The Economy : Any one else starting to get very worried ?

KomradeBishop

Jawgap wrote: »

Yes, I know - but here's the thing - they're paying jobs whether the money is coming from foreign banks or the government revenue and that's money going into the local community, impacting local money supply and local prices :rolleyes:

We're in deflation right now - the opposite of inflation.

lawlolawl

smash wrote: »

That's nonsense. How can they not afford where they're living if they can quite easily pay €1,400 or €1,500 a month?

That just means that they can afford their rent and fair play to them.

The mortgage they are getting will just have to fit the size of whatever they can save of what's left.

Captain Chaos

lawlolawl wrote: »

That just means that they can afford their rent and fair play to them.

The mortgage they are getting will just have to fit the size of whatever they can save of what's left.

Rents in Dublin are now a good bit higher than monthly mortgage repayments yet the banks are telling the same people they cannot afford to take out a mortgage.

It's a joke.

_Brian

I think the new government are actually in for a tough ride.. As of the news this morning exchequer funding is running a meager €500m ahead of expected tax take..

However, pay restoration is looming and this could be a problem. Haddington road left 2016 as the year when pay restoration would start, this will see the public sector pay bills rise by 10%+. Scenes like what we're seeing with the Luas drivers where they are looking for 25%+ pay rises will be more common. The unions are flexing their power, they know that the ordinary Union member is feeling down and they will capatilise on all the talk of extra money in the government bank account.

1,000's of new guards to be taken on (badly needed)
Guards, nurses, teachers all looking for the end of the two tier pay system.
Luas, Irish Bus, Irish Rail all expected to achieve substantial pay increases.

A deal has been struck to eliminate the USC, thats ~€4bln out of the tax take straight away. More increases in social welfare likely, pensions, childrens allowances all due to increase. Water charges, which were a way of widening our tax take to get security into government funding has been abolished.

The US has been talking about stopping the multinationals using Ireland as a tax haven. I could see a new president Trump going out of his way to punish American companies for setting up here and so some would leave and fewer would come. And its why they are here, when you see companies like Intel Ireland actually registered business is in the Cayman Islands that is only for a tax dodge.

The recovery we have seen to date is built on two fickle things, exports based on a weak euro - any wobble on world markets would collapse exports instantly. Multinationals wanting to be here - wouldn't take much for the American government to construct a scenario where being in Ireland is much less favorable than it currently is, something they have promised to do during their election speeches.

So the seeds have already been set, the country plans to spend more and more and take in less and less while the revenue streams the government is relying on are far from secure.

_Brian

Captain Chaos wrote: »

Rents in Dublin are now a good bit higher than monthly mortgage repayments yet the banks are telling the same people they cannot afford to take out a mortgage.

It's a joke.

I'd imagine alot of that has to do with the banks true outlook for our financial stability. Yes you can afford the mortgage now but maybe another downturn just around the corner and the bank are protecting themselves..

maudgonner

Captain Chaos wrote: »

Rents in Dublin are now a good bit higher than monthly mortgage repayments yet the banks are telling the same people they cannot afford to take out a mortgage.

It's a joke.

The standard for affordability of a mortgage should be much more stringent than what you can afford in rent though.

It absolutely needs to include a reasonable amount of stress testing. It should take into account that circumstances change as you get older, maybe have a family - the percentage of your income that is available to service a mortgage can change dramatically. And there are significant costs that come with being a home owner that don't apply to renters.

While the gap at the moment may be larger than makes sense, that's not always going to be the case. I'd much prefer that banks were cautious now, rather than end up bailing people out again in 10 years time.

Jawgap

KomradeBishop wrote: »

We're in deflation right now - the opposite of inflation.

That doesn't mean there aren't areas of the country where some goods and services are increasing in price - not everything in the 'basket' is in declining in price

KomradeBishop

Jawgap wrote: »

That doesn't mean there aren't areas of the country where some goods and services are increasing in price - not everything in the 'basket' is in declining in price

Yet deflation drags everything down over time - that's one of the reasons why economists regard it as a dire state for an economy to be in long-term - and long-term deflation is where we're headed, absent a huge EU-backed boost in fiscal spending.

Jawgap

KomradeBishop wrote: »

Yet deflation drags everything down over time - that's one of the reasons why economists regard it as a dire state for an economy to be in long-term - and long-term deflation is where we're headed, absent a huge EU-backed boost in fiscal spending.

