100% Mortgage Anyone

Lord Nikon

lomb wrote:

can u explain that nueromancer?

What do you want me to explain? We're talking about Ireland here, not Wales. Wales is completely different, i) there is high unemployment due to the mines closing down, ii) Ireland doesn't have a high unemployment rate, infact it's not as bad as it was in the eighties.

It also bares to think why anyone would want to live in Machynlleth, with high unemployment, high mortgage rates, 200k poor area council areas.

CiaranC wrote:

Dont you think a 4 bed is a touch unrealistic? Do you plan to have loads of kids or what?

Not unrealistic at all, I'd like a decent sized house to start a family in. Have you noticed the amount of 2 bed and 3 bed townhouses sprouting up all over the place ie. Lucan, Celbridge, Newcastle?

Would you prefer to start a family in a 2 bed townhouse. Do you want to live in a 3 bed townhouse with 3 kids? Does anyone? 2 & 3 bed townhouses are good for two things i). Renting ii). Starter homes for FTB's, I emphasise the word "starter"

I bet there are more 2, 3 bed townhouses being built than there are semi's being built. Hell, they take up less roomand are cheaper to build.

Imposter

garred wrote:

The house prices are at a level that are too high so investment in overseas property is huge. Maybe wrong but I suspect every country are seeing house prices rise...France, S Africa, Turkey, Bulgaria, Italy, (even Iraq) etc all from foreign investors. So in essence what people seem to be doing now is stop buying here and buy elsewhere. This should cause prices here to stabilise while the problem of increasing prices moves to other countries. Obviously this does'nt apply to ftb's but certainly investors. Prices will stabilise and not fall. As with all the responses, its only my opinion.

Prices for new houses are generally rising with inflation elsewhere. yes there will be some countries where prices are rising more especially countries which are showing strong economical growth.

Most people investing in overseas property though are still caught up in the irish attitude to property. They think everyone wants to own their own home and prices can't go down and must go up. In many cases they also fail to get any independent advice on property in the countries they buy-in.

garred

Imposter wrote:

Most people investing in overseas property though are still caught up in the irish attitude to property. They think everyone wants to own their own home and prices can't go down and must go up. In many cases they also fail to get any independent advice on property in the countries they buy-in.

It's no longer an Irish only attitude, its ripe throughtout Europe. Property expos, web pages, all promoting foreign investment. Talking to a vendor in one of the expos here and he was telling me his schedule. The amount of countries that these expos visit and the demand for property is crazy. What is independant advice? If you were buying a house here what independant advice would you get? You can get financial advise, legal advice, tax advice but there is no-one in any country in the world that will tell you for fact that your property will be a good investment. They can give you their opinion but if you do your home work on an invesment you can make your own decision.

Bye the way, what are the house prices in Austria (say a 3 bed semi) at the mo?

Imposter

garred wrote:

Bye the way, what are the house prices in Austria (say a 3 bed semi) at the mo?

3 bed semis don't exist. Almost all houses are standalone with their own gardens etc. A one family house (3 or 4 beds) with about 500sqm ground, with about 150sqm floorspace, in suburbs of a largish town or city would be about would be about 300k. It really depends on location though.

As a more concrete example a 70sqm apartment (one bed, maybe 2) in one of the suburbs of Linz is about 70-80k. Maybe even up to 100 in one of the more expensive areas. In te city centre you're looking at about 130-140k. Property is quite difficult to sell though as people are content with long term renting as they have to furnish the place (most of the place at least) themselves. There just isn't the same market as in Ireland.

These prices wouldn't be for a new apartment either. They would be a bit more expensive.

homeOwner

MorningStar wrote:

Instead of buying a house that suits their needs they buy more than they need further out as they don't want to buy a small house in a "bad" area. THe bad areas being created further out will come to fruit when the kids become teenagers ,have no services and the parents aren't about becasue they are at work. This will also increase the population

Who are you to tell people what their "needs" are? If a person wants to buy a ten room mansion just for him/her self and they have the money to do it, good luck to them. We live in a capitalist society, some people have more money than others - deal with it!

MorningStar

Imposter wrote:

They think everyone wants to own their own home and prices can't go down and must go up. .

