Will the bubble burst?

FillSpectre

smccarrick wrote:

Investors are (in general) not stupid.
The landlord I was talking to bought the property in one of his children's names and intends to gift it to them at some point in the future. The fact that he is not covering his outgoings, while an annoyance, is not the end of the world for him. If he had to pay the mortgage on a vacant property he would most probably be more than willing to do so.

That is the kind of thing I expect many "investors" are doing. The loss of value doesn't quite bother them as it is not strictly what the property was bought for. I think there is more lateral thinking going on then being given credit. Say you were saving with an SSIA and now you decide to invest that into a property shortfall to give the property away in 10-15 years the chances are you will be alright. You might just decide on an interest only so your child can buy it at current market prices. A little bit risky but I think putting your own house on pause in rental accomadation is a lot riskier as it is mostly financially based. Owning your own furniture is an issue etc... DO peopel still take out life insurance if they don't buy a house?

Afuera

FillSpectre wrote:

Say you were saving with an SSIA and now you decide to invest that into a property shortfall to give the property away in 10-15 years the chances are you will be alright.

Are you suggesting that property in 10-15 years will be more expensive than it is now? This is highly dubious considering long periods of inflation are usually followed by long periods of deflation. The boom-bust cycle has never been broken and still holds true.

Back to the original posters question though about predictions for the next 12-18 months... I think that there will be no real sign of cooling for at least a year anyway. The SSIAs will keep things ticking over for a little while longer and there is still a lot of demand. Predictions of a slowdown to rises that are more in line with inflation in 2007 are quite likely but I think if something like that happened then in time it would eventually lead to a larger slowdown.

If price growth slowed down to match inflation you won't get people panic buying (afraid that they'll never be able to afford a house if they don't do it now) and they'll adopt the "wait-and-see" attitute. Also, investors who are hoping to make capital gains may start to get edgy if they could be getting better returns from leaving their cash in a bank (and new investors wouldn't be so gung-ho).

Other factors to consider are that younger and younger first time buyers, as well as parents buying for their children, has already removed a lot of future demand for housing. Most immigrants to Ireland are not planning on settling here for the long term and further opening up of the EU will make places such as Germany much more attractive to Eastern Europeans.

A decline in housing demand would lead to a decline in work in the construction industry, estate agencies, banks etc. Less work in these areas would increase unemployment, making Ireland less attractive for immigrants still. Less immigration/higher emigration would reduce demand for houses, cause prices to drop, and the spiral would continue.

It's hard to know how accurate that scenario above may be, but it's also equally hard to refute it as not being possible. If you are considering buying under the current climate I think you need to be aware of the fact that you could be overpaying for your property (the OECD economic thinktank has already realeased figures suggesting that properties are overvalued here). The fact that rent is so cheap right now, relative to a mortgage, makes adopting the "wait-and-see" attitude more prudent I feel.

ambro25

FillSpectre wrote:

You have to live somewhere if owning a house means your expediture is lesss iti s the same as making money as you end up with more.

Look at the term (35/40 years) and do the maths - we've been through this before

You may end up with more, but then again you may not - buying a property, in this respect, is no more certain than renting and using the variance (equivalent mortgage for place rented minus rent paid) to invest.

Wih property, you only 'make money' if the property appreciates over the term and you cash in: if you never cash in (you've bought to live), the question is moot.

But so long as you're paying a mortgage, you've 'lost' money (€500k of it) at day one of the morgage until you've paid it all back, with interests. To make this even clearer, think of a repo situation: same mortgage for €500k, you've repaid -say- half of it, but then *problems* (whatever - no job, interest rates quadruple, can't trade down, etc, etc/ -) and bank repossess: you get left with next to nothing out of the €250k you've paid to date (because with a standard mortgage, you've been mostly paying interests during the first half of the term, and not much of the €500k capital you've borrowed. And of course I don't need to explain the situation with an interest-only mortgage, do I?)

FillSpectre wrote:

Do people still take out life insurance if they don't buy a house?

If you have dependents, yes. It would take a sh*t of a long time for a monthly premium of -say- €20, starting from zero, to accrue to -say- a payable premium of €75000 (without working the markets and taking serious risks along the way).

If you have other investments providing interests over and above €20 net, paying such a €20 premium for a "what if" once you have dependants becomes a sensible option.

Note that I'm not calling it an investment - it's lost funds if I don't peg... so I'd be rather happy for it to stay lost funds for a while

FillSpectre

Afuera wrote:

Are you suggesting that property in 10-15 years will be more expensive than it is now? This is highly dubious considering long periods of inflation are usually followed by long periods of deflation. The boom-bust cycle has never been broken and still holds true.

I am saying it is smallish risk to cover what is very possible. I got the impression that it was quite difficult to get a house in many areas hence the prices rose. A house in a good area now may be very difficul get in that area in a 10 years. It is the lateral thinking with an eye on reality. Hedging bets but there is still risk. Property as mentioned does act differently to many assets and if you want you family to live close to you when they are grown up it might be best buy a property so they will be able to.

Afuera wrote:

Back to the original posters question though about predictions for the next 12-18 months... I think that there will be no real sign of cooling for at least a year anyway. The SSIAs will keep things ticking over for a little while longer and there is still a lot of demand. Predictions of a slowdown to rises that are more in line with inflation in 2007 are quite likely but I think if something like that happened then in time it would eventually lead to a larger slowdown.

The OP is from last year so it was about what has happened that is the point. It isn't will it burst within the year, it is somebody saying last year will it burst in the year just gone. It didn't and the same stuff said then is being said now. It can't go up, it doesn't make sense to investe etc... THe theories have sound logic but as they have been said for so long now it is becoming a parody. I think a very simplist view is being taken and massive assumptions on what investors are doing are being made. It ignores many of the human aspect of housing and the nature of property. IF people keep saying there is a bubble and it will burst maybe the will be proved right buthey have been very wrong about when it will burst. THe fact google trensds shows people have looked up property bubble suggests people are aware of the claims and have researched it themselves. I think people are making informed choices in much the same way Bluehair did. Only time can tell and nobody will be proved a fool. You can make good decisions and have bad outcomes and vise versa is true also. Owning your own home has a sense of pride, security and opens potentials these have value too. Renting has its own values such as no mainteance, better location and changibility. After years of living with a crazy disorganised life I realised that living spur of the moment doesn't make me happier being in more control reduces stress and does make me happier. Sounds like a seatled down but it isn't that it is I prioritised what I feel is important. Having things I can afford is fine and I try not to compare my buying power with others as it either makes you smug or envious. THis is all speculation about the future when it really should be talk about last years speculation and why one was ight and the other was wrong. No point in repeating stuff that was wrong last year. Can you explain why people taking your line last year were wrong then and the year before and before. People were saying SSIAs would effect the market and it was dismissed but manay people believe that is what drove the 100% mortgages at the end of last year and effectng prices now.

