David McWilliams house price theory

nino1

David McWilliams recons that the irish property crash will exactly follow the Japanese crash.
He recons that there is another 12-18 months of a decline and then stabilisation.
Surely there are so many exterior factors and potential global developments that can occur that will affect the outcome than simply drawing two graphs and saying one will follow the other.

Do you think that we will have a japenese "lost decade" of house prices going along the bottom or an immediate rise again one the bottom is reaches?

kneemos

nino1 wrote: »

David McWilliams recons that the irish property crash will exactly follow the Japanese crash.
He recons that there is another 12-18 months of a decline and then stabilisation.
Surely there are so many exterior factors and potential global developments that can occur that will affect the outcome than simply drawing two graphs and saying one will follow the other.

Do you think that we will have a japenese "lost decade" of house prices going along the bottom or an immediate rise again one the bottom is reaches?

McWillams is as barmy as a badgers backside.Been proven economists can't predict a fine day.

Senna

The Japanese had very low inflation through out their crash, with the exception of 90-91, their inflation was well below 2% and in negative % for periods. Their inflation is still very low and drops into the negative regularly.
On the other hand, Irish inflation is constantly over 2% and for that reason i dont think ours will be as drawn-out. In real terms our bottom may last for years, but i think a rise in-line with inflation will come fairly soon after.
The problem is i dont think his 12-18 months till the bottom is correct, there is still a huge over supply coupled with a mass exodus of 20-30yrs olds, there just isn't the market to stabilise prices. 18 months may see some stabilization in areas, but nationally, we are in for a massive overshoot on the way down unless NAMA bulldozes 50% of the ghost estates and lumps the debt on us.

kneemos

Senna wrote: »

The Japanese had very low inflation through out their crash, with the exception of 90-91, their inflation was well below 2% and in negative % for periods. Their inflation is still very low and drops into the negative regularly.
On the other hand, Irish inflation is constantly over 2% and for that reason i dont think ours will be as drawn-out. In real terms our bottom may last for years, but i think a rise in-line with inflation will come fairly soon after.
The problem is i dont think his 12-18 months till the bottom is correct, there is still a huge over supply coupled with a mass exodus of 20-30yrs olds, there just isn't the market to stabilise prices. 18 months may see some stabilization in areas, but nationally, we are in for a massive overshoot on the way down unless NAMA bulldozes 50% of the ghost estates and lumps the debt on us.

If's, but's and maybe's and more proviso's than you can shake a stick at. Reminds me of a lad pondering a horse in the Bookies

Mr. Loverman

kneemos wrote: »

If's, but's and maybe's and more proviso's than you can shake a stick at. Reminds me of a lad pondering a horse in the Bookies

Care to share your theory with the world? It's only fair to allow others ridicule you too.

kneemos

Mr. Loverman wrote: »

Care to share your theory with the world? It's only fair to allow others ridicule you too.

What theory!? Don't have one.Just saying there's so many if's in a medium to long term prediction it turns into a fairytale.

the keen edge

It makes me laugh how experts can contrive such theories; when its not unreasonable to wonder what type of currency will even be in our wallets in a years time.

naughtysmurf

Who knows, always liked this quote though,

President Truman would call his economic advisors and ask
them questions. What happens if I balance the budget? What
happens if I raise taxes? The advisors would reply, “Well,
on the one hand...But then on the other hand...” Finally Truman

got exasperated and declared, “What this country needs is a
good one handed economist"

Mr. Loverman

It is impossible to say with 100% certainty what the future will hold, but it's pretty obvious house prices are still too expensive in Ireland, our economy and the euro are bolloxed, and things are more likely to get worse than better... hence house prices will continue to decline.

Senna

kneemos wrote: »

If's, but's and maybe's and more proviso's than you can shake a stick at. Reminds me of a lad pondering a horse in the Bookies

Its call "my opinion" and thats about all anyone can offer. Mine, yours or the fella at a bookie has about as much chance of being right as McWilliams.

kneemos

Senna wrote: »

Its call "my opinion" and thats about all anyone can offer. Mine, yours or the fella at a bookie has about as much chance of being right as McWilliams.

