Daft.ie website- snapshot from 2005

Eight Ball

It will happen again, you can bet on it.

Eight Ball

mike65 wrote: »

The madness is already back in my opinion.

South Dublin apartments with 1 bedroom for at least 200,000.

Yeap and is being pushed by media outlets. I even heard a guest on newstalk few weeks back and I quote "If you don't get onboard in the next 5-6 months the train will already have left the station" This was in regards to property prices.... Seriously :pac:

Ush1

Caliden wrote: »

If you bought a house to raise a family in then what does it matter if you're in negative equity?

Negative equity only matters if you plan on selling the house.

If you bought a house with the intent on making a quick profit then you got a harsh dose of 'there's no such thing as a sure thing'

You will be paying for it for longer as the mortgage was bigger.

humbert

Caliden wrote: »

If you bought a house to raise a family in then what does it matter if you're in negative equity?

Negative equity only matters if you plan on selling the house.

If you bought a house with the intent on making a quick profit then you got a harsh dose of 'there's no such thing as a sure thing'

Negative equity wont matter but the recession associated with it might.

DeanAustin

Eight Ball wrote: »

Yeap and is being pushed by media outlets. I even heard a guest on newstalk few weeks back and I quote "If you don't get onboard in the next 5-6 months the train will already have left the station" This was in regards to property prices.... Seriously :pac:

Yeah heard that woman alright. Wasn't she in the property game so, heaven forbid, she might have been pushing an agenda? The media do seem to be pushing the property market alright.

Was looking at the Japanese trend on house prices from their crash in the 90's and the trend in the first 5 years is very similar to ours (property prices nosedived by 50%-60%). Their property prices have declined by another 10% over the last 15 years or so so I wonder is that an indicator of where our property prices will head or are the drivers of their crash different to ours?

Hannibal Smith

So funny reading the hindsight posts. Every ones an expert economist when it comes to looking back on the boom. For every report and negative comment that was made about house prices and the economy at the time. ..there was a 'moaning' and 'cribbing' retort from Bertie and at the same time prices were just going up and up.

So if your going to blurt on with your expert knowledge. ..at least try and remember the whole picture.

UCDVet

UCDVet wrote: »

It's called 'hindsight' and it tends to be 20/20.

Lots of people, including top economists and investors believed, in good faith, that the housing market was stable. And it wasn't just an Irish thing, the same thing happened all over the world.

Why would someone pay half a million euro for a house in Cavan or Mullingar? Well....

1.) Prices were increasing. If you didn't pay half a million now, you'd have to pay 600k next year and 750k the following the year.

2.) It's not a flat cost....because it's such a solid investment, the 500k you pay now, is probably going to be worth 900k when you go to sell it. In fact, if you believe housing prices are going to continue to increase, it makes the most sense to buy the most expensive house you can afford.

3.) That's what *they cost*. The first time I went to a restaurant in Dublin - I paid three euro for one glass of coke. Refills were not included. I know, for a fact, the actual cost of a glass of coke is less than 20p. Why would I pay 3 euro for something that I know costs a tiny fraction of that? Because it *costs* 3 euro, and I want one. If you want a house and all of the houses cost X, you'll either *not* get a house, or pay X.

Most people that made money in the real estate boom weren't smart, they were lucky. Most people that lost money in the real estate bust weren't dumb, they were unlucky. But regardless, it's really not fair to look at things now and say, 'Ohh yeah, *obviously* that was a bad decision'.

Instead of economics, make it about science. Take Einstein, he was the top of his field, and using the best information he had, he thought Quantum Physics was 'wrong'. Now quantum mechanics is taught as part of any university-level science curriculum. This is like calling my Grandmother stupid because, in 1950, she agreed with Einstein, a leading expert in science, on a scientific issue she didn't actually understand. But she trusted the experts and took a stance many experts shared.

Trouble is with the 'hindsight' argument is that you could use it about any foolish decision. Plenty of us could see it at the time.

1) You really thought house prices in Cavan were going to be 750K for any length of time? You couldn't see that this was a bubble and not sustainable? In an underpopulated country with huge amounts of new house/apartment construction? A country whose economy had suddenly skyrocketed beyond all recognition in a very short time? No alarm bells?

2) See point number one. Dublin is not London and Mullingar certainly isn't London. Why would anyone have thought prices in Ireland would keep going up and up? Why would that have happened? It happens in London because it's a hugely overcrowded city which has had a very good economy for years, thousands of homegrown companies, foreign investors buying to let...and even in London, prices will have to come down eventually. To imagine that your 3 bed semi in Cavan will ever be worth millions of euro is just delusional, honestly.