I don't think anybody thinks that. Nobody here has even suggested house prices will just keep going up. People seem to be debating when they will go down and what is making them go up. Are you just going to keep avoiding the direct questions about what you are basing your views on?
You claimed the quality of life in Ireland has gone down but that seemd to be based on lack of knowledge or looking back with rose coloured glasses. I am guessing you are in your early 20's judging by what you have said. It's not a crime it just means you might no really know what was going on here and now you don't live here you may lose touch with what is actually happening.
I know Austria has a bigger population and a higher GNP but what is the average wage and minimum hourly rate. Big factors on house prices.

For those who think investors are taking the market here I think people are pointing out the investors are not investing in ireland but elsewhere. It really does blow a hole in the theory investors are pushing up prices here.

MorningStar

homeOwner wrote:

Who are you to tell people what their "needs" are? If a person wants to buy a ten room mansion just for him/her self and they have the money to do it, good luck to them. We live in a capitalist society, some people have more money than others - deal with it!

I am not saying people should be told what they need it just a reality that peoples' desires are causing a problem. I live with my wife in a three bedroom house with no kids. It could be better used but I can afford it and somebody with kids couldn't. People are buying houses with out enough services just because it's bigger than one with services. They then have to drive everywhere. There is a myth that peolpe can only buy outside the cities IMHO. Most people I know could have afforded to live closer to the city but choose to buy a bigger (larger rooms, garage , extra room) house further out.
The government needs to control what is happening so that peoples' personal desires don't make things worse for all. Schools are needed in some areas and closing in others because there aren't any kids. It's just bad use of the property stock.
The slums of the future are being built now. The kids will go nuts in these areas when they become teenagers and their parents are at work.

homeOwner

MorningStar wrote:

Most people I know could have afforded to live closer to the city but choose to buy a bigger (larger rooms, garage , extra room) house further out.

Yes and that is their right. I live in a 2 bed apt in Dublin. I want to buy a house with a back garden so I can sit outside an enjoy weather like we have had for the past week and I cant do that in an apartment. I have no kids. Are you suggesting I stay where I am because that is all the space i am deemed to need, so as to free up a house for people with kids who need it? I dont understand that.

MorningStar wrote:

The government needs to control what is happening so that peoples' personal desires don't make things worse for all. Schools are needed in some areas and closing in others because there aren't any kids. It's just bad use of the property stock.The slums of the future are being built now. The kids will go nuts in these areas when they become teenagers and their parents are at work.

The government should not be "controlling" anything to do with peoples personal desires. It is not the responsiblility of the government to interfer one way or the other in what people can or cannot buy with their own money as long as it is legal. They should however be tightening up on planning applications and refusing to allow large housing estates to be built without infrastructure such as transport, schools, shops, green areas etc... and ensuring that enough new properties are coming on the market to meet demand.

Honestly your point of view baffles me.

MorningStar

homeOwner wrote:

Yes and that is their right. I live in a 2 bed apt in Dublin. I want to buy a house with a back garden so I can sit outside an enjoy weather like we have had for the past week and I cant do that in an apartment. I have no kids. Are you suggesting I stay where I am because that is all the space i am deemed to need, so as to free up a house for people with kids who need it? I dont understand that.

You can do what you like I don't really mind. I am not going to force you to do anything. What I suggest is you don't allow a ton of unserviced houses to be created and use the current stock of housing more efficiently. I posted up what I think is a good idea already here. It's not like I am suggesting a communist or socialist state I think it should be done through tax incentives and/or penalties. I am not even suggesting a property tax incase you think I am. I 'd be in favour of reduced stamp duty on the grounds of family size.

homeOwner wrote:

The government should not be "controlling" anything to do with peoples personal desires. It is not the responsiblility of the government to interfer one way or the other in what people can or cannot buy with their own money as long as it is legal. They should however be tightening up on planning applications and refusing to allow large housing estates to be built without infrastructure such as transport, schools, shops, green areas etc... and ensuring that enough new properties are coming on the market to meet demand.

Honestly your point of view baffles me.

