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

The Spider

There's other banks entering the fray and first time buyers are back with a vengeance, it's been a while since an article like this was published in the times.

http://www.irishtimes.com/business/personal-finance/first-time-buyers-clamber-back-on-the-housing-ladder-1.1513675

The rolling rock is gathering momentum.....

Snakeblood

The Spider wrote: »

There's other banks entering the fray and first time buyers are back with a vengeance, it's been a while since an article like this was published in the times.

http://www.irishtimes.com/business/personal-finance/first-time-buyers-clamber-back-on-the-housing-ladder-1.1513675

The rolling rock is gathering momentum.....

Not like a company who bought a property website for fifty million to start priming the pump.

Bob24

The Spider wrote: »

There's other banks entering the fray and first time buyers are back with a vengeance, it's been a while since an article like this was published in the times.

http://www.irishtimes.com/business/personal-finance/first-time-buyers-clamber-back-on-the-housing-ladder-1.1513675

The rolling rock is gathering momentum.....

Out of 20 comments currently present under the article, there isn't a single posivtive one (and some of them giving interesting insight about the author of the article).

Not everybody comments and I won't judge the general publics opinion based on a few comments - but still, not a single positive one.

Victor

Mustard1972 wrote: »

Villa05 and Gaius c are like on 2 man bear strike force.
You guys would even look into the tea leaves and find a way to interpret them into telling us the sky is falling.
Entertaining though.

Constructive posts only please.

Moderator

The Spider

Bob24 wrote: »

Out of 20 comments currently present under the article, there isn't a single posivtive one (and some of them giving interesting insight about the author of the article).

Not everybody comments and I won't judge the general publics opinion based on a few comments - but still, not a single positive one.

But I don't see what that has to do with anything, people more likely to comment are the ones that disagree. It's as plain as the nose on your face about what's going on with houses at the moment.

Anyway here's another couple of links to enforce the point.

Investors back in the values there, these boys have done their homework.

http://invezz.com/news/real-estate/5085-surging-dublin-property-prices-spark-fresh-investor-interest

Construction industry is back in action

http://www.finfacts.ie/irishfinancenews/article_1026519.shtml

Either way you cut itif it's a dead cat bounce, it's some bounce, that cat must be made of industrial grade rubber!

lima

I'm Under 35, 90K savings, 250k mortgage approval, no debts.... still not interested in buying a house. The stuff on the market now is terrible. Repossessions need to happen. If the higher-uppers prevent property prices going down naturally, then I will simply leave this country and take my tech job with me.

Villa05

Just in case you were in any doubt that this country is run for a certain professional class and all else are to be whipped to maintain this professional class status. Have a listen to yesterdays Drivetime on Radio 1 where Mary Wilson interviews a PIP. It would explain alot about the lack of supply in upmarket areas

from the Propertypin

Just listened to it
http://www.rte.ie/radio/radioplayer/rteradioweb.html#!rii=9%3A10195316%3A83%3A09%2D09%2D2013%3A


As said above, a professional (and he specifically mentions a solicitor, Accountant, Hospital consultant) should be allowed keep a palatial house as this befits his/her standing in society and sends out the signal to neighbours and clients about who they are, thus allowing them to continue to earn a living.
They need a bigger house than a PAYE worker.
Really, said Mary Wilson, even if they are insolvent.
Yes said Jim...the bigger house is in line with their standing in society and he will argue this point with the insolvency board as being a totally legitimate viewpoint.

1 hour and 20 minutes in

Villa05

In the same interview, he mentions a client who owes more than 40,000,000. The PIP boasts that he can't be touched because all his assets are in his wife's name and he is employed by his children.

So there you have it folks, the banks bailed out by the guarantee, developers by NAMA and the professional SCD crew many who caused their country to go bankrupt with Personal Insolvency Arrangements.

This was all planned, now off to work, all ye PAYE people and pay up

Villa05

The Spider wrote: »

There's other banks entering the fray and first time buyers are back with a vengeance, it's been a while since an article like this was published in the times.

http://www.irishtimes.com/business/personal-finance/first-time-buyers-clamber-back-on-the-housing-ladder-1.1513675

The rolling rock is gathering momentum.....