3) Well, you had another option, didn't you? Not to buy that glass of Coke. If nobody bought 3 euro glasses of Coke, the price would come down. You could have gone to the supermarket and bought a bottle of it or you could have just gone without. If Coke went up to 10 euro a glass, would you still buy it because that's what it costs, even though the cost is not in line with anything else and certainly not in line with your salary? Would you start borrowing money from other people so you could afford your daily glass of Coke?

Menas

mariaalice wrote: »

Think of this, how much are the repayments on a 300K mortgage with a tracker verses a 150K mortgage with the current interest rate?, as Salaries have gone down houses are still probably about 5 time income almost the same as the boom so what's changed.

I would love to see the figures behind this.
ie, if you bought a 300k house on a 25 year tracker mortgage (say, 1% above ECB rate) during the boom...what would your total repayable amount be?
Then to compare that with buying a 150k house at standard interest rates today.

The figures would be interesting. Of course if the ECB start increasing rates (which they will likely do from late 2014 onwards) then each increase hurts the former more than the latter?

Anyone here clever enough to work out the figures?

Dyr

I rang an estate agents yesterday about a gaff, and your man was like "oh yeah, we were just offered the asking price on that property this morning, I'll just get you the agents mobile number"

yeah don't bother ya skid mark. The more things change...

johnnyskeleton

dd972 wrote: »

The Friday property supplement used to be bigger than the Indo it came with, the luckiest, jammiest generation of Irish people who ever lived were the baby boomers who didn't have the balls the emigrate, stayed and bought some piddling 3 Bed Semi in Santry or Glasnevin in the 70's then sold up pre-crash.

The Indo property section? How gauche. I suppose someone has to buy the McMansions dotted across the country.

The real deal was the Irish Times Thursday supplement (natch!) with all the €10m ballsbridge gaffs that developers bought and sold to each other.

FlashD

Caliden wrote: »

If you bought a house to raise a family in then what does it matter if you're in negative equity?

Because years later (when the house should have been paid off and is secure in your ownership) you're still paying a whopping big mortgage which takes a huge slice of your salary every month.....money you should be using for other things, like putting your kids through college or retirement savings.

Jeez...it's not rocket science!

sbsquarepants

€445k for a 2 bed apartment in inchicore:eek:

Hannibal Smith

Amalia Green Soul wrote: »

Trouble is with the 'hindsight' argument is that you could use it about any foolish decision. Plenty of us could see it at the time.

1) You really thought house prices in Cavan were going to be 750K for any length of time? You couldn't see that this was a bubble and not sustainable? In an underpopulated country with huge amounts of new house/apartment construction? A country whose economy had suddenly skyrocketed beyond all recognition in a very short time? No alarm bells?

2) See point number one. Dublin is not London and Mullingar certainly isn't London. Why would anyone have thought prices in Ireland would keep going up and up? Why would that have happened? It happens in London because it's a hugely overcrowded city which has had a very good economy for years, thousands of homegrown companies, foreign investors buying to let...and even in London, prices will have to come down eventually. To imagine that your 3 bed semi in Cavan will ever be worth millions of euro is just delusional, honestly.

3) Well, you had another option, didn't you? Not to buy that glass of Coke. If nobody bought 3 euro glasses of Coke, the price would come down. You could have gone to the supermarket and bought a bottle of it or you could have just gone without. If Coke went up to 10 euro a glass, would you still buy it because that's what it costs, even though the cost is not in line with anything else and certainly not in line with your salary? Would you start borrowing money from other people so you could afford your daily glass of Coke?

No you did not forsee what was going to happen. No one could forsee what was going to happen with Leman Brothers, how quickly it would crumble and how it would effect the rest of us. That is total arrogant nonsense

Valetta

FlashD wrote: »

Because years later (when the house should have been paid off and is secure in your ownership) you're still paying a whopping big mortgage which takes a huge slice of your salary every month.....money you should be using for other things, like putting your kids through college or retirement savings.

Jeez...it's not rocket science!

A mortgage won't get paid off any quicker just because the house isn't in negative equity.

Jeez....

constance tench

'Soft landing'....was that something to do with carpets?

DeanAustin

FlashD wrote: »

Because years later (when the house should have been paid off and is secure in your ownership) you're still paying a whopping big mortgage which takes a huge slice of your salary every month.....money you should be using for other things, like putting your kids through college or retirement savings.

Jeez...it's not rocket science!

But if you agreed a price that you could afford in say 2008, your take-home pay is pretty much the same now as it was then you're not really any worse off are you?

R P McMurphy

Amalia Green Soul wrote: »

Trouble is with the 'hindsight' argument is that you could use it about any foolish decision. Plenty of us could see it at the time.

1) You really thought house prices in Cavan were going to be 750K for any length of time? You couldn't see that this was a bubble and not sustainable? In an underpopulated country with huge amounts of new house/apartment construction? A country whose economy had suddenly skyrocketed beyond all recognition in a very short time? No alarm bells?

