Property Crash

[pete]

Enough with the trolling pete. You know damn well that CA is for serious discussion only, and you're not above the rules. Knock it on the head, now, or I'll toss you out of this forum like I'd toss anyone else out.

adam

If you have problem PM me. I am using facts to argue my point.

The CSO figures you linked above show 15% vacant properties including holiday homes. When you take holiday homes out of the numbers it is 12% (approx 210,000 properties). Where is this 20% figure?

Back on topic. There is no doubt there is drop in new homes being build but does this mean the country about to fall into a recession? I don't think the facts back this up yet but maybe they will change...

4.6-4.7% unemployment (http://www.rte.ie/business/2007/0907/jobless.html) is basically full employment.


Companies in the construction sector are still hoarding workers, but those job losses have been postponed rather than cancelled, they said in a research note. House completions have started to fall (-35% yoy in July), so workers are bound to be laid off it said.
He expects an unemployment rate of 5.1% by the end of the year, ticking up to 6% by the end of 2008.

Even 6% is not a recession.

[dahamsta]

Apologies pete, we're at cross-purposes here. You said:


Its also fairly clear from the figures that claims that only 3% are holiday homes is hopelessly low.I see now that you were talking about 3% of homes in the state, I thought you were trying to claim that 3% of vacant homes were holidays homes. That's where my 20% comes from (50k in 250k).

I still think you're trolling though. Correct me if I'm wrong, but it looks to me like you're still suggesting a "soft landing", in complete denial of the market, and zero evidence for such a thing having happened any place at any time in history. Why don't you address that with evidence of a previous occurence and prove you're not trolling? (On that topic, there's a difference between someone saying something disagreeable and someone saying something stupid. Trolling is when someone intelligent says something stupid. QED.)

(Again though, apologies for the above. It really was a misunderstanding.)

adam

[OneRedArmy]

Just to put things in perspective. In my neighbourhood in North Culchie Dublin a three bedroom semi is selling for €370k. I believe it was bought in the early eighties new for £29k = €37k aprox. In the mid to late 80's house's in this estate couldn't sell for €25k. All we're seing now is a levelling off in the market. Supply and demand, low interest rates -v- higher interest rates. But remember this, in the mid eighties interest rates were over 17% and the high rate of tax was 60% IMO we're a lot better off now than then. It's just that people have become more materialistic and want want want, and there are a lot of people out their willing to lend them the funds to do it come hell or high water.Unfortunately crashes aren't defined by assessing property price movements over generations. I'd also be surprised that the area you quoted suffered a fall in value between the start and the end of the eighties, as property prices in Ireland are generally accepted to have only fallen once, by a very small amount (1.6%?) in the last 35 years. http://www.arandomwalk.com/wp-content/uploads/2007/09/cso-irish-house-prices.png

As in the UK, its the people that bought in the last few years, and who stretched (or lied) to afford a mortgage, that are in real danger. On a macro level its much more serious as property drove a large amount of the GDP growth in the last 5-10 years.

[onceahoop]

Unfortunately crashes aren't defined by assessing property price movements over generations. I'd also be surprised that the area you quoted suffered a fall in value between the start and the end of the eighties, as property prices in Ireland are generally accepted to have only fallen once, by a very small amount (1.6%?) in the last 35 years. http://www.arandomwalk.com/wp-content/uploads/2007/09/cso-irish-house-prices.png

As in the UK, its the people that bought in the last few years, and who stretched (or lied) to afford a mortgage, that are in real danger. On a macro level its much more serious as property drove a large amount of the GDP growth in the last 5-10 years.

Prices did drop in my area in the 80's. Not for long mind you.

