Opinions on when the next property crash may happen

Villa05

handlemaster wrote:

2 wrongs ? what is the wrong ?

Runaway inflation in house prices and rents

OwlsZat

It was funny to hear Eddie Hobbs on the radio talking up the 217 trillion global debt and an inevitable collapse. Once bitten I guess.

handlemaster

OwlsZat wrote: »

It was funny to hear Eddie Hobbs on the radio talking up the 217 trillion global debt and an inevitable collapse. Once bitten I guess.

a now eddie .. do people still listen to him

Wanderer78

Some believe that some of the debt isn't as big as problem as others believe, as debt and money are interchangeable, they are basically the same thing, I.e. no debt would mean no money supply. But I would agree with somebody like Steve keen that the main problem is private debt levels globally, are simply too high and unsustainable, this will need to be addressed eventually.

The_Conductor

Wanderer78 wrote: »

Some believe that some of the debt isn't as big as problem as others believe, as debt and money are interchangeable, they are basically the same thing, I.e. no debt would mean no money supply. But I would agree with somebody like Steve keen that the main problem is private debt levels globally, are simply too high and unsustainable, this will need to be addressed eventually.

In an Irish context- the Oireachtas recently had a hearing, and sought submissions from the Central Bank- on car leases- which are viewed as far more problematic than residential mortgage debt. Some officers from the Department of Finance consider car finance to be the next disaster on our horizon- but funnily enough- residential mortgages aren't featuring on the current agenda.

Wanderer78

The_Conductor wrote: »

In an Irish context- the Oireachtas recently had a hearing, and sought submissions from the Central Bank- on car leases- which are viewed as far more problematic than residential mortgage debt. Some officers from the Department of Finance consider car finance to be the next disaster on our horizon- but funnily enough- residential mortgages aren't featuring on the current agenda.

i think you could be right, bill black has been speaking about this problem in relation to his own country, america. when will we ever learn!

minimumprice

Hey guys, the boom in the property market is a natural process and the bubble will happen again. I don't have time to stop the next one but I am working on a project to establish fair house prices on the market forever which will prevent the bubble from appearing. Be careful - the purpose of the bubble is artificial and it's made up by the politicians and top businessmen in Ireland to make more money on us. We may have to do an economical revolution to send a bullet in their miserable head

Cyrus

The_Conductor wrote: »

In an Irish context- the Oireachtas recently had a hearing, and sought submissions from the Central Bank- on car leases- which are viewed as far more problematic than residential mortgage debt. Some officers from the Department of Finance consider car finance to be the next disaster on our horizon- but funnily enough- residential mortgages aren't featuring on the current agenda.

I can’t for the life of me see what the big issue with car leases is

Cyrus

Cyrus wrote: »

I can’t for the life of me see what the big issue with car leases is

I had to look it up, this goes into the issue a little: https://www.ft.com/content/0e651206-0ee1-11e7-a88c-50ba212dce4d

Sounds like the subprime bubble all over, although on a smaller scale.

Cyrus

Sergio Georgini wrote: »

I had to look it up, this goes into the issue a little: https://www.ft.com/content/0e651206-0ee1-11e7-a88c-50ba212dce4d

Sounds like the subprime bubble all over, although on a smaller scale.

Much much smaller though surely , or at least most of the risk on the car manufacturers, as they may be left with over valued assets at the end of a lease .

Even if someone can’t keep up their payments the most they are going to be on the hook for is in the thousands

I can’t see how this is taking up government time over the property market

The_Conductor

minimumprice wrote: »

Hey guys, the boom in the property market is a natural process and the bubble will happen again. I don't have time to stop the next one but I am working on a project to establish fair house prices on the market forever which will prevent the bubble from appearing. Be careful - the purpose of the bubble is artificial and it's made up by the politicians and top businessmen in Ireland to make more money on us. We may have to do an economical revolution to send a bullet in their miserable head

Honestly- thats up there with some of the biggest conspiracy theories there are out there- thats from someone who majored in Mathematical Science and Applied Statistics.

Bubbles do recur- but its more a reflection of the herd principle and human psychology- than politicians and top business men having some master plan to burn the rest of the populace (most of whom don't ever read past the executive summary of economic reports).

Predicting bubbles, and/or uses business men and politicians as scapegoats- is not a science (predicting bubbles- though it is a bit of self-fulfilling prophecy)- and its ascribing intelligence to business men and politicians- that they quite simply don't have.

