property markets would rebounce to some extend, some more - some less, and Ireland would be among them.
2) Maybe for you personally there is no reason for owning several properties, however a lot of people in the world, including some people in Ireland, do own several properties for different reasons. So, you have to count on them in your assumptions.0 -
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Irresistible force, meet immovable object0
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