Construction has driven the economy over the last few years. The reduction in new house starts will inevitably lead to greater unemployment. Many of those who will become unemployed are migrant workers who will eventually have to move on. There is talk of major construction projects in England ahead of the 2012 Olympics. If they leave there will be a huge surplus of accommodation to rent leaving many investors stretched. Remember a lot of these investors are those who bought new homes and kept their first one to rent and pay their mortgage. There will also be knock on loss of employment in the supplies sector. Add all this to our inability to maintain competetiveness in the manufacturing industry and it doesn't paint a pretty picture. I read some years ago that Ireland would end up as a country of services. It could come true.

[pete]

I read some years ago that Ireland would end up as a country of services. It could come true.

The most advanced countries are 75-80% Services based.

I think the biggest threat to Irish competitiveness is the weak US dollar. If you are a US multinational you will see Irish wages increase every year even with no pay increases. This can be ok if the Irish based company if earning money is Euro but a disaster id supporting US based activities. The dollar - euro rate is likely to continue to get worse & we have no control over it.

[OneRedArmy]

Prices did drop in my area in the 80's. Not for long mind you.

Construction has driven the economy over the last few years. The reduction in new house starts will inevitably lead to greater unemployment. Many of those who will become unemployed are migrant workers who will eventually have to move on. There is talk of major construction projects in England ahead of the 2012 Olympics. If they leave there will be a huge surplus of accommodation to rent leaving many investors stretched. Remember a lot of these investors are those who bought new homes and kept their first one to rent and pay their mortgage. There will also be knock on loss of employment in the supplies sector. Add all this to our inability to maintain competetiveness in the manufacturing industry and it doesn't paint a pretty picture. I read some years ago that Ireland would end up as a country of services. It could come true.I didn't think we had a manufacturing industry to be competitive in, unless you count a couple of thousand people in Limerick screwing the lids on computers, who are living on borrowed time :confused:

We've been a country of services for at least 15 years. Before that we were a country of farmers.

Broad generalisations, but ever since protectionist policies were dropped in the 60's and 70's we've never really made anything of substance.

[onceahoop]

I didn't think we had a manufacturing industry to be competitive in, unless you count a couple of thousand people in Limerick screwing the lids on computers, who are living on borrowed time :confused:

We've been a country of services for at least 15 years. Before that we were a country of farmers.

Broad generalisations, but ever since protectionist policies were dropped in the 60's and 70's we've never really made anything of substance.

These are figures for IDA companies.

Total Employment by sector in IDA Ireland supported companies

Pharmaceuticals & Healthcare - 20,207
Information and Communications Technologies (ICT) - 43,661
Engineering - 13,161
International & Financial Services - 51,021
Miscellaneous Industry -7,437

Many of the above jobs could be outsourced to lower cost base countries. We've sen some of this already.

However the IDA recognise the need for change. The following is an extract from theIr Website www.idaireland.com/home/business

"While production and manufacturing industries will continue to be the backbone of the Irish economy well into the future, IDA is also promoting Ireland as a location for a range of headquarter functions. A movement away from the industrial economy to the knowledge economy has caused a shift in the understanding of headquarter operations. Headquarters are no longer necessarily located with the manufacturing site and made up of the functions such as finance, strategy, marketing and human resources. Activities previously considered as cost centers are being converted to profit and wealth generation centers.

Headquarter Activities
Activities which are relevant for headquarter functions today include:

Research & Development
Sales and Marketing
Intellectual Property Management
Supply Chain Management
Shared Services/Contact Centres
Digital Media

Why Ireland for Headquarter Activities
IDA is promoting Ireland as an ideal location for headquarter activities because of its

pro-business environment
political stability
transparent tax regime
knowledge intensive skills and excellent telecommunications infrastructure"

Sorry for going off topic a bit but if our immigrant work force up sticks and go it will lead to problems in the housing market.

[Ringo]

Your perception of soft or hard landing obviously depends on your situtation. My house has doubled in the last four years so a drop in house price won't really effect me. its also my home here i intend staying for a long time & so view it as a long term investment. Its my second home so i'm seeing a soft landing. Now if you take someone thats just bought, lets say last year. Then they are could be looking at their house being worth less than they paid for it. For them thats a hard landing. Reality is, we probably will never see the same rate of growth. But if you view your house as a long term investment, you'll be ok in the long run.