2) See point number one. Dublin is not London and Mullingar certainly isn't London. Why would anyone have thought prices in Ireland would keep going up and up? Why would that have happened? It happens in London because it's a hugely overcrowded city which has had a very good economy for years, thousands of homegrown companies, foreign investors buying to let...and even in London, prices will have to come down eventually. To imagine that your 3 bed semi in Cavan will ever be worth millions of euro is just delusional, honestly.

3) Well, you had another option, didn't you? Not to buy that glass of Coke. If nobody bought 3 euro glasses of Coke, the price would come down. You could have gone to the supermarket and bought a bottle of it or you could have just gone without. If Coke went up to 10 euro a glass, would you still buy it because that's what it costs, even though the cost is not in line with anything else and certainly not in line with your salary? Would you start borrowing money from other people so you could afford your daily glass of Coke?

People saw prices steadily increase for a decade and a half so probably thought it was not gonna go on forever but might get in and hope for a soft landing.

The houses in Cavan are kind of in a different category as these were not principal residences and were holiday homes with section 23 attached which was viewed as a good investment tool. People buying these with a free marina berth and boat thrown in could probably afford to take a hit. Or else are seriously screwed now

.jacksparrow.

FlashD wrote: »

Because years later (when the house should have been paid off and is secure in your ownership) you're still paying a whopping big mortgage which takes a huge slice of your salary every month.....money you should be using for other things, like putting your kids through college or retirement savings.

Jeez...it's not rocket science!

See, this is an example of how the media can get into peoples heads and convince them of something that just isn't true!


Negative equity is all we here!

FlashD

FlashD wrote: »

Because years later (when the house should have been paid off and is secure in your ownership) you're still paying a whopping big mortgage which takes a huge slice of your salary every month.....money you should be using for other things, like putting your kids through college or retirement savings.

Jeez...it's not rocket science!

That all depends if you have a tracker mortgage of say 1% or a variable mortgage of 4.5%

Menas

R P McMurphy wrote: »

People saw prices steadily increase for a decade and a half so probably thought it was not gonna go on forever but might get in and hope for a soft landing.

The houses in Cavan are kind of in a different category as these were not principal residences and were holiday homes with section 23 attached which was viewed as a good investment tool. People buying these with a free marina berth and boat thrown in could probably afford to take a hit. Or else are seriously screwed now

I remember driving through virgina in cavan during the boom and seeing developments with 'only 45 minutes from dublin' signs on them.
These signs were commonplace on developments throughout the midlands unfortunately. I suppose they were true if you had a helicopter.

johnnyskeleton

Hannibal Smith wrote: »

No you did not forsee what was going to happen. No one could forsee what was going to happen with Leman Brothers, how quickly it would crumble and how it would effect the rest of us. That is total arrogant nonsense

Here's a thread from thepropertypin about Lehman Brothers collapsing - two months before they actually did:

http://www.thepropertypin.com/viewtopic.php?f=19&t=10455

Here is a thread with excerpts from Morgan Kelly's various writings, predicting 70% falls of gains from peak, banking collapse and the length of time it woud take etc:

http://www.thepropertypin.com/viewtopic.php?f=19&t=60874

These are just two examples of many that predicted exactly what was going to happen. More generally, many people could predict in broad terms what might happen.

Whether any one individual did or did not predict what might or would happen is a moveable feast, and I'm sure many people (including myself) did not anticipate the scale of what happened. But it is simply incorrect to say that no one could foresee the collapse.

Going Forward

bluewolf wrote: »

Still no harm looking back on it, and I don't think OP's "ouch" is the personal slight some seem to take it as

Thanks; I posted it not to be clever or malicious, nor as some excuse for posting tales of "oneupmanship".

It can be very easy to forget just how mad things were at the time, and there is a tendency for those who were not detrimentally affected by the "boom" to gloss over it, or ultimately even forget the specifics- the crazy prices of houses. (And the bulls*it in the ads!)

And I get a bit nervous when I hear things like Noonan's reported plan:

The Government is eager to kick-start the construction industry again, getting workers off the dole while also dampening any hint of a new property bubble by providing more family homes in city areas.

I think its worth checking back every so often to ground ourselves, thats all.

Valetta

johnnyskeleton wrote: »

Here's a thread from thepropertypin about Lehman Brothers collapsing - two months before they actually did:

http://www.thepropertypin.com/viewtopic.php?f=19&t=10455

Here is a thread with excerpts from Morgan Kelly's various writings, predicting 70% falls of gains from peak, banking collapse and the length of time it woud take etc:

http://www.thepropertypin.com/viewtopic.php?f=19&t=60874

These are just two examples of many that predicted exactly what was going to happen. More generally, many people could predict in broad terms what might happen.

