Glut of repossessed houses could depress prices ‘by up to 25%’

cdeb

StillWaters wrote: »

to say rising house prices and contributing factors = bad is nonsensical.

Not at all. In fact, I'll say it again.

Rising house prices = bad.

This notion that people are borrowing obscene amounts of money and are straddled with debt until they retire is farcical. The notion that people are paying out, say, two grand a month a month each month for 35 years on mortgages is damaging to the economy - that money could be spent on constructive items - mainly in shops, of course, which would help the economy recover. We could even, heaven forbid, reach a position where people could retire earlier and have happier lives as a result.

House prices in the last 50 years have sky-rocketed whereas, by comparison, many other things - cars, white goods, entertainment goods like music - have considerably dropped (in terms of number of hours you have to work to earn one). That's utterly ridiculous given that of those, the house is the only one that doesn't even have to be made; there's enough of them around the country for everyone now.

StillWaters

There isn't enough stock where people want to live, hence prices rising.

As an aside, people retiring early is bad for the economy. I have, in 20 years of house buying had quite a few 30 and 35 year mortgages. I'm now mortgage free. Having a 35 year mortgage doesn't mean you are a debt slave for 35 years. It means you have flexibility and MORE purchasing power thanks to the magic of inflation.

cdeb

People retiring early is bad? Why? If they can afford it (so they're not a huge draw on state pensions) and if they're still spending money, it's grand. It'd free up jobs for the unemployed youth too.

A 35-year mortgage means you pay above the odds for a stack of bricks. That's bad. If the price of a pint jumped to a tenner tomorrow, there'd be uproar. But if house prices double, that's good? Nonsense.

You don't have any more purchasing power with a 35-year mortgage if they're available to everyone else as well. If you give everyone, say, E120k more to spend on a house, then ceteris paribus, house prices are going to go up around E120k.

StillWaters

cdeb wrote: »

People retiring early is bad? Why? If they can afford it (so they're not a huge draw on state pensions) and if they're still spending money, it's grand. It'd free up jobs for the unemployed youth too.

the OECD has done some excellent research on this. In a nutshell the loss of expertise, experience and networks to the workforce is substantial when policy encourages early retirement. Far from freeing up jobs, it causes a contraction.
We will never agree on the mortgage length discussion.

cdeb

StillWaters wrote: »

We will never agree on the mortgage length discussion.

But you seem to think that rising house prices are good.

Can you justify this view at all?

Snakeblood

cdeb wrote: »

But you seem to think that rising house prices are good.

Can you justify this view at all?

That really depends on whether you are talking about 'are rising house prices good' or 'are rising house prices good for people who own houses'

StillWaters

cdeb wrote: »

But you seem to think that rising house prices are good.

Can you justify this view at all?

No. I think that rising house prices are neither good or bad. They are a consequence of several factors, some good, some bad.

In the 90s house prices rose in Ireland as a consequence of demographics, an increasingly skilled workforce, and real sustainable economic growth = Good

In the bubble, there was a shocking overreliance on construction for economic growth, there was bad Governance at Central and Local Level, lax regulation of the financial sector, a transfer to cash based giveaways and poor decisions such as the roll back on the Bacon Report = Bad

Frank Lee Midere

StillWaters wrote: »

In the 90s house prices rose in Ireland as a consequence of demographics, an increasingly skilled workforce, and real sustainable economic growth = Good

Why was it good? Why, for instance, can houses fall in price over time? Thats the real question.

StillWaters

Frank Lee Midere wrote: »

Why was it good? Why, for instance, can houses fall in price over time? Thats the real question.

It was good as the underlying fundamentals were good. I dont understand your question, houses do rise and fall in value.

cdeb

But one of the factors which caused prices to increase in the bubble was 35-year mortgages. Which you seem to be in favour of.

Contradiction, surely?

Snakeblood wrote: »

That really depends on whether you are talking about 'are rising house prices good' or 'are rising house prices good for people who own houses'

Rising house prices are irrelevant for people who own houses. Though they like to think otherwise.

So that part of the equation is moot, I think. And by default, we're looking at "Are rising house prices good" in general.

The Spider

This is absolute nonsense, using a pint as an example is ridiculous, I don't invest in a pint, I buy it to consume it. House prices rising are good news because it's the biggest investment most people will make in their lives. All of this argument is moot regardless because as soon as anyone buys a house they don't want to see prices drop.

Either way people don't have to pay the prices in the city centre, they can either rent, or move out to somewhere where they can find something affordable, plenty of sub 80 grand houses in the country.

You can't afford dublIn city? So what plenty of people in London can't afford Knightsbridge either.

murphaph

cdeb wrote: »

House prices in the last 50 years have sky-rocketed whereas, by comparison, many other things - cars, white goods, entertainment goods like music - have considerably dropped (in terms of number of hours you have to work to earn one). That's utterly ridiculous given that of those, the house is the only one that doesn't even have to be made; there's enough of them around the country for everyone now.

Land is a finite resource and the population is increasing. It's the very fact that you can't manufacture land that means it'll get more and more expensive as the population grows.

There are NOT enough units in Dublin and other urban centres BTW. An empty house in the midlands means precisely nothing to the Dublin market(s).

cdeb

You don't invest in a house either; you buy it to live in it.

Or at least, that's what people have done for millennia until this ridiculous notion of "investing" in a basic human right came along.

House prices going up is a bad thing for those who haven't bought and utterly irrelevant for those who have bought and have no intention.

The Spider

cdeb wrote: »

You don't invest in a house either; you buy it to live in it.

Or at least, that's what people have done for millennia until this ridiculous notion of "investing" in a basic human right came along.

House prices going up is a bad thing for those who haven't bought and utterly irrelevant for those who have bought and have no intention.

More nonsense, people have always invested in property, that's why a house in Georgian Dublin cost more than a house in Meath.

That's why marriages were based on how much land someone had.

That's why wars were fought, to acquire territory, no more than here,and that's why people will always pay for property.

StillWaters

cdeb wrote: »

Or at least, that's what people have done for millennia until this ridiculous notion of "investing" in a basic human right came along.

Ah, you are coming at it from a Socialist perspective. Whilst I respect your beliefs, people have invested in basic human rights since the first coins were pressed, and even before. Housing, clothing, fuel, water. All commodities.

El_Dangeroso

The Spider wrote: »

More nonsense, people have always invested in property, that's why a house in Georgian Dublin cost more than a house in Meath.

The house you live in is not an investment, it's that sort of thinking that fuelled the madness in the bubble. An investment (asset) makes you money, a house an expense of living, in the classical business sense of the word, your home is a liability.

The Spider

El_Dangeroso wrote: »

The house you live in is not an investment, it's that sort of thinking that fuelled the madness in the bubble. An investment (asset) makes you money, a house an expense of living, in the classical business sense of the word, your home is a liability.

No that's your thinking, and has the whiff of socialism about it, I'm a capitalist I live in a capitalist country. If I INVEST the vast majority of my money in an asset, you'd better believe its an investment.

An investment makes you money when you sell it on, due to an increased demand for the asset ideally you don't lose money, a car is a liability.

Not just the bubble people have always thought this, to quote Mark Twain

'Buy land, they're not making it anymore.'

Mark Twain

El_Dangeroso

The Spider wrote: »

No that's your thinking, and has the whiff of socialism about it, I'm a capitalist I live in a capitalist country. If I INVEST the vast majority of my money in an asset, you'd better believe its an investment.

An investment makes you money when you sell it on, due to an increased demand for the asset ideally you don't lose money, a car is a liability.

Not just the bubble people have always thought this, to quote Mark Twain

'Buy land, they're not making it anymore.'

Mark Twain

Socialism, HA!

You clearly have no idea what the definition of an asset and a liability are.

https://www.youtube.com/watch?v=P1KO_Sjsq2U

Villa05

The Spider wrote: »

No that's your thinking, and has the whiff of socialism about it, I'm a capitalist I live in a capitalist country. If I INVEST the vast majority of my money in an asset, you'd better believe its an investment.

If we lived in a capitalist country, we would not have 50+ pages of this. Banks would have been left fail, those that can't pay for their asset would be repossessed and we all move on with accommodation costs considerably lower than they are now. Maybe you would be considerably poorer as your assets value would not be propped up by taxpayers mula

The Spider

Villa05 wrote: »

If we lived in a capitalist country, we would not have 50+ pages of this. Banks would have been left fail, those that can't pay for their asset would be repossessed and we all move on with accommodation costs considerably lower than they are now. Maybe you would be considerably poorer as your assets value would not be propped up by taxpayers mula

Nah bought mine for a steal last year, bubble'd popped, but the upward cycle has begun, timing you see?

What you mean is I could've bought it cheaper!

(meant to say a capitalist country with a touch of socialism)

cdeb

Upward cycle has begun, has it?

Your main home - which is what most people have bought - is not an investment. It's a home. Capital appreciation is worthless to you while you're living in it.

Also, I can absolutely appreciate that a 4-bed detached house in SCD is worth more than a 1-bed flat in Clare (but not for investment reasons, as you say - rather because the former is more desirable). But the point is that the same house is now worth multiples of what it was 20/30 years ago. This is partly because banks are willing to loan more, partly because they've extended mortgage lives (and yes, partly because of population increase).

This is a bad thing.

gaius c

Worth mentioning that houses depreciate too. They require maintenance and upgrading to maintain standards.
What actually increases in value is the land it's built on.

StillWaters

cdeb wrote: »

But the point is that the same house is now worth multiples of what it was 20/30 years ago. This is partly because banks are willing to loan more, partly because they've extended mortgage lives (and yes, partly because of population increase).

This is a bad thing.

And partly because wages have increased, feminism reached our shores and women could have careers and contribute financially, and we entered the EEC. Honestly if you are harping back to 30 years ago as some economic nirvana, time to talk to some of us who lived there!

The Spider

This is a no win argument it really is, ultimately the people who haven't bought are saying they want cheap house prices so they can buy a house, the reason they're so vociferous is because they're so far away from being able to do it, because either age, or career isn't where it needs to be, so they scream and say its not fair, prices are picking up they know whats coming next, they may not rise forever but they can quite easily do five to six years at least. The market can remain irrational longer than you can stay solvent, comes to mind.

Now here's the rub, let's say somehow some of these guys manage to get the money together for a deposit, a relative leaves it to them, lottery win (insert reason here) it's more money than they've ever seen, because of the age profile mid twenties to early thirties, now they could travel for a year or two and blast through it, or invest in a house a bank gives them the rest of the cash.

Now seriously are these people than hoping for a property crash after using every penny they had to buy a house?

Or have they crossed the rubicon and are now more concerned that they don't want all that cash to be flushed away?

Obvious answer is no one in their right mind wants to see everything they had suddenly be worth nothing, just to accommodate the people who aren't in your position.

Villa05

StillWaters wrote: »

And partly because wages have increased, feminism reached our shores and women could have careers and contribute financially, and we entered the EEC. Honestly if you are harping back to 30 years ago as some economic nirvana, time to talk to some of us who lived there!

Extending the mortgage term from max 25 years to a max of 35 years has nothing to do with any of the above factors, it purely drives up the price of the asset with no corresponding rise in the quality of the asset. In fact the quality deteriorated. It is a pure leech on the real economy.

People would have paid more because of the factors listed anyway, this is called sustainable growth. 35 year mortgages led to bubble growth, the cost of which has yet to be fully calculated as people find basics like education, pension provision, healthcare unaffordable. We were facing in to a pensions time-bomb before the bubble burst, Imagine what that bomb is going to look like now

gaius c

StillWaters wrote: »

And partly because wages have increased, feminism reached our shores and women could have careers and contribute financially, and we entered the EEC. Honestly if you are harping back to 30 years ago as some economic nirvana, time to talk to some of us who lived there!

What good is the dual-income economic nirvana if both incomes get swallowed up by vastly increased cost of accommodation?

