Recession is over - Whats the 6 month prognosis?

Raiser

What do you see happening in the next 6 months re. Property Prices?

- What are the trends likely to be and will the graphs spike, plateau or climb lazily upwards?

Post here today so you can be smug later.......

McTigs

Given that it will be a jobless recovery and those still working can look forward to tax increases in the next budget, banks remaining insolvent, an impending property tax, continued oversupply and the fact that houses are still overvalued i would a imagine the graph will show prices continuing to decrease

bigjohnny80

Considering the slight recovery is only export led house prices are unlikely to climb until we see a good reduction in unemployment.

Fighting Irish

Raiser wrote: »

What do you see happening in the next 6 months re. Property Prices?

- What are the trends likely to be and will the graphs spike, plateau or climb lazily upwards?

Post here today so you can be smug later.......

House prices will continue to fall for at least a few years, fairy easy to see really

mprop

Its a guessing game really but I would say that there is still a bit of a drop in prices but only up to 10% (I dont mean to belittle the drop by using the word "only")

The lower end houses in Dublin are selling and some of the higher end are starting to shift (albeit at reduced prices). Keep it in mind that the prices advertised are not the prices that the houses are actually going for. A correction of 10% on advertised prices is a more realistic indicator of value.

If you are going to buy now, haggle!

Cheapo

I am no expert but its seems that with the banks now basically not lending and them having trouble in their own back yards with regards to their own funding, I cant see anything recovering for a while....I think some areas may do better than others but to me House prices are still a far reach away...we are a one income family ( and thats the way we like it...we don't want our children going to a crèche or been minded by strangers) it will still be a while till we can properly afford a house....but by the time that comes around we may have a decent enough deposit to put down....... I for my own personal reasons hope that it falls by at least another 20%. I am not been bad to anyone who may have purchased a property and now in negative equity but at the end of the Day I have to try and do and (hope ) whats best for my family...

quozl

Just to be clear, while the recession is technically over, anybody who thinks this is the beginning of the end is a fool.

We are continuing to lose jobs, that has not even stabilised yet. We have the largest number of people unemployed in the state's history.

GNP is continuing to fall, while GDP has risen slightly that money is going to pharmaceutical exporters and mostly leaving the state. Have you noticed the number of pharma job losses recently? They're not even maintaining the same level of employment.

We have a massive and spiralling public debt.

Massive private debt.

An on-going credit crunch and Irish banks that are insolvent and being held up by the irish taxpayer.

Typically when I see someone saying 'The recession is over', they either don't have a clue what is going on, or they're a media out-let reporting the fact that it is technically over, but not bothering to explain why that makes feck all difference.

Anyone who truley thinks house prices are going to start rising on the back of all that is deluded.

CluelessGirl

I think they will increase slightly next year......but it will depend on where your house is.....if its a good address it will increase in value faster.;)

the_syco

CluelessGirl wrote: »

I think they will increase slightly next year......but it will depend on where your house is.....if its a good address it will increase in value faster.;)

Your username really does describe you...

danbohan

CluelessGirl wrote: »

I think they will increase slightly next year......but it will depend on where your house is.....if its a good address it will increase in value faster.;)

ogh thank god for that , i was worried for a while !

Money Shot

CluelessGirl wrote: »

I think they will increase slightly next year.......;)

Based on what ?

Do you think house prices are now in line with income and rent levels. Do you think prices will be forced up next year because the excess supply will be eroded and we will be into a short term situation of excess demand. Will this excess demand be created by people coming into the country to take up the huge level of jobs that will be created next year. Do you think affordability will remain high as interest rates remain at historicly low levels indefinitely and wage inflation returns as we approach full employment again ?

Just curious as to whats behind your analysis ?

Treehouse72

CluelessGirl wrote: »

I think they will increase slightly next year.

Could you tell us why you think that? With the greatest of respect, I think you are just saying this because you "feel" prices might rise again....because you are used to high house prices and think they are "normal" and that this "normality" is bound to return.