I don't think prices will keep going up but I also don't see a crash coming just becasue prices go too high, has this happened before? I know there have been crashes just I always thought there was a reason for them.

FillSpectre

ambro25 wrote:

Look at the term (35/40 years) and do the maths - we've been through this before

Yes we have and I disagree with you. I believe people can do things but certain steady appraoches are less risky.
I believe owning a home has a lot of value and even if that is meantl that is value.
Banks reposses houses a lot less than landlord kicking tenants out.

AS I have been saying strokes for folkes. The air of superiority of some people is flawed IMHO. I am better off paying a mortgage then renting others will be different. If you play russian roullete and don't get shot it doesn't prove anything about a smart dicision just you took a risk and won.

Work smart for your situation and try not to compare what you have with others.
Can you explain why the "bubble" hasn't burt? When did it become a bubble?

People throw the term around too easily. I am sure somebody will quoote figures showing how they believe it is a bubble but when it started and will end is a mystery to them. I think that indicates a lack of understanding of the term. I don't like to use the term because it seems unproven with out a start date it is like the term overpriced. Price used to mean what somebody was willing to pay so how do we get over priced?

When I did economics it was not common speech now it is, it appears many people don't quite understand the concepts or the terms yet use them.

ambro25

FillSpectre wrote:

Yes we have and I disagree with you. I believe people can do things but certain steady appraoches are less risky.

And I can respect that - we didn't agree to disagree, which I think we should: at the end of the day, it's an attitude to risk thing

FillSpectre wrote:

Can you explain why the "bubble" hasn't burst?

Because it will take a lot of socio-economic variables to collude, and that takes time. Mentions of 'The Bubble' surface everytime oneof such indicators edges closer to critical (e.g. interest rate, increasing divestment, etc.), but it's the combination of them all at some point in time, that will trip the thing. I lack time (and the server probably lack storage space ) to fully detail this further.

It's a bit like a chain reaction: takes a long time and a lot of effort setting it up and getting it going, but once it starts...

FillSpectre wrote:

When did it become a bubble?

I'll not play that semantic game. I know where it always end on Boards

FillSpectre wrote:

Can Price used to mean what somebody was willing to pay so how do we get over priced?

Because there's two approaches to define "what somebody is willing to pay", each of which being just as relevant as the other, but one of which being regularly dismissed because of the other (which is itself dictated by the market practices and the emotional component of the transaction) :

(i) how much they believe the property is worth?

(ii) how much they have to pay to buy the property?

For instance, I'm referring to another thread in here, wherein the OP stated that they'd been in a bidding war and in the space of a few days, the price went from €360 or so to €420 or so - that's a difference of €60k.

Now, let's put some context about that number:

(i) not quite the average Dublin wage, is it? Yet in the space of a few phone calls, the OP has -just like that- decided to up the ante by about double the average Dublin wage... This in the days of 10x average Dublin wage mortgages.

(ii) that will buy you quite a nice Merc' or Beemer, say (Note: just an example to which a lot of people can relate - I pesonally hate German metal and only ever buy second hand ). Yet the OP in that thread might never have wanted anything more than a 1.0L Micra. Again, in the space of a few phone calls, the OP has -just like that- decided to up their debt by the equivalent of buying a top of the line luxury car.

Just examples, of how you find yourself in debt for an over-priced property: the over-pricing most often has its base in the emotional component of the transaction. The skill (for lack of a better word) in buying property, is to remain entirely dispassionate and stick to whatever budget calculated - no matter how much the property would be ideal/exactly what one is looking for/etc. That way you never get caught out financially. The emotional component (well... the 'not-quite-estimatable-variable') in buying property, should just be whether you believe you are getting value for money or not. That way you never get buyer's regret.

Beta2

FillSpectre wrote:

I am better off paying a mortgage then renting others will be different. If you play russian roullete and don't get shot it doesn't prove anything about a smart dicision just you took a risk and won.

This is a very sensible idea, but remember it can be applied to both sides of the argument, just because it hasn't burst in the last few years doesn't mean it wont.

Why hasn't the bubble bust, well to begin to answer this we need to understand what a bubble is:

An economic bubble (sometimes referred to as a "speculative bubble") occurs when speculation in a commodity or asset class causes the price to increase, thus producing more speculation. The price of the good then reaches absurd levels (that no longer reflect utility of usage and purchasing power) and the bubble is usually followed by a sudden drop in prices, known as a crash or a bubble burst. Both the boom and bust phases of the bubble are examples of a positive feedback mechanism, in contrasts to the negative feedback mechanism that determines the equilibrium price under normal market circumstances. Prices in an economic bubble can fluctuate chaotically, and become impossible to predict from supply and demand alone.

You can only determine if it is a bubble and what caused it in hindsight.

The problem is that the vast majority of people here are irrational and emotionally attached to property prices, people subconsciously choose to ignore all the warning advice.

Virtually every economist in Ireland says house prices are over inflated, the ESRI says so, OECD agrees, so does a recent report by the EU commission, the IMF says we're in a bubble the economist magazine thought so to as did business week.

But if I had a mortgage of 250K on a house worth 500K and then released some equity to buy an investment property I wouldn't want to believe it either. The thoughts of even a 20% drop in prices would make me sick, so I’d blank out all rational thoughts and hope for a miracle. Maybe Ireland’s economy is special!

FillSpectre

AMbro

The definition of price has not changed it is still what people are willing to pay. Their reasons for doing so don't matter and to suggest they do is to try and change the definition. That is speaking from an economics point which is what we are talking about. If other people are willing to pay the same then it is not overpriced.

Estate agents use guide prices to attract people and it appaars they are all 10-20% below expected prices. €360k *120% = €432k so I expect that is what the property is valued at.

This is not an example of how you find yourself in an over valued property. You have to pay more than anybody else is willing to. AS owning a house is debt it is highly subjective the words you used. I pointed out before that while you have a point you keep denograting the other view. It is possible to just state your view instead of using terms to suggest there is something plain wrong with owning a house becasue everybody in Dublin is in huge debt in over valued houses. This isn't fact you are basically screaming you are right when obviously it is point of view with no backing.

When did houses become over priced and where?

It seems strange how many people state this yet can't even name a rough point in time. SOme claimed it was 2 years ago and a crash was any minute others 3 etc... It easy to get people to say over priced but it doesn't make it fact and it goes agasint the very idea of what a free market is.

Beta2

FillSpectre wrote:

If other people are willing to pay the same then it is not overpriced.

This is not the same as overvalued.

FillSpectre wrote:

This isn't fact you are basically screaming you are right when obviously it is point of view with no backing.

:rolleyes:

ambro25

FillSpectre wrote:

This is not an example of how you find yourself in an over valued property. You have to pay more than anybody else is willing to.

