Irish property market

The Spider

Ha maybe you're right edited to reflect below, thanks Gaius

gaius c

I know how you feel. I often forget to mention my non-ppr mortgages when I'm bragging on the internet too.

jmayo

The Spider wrote: »

Certainly don't because the greater good means it will have to be cancelled out written off, destroyed pick one, if not then I'm afraid this country is fubarred for the forseeable future,

Are you sure you are not confusing your family's greater good with the greater good of all of us ?

Nice that you are telling posters, in other threads, how your other half is stuck with negative equity apartment and then you advise
"Then start thinking about going for the debt writedown they're going to be given out, just play it up with the banks when the time is right."

Yet on here you have been claiming that you will not be affected.
You should remember what you say on the web is always and forever there.

This country is fubarred and it will be even more fubarred if the likes of you get your way. :mad:

The Spider wrote: »

people won't spend money no new business, it's not difficult, so suck it up because yes debt forgiveness is the only way out really, see what Paul Krugman has to say on the matter.

So the fact that the money for all this debt forgiveness being taken out of other peoples' pockets will have no affect on the consumer spending of that group.

I am finally beginning to get where you are coming from now.

You are of the belief the country's economy will be rescued if only all in those in massive debt were out of it, so that they could launch into another spending frenzy with yet more borrowed money.
Interesting view. :rolleyes:

lima

The Spider wrote: »

Nah bought a house last year for a third of the price it was, and paid a third up front so tiny mortgage, thanks very much, won't affect me, either way, but I'm not blinkered enough to know that it needs to happen.

The rates on your mortgage are going up to offset any debt forgiveness that is happening now, so you are paying towards it (alongside your taxes)

Regards,

Renter in D6 paradise.

The Spider

lima wrote: »

The rates on your mortgage are going up to offset any debt forgiveness that is happening now, so you are paying towards it (alongside your taxes)

Regards,

Renter in D6 paradise.

Seriouly I really have no axe to grind here, I spent long enough over the years looking at this board, and others ie property pin etc, I watched the madness from bizarrely in hindsight 1998 onwards where I thought property was overpriced ( or was that my reluctance as a young chap to give up the great lifestyle in favour of a more modest lifestyle?)

Point is after watching it go up down and around the corner, I dont think you're going to get better value than now.

Average wage is never going to buy in sandy ford or Ranelagh, or ( insert area where everyone wants to live here!) trick is to spot the trend, and make sure you don't fall into the trap of thinking it'll go down forever, it didn't go up forever, reverse also applies!

Galego

The Spider wrote: »

Seriouly I really have no axe to grind here, I spent long enough over the years looking at this board, and others ie property pin etc, I watched the madness from bizarrely in hindsight 1998 onwards where I thought property was overpriced ( or was that my reluctance as a young chap to give up the great lifestyle in favour of a more modest lifestyle?)

In real terms (stripping inflation) houses prices are back at 1997-98 price levels. There is currently a higher disposal income than in 1997-8 (in average) but my question is:

Should real prices not return to 1994-95 price levels?

My take is that an equilibrium should be met at 1996 price level due to a real increase in disposable income since 1994.



House prices in Ireland adjusted for inflation, incomes and rents, 1975-2011

gurramok

The Spider wrote: »

Seriouly I really have no axe to grind here, I spent long enough over the years looking at this board,

And you only registered last month to post here. Why did it take so many years to post your thoughts on our bubble?

ted1

Galego wrote: »

In real terms (stripping inflation) houses prices are back at 1997-98 price levels. There is currently a higher disposal income than in 1997-8 (in average) but my question is:

Should real prices not return to 1994-95 price levels?

My take is that an equilibrium should be met at 1996 price level due to a real increase in disposable income since 1994.



House prices in Ireland adjusted for inflation, incomes and rents, 1975-2011

The graph only goes up to 2010, any chance of geting 2011 and 2012 on it?

AlanG

In my opinion the key is interest rates. Right now you can have a 300,000 house in Dublin at 5% for around 1750 per month over 25 years (Hopefully no one will have a 100% mortgage but there is still an opportunity cost to using a deposit). At 8% that would be 2315 per month. Or conversely for the 1750 per month you will be getting a house at 226,000.

I believe base interest rates will increase from their current record low and therefore SVR rates will also increase significantly in the next 10 years. In a functioning market this should bring house prices down a bit more. Add to that the fact that many areas the price v rent ration is far above the 200 – 250 times monthly rent multiple that is the norm in most markets and I think this backs up the notion of further real price drops.