Lambs to the Slaughter

http://moneyweek.com/what-the-end-of-cheap-money-means-for-you/

Companies are rushing to raise cash as the cheap money era fades

The_Conductor

Very good article.
People seem to imagine- that if the ECB overnight rate is 0.5% that their mortgage rate should be this + x%
The simple fact of the matter is- the cost of raising funds for banks and other institutions has in fact very very little to do with the overnight rate. Traditionally- banks lent to one another on the interbank overnight market- rather than parking their money with the ECB- where the return is always lower. These days- even after the crisis- its still seen as the safe thing to do for the big banks- to park their excess liquidity with the ECB- at rates of nothing at all- than it is to lend to their peers.

If people imagine that the upstream aspect of the financial system is any healthier than the downstream portion that is most visible to all of us- they're very very wrong.

Bob24

lima wrote: »

I'm Under 35, 90K savings, 250k mortgage approval, no debts.... still not interested in buying a house. The stuff on the market now is terrible. Repossessions need to happen. If the higher-uppers prevent property prices going down naturally, then I will simply leave this country and take my tech job with me.

Very similar situation here. If one day my taxes start being used to write-off other people's mortgages so that they can stay in their house and the supply keeps getting artificially restricted to keep prices up; I will be sad to do so but I will also get out of here.

The_Conductor

If I didn't have two young children- and I had somewhere to go- I'd be following you (despite the fact that my wife and I are very lucky to have two good jobs).

cookie1977

I'd love to know where this other green grass land is?

Bob24

cookie1977 wrote: »

I'd love to know where this other green grass land is?

As far as I am concerned, candidate destinations would be most of Western Europe except the south and I would also be cautious about property in the UK. Other people might mention the usual Irish suspects: the US, Canada, Australia. Not saying the property market or the employment situation is perfect in all these places and obviously anyone considering this seriously would need to do some homework before moving abroad. But I don't think any of them has such a high mortgage arrears rate as Ireland (even Greece is less than half of Ireland I believe), and I don't think anyone there is talking about taxpayers possibly having to massively pay for these mortgages so that people can keep their properties (which is what a number of politicians here are advocating even though they usually forget to mention where the money would have to come from).

Now, personally as I said what would push me to leave would be seeing my taxes increased to pay for other people's mortgages ... I don't think we are there yet.

who_ru

Bob24 wrote: »

Very similar situation here. If one day my taxes start being used to write-off other people's mortgages so that they can stay in their house and the supply keeps getting artificially restricted to keep prices up; I will be sad to do so but I will also get out of here.

it has already begun.

Bob24

who_ru wrote: »

it has already begun.

I would say right now public money is being used to keep the banks afloat while people are not making repayments. I don't think there have been massive write-offs deals by public owned banks which also let people keep their houses. Am I missing something?

stevedublin

Villa05 wrote: »

As said above, a professional (and he specifically mentions a solicitor, Accountant, Hospital consultant) should be allowed keep a palatial house as this befits his/her standing in society and sends out the signal to neighbours and clients about who they are, thus allowing them to continue to earn a living.

so people would not employ a solicitor, accountant or hospital consultant if they lived in a small house?
:eek:

Potatoeman

The_Conductor wrote: »

We do have a uniquely Irish mentality about owning property- that puzzles many of our EU brethren. Its very unusual to have such a high ownership rate. Will we ever get over this mentality- realistically- I doubt it- but time will tell.

The rental market is just as if not more expensive than buying. Im looking at buying at the moment, even though I think prices are inflated.
Im paying 500 per month rent at the moment sharing and could for an extra hundred a month buy a house or apartment. I would also not have to worry about rent increases or lease renewal.
Renting in Ireland is a hassle and has no stablity. This is why Irish people want to own their own home. Its far cheaper in the long run.

JoeyJJ

You do need to worry about property tax, interest rates and general repairs though.

The_Conductor

Potatoeman wrote: »

The rental market is just as if not more expensive than buying. Im looking at buying at the moment, even though I think prices are inflated.

This sentiment alone- is what I was alluding to. You are only looking at upfront costs- ignoring the other costs of ownership. Your mortgage repayments are often matched by other costs of ownership

Potatoeman wrote: »

Im paying 500 per month rent at the moment sharing and could for an extra hundred a month buy a house or apartment.

And when interest rates go up- so your repayments are a couple of hundred more- what then? Interest rates are at historically low levels. They are not going to stay at these levels forever.

Potatoeman wrote: »

I would also not have to worry about rent increases or lease renewal.

No. You would have to worry about increases in interest though- and you can be damn sure they will increase.

Potatoeman wrote: »

Renting in Ireland is a hassle and has no stablity. This is why Irish people want to own their own home. Its far cheaper in the long run.