[pete]

Your perception of soft or hard landing obviously depends on your situtation. My house has doubled in the last four years so a drop in house price won't really effect me. its also my home here i intend staying for a long time & so view it as a long term investment. Its my second home so i'm seeing a soft landing. Now if you take someone thats just bought, lets say last year. Then they are could be looking at their house being worth less than they paid for it. For them thats a hard landing. Reality is, we probably will never see the same rate of growth. But if you view your house as a long term investment, you'll be ok in the long run.

I agree but when we reach the bottom there could be a surge back into the market due to people delaying first home purchase. I think investors will dry up but some people will still buy houses as its the correct location & they willing to rise out the fall in prices.

I think some prices may be inflated by developers giving away freebies as part of the deal. Its easy that selling houses lower than the you sold a few months ago.

I still lots of building in the Dublin City area. Developers are started to build on the gaps (derelict builds & such) as people will always want to buy close to the City. I am sure it will harder to sell property far from City without transport links as more options for buyers.

[OneRedArmy]

My favourite site of the minute, www.arandomwalk.com (http://www.arandomwalk.com)has spotted a devious scheme by one particular property website to, allegedly, try to obscure price drops in properties being advertised.


it appears that the site (myhome.ie) has started to display house prices as images rather than text. This is interesting because it impacts on two things
1. IrishPropertyWatch which provided very helpful statistics on price drops
2. It prevents people using google’s “cache” to find out whether houses had changed price in the past

I think it’s indicative of the property vested interests in this country who are running scared of the public finding out what is really going on in the market. We have to rely on the PTSB monthly reports which tell us property prices have fallen by a few %, when most observers know they’ve fallen by a lot more. We find ourselves in a situation where statistics from a couple of computer nerds and other amateurs are more reliable and timely than the “official” statistics - it’s an absurd situation for such an important industry.

Interesting stuff and pathetic if they think this will pull the wool over peoples eyes.

Someone on the Sunday Business Show on Today FM yesterday made a great point that its exactly those people with vested interests who talked the economy/house prices (as they are so interlinked to be one and the same at the minute) up over the last decade who are howling now that we are talking ourselves into a recession.

So its okay to inflate the bubble but wrong to burst it?

[Lionel Ritchie]

it appears that the site (myhome.ie) has started to display house prices as images rather than text. This is interesting because it impacts on two things
1. IrishPropertyWatch which provided very helpful statistics on price drops
2. It prevents people using google’s “cache” to find out whether houses had changed price in the past

pesky myhomers have figured out them new fangled printer yokes never caught on here. :D

[pete]

If I was an estate agent I would be trying any trick I could to give a better impression of property. It is the free market afterall & happens everywhere. Read a quote from big US developer recently where he said that in falling market he prefers to include free kitchen etc... instead of dropping the price because reduced prices just p*** off the neighbour who bought his house for 100k more 3 months ago.

Standard Irish attitude - we complain when prices rising (ah sure its it terrible people can't afford homes) & we complain when prices dropping (negative equity!!!).

[Poor Student]

Read a quote from big US developer recently where he said that in falling market he prefers to include free kitchen etc... instead of dropping the price because reduced prices just p*** off the neighbour who bought his house for 100k more 3 months ago.

Same thing has been happening here for a while. It's a way of averting actual price drops which would register in statistics and encourage the public to bid lower.


Standard Irish attitude - we complain when prices rising (ah sure its it terrible people can't afford homes) & we complain when prices dropping (negative equity!!!).

Standard human attitude, two groups of people, those with no property will complain about prices and those who have just bought property will complain about negative equity.

[OneRedArmy]

Bumpety bump.