Ray Palmer

minimumprice wrote: »

Hey guys, the boom in the property market is a natural process and the bubble will happen again. I don't have time to stop the next one but I am working on a project to establish fair house prices on the market forever which will prevent the bubble from appearing. Be careful - the purpose of the bubble is artificial and it's made up by the politicians and top businessmen in Ireland to make more money on us. We may have to do an economical revolution to send a bullet in their miserable head

It actually isn't and that is what many people don't understand. Name the boom and bust in Ireland other than 2007. You won't be able to because it didn't happen. A bubble is not a natural inevitability it is when something is wrong. Rising house prices does not mean a bubble.
As for a correction, this is the correction. Houses were undervalued and people complaining they can't go up because people can't afford them are under the assumption that they should be able to. Ireland has changed home ownership rates were the highest in the world here. When we started bring the country in line with the rest of Europe this was a thing that was going to change and permanently
Gone are the days where all you could buy was a 3 bed semi because we needed different housing stock for the other changes to society. Some of the houses that are around are too big for people now and will be split up the same way georgian houses were when they were single household and too big for modern lifestyles. There is so much more going on than people are considering.
It is like people are thinking in 2 dimensions only. Even the people who bought during rising prices versus those who bought after the crash are being consider very simplistically. Consider somebody who bought in 2004 versus 2010, 2004 got a tracker mortgage and didn't rent for 6 years. 2010 had 6 years of rent, variable rate mortgage but bought for less. Over the course of the mortgage 2010 will actually have paid more and will be finished 6 years later. Mortgage payments put into a pension and get more tax breaks. The years of negative equity a distant dream.

The_Conductor

Cyrus wrote: »

I can’t for the life of me see what the big issue with car leases is

Between 80-88% of new car sales are financed with Leases/HP/PCP finance.
The Competition and Consumer Protection Commission (CCPC) have setup a new section on their website to try and educate the public on the topic.

Villa05

The_Conductor wrote:

Between 80-88% of new car sales are financed with Leases/HP/PCP finance.

Is it considered as bad as sub prime or is it that the banks are so fragile after the last bust this is the straw that breaks the camels back

The_Conductor wrote:

Honestly- thats up there with some of the biggest conspiracy theories there are out there- thats from someone who majored in Mathematical Science and Applied Statistics.

With respect every action taken by Government has made the situation worse. At what point do you say this is a Government plan rather than an unintended consequence.

There is considerable evidence to backup a claim that Government policy is to drive up house prices regardless of cost to society and the economy

OwlsZat

Villa05 wrote: »

Is it considered as bad as sub prime or is it that the banks are so fragile after the last bust this is the straw that breaks the camels back

With respect every action taken by Government has made the situation worse. At what point do you say this is a Government plan rather than an unintended consequence.

There is considerable evidence to backup a claim that Government policy is to drive up house prices regardless of cost to society and the economy

There is a massive conflict of interest with politicians being homeowners and residential landlords, but there's also a huge conflict of interest with the Healy-Rae's and their council plant hire. The Irish political system is poor at best, plenty have very thinly veiled interests.

Cyrus

The_Conductor wrote: »

Between 80-88% of new car sales are financed with Leases/HP/PCP finance.
The Competition and Consumer Protection Commission (CCPC) have setup a new section on their website to try and educate the public on the topic.

I would well believe it but so what ?

CorkonianBoy

To me, one of the interesting things about boom and bust cycles is that, if measured over say a 10-15 year period of time - for example, the average period of home ownership - the peaks and troughs get smoothed out as if they never happened.  Of course, they did happen and many either got hurt badly or made a killing depending on when they invested.  So it seems that there does need to be a way to moderate the booms and busts.  For example, higher stamp duty appears to lengthen ownership periods and reduces speculation.

Researchers such as Case-Shiller have shown that, over long periods of time, residential real estate prices do not perform much better than general inflation.  In comparison over the same periods, stock markets perform substantially better.

Among asset classes, real estate is one of the most illiquid.  And many people are extremely over-weighted in real estate, mainly due to home ownership.  In my opinion, no one should never buy a house that is too big - or too expensive - than your needs because you never know when you may need to liquidate.  Same with financing.  Just because some bank is willing to lend you 110% of your purchase price, doesn't mean that you should take the money.  It is a primary axiom in real estate investing that higher leverage = higher risk.

