Why Irish houses are still massively overpriced

Cody Pomeray

Potatoeman wrote: »

No it really isn't. You are basically expecting those that didnt buy during the boom to pay more now to keep the pyramid scheme going.

Not really. It's more about maintaining the banks' balance sheets. I keep mentioning this but you are ignoring it, preferring instead to construct straw man arguments.

gaius c

There's a cost to strangling the entire economy to maintain the banks' balance sheets though. We keep mentioning this but you are ignoring it, preferring instead to construct straw man arguments.

Cody Pomeray

Cody Pomeray wrote: »

Not really. It's more about maintaining the banks' balance sheets. I keep mentioning this but you are ignoring it, preferring instead to construct straw man arguments.

If people aren`t paying their mortgages then the state picks up the tab through recapitalisations. Whether we repossess and drop the floor in the market will make no difference to this loss in fact repossessing is what is normally done by banks to cut their losses.

creedp

Villa05 wrote: »

Govt Intervention was a disaster in the bubble and will be a disaster in the bust, that is why many did/will not buy, not luck as you say. If you had a pulse you got a mortgage in the bubble, therefore it was choice not luck that stopped people from buying.

No its not that simple .. there were many people who chose not to get a mortgage/buy a house during that period for whatever reason .. not the right time .. still sowing thier wild oats!, etc. Some of those could have afforded the purchase/ would have been awarded a mortgage had they chosen to do. It amazes me to hear now that of the people who didn't buy 100% did so for rational reasons associated with the price of the house at the time ... retrospective 20:20 vision is a great thing.

I agree Govt intervention was a disaster during the bubble .. but it was that intervention that created and sustained the bubble so I think the Govt has a certain moral obligation to try and assist people who are now sufferring the consequences of that intervention. By the way I am not calling for wholesale debt write-off .. I think that would be a case of 2 wrongs dont make a right .. but I do think that some measures need to be implemented to try and help people that are genuinely in trouble and are doing their best to overcome the problem.

creedp

johnr1 wrote: »

Some very angry prospective buyers around here... when houses are about 25,000 there'll be plenty of buyers - unless you lot decide to share one between ye....

Im in both camps, I built at the height of the boom, lost my business, was in arrears for a time, am now fully up to date - ahead even, and I have every intention of buying another one over the next year or three.

I can only remember ONE poster here "looking for a bailout" a few weeks ago, so this constant carping about everyone in negative equity looking for them is getting a bit old. Think up a new line could ye. Ive never asked for one, and neither have 99% of home owners who post here.

I think most of the bitching is simply a symptom of frustration at not having enough mortgage credit available to today's prospective buyers, and looking to place the blame on people who have enough problems in their lives because YOU can't get a mortgage and when it was THEIR time, they could.

I think most of the wise heads here didn't buy because they were to young and not in full time employment in 2002-07 or because they were backpacking around Asia, and again didn't want to stop being "young and free" Frankly I don't believe that you all were smarter than the hundreds of thousands of us who were working flat out and watching prices get further ahead of us every month.

To now pass off your youth/fecklessness which turned out to be fortuitous, as wisdom is fairly low tbh.

Apologies to anyone who can quote themselves pre 2007 showing their superior wisdom.

.

+1 .. nail on the head.

Duggys Housemate

creedp wrote: »

No its not that simple .. there were many people who chose not to get a mortgage/buy a house during that period for whatever reason .. not the right time .. still sowing thier wild oats!, etc. Some of those could have afforded the purchase/ would have been awarded a mortgage had they chosen to do. It amazes me to hear now that of the people who didn't buy 100% did so for rational reasons associated with the price of the house at the time ... retrospective 20:20 vision is a great thing.

I agree Govt intervention was a disaster during the bubble .. but it was that intervention that created and sustained the bubble so I think the Govt has a certain moral obligation to try and assist people who are now sufferring the consequences of that intervention. By the way I am not calling for wholesale debt write-off .. I think that would be a case of 2 wrongs dont make a right .. but I do think that some measures need to be implemented to try and help people that are genuinely in trouble and are doing their best to overcome the problem.

Have we moved onto debt write-off now, rather than bank capitalization?

No debt write off will ever allow people to own a second house, which will significantly reduce house prices. Exactly the opposite of your argument.

As for the family home, they may possibly keep that on a debt write down but any future sale will pay all money to the banks ( or government) unless the sale more than covers the initial mortgage cost and interest. Otherwise we are gifting equity to people at the cost to the taxpayers.