But I don't think you quite grasp that the last 10 years were an aberration and not the norm. If I am wrong and you have a technical reason to back up what you say I am very happy to stand corrected. I don't want to come across as needlessly rude or confrontational - I just think you are very, very wrong and am trying to make you see why that is.

In my view house prices will continue to fall for several more years until they are in line with current rents and current salaries. When an average salary can buy an average house over a 25 year mortgage term with repayments c.1/3 of disposable income then we'll be at or near the bottom. And/or, when yields on rentals for professional landlords are at c. 6% gross. At the moment, house prices need to fall c.30% (more in many instances) to make either of these things true.

A reminder:
> Credit, the most important single factor influencing house prices, is continuing to contract with no end in sight to that. In addition, the financial regulator has recently indicated that he will be applying credit limits on borrowers. Both these facts mean that even if every person in Ireland wanted house prices to rise it would literally be impossible since there isn't the credit available to support higher prices. Absent ample credit, how can house prices rise? They quite simply cannot.
> We have 500,000 people unemployed
> We have 300,000 empty properties
> EBS will not allow LTV's above 85% on apartments in the cities and are not lending at all on apartments elsewhere. Other lenders will follow suit. In an instant, this means apartment prices cannot rise. In fact, it indicates they need to fall a lot.
> All lenders are insisting now that BTL mortgage holders pay interest and capital. This is likely to force repossessions and firesales which will depress the entire market
> We are seeing more and more firesales in general (eg, Carrickmines last month)
> Interest rates will never be lower than they are now. The ECB will rise again at some point, and banks are looking for ways to put up rates people pay...in particular banks are looking for ways to move people off trackers, which again might force repossessions
> A property tax is on the way in addition to the 2nd home tax
> Further pay and spending cuts are coming to the PS, and are continuing in the private sector.
> Public sentiment is through the floor. There are no investors in the market. People are negative as hell on house prices
> Rent supplement is falling, lowering the floor on rental values
> Emigration continues, lessening demand for sales and rental properties. Immigration is dead.
> The "end of the recession" talk is bogus in that it does almost nothing to put more money in people's pockets. A rise in GDP will do NOTHING to bolster house prices.

If I was to make a similar list listing the reasons why property prices might rise, I honestly could not come up with one single solitary reason. Not one.

Against this backdrop, let me make you a promise: it is IMPOSSIBLE that house prices will rise next year, or, indeed, for several years after that.

Cheapo

^^^^^^^^Well Said .........a great explanation...

kmick

6 months - down
2 Years - down
5 years - stabilise

Theboinkmaster

quozl wrote: »

Just to be clear, while the recession is technically over, anybody who thinks this is the beginning of the end is a fool.

We are continuing to lose jobs, that has not even stabilised yet. We have the largest number of people unemployed in the state's history.

GNP is continuing to fall, while GDP has risen slightly that money is going to pharmaceutical exporters and mostly leaving the state. Have you noticed the number of pharma job losses recently? They're not even maintaining the same level of employment.

We have a massive and spiralling public debt.

Massive private debt.

An on-going credit crunch and Irish banks that are insolvent and being held up by the irish taxpayer.

Typically when I see someone saying 'The recession is over', they either don't have a clue what is going on, or they're a media out-let reporting the fact that it is technically over, but not bothering to explain why that makes feck all difference.

Anyone who truley thinks house prices are going to start rising on the back of all that is deluded.

Good post - i agree 100%. The short-term future is bleak however im tring to be optimistic...

As regards property prices - IMO they will continue to fall for at least another 3 years and when they eventually do bottom out i think they'll stagnate for years. We won't see any increase in prices for 10 years i believe

who_ru

Theboinkmaster wrote: »

As regards property prices - IMO they will continue to fall for at least another 3 years and when they eventually do bottom out i think they'll stagnate for years. We won't see any increase in prices for 10 years i believe

what if the current regulator Elderfield were to move on..somewhere like london for example. the politicans are already probably sick of the guy ruining the party and cracking down on reckless lending and turning a blind eye to all sorts of criminality within the financial services sector.

it's not inconceiveable that another 'yes' man like neary could be installed. many consumers are unhappy at having lending restrictions imposed upon them, even if it's for their own good. in fact if the post of financial regulator was filled by having an election, Elderfield would be out the door in a shot.

by the way it was reported in today's examiner that almost 1,000 people in this country own between 12 and 21 non primary properties! how many of these were a result of cheap credit and insane lending practices. having said that more and more stories of human misery in the form of repossesions are emerging each day. they say it takes a generation for a property bubble to inflate and burst and another generation for it to unravel. about right i'd say.