So go ahead and buy a house with some - but not all - of your liquid savings and take out a reasonable mortgage that you can afford on your existing salary.  Put the rest of your cash in the stock market or your retirement account and leave it there.  Follow these rules and hopefully, you will still have that house in 20 years, along with a decent pension to look forward to.

Villa05

CorkonianBoy wrote:

So go ahead and buy a house with some - but not all - of your liquid savings and take out a reasonable mortgage that you can afford on your existing salary. Put the rest of your cash in the stock market or your retirement account and leave it there. Follow these rules and hopefully, you will still have that house in 20 years, along with a decent pension to look forward to.

Great in theory but most buy a house out of need and are consquently exposed to unnecessay peaks and troughs of a dysfunctional market. Out of control rents push people into buying when they may ordinarily hold back due to high prices

rsynnott

The_Conductor wrote: »

In an Irish context- the Oireachtas recently had a hearing, and sought submissions from the Central Bank- on car leases- which are viewed as far more problematic than residential mortgage debt. Some officers from the Department of Finance consider car finance to be the next disaster on our horizon- but funnily enough- residential mortgages aren't featuring on the current agenda.

With the borrowing limits, and some form of stress testing, residential mortgages are much safer than they used to be. Most people aren't taking out mortgages that take every penny they've got, because the rules don't really allow that (assuming that banks are applying them correctly...) Maybe there'll be another crash and people will end up in negative equity, but far fewer people will default than last time. Car loans seem to be far less well-regulated, though.

rsynnott

CorkonianBoy wrote: »

So go ahead and buy a house with some - but not all - of your liquid savings and take out a reasonable mortgage that you can afford on your existing salary.  Put the rest of your cash in the stock market or your retirement account and leave it there. .

While a pension is all very well, putting it into the stock market directly likely isn't very tax efficient. If you have a 3.5% interest mortgage, and you're paying the high rate of tax, then you need to make about 7% on your investment to have 3.5% net profit just to break even with paying it off the mortgage/putting up a bigger deposit instead. This is an optimistic rate of return.

CorkonianBoy

rsynnott wrote: »

CorkonianBoy wrote: »

So go ahead and buy a house with some - but not all - of your liquid savings and take out a reasonable mortgage that you can afford on your existing salary.  Put the rest of your cash in the stock market or your retirement account and leave it there. .

While a pension is all very well, putting it into the stock market directly likely isn't very tax efficient. If you have a 3.5% interest mortgage, and you're paying the high rate of tax, then you need to make about 7% on your investment to have 3.5% net profit just to break even with paying it off the mortgage/putting up a bigger deposit instead. This is an optimistic rate of return.

My point about buying a home and using debt are mainly about 1) the risk of being seriously over-weighted in one asset type - real estate - which is very illiquid and often performs below other types of investments such as tax-deferred retirement accounts and mutual funds, and 2) the excess use of debt which increases risk significantly.  I have seen too many people caught in a jam when the market turns sour or they loose their jobs.  As we have already seen, expect no sympathy from the banks who helped put you in that situation.  Have banks changed enough to stave off another crisis?  Time will tell.

The_Conductor

The_Conductor wrote: »

Between 80-88% of new car sales are financed with Leases/HP/PCP finance.
The Competition and Consumer Protection Commission (CCPC) have setup a new section on their website to try and educate the public on the topic.

And the vast majority will pay no problem.
Anyone not paying the PCP payments loses the car.

there's little to no issue here.

Cyrus

Augeo wrote: »

And the vast majority will pay no problem.
Anyone not paying the PCP payments loses the car.

there's little to no issue here.

Exactly

Nika Bolokov

Ray Palmer wrote: »

It actually isn't and that is what many people don't understand. Name the boom and bust in Ireland other than 2007. You won't be able to because it didn't happen. A bubble is not a natural inevitability it is when something is wrong. Rising house prices does not mean a bubble.
As for a correction, this is the correction. Houses were undervalued and people complaining they can't go up because people can't afford them are under the assumption that they should be able to. Ireland has changed home ownership rates were the highest in the world here. When we started bring the country in line with the rest of Europe this was a thing that was going to change and permanently
Gone are the days where all you could buy was a 3 bed semi because we needed different housing stock for the other changes to society. Some of the houses that are around are too big for people now and will be split up the same way georgian houses were when they were single household and too big for modern lifestyles. There is so much more going on than people are considering.
It is like people are thinking in 2 dimensions only. Even the people who bought during rising prices versus those who bought after the crash are being consider very simplistically. Consider somebody who bought in 2004 versus 2010, 2004 got a tracker mortgage and didn't rent for 6 years. 2010 had 6 years of rent, variable rate mortgage but bought for less. Over the course of the mortgage 2010 will actually have paid more and will be finished 6 years later. Mortgage payments put into a pension and get more tax breaks. The years of negative equity a distant dream.