Whether any one individual did or did not predict what might or would happen is a moveable feast, and I'm sure many people (including myself) did not anticipate the scale of what happened. But it is simply incorrect to say that no one could foresee the collapse.

They were just guessing, the same as all the others who "predicted" the opposite.

johnnyskeleton

DeanAustin wrote: »

But if you agreed a price that you could afford in say 2008, your take-home pay is pretty much the same now as it was then you're not really any worse off are you?

The difficulty is that it was kinda like a game of musical chairs. People bought houses not to live in for the rest of their lives, but to live in for a few years to then sell with the increase in prices and use the positive equity as a deposit on a bigger house or a house closer to where they wanted to live. The people who bought houses in Cavan, for example, who work in Dublin, for example, did not intend to live there for the rest of their lives so feel hard done by in that regard and their temporary situation of commuting long distances has become a permanent one.

jr22

johnnyskeleton wrote: »

The difficulty is that it was kinda like a game of musical chairs. People bought houses not to live in for the rest of their lives, but to live in for a few years to then sell with the increase in prices and use the positive equity as a deposit on a bigger house or a house closer to where they wanted to live. The people who bought houses in Cavan, for example, who work in Dublin, for example, did not intend to live there for the rest of their lives so feel hard done by in that regard and their temporary situation of commuting long distances has become a permanent one.

Living in Cavan and working in Dublin. Dopes. Zero sympathy.

.jacksparrow.

johnnyskeleton wrote: »

The difficulty is that it was kinda like a game of musical chairs. People bought houses not to live in for the rest of their lives, but to live in for a few years to then sell with the increase in prices and use the positive equity as a deposit on a bigger house or a house closer to where they wanted to live. The people who bought houses in Cavan, for example, who work in Dublin, for example, did not intend to live there for the rest of their lives so feel hard done by in that regard and their temporary situation of commuting long distances has become a permanent one.

Hmmm that's life really. Buying a house to make a profit on is something you shouldn't really gamble on when buying your first home.

FlashD

Valetta wrote: »

A mortgage won't get paid off any quicker just because the house isn't in negative equity.

Jeez....

You're wrong, it will.

If the market value of a house is 100k and you are paying a mortgage of 200k (negative equity 100k) ....then it will take longer.

Jeez....

desertcircus

Valetta wrote: »

They were just guessing, the same as all the others who "predicted" the opposite.

No, they weren't. They were making predictions based on freely available data. House prices reached a level utterly divorced from reality and anyone willing to think critically about the narrative being pushed had an abundance of evidence that the entire Irish housing bubble was a gigantic pyramid scheme with no foundation. There was no good reason why a terraced house in Cavan should cost ten times median annual salary, and it wasn't "guessing" to come to that conclusion.

DeanAustin

johnnyskeleton wrote: »

Here's a thread from thepropertypin about Lehman Brothers collapsing - two months before they actually did:

http://www.thepropertypin.com/viewtopic.php?f=19&t=10455

Here is a thread with excerpts from Morgan Kelly's various writings, predicting 70% falls of gains from peak, banking collapse and the length of time it woud take etc:

http://www.thepropertypin.com/viewtopic.php?f=19&t=60874

These are just two examples of many that predicted exactly what was going to happen. More generally, many people could predict in broad terms what might happen.

Whether any one individual did or did not predict what might or would happen is a moveable feast, and I'm sure many people (including myself) did not anticipate the scale of what happened. But it is simply incorrect to say that no one could foresee the collapse.

There were people who predicted it to be fair but there were also lots of people who predicted a soft landing. You'll always get a wide variety of predictions on these sorts of issues. For example, there are people who predicted the ice caps melting by 2015 or nuclear war wiping out the human race by 2000. In amongst a wide variety of opinions, most people will listen to the majority view which was that we would, at worst, have a soft landing.

It's okay to say "Ah 300k in Cavan, sure twas obviously mad". My parents bought for about 7k in the 70s and they were told they were mad too. Turns out they weren't because their house is worth substantially more now. We'd seen property rise in value over a long period of time (albeit spectacularly during the Celtic Tiger years). We'd also never seen a property crash in our history like we've had and those factors, coupled with a culture of having to own your own house, contributed to what we can now see was madness with people buying anything just to get onto the ladder.

It's easy to be wise after the event. I'm one of the lucky ones who didn't buy in the boom. But as someone said earlier, that was as much luck on my behalf as it was bad luck for a lot of people who did buy.

.jacksparrow.

FlashD wrote: »

You're wrong, it will.

If the market value of a house is 100k and you are paying a mortgage of 200k (negative equity 100k) ....then it will take longer.

Jeez....

But the mortgage you took out hasn't changed, you still have to pay it back regardless of the value of your house.

Please tell me you're just on a wind up now? Although its a pretty bad one if true.