Whatever way you are analysing things don’t bother to look at drop from peak as bubble prices have no bearing on real value – just look at the BoI and AIB share prices.

The Spider

gurramok wrote: »

And you only registered last month to post here. Why did it take so many years to post your thoughts on our bubble?

Actually feck that, seriously I really don't have time for the tinhat brigade, where I would definitely put you.

Problem is you've been preaching it so long it's like a religion and anything that deviates from your viewpoint must be ridiculed and pointed at.

Same attitude in reverse at the height of the bubble when the bulls were everywhere, especially on the housing bubble bursting thread on askaboutmoney, which was locked, people didnt like the bubble being pointed out.

As for why I signed up, more to give my opinion that people should maybe think about buying, in my opinion (that's my opinion not yours) I think now's the time to do it, if even because there's definitely more bears than bulls, and the last time there was more bulls than bears it went Kaput!

Funny being one of the bulls, but hey there ya go!

Galego

AlanG wrote: »

In my opinion the key is interest rates. Right now you can have a 300,000 house in Dublin at 5% for around 1750 per month over 25 years (Hopefully no one will have a 100% mortgage but there is still an opportunity cost to using a deposit). At 8% that would be 2315 per month. Or conversely for the 1750 per month you will be getting a house at 226,000.

I believe base interest rates will increase from their current record low and therefore SVR rates will also increase significantly in the next 10 years. In a functioning market this should bring house prices down a bit more. Add to that the fact that many areas the price v rent ration is far above the 200 – 250 times monthly rent multiple that is the norm in most markets and I think this backs up the notion of further real price drops.

Whatever way you are analysing things don’t bother to look at drop from peak as bubble prices have no bearing on real value – just look at the BoI and AIB share prices.

IMO, the ECB rate will follow the EU inflation rate – therefore no likely to increase in the short-term (5 years). SVR rates are totally dependable of the banks so these are up to the banks to decide how much more they want to squeeze their borrowers. You’d like to think that they also need to find a balance because if they squeeze too much, many borrowers will fall in arrears. Right now SVR rates are used to balance their losses from trackers. Once they work around the “trackers’ mortgage issue”, I believe the pressure on the variable rates will be a bit less. I personally do not foresee SVRs going to 8% in the next 5 years, but see them floating around the 5-6%.

IMO, there are more important macro –economic factors to consider that just looking at BoI and AIB share prices. And the historic economic data is there to be used; see where all it started going wrong and work out the market equilibrium point (hard one to determine since the market is dysfunctional at the moment anyway).

gurramok

The Spider wrote: »

Actually feck that, seriously I really don't have time for the tinhat brigade, where I would definitely put you.

Problem is you've been preaching it so long it's like a religion and anything that deviates from your viewpoint must be ridiculed and pointed at.

Same attitude in reverse at the height of the bubble when the bulls were everywhere, especially on the housing bubble bursting thread on askaboutmoney, which was locked, people didnt like the bubble being pointed out.

As for why I signed up, more to give my opinion that people should maybe think about buying, in my opinion (that's my opinion not yours) I think now's the time to do it, if even because there's definitely more bears than bulls, and the last time there was more bulls than bears it went Kaput!

Funny being one of the bulls, but hey there ya go!

I'm a realist who looks for reasoned evidence of said speculation and spin of a sustained period of "rising prices" in today's climate. I do not take such spin as gospel, its right to question it. If some bulls cannot provide the evidence, that's their problem not mine.

My opinion would change when the evidence is forthcoming.

Galego

ted1 wrote: »

The graph only goes up to 2010, any chance of geting 2011 and 2012 on it?

Those are 2011 prices. Take a further 10-15% drop from 2011 to present time in prices, hardly no impact inflation, but slightly impact in disposal income due to governmental tax pressure.

gaius c

Galego wrote: »

In real terms (stripping inflation) houses prices are back at 1997-98 price levels. There is currently a higher disposal income than in 1997-8 (in average) but my question is:

Should real prices not return to 1994-95 price levels?

My take is that an equilibrium should be met at 1996 price level due to a real increase in disposable income since 1994.



House prices in Ireland adjusted for inflation, incomes and rents, 1975-2011

Morgan Kelly looked at a number of housing bubbles and busts and said typically 70% of bubble gains are lost during the bust so they won't be going all the way back to the start of the bubble. Now you need to ask when the bubble started and I would say mid 90's so we should certainly be going back to late 90's prices.

One thing to bear in mind is the rather "special" nature of our bubble. It pretty much dwarfed anybody else's housing bubble bar perhaps the Japanese one so we can't really assume that we'll follow their trends either.

gurramok

SVR rates were in the 5-6% bracket back when ECB rates were "at their peak" a few years ago around '07\'08.

Piriz

we should listen to the experts (tongue in cheek) :

http://www.irishtimes.com/business/economy/ireland/experts-believe-property-prices-will-fall-in-2013-1.1402672

seems the experts are somewhat as divisive on the subject as the posters on here...

personally I believe there will be drops for the next 3 years due to high unemployment, reduced disposable incomes, high emigration, negative equity etc effecting demand and affordability...

the criteria in being granted a mortgage from the banks will determine a lot too in the next decade...this will possibly be tightened further when banks have to crystallise bad loans and potentially increase interest rates etc. and be more conservative in their lending.. (?)

at the moment there appears to be a level of market skimming taking place...year on year those who have the most cash and/or mortgage approval purchase the nice homes in the market, as each year passes the level of affordability gets lower and the nice homes become cheaper and the amount of purchases get smaller...when those who can afford run low we will see sharper drops.. aka dead cat bounce...

the property market will reach a point in the next decade where the youth or NEET generation (not in employment, education or training, and most effected by the recession) will make up a large percentage of the demographic that would normally be part of the demand for housing... this coupled with the other difficulties of the bust aftermath will probably equate to further downward pressure on property prices for a long period of time...

gurramok

Piriz wrote: »

we should listen to the experts (tongue in cheek) :

http://www.irishtimes.com/business/economy/ireland/experts-believe-property-prices-will-fall-in-2013-1.1402672

seems the experts are somewhat as divisive on the subject as the posters on here...

IT wrote:

Approximately one third of those surveyed expected an increase in prices in 2013.

The survey group includes estate agents and surveyors, as well as those with a more indirect involvement in the industry such as economists, market analysts and academics.

Yeh we know who those 33% are, estate agents, bank paid economists and a couple of posters here

lima

Well this is good news for this morning:

http://www.irishtimes.com/business/economy/ireland/real-risk-to-homes-in-arrears-says-honohan-1.1404588

Hopefully the ball will get rolling on Repossessions as soon as possible and there will be more options on the property market (especially cite center where I am looking)

StillWaters

Honohan has to say this, but he is not exactly taking action is he? There is no political will for this. FACT.

The Spider

And then you have this, good news all around by the looks of it.

http://www.irishexaminer.com/business/permanent-tsb-to-write-off-some-unsustainable-debt-232006.html

gurramok

The Spider wrote: »

And then you have this, good news all around by the looks of it.

http://www.irishexaminer.com/business/permanent-tsb-to-write-off-some-unsustainable-debt-232006.html

hief executive Jeremy Masding said that some mortgage debt had already been written off, but refused to disclose how much, claiming it was commercially sensitiveinformation

Currently, 20,000 of the bank’s mortgage customers are in arrears for a period of 90 days or more.

The bank said yesterday, that of that figure 11,400 have applied for some kind of restructuring of loans; with 9,200 having been offered some kind of treatment proposal — such as a split mortgage arrangement — by the bank.

They are keeping the info of what qualifies for "write-offs" under wraps. It's the taxpayer that's ends up funding this.

lima

The Spider wrote: »

And then you have this, good news all around by the looks of it.

http://www.irishexaminer.com/business/permanent-tsb-to-write-off-some-unsustainable-debt-232006.html

"he has concerns that the act could be viewed, by some, as being a “back door” to debt forgiveness access"

At least they appear to be keeping an eye on any cute hoors who are refusing to pay their debts whilst keeping a high-quality lifestyle

Also, if someone gets debt written-off with the PIA, don't they lose their home as part of it?

The Spider

gurramok wrote: »

They are keeping the info of what qualifies for "write-offs" under wraps. It's the taxpayer that's ends up funding this.

Course they are, but I said write offs were going to happen, and here's the first bank doing it, either way the taxpayer is going to pay, whether it's debt writeoffs or increased taxes because people aren't spending in the economy.

The economy can't function with the vast majority of it's citizens carrying unsustainable debt.

Piriz

The Spider wrote: »

The economy can't function with the vast majority of it's citizens carrying unsustainable debt.