Yes, thank you for the macro-economic lecture - but if you read the exchange in full you'd see I was referring to the potential impact a relatively large building project might have on the local economy of modest provincial town :rolleyes:

smash

maudgonner wrote: »

The standard for affordability of a mortgage should be much more stringent than what you can afford in rent though.

It absolutely needs to include a reasonable amount of stress testing. It should take into account that circumstances change as you get older, maybe have a family - the percentage of your income that is available to service a mortgage can change dramatically. And there are significant costs that come with being a home owner that don't apply to renters.

While the gap at the moment may be larger than makes sense, that's not always going to be the case. I'd much prefer that banks were cautious now, rather than end up bailing people out again in 10 years time.

Were mortgage holders bailed out? I must have missed that one.

Tsipras

kneemos wrote: »

The same self defeatest crap every time things look vaguely better.Some people ain't happy unless they're wallowing in misery.

Is that you Bertie?

cowboyBuilder

I don't live in Ireland anymore, but I'm not surprised, I always knew there would be another economic boom and another crash.

lawlolawl

smash wrote: »

Were mortgage holders bailed out? I must have missed that one.

There were far fewer repossessions of houses than there should have been, only a handful really and mostly by sub-prime lenders.

And banks offered to restructure payments for thousands of people who ran into difficulty.

smash

lawlolawl wrote: »

There were far fewer repossessions of houses than their should have been, only a handful really and mostly by sub-prime lenders.

And banks offered to restructure payments for thousands of people who ran into difficulty.

Restructuring isn't a big bail out and it wasn't hugely widespread either. The bank still get their money and in most cases it was just a term extension which makes sense. Why would a bank repossess a house and sell it for circa 50% of the outstanding mortgage when the owner is willing to pay the full amount over an extended term?

lawlolawl

smash wrote: »

The bank still get their money...

And rightly so.

When did paying your debts or facing the consequences become a bad thing?

smash

lawlolawl wrote: »

And rightly so.

When did paying your debts or facing the consequences become a bad thing?

I never said it was a bad thing. You're the one proposing large scale repossession which would in turn leave the banks not being able to recoup their money.

GekkePrutser

Like the OP I also don't really believe that everything is OK now. So many companies are only here because of the tax breaks. It seems a really fragile base for an economy to me, fully dependent on the whims of politicians. Now would be the time to diversify and modernise and I see none of that happening. It's really worrying when so much of the economy depends on exploiting an artificial loophole.

Meanwhile looking on the streets things are far from normal, there's still so many closed down shop fronts and bargain pound stores as fillers. The retail economy has not adapted to the uptake in ecommerce at all, in fact much less so than in the rest of Europe. Over there most traditional retail chains have web shops and integrate with their retail stores (eg order online and pick up instore) but here the best way to order online is from the UK. I order most of my significant purchases online and I can't remember the last time I used an Irish webshop. The few that are there are not competitive on neither price, product range nor delivery speed and most are just UK franchises anyway.

Meanwhile the social pressure to 'get on the property ladder' is back on and house prices are already higher again than in the rest of Europe while having less facilities. My gf really wants to buy a house again but I won't, I want to be able to move abroad if my job ever gets cut. It's not like there's many jobs in the IT sector here in Galway and I don't want to settle for the dole if that happens.

To me all this 'good news' sounds like wishful thinking and trying to get another boom started. It's like no lessons were learned from the last crash at all. Meanwhile the old problems like the Euro stability being dependent on weak countries are not solved at all and a huge refugee crisis is looming.

I'm certainly keeping my wallet closed anyway. Don't want to be pessimistic but I guess I've just become sceptical.

CelticRambler

If it's good enough for the British, the Irish will be looking for the same. :rolleyes:

In both countries, someone had the great idea of re-branding the family home as "an investment" instead of somewhere to live. I was living in the UK at the time this spiralled out of control, watching ordinary people with a bit of spare cash (or a cheap loan) buy a house with no objective other than to re-sell it in the shortest possible time, usually with nothing more than a fresh coat of paint.

Then I (briefly) returned to Ireland and saw that ye'd taken on the same bad habit, and not only that, but anyone with a decent garden built another house in it (sometimes two :eek: ). That was back in 2004, and as a (relative) outsider at that stage, it certainly sounded like the "begrudgers" predicting an almighty crash were taking sense. So I left and moved to a country where it's damn near impossible to make a profit from flipping property. And decent houses are affordable for single-income families.

