Property Crash

[OneRedArmy]

The real worry is not the fall in house prices (I concur with Adam's views that its long overdue and have little sympathy, particularly for those who over-extended themselves to get into investment property) its the lingering fear that the whole Celtic Tiger has actually been a house of cards, built purely on property.

The pro-property pundits always use the general health of the economy and net migration as a justification for property prices to remain relatively positive going forward, reasoning that as long as their is new demand for houses, prices will not drop markedly.

However, if you look a bit closer you will see that a lot of the immigrants are working either directly in property sector (notably construction) or in the service industry which oils the wheels of the property sector.

Its possible to view this as a large vicious circle/self-perpetuating myth, with demand for property being driven primarily by the property sector itself.

Lets face it, as a nation we don't make anything physical, industry of any sort is non-existant outside of localised hotspots such as pharmaceuticals.

The service industry, including financial services, is relatively strong but I'm not sure it is strong enough and a large enough employer to justify what we have seen happen to the property market over the last 10-15 years.

Also, the high cost of living (principally property!) has made Ireland a much less attractive destination for Foreign Direct Investment than it was 10 or 20 years ago. FDI inflows have fallen over the past few years and we are no longer in any way a low cost destination.

Moreover, Ireland is becoming a less attractive destination for US FDI specifically as other countries have instituted similar tax breaks and the US authorities have gotten wise to the transfer pricing "schemes" that made Ireland such an attractive destination for the Microsofts of this world.

Whilst the likely outcome is a softening of the economy, there is probably somewhere between a 1 in 10 and 1 in 25 chance that it could all go tits up in a big way.

[Macy]

Decentralisation is a political campaign and not a policy one so and when your job location moves you should be entitled to redundancy.
Obviously it's a political one - Departments moved based on where the Minister was based, with no reference to the National Spatial Strategy. Unfortunately most of the electorate to dumb to see it, especially in the places that think they're going to see all these jobs and don't notice a few FF/PD chums with development lands rubbing their hands, or house prices shooting up for their young.

As for the redundancy - it's nothing to do with whether it's political campaign or policy. If your job moves beyond a reasonable distance (private or public sector) you're entitled to redundancy.

[Poor Student]

This thread has trailed off in recent times. Reports a few weeks ago have shown an actual drop in the average paid nationally for house prices. Even in Dublin increases have slowed to just 0.1%. Interest rates have risen again today and 2 or 3 more rises are expected by the year's end. Is the market about to grind to a halt or even crash?

[dahamsta]

House I left 2 months ago was listed at 325k, it's now 275k. I reckon he'll be lucky to get that.

adam

[drinkfeckarse]

All the Celtic Tiger did was bring Ireland up to date. People seem to think that the bubble has to burst but why do people think we are in a bubble in the first place? There won't be any widescale depression IMO. Ireland is a modern country now and people thinking it will somehow go back to how it was in the 70's & 80's is unrealistic.

I should, however, point out that I am no financial guru or city analyst so the above is all uneducated opinion. ;):)

[pete]

All the Celtic Tiger did was bring Ireland up to date. People seem to think that the bubble has to burst but why do people think we are in a bubble in the first place? There won't be any widescale depression IMO. Ireland is a modern country now and people thinking it will somehow go back to how it was in the 70's & 80's is unrealistic.

I have not heard anyone suggest we would go back to 20% unemployment. Bubbles by their nature burst it just depends if small or big bang.

Interest rate rises are no harm as will help bring us to a softer landing.

The EU will be pushing us to increase our Corporate tax rates but we need to resist as long as possible as would have very negative affect on the economy.

[BohsPartisan]

The reason bubbles burst is because there is nothing substantial inside them. As in nature also in economics. The current boom is based on an artificially inflated property market i.e. a bubble. It is unthinkable that it could continue to expand ad infinitum or even stabilise without deflating.

[Bald Student]

Bubbles always burst because the ones that didn't burst stop being called bubbles.

[Bluebeard]

From a socio-algerbraic point of view, the dropping off of property values is a great thing for the people of Ireland.

All Property is theft

Theft is a crime

Therefore, if property is dropping in value, the amount of theft drops in value too, thereby lowering the amount of crime

Therefore, plunging house prices means that Ireland is becoming a safer place to live.

There may be one or two slight holes in the logic, but it works for me.

[BohsPartisan]

All Property is theft



Camomile for you so?

[drinkfeckarse]

For the record, I don't believe Ireland is in a bubble or ever was. All that happened was that we modernised. No need to assume there's a great big fall waiting for us.

[pete]

There may be one or two slight holes in the logic, but it works for me.

One or two? :eek:

If you think believe private ownership is a crime I suggest North Korea as the place for you to emigrate to.

[Jerry The Saint]

All Property is theft

Theft is a crime

Therefore, if property is dropping in value, the amount of theft drops in value too, thereby lowering the amount of crime

Therefore, plunging house prices means that Ireland is becoming a safer place to live.


Fianna Fáil Manifesto - Election 2012 :)

[BohsPartisan]

For the record, I don't believe Ireland is in a bubble or ever was. All that happened was that we modernised. No need to assume there's a great big fall waiting for us.

Sorry did you miss this?


The current boom is based on an artificially inflated property market i.e. a bubble. It is unthinkable that it could continue to expand ad infinitum or even stabilise without deflating.

That is not opinion, it is fact. The fall in house prices is symptomatic of the @rse falling out of the economy i.e. a pin in the bubble.

[pete]

That is not opinion, it is fact. The fall in house prices is symptomatic of the @rse falling out of the economy i.e. a pin in the bubble.

I think it may be symptomatic that the Construction sector falling. In recent years that has taken bigger portion of the economy which makes us more exposed.

We are losing some manufacturing jobs but that was always likely as more people move into the Services sector. Its a bit like the move away from Agriculture in the past. I am not aware of any other sectors that suffering that much.

[BohsPartisan]

I am not aware of any other sectors that suffering that much.

What sectors do we have left? The manufacturing/export based boom that was The Celtic Tiger ended around the turn of the century. We were saved a fall by the property bubble. Chickens roost home coming to.

http://www.thepropertypin.com/

[pete]

What sectors do we have left? The manufacturing/export based boom that was The Celtic Tiger ended around the turn of the century. We were saved a fall by the property bubble.


- Pharmaceuticals
- IT
- Services
- Finance
- Tourism

Dell was mentioned recently as Irelands biggest employer but at half those jobs in sales, support & other services. Dell is more a manufacturing company than an IT company.

IT had a big boom followed by a significant withdrawal but is fairly busy for last few years.

Ireland never had a sizeable manufacturing sector. We have few heavy industry largely due to our colonial past.

[BohsPartisan]

- Pharmaceuticals
- IT




AKA manufacturing.

Services are being moved abroad - call centres in India etc. Finance is totaly reliant on the other sectors. Tourism, well we can't all dress up as leprechauns for a living.

250,000 people are employed directly in the construction industry. This doesn't even count auctioneers and all the other people who rely on the property market.

[pete]

AKA manufacturing.


IT = software & other services. Microsoft, Google, eBay to name high profile examples are not manufacturing companies. There are apparently 17,000 vacant IT jobs

Pharmaceuticals are not traditional manufacturing & not as price sensitive like say a toaster factory. This has been a large growth area for the last 5 years. The recent high profile announcement by Pfizer to let people go was worldwide decision & nothing to do with the irish economy - trials of a new drug failed so large drop in expected revenues.

There is no doubt as an economy we are exposed to the boom of the construction sector but Interest Rate rises will hopefully soften the downturn.
Call centres are minimal employer in Ireland & the trend is for call centres to move back from India.

As has always been the case the biggest threat to the Ireland economy is the World economy as we are so open & trade a lot. If EU Interest Rates are increasing it should mean the EU economy rising.

[BohsPartisan]

As has always been the case the biggest threat to the Ireland economy is the World economy as we are so open & trade a lot. If EU Interest Rates are increasing it should mean the EU economy rising.

As I said one eight of the population is employed directly in construction. If one eight of the population's livelyhood is in jeapordy then consumer spending decreases leading to a downturn in other sectors including services. If services are hit then so is IT. Anyway you look at it its bad news for the Irish.
You are right that we are linked to the World economy. The biggest factors in the world economy are China and the U.S.A. The construction industry is in freefall in the US and consumer spending is down. The US is Chinas biggest market for its cheap consumer goods. If US spending is down, the effects of that will be felt in China. The EU is not immune to what happens elsewhere in the world economy. I would also argue that we are more prone to infection from whatever affects the US as we never had a developed indiginous economy and have relied on the multinationals far too much.

[Magicme]

Kingspan Century cut jobs this week due to the "property crash" apparently.

[DvB]

Kingspan Century cut jobs this week due to the "property crash" apparently.

Timber frame manufacture was always likely to drop off, signs of this have been clear for a while. Our construction industry is largely based on traditional tried & trusted methods & is slow to embrace new methods on a large scale (trust me i'd love it to change & alot of architects are constantly pushing for this to happen), TF has had alot of negative press (some deserved, some not so) in the last couple of years with a number of developments being erected substandard leading to massive problems further down the line! The vast majority of home buyers over here are still extremely wary of investing in TF homes, this is now being reflected in the reduction of orders & hence loss of jobs!

If its any consolation its generally accepted the first people to see the pinch in the construction industry are the architects/planners, from my perspective whereas the amount of new work has dropped off, realistically all its really done is drop from the ridiculous levels of 2/3 years ago to a more acceptable level, if its to collapse its either a couple of years off yet or will do so in a massive 'Black' monday type scenario!!

[Peadar]

Kingspan Century cut jobs this week due to the "property crash" apparently.

Could it have anything to do with the fact that we don't tend to want wooden homes, in Ireland?

Anyway, I believe that our economy is like nothing we've ever known, in this country. We were over dependant on farming, which was never modern or efficient enough, to allow farms be run as businesses.

We've modernised, as a state and now have a work force which is very diverse and is willing to diversify. The idea of someone staying in the same job for 50 years, will be a thing of the past.

People rarely moved home, with some families living in the same house for generations. The extended family was a support network and families tended to live in close proximity to each other.

Improved wealth and transport has changed all that and moving jobs is very common. As a consequence, moving house is much more common, than it used to be.

The state isn't finished it's upgrade, with communication & transport infrastructure continually being improved. We now list Tourism as our leading indigenous industry and have increased numbers of people involved in the service industry.

There's no doubt that our circumstances will change again. It's inevitable, as we live in an ever changing world, but we've proved many times that we're durable & adaptable, so there's no reason to believe that we wont be able to cope with significant change.

[endabob1]

I'm no architect but aren't most modern houses built on a timber frame?

[Peadar]

I'm no architect but aren't most modern houses built on a timber frame?

Quite simply, no!

[dahamsta]

Quite a lot of them though, at least down here. I'd say a good 50% of the developments I see are of timber-framed houses.

adam

[endabob1]

I live in one which is why I asked the question, then again I live in Engerland so maybe it's more prevalent here. I know from my time in Oz virtually all modern houses there are timber framed.

[BohsPartisan]

Nearly sure that whole Tyrrelstown area is timberframe. Onghar anyway.

[DvB]

Nearly sure that whole Tyrrelstown area is timberframe. Onghar anyway.

Parts of each (ongar & Tyrellstown) are, a friends of mine worked for the Architectural firms reponsible for both developments, according to them there have been loads of problems with the TF causing problems!
TBH Its partly their feedback that gave me the impression things were starting to swing back to traditional methods, as they & their clients were predominantly pushing the TF method as an cheaper method of construction and now seem to be going back to the traditional concrete block forms of construction!

Another colleague/friend works for a Timber Frame manufacturer and said the same thing, simply that the orders were reducing in number at a rate far greater than the reduction in theamount of new homes being built per quarter!

TBH i'm not debating here the pro's & cons of the different methods of construction i'm merely pointing out some observations & feedback i've recieved through work based on Magicme's post that Century Homes have let people go! If someone has more nationwide detailed figures i'll happily stand corrected!

[dahamsta]

What problems though? Pointing out problems without actually pointing out problems is typical of those involved in the business!

[Poor Student]

Bank figures show mortgage take up rates are down massively. The rate hikes and the prices are making it simply impossible for people to bridge the gap.

[Bluebeard]

Irish Concrete business has been in terror of timberframe for years - they have been "helping out" their local politicians for years on the back of it. Huge advertising budget, and presumably, lobbying budget - whole bloody country is taking it as read that the timber frame is a bad idea. No wonder FF are back in.

[Magicme]

I wish my house was Timber Frame coz my parents used to live in one and the heat was amazing. They did however block build their new house due to the possiblity that my mum's health problems were due to the treatments on the timber frame polluting the atmosphere. Not proven but mum is convinced altho her health hasnt improved any really.

The new house is much harder to heat despite underfloor heating & air vent heating systems as well as an oil burner in sitting room.

[s-side hoop]

wouldnt go near a timber frame myself, people across the road from me built one which began to collapse coupled with high winds blowing bits off it the council condemned it and it has now been ripped down completely.

[DvB]

What problems though? Pointing out problems without actually pointing out problems is typical of those involved in the business!

I'd already stated i didnt want to get into debating the pro's & con's of either method of construction, however seeing as you've written an entire business off in one foul swoop, a business i'm employed in, I feel some clarification is required on your part!

[Peadar]

wouldnt go near a timber frame myself, people across the road from me built one which began to collapse coupled with high winds blowing bits off it the council condemned it and it has now been ripped down completely.

I think it's important to distinguish between a timber house and a timber frame house.
The timber frame house has a concrete outer leaf and a timber inner leaf.
For one to be falling apart in the wind, it's either a wooden house or badly built or both. Timber frame houses are relatively durable. I've heard of problems with window frames, due to a shift in the wooden house frame, as well as doors not closing. There are other issues, but I can't recall them and therefore wont speculate on them here.

[pete]

I am surprised there is a downturn in timber frames as they seem to be a win-win. The heat is great & they are much quicker to build. The only downside is that they don't insulate sound as well as concrete so may not be suitable for terraces or semi-Ds

[dahamsta]

My last gaff was timber frame, we hardly turned the heat on the whole time we were there, but I was damned glad the neighbours were quiet, and that we moved out just before yerone exploded. Given that I could hear murmurs when they were talking in bed - their bedroom backed onto mine - I can only imagine how loud a screaming baby would be. And I likes me quiet!

adam

[OneRedArmy]

Bank figures show mortgage take up rates are down massively. The rate hikes and the prices are making it simply impossible for people to bridge the gap.I`m not sure they are down massively, although they are certainly down.
The rates increases are obviously an issue but the whole stamp duty uncertainty has also been a huge deterrent.

In any case, I wouldn`t go near the market for the next 12 months.

A few pages (& months) back I estimated the probability of a significant drop in house prices in the next 12 months (15-20% plus across the board) as being between 1 in 25 and 1 in 10. I`d say its less than 1 in 10 at this stage.

Also funny how according to Bertie we`ve only faced a challenging economic climate in the 2 weeks since the election....

[Poor Student]

I`m not sure they are down massively, although they are certainly down

I think mortgage take up is down about 20% according to the AIB. Is that significant enough?

[Ringo]

was listening to newstalk the other morning. a girl from navan was talking about her huse price plummeting ( 4% as it turned out). A guy from Myhome.ie was on he said in the context of the same house going up 12 % over the previous year, she was still way ahead. if your looking to buy a house and make huge gains over a year or two , its a bit unrealistic. He was saying the sales have picked up since the election. The price drop has more to do with people who were being greedy , having to be realistic.

[BohsPartisan]

Myhome.ie are the propagandists of the construction industry. Do not take them as serious analysts. It would be like asking a boardmember of the Coca Cola company which was nicer - Pepsi or Coke.

Same goes for the Irish Times. They own Myhome.ie and its now their main source of revenue.

[Ringo]

All the negative talk & doom & gloom is not helping the industry. were talking ourselves into a recesion.

[BohsPartisan]

All the negative talk & doom & gloom is not helping the industry. were talking ourselves into a recesion.

Thats bull, we borrowed ourselves into a recession. We threw caution to the wind and got ourselve into record levels of debt, and the banks and the media egged us on. The notion that if everyone keeps quiet, the good times will continue is plain stupid. Economic downturns are a result of unplanned overproduction where the total cost of goods and services is greater than the wealth of the consumers. We got around that for a while by being stupid and borrowing, borrowing, borrowing, which created a bubble economy which is now bursting. No amount of positive thinking or talk will make a difference to that.

[pete]

...were talking ourselves into a recesion.

While it may not all be great I think there is a lot of truth in that. I think some people want to see the country fail.

If you own a home & live in it what difference does it make if it drops in value for a few years? As long as you have a job & can pay your mortgage you are ok. I think the problem is for some reason everyone think they entitled to 20% rise in value yearly.

:rolleyes:

[Ringo]

While it may not all be great I think there is a lot of truth in that. I think some people want to see the country fail.

If you own a home & live in it what difference does it make if it drops in value for a few years? As long as you have a job & can pay your mortgage you are ok. I think the problem is for some reason everyone think they entitled to 20% rise in value yearly.

:rolleyes:

Very true. People are expecting too much. i don't see much chance of negative equity in Ireland, silmilar to the Uk in the 80's/90's. Some people would love the though.

[pete]

Very true. People are expecting too much. i don't see much chance of negative equity in Ireland, silmilar to the Uk in the 80's/90's. Some people would love the though.

I am no expert but I think even a 20% down would not be a crash but more a re-adjustment. If its a home value will come back up over time.

I have no read anything about the foreign investment market but will be interesting to see interest rate rises will have an affect there.

[BohsPartisan]

While it may not all be great I think there is a lot of truth in that. I think some people want to see the country fail.



No they don't they are simply telling it as it is. Chinese whispers don't make or break an economy. Your arguement here is the same as saying if you don't support the war in Iraq, you hate America. 20% down turn is massive Pete and its not about people "expecting" 20% increases in value every year, its the knock on effect that it has on the rest of the economy, but hey why do I bother, I'll leave you and Ringo to pretend nothing is wrong. Follow the yello brick road...

[pete]

I'll leave you and Ringo to pretend nothing is wrong. Follow the yello brick road...

I never said there was nothing wrong. I just dispute the reasons & nature of knock on to the rest of the economy. It could be argued cheaper house prices are good for other sectors of the economy?

I am sure people are holding off buying until they see the stamp duty changes. Banks are already doing test on income based on 1 % rise in interest rates so its difficult to see ECB rates hitting 5% in the short term. It doesn't matter if 1m+ house prices are reducing, the 1st time buyer market is important marker.

[BohsPartisan]

I just dispute the reasons & nature of knock on to the rest of the economy. It could be argued cheaper house prices are good for other sectors of the economy?



I'll repeat it, 250,000 directly employed in construction. If 50,000 of them are out of work will that not have a knock on effect on the economy? And we're not even counting people working in estate agents, builders providers, etc. etc.

Thats a lot of people who had money to spend on consumer goods who won't any more. Even those who are in work will not be as free spending because they will fear the same fate. And as for lower house prices being better for other sectors of the economy, which ones? It is only better for people if wages continue to rise at a stable level and other prices don't increase at a rate greater than wages. Construction is not in a vacume. It will effect the rest of the economy.