Anyone out there who still has any faith in the housing market? Pete, you're usually the optomist in this area, have you changed your views?

From my perspective the housing market appears to be potentially in danger of suffering death by thousand cuts, whereas a short, sharp (and large) drop would be much more preferable.

Also lots of evidence of trying to brush the bd news under the carpet by the usual suspects (estate agents and banks) aided and abbetted by a compliant fourth estate who are far too tightly tied into the property market.

[pete]

Clearly house prices have dropped but that was never a debate. I still don't see it in crash territory yet. I think if we were in a crash everyone would stop buying & would be almost impossible to shift property as prices falling too quickly. I have no doubt though that the prices recorded in surveys no not reflect reality as developers probably including freebies in existing prices. I get the impression big developers are slowing production so lower supply demand may balance off against the lower supply...?

Unemployment has risen but so small it is unimportant. Interest Rates have held & I think more than anything else they will decide the future. Throw another 1% increase on & market screwed, drop it 1% & all those people holding off to purchase 1st home will jump in again...

[Ringo]

Thought this made interesting reading



http://www.thepropertypin.com/viewtopic.php?t=3861

[Student Mullet]

Thought this made interesting reading



http://www.thepropertypin.com/viewtopic.php?t=3861Can we call a drop of 4.5% a crash? I would have expected something more dramatic.

[OneRedArmy]

Can we call a drop of 4.5% a crash? I would have expected something more dramatic.Propertypin is blocked for me but I understand the 4.5% drop is the ESRI/PTSB figures, which (as I flagged earlier in the thread) is based on valuations and asking prices as opposed to sale prices.

Any realists put the true drop at between 10-15% with only downside in the next 6 months.


Clearly house prices have dropped but that was never a debate. I still don't see it in crash territory yet. I think if we were in a crash everyone would stop buying & would be almost impossible to shift property as prices falling too quickly. I have no doubt though that the prices recorded in surveys no not reflect reality as developers probably including freebies in existing prices. I get the impression big developers are slowing production so lower supply demand may balance off against the lower supply...?

Unemployment has risen but so small it is unimportant. Interest Rates have held & I think more than anything else they will decide the future. Throw another 1% increase on & market screwed, drop it 1% & all those people holding off to purchase 1st home will jump in again...
1) With the recent interest rate rises affordability for 1st time buyers has never been lower.

2) Current interest rates, in the context of an economic cycle, are still low. What we experienced for the last 5 odd years in terms of rates was unprecedented, not the norm.

3) Property prices in the UK fell 25% in the early 90's over the period of around 3 years. This is referred to as a crash. We aren't far away from that.

4) As for people stopping buying, do you know many people who have bought or sold in the last 3 months? I don't.

[dahamsta]

You all understand that property crashes and recessions don't happen over a period of a couple of months, right? :rolleyes:

[Ringo]

Propertypin is blocked for me but I understand the 4.5% drop is the ESRI/PTSB figures, which (as I flagged earlier in the thread) is based on valuations and asking prices as opposed to sale prices.

Any realists put the true drop at between 10-15% with only downside in the next 6 months.


1) With the recent interest rate rises affordability for 1st time buyers has never been lower.

2) Current interest rates, in the context of an economic cycle, are still low. What we experienced for the last 5 odd years in terms of rates was unprecedented, not the norm.

3) Property prices in the UK fell 25% in the early 90's over the period of around 3 years. This is referred to as a crash. We aren't far away from that.

4) As for people stopping buying, do you know many people who have bought or sold in the last 3 months? I don't.

the house next door to me has just sold, at what i'd concider a reasonable price.. Not what he was looking for it at first, but still a good price. Friends of ours have just bought/sold as well. Didn't get as much as they wanted origionally for their house, but got another house for less, so it balances out for them. i still see it as a correction. prices were rising far too fast & have just fallen back to realistic levels

[rebs23]

An estate agent (Phillip O' Reilly from Ennis)was on the news at 1 stating that there is a crisis in the housing market but that prices cannot fall due to costs involved in constructing houses.