Better for the economy if they rented the property.

creedp

Prof. Armitage Shanks wrote: »

Or perhaps it has nothing to do with the unavailability of mortgage credit. Perhaps it is due to ones desire to live in a society that deals with it's economic problems in a responsible manner, a society that does not bow to the vested interests of large groups to the potential detriment of the whole. A desire to see ones children grow up in a society that judges it's economic performance on sound economic principles and not the ability to buy and sell houses to each-other.

Wow there's a definition of Utopia right there! Where does it exist?

Duggys Housemate

creedp wrote: »

+1 .. nail on the head.

-1 nail off the head. Take this point

I think most of the wise heads here didn't buy because they were to young and not in full time employment in 2002-07 or because they were backpacking around Asia, and again didn't want to stop being "young and free" Frankly I don't believe that you all were smarter than the hundreds of thousands of us who were working flat out and watching prices get further ahead of us every month.

I know why I didn't buy, the economics was clear. Houses were increasing faster than income and rent ratios were declining while there was no shortage of housing.

It wasn't rocket science.

Potatoeman

Cody Pomeray wrote: »

Not really. It's more about maintaining the banks' balance sheets. I keep mentioning this but you are ignoring it, preferring instead to construct straw man arguments.

That should not be a concern of a potential buyer and will dissuade them. They are paying for others mistakes. If thats your idea of fair then do you expect those that bought before prices went crazy to contribute too. What about those that sold for massive profits.

creedp

Duggys Housemate wrote: »

Have we moved onto debt write-off now, rather than bank capitalization?

No debt write off will ever allow people to own a second house, which will significantly reduce house prices. Exactly the opposite of your argument.

As for the family home, they may possibly keep that on a debt write down but any future sale will pay all money to the banks ( or government) unless the sale more than covers the initial cost and interest. Otherwise we are gifting equity to people at the cost to the taxpayers.

Better for the economy if they rented the property.

I'm not advocating for house price reductions or increases .. I'm simply making the point that it would not be appropriate to go turfing a whole generation of home owners out on the road when alternative approaches which involved them stayng in their homes are possible ... as I said I'm not advocating for wholesale write downs. Its like a lot of other issues . its seems people you are either black or white on an issue, in this case you either pay up in full now or you get turfed out .. is there any alternative that doesn't involve turfing people out of there homes when they are genuinely trying to cope and will make good their commitments albeit over a longer timeframe or maybe by giving up equity in their homes to be realised down the road.

The whole tone of this discussion seems to be I wasn't stupid enough to buy a house during the bubble and therefore the thickos who did are now fair game for a kicking so I can buy at a massively reduced price .. sorry the purely unadulterated 'market price'.

creedp

Duggys Housemate wrote: »

-1 nail off the head. Take this point



I know why I didn't buy, the economics was clear. Houses were increasing faster than income and rent ratios were declining while there was no shortage of housing.

It wasn't rocket science.

Good man (I'm making an assumption) .. bully for you! Potential house buyers were really all closet traders who fully understood the maechanics of the market and could see through all the bullsh1t expert advice being thrown at them from all angles. Why the hell do we have consumer protection/ombudsmen/etc to protect people who are buying lollipops but expect the masses to fully understand the economics of the house market.

Duggys Housemate

creedp wrote: »

I'm not advocating for house price reductions or increases .. I'm simply making the point that it would not be appropriate to go turfing a whole generation of home owners out on the road when alternative approaches which involved them stayng in their homes are possible ... as I said I'm not advocating for wholesale write downs. Its like a lot of other issues . its seems people you are either black or white on an issue, in this case you either pay up in full now or you get turfed out .. is there any alternative that doesn't involve turfing people out of there homes when they are genuinely trying to cope and will make good their commitments albeit over a longer timeframe or maybe by giving up equity in their homes to be realised down the road.

The whole tone of this discussion seems to be I wasn't stupid enough to buy a house during the bubble and therefore the thickos who did are now fair game for a kicking so I can buy at a massively reduced price .. sorry the purely unadulterated 'market price'.

You are engaging in straw man arguments with yourself. Yes people are saying that people who bought in the boom should pay for it, and were not economically smart - whats wrong with that.