Renting in Ireland is actually a lot easier than it is in a lot of other places. Normally you'd have a 3 month deposit, and a residential unit would be let unfurnished. Its very rare in France or anywhere else to find a furnished apartment to rent. Its also very rare for a deposit to only be a month's rent. The grass isn't always greener on the other side.

techdiver

Potatoeman wrote: »

Im paying 500 per month rent at the moment sharing and could for an extra hundred a month buy a house or apartment. I would also not have to worry about rent increases or lease renewal.
Renting in Ireland is a hassle and has no stablity. This is why Irish people want to own their own home. Its far cheaper in the long run.

What about interest rate increases? At least with rent increases you can move to somewhere within budget.

Bob24

The_Conductor wrote: »

Renting in Ireland is actually a lot easier than it is in a lot of other places. Normally you'd have a 3 month deposit, and a residential unit would be let unfurnished. Its very rare in France or anywhere else to find a furnished apartment to rent. Its also very rare for a deposit to only be a month's rent. The grass isn't always greener on the other side.

Having lived in both countries, I can definitely confirm this. The paperwork in Ireland is much easier, and the fact that the apartment is furnished and the landlord is responsible for pretty much anything that could break and cost money in the apartment is a pretty good benefit for the tenant (as long as you have a good landlord obviously).

Also you have to look at what part of your mortgage is interest repayment and what part is capital repayment. A lot of people have taken long term mortgages with high rates where for the first couple of years a lot more than half of what they are paying to the bank is going into interest repayment. In the end the 300k they have borrowed will cost them 600k includign the interest. The 300k paid in interests are as improductive as 300k which would have been paid in rent.

Potatoeman

The_Conductor wrote: »

This sentiment alone- is what I was alluding to. You are only looking at upfront costs- ignoring the other costs of ownership. Your mortgage repayments are often matched by other costs of ownership



And when interest rates go up- so your repayments are a couple of hundred more- what then? Interest rates are at historically low levels. They are not going to stay at these levels forever.



No. You would have to worry about increases in interest though- and you can be damn sure they will increase.



Renting in Ireland is actually a lot easier than it is in a lot of other places. Normally you'd have a 3 month deposit, and a residential unit would be let unfurnished. Its very rare in France or anywhere else to find a furnished apartment to rent. Its also very rare for a deposit to only be a month's rent. The grass isn't always greener on the other side.

Interest rates can go up but so can rent. Its getting to the point where it makes financial sense for me. My point being that for what I would pay in rent now I could buy a place. There are costs in owning property but the gap has shortened.
Renting also provides very little stability as leases are for one year. I have moved four times in the last eight years due to landlords increasing rents or refusing to drop them and I did get better deals but overall its massive hassle.

Potatoeman

techdiver wrote: »

What about interest rate increases? At least with rent increases you can move to somewhere within budget.

You need to budget for possible increases but as you do need to live somewhere, once you have paid it off you are done. This is why the gap should be greater and why people will want to buy.

cookie1977

Bob24 wrote: »

As far as I am concerned, candidate destinations would be most of Western Europe except the south and I would also be cautious about property in the UK. Other people might mention the usual Irish suspects: the US, Canada, Australia. Not saying the property market or the employment situation is perfect in all these places and obviously anyone considering this seriously would need to do some homework before moving abroad. But I don't think any of them has such a high mortgage arrears rate as Ireland (even Greece is less than half of Ireland I believe), and I don't think anyone there is talking about taxpayers possibly having to massively pay for these mortgages so that people can keep their properties (which is what a number of politicians here are advocating even though they usually forget to mention where the money would have to come from).

Now, personally as I said what would push me to leave would be seeing my taxes increased to pay for other people's mortgages ... I don't think we are there yet.

If you go to Germany their taxes are bailing Europe out so if you worked there yours would too. Would you leave Germany because of that? France has 10.9% unemployment.

Bob24

cookie1977 wrote: »

If you go to Germany their taxes are bailing Europe out so if you worked there yours would too. Would you leave Germany because of that? France has 10.9% unemployment.

I don't believe German tax money has been used to offer anything else than loans to date, bailing-out a country and writing-down private mortgages are not the same thing. I don't think anyone in Germany is planning on using tax money to pay for anyone's property in Europe either.