Employment has declined by 3.3% from this month last year but the Live Register doesn't reflect an increase in Male unemployment, indicating that some workers have probably gone back to Eastern Europe and others are probably employed in other sectors of the economy. (maybe in the repair and maintanance sector of construction) www.cso.ie
Its an uncertain time to be a construction worker but I honestly believe that its definitely going to effect some areas worse than others. The days of the massive housing estates on the outskirts of our cities seem to be a thing of the past as people don't want to live in them and their value declines.

Its all a matter of speculation beyond anyones control, trying to predict the winner in the grand national is possibly easier than to predict what will happen in the housing market.

[Poor Student]

Can we call a drop of 4.5% a crash? I would have expected something more dramatic.

We've gone from a galloping increase in prices to gradual increases, a halt and now a decline. It's a big reversal in that context and it's not over.

The resultant increasing unemployment from the decline in the construction has a knock on to other businesses associated with construction and that means less money around to pump into the property market and less money for the banks to lend out which points to further deflation of house prices which leads to more cut backs in construction and you're back to the start of the cycle.

[dahamsta]

An estate agent (Phillip O' Reilly from Ennis)was on the news at 1 stating that there is a crisis in the housing market but that prices cannot fall due to costs involved in constructing houses.Proof positive that estate agents generally live up to their reputation as liars. Prices are falling, and have been falling for several months; and houses have been heavily marked up in Ireland for damn near a a decade now. Property costs have certainly pushed the overall cost of construction up, but most of this land has been sat on for that same decade or more. Builders aren't as thick as bandwagon-jumping muppet property investors that shouldn't be allowed have money in the same way toddlers aren't allowed have bowie knives and gas ovens.

adam

[anto1208]

If you buy a house for 190,000 and a year later the same houses are being sold for 260,000(new)-270,000(2nd hand)then If this "property crash" knocks 60,000 off the price of the house your still make money on selling it,

Prices can fall 10-25% and it is only going to slightly even out the market.

There is no crash its just an evening out of the market / construction industry. And if you have bought your house as a home and not to make a fash buck then you ll be fine. If you did it to make a fash buck then i hope you get burned .

[passinginterest]

The resultant increasing unemployment from the decline in the construction has a knock on to other businesses associated with construction and that means less money around to pump into the property market and less money for the banks to lend out which points to further deflation of house prices which leads to more cut backs in construction and you're back to the start of the cycle.

Certainly true, as an example my Dad was recently laid off by a company that makes timber doors. This time last year they couldn't keep up with demand. About three months ago the first employee was let go, then another and then my Dad. He was a machine operator, but, for most of the last month he was sweeping the floor or spraying weeds in the yard, demand literally dropped to zero. From what he's been told it's mainly due to developers freezing projects, in the hope that this will stop the decline in prices. Plenty of developments ready to go, or already in progress, but, frozen because they can't get the prices they want.

[MyTown]

I've heard similar stuff around here PI & loads of anecdotal stuff about housing developments of 15 - 20 units with just one occupied & estate agents who haven't shifted a unit in months.

Our main sponsor for the past two seasons is a property developer, so I'm definitely hoping for an upturn in the market, or the ripple affect could hurt my team too.:eek:

[dahamsta]

I haven't heard it, I've seen it with my own eyes. There's only one development in my neck of the woods still moving, holiday homes in Garryvoe. Several developments in Cloyne have stopped completely - some a good while ago in fact - and others are unmistakably on a go-slow. Same goes for developments in Killeagh and other areas in East Cork. Last week I drove around a development I moved out of earlier this year, Gort an Oir in Castlemartyr, and there were sixteen properties for sale. Sixteen!

adam

[strangeirish]

I don't know if any of you have been paying attention to the US market, but it has been in turmoil for the last year and a half and is getting worse by the minute. There is approximately 12 to 18 months worth of inventory, with foreclosures being added on a daily basis. Over 180 lenders have exited the market, hence the credit crunch and lack of liquidity in the secondary market. Property values are declining in most parts of the Country. The trickle down effect of manufacturing, i.e. Household appliances, furniture, building materials etc..is having a major impact on the US economy. Add to that the weakness with the dollar and a record 9 Trillion(Yes, that's trillion) dollar National debt, I'd say it's safe to say the US is on the verge of a deep recession.