I take it you were very very young in 2005 and don't recall the 80s at all.

ToxicPaddy

The biggest issue with the past property bubble was banks offering mortgages to those who really couldn't afford them. This drive up demand and thus prices.

Granted those borrowing the money should have been better educated about the consequences and had more restraint. I suppose human nature is it's own worst enemy.

If these individuals had not been offered mortgages, demand wouldn't have been as high and if banks had been forced to play by the rules, a lot of the property bubble wouldn't have been created.

Global finance did play a major part also, but a big chunk of the Irish issue was based around people borrowing way more than they could afford to buy try and compete in a stampede for over priced in demand property.

Just cause a bank offers you a 500k mortgage, doesn't mean you need or should want a 500k mortgage, especially when you're earning 50k a year..

Granted this is a very simplified version of events..

123shooter

traveller0101 wrote: »

Properties are in short supply and salaries are going up at the moment. There's a lot of people living at home saving their money so they'll be able to pay a bigger deposit. House prices are being driven up by bidding wars by people with growing salaries and big deposits available.



I don't see that stopping really.


Brexit could mean more companies and people coming to Dublin. If that happens, there will be more demand. The supply probably won't have changed dramatically so that will bump the price.


Brexit might mean no new companies (other countries get those companies). Demand is already high so it will remain high so the price will still increase.


If supply can out grow the demand then the prices will level off but I personally doubt there can be enough supply in areas that people want to live (Close to the city centre).


There is some panic in the market where houses not in an ideal location are going for more than they are worth. I think those houses will grow into their values over time though so not necessarily a bad purchase.



I don't see a recession happening any time soon either.


I am not sure if this is a positive or negative post

Positive but a dream.

Companies only come to Ireland for tax reasons. Population too small. Too far away from end market for manufacturing. Logistics problems.

Country has tourism and agriculture and no other real economy other than multinationals set up here for tax reasons which benefits will soon be wiped out by EU. Multinationals will then fly.

Example.......You are a multinational or any company.....why would you set up on the arsend of Europe with a tiny population unless the government built your premises and didnt tax you on profits? You would simply go where you need to be.

So your bust/recession will happen when some other sh*te starts the ball rolling and things do not look healthy for the near or long term.

mloc123

123shooter wrote: »

Positive but a dream.

Companies only come to Ireland for tax reasons. Population too small. Too far away from end market for manufacturing. Logistics problems.

Country has tourism and agriculture and no other real economy other than multinationals set up here for tax reasons which benefits will soon be wiped out by EU. Multinationals will then fly.

Example.......You are a multinational or any company.....why would you set up on the arsend of Europe with a tiny population unless the government built your premises and didnt tax you on profits? You would simply go where you need to be.

So your bust/recession will happen when some other sh*te starts the ball rolling and things do not look healthy for the near or long term.

How so?

123shooter

mloc123 wrote: »

How so?

Because they want business tax harmonization throughout the EU so Irelands low rate to multinationals will disappear and Ireland will do what the EU tells them so.

Graham

123shooter wrote: »

Because they want business tax harmonization throughout the EU so Irelands low rate to multinationals will disappear and Ireland will do what the EU tells them so.

Mod Note: Back to the subject of accommodation & property please.

123shooter

crow_bar wrote: »

nothing happened in the housing market in the eighties which was remotely comparable to what happened from 2007 to 2012 , that was a multi generational event , a severe downturn might happen again in the next ten to twenty years but what happened a few years ago was a perfect storm , we also wildly overshot the bottom due to the level of dread which gripped the nation - globe

This is quite true and actually in the UK until the mid 1970's not many people purchased a house and there wasn't really a property market as we know it today.

The continuing relaxing of borrowing rules with banks and the banking sector seeing away to make money encouraged the property market to grow mainly from people who should never have got involved in buying a house to begin with.

The property market is there to suit banks and governments who like to use it to give people a 'feel good' factor and thats probably why they never tax the profits you make on your house (if there is any real profit).

But most property buyers are locked in to becoming an employer/slave to the banks for 25 years and paying at least 5 times more than the purchase price of the house they bought and making lots of dosh for the banking sector while taking huge risks with their hard earned cash.