But I said something else. If people get debt reductions ( which I am not totally opposed to) they

1) lose any second house they have. Plenty of people have second houses, not just BTLers. Somebody who moves in with their wife or husband etc.
2) They are not turfed on the street but they can:
2.1) continue to rent the same house as a council house or
2.2) keep the house but make no profit on sales even if the house appreciates over their new mortgage value.

i.e. if the house cost 400K and they would have paid say 600K in a mortgage ( the exact have to be worked out after the time of sale depending on interest rates) and they get a reduction in mortgage payments to 300K, they owe the extra 300K on sale, or the best they can get from the house. Sales of the house go to the bank/tax payer. No property is inheritable.

That will reduce prices given 1) but it is not really the same as the original points being made about the government keeping prices up.

Cody Pomeray

Deleted User wrote: »

If people aren`t paying their mortgages then the state picks up the tab through recapitalisations.

Of course, this has been gone over a number of times in the last couple of pages alone.

OPTION 1. Debt Equity Swap/ Baby NAMA, etc.: There will probably be a need for some recapitalisation. However, because 88% of home-owners have no arrears at all on their homes, nobody expects the adjustment to be monstrous. The reason is simple. If most of this 12% people were simply given a debt-equity swap, the value of the underlying security would remain largely intact, the repayments would be viable, and the bank would only need to make a minor adjustment to its capital base in accordance with the accounting standards.

OPTION 2. On the other hand, if you allow a firesale of property, you are going to demolish the value of the banks' underlying securities as multiples of that plan I have just mentioned. This will require a substantial recapitalisation in order to meet the banks' correct level of provisioning.

Now, I can see why a house hunter would prefer the latter option.

House hunters are in the minority.

For you average taxpayer who is not looking to buy more, or any, property, it makes no sense to go with Option 2.

To risk damaging the economy even further, simply because a small minority are property hungry... well, shouldn't we have learned from that mistake by now?

creedp

Duggys Housemate wrote: »

You are engaging in straw man arguments with yourself. Yes people are saying that people who bought in the boom should pay for it, and were not economically smart - whats wrong with that.

But I said something else. If people get debt reductions ( which I am not totally opposed to) they

1) lose any second house they have. Plenty of people have second houses, not just BTLers. Somebody who moves in with their wife or husband etc.
2) They are not turfed on the street but they can:
2.1) continue to rent the same house as a council house or
2.2) keep the house but make no profit on sales even if the house appreciates over their new mortgage value.

i.e. if the house cost 400K and they would have paid say 600K in a mortgage ( the exact have to be worked out after the time of sale depending on interest rates) and they get a reduction in mortgage payments to 300K, they owe the extra 300K on sale, or the best they can get from the house. Sales of the house go to the bank/tax payer. No property is inheritable.

That will reduce prices given 1) but it is not really the same as the original points being made about the government keeping prices up.

No difficulty with any of that .. if it is an option that allows people to stay in their homes then it should be actively pursued. I haven't been calling for write downs or that house prices should be artifically protected. It seems though that anybody that does call for something other that turfing people out of their homes is doing just that.

As for the strawman comment .. I ignore any comments that includes that term - can't stand it personally.

Potatoeman

Cody Pomeray wrote: »

Of course, this has been gone over a number of times in the last couple of pages alone.

OPTION 1. Debt Equity Swap/ Baby NAMA, etc.: There will probably be a need for some recapitalisation. However, because 88% of home-owners have no arrears at all on their homes, nobody expects the adjustment to be monstrous. The reason is simple. If most of this 12% people were simply given a debt-equity swap, the value of the underlying security would remain largely intact, the repayments would be viable, and the bank would only need to make a minor adjustment to its capital base in accordance with the accounting standards.

OPTION 2. On the other hand, if you allow a firesale of property, you are going to demolish the value of the banks' underlying securities as multiples of that plan I have just mentioned. This will require a substantial recapitalisation in order to meet the banks' correct level of provisioning.

Now, I can see why a house hunter would prefer the latter option.

House hunters are in the minority.

For you average taxpayer who is not looking to buy more, or any, property, it makes no sense to go with Option 2.

To risk damaging the economy even further, simply because a small minority are property hungry... well, shouldn't we have learned from that mistake by now?

House prices will just fall over a longer period of time. Its delaying the
inevitable and will just encourage more to stay out altogether.

jmayo

creedp wrote: »

I'm not advocating for house price reductions or increases .. I'm simply making the point that it would not be appropriate to go turfing a whole generation of home owners out on the road when alternative approaches which involved them stayng in their homes are possible ... as I said I'm not advocating for wholesale write downs.

You see this is where you are making a big assumption with sweeping emotive hyperbolic statements.
It is not an entire generation and it is not soley linked to a single generation.