Suffice to say, the US property crash hasn't quite hit bottom yet, but it's having a huge impact on the overall strength, or lack thereof, on the US economy. Is Ireland to follow? The old adage, when America sneezes, Ireland catches the cold, could be invoked.

[OneRedArmy]

I don't know if any of you have been paying attention to the US market, but it has been in turmoil for the last year and a half and is getting worse by the minute. There is approximately 12 to 18 months worth of inventory, with foreclosures being added on a daily basis. Over 180 lenders have exited the market, hence the credit crunch and lack of liquidity in the secondary market. Property values are declining in most parts of the Country. The trickle down effect of manufacturing, i.e. Household appliances, furniture, building materials etc..is having a major impact on the US economy. Add to that the weakness with the dollar and a record 9 Trillion(Yes, that's trillion) dollar National debt, I'd say it's safe to say the US is on the verge of a deep recession.

Suffice to say, the US property crash hasn't quite hit bottom yet, but it's having a huge impact on the overall strength, or lack thereof, on the US economy. Is Ireland to follow? The old adage, when America sneezes, Ireland catches the cold, could be invoked.You're a year ahead of us in the cycle, as with everything.

[Poor Student]

Certainly true, as an example my Dad was recently laid off by a company that makes timber doors. This time last year they couldn't keep up with demand. About three months ago the first employee was let go, then another and then my Dad. He was a machine operator, but, for most of the last month he was sweeping the floor or spraying weeds in the yard, demand literally dropped to zero. From what he's been told it's mainly due to developers freezing projects, in the hope that this will stop the decline in prices. Plenty of developments ready to go, or already in progress, but, frozen because they can't get the prices they want.

Sorry to hear about your dad, PI. As you're pointing out, developers are trying to cut supply to increase demand but it's not that simple and it puts the likes of your father out of a job. With the increase in unemployment you have a decrease in demand to meet your decreased supply.

[strangeirish]

Sorry to hear about your dad, PI.
Seconded. I forgot to mention that in my previous post

[onceahoop]

Employment has declined by 3.3% from this month last year but the Live Register doesn't reflect an increase in Male unemployment, indicating that some workers have probably gone back to Eastern Europe and others are probably employed in other sectors of the economy. (maybe in the repair and maintanance sector of construction) www.cso.ie
Its an uncertain time to be a construction worker but I honestly believe that its definitely going to effect some areas worse than others. The days of the massive housing estates on the outskirts of our cities seem to be a thing of the past as people don't want to live in them and their value declines.

Its all a matter of speculation beyond anyones control, trying to predict the winner in the grand national is possibly easier than to predict what will happen in the housing market.

The unemployment figures are misleading from what I know. Ten lads (all trademen) from my area went to Australia a year ago because they couldn't get work here. They're back here now but things are no better so they're off on their travels again in January. Also a friend in the construcion industry tells me the economy in Poland is picking up and The Poles are expected to start returning home. This of course will also leave a lot of rental property vacant which in turn will probabaly slow even further the start up housing market

[Reality Bites]

I am right in coming to the opinion that Dahamsta and others here would be very pleased with a property crash and recession! very unfair wishful thinking in light of poster - passinginterests dad getting laid off due to slowdown..there are many others out there I know of in same situation, a slowdown in the longterm may be good for all but a crash is a disaster! So all you Agent Provacauteurs out there be careful what you wish for!!