What do you think the government currently doing? Where can you smoke?What drugs are you allowed take? Can you drink and drive? The idea of stamp duty is a control on people's purcahses as is the fact FTB don't pay stamp duty on houses under a limit. Currently the government is allowing stamp free property to be built to encourage building. I could just keep going on about how the govenrment control people and the prperty market. The point is the government has as one of it's primary duties to protect the citizens. Just because somebody has money doesn't give you the right to screw somebody over. The government should be encouraging best use of exisiting property and controlling the building to ensure people have places to live and that we aren't just stuck with urban sprawl. There is no point in just not allowing places to be built due to lack of services you need to use the existing services and housing stock
The way housing was done in past here relied heavily on the government provided housing which literally decided who got what. The private buyers were under less pressure and able to choose housing which just followed traditional housing and lifestyle.
I think you are reading an extreme view into what I am saying so maybe I am not being clear enough.

homeOwner

MorningStar wrote:

What do you think the government currently doing? Where can you smoke?What drugs are you allowed take? Can you drink and drive?

I am saying they SHOULD NOT be interferring. Although the examples you have given above are a completely different story. In those cases the government is protecting people by preventing passive smoking or people killing other people while driving drunk. They arent telling you you cant smoke or drink. Maybe I am taking you too literally but you wrote the words. I was merely pointing out that the problems with housing isnt people's desire for larger houses or greed, among other things its a lack of planning and abuse of planning by builders and those councillers in the past who took brown paper envelopes to get dodgy planning applications passed, among other things.

MorningStar wrote:

Just because somebody has money doesn't give you the right to screw somebody over.

I am not suggesting that it does.

MorningStar wrote:

The government should be encouraging best use of exisiting property and controlling the building to ensure people have places to live and that we aren't just stuck with urban sprawl. There is no point in just not allowing places to be built due to lack of services you need to use the existing services and housing stock.

I totally agree with you.

MorningStar

homeOwner wrote:

I am saying they SHOULD NOT be interferring. Although the examples you have given above are a completely different story. In those cases the government is protecting people by preventing passive smoking or people killing other people while driving drunk. They arent telling you you cant smoke or drink. Maybe I am taking you too literally but you wrote the words. I was merely pointing out that the problems with housing isnt people's desire for larger houses or greed, among other things its a lack of planning and abuse of planning by builders and those councillers in the past who took brown paper envelopes to get dodgy planning applications passed, among other things.

I actually think there are too many idiots here to not have the government interferring. I am glad they do to be honest. I don't think the examples I have given completely differnt. The govenrment should be stopping people destroying protected buildings as that is the futures history as it is ours. THe prevention of an unsubstinable commuter belt because of people's desire to own a house with a front and back door. I do think greed and desire is making some people want to buy a large house that is unsubstainable. Lack of planning is part of the problem along with people not living in areas already serviced. THere are a lot of people living in big expensive housing in new estates complaining about lack of services and traffic. I think they should take responsibility for their decission and not complain. It's like people who recently moved near Croke Park complaining about the traffic during match days. What do they expect?
We seem to agree there is a problem but not on the all the causes. I agree with the causes you mentioned but I also think there are other causes like people willing to buy in area that require the private car. I made a suggestion earlier that I think will address a number of problems and is more substainable for the future.
Some of my suggestions would actually effect me negatively but I think it fair for current and future generations. On my last road there were a total of 9 people in 7 houses designed to take 21. Meanwhile in an estate in the middle of nowhere a family of 3-4 need two cars to get to jobs and drop kids off at school and commute for 1-2hours each way. It's just maddness and with fuel dwindling that can't keep going on

SkepticOne

I'm very interested in the housing market at the moment. I thought earlier this year that the housing market would peak in 2005 but with this announcement I don't think this will happen.

On the surface it seems like everyone wins:
1. FTBs don't need to worry about a deposit. Win.
2. The increased number of FTBs drive prices up further - property investers and land owners win.
3. More houses will be built - builders win.
4. Existing home owners will see an increase in the value of their homes. Always nice.

Who loses?

The question for me is what more rabbits can be pulled out of the hat to sustain the boom? We have just had the lowest 5 month period of rises at 1.8% over the 5 months and the trend was towards zero growth by the end of the year. Without boosts the boom was clearly running out of steam. In the UK, prices have already started to fall after a long boom.