It is not the vast majority..it's a significant number though...

The Spider

lima wrote: »

"he has concerns that the act could be viewed, by some, as being a “back door” to debt forgiveness access"

At least they appear to be keeping an eye on any cute hoors who are refusing to pay their debts whilst keeping a high-quality lifestyle

Also, if someone gets debt written-off with the PIA, don't they lose their home as part of it?

Doubt people will lose their homes it costs as much to repossess and sell it on as it does to write off a portion of the debt.

mortgage on a house is say 300'000 now worth 180'000 reduce the mortgage to 180'000, if the bank wrote off the debt repossessed the house then they would incur the costs of trying to sell that house for 180'000
and the debt would be written off anyway, what's to be gained by the bank reposessing?

And if house prices fall, then the bank has lost more money than if they just wrote off the 120 grand.

The Spider

Piriz wrote: »

It is not the vast majority..it's a significant number though...

I agree with this, but it's enough of a number to prevent the economy functioning correctly.

Piriz

The Spider wrote: »

I agree with this, but it's enough of a number to prevent the economy functioning correctly.

Don't forget to include the level of unemployment, reduced capitol spending by the government and a post boom defunct construction sector from preventing the economy functioning correctly...not to mention reduction in incomes, increases in taxes, and a global downturn... these wider issues all place downward pressure on property prices and can not be rectified by banking policy writing off some unsustainable debts...

The Spider

Piriz wrote: »

Don't forget to include the level of unemployment, reduced capitol spending by the government and a post boom defunct construction sector from preventing the economy functioning correctly...not to mention reduction in incomes, increases in taxes, and a global downturn... these wider issues all place downward pressure on property prices and can not be rectified by banking policy writing off some unsustainable debts...

Nope they can't however an economy works on sentiment, if you have a situation where people see it as hopeless they won't spend a penny, construction will pick up again, but not at the levels seen in the boom.
There's now a housing shortage in Dublin as has been discussed here, that will have to be addressed.

We've been here before I remember relatives who were tradesmen in the eighties losing their jobs and not finding anything else, it was all doom and gloom then too.

Ideally we need to be back to where we were around 1998-2000, we weren't relying on the construction industry then, how we do it, well like I say the first thing is that people need to feel that they're not locked into debt for the rest of their lives.

They can then take chances with setting up small to mid size businesses, this is already happening with the amount of startups in the IT industry.

Piriz

The Spider wrote: »

an economy works on sentiment

yes and the unemployed persons sentiment is i cant get a job, the average family's is im sick of increasing tax and job uncertainty, the government's is we've inherited a mess lets put the unemployed into jobs bridge schemes, young peoples is im going to Australia coz there is no future here...

sentiment is based on whats happening...facts and figures...mortgage debt relief for those who are insolvent will not turn this ship around.

people who receive mortgage debt relief or write offs do so because they are insolvent...i.e. they couldnt pay anyway...they will contribute the same to the economy after as they did before...

The Spider

Piriz wrote: »

yes and the unemployed persons sentiment is i cant get a job, the average family's is im sick of increasing tax and job uncertainty, the government's is we've inherited a mess lets put the unemployed into jobs bridge schemes, young peoples is im going to Australia coz there is no future here...

sentiment is based on whats happening...facts and figures...mortgage debt relief for those who are insolvent will not turn this ship around.

people who receive mortgage debt relief or write offs do so because they are insolvent...i.e. they couldnt pay anyway...they will contribute the same to the economy after as they did before...

When the economy is functioning an unemployed person can get a job, that's the point, people don't spend when things look unstable, even the ones that can afford to, they save. The more they save the less is going into the economy, instead the person who can afford to eat out in a restaurant doesn't do it, saves their money just in case with all the doom talk they think they could be next, even if they won't be.

That has a knock on effect on the restaurant that now has to let staff go, and in the worse circumstances close, that then enforces in the people who could afford it, that they should save even more...just in case.

Someone has a bakery that normally a person who could afford it would go to, however the siege mentality now means they go to aldi for everything, which is cheaper, but at a cost to a small business.

The government isn't getting the taxes from these businesses that close down, and now has to pay more social welfare to the ex employees so taxes start to go up, and yet again the people who could afford to spend in these businesses save their money.

So you see where sentiment affects the entire economy? If everything is doom and gloom the people who have money will not spend it and will hoard it away just in case they're the next ones on the chopping block.