[pineapple stu]

I am right in coming to the opinion that Dahamsta and others here would be very pleased with a property crash and recession!
Without wanting to talk for other posters, I hate poters who think that just because someone thinks something will happen means they want it to happen. How hard is it to make the distinction?

[dahamsta]

Without wanting to talk for other posters, I hate poters who think that just because someone thinks something will happen means they want it to happen. How hard is it to make the distinction?Thanks for saving me having to post a rolleyes smiley stu.

[strangeirish]

I am right in coming to the opinion that Dahamsta and others here would be very pleased with a property crash and recession! very unfair wishful thinking in light of poster - passinginterests dad getting laid off due to slowdown..there are many others out there I know of in same situation, a slowdown in the longterm may be good for all but a crash is a disaster! So all you Agent Provacauteurs out there be careful what you wish for!!
Well, can you articulate an argument to tell us just how good the current market is and if so, what are your near or longterm predictions? I'm sorry, but at this time, Realty Bites;).

[dahamsta]

That was actually quite funny, I hope it wasn't a typo. :)

[strangeirish]

That was actually quite funny, I hope it wasn't a typo. :)No, not a typo.

[dahamsta]

You can't beat a good double pun!

[GavinZac]

Genuine question, what are the chances of us having much lower house prices, without a recession?

There are, after all, those of us who aren't lucky enough to have deprecating assets yet.

[NeilMcD]

Yeah I hope there is a crash and I come along and buy a nice house wooo hoo.

[Reality Bites]

Well, can you articulate an argument to tell us just how good the current market is and if so, what are your near or longterm predictions? I'm sorry, but at this time, Realty Bites;).

My statement is not a barameter or a comment on the market, We all know the property market is at a standstill, Its teetering on the brink, But a correction would be great as affordability would allow more people to get on board the property ladder, this will take I suspect another year to be realised, a 5% drop this year with similar by the end of 2008 would be welcome but a 20%+(I am excluding inflation) drop would be a disaster for alot of young people and tradesmen and labourers in industry! I do think the Government needs to accelerate the NDP and Transport 21, roads, railway lines, schools and hospitals are badly required around the country..The Budget need to reflect this and bring well needed employment to staff laid-off in SMC last Friday and Atlas Aluminium today!! Neil McD comments said in Jest might have a grain of truth in them, I suspect there are alot of Vultures out there hoping for this! at the end of the day which would you prefer a wholesale property crash and with it resultant recession and massive Job loss or a correction and adjustment with continued growth! No-Brainer! Yes it is good to discuss but I just hope everyones motives are not selfish..thats all

[strangeirish]

You redeemed yourself with that post. I'm trying not to speak for other posters, but I don't think anyone wants a recession, no matter what country you live in. Yes, a correction is long overdue, but the question is, can an economy like Irelands, maintain itself while this correction is taking place? I know there are a lot of other factors to take into consideration other than housing, but when that industry is a large part of the overall strength of the economy, the outlook, sadly, is bleak. I hope I'm wrong. It's not what we want, but there are too many heads stuck in the sand on this one.

[dahamsta]

The only exception to the no-recession rule would be very wealthy people, who can get out at a high, sit on the cash, and reinvest down low; and I certainly ain't one one of those. You have to be in a very particular place to do that though, and you have to have impeccable timing. In other words, there's very few people could actually benefit from a recession.

Sadly, I think we're on the brink of a recession, and I don't think there's a lot we can do to get out of it. Pete has tried to suggest in the past that his comments about so-called "soft landings" have just been attempts to calm the madness, as we talk ourselves into a market collapse; but talk was and is only a contributory factor, the market was and is utterly unsustainable in it's current state. You can't overheat to that level and expect not to get burned. And if there was a way out of it, Fianna Fail wouldn't be the ones to pull it off. Excess is not the answer. You can't buy your way out of a problem if you don't have any money.