Makes my point in fairness.

Caseywhale

Get a list of all the predictions McWilliams ever made in public though and see how many of them he has been right on.

Somewhere about the same hit rate as Russel Grant. Nothing more than an astrologer writing whats in your stars. People never remember the incorrect statements.

dahamsta

At least he got some things right, unlike the economists that were still predicting a "soft landing" when any idiot could see we were in trouble.

Forest Demon

I think the interference in the market during the crash has been unprecedented. Its not a normal situation with NAMA sitting on the majority of the loss (and property).

It would recover steadily if it was allowed to reach its true value (for a shorter period of time). That's the true value of the market with the real over supply on the market.

It will be a slow recovery if the government continues to interfere with the market. The government also need to get the finger out and get the banks to face up to the mortgage situation (recapitise again :mad::mad:)

riclad

IT seems to me prices seem to be stabilising in some areas,
where there s strong rental demand.Shortage of 3bed houses ,in some areas,may keep prices at current level.
i,d expect price s may continue to fall in country areas, towns ,
where theres oversupply, ie simply too many houses ,apartments built.
You cant compare a small town in the country with ghost estates ,with many young
people emigrating,declining population.
to an area like rathmines, phibsboro with strong rental demand
Theres different market forces outside citys, in country areas, small towns ,and most people are now at the stage ,where they wont commute long distance to work in dublin.
if they are in the market to buy the ,ll buy closer to work.IF they can get a loan
MAYBE all those stupid bankers, and politicians, with 3 pensions ,100k plus
salarys had no financial incentive to agree or understand mcWilliams warnings
re the housing market bubble.
Civil servants were getting large salary increases, so who was left
to say we are heading for a economic crisis.
IN some areas there people waiting on housing list,
while nama has empty housing estates ,
perhaps nama could give some housing to local authority ,
and save the taxpayer paying out rent allowance.

Monty Burnz

nino1 wrote: »

Do you think that we will have a japenese "lost decade" of house prices going along the bottom or an immediate rise again one the bottom is reaches?

Has there ever been a huge housing market crash where prices started rising as soon as they bottomed out? If there has, I haven't heard about it.

Monty Burnz

Caseywhale wrote: »

Get a list of all the predictions McWilliams ever made in public though and see how many of them he has been right on.

Somewhere about the same hit rate as Russel Grant. Nothing more than an astrologer writing whats in your stars. People never remember the incorrect statements.

Having said that, he has a decent record of being approximately correct on the big questions. The property bubble is probably the biggest economic phenomenon that Ireland has experienced in a hundred years. As Warren Buffet says, it's better to be approximately right than to be exactly wrong.

christmas2012

I think there is a property stand off ,as long as people dont believe the hype,even economists cannot be trusted,they tend to talk house prices up,why after it goes rock bottom is it going to rise up again,who does it benefit to say this?economists and auctioneers,and landlords,and any money grubbing politicians and / or business sharks..thats who

as long as people stand off,dont believe the bull**** and dont pay,house prices may stay low,as long as we dont panic buy in droves house prices will stay low..

riclad

THE boom was helped by the banks giving easy credit,making it easy to borrow 6x or more times your salary ,and they were extremely reckless in lending ,as they were getting money from german banks or other european sources.
I dont see this happening again as irish banks are being closely watched
by the troika ,and the imf.
Hopefully we,ll have a regulator who does his job and keeps mortgage
lending down to realistic salary x4 times ratio.
ITS better for the economy for the banks to be cautious and very strict re criteria in the process of mortgage loans ,
rather than over lending which just cause s a bubble which at some point collapses leaving the taxpayer paying for the bill to rescue the banks.
IF we have proper regulation and conservative rules re lending
house prices will be kept under control as in germany or france.

robd

Couple of issues with comparing Ireland to Japan.