The 100% mortgages + SSIAs should see continued growth through 2005 and 2006 but what happens after that?

The person who loses, I think, will be the last person to take out a 100% mortgage before the crash. That person will immediately be in negative equity since there isn't the cushion of the deposit. Through out this period more and more properties will be built lessening the problem of undersupply but making a correction more severe should one occur.

The only good thing is that we're unlikely to see an interest rate hike given the state of the euro economy. And the Irish economy is in reasonable shape.

Thomond Pk

homeOwner wrote:

The government should not be "controlling" anything to do with peoples personal desires. It is not the responsiblility of the government to interfer one way or the other in what people can or cannot buy with their own money as long as it is legal.

That is an excellent definition of Me Fein ( excuse the lack of a fada over the first e)

MorningStar

A lot of people seem to be focusing on a crash. It fair enough that people say there is a bubble but there are people saying there isn't a bubble. For one little moment think about one thing what causes a crash? Something actually has to happen other than the prices just keep on going up. What are people saying is going to happen? What is actually going to cause the price to turn around and become cheaper? It doesn't really happen with anything else other than fashion items that prices suddenly drop.
People seem to be suggesting a bubble is just high house prices but there is more to it.

Sceptic one>
1) they still need the deposit and there mortgages are now more.
2) FTB generally only afford the lower end of the market which doesn't instantly mean the whole market increases in price. You get only one section going up in value.
3) More houses being built means more urban sprawl and baddly serviced areas which will be trouble in the future
4) Exisiting home owners have children who can't afford property so stay at home. THis eats into the parents retirement fund.

The government have not pulled out 100% mortgages the banks have. They did it to make more money not to sustain a boom.

ionapaul

Come on now, the banks make the most money during a boom. It is clearly in their (short-term) interests to sustain a boom.

Good point though about people's analysis of the current situation. It seems most commentators now believe there is a 'bubble' - what is interesting is that many seem to accept this but refuse to take the next step and realise that if there is a bubble, the situation is not looking good. Maybe they don't understand exactly what an asset price bubble is? IF there really is a housing market bubble in Ireland, THEN we arn't in such great shape. IF there really is a housing market bubble in Ireland, THEN it is much more likey to be burst than simply 'deflate'. I think that many of the commentators who say 'oh yes there is a bubble, but it isn't a problem', don't actually realise what they are saying, and don't really believe there is a bubble situation at all.

Thomond Pk

I agree these type of mortgages are created by financial institutions that are under severe pressure to deliver short-term profits. The problem is that once an institution offers a 100% mortgage other providers will increase loan to value ratios. Loan to Value ratios are the only protection that banks have over the first five years of a mortgage due to the high proportion of interest paid early in a loan period.

There are two risks in this firstly it fuels house-price inflation which increases risk for everyone and increases motgage terms which have already typically lengthened by 50% over the past 5 years.

Secondly it puts the deposits within the specific institution at a higher level of risk due to the bank having no equity and all the risk.

MorningStar

ionapaul wrote:

Come on now, the banks make the most money during a boom. It is clearly in their (short-term) interests to sustain a boom.

Good point though about people's analysis of the current situation. It seems most commentators now believe there is a 'bubble'...

Banks might make more money in a boom but they really make their money on speculation. They are speculationg that people will take 100% mortgages andt they will get a gain on the FTB market which last for about 30years. The point is they are doing it for profit and it isn't the government doing it to allow people to buy a home. It was directly connected to the post I was replying to at that point.

The strange thing is a lot of analysists aren't actuallly calling it a bubble as much as people think. The main news headline and articles often give warnings. It's actually a bit like relying on the Sun for the news. The property market and analyist market is a bit stranger. The main stories that hit the main papers are given by people who have a vested interest. Most of the people who call it a bubble seem to be the regular public. This is why they are not planning to do anything IMHO.
When did the house price rises turn into a bubble? When the bubble burst prices have to drop to some limit what is it 5 years ago?2? 10?
People also seem to think a price crash effects all equally. In London when it happened (after a 3 year bubble) the houses with poor services (trians,roads etc..) lost most. Generally investors in the private housing market didn't lose because they had 10 year plans and bought in the right areas. Investors did lose but most were in the corporate investment which was the big crasher in the market. The bubble burst due to stock drops and the market dropped because businesses weren't going to rent property due to financial losses.
I paid close attention to all of this at the time and later reports.
The bubble was caused by finanacial speculation on the businesses and need for offices. I am not sure what people think has created a bubble here as opposed to house prices rising due to demand.There seems to be a belief investors own a huge section of the market but nobody seems to know how many are in the market. The government encourage the investors back already after getting them out of the market so they think thay are needed or the political pressure was too much.