Not everyone who bought in Ireland during the bubble is in default and can't pay for their mortgage.
They may be in negative equity, but they can still pay for their mortgage.
Thus there should be no problem if they are allowed to move the negative equity to another property should they need to move.

Some of this bunch are indeed looking for an out because they don't see why they should pay more than their proeprty is now worth.
The answer is tough sh**.
You made deal stick to it.
Would they have complained if things worked out with massive price increases ?

Secondly I would bet some people who bought before the bubble are in trouble because they released equity in their properties, either to help family buy into the ponzi scheme or to buy overseas.
A lot of people felt Ireland was too expensive, but they made an even worse mistake of thinking Bulgaria, Cape Verde, New Foundland, Spain, Cyprus, etc were goood bets.

creedp wrote: »

Its like a lot of other issues . its seems people you are either black or white on an issue, in this case you either pay up in full now or you get turfed out .. is there any alternative that doesn't involve turfing people out of there homes when they are genuinely trying to cope and will make good their commitments albeit over a longer timeframe or maybe by giving up equity in their homes to be realised down the road.

Here we go again with the emotive statements about evictions.
God how does anyone manage without their own house.

I have no problem with allowing people with a hope of repaying their debt from being faciliated with some leeway on repayments.
If debt can be restructured over longer term then fine.

I do however have a major problem with compensation because the debt is now worth more than the property or where someone gets to keep their property whilst they get chunk of their debt wiped out.
And trust me there are those looking for this.
I can even point you to the threads on here.

If you get debt wiped out you lose the house or commensurate portion of the house.
If you have no hope of repaying the debt then you lose any right to the property.

creedp wrote: »

The whole tone of this discussion seems to be I wasn't stupid enough to buy a house during the bubble and therefore the thickos who did are now fair game for a kicking so I can buy at a massively reduced price .. sorry the purely unadulterated 'market price'.

I would make no excuse for wanting the best deal possible.
I am not a fooking charity and I don't expect charity.
I have made investment decisions I have regretted, but I chose to live with them and not go looking for others to suffer for them.

Why should I, and my family, suffer to guarantee someone else gets to live in a lifestyle they can no longer afford and being honest could never afford except for the availability of very cheap uncontrolled credit.

Your mention of "reduced prices" says a lot.
You are exhibiting signs of one who either bought into the bubble or believed in it somewhat.
Stop comparing prices now to the height of the bubble.
They were not the norm and should be discarded.

The prices people paid were outlandishly inflated prices.
Maybe if more people copped onto this at the time they wouldn't be in the mess they are in.

I just love how the amount of people who have become socialists over the last 6/7 years has jumped, when they discovered that instead of getting promised gains in capital appreciation they got losses.

Cody Pomeray

Potatoeman wrote: »

House prices will just fall over a longer period of time. Its delaying the
inevitable and will just encourage more to stay out altogether.

At their current rate, which has been an average monthly decrease of about 0.2% nationally over the past 12 months, that shouldn't be very worrying. There was a time prices were falling more than 10 times that per month, back in 2009. A diminished decrease like this is hardly going to undermine the balance sheets in the short to medium term.

I don't think you can seriously believe that is a valid comparison to a firesale.

Potatoeman

Cody Pomeray wrote: »

At their current rate, which has been an average monthly decrease of about 0.2% nationally over the past 12 months, that shouldn't be very worrying. There was a time prices were falling more than 10 times that per month, back in 2009. A diminished decrease like this is hardly going to undermine the balance sheets in the short to medium term.

I don't think you can seriously believe that is a valid comparison to a firesale.

That depends on if its continuous. You would be in a better position if you had a large drop and a small continuous increases.

Cody Pomeray

No it would be seriously bad - it would be major trouble for the banks in meeting their provisioning requirements.

They can't tell the regulator "sorry, our securities are inadequate, but look sure at least they're going up". That's not how accounting standards operate. That "large drop" would necessitate a "large recapitalisation". There are just no two ways about that.

Anyone who thinks there should be a big sell-off and also thinks they can avoid a big recap is kidding themselves.

Potatoeman

Cody Pomeray wrote: »

No it would be seriously bad - it would be major trouble for the banks in meeting their provisioning requirements.

They can't tell the regulator "sorry, our securities are inadequate, but look sure at least they're going up". That's not how accounting standards operate. That "large drop" would necessitate a "large recapitalisation". There are just no two ways about that.