That's precisely how you buy the house and not the other viewers who put in an offer less than yours. Ergo how real estate works as standard, for the private buyer/bidder. Last time I checked.

FillSpectre wrote:

Estate agents use guide prices to attract people and it appaars they are all 10-20% below expected prices. €360k *120% = €432k so I expect that is what the property is valued at.

So say you. Could it also be that guide prices are not so skewed, and buyers expect them to go for 10% or more anyway (giving rise to 10% annual price increases)?

FillSpectre wrote:

AS owning a house is debt it is highly subjective the words you used.

How many times... Owning a house is not debt, buying one with a mortgage is. Will you please understand the difference between owning (it's already yours) and acquiring (it will be yours).

(i) you have €10k for a deposit and buy a €100k house
(ii) the bank lends you €90k to buy the house, whereby the owner (or his bank if it's still being mortgaged) gets €100k
(iii) you therefore owe the bank €90k secured on the house you are acquiring (it's not yours, it's the bank's, because they have paid the seller on your behalf)
(iv) once you've paid the bank back, it's yours - you are now a home owner

Have you ever heard of "One Account" -type mortgages? I had one in the UK some years back: it's a great way of realising that a mortgage is a debt (as well as a great way of realising how much everyday life costs generally, and what your real 'spending power' is): your current account goes from €1k in the green to €300k in the red overnight (the current account being your mortgage, operatively).

I'm not demeaning people for taking on debt - it's what makes the world go around and their choice. And if they have done so informedly and by not stretching themselves, good for them. Heck, if I want something and can get finance for it @ 5% when my capital earns more than the loan repayments, I'd be dumb not to borrow instead of using my capital!

FillSpectre wrote:

I pointed out before that while you have a point you keep denograting the other view. It is possible to just state your view instead of using terms to suggest there is something plain wrong with owning a house becasue everybody in Dublin is in huge debt in over valued houses. This isn't fact you are basically screaming you are right when obviously it is point of view with no backing.

I don't believe that I have been partisan in any way, nor been laughing at home buyers and chanted look-at-them-idiots-walking-to-the-slaughter. I have merely outlined some common pitfalls of home acquisition and addressed some points about which I have an informed opinion. If my neighbour can buy his pad €500k with cash on the table tomorrow, I'm not gonna laugh at him for paying way-over-the-odds: I'll say good on him for capitalising cleverly up to now, and not being at the mercy of interest rates, his professional situation, or the bank manager, when buying his property.

I have even gone so far as to explicitly acknowledge that you are right yourself, considering your apparently very risk-averse nature. So can you please drop the personal attack some. Just because I don't agree with some of your points, doesn't mean that I should de facto agree with them all to please your good self.

FillSpectre

Beta2 wrote:

This is a very sensible idea, but remember it can be applied to both sides of the argument, just because it hasn't burst in the last few years doesn't mean it wont.

My point was and is that what suits me might not suit others.Even if there is a crash I am unlikely to lose. I am at a low risk situation that suits me. Renting to wait out the market is high risk one way or the other IMHO but others are convinced it will happen so take the risk. House prices need to be drop over 50% to effect me. To rebuild my house is about 40% of the current market price.

I do understand what a bubble is and it is speculation to say one is currently in play and not fact as many would say.

You never actually answered when it would crash but have told me that you somehow know that people are sub conciously doing. I think that kind of deductive reasoning and assumption of intent is the problem with that both sides seem to think is fine. THe problem with the economists is they have been crying wolf incorrectly for too long.

Beta2 wrote:

But if I had a mortgage of 250K on a house worth 500K and then released some equity to buy an investment property I wouldn't want to believe it either. The thoughts of even a 20% drop in prices would make me sick, so I’d blank out all rational thoughts and hope for a miracle. Maybe Ireland’s economy is special!

I already gave an example showing that it is possible to buy another property and have smaller mortgage than your neighbour. If you mortgage payment are less than 25% of your income then is it really a problem? 20% drop in the market for two properties with a mortgage less than the value in both wouldn't upset me and property investment is not generally short term. I don't know anybody who went in lightly and they know ewhat they are doing. The suggestion that they are all greedy idiots is very bias and I would think inaccurate. I have my home and no investment property. I would rather diversify but it doesn't make my house a bad investemnt as I need a home and I don't feel I would get a home in a rental.

Doom and gloom are fine if it isn't tied up in superiorty on what is essentially a personal gamble that may or may not pay off and that goes for both sides.

FillSpectre

Ambro

Let me be crystal clear. I don't agree with you and your view of what a mortgage means. I understand what way you are looking at it. I think it is skewed way of looking at considering renting is the alterantive

I have told you more than once my opinion of the words you have used and manner you speak on the issue. If nobody else thinks your terminology in this way fine but I doubt it. I stopped responding to you becasue you didn't listen and I think I have seen others do the same for the same reason. Don't believe me if you don't want to .For example your sugggest that you need repeat it again suggests I don't understand. I do and have said I do yet you either ignore,forget or think I don't undestand regardless of what I have siad. You don't cosider rent in your example so it is skewed in my eyes. I don't need you to say it again becasue I don't believe it is accurate. THis is you repeating your self again and again. SO your sense of superior view is coming through. You think you are being balanced but your not. You have one view and aren't even discussing it. There really isn't any point. I know your point of view and you are not expounding it.

You come accross as feeling superior in what you say not because I don't agree. If you are going to just repeat yourself and not listen to people there really is no point talking to you.

ambro25

FillSpectre wrote:

let me be crystal clear. I don't agree with you and your view of what a mortgage means. I understand what way you are looking at it. I think it is skewed way of looking at considering renting is the alterantive

What's my views about renting got to do with anything in this thread? Where have I discussed it?

EDIT: my apologies, Mr FillSpectre - I did indeed, to an extent:

Look at the term (35/40 years) and do the maths - we've been through this before

You may end up with more, but then again you may not - buying a property, in this respect, is no more certain than renting and using the variance (equivalent mortgage for place rented minus rent paid) to invest.

But note that the above was in the context of you disputing what 'making money' means (i.e. make money with acquiring a property, not acquire a property to live in it).

Not extolling the virtues of renting vs buying (which is, after all, an entirely personal choice). And certainly not once you've actually read what I posted: as a person you're free to do either/or./EDIT

All the same, it's interesting to note that, apparently, you would rather stonewall than recognise a fact (not an opinion or PoV) when it bites you in the @ss. And here's me thinking I was having an interesting conversation :rolleyes:

FillSpectre wrote:

I stopped responding to you becasue you didn't listen

Kinda hard, through a PC with no TS/VoIP - you mean to say "I stopped responding to you becasue you didn't agree", surely?

FillSpectre wrote:

and I think I have seen others do the same for the same reason.

Who?

FillSpectre wrote:

You don't cosider rent in your example so it is skewed in my eyes.