Japan controls it's currency and interest rates. Ireland does not and is at the mercy of mainly Germany in this regard. Ireland also does not control inflation as it is controlled by monetary policy. What we do know is that German has rightly buggered things up for most of the minnows of Europe by making individual countries guarantee their own banks (banks which grew to European rather than local size due to market they operated in).

Soros has a good speech on it:
http://businessetc.thejournal.ie/george-soros-the-eurozone-crisis-is-all-merkels-fault-and-this-is-why-473422-Jun2012/

Hard to really see where this will end to be honest. Lots of bottom callers (economists). Some saying we've already hit bottom, others like McWilliams predicting 18 months. Remember what these peoples jobs are. McWilliams job is to sell his next book, which you can be sure is due soon if he's making big statements like this. Most of the other bottom callers are linked to marketing departments of various Estate Agents and Banks. Essentially they all have vested interests in presenting the view that they do.

Zamboni

It's not a theory. It is a hunch.

If anyone read it he even says so in the very last line.

http://www.davidmcwilliams.ie/2012/01/18/expect-house-prices-to-hit-the-bottom-next-year

I've always found it easier to judge people on what they actually said rather than what I've heard they said from another party

jmayo

kneemos wrote: »

McWillams is as barmy as a badgers backside.Been proven economists can't predict a fine day.

Well he was more right than the brigade of economists and so called experts that either predicted growth ad infinitum or that we could have a soft landing.

He is far from the complete eejit that some would make out.

All one can predict at the moment is that the next few years are going to be pretty painful and both the Irish and European political and economic climates are going to be turbulent.

beeno67

jmayo wrote: »

Well he was more right than the brigade of economists and so called experts that either predicted growth ad infinitum or that we could have a soft landing.

He is far from the complete eejit that some would make out.

All one can predict at the moment is that the next few years are going to be pretty painful and both the Irish and European political and economic climates are going to be turbulent.

To my knowledge only once has David McWilliam's advice been taken by the government. He advised the bank guarentee scheme. Is there a bigger, more stupid mistake by any economist ever in this country's history? What did he get right that could remotely equal his stupidity on this one? Not only by his own admission did he advise it, he went to great lengths to get Lenihan to go along with it.
Economists waffle on about this and that but advice and predictions in blogs aren't worth tuppence. Judge an economist when his advice can actually be put into action then it is easy to spot the idiots

beeno67

Zamboni wrote: »

It's not a theory. It is a hunch.

If anyone read it he even says so in the very last line.

http://www.davidmcwilliams.ie/2012/01/18/expect-house-prices-to-hit-the-bottom-next-year

I've always found it easier to judge people on what they actually said rather than what I've heard they said from another party

His graph is pretty stupid. The actual graphs of Irish and Japanese property collapses don't really match at all. He has simply altered the graphs by using different units on the Y axis which is odd as they are comparing the same thing i.e. % drop in house prices. Also he started the Japanese graph at the peak of the market but the Irish one one year before the peak. Matching the graphs properly would put the bottom of the market 2-3 years away.

jmayo

beeno67 wrote: »

To my knowledge only once has David McWilliam's advice been taken by the government. He advised the bank guarentee scheme. Is there a bigger, more stupid mistake by any economist ever in this country's history? What did he get right that could remotely equal his stupidity on this one? Not only by his own admission did he advise it, he went to great lengths to get Lenihan to go along with it.
Economists waffle on about this and that but advice and predictions in blogs aren't worth tuppence. Judge an economist when his advice can actually be put into action then it is easy to spot the idiots

Ehh what I was talking about was his prediction that the Irish property market was over hyped and would not end in soft landing.

Did I anywhere say his advice regarding blanket bank guarantees was a good idea ?
BTW did the government actually follow his advice precisely ?
I seem to remember that he did not advise something like complete guarantee of debts etc ??

With regards to economists Morgan Kelly was one of the most correct, but then again I appear to remember he was advocating debt forgiveness or some such ?