Wibbler

Treehouse72 wrote: »

Against this backdrop, let me make you a promise: it is IMPOSSIBLE that house prices will rise next year, or, indeed, for several years after that.

Excellent post! Thank you.

johnnyskeleton

As a very rough and ready measurement, when an economy experiences a housing bubble and a recession, there will be a lag of a year on average after the country comes out of recession before house prices stabilise, and they might not rise for several years after that.

It is also debatable whether we have come out of recession or not. The fact that the media are calling it "technically" out of recession says a lot, given that in reality we are not out of recession at all (GNP still down, GDP figure could be abberation due to companies putting through more profits this year than last year for tax purposes).

SoupyNorman

I think it's been utterly offensive (verging on the slightly sick) that the 'We're out of recession' headline was in fact headlined in the various media outlets.

I think one news report led with the story and at the end did the 'meanwhile' 400k+ people are now unemployed and so on...

Remember the episode of 'The Office', David gets promoted and goes out and tells the employees that they'll be losing their jobs but theres a silver lining...

In essence, the news only contained bad news(live register) and irrelevant news(emergence from recession due to GDP and exports).

I personally feel that house prices are about half way down an deep ocean trench, the light above is nothing more then a distant gloom and theres nothing but blackness below.

The_Conductor

kmick wrote: »

6 months - down
2 Years - down
5 years - stabilise

I'd query the stabilisation at the 5 year mark.......
If you look at the current economic arguments where the French are trying to persuade the Germans to stimulate domestic consumption- rather than focusing solely on export led growth- and amidt a general weakening of the currency- its highly possible that inflation may begin to creep into the equation in the 3-4 year window- which would give the ECB the opportunity to 'normalise' overnight lending rates at 4-5%. At present the Irish banking sector is almost uniquely reliant on ECB overnight lending (which is partially why BOI is going to get a rather high bank tax in the UK). When these rates increase- as they are going to- its just a matter of when- regardless of how little lending is happening here at the moment- credit will become incementally more expensive.........

If we are forced to account for the Anglo Irish bailout in our lending figures- as now looks likely- in addition to the above- our national debt rises to 152% of GDP (in today's terms) and allowing for the above increase in interest rates- we would be paying between 17 and 22 billion a year in interest alone, depending on how we manage to rein in expenditure/increase taxation over the next 3-5 years- which in itself will put the economy in further trouble.....

Personally I think a medium term recovery is optimistic in the extreme- we have many travails on our road ahead.

ricman

The government has to find 3billion a year in spending cuts each year ,so it,ll cut services bring in extra taxes ,i see prices falling for the next 3 years.This country could be like the us,some big companys are doing ok,pharma etc while
unemployment gets worse.ITS hard for the government to stimulate the economy while taking on such a massive dept,eg 20billion for anglo.
we have a crazy situation ,borrowing millions each week to pay for things like civil servants pensions,quangos and the senate .90 PER CENT of civil servants should be on REDUCED pension , IE civil servants should not be getting 40k pensions.

AARRRRGH

Well if anyone knows with any degree of confidence what is going to happen economically in the future, they shouldnt be here. They should be planning their move on the markets so they can retire.

There are riches to be harvested for such skilled people.

Colonel Sanders

Over supply shows no sign of abating either

Treehouse72

AARRRRGH wrote: »

Well if anyone knows with any degree of confidence what is going to happen economically in the future, they shouldnt be here. They should be planning their move on the markets so they can retire.