Personally, I'm revelling in the current market, since I've been saying it'd happen for years, and I'm finally being proved right. It could also be to my benefit, because I've put off buying a house for all those years based on my beliefs, and there's a chance it'll bottom out in ~2 years time, when I'll be buying. I'm not revelling at the chances of a recession though, and as should be obvious, I think the idea that any normal person would do so is frankly ludicrous. The lower the market goes, the harder it'll be to borrow; only a stupid person would want a recession so they could buy a house.

The market isn't at a standstill btw. It's higher than it was ten years ago, but a downward swing remains... downward. Calling that a standstill is yet more blinkered denial.

There'll be no soft landing. All we can do is hope it doesn't bottom out too low, and get us stuck.

adam

[pete]

It is pointless listening to estate agents & other people with vested interest. Not sure who to listen to as everyone with knowledge of construction has a vested interest.

It would be interesting to know what the figures are for "1st time buyer" category of homes. I remember in 2002-03 there was a fall in overall prices but 1st time buyer homes remained level. At that time there were large price decreases in the high value auctioned homes which seemed to have a disproportionate affect on overall average prices.

I suspect with buyers being price aware it may be difficult to shift homes in the back-end of nowhere with no facilities. In Dublin I feel there will always be good demand for property close th the City and/or good public transport such as Dart/Luas.

[John83]

...The lower the market goes, the harder it'll be to borrow...
Harder than you think. The ECB has kept the cost of borrowing artificially low in this country for years now - it's one of the driving factors behind the house prices. It'll keep it artificially high during a recession here.

[Poor Student]

Difficulty in borrowing will bring house prices down in itself as the funds simply won't be available to sustain a level of prices above borrowing capacity.

[dcfcsteve]

3) Property prices in the UK fell 25% in the early 90's over the period of around 3 years. This is referred to as a crash. We aren't far away from that.

What's your source for this 25% figure for the UK ORA ? My understanding is that it was a 13% fall on average (18% max) across 1989-1993. Prices only started climbing again properly from about 1995.

I wouldn't consider a drop in prices of below 15% to be a crash personally - particularly if over a number of years. The vast majority of property owners would avoid being in negative equity if the value of their property fell by less than 15%.

[beautifulrock]

Good point Steve, but what is for certain during that 89-92 period repossessions increased dramatically (see bolow figures from the CML, showing year, number of live mortgages, repos, % of total mortgages). The vast majority of these repo's would have had negative equity. See also the increase over the last few years although no of course anywhere near the 89 - 92 levels. The general assumption around this period was that 1 in 7 of mortgages were in a negative equity situation. If you want to look at the overall impact on both insurers and mortgage lenders in the Uk at that time, just look at the amount of mergers within the two groups. A number of both were inches away from going belly up as a result. If we have the same reaction in Ireland, ie. repos then we are in trouble, big trouble.


1987 8,283,000 26390 0.32
1988 8,564,000 18,510 0.22
1989 9,125,000 15,810 0.17
1990 9,415,000 43,890 0.47
1991 9,815,000 75,540 0.77
1992 9,922,000 68,540 0.69
1993 10,137,000 58,540 0.58
1994 10,410,000 49,210 0.47
1995 10,521,000 49,410 0.47
1996 10,637,000 42,560 0.40
1997 10,738,000 32,800 0.31
1998 10,821,000 33,900 0.31
1999 10,982,000 30,000 0.27
2000 11,173,000 22,900 0.20
2001 11,247,000 18,300 0.16
2002 11,364,000 12,000 0.11
2003 R 11,452,000 8,500 0.07
2004 R 11,512,000 8,000 0.07
2005 R 11,595,000 15,100 0.13
2006 R 11,719,000 22,700 0.19

[John83]

Difficulty in borrowing will bring house prices down in itself as the funds simply won't be available to sustain a level of prices above borrowing capacity.
Yes, so the ECB factor should cause a bigger swing here than would otherwise occur.