Anyone who thinks there should be a big sell-off and also thinks they can avoid a big recap is kidding themselves.

Pretending the assets they have are worth more just delays this and the recovery of those assets.
As long as the mortgages they gave out are preforming the value of the asset is not a problem.

gaius c

creedp wrote: »

I'm not advocating for house price reductions or increases .. I'm simply making the point that it would not be appropriate to go turfing a whole generation of home owners out on the road when alternative approaches which involved them stayng in their homes are possible ... as I said I'm not advocating for wholesale write downs. Its like a lot of other issues . its seems people you are either black or white on an issue, in this case you either pay up in full now or you get turfed out .. is there any alternative that doesn't involve turfing people out of there homes when they are genuinely trying to cope and will make good their commitments albeit over a longer timeframe or maybe by giving up equity in their homes to be realised down the road.

The whole tone of this discussion seems to be I wasn't stupid enough to buy a house during the bubble and therefore the thickos who did are now fair game for a kicking so I can buy at a massively reduced price .. sorry the purely unadulterated 'market price'.

Bet you don't have the same opinion of tenants who cannot or will not pay their rent?

Cody Pomeray

Potatoeman wrote: »

Pretending the assets they have are worth more just delays this

No offence but this is one of those generic, pointless kicking the can comments.

I've given you a credible way of addressing the arrears issue, either answer it with something of substance or suggest something logical yourself, ideally something that doesn't involve a major bank recapitalisation tbh....

gaius c

Cody Pomeray wrote: »

At their current rate, which has been an average monthly decrease of about 0.2% nationally over the past 12 months, that shouldn't be very worrying. There was a time prices were falling more than 10 times that per month, back in 2009. A diminished decrease like this is hardly going to undermine the balance sheets in the short to medium term.

I don't think you can seriously believe that is a valid comparison to a firesale.

I know you're just trolling but please stop being so lazy about it. Continuous 0.2% decreases will mean that a new mortgagee's LTV is actually increasing the minute they buy the house.

Cody Pomeray

gaius c wrote: »

Continuous 0.2% decreases will mean that a new mortgagee's LTV is actually increasing the minute they buy the house.

So?

The purpose of the illustration was as part of a comparison with the sustained periods where we were seeing m-o-m reductions in excess of 10 times that amount. The pace of contraction has fallen, and the banks are in no immediate danger as regards asset quality,not least because they are maintaining a floor in house prices.

You can't have it both ways. There can't be a floor in house prices AND an ongoing property crash. Sorry, pick one and stick to it.

Potatoeman

Cody Pomeray wrote: »

No offence but this is one of those generic, pointless kicking the can comments.

I've given you a credible way of addressing the arrears issue, either answer it with sodmething of substance or suggest something logical yourself, ideally something that doesn't involve a major bank recapitalisation tbh....

Debt for equity swaps for struggling homeowners.
NAMA was setup to take these bad assets off the banks balance sheet. Trying to make a profit off these will not really be possible without continuing the problem that got us here.
Without reaching the bottom there wont be a recovery. We are just delaying things.
People seem to be blind to simple facts. Earlier someone was comparing prices in London to Dublin. London has a pop of 8mil.

creedp

gaius c wrote: »

Bet you don't have the same opinion of tenants who cannot or will not pay their rent?

What do you mean .. that I would get a kick out of kicking enants out on the street?

If a landlord owns a property with a mortgage and can't pay the mortgage because the tenant won't pay his rent presumably you would advocate that the bank take the house and then tell the tenant to carry on regardless.

Cody Pomeray

Potatoeman wrote: »

Debt for equity swaps for struggling homeowners.

I've no idea if you are suggesting a Debt for Equity swap or just repeating what I said... I suggested debt for equity swaps as a possible solution earlier.

That won't satisfy people who oppose putting a 'floor' in the market... debt for equity swaps, by definition, keep people in homes they cannot afford.

Most people are fine with that because most of them can see the bigger picture.

What we're seeing in this thread is a clamor at the first rung at the bottom of the property ladder, where some people want the State to help them get on the property ladder at the expense of the wider economy.

Property Madness 2.0.

Potatoeman

Cody Pomeray wrote: »

I've no idea if you are suggesting a Debt for Equity swap or just repeating what I said... I suggested debt for equity swaps as a possible solution earlier.

That won't satisfy people who oppose putting a 'floor' in the market... debt for equity swaps, by definition, keep people in homes they cannot afford.

Most people are fine with that because most of them can see the bigger picture.