ionapaul

I *think* that commentators are calling the situation a bubble for the same reasons they called the dot-com mania a bubble - speculative investments based as much on emotion, both fear and greed, as proper analysis on potential return. Impossible to quantify, but I am sure you and I both know people who have invested over the past year who do not expect to make a profit on the rental they receive, but make their profit on capital appreciation. That is speculation of the highest order! The fact that many investors are willing to 'take a risk' and are foregoing higher returns available elsewhere for the hope that capital appreciation will outstrip inflation...well that points at a bubble situation! The wholesale abandoning of traditional restraints on borrowing (100% mortgages, borrowing up to x5 annual salaries in some cases) and any historical ratio of house prices : salary would worry many too.

Fear is the very last emotion that we see before any financial bubble bursts - once enough people have convinced themselves that unless they get 'on the ladder' now, they will never get on the ladder, we can expect an end to the mania. I know several people with this fear at the moment.

lomb

of course fear is the last emotion, however u are forgetting that inflation will eat any purchase made today and within 20 years the average house may be worth 1000000 euro

Thomond Pk

A lot of what is said above is true but the critical point that you all miss is that if something does go wrong the banks involved have no safety net. Prudent financial institutions such as AIB, BOI & BOS will be fine as they will maintain Loan To Value (LTV's) at safe levels of no more than 80%.

However the practice of 100% mortgages is flawed significantly and this is not something I say to generate fear it is based on statistical fact generated from real examples such as the US farm crash of the mid 1980's, the Swedish residential crash of the Early 1980's, the German commercial crash and the UK commercial/residential crash both that occured in 1992.

The cause excessive loan to value ratios as financial institutions who attempted to enter the market and then sought to increase market share aggressively by slashing share-holder protection. One of the main problems of this are that all deposits are gauranteed by the Central Bank of Ireland and if these institutions end up with a loan book that reflects their risk management policies the tax-payer will foot the bill to gaurantee the deposits. This is despite the willfull 'Diasaster myopia' on the part of the financial institutions involved who ultimatley generate and retain higher short-term profits whilst shifting the medium to long-term risk onto the Central Bank who get none of the reward and much of the risk.

100% mortgages should be banned in all but the most extreme of circumstances, a purchaser either has the ability to purchase property with some credible deposit of 10-30% or they don't. No equity and interest only motgages will only serve to undermine the fundamentals of what is a reasonably secure housing market.

ionapaul

As others have probably mentioned, many of those FTBs who have bought over the past few years have actually borrowed the full 100% - just not from the one bank! 92% from their mortgage provider and the other 8% from their parents or the local credit union. So First Active want the entire pie, not just 92% of it! A house of cards that will come down should the Irish economy weaken for any reason...can't see how this may happen though, so who knows?

Imposter

MorningStar wrote:

I am not sure what people think has created a bubble here as opposed to house prices rising due to demand.There seems to be a belief investors own a huge section of the market but nobody seems to know how many are in the market. The government encourage the investors back already after getting them out of the market so they think thay are needed or the political pressure was too much.

As well as what Paul has said would i be right in saying that investors are not seeing as much percentage return in rents as they were? There was talk on here a while back that landlords are having to charge less rent for their properties. Surely that means that there are too many landlords/investors out there. If this is the case, any move by a reasonable number of landlords to offload their properties could easily be the trigger to cause a crash to occur.

lomb

people were talking of a crash years ago, where was the crash many people never bought because of talk, and have ruined there lives in some ways.

ionapaul

lomb wrote:

people were talking of a crash years ago, where was the crash many people never bought because of talk, and have ruined there lives in some ways.