I'm not getting "very worried" about Ireland's economy overheating and inevitable crash - but only because it'll have a limited effect on me. If I can time it right, I just might have enough cash saved to buy a nice appartment for my children at a discount, just in time for them to go to UCD. :P

lawlolawl

smash wrote: »

I never said it was a bad thing. You're the one proposing large scale repossession which would in turn leave the banks not being able to recoup their money.

I'm didn't propose anything of the sort. I merely pointed out that repossession hadn't taken place on the scale it by rights should have and borrowers were given alternative methods to pay when you started going on about how mortgage holders hadn't been bailed out.

What did you expect? Their debts to be completely written off? For them to be given the cash from somewhere so that they could meet their repayments?

frozenfrozen

should I get a loan to be buying rounds in the pub? that way people will think I'm sound and offer great investment opportunities?

smash

GekkePrutser wrote: »

My gf really wants to buy a house again but I won't, I want to be able to move abroad if my job ever gets cut. It's not like there's many jobs in the IT sector here in Galway and I don't want to settle for the dole if that happens.

Maybe there's not in Galway, but there's plenty on the East coast!

smash

lawlolawl wrote: »

I'm didn't propose anything of the sort. I merely pointed out that repossession hadn't taken place on the scale it by rights should have and borrowers were given alternative methods to pay when you started going on about how mortgage holders hadn't been bailed out.

What did you expect? Their debts to be completely written off? For them to be given the cash from somewhere so that they could meet their repayments?

I didn't expect anything of the sort so I don't know where you're picking that up from or where you're going with it. My statement was that there was no big bailout for mortgage holders as you allude to. There was a small percentage who had their mortgages restructured, and rightly so because in doing this nobody lost out. If there had been the level of repossessions that you say should have happened, the banks have been left short and the home owners would have been left homeless. What happened, is what should have happened.

lawlolawl

smash wrote: »

My statement was that there was no big bailout for mortgage holders as you allude to.

Why would there have been? Most people were still meeting their mortgage repayment obligations and the ones who weren't were given repayment options to avail of and the few who didn't engage with the banks or make a decent attempt at repayment were turfed out, as they should have been.

smash

lawlolawl wrote: »

Why would there have been?

You tell me... You're the one who alluded to it by stating "I'd much prefer that banks were cautious now, rather than end up bailing people out again in 10 years time.".

lawlolawl wrote: »

Most people were still meeting their mortgage repayment obligations and the ones who weren't were given repayment options to avail of and the few who didn't engage with the banks or make a decent attempt at repayment were turfed out, as they should have been.

That's what I've been stating for the past few posts!

lawlolawl

smash wrote: »

You tell me... You're the one who alluded to it by stating "I'd much prefer that banks were cautious now, rather than end up bailing people out again in 10 years time.".

That's all well and good except for the fact that i didn't post that at all.

I think you and i are actually agreeing with each other in a roundabout way.

diomed

I haven't got a letter yet from Bank Or Ireland telling me to buy a new car. :mad:

mahoganygas

smash wrote: »

My statement was that there was no big bailout for mortgage holders as you allude to. There was a small percentage who had their mortgages restructured, and rightly so because in doing this nobody lost out. If there had been the level of repossessions that you say should have happened, the banks have been left short and the home owners would have been left homeless. What happened, is what should have happened.

I completely disagree.
There are far too many distressed mortgage holders, who should have been forced to hand over their properties a long time ago. This is a huge cost for our banks, which in turn is a huge cost to the taxpayer.
There is no appetite to force people out of their homes. Which is a fine and honorable sentiment when you look at that statement in isolation. But how many of those mortgage holders were downright reckless in their borrowing decisions?

Today's first time buyers suffer as a result. They have to pay inflated lending rates to make up for the loss making mortgages on our bank's books. Part of this is due to tracker mortgages and part of it is due to non-performing loans.

If these properties were seized (at a loss to the bank) at least they could be put back on the market and help the supply issue. It's called collateral for a reason.

The younger generations are paying for the mistakes of the celtic tiger generation. I'd call that a bailout.

GekkePrutser

smash wrote: »

Maybe there's not in Galway, but there's plenty on the East coast!

I know but if I'd buy a house in Galway that'd be no good to me, it's way too far to commute to Dublin. I travel a lot for work to Eastern Europe and the Dublin drive is a big hassle for that too.

And the reason most IT companies are there is the tax loopholes which I don't really trust as a stable base.

By the way now that I think of it those trips to Eastern Europe are one of the things that make me pessimistic about here. Because there they are really moving forward and it's obvious to see. They're not struggling to modernise, they are driving it

smash

lawlolawl wrote: »

That's all well and good except for the fact that i didn't post that at all.