What we're seeing in this thread is a clamor at the first rung at the bottom of the property ladder, where some people want the State to help them get on the property ladder at the expense of the wider economy.

Property Madness 2.0.

Debt for equity swaps are fine as long as they are managed properly and not just handed out. This means the homeowner will pay more in the long run if they need this and is limited to a % of the property. So it cant be abused and is not available for those that cant make even the minimum payments

Putting an artifical floor on the property market just delays the inevitable decline and forces people to wait before buying into a declining market. You seem to think people should overpay because those that bought during the bubble overpaid more.

Cody Pomeray

Potatoeman wrote: »

Debt for equity swaps are fine as long as they are managed properly and not just handed out. This means the homeowner will pay more in the long run if they need this and is limited to a % of the property. So it cant be abused and is not available for those that cant make even the minimum payments

Putting an artifical floor on the property market just delays the inevitable decline

One of the major functions of a debt equity swap is to put a stay on house price contractions.

Nevertheless, this is hardly relevant, clearly support for debt equity swaps can be common to both sides. I doubt some of the others here would agree with debt equity swaps, though.

Potatoeman

Cody Pomeray wrote: »

One of the major functions of a debt equity swap is to put a stay on house price contractions.

Nevertheless, this is hardly relevant, clearly support for debt equity swaps can be common to both sides. I doubt some of the others here would agree with debt equity swaps, though.

I only support it under certain circumstances and believe that it should cost the borrower more in the end to discourage fraud.
I dont think its practical to let people stay in houses they will never afford.

On house prices. The average Dublin house was 10k in 1970 then jumped to 30k in 1980, 70k in 1990, 250k in 2000 and 420k in 2005.
The peak was insane and even with prices falling 50% from peak they are still exponentially inflated.

Cody Pomeray

Potatoeman wrote: »

On house prices. The average Dublin house was 10k in 1970 then jumped to 30k in 1980, 70k in 1990, 250k in 2000 and 420k in 2005.
The peak was insane and even with prices falling 50% from peak they are still exponentially inflated.

Even if that were real house prices, which it isn't, it would be irrelevant. The market is entitled to its peaks and troughs so long as it enjoys public support and operates within the law.

Potatoeman

Cody Pomeray wrote: »

Even if that were real house prices, which it isn't, it would be irrelevant. The market is entitled to its peaks and troughs so long as it enjoys public support and operates within the law.

I got those prices from a dept of finance graph back in '08 also they are Dublin as a whole. Look at any figures for house prices overthe last 30-40 years and it's clear we had bubble before 2000. It wasmanageable until 2000 when it became a colossal inevitable problembut there was already a bubble in the 90's. Houses doubled in 00'sbut had already tripled in the 90's.

Edit: Here it is http://irish-property-bubble.blogspot.ie/2007/03/dublin-house-prices-1970-2005.html

gaius c

creedp wrote: »

What do you mean .. that I would get a kick out of kicking enants out on the street?

If a landlord owns a property with a mortgage and can't pay the mortgage because the tenant won't pay his rent presumably you would advocate that the bank take the house and then tell the tenant to carry on regardless.

Nice try at avoiding the point I made and trying to respond to one I didn't make. Let's have a look at what you said.

creedp wrote: »

I'm simply making the point that it would not be appropriate to go turfing a whole generation of home owners out on the road

i.e. not paying your mortgage should be no bar to you staying in the house.
However, it's implicit in the first quote that you don't feel the same about tenants who don't pay their way. You obviously feel that they should move out and find accommodation within their means and I do agree with you but you have the classic mortgage holder's bias in that you think that only tenants should be evicted from properties they are not paying for.

gaius c

Potatoeman wrote: »

Debt for equity swaps are fine as long as they are managed properly and not just handed out.

They are also fine if the value of the equity doesn't go below 0. That's not such a safe assumption anymore.

It's not really in bank's interests to go for debt-equity swaps because they already own 100% of the house until you pay it back in full. Why should they commit to unprojectable profits or losses at an unknowable future date?

Cody Pomeray

Potatoeman wrote: »

I got those prices from a dept of finance graph back in '08 also they are Dublin as a whole. Look at any figures for house prices overthe last 30-40 years and it's clear we had bubble before 2000. It wasmanageable until 2000 when it became a colossal inevitable problembut there was already a bubble in the 90's. Houses doubled in 00'sbut had already tripled in the 90's.