Erm, nonsense. Speculating on the markets is an entirely different thing to preparing oneself for what will happen in a sensible way. I know with 100% certainty that house prices will continue to fall, but I don't have the capital or financial expertise to successfully bet on that outcome. Nothing to do with lack of confidence about what's going to happen, just a realisation that playing the markets is a job for professionals, not amateurs. If I had a million quid and a knowledgeable stockbroker I would very happily put half of it on a short bet on Irish house prices. Bit since I have neither, I can't. But I can certainly continue to rent and advise people as best I can as to what's going on.

ricman

The point is it would be safer to rent for two years ,see what happens to prices.if you buy house x it,ll likely lose 20 per cent of the value ,if you buy an apartment it could be effected by nama if nama gives out apartments for social housing or at a discount.
i,d say simply things will get worse before they get better.I SEE many shops closing down in dublin ,more and more vacant premises.

AARRRRGH

Treehouse72 wrote: »

Erm, nonsense. Speculating on the markets is an entirely different thing to preparing oneself for what will happen in a sensible way. I know with 100% certainty that house prices will continue to fall, but I don't have the capital or financial expertise to successfully bet on that outcome. Nothing to do with lack of confidence about what's going to happen, just a realisation that playing the markets is a job for professionals, not amateurs. If I had a million quid and a knowledgeable stockbroker I would very happily put half of it on a short bet on Irish house prices. Bit since I have neither, I can't. But I can certainly continue to rent and advise people as best I can as to what's going on.

Look whos talking nonsense
So what you are saying is that you are guessing that house prices will continue to fall. Fair enough. They probably will, but dont pretend that its some fantastic skill you have. Its a guess. So, based on a guess you are advising people. Im sorry, but do you not see anything wrong with that?

Treehouse72

If you stick your head out the window right now and are asked if it's going to rain in 10 minutes, what would your answer be? It would be no, because it is a lovely sunny day and not many clouds overhead.

Is that a guess too?

The_Conductor

AARRRRGH wrote: »

Look whos talking nonsense
So what you are saying is that you are guessing that house prices will continue to fall. Fair enough. They probably will, but dont pretend that its some fantastic skill you have. Its a guess. So, based on a guess you are advising people. Im sorry, but do you not see anything wrong with that?

Its more than a simply guess though- its a hypothesis, based on empirical data. Interest rates are going to rise. The economy is going to have 3-4 billion a year taken out by the government. Numerous taxes on property ownership are on the horizon. In addition to all the vacant properties nationwide- NAMA have already given 6 billion to developers to complete those developments they consider to have a market value. This in turn is keeping 128,000 construction employees in work- but it too will come to an end in due course- further increasing our headline unemployment rates........

We have more known clouds on the horizon- than we have silver linings. You may be optimistic about our medium term prospects- all I see on the horizon is cuts everywhere, tax rises, and increasing unrest across all social divisions.

ei.sdraob

who_ru wrote: »

by the way it was reported in today's examiner that almost 1,000 people in this country own between 12 and 21 non primary properties!

Frank Fahey ahem ahem

anyways to get back to subject

prices would fall about 10% in a year me thinks, but so far no one has mentioned 2 big variables that would reduce affordability
* inflation should return fast and furious in all the wrong places (as happened in UK), as already seen with health,education and energy/oil
* euro might loose more of its value if theres more Greek style episodes, so what you say? well since we live on an island where alot of stuff is imported this will fuel inflation while people are still loosing jobs lowering affordability

ricman

Theres at least ten reasons to point towards more price declines as outlined in previous posts in this thread.
ONE does not need a mystic talent to see this.The government is going for spending cuts ,increased taxes ,throw money at the banks .Its priority is stabilise the finances and strengthen the banks and then perhaps the jobs will appear.And its made an agreement not to cut civil service wages further.
IN one sentence ,it,ll sort out the finances no matter how much it damages
the average working person or irish citizen.OR how much dept it places on future generations.The us can just print money to stimulate the economy ,we do not have that option.

ArraMusha

The government talk about we've 'turned a corner' would make a dog cough up what he never ate..

Given that most corners are at 90 degrees and they've said it at least 4 times since the last budget...we've gone 360...right back to where we were.:rolleyes: