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

The Spider

Villa05 wrote: »

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.

Well there is no them and us really, stuff sells for what it sells for! Supply and demand if theres a limited supply the price'll be high, if not then it won't.

And again I say as soon a you buy you've got "skin in the game" as you say, but there is no way around this, ultimately it's down to timing the whole thing, because regardless of what anyone says here, it's all about getting in at the lowest point possible. Has that point come and gone? Or is it still around the corner?

My money is on last year was the low point, however I stand to be corrected, and well....we'll see how we go....

cdeb

StillWaters wrote: »

35 year mortgages did not lead to bubble growth,

Clearly it did.

Two people bidding for a house; one has E90k and one has E100k; the house will go for close to E100k. Give the same two people an extra E50k each, and the house will go for E50k extra.

Same reason interest-only mortgages led to a price increase; no principal repayments -> you can afford to repay more interest -> you can afford to borrow more -> house prices go up.

Other posters have already made points I would have made, so no point repeating them except to note that the idea that a second earner should end up working purely to fund an increase in price in the same asset is utterly twisted.

The country would be far better off (debt aside) if house prices were more than halved again from what they are now. Paying off mortgage debt for a lifetime on an unproductive asset is a complete waste of funds and a drain on the economy.

gurramok

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!

Dual incomes have been destructive. What in essence it meant was that a child had to be thrown into expensive childcare if there was no granny around to mind it. Double the cost for two kids and so on.

And then if one partner lost their job for a period of time, the couple get further into debt. And what made matters worse in bubble times was jumbo mortgages, insane.

The_Conductor

gurramok wrote: »

Dual incomes have been destructive. What in essence it meant was that a child had to be thrown into expensive childcare if there was no granny around to mind it. Double the cost for two kids and so on.

And then if one partner lost their job for a period of time, the couple get further into debt. And what made matters worse in bubble times was jumbo mortgages, insane.

Aka- its a stretch for a working family to bring up two children- and definitely not more. The main people who can afford to have children, are ironically, those reliant on social welfare.

A big issue is the lack of affordable childcare in Ireland- and indeed, the fact that its not tax deductible for working parents.

So- if you want to have children- you give up work, and ideally, rely on UA/UB and other social welfare payments.

There is some perversity there..........

cdeb

Just a couple of other points which I've noticed since posting -

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.

It's absurd to think that one form of people having more money to spend on houses (dual incomes) is causing prices to rise and another form (banks lending more, through reduced interest rates and longer terms) isn't affecting house prices.

Also -

StillWaters wrote:

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.

- the notion that the abolition of negative equity insurance has had an effect on house prices is surely laughable.

Can you give any basis at all to back up your point here?

Zamboni

The_Conductor wrote: »

Aka- its a stretch for a working family to bring up two children- and definitely not more. The main people who can afford to have children, are ironically, those reliant on social welfare.

A big issue is the lack of affordable childcare in Ireland- and indeed, the fact that its not tax deductible for working parents.

So- if you want to have children- you give up work, and ideally, rely on UA/UB and other social welfare payments.

There is some perversity there..........

Perversity does not even begin to cover it!
As a society we are freely breeding people who are dependent on welfare and punishing those that work by limiting their family size.

Sheer bloody lunacy.

who_ru

Zamboni wrote: »

Perversity does not even begin to cover it!
As a society we are freely breeding people who are dependent on welfare and punishing those that work by limiting their family size.

Sheer bloody lunacy.

The Labour Party wouldn't have it any other way. Welfare rates must be maintained no matter what.

See Joan Burton's recent comments about how welfare and not job creation keeps the economy going.

The_Conductor

who_ru wrote: »

welfare and not job creation keeps the economy going.

Really?
How are we supposed to pay welfare?
Shake the magic money tree a few times every month?
Pray the Germans aren't mentioned in any more Anglo tapes and buy more Irish debt?
I have no idea what the hell planet people are on- who make statements like this.

jay0109

The_Conductor wrote: »

Really?
How are we supposed to pay welfare?
Shake the magic money tree a few times every month?
Pray the Germans aren't mentioned in any more Anglo tapes and buy more Irish debt?
I have no idea what the hell planet people are on- who make statements like this.

I think who_ru is pointing to what Joan Burton said rather than saying this himself. She has said this on a few occasions recently...SW payments are keeping the local economy going and therefore cannot be touched

jay0109

The_Conductor wrote: »

Aka- its a stretch for a working family to bring up two children- and definitely not more. The main people who can afford to have children, are ironically, those reliant on social welfare.

A big issue is the lack of affordable childcare in Ireland- and indeed, the fact that its not tax deductible for working parents.

So- if you want to have children- you give up work, and ideally, rely on UA/UB and other social welfare payments.

There is some perversity there..........

I've being saying this for a long time....the system is encouraging a lot of people to have kids in order to further exploit the system. Hardly the right reason to have a child.

Whereas the squeezed middle-classes are getting hit at every turn, with child care prices being the main killer. So they are having less kids

It's crazy....a never ending downward's spiral

The_Conductor

jay0109 wrote: »

I think who_ru is pointing to what Joan Burton said rather than saying this himself. She has said this on a few occasions recently...SW payments are keeping the local economy going and therefore cannot be touched

Aka- its fine to crucify those of us lucky enough to have jobs- irrespective of how much or little we earn- as long we as we damn don't touch social welfare rates. How perverse is that? Lets crucify a few more workers- sure, worse case scenario- they're better off on social welfare anyway (especially if they have the audacity to have children).

Snakeblood

The_Conductor wrote: »

Aka- its fine to crucify those of us lucky enough to have jobs- irrespective of how much or little we earn- as long we as we damn don't touch social welfare rates. How perverse is that? Lets crucify a few more workers- sure, worse case scenario- they're better off on social welfare anyway (especially if they have the audacity to have children).

I was listening to the radio and they had an economist on, explaining the situation with that. Poor people spend more of their money on domestically produced stuff. Like bread and milk and the like. Richer people spend their income on luxury goods, very few of which are sourced in Ireland. The concept of the virtuous circle where people buy goods that are local, giving jobs to local workers, who then spend that money on local goods, doesn't work here, but it does work to some extent on for the unemployed who are basically stuck buying locally produced goods. Although they most likely go to Aldi and the money swans off thataways. I can kind of see Burton's point, but yeah. It doesn't suit me at all.

The_Conductor

Snakeblood wrote: »

I was listening to the radio and they had an economist on, explaining the situation with that. Poor people spend more of their money on domestically produced stuff. Like bread and milk and the like. Richer people spend their income on luxury goods, very few of which are sourced in Ireland. The concept of the virtuous circle where people buy goods that are local, giving jobs to local workers, who then spend that money on local goods, doesn't work here, but it does work to some extent on for the unemployed who are basically stuck buying locally produced goods. Although they most likely go to Aldi and the money swans off thataways. I can kind of see Burton's point, but yeah. It doesn't suit me at all.

Poor people- and richer people?
The poor people are those who are working and have children, and don't qualify for any social welfare assistance.
Ask any Community Welfare Officer- any household with 2 children, where both parents are on a little over the 'average industrial wage' (I hate that term) would be significantly better off, giving up work, and living off the state. The absolute killer in the equation- is the cost of childcare. It simply doesn't pay young families to work- you'd be crazy to- when you're so much better off, claiming benefits.

Workers are the new poor.

Snakeblood

The_Conductor wrote: »

Poor people- and richer people?
The poor people are those who are working and have children, and don't qualify for any social welfare assistance.
Ask any Community Welfare Officer- any household with 2 children, where both parents are on a little over the 'average industrial wage' (I hate that term) would be significantly better off, giving up work, and living off the state. The absolute killer in the equation- is the cost of childcare. It simply doesn't pay young families to work- you'd be crazy to- when you're so much better off, claiming benefits.

Workers are the new poor.

No, the poor people are the people who don't have jobs and are scraping by or drowning. I'm earning a little bit over the average industrial wage, am married, and my wife works (and earns less than the average industrial wage), I also have a child, I pay childcare of a grand a week, so I'm in exactly the demographic you are referencing. I'm dreading having another kid. Also, lest this not be weird enough, my mother's a Community welfare officer, and regularly regales me with tales of people who really are up **** creek without a paddle. I feel sorry for me paying high tax, high rent, high childcare, high everything, but I feel sorrier for people whose lives have pretty much crashed around them.

cookie1977

Snakeblood wrote: »

No, the poor people are the people who don't have jobs and are scraping by or drowning. I'm earning a little bit over the average industrial wage, am married, and my wife works (and earns less than the average industrial wage), I also have a child, I pay childcare of a grand a week, so I'm in exactly the demographic you are referencing. I'm dreading having another kid. Also, lest this not be weird enough, my mother's a Community welfare officer, and regularly regales me with tales of people who really are up **** creek without a paddle. I feel sorry for me paying high tax, high rent, high childcare, high everything, but I feel sorrier for people whose lives have pretty much crashed around them.

I presume you mean a grand a month? I pay 1800 for 2 per month. Would love some tax relief on that but as long as we earn more than our costs (even a few euro), it's better for us to work but things are getting closer.

Frank Lee Midere

The Spider wrote: »

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.

Your accusations of bias could run the other way so are useless. I earn 75k and could buy for cash but am waiting until the inevitable repossession inevitably crash the market even more. I came into this thread mostly neutral, now I am convinced by arguments like "they aren't making any more land" that we are in 2006 again. No market falls without a dead cat bounce or two, I bet Tokyo property increased for a quarter or so many times.

The market is disfunctional. A few farmers are buying. There are few properties but no mortgage buyers. All it takes is for the "confidence" of the cash holders who are buying to take a hit and some repossessions and the trend starts again. The real fundamentals are disastrous, no credit, falling populations in the buying age, lower income after tax, no tax free allowance , increasing property taxes, and 20% of people in arrears. Good luck with being optimistic in that market.

The Spider

Frank Lee Midere wrote: »

Your accusations of bias could run the other way so are useless. I earn 75k and could buy for cash but am waiting until the inevitable repossession inevitably crash the market even more. I came into this thread mostly neutral, now I am convinced by arguments like "they aren't making any more land" that we are in 2006 again. No market falls without a dead cat bounce or two, I bet Tokyo property increased for a quarter or so many times.

The market is disfunctional. A few farmers are buying. There are few properties but no mortgage buyers. All it takes is for the "confidence" of the cash holders who are buying to take a hit and some repossessions and the trend starts again. The real fundamentals are disastrous, no credit, falling populations in the buying age, lower income after tax, no tax free allowance , increasing property taxes, and 20% of people in arrears. Good luck with being optimistic in that market.

Keep telling yourself that, Dublin is reaching maximum occupancy, no construction for years, it's starting to move again.

Anyway the below article explains it better than I can.

http://www.irishexaminer.com/business/features/keeping-tabs-on-a-recovery-in-construction-239093.html

Snakeblood

cookie1977 wrote: »

I presume you mean a grand a month? I pay 1800 for 2 per month. Would love some tax relief on that but as long as we earn more than our costs (even a few euro), it's better for us to work but things are getting closer.

Yep.

Slydice

Fitch downgrades Irish mortgage securities
http://www.irishtimes.com/business/economy/ireland/fitch-downgrades-irish-mortgage-securities-1.1487140
Agency says absence of credible threat of repossession is helping drive up mortgage arrears
First published: Wed, Aug 7, 2013, 11:21

Ratings agency Fitch has downgraded the ratings on six tranches of Irish residential mortgage-backed securities (RMBS), saying the absence of a credible threat of repossession helped drive up mortgage arrears.

gaius c

Repossession or the voluntary surrender of homes are likely to be a "last resort" to resolve the mortgage arrears crisis in the Republic, according to international ratings agency Fitch.

The agency said long-term restructuring of mortgages would become more prevalent in Ireland now that a "cohesive and credible framework for dealing with arrears has taken shape".

In a note published yesterday, Fitch, said: "We expect tools such as split mortgages or trade-down products for borrowers in negative equity to be used first, followed by Personal Insolvency Arrangements (PIA). Repossession or voluntary surrender will be a last resort."

http://www.fxcentre.com/news.asp?3086135

In other words, house borrowers will be required to forfeit their entire lifetime's disposable income if they wish to keep their property. Anyone who bought at the top of the bubble would almost certainly be better off with repossession.

Snakeblood

The Spider wrote: »

Keep telling yourself that, Dublin is reaching maximum occupancy, no construction for years, it's starting to move again.

Anyway the below article explains it better than I can.

http://www.irishexaminer.com/business/features/keeping-tabs-on-a-recovery-in-construction-239093.html

They don't say anything about maximum occupancy in that article.

It's also weird how it says 3,000 people are emigrating a month, but that doesn't seem to come into the calculations about how much housing stock are necessary. Doesn't say anything about the stock of property NAMA have that they're not release. I guess that's not germane either.

Pointing to the UK turnaround is really useful as an example for Ireland because: Dunno, doesn't' say.

That article is selective garbage. The only thing I can see being actually useful and positive is the IDA fast tracking multinational tax frauds in.

The_Conductor

Slydice wrote: »

Fitch downgrades Irish mortgage securities
http://www.irishtimes.com/business/economy/ireland/fitch-downgrades-irish-mortgage-securities-1.1487140
Agency says absence of credible threat of repossession is helping drive up mortgage arrears
First published: Wed, Aug 7, 2013, 11:21

Sort of a 'No **** Sherlock' moment.........

cookie1977

Interesting move today from the Bank of England. They've said they wont raise interest rates (0.5% at present) until the jobless rate has fallen to 7% or below unless there's a sudden increase in inflation to 2.5%. This could mean up to 3 years (by the banks estimates) of no rate increase. Pretty bold move (unless you're a saver) to shore up confidence in the domestic economy. Would the ECB consider making a similar announcment? Unlikely.

gaius c

cookie1977 wrote: »

Interesting move today from the Bank of England. They've said they wont raise interest rates (0.5% at present) until the jobless rate has fallen to 7% or below unless there's a sudden increase in inflation to 2.5%. This could mean up to 3 years (by the banks estimates) of no rate increase. Pretty bold move (unless you're a saver) to shore up confidence in the domestic economy. Would the ECB consider making a similar announcment? Unlikely.

Don't think it would be wise for the ECB to box themselves into a particular course of action that may or may not help the particular problem they are trying to fix.

The_Conductor

Its only mirroring recent comments from the Fed in the US- linking quantitative easing to employment figures. It is a new phenomenon though- as it used be inflation at all costs- now inflation is taking a back seat to employment- arguably as it should be. The reason the ECB are never going to play ball- is the Germans. They want low inflation at any cost. The Weimar Republic may have been 80 years ago- but its still in people's consciousness.

cookie1977

The_Conductor wrote: »

Its only mirroring recent comments from the Fed in the US- linking quantitative easing to employment figures. It is a new phenomenon though- as it used be inflation at all costs- now inflation is taking a back seat to employment- arguably as it should be. The reason the ECB are never going to play ball- is the Germans. They want low inflation at any cost. The Weimar Republic may have been 80 years ago- but its still in people's consciousness.

That's true but no harm them asking Angela what she'd prefer

StillWaters

The_Conductor wrote: »

Its only mirroring recent comments from the Fed in the US- linking quantitative easing to employment figures. It is a new phenomenon though- as it used be inflation at all costs- now inflation is taking a back seat to employment- arguably as it should be. The reason the ECB are never going to play ball- is the Germans. They want low inflation at any cost. The Weimar Republic may have been 80 years ago- but its still in people's consciousness.

I don't know. Big focus and a LOT of EU money coming at unemployment from 2014.

gaius c

The_Conductor wrote: »

Its only mirroring recent comments from the Fed in the US- linking quantitative easing to employment figures. It is a new phenomenon though- as it used be inflation at all costs- now inflation is taking a back seat to employment- arguably as it should be. The reason the ECB are never going to play ball- is the Germans. They want low inflation at any cost. The Weimar Republic may have been 80 years ago- but its still in people's consciousness.

Trouble is...do we know for sure that the relationship: QE up => unemployment% down?

Seems to be an overly simplistic analysis if you ask me.

cookie1977

I personally think at present it's more important to keep interest rates down despite the risk of inflation. Germany's previous experience with Inflation will ensure no such announcement from the ECB like the BOE but I do believe if a similar announcement was made speaking of the short term (1-2 years) it would do some good for domestic economic confidence. Think of all those people on trackers now in Ireland just hanging on in there. A few successive rate increases could be disastrous but some confidence about the short term could allow them to plan or maybe even loosen the belts for the domestic market.

It's the same for the Irish budgets. Yes we know the value of the adjustments to be made but if the government would just come out and announce the big ticket items for the next 2-3 budget guaranteed , however bad they are, it would allow people to plan and I personally would feel delighted to be treated as an adult in my own country. Then any adjustments after that may be to our benefit to soften the blows if the economy improves, hopefully. Any who, wishful thinking on my part.

StillWaters

gaius c wrote: »

Trouble is...do we know for sure that the relationship: QE up => unemployment% down?

Seems to be an overly simplistic analysis if you ask me.

Yes, we know for sure. But I'm a Keynsian.