Edit: Here it is http://irish-property-bubble.blogspot.ie/2007/03/dublin-house-prices-1970-2005.html

I said they're not real house prices.

Your own link says they're not real house prices.

They are not real house prices.

Potatoeman

Cody Pomeray wrote: »

I said they're not real house prices.

Your own link says they're not real house prices.

They are not real house prices.

I'm open to correction post figures.

Potatoeman

gaius c wrote: »

They are also fine if the value of the equity doesn't go below 0. That's not such a safe assumption anymore.

It's not really in bank's interests to go for debt-equity swaps because they already own 100% of the house until you pay it back in full. Why should they commit to unprojectable profits or losses at an unknowable future date?

It would have to be state funded which is fine as long as they cabget the money back including the interest.

Cody Pomeray

Potatoeman wrote: »

I'm open to correction post figures.

You're the one making the assertion. You think you can just come up with just any old statement on house prices and then suggest someone else supply the house prices? Sorry, that's not how it works. It's a tangent I don't even care about, I'm just saying it's only the real prices that matter.

ezra_pound

Cody Pomeray wrote: »

You're the one making the assertion. You think you can just come up with just any old statement on house prices and then suggest someone else supply the house prices? Sorry, that's not how it works. It's a tangent I don't even care about, I'm just saying it's only the real prices that matter.

Agree absolutely.

Tayto cheese and onion are horribly overpriced. In the early eighties they were under 10p. By the mid nineties they were around 30p. Now in 2013 a packet costs near on a euro. Definitely overpriced in unreal terms!

creedp

gaius c wrote: »

Nice try at avoiding the point I made and trying to respond to one I didn't make. Let's have a look at what you said.

i.e. not paying your mortgage should be no bar to you staying in the house.
However, it's implicit in the first quote that you don't feel the same about tenants who don't pay their way. You obviously feel that they should move out and find accommodation within their means and I do agree with you but you have the classic mortgage holder's bias in that you think that only tenants should be evicted from properties they are not paying for.

How much an hour do you charge for the psychology assessment?

By the way while you are assessing me can you tell me if I have advocated that people should be left in their houses while refusing to pay their mortgage? I seem to recollect I have reiterated on a number of occasions that I don't support general write downs but instead want to see some arrangements put in place to assist mortgage holders to hold onto their houses while continuing to pay what they can. I've never said they shouldn't have to give up equity in their houses or park part of the debt for a period of time or some other arrangement that is mutually satisfactory to the lender in response to that arrangement being put in place.

Going back to the tenant issue, if the tenant leaves he is not saddled with negative equity and can source other accommodation at more reasonable rates which means he won't continue to build up debt trying to finance accommodation that is not affordable. My understanding also is that rental rates have dropped significantly since the bubble burst which is the opposite to that experienced by mortgage holders unless they are lucky enough to have a tracker. Even if you have a tracker you will still be saddled with significant negative equity hanging around your neck and having to pay that back as well as paying rent. So comparing mortgage holder losing their house and a tenant being evicted for not paying their rent is not comparable in most cases.

Anyway carry on judging people and parceling them into your neat little world of mortgage holders lovers/tenant haters with no middle of the road position possible. Its much more entertaining.

gaius c

Potatoeman wrote: »

It would have to be state funded which is fine as long as they cabget the money back including the interest.

State has no business "investing" in the property market.

Scofflaw

Cody Pomeray wrote: »

Potatoeman wrote:

I'm open to correction post figures

You're the one making the assertion. You think you can just come up with just any old statement on house prices and then suggest someone else supply the house prices? Sorry, that's not how it works. It's a tangent I don't even care about, I'm just saying it's only the real prices that matter.

Just to be sure - there may be a communication issue here. When Cody says they're not "real" house prices, he means that they're not adjusted for inflation, not all in 2001-euro-values, say. He does not mean they're not genuine prices.

Some of the house price inflation in those figures, therefore, is actual inflation - money being worth less, rather than house prices going up.

This is Irish house prices adjusted for inflation - in this case, the price is in 2011 euros:



The graph is also from 2011, I'm afraid.

cordially,
Scofflaw

Potatoeman

Cody Pomeray wrote: »

You're the one making the assertion. You think you can just come up with just any old statement on house prices and then suggest someone else supply the house prices? Sorry, that's not how it works. It's a tangent I don't even care about, I'm just saying it's only the real prices that matter.

Ok from the cso
new second hand
1980 34924 . 31751
1990 81624 . 76817
2000 205753 . 225081
2010 247515 . 296130

2012 230267 . 320728

It seems to reflect the same bubble levels pre 2000.

Edit: spacing not good on my phone. :-(

Potatoeman

Scofflaw wrote: »

Just to be sure - there may be a communication issue here. When Cody says they're not "real" house prices, he means that they're not adjusted for inflation, not all in 2001-euro-values, say. He does not mean they're not genuine prices.

Some of the house price inflation in those figures, therefore, is actual inflation - money being worth less, rather than house prices going up.

This is Irish house prices adjusted for inflation - in this case, the price is in 2011 euros:



The graph is also from 2011, I'm afraid.

cordially,
Scofflaw

Thanks for the info. There still seems to be a bubble before 2000.

Cody Pomeray

The simple fact of a price increasing is not indicative of a bubble surely. I think you have to look at rental income and the User cost of capital in conjunction with house prices to determine a bubble.

Anyway, compare that graph to the one you were posting earlier. Big difference, that's my point.

Potatoeman

Cody Pomeray wrote: »

The simple fact of a price increasing is not indicative of a bubble surely. I think you have to look at rental income and the User cost of capital in conjunction with house prices to determine a bubble.

Anyway, compare that graph to the one you were posting earlier. Big difference, that's my point.

There is clearly a huge jump from the mid 90's on. We know that cheap credit played a large part in this but it does not justify house prices remaining high. You could extrapolate an average price from the charts above to see where things should be under normal growth rates.

maryishere

ezra_pound wrote: »

Tayto cheese and onion are horribly overpriced. In the early eighties they were under 10p. By the mid nineties they were around 30p. Now in 2013 a packet costs near on a euro.

But you can buy a bag of 6 or 12 or 18 in a supermarket for around 25 cents per bag or whatever. In terms of wages thats good value. Years ago a pint that took 40 minutes to earn now takes 20 minutes for the same person. And property is very cheap in some parts of the country ( not Dublin, where it will fall more ). In many parts of the country you could buy a new or almost new apartment, built to modern standards, for the equivalent of a years gross wages. ( check the cso for average earnings). Not many countries you could do that in.

Cody Pomeray

Potatoeman wrote: »

There is clearly a huge jump from the mid 90's on. We know that cheap credit played a large part in this but it does not justify house prices remaining high.

I'm not "justifying" high house prices nor do I think anyone needs to "justify" them. The reason there is a floor in the Irish property prices is to protect the banks' balance sheets. If, as a consequence of that a person cannot buy the house they'd like to buy, I don't think anybody else should actually care. The last time we cared and intervened for the sake of property rights, as opposed to interfering out of financial prudence, we got into a whole lot of trouble.

I don't even know what point you're getting at by referencing high house prices.

What matters is the current situation. According to the Central Bank, house price-to-rent ratios and price-to-income ratios have returned to their long-run average value, or even gone below their long term values, the latter of which seems to indicate an undervaluation of house prices at the moment.





http://www.centralbank.ie/publications/Documents/04RT13.pdf

Potatoeman

Cody Pomeray wrote: »

I'm not "justifying" high house prices nor do I think anyone needs to "justify" them. The reason there is a floor in the Irish property prices is to protect the banks' balance sheets. If, as a consequence of that a person cannot buy the house they'd like to buy, I don't think anybody else should actually care. The last time we cared and intervened for the sake of property rights, as opposed to interfering out of financial prudence, we got into a whole lot of trouble.

I don't even know what point you're getting at by referencing high house prices.

What matters is the current situation. According to the Central Bank, house price-to-rent ratios and price-to-income ratios have returned to their long-run average value, or even gone below their long term values, the latter of which seems to indicate an undervaluation of house prices at the moment.





http://www.centralbank.ie/publications/Documents/04RT13.pdf

Well the unstable increase in house prices is what caused the mess we are in now. Many people that bought could not afford what they bought and others that could afford then cant now (lets not even go into pensions,kids and college fees)
The value of property to banks is dependant to what they fully own. NAMA took the developer properties and the actual asset value of a preforming loan does not matter as long as the payments are being made.
The rental market was skewed by high house prices and the government effectively setting a price minimum floor.

Cody Pomeray

Sorry but those points are like randomly generated messages that one could apply to any discussion of the house price debate.

They don't actually engage with the evidence above that house prices don't appear to be overpriced, based on long run averages going back almost 20 years before the boom.

Using household income statistics, the data actually suggests house prices were undervalued by 12% in 2012.