'They' said the dotcom shares were overpriced in 1998, but there was no crash. Shares went up! 'They' said the dotcom shares were overpriced in 1999, but there was no crash. Shares went up! 'They' said the dotcom shares were overpriced in 2000, but there was no crash. Shares went up! 'They' said the dotcom shares were overpriced in 2001...the market crashed. Impossible to time the markets. The average house price in Lucan *could* rise by 15% this year, or decrease by the same amount.

jhegarty

ionapaul wrote:

'They' said the dotcom shares were overpriced in 1998, but there was no crash. Shares went up! 'They' said the dotcom shares were overpriced in 1999, but there was no crash. Shares went up! 'They' said the dotcom shares were overpriced in 2000, but there was no crash. Shares went up! 'They' said the dotcom shares were overpriced in 2001...the market crashed. Impossible to time the markets. The average house price in Lucan *could* rise by 15% this year, or decrease by the same amount.

Two things have me convinced the boom/bubble will last at least another year

1. 100% Mortgages
2. SSIA cash

Thomond Pk

ionapaul wrote:

'They' said the dotcom shares were overpriced in 1998, but there was no crash. Shares went up! 'They' said the dotcom shares were overpriced in 1999, but there was no crash. Shares went up! 'They' said the dotcom shares were overpriced in 2000, but there was no crash. Shares went up!

Not quite correct the Nasdaq entered decline on March 30th 2000 and was down over 50% by year end as eveidenced by the below 5 year graph which even ignores the first three months of decline:

http://mwprices.ft.com/custom/ft-com/interactivecharting.asp?pageNum=&company=NEW&industry=&region=&extelID=&isin=&ftep=&sedol=63299000&FTSite=FTCOM&symb=nasdaq&countrycode=us&t=e&s2=us&q=nasdaq&osymb=nasdaq&ocountrycode=us&expanded=false&subtab=1&colMode=&time=5yr&freq=1dy&compidx=DJIA%7E1643&indName=sof%7E171599&sid=3291

MorningStar

ionapaul wrote:

I *think* that commentators are calling the situation a bubble for the same reasons they called the dot-com mania a bubble - speculative investments based as much on emotion, both fear and greed, as proper analysis on potential return. Impossible to quantify, but I am sure you and I both know people who have invested over the past year who do not expect to make a profit on the rental they receive, but make their profit on capital appreciation. etc ...

What I am saying is the commentators with knowledge and no vested interest aren't calling it a bubble. Even the one that do call it a bubble don't think it is a bubble in the way the general public thinks. From what I can tell none of them think the investors are the problem.
The speculation on house prices rising isn't the same as speculation on financial markets. Property as a very general rule does appriciate it's just a matter of time. It's just about how long you stay in the market anybody expecting capital appreciation in any time less than 10 years is taking a large risk. Very, very, very few investors do this it's a long term plan to invest in property and only the stupid don't realise this. It may be speculation but it doesn't make it a bubble. Currently there is not enough property available in the rental market for the projected population growth that will need rented property. Many investors are there for pensions i.e. 30 years or longer.

lomb wrote:

of course fear is the last emotion, however u are forgetting that inflation will eat any purchase made today and within 20 years the average house may be worth 1000000 euro

What you might not be thinking about is that a social change that is currently begining. This is the start of an Irish generation that will have to rent and not own. People may generally own property passed through family and/or intergeneration mortgages. Inflation could only marginally increase while house prices just go up out of the reach of a large portion of the population. The government seriously reduced the amout housing it provides and gives away. This is a huge change that is part of the problem. Inflation is a better indicator of the price of bread but doesn't register property very well or social shifts.

lmposter wrote:

As well as what Paul has said would i be right in saying that investors are not seeing as much percentage return in rents as they were?

Again a little bit of a limited view. A new investor would definitly feel the crunch now but general investors are alright here. 3 years ago buying an 2 bed appartment off tha plans spent €250K it's now worth €340. So the rent doesn't pay the mortgage at the moment it's still a a pretty good investment. the property market needs to drop 36% before they lose money now. This is why I don't think investors are the ones that will suffer. Most Irish property investors now go outside the country or they plan to add value by development. There are a few who buy off the plans and then sell once complete but that's the govenrment fault for leaving the loophole there.