Villa05

The Spider wrote: »

Now here's the rub, let's say somehow some of these guys manage to get the money together for a deposit, a relative leaves it to them, lottery win (insert reason here) it's more money than they've ever seen, because of the age profile mid twenties to early thirties, now they could travel for a year or two and blast through it, or invest in a house a bank gives them the rest of the cash.

Now seriously are these people than hoping for a property crash after using every penny they had to buy a house?.

It's what an Anglo Bwanker would say "They've got skin in the game" You are basicaly muppets with a very small cohort of the "professional" classes pulling the strings. They now they have you roped in, they know you will be the salesperson to rope other people in, as time goes by it will be all too easy for them to enslave your children with debt.

I agree with most of what you say, Group think was identified as a major contributing factor to the bubble. With over 80% described as home(debt)owners, how could anyone with constructive, balanced arguments against the bubble be heard.

StillWaters

Villa05 wrote: »

Extending the mortgage term from max 25 years to a max of 35 years has nothing to do with any of the above factors, it purely drives up the price of the asset with no corresponding rise in the quality of the asset. In fact the quality deteriorated. It is a pure leech on the real economy.

People would have paid more because of the factors listed anyway, this is called sustainable growth. 35 year mortgages led to bubble growth, the cost of which has yet to be fully calculated as people find basics like education, pension provision, healthcare unaffordable. We were facing in to a pensions time-bomb before the bubble burst, Imagine what that bomb is going to look like now

35 year mortgages did not lead to bubble growth, other countries have longer, even intergenerational mortgages. Ive surmised earlier what I believe led to bubble growth. I remember purchasing my first house here, it was obligatory to purchase insurance against negative equity, I think it was about 3% of purchase price. the abolition of this would have been more of a contributing factor than the extension of mortgage terms.

lima

Have a think about my case as there are probably a lot like me... I'm early 30's I have 85k in the bank and am in the 50k-60k salary range in a permanent job with great prospects of promotion.. but I am sitting tight and am happy paying rent, until the time I decide to rent money from the bank (my rent is the same as what the interest would be on a mortgage plus I save 1k per month)

But I am not comfortable with the fact that the elite controllers of the state are controlling the floor for property prices.

Right now I am sitting here working in the US for a few weeks and I am watching a property channel they have here.... nearly every house on offer is a short sell or forclosure, and the people are happy to take property from the banks... but what I see in Ireland is tiny, tiny houses (absolutely fecking TINY) still on sale for far higher that what you would get in some of the big US cities that have jobs.. I for one will be waiting for a nice repossession to take off the banks hands for a fair amount.

Ireland is completely delusional as to what is good value in property.. not only did people get destroyed in the boom by buying little boxes for e450k but even now, with those boxes now worth e200-250k, they are still extremely expensive for what they are!!

Again, now that banks can repossess, we will see prices drop for some types of apartments and houses in some areas. This whole SCD sh*t - there are no houses being built there and there is extremely limited stock - but I for one have no care in the world for SCD (i'm Northside), it's only southsiders and b*ggers who aspire to be middle class and lose their country accents to mid-atlantic acents who really care about this area of Dublin. The big secret is that there is a whole rest of the city (and country) to live in... The elite class, they live there in SDC, they will make sure their homeland will keep its value and even increase, so don't just use it as a measuring stilk for the rest of Dublin, have a look at the daftdrop website and you will see how many houses are falling in value...

Villa05

StillWaters wrote: »

35 year mortgages did not lead to bubble growth, other countries have longer, even intergenerational mortgages. Ive surmised earlier what I believe led to bubble growth. I remember purchasing my first house here, it was obligatory to purchase insurance against negative equity, I think it was about 3% of purchase price. the abolition of this would have been more of a contributing factor than the extension of mortgage terms.

How do you think a state with the debt load ours carries will be able to subsidise college fees, care for the elderly and the sick and do you think your property portfolio will retain its value in such an environment, so that your needs will be catered for.
What do you think would have happened that insurance company were it in existence in 2008?