Why should I? This thread is about "The Bubble".

Anyhow, suit yourself

Afuera

FillSpectre wrote:

Can you explain why people taking your line last year were wrong then and the year before and before.

My view is that the predicted slowdown in house price inflation (to 3% in 2007), combined with rising interest rates, will cool the property market down. I also suspect that once things cool down it will start a more serious downturn. There were no interest rates rises a year ago and the SSIAs were nowhere near maturing then either so I'm not sure what the "line" was back then.

FillSpectre wrote:

I don't think prices will keep going up but I also don't see a crash coming just becasue prices go too high, has this happened before? I know there have been crashes just I always thought there was a reason for them.

If prices are too high for an asset then for them to return to a normal level a crash is a possible way for it to happen. The larger the upswing the greater the likelyhood of a large downturn. If you look at any historic crash from the tulips in Holland to the stock market crash of the 30`s in the US, the reason for them was simply due to assets being priced at an incorrect value. The main cause of these overvaluations were from speculation or an anticipated movement in the price.

The amount of investors in our current property market suggests that many are buying out of speculation. The perception that you just can't go wrong with property in the long term is very strong.

ambro25

@ Afuera - don't forget that the stocks are in a bit of a doldrum at the moment in US and Europe, so that might maintain the attraction for all things 'stone' some more.

Then again, whilst rising interest rates are bad for mortgages, they're good for saving - so what's the likelihood (the proportion?) of SSIA payees re-dumping the €s into higher % savings? For instance, I'm currently looking at a new Halifax UK standard saving product at 8% yearly. That's not a bad product if you are of a 'clouds on the horizon' persuasion but not risk-minded: the picture of the average saver, really...

Gateway

Bluehair wrote:

Ah yes good old boards, you can be damn sure someone else will bump this thread over the years to work out which i was

You can count on that! Right up till this bubble bursts.

FillSpectre

Afuera wrote:

There were no interest rates rises a year ago and the SSIAs were nowhere near maturing then either so I'm not sure what the "line" was back then.

I just meant the view that there will be a crash and it will be soon that is all. I don't beleive these people disappeared in a puff of smoke when it didn't happen. THe thread is a year old after all.

Afuera wrote:

If you look at any historic crash from the tulips in Holland to the stock market crash of the 30`s in the US, the reason for them was simply due to assets being priced at an incorrect value.

Not sure about the tulip cause but the US crash was casued by junk bonds not over pricing. The UK crash was connected to the stock exchange. My point is that high prices don't casue crashes they just make it possible. It could just as easily be a boom and natural cycle which is not a bubble

Afuera wrote:

The amount of investors in our current property market suggests that many are buying out of speculation. The perception that you just can't go wrong with property in the long term is very strong.

I do agree but I don't think the speculation is purely financial and for short gain. I think the irish tie to property and family may be also having an effect not just the belief in property. The investors and people are not stupid. There are stupid ones but they aren't all stupid and the banks aren't either.

Ambro

I explained myself and I explained how you come accross. You confirmed it with your many times edited taunting. You choose to ignore what I said and make yourself look quite petty and childish to boot good luck with that in your life.

Beta2

FillSpectre, I want to make my point very clear, I am not attacking you or anyone who has ever bought a house.

I am attacking the notion that house prices will rise forever, I believe that in 18 months time house prices will be lower than they are now.

I said all along that if you are happy with where you live then you have made a good investment, I would however be concerned for people who buy up to 3 years before a crash, many of these people have made huge sacrifices to get onto the ladder in the first place, they live miles from family and friends, commute 2 hours in the morning and are doing without luxuries to pay the mortgage. The ESRI said that 37% of people are struggeling to make mortgage repayments as is. These people will get burnt.

You make the point that a fall of 50% is needed to put you into negative equity, that is a good point, but what about the person across the street from you with the 100% mortgage, if that fall happens they will get screwed.

I have backed up my opinion with historical, empirical, and media based data.

I'm not a profit of doom, I think we still have a chance to get out of this without destroying the economy, but the longer this exceptional growth of house prices is allowed to continue the longer the downturn.

I don't think our economy is healthy right now, single people paying 10x their salary, or couples paying 17.5x their combined salaries to buy a house 50 miles from where they work.

My friend earns 43K a year, he recently had his mortgage application turned down to buy a 2 bed apartment in Naas. Can some one explain to me how this apartment is not overvalued? He earns much more that the average national wage, he has no other debts, he's buying in an average suburban town, but he can't afford a less than average property. (I say the apartment is less than average because its one of the smallest apartments to be had in Naas)

Lex Luthor

Beta2 wrote:

My friend earns 43K a year, he recently had his mortgage application turned down to buy a 2 bed apartment in Naas. Can some one explain to me how this apartment is not overvalued? He earns much more that the average national wage, he has no other debts, he's buying in an average suburban town, but he can't afford a less than average property. (I say the apartment is less than average because its one of the smallest apartments to be had in Naas)

2 bed apts in Naas going for nearly 300k now.

ambro25

Beta2 wrote:

I'm not a profit of doom, I think we still have a chance to get out of this without destroying the economy, but the longer this exceptional growth of house prices is allowed to continue the longer the downturn.

I don't think our economy is healthy right now, single people paying 10x their salary, or couples paying 17.5x their combined salaries to buy a house 50 miles from where they work.

There's an inherent problem in that, which goes beyond the mere "housing gone bubble" argument - but which is connected to it in quite intimate fashion.

Investment in businesses in/around Dublin is starting to erode, especially foreign investment, and this is a factor in part derivable from the housing market (there are many other considerations, not the least of which is the total cost of living in Dublin, excluding housing: e.g. higher insurance premiums, higher social life costs, etc.):

(i) no matter how good the skills of inviduals (just as good if not better than US/UK/DE/FR/etc.),

(ii) if it becomes too expensive to employ these individuals (which is fast becoming the case because it's becoming more & more expensive for them *in general* to house themselves & live),

(iii) thus directly impacting business running costs,

(iv) then businesses will increasingly be set up elsewhere and/or employ cheaper immigrant labour... as is starting to be the case.

There is a point at which even highly favourable corporate tax becomes offset by running costs over the period of investment.

This impacts the economical tissue directly (and the housing market indirectly). The web of interrelation is complex, but not to be underestimated - particularly in the context which you outline (mortgage borrowings vastly exceeding realistic repay capacity - the norm in the UK was 4.5 x combined salary not so long back), and of which we are all quite well appraised these days.

Of investment starting to dry up in Ireland (Fine Gael source, but OECD numbers)

OfInvestment perking up in 2005, but increasingly outside Dublin

Of buying to let and real numbers of same

Of [URL="http://www.finfacts.com/irelandbusinessnews/publish/article_10002284.shtml] bubbles, contrasts with other countries and what if scenarios[/url]

Afuera

FillSpectre wrote:

Not sure about the tulip cause but the US crash was casued by junk bonds not over pricing. The UK crash was connected to the stock exchange. My point is that high prices don't casue crashes they just make it possible.