And different people have different personal circumstances, but I wouldn't be worried about finding employment in France. My brother is in Paris working in IT and with the right qualifications and experience he is getting job offers and has changed employer a few times in the past few years to play the competition and get pay raises. I wouldn't be so keen on buying property there at the moment though - not with full Irish glory but it looks like to me France has also been building-up its own property bubble recently.

cookie1977

I think some people can look at things through rose tinted glasses. No where is perfect and each has its own issues. To be honest I feel more confident about Ireland now then I did a year ago but certainly we've still a long road ahead with some big hurdles/pot holes.

gaius c

Villa05 wrote: »

Just in case you were in any doubt that this country is run for a certain professional class and all else are to be whipped to maintain this professional class status. Have a listen to yesterdays Drivetime on Radio 1 where Mary Wilson interviews a PIP. It would explain alot about the lack of supply in upmarket areas

from the Propertypin

Just listened to it
http://www.rte.ie/radio/radioplayer/rteradioweb.html#!rii=9%3A10195316%3A83%3A09%2D09%2D2013%3A


As said above, a professional (and he specifically mentions a solicitor, Accountant, Hospital consultant) should be allowed keep a palatial house as this befits his/her standing in society and sends out the signal to neighbours and clients about who they are, thus allowing them to continue to earn a living.
They need a bigger house than a PAYE worker.
Really, said Mary Wilson, even if they are insolvent.
Yes said Jim...the bigger house is in line with their standing in society and he will argue this point with the insolvency board as being a totally legitimate viewpoint.

1 hour and 20 minutes in

Transcript (complements of Alderman on p.ie)

Mary Wilson (reading a listener email): What happens to my home if I enter into a PIA?

Jim Stafford: Well, under the legislation the PIP is to try and keep the family in their family home if at all possible. The PIP will have to assess the existing mortgage on the family home, if it's a modest house, if it's a trophy house.

In practice, the PIP will also have to assess the type of house that might be needed for a professional person such as a solicitor, accountant or a hospital consultant as opposed to a house that's needed by someone who is in the PAYE sector for example, so that, as a PIP, I would be making a very strong case, for example, that a solicitor should have a bigger house that accords with his professional status in society so that his neighbours and clients can see that, yes, this person is a good solicitor who's is living in a good house etc. etc.

MW: Really?

JS: Absolutely. The same as for hospital consultants, people like that

MW: Despite the fact that he's insolvent?

JS: Despite the fact that he's insolvent, because remember, if we want the solicitor to continue to earn money or the accountant or the hospital consultant it's important that he has his tools of trade for example

MW: Well, he may need an office, but he hardly needs a palatial house in South County Dublin

JS: Believe me, the clients who we have on our books are insisting they continue to stay in their palatial houses, now, it's possible that some of them might have to down trade, but that all goes into the pot and at the end of the day the banks, the creditors have to agree to that process.

The PIP guy has registered to respond in person there. Whatever you might think of his views, that's a rather brave move to make.

gaius c

The Spider wrote: »

You're missing the point, if people bought at the peak and wanted to sell if prices continue to rise, they can sell without a loss, which means they won't have a debt to repay to the bank.

It's one thing to say that NE only matters if you move, but what about being in NE and having lost your job, you lose the house (repo'd) have no job and have a massive debt to the bank, as well as somehow having to pay rent and put a roof over your familys head?

The other fact is psychological, if your asset is worth more than you paid for it then even if you don't move, you have mental wealth in your head, as in "if the worst comes to the worst I can sell the house and move on!"

This in turn makes you more likely to spend that spare cash in the pub, restauraunt, shop etc, because at the back of your mind you feel relatively wealthy.

If its in NE you save every penny and build up a war chest, because you never know when you're going to need it.

This sort of attitude is typical of bubble cheerleaders who think that the bursting of the bubble is what caused the recession (and NE). The reality is that the recession (and NE) was caused by the enormous bubble.

The bust is unpleasant for a lot of people but it is actually part of the recovery process. You don't recover from the damage wrought by bubbles through re-inflating them.

Bob24

cookie1977 wrote: »

I think some people can look at things through rose tinted glasses.

The question is to know who is able to tell the color of their glasses and remove them when required :-)

But yes no place is perfect; and anyone is free to make their choices based on their opinions and current situation.

For a strategic defaulter waiting for a good offer from the bank, clearly it is not time to leave - and it will even less be if they get that offer.

For someone with good international employability and limited commitments here - and thinking that the prices are still too high, leaving is an option. And if they start having to pay for the offer made to the strategic defaulter it will look increasingly attractive.

And then there is a very large group of people somewhere in between.