How big a crash are people expecting?

ionapaul

Thomond Pk wrote:

Not quite correct the Nasdaq entered decline on March 30th 2000 and was down over 50% by year end as eveidenced by the below 5 year graph which even ignores the first three months of decline:

http://mwprices.ft.com/custom/ft-com/interactivecharting.asp?pageNum=&company=NEW&industry=&region=&extelID=&isin=&ftep=&sedol=63299000&FTSite=FTCOM&symb=nasdaq&countrycode=us&t=e&s2=us&q=nasdaq&osymb=nasdaq&ocountrycode=us&expanded=false&subtab=1&colMode=&time=5yr&freq=1dy&compidx=DJIA%7E1643&indName=sof%7E171599&sid=3291

Oops! Got my year wrong! And I was investing in some rubbish shares at the time But you get the picture I assume

ionapaul

What I am saying is the commentators with knowledge and no vested interest aren't calling it a bubble. Even the one that do call it a bubble don't think it is a bubble in the way the general public thinks. From what I can tell none of them think the investors are the problem.
The speculation on house prices rising isn't the same as speculation on financial markets. Property as a very general rule does appriciate it's just a matter of time. It's just about how long you stay in the market anybody expecting capital appreciation in any time less than 10 years is taking a large risk. Very, very, very few investors do this it's a long term plan to invest in property and only the stupid don't realise this. It may be speculation but it doesn't make it a bubble. Currently there is not enough property available in the rental market for the projected population growth that will need rented property. Many investors are there for pensions i.e. 30 years or longer.

Not certain I agree 100% with you. From what I've seen, most commentators who take the view 'all is rosy in the Irish property market garden, THERE IS NO BUBBLE!' are those commentators with a vested interest in seeing the boom continue! The banks, the Irish stock brokers (all HEAVILY invested in Irish banking shares), etc... Again, I disagree with you about the differences the housing market and other equity markets and speculation in either - to paraphrase a former British PM, speculation is speculation is speculation, just because housing prices 'traditionally' rise (as do share prices, even more so), doesn't mean a speculative investment in the same should be viewed with any less skepticism. If these investors are investing in property for their pensions, but are ignoring greater returns in other investments (stocks, bonds, etc...) then plain and simple they are foolish to invest at all, they should give their money to a professional to do it for them. Sorry if this is going way OT.

MorningStar

ionapaul wrote:

to paraphrase a former British PM, speculation is speculation is speculation, just because housing prices 'traditionally' rise (as do share prices, even more so), doesn't mean a speculative investment in the same should be viewed with any less skepticism. If these investors are investing in property for their pensions, but are ignoring greater returns in other investments (stocks, bonds, etc...) then plain and simple they are foolish to invest at all, they should give their money to a professional to do it for them. Sorry if this is going way OT.

We can disagree on the commentators which is fair enough but it depends on where you are reading. If it is the newspapers alone and not property specific publications it is all very subjective IMHO. I wouldn't read a newspaper to get my information on trash metal I'd go to Kerrang.

It's not property "traditionally" goes up in time it property always goes up it's just a matter of time. There are exception but these are permenant disasters and political troubles (some Irish investors in Kusadasi are about to lose some money). Unless a nuclear weapons goes off in Ireland I think we are OK. The residential property market follows different economic rules and always has, seriously go check economic books out. While economic laws are not solid we aren't doing anything strange in the property market yet.
Property pensions are not a direct investment return plan either. The model is rent out and pay off the mortgage as time goes on. Over the 30 years rent exceeds mortgage (small profit monthly) then the mortgage is paid off. The rent can be taken as pure pension or the house can be sold and reinvested for pension. Some want to leave property to children too. Over that period of time most investors are thinking there is a pretty small risk. Buying a house in the middle of a non serviced area is a bigger risk IMHO.
I still don't get what you think will cause a crash? Prices just going up has never ever done it somehting else happened. THe investors in the market are speculating but not in the manner where they are bidding more than the market price it is this act which was the cause of market crashes in the past. The commercial investors forced prices up by wild speculation in other bubbles. That hasn't happened here which is one of the reasons I don't think we are in a bubble. Investors have a milder influence on house prices here. THere are very few people actually speculating on houses going up in a normal short speculative manner.