I think you and i are actually agreeing with each other in a roundabout way.

I think we are, but I got you confused with maudgonner who stated there'd been a previous bailout. My bad.

diomed

Property supplements, life coaches, New York shopping, garden design, re-mortgaging the re-mortgage, €100k weddings, €7 sandwiches.
The good old days.

lawlolawl

diomed wrote: »

I haven't got a letter yet from Bank Or Ireland telling me to buy a new car. :mad:

I remember getting a phone call from them offering me 20k of a personal loan maybe 6 months after i started my very first full time job. The had already given me a credit card with a 1800 limit as well. I wasn't even on great money at the time.

The lady on the phone was a bit surprised that i had no interest at all in putting myself in debt for about as much money as i was making in a year, before tax.

RADIORAT

YEP.

Another estate agent just opened in my town.

HERE WE GO AGAIN.

The merry-go-round starts starts to turn. Round and Round she goes and where or when she stops nobody knows.

smash

GekkePrutser wrote: »

I know but if I'd buy a house in Galway that'd be no good to me, it's way too far to commute to Dublin.

I'm not suggesting buying in Galway and working in Dublin. But surely if you're worried about work in Galway then working and living just 3 hours away is a lot better than packing in and moving abroad?

GekkePrutser wrote: »

I travel a lot for work to Eastern Europe and the Dublin drive is a big hassle for that too.

Well Dublin does have an airport...

GekkePrutser wrote: »

And the reason most IT companies are there is the tax loopholes which I don't really trust as a stable base.

No, they're in Ireland for 2 reasons. one is the tax, the other is the skill set. The reason they're in Dublin is because it's where the majority of the skill set are located.

mahoganygas

mahoganygas wrote: »

I completely disagree.
There are far too many distressed mortgage holders, who should have been forced to hand over their properties a long time ago. This is a huge cost for our banks, which in turn is a huge cost to the taxpayer.
There is no appetite to force people out of their homes. Which is a fine and honorable sentiment when you look at that statement in isolation. But how many of those mortgage holders were downright reckless in their borrowing decisions?

Today's first time buyers suffer as a result. They have to pay inflated lending rates to make up for the loss making mortgages on our bank's books. Part of this is due to tracker mortgages and part of it is due to non-performing loans.

If these properties were seized (at a loss to the bank) at least they could be put back on the market and help the supply issue. It's called collateral for a reason.

The younger generations are paying for the mistakes of the celtic tiger generation. I'd call that a bailout.

Complete nonsense the banks charge the interest rate that the market will bare, or that they are let away with, no matter how robust the banks. finances are.

you are also contradicting yourself sized and sold at a lost to the banks is still a loss to the bank and by you logic a loss to the tax payer.

That does not mean there were not some messers who should have never been given a mortgage in the first place.

There seems to be a lot of people annoyed that the banks/society was preventing them for getting a bargain in the downturn. Although I do know someone who had done spectacularly well with a property they got in 2012.

diomed

diomed wrote: »

Property supplements, life coaches, New York shopping, garden design, re-mortgaging the re-mortgage, €100k weddings, €7 sandwiches.
The good old days.

How are people doing this with the mortgage rules in place?

smash

mahoganygas wrote: »

I completely disagree.
There are far too many distressed mortgage holders, who should have been forced to hand over their properties a long time ago. This is a huge cost for our banks, which in turn is a huge cost to the taxpayer.

There has been a steady decline in mortgage arrears since 2013. This is good news but the bottom line is that mortgage arrears figures don't relate in any way to negative equity figures. Negative equity is still huge and if owners had handed over their properties then the banks would have lost out a hell of a lot more than they did through restructuring the debt.

diomed

mariaalice wrote: »

How are people doing this with the mortgage rules in place?

I said "the good old days". You didn't finish reading my post.

mahoganygas

mariaalice wrote: »

Complete nonsense the banks charge the interest rate that the market will bare, or that they are let away with, no matter how robust the banks. finances are.

Example:

Banks borrow money to finance existing loans: 5%
They lend money to new mortgage holders: 4%

The difference is margin.

When the cost of existing loans are higher then the bank either reduces the margin (bad for taxpayer) or increases new lending rates (bad for first time buyer).

Right now both are happening.
Costs of existing loans need to come down.
There is no political will to seize non-performing properties. That is the issue I have.

JustTheOne

JustTheOne wrote: »

Rabble rabble.