Junk bonds were the result of the crash in the US, not the cause. Speculation was the cause and led bonds to be vastly overvalued.

I'm not too sure if there's any one definate theory on the cause of the housing slump in the UK but one of the main factors being mentioned at the time in the papers was that houses were unaffordable for FTBs. Have you got anything to back up that the stock exchange was a cause?

High prices don't necessarily cause crashes on their own but overvalued assets can.

FillSpectre wrote:

It could just as easily be a boom and natural cycle which is not a bubble.

Should this read "boom and bust cycle"?

FillSpectre wrote:

The investors and people are not stupid. There are stupid ones but they aren't all stupid and the banks aren't either.

Banks can go bust too. Just as countrys, cities, companies and people can.

Beta2

Lex Luthor wrote:

2 bed apts in Naas going for nearly 300k now.

Actually he's got a deposit on phase one, its 305K.

Phase 2 will be 350K according to the state agent.

I live in Naas myself, the apartments are OK but nothing special

FillSpectre

Beta2 wrote:

FillSpectre, I want to make my point very clear, I am not attacking you or anyone who has ever bought a house.

I didn't think you were

Beta2 wrote:

I am attacking the notion that house prices will rise forever, I believe that in 18 months time house prices will be lower than they are now.

I doubt that as SSIAs will still have an effect but it is as valid to say that as they will keeping going up. Why you think they will is important though. I don't know of anybody saying they will rise forever even the optomistic.

Beta2 wrote:

I said all along that if you are happy with where you live then you have made a good investment, I would however be concerned for people who buy up to 3 years before a crash, many of these people have made huge sacrifices to get onto the ladder in the first place, they live miles from family and friends, commute 2 hours in the morning and are doing without luxuries to pay the mortgage. The ESRI said that 37% of people are struggeling to make mortgage repayments as is. These people will get burnt.

I am equally concerned about them but unlike many people I don't think the investors will be stung so much as they aren't all over streching themselves. Some are but I doubt the majority is.I never heard the ERSI report . FTBs are most at risk and other people are hoping it will be investors as some kind of retribution. Some will suffer sure but not all and the investors in the market more than 3 years are very unlikely to suffer.

Beta2 wrote:

You make the point that a fall of 50% is needed to put you into negative equity, that is a good point, but what about the person across the street from you with the 100% mortgage, if that fall happens they will get screwed.

My point would be thre is nobody accross the street with 100% mortgage. I am not saying they don't exist just they aren't the huge element people say. We have heard stores of people with 100% mortgage, 4 hour round commute, kids in creche and strugling to pay bills. I know nobody close to this yet the media suggests that it is really common or at least metnion such people when complaining about something. Is it really that bad? Very few people can get 100% mortgages to start with so that would be one point and secondly I am under the impression many had SSIAs. Not saying people aren't sugffering jut not sure who the papaers and reports are talking about. I am in my early 30s and between me and the wife we have a fullish spectrum of people and nobody is in these situation and thsoe close toit (4 hour commute) do so through choice.

Beta2 wrote:

My friend earns 43K a year, he recently had his mortgage application turned down to buy a 2 bed apartment in Naas. Can some one explain to me how this apartment is not overvalued? He earns much more that the average national wage, he has no other debts, he's buying in an average suburban town, but he can't afford a less than average property. (I say the apartment is less than average because its one of the smallest apartments to be had in Naas)

Isn't the average industrial wage €35k? I agree he is paid more but not much and a single person buying on their own wasn't able to do so before so just becasue there was a time they could doesn't mean they have to now. A 2 bed appartment on a single income is better than average as an expectation.

Do I think he should be able to buy? Not really he does qualify for social/affordable housing though AFAIK. Compare his desires with an average european worker and what they can do on their own. If his want is more does that make his expectation unreasonable as we catch up with Europe?

ambro25

Afuera wrote:

I'm not too sure if there's any one definate theory on the cause of the housing slump in the UK but one of the main factors being mentioned at the time in the papers was that houses were unaffordable for FTBs. Have you got anything to back up that the stock exchange was a cause?

It wasn't the UK stock market, which did OK in 2004. (source) (and my own experience of it then and since).

I sold my property in the UK in December 2004, at what was deemed by anyone involved (estate agents, solicitors, prices in area and region until June/July 2005, media) the peak. What followed was more a hiccup than a burst. Think of the slump as a temporary flat line, but certainly not a dip: current prices in the area haven't moved that much at all, there's a slight rise but marginal, which is small potatoes compared to what goes on in Dublin

JimmySmith

There are now 2 incomes for almost every house bought.
This is completely different to the time of the UK crash even.
Now that the banks have established that one person alone cannot buy a house, and people are used to this fact of life, they will start to lend to groups of 3 and then 4.

Can all the people who were predicting a crash for the last 5 years please stand up and leave the room. you are clearly talking through your arses and have been proving it for years. If you can get it wrong for so long and still cannot admit you havent a clue what will happen you need to take a cold shower.
Nobody here knows anything about when or if there will be a crash. Nobody.

In fact the person talking the most sense here is the person who sold their house last year and consolidated at a time of his choosing, rather than trying to time the market. Thats not to say he would not have been better off waiting til this year, but who would have known? It would have been just a guess. I think he wins in the banked money stakes.

FillSpectre

Jimmy
A broken clock tells the time right twice a day don't deny the time becasue the clock is there.

It is possible and there are some indicators. WE are talking property not houses and more single people buy now with a huge increase in the number of woman buying on their own. All demographics point to an increase in single living in Ireland over the next few years. The majority of new hosuing in Dublin is single and 2 bed places. Some say it is just for money and others say it is to fit the gap in the housing stock.

Huge rise do increase possible crash situations the same as sudden snow can make conditions for avalaches.

Valid points are being made and should be listened to.

I do agree though that people who have been saying the same thing for a few years should explain themselves

Afuera

JimmySmith wrote:

Can all the people who were predicting a crash for the last 5 years please stand up and leave the room. you are clearly talking through your arses and have been proving it for years. If you can get it wrong for so long and still cannot admit you havent a clue what will happen you need to take a cold shower.
Nobody here knows anything about when or if there will be a crash. Nobody.

I have not been predicting a crash for the last five years but increasingly I have been thinking that it may be unavoidable.

Do you believe prices will continue to rise? Or do you believe that there will be a soft landing? Or do you not care and prefer to buy/invest without really thinking about any possible negative outcomes?

JimmySmith

Afuera wrote:

I have not been predicting a crash for the last five years but increasingly I have been thinking that it may be unavoidable.

Do you believe prices will continue to rise? Or do you believe that there will be a soft landing? Or do you not care and prefer to buy/invest without really thinking about any possible negative outcomes?

You can run all of the scenarios you like. None run by the economists (who get paid for it) have been right in years.
At the end of the day, you buy a house and you live in it. Then when you have spare cash if you feel like betting on black do. But its a gamble and should be seen as no more.
I did this very thing a good few years ago. Sold some house over the last couple of years. Now have some houses and no mortgages. Even though i thought i knew it all and tried to time the markets i now realise i hadnt a clue about the markets at all (i did more analysis than i'm seeing in this thread too). It could have easily ended in tears for me and i wont pretend otherwise. The ball just landed on black which i bet on.
I'm going to cash out over the next 6 months or so and bank a few bob, because i havent a clue whats next and i know it.

ambro25

Afuera wrote:

I have not been predicting a crash for the last five years but increasingly I have been thinking that it may be unavoidable.

Echoed.

Afuera wrote:

Do you believe prices will continue to rise?

Yes. For a while at least. There's no denying the forthcoming SSIA effect to boost funds available for deposits (to increase same or at least prop them on asset funds as opposed to borrowed funds)

Or do you believe that there will be a soft landing?

Eventually. Probably more like the UK 'slump' (not quite a 'burst' of dot.comn proportions, which is what 'Bubble-predictors' have been envisaging - it'd be nice to be wrong but...;) ). Think of it as a collective 'intake of breath' - but not panic.

Or do you not care and prefer to buy/invest without really thinking about any possible negative outcomes?

I really think buying and investing should be dissociated (eating humble pie & winking at FillSpectre ). If buying not-to-invest, the outcome never really is 'negative' (barring repayment default, the house will be yours at term no matter what (unless you have an endowment mortgage-now there's risk!)).

JimmySmith has got it nailed with the 'bet' analogy, because investment is always a matter of timing (and deciding on the right 'timing' can be a matter of luck in good proportion). Good timing and the ball goes on black (sell at market peak - I was lucky in the UK), bad timing and the ball goes on red (which can just as easily be a market crash as a divestment halfway into the growth cyle and losing out on the other half of the cycle).

Beta2

FillSpectre wrote:

Isn't the average industrial wage €35k?

According to the CSO as of last month it stood at 27K. so he earns 60% more than the average industrial wage.

FillSpectre wrote:

2 bed appartment on a single income is better than average as an expectation.

An average Dublin Expectation

FillSpectre wrote:

Compare his desires with an average european worker and what they can do on their own. If his want is more does that make his expectation unreasonable as we catch up with Europe?

I think you missed the point I was making, people in europe who earn 60% more than average typically can buy a better than average house.

FillSpectre wrote:

My point would be thre is nobody accross the street with 100% mortgage

Just guessing here but at some stage in the past FTBers were able to purchase a house near yours? But today they cant. Where I live the neighbours were first time buyers 10 years ago(hes an ambulance driver, wife doesn't work), they paid 1 tenth of what it is worth today. Today FTBers like my friend (who earn 60% more than industrial average) can't even buy a small 2 bed a quarter of a mile away. That suggests to me that something is imbalanced.

FillSpectre

Beta2 wrote:

According to the CSO as of last month it stood at 27K. so he earns 60% more than the average industrial wage.

No tha tis not what the CSO say

http://www.cso.ie/statistics/indearnings.htm

http://www.cso.ie/statistics/earnings_banking_ins_building_soc.htm

He is earning more than the average industrial wage about 11k (35% more)

And only 2k more than a banking type job. (7%)

Not really amazing money or much more tha

Beta2 wrote:

An average Dublin Expectation

I did say compare with an average European. I have friends living abroad and places are smaller and not owned. Really the claim that it is all terrible hear is a bit of an exageration

Beta2 wrote:

I think you missed the point I was making, people in europe who earn 60% more than average typically can buy a better than average house.

You over estimate the figure and I agree there is a change but I am not claiming it is bad you are saying it is. I think it is an inevitability that homeownership has to drop in Ireland to line up with the rest of the EU and the world. A single person earning 7% more than the average white collor job is not some amazing buying power and not really surprising that they can't get a mortgage considering there are so many people working.

If you were right about the 60% I think you would have a point. I don't mean to suggest you are just simply wrong it is just that what you based your view on is not right. Given that Ithink what I said stands:o

Beta2

http://www.cso.ie/statistics/indearnings.htm Show an average industrial wage of 31707Eur for a male and and 22415Eur for a female. I built in the assumption that single first time buyers were split evenly at 50-50 between men and women which gives a figure of 27061Eur as the average industrial wage. You on ther other hand just took the figure that suited you.

Getting back to the original question:

Will the bubble burst? This assumes there is a bubble, if there is a bubble it will bust, but when no one can say for sure.

However, can we say for sure that there is a bubble, no.

Thats all I'm gonna say on the topic

dochasach

FillSpectre wrote:

...
I did say compare with an average European. I have friends living abroad and places are smaller and not owned. Really the claim that it is all terrible hear is a bit of an exageration

As of 3Q 05, Ireland had one of the worst housing affordability indexes, with an average house costing 6 times annual income:

http://www.demographia.com/dhi-ix2005q3.pdf

Given that Irish house prices have risen significantly since 3Q05 (and yet are steady or "correcting" in some other unaffordable markets), I wonder when we will be the most rareified housing market in the world?

FillSpectre

Beta2 wrote:

http://www.cso.ie/statistics/indearnings.htm Show an average industrial wage of 31707Eur for a male and and 22415Eur for a female. I built in the assumption that single first time buyers were split evenly at 50-50 between men and women which gives a figure of 27061Eur as the average industrial wage. You on ther other hand just took the figure that suited you.

I used the first figures I saw. They are from the same source. Average industrial wage however is not average wage. THe figures you used are more suited to your arguement but I pointed out that their is a difference from average industrial wage and office workers. Your friend's wage is not a massive wage still stands. He is also trying to buy a home on his own which is not an average of home buying.


Will the bubble burst? This assumes there is a bubble, if there is a bubble it will bust, but when no one can say for sure.

However, can we say for sure that there is a bubble, no.

I agree. I feel it has to be said that those who insist it is a bubble and it will burst are starting with assumptions. To deny the possibility there is a bubble is also making assumptions.

dochasach wrote:

As of 3Q 05, Ireland had one of the worst housing affordability indexes, with an average house costing 6 times annual income:

I did say European average. We are an old country with inheritated issues. USA and Australia are not good comparisons as a result. If you compare our country with the rest of Europe you would get a fair comparison. Irish society has changed elsewhere so I would guess homeownership is another thing that has to change

dochasach

FillSpectre wrote:

I did say European average. We are an old country with inheritated issues. USA and Australia are not good comparisons as a result. If you compare our country with the rest of Europe you would get a fair comparison. Irish society has changed elsewhere so I would guess homeownership is another thing that has to change

I'd like to see these numbers for other european markets, but of the markets in the demographia survey, all of them had a median multiple of about 3 in the mid 1990s (Ireland, U.K., Austrailia, New Zealand, U.S.)
nflating.

FillSpectre

dochasach wrote:

I'd like to see these numbers for other european markets, but of the markets in the demographia survey, all of them had a median multiple of about 3 in the mid 1990s (Ireland, U.K., Austrailia, New Zealand, U.S.)
nflating.

So would I . My point is from my experience in other countries property owning expectation s are completely differnt. THe properties are also more varied than here. A 3 bed semi is not the expectation of a single person in the rest of Europe it is only here. Irish expectations are limited becasue we haven't seen any other way in this country. Comparison with non compariable goods whether they ever met or not is flawed IMHO. 3 new world colonies with one being the most poluting,richest and unequal societies in the world is not a fair comparison if you ask me.

ambro25

I can research FR quite well, for some maybe-useful comparisons:

source

Ralentissement des prix, sous l'effet de la désolvabilisation des ménages - 25/04/2006

Les prix de l'immobilier en France, en progression de 120 % par rapport à leurs plus bas de 1996, atteignent un seuil critique d'après Olivier Eluère du Crédit Agricole. Leur progression, qui a diminué tout au long de 2005, devrait continuer à fléchir dans le courant de 2006, avec une hausse prévue de 5 % sur 2006 (pour rappel, la FNAIM table sur 9-10 %). Deux facteurs commencent à peser sur le marché : le risque de hausse des taux, déjà mentionné dans un article précédent de ce site, et l'arrivée en masse des Robiens, qui commence à déséquilibrer localement les marchés locatifs. Pour autant, la banque verte ne prévoit aucune baisse et ne perçoit pas de situation de bulle sur le marché pour deux raisons : la solvabilité des ménages reste meilleure qu'en 1991 (les annuités de crédit habitat représentent aujourd'hui 38 % des revenus d'un ménage parisien contre 55% à l'époque) et il n'y a pas de comportement spéculatif sur le marché (les anticipations des acteurs sont raisonnables sur les loyers, l'inflation et les revenus et la prime de risque est positive). Au niveau national, la solvabilité s'effrite également puisqu'un ménage moyen dépense aujourd'hui 31 % de son revenu pour un achat immobilier. Le rapport évalue qu'une hausse des taux de 1 % ferait monter ce ratio à 34 %, avec pour effet de freiner voire baisser les prix dans certaines zones ponctuelles.

Prices in FR slowing down, expected to grow by 5% instead of predicted 9-10%. Main factors affecting slowdown are (i) likely rise in interest rates and (ii) the 'Robiens' (something akin to SSIA, but only for real estate, as an operation of the "Law Robien"-however, arriving at term in the FR context, so it's the 'end of it', not the 'beginning of it' when looking at SSIAs). No bubble perceived because (i) households have better capacity to repay today than before (mortgage repayment represents smaller portion of income) and (ii) no speculation perceived in the market. However, capacity to repay eroding, with 31% of average household income required to pay mortgage, which a 1% interest rate increase would raise to 34%.

5672 € du m2 en Mars : prix stabilisés à Paris depuis presque un an
- 19/04/2006
L'indicateur du prix au m2 à Paris intra-muros, publié par les Echos-Laforêt, fait preuve en Mars d'une grande stabilité par rapport à Février (5708 € du m2). Sur un an, les prix sont restés très stables à l'intérieur d'un couloir entre 5300 et 5800 € du m2, à "l'accident" près de décembre (4849 € du m2, non significatif).

Prices stabilising in Paris, between €5300 and €5800 per squ.meter on average year-on-year, with an "accident" at €4849 in December. Rest of article speaks of offers being withdrawn increasing and number of FTBs in transactions decreasing.

For cross-EU numbers and stats, there ya go: Report prepared by the FR National Bank for real estate market comparsion purposes (pdf)

Provides useful insight because compares same data for old world and new world.
* check page 4 - annual variation in % of price per sq.meter for old dwellings (as in: not newly-built)
* check page 5 - capacity to buy for the average houselhold (indicia of 100 in tables is the average over the period of observation)
* check page 14 - relative yield of rental investment, in % (0 is break even)
* check page 15 - actual rent variation (dotted line) compared to that expected by investors (solid line), in %

in the graphs: Royaume Uni = UK, Etats-Unis = US, Pays Bas = Netherlands, Espagne = Spain, Allemagne = Germany. Funnily enough, France = France.

jobless

From the Indo today.......



House prices up by 14pc

ADVERTISEMENT





Average home likely to break the €400,000 barrier forfirst time



AVERAGE house prices in Ireland are set to break the €400,000 barrier for the first time.

Prices across the country grew by 14pc in the past 12 months, adding €45,000 to make a new average price of €365,000.

It is estimated prices will grow by a further 10pc in the next year, bringing the cost of a home to €401,500.

Homes in the capital are now almost two-and-a-half times more expensive than the same property in the south-west of Ireland.

The quarterly report from Daft.ie has also shown that rents have increased by 4.6pc over the 12-month period to April 2006. However, this is still 8.5pc lower than they were in 2002.

Commenting on the price increases, David Duffy of the ESRI said the upward growth will continue.

It was also pointed out that the figures are based on asking prices, with the sale price likely to be even higher than those recorded.

"The view has been that prices won't grow at quite the rate in the next 12 months, but we're still talking of growth in the region of 10pc," said Mr Duffy.

"The rise in interest rates will have some impact on affordability which will hit price growth.

"Strong supply this year will also go some way to meeting demand."

He pointed to strong employment, inward migration and strong consumer confidence as the underlying reasons for the continuing boom. Prices grew by 5.5pc between January and April this year, and Mr Duffy believes the SSIAs will have an impact on prices in the near future.

"We really don't know what the SSIA effect will be, but all of the surveys suggest some of it is going into property," he added.

He believes the market will experience "very strong growth" throughout 2006 with no sign of a fall in prices.

The average three bed-house on the northside of the capital now costs €441,999 compared to €456,638 on the southside. A further 10pc hike would bring the prices to €486,198 and €502,301 respectively.

Expensive

Prices are most expensive in south county Dublin at €637,175, compared to €335,951 in west Dublin.

The same type of home in the commuter towns costs €411,531 compared to €325,577 in Cork and €233,426 in Connaught and Ulster.

Owners of a three-bed house in Dublin city centre could expect to get rental income of €1,900 per month compared to €1,171 in commuter towns such as Celbridge, Naas and Maynooth.

Other findings from the report show that Clonakilty is the most expensive town in Munster with an average asking price of €350,000. This compares to less than €200,000 in Newcastle West.

Wicklow saw the biggest gain, with prices up 21pc compared to last year.

FillSpectre

jobless wrote:

Owners of a three-bed house in Dublin city centre could expect to get rental income of €1,900 per month compared to €1,171 in commuter towns such as Celbridge, Naas and Maynooth.

This is where I don't trust the papers. How many 3 bed houses are there in the city centre (which is inside the canals)? I did a Daft search and found one. THe article suggests this is normal and it isn't.
You can rent 3 bed houses for €1200k very easily around Dublin.

The_Conductor

FillSpectre wrote:

This is where I don't trust the papers. How many 3 bed houses are there in the city centre (which is inside the canals)? I did a Daft search and found one. THe article suggests this is normal and it isn't.
You can rent 3 bed houses for €1200k very easily around Dublin.

Not very easily- you would be very limited in which area you would manage to rent a 3 bed at 1200 per month. I do not believe that 1900 is realistic- but 1200 would be extremely optimistic for quite a lot of areas.

gurramok

In the paper today it said that auctioneering firm Gunne are now selling off their property and financial services plus the 80% of auctioneers who own myhome.ie are selling the website.
They are cashing in their 'chips' while the going is good while saying all along that prices will continuing rising, no logicin that!

Its said by the paper that its an indicator that the market has peaked, hopefully maybe?!

faceman

gurramok wrote:

In the paper today it said that auctioneering firm Gunne are now selling off their property and financial services plus the 80% of auctioneers who own myhome.ie are selling the website

Didnt see that article? u got a link?

Lots of interesting posts in this thread but i guess one thing IS for sure about the housing market... no one has the foggiest what will happen. Economists have been getting it wrong for years, no one can even tell how big the bubble is - and if it is a bubble at all.

at the mo we have full employment, high immigration, more cash to splosh and high housing demand. I guess we will have to wait n see!!

gurramok

It was in evening herald, written by a Dan White, he's actually quite good in his 'theories' on his past performance, which is good for a rag paper

faceman

gurramok wrote:

It was in evening herald

aaah no disrespect dude but i despise the herald!! Not sayin it isnt true but i wudnt be concerned yet.

Victor

Beta2 wrote:

http://www.cso.ie/statistics/indearnings.htm Show an average industrial wage of 31707Eur for a male and and 22415Eur for a female. I built in the assumption that single first time buyers were split evenly at 50-50 between men and women which gives a figure of 27061Eur as the average industrial wage. You on ther other hand just took the figure that suited you.

Be careful with average industrial wages - the represent all grades form cleaners up to the managing director. I'm also guessing only about 10% of Irish people now work in industry.

lomb

Victor wrote:

Be careful with average industrial wages - the represent all grades form cleaners up to the managing director. I'm also guessing only about 10% of Irish people now work in industry.

good point that. average industrial is probably irrelevent around greater dublin area anyway.

Captain Trips

ambro25 wrote:

Of investment starting to dry up in Ireland (Fine Gael source, but OECD numbers)

OfInvestment perking up in 2005, but increasingly outside Dublin

Of buying to let and real numbers of same

Of [URL="http://www.finfacts.com/irelandbusinessnews/publish/article_10002284.shtml] bubbles, contrasts with other countries and what if scenarios[/url]

Those are very good articles, especially the last two. Thanks for the links!

I was considering a buy to let but the returns are just minimal if any. Some properties I've been watching and know people who own in the developments haven't gone up at all in the past year (one sold for 20 grand less than a similar one in same block 12 months earlier and another 10 grand more, but with stamp duty it's more cash that is gone). It seems like city centre has not moved much at all. Only a few places in Temple Bar are maintaining or increasing value.

Property in wealthy suburbs seems to keep going through the roof like Ranelagh, Blackrock and so on. I just can't see the rental returns on properties that cost over 300,000 in Dublin. E.g., even IFSC, a one bed on market for 317500 yet check in Daft and several similar properties rent for €950, so with stamp duty, you'd be making a steady loss of several hundred every month and be years trying to regain the capital appreciation to equalise the stamp duty. Better to make some low risk stocks or something.

lomb

Captain Trips wrote:

Property in wealthy suburbs seems to keep going through the roof like Ranelagh, Blackrock and so on.

some commercial property offers excellent returns. the trick is picking pivotal properties that are special. renting is then easy at 4.5% and covers the interest. however banks wont lend more than 75% of the collatoral forwarded so u need to be fairly wealthy to play in that pond and in any case its slightly risky due to the fact it might be vacant for a year or more.

residential on d4, d6 and blackrock/foxrock is increasing at 20-25% or more a year, in some cases they have lept 40-80 % imho in the last year for some sought after stuff. even houses here are now going to tender here!!! a process once reserved for development land.
personally i think this reflects the wealth of people at this end and truely does cristalise that the rich are most certainly getting much much richer.

dochasach

FillSpectre wrote:

...Comparison with non compariable goods whether they ever met or not is flawed IMHO. 3 new world colonies with one being the most poluting,richest and unequal societies in the world is not a fair comparison if you ask me.

Property bubbles are always different here, no matter where "here" is.
http://www.google.ie/search?hl=en&q=boom+property+%22different+here%22&btnG=Search&meta=

There are some similarities between Ireland and these new world colonies. A booming economy, net immigration, expectation of low density home ownership, historically low interest rates, free (more or less) market economy, real estate agents aren't regulated as investment advisors...

As for the differences you pointed out: The oft repeated "biggest polluter" meme obviously refers to current CO2 emissions, since emissions of other pollutants are higher outside of the U.S., and exempt kyoto signatories (China and India) will soon be the highest emissions of CO2, but it is a clever phrase to beat the U.S. with. The U.S. deserves a spanking on energy use. However, the U.S. didn't sign the Kyoto agreement and its greenhouse gas levels rose by 13% from 1990-2003. Ireland did sign the Kyoto agreement, and its greenhouse gas levels rose by 25% over the same period: http://news.nationalgeographic.com/news/2005/07/0705_050705_G8score_2.html
Both countries deserve a good spanking, but which one have you heard about?

As for wealth, Ireland now has the third highest GDP/capita in the world, but the rate of poverty has grown since 1990. The inequity level here is the highest in Europe and is rapidly approaching that of the U.S. http://www.cori.ie/justice/publications/ansoecrev/ase_review05.pdf

Are we really so different that market forces can't work here?

FillSpectre

dochasach

It is like you haven't read the thread and just read the title.

I was talking about housing standards not a property bubble. SO Housing in the USA and Australia aren't the same and non compariable.

There is no certainty there is a bubble here to say there is is speculation.

THe USA is a very differnt country to here and the rest of Europe. It is the biggest pollutor and does not have green movememnt like the EU. IT is the worst now, getting worse and not trying to correct things. It fights wars in order to secure its supply of oil. It doesn't matter what we have done or objective is different.

Relative poverty increases with wealth that is all your report really says and we know that. THe US poverty and Irish poverty aren't even close. We have a social welfare system.