FG's spectacular achievement in the last administration was to divert yet more fortunes towards Denis O'Brien, in the face of what a Tribunal has said about his previous dealings with that party.

If they achieved anything else, it was incidental to this main aim, a goal that has survived various administrations, has seen him linked to the real party boss, Phil Hogan again and again etc.

Some day we'll find out why they were just so determined to do right by him again and again.

mahoganygas

mariaalice wrote: »

you are also contradicting yourself sized and sold at a lost to the banks is still a loss to the bank and by you logic a loss to the tax payer.

The alternative is for the mortgage holders to hold onto these properties (at a loss to the bank) until there is some magical upturn in the market.

That is speculation on behalf of the banks. Back to the old days. No thanks.

mahoganygas

mahoganygas wrote: »

The alternative is for the mortgage holders to hold onto these properties (at a loss to the bank) until there is some magical upturn in the market.

That is speculation on behalf of the banks. Back to the old days. No thanks.

There has been a up turn in the market a very large one in some areas.

I am not saying there were not some idiots out there, there was a woman on the radio... in her thirties still calling her parents mammy and daddy, some where in Tipperary or the like who had paid for house she could not afford with the help of the same mammy and daddy and now wanted someone else to sort it out for her.

Cee-Jay-Cee

The Rape of Lucretia wrote: »

Anyone else starting to get nervous about all these 'positive' economic notices ?

No because my pay us still lower than it was in 2010, prices in general have all risen so there may be a boom but not in my fcuking house.

smash

mahoganygas wrote: »

The alternative is for the mortgage holders to hold onto these properties (at a loss to the bank) until there is some magical upturn in the market.

That is speculation on behalf of the banks. Back to the old days. No thanks.

A steady repayment on a marginal loss making mortgage is a hell of a lot better than a repossession and subsequent resale at a 50% write-off.

mahoganygas

mariaalice wrote: »

There has been a up turn in the market a very large one in some areas.

The market has been very volatile for the past few years. Every quarter we are getting valuations which are way out of kilter with economist's predictions. Both up and down.

The market needs to settle and stay settled before we can make any judgement.

Personally I would be very reluctant to buy a house in Dublin in the next 6 months.

maudgonner

smash wrote: »

Were mortgage holders bailed out? I must have missed that one.

There's have been write downs, not that many, granted.

But there have also been a huge number of people allowed to remain in their homes, despite not meeting repayments for years on end, violating the terms of their mortgage. So yeah, I'd term that a bail-out.

smash

maudgonner wrote: »

There's have been write downs, not that many, granted.

But there have also been a huge number of people allowed to remain in their homes, despite not meeting repayments for years on end, violating the terms of their mortgage. So yeah, I'd term that a bail-out.

Would you rather they were turfed out and contributed to the homeless crisis instead?

mahoganygas

smash wrote: »

Would you rather they were turfed out and contributed to the homeless crisis instead?

One could argue that it alleviates the homeless crisis.

The house doesn't disappear. It's sold on/rented out.

maudgonner

smash wrote: »

Would you rather they were turfed out and contributed to the homeless crisis instead?

For everyone 'turfed out', a house or apartment would become available for renters/other buyers.

I'd rather that they were treated the same as people who were not relying on banks to fund their houses.

lawlolawl

smash wrote: »

Would you rather they were turfed out and contributed to the homeless crisis instead?

People turfed out of the €1200 mortgage a month house they bought and can no longer afford aren't automatically excluded from the €600 a month rental place 15 minutes down the road.

Idbatterim

The thing most worrying me is the size of the Irish Times property supplement these days. Getting bigger and more salubrious by the week.

The Irish Times is releasing a monthly article on the crane count in Dublin, the one from yesterday...


http://www.irishtimes.com/business/commercial-property/number-of-cranes-in-use-over-dublin-city-centre-rises-to-43-1.2633384

Number of cranes in use over Dublin city centre rises to 43
Recovery in economy will lead to further developments being started in months ahead

Wed, May 4, 2016, 07:10
Justin Comiskey

two things are massive 1) the central bank keeping a firm lid on the lending cap (as they are meant to be independent) there isnt much in theory the snakes in government should be able to do about this. Despite the fact they would love prices to explode again

2) Massive resistance from IBEC etc to ridiculous wage claims and a return to social partnership...

In terms of housing etc, let the government look into costs etc, the alternative is to simply allow more to be borrowed, indebting people even further and letting those snakes off the hook...