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Unfortunately its this kind of rationale that has led us to the current problems.Quote:
Originally Posted by tricky_colour
Economic development creates housing demand which is met by building houses. When the primary source of this economic deveopment is...housebuilding & ancilliary property services, then it shouldn't take a genius to work out it's an unsustainable bubble and the economic equivalent of a perpetual motion machine
Probably going off topic a bit here but it is all part of same issue at this stage.
The only sensible article I read suggested the government should intervene to increase home purchases i.e. allow people access to credit who can't get it now due to banks hoarding cash. The suggestion was that the government should not encourage new building but it would assist those people who already want to buy but borrowing restrictions too tight now. This would also use up the surplus property already built. Maybe this is what is planned by assisting first time buyers.
Wasn't it that sort of lending that caused all this trouble in the first place?Quote:
Originally Posted by pete
I think the difference was that in the past, the banks had the money and the limiting factor was how much a person could afford. Now there are people who could afford a mortgage but can't get one because the banks don't have the money.Quote:
Originally Posted by Schumi
That is what was suggested. I don't know how this would be done as the state should not be insuring personal mortgages but it was pointed out that they should not encourage new building. By encouraging sales new buildings would start if demand allows.Quote:
Originally Posted by Student Mullet
Personally speaking - i worked on a trading desk in london until mid august - i decided to walk before i got pushed , trading levels were way down since about may , i spent the majority of june and july either on this or facebook , back in feb that was impossible, i'm one of the lucky ones to get a job - unlike some of my former colleagues who face future months of uncertainity. From my own perspective i don't feel sorry for a lot of these people - greed in terms of salary + bonuses has been a major contribution to this crisis, most people end up falling into investment banking - it's driven by hunger for £ , i'll be the first one to admit it.
Quote:
Originally Posted by pete
I would reckon that is the worst thing they can do. They should let the property market bottom out. Its the whole ideology that these people have which is to privatise profit and nationalise loss.
The best assistance to a first time buyer is to let the market dictate here in Ireland and it will keep on dropping and dropping and the first time buyers will screw the developers in the same way that the developers have being screwing others beforehand.
Dunno bout that Neil. Major factor affecting prices at the mo isnt developers greed but the sellers expectations. If anything the only houses/apartments with anything approaching realistic prices are the ones on offer from developers. In fairness if you paid 350000 grand in the last few years for a house how much of a hit would you be willing or able to take on that if you needed to sell now? Go on to myhome.ie and look at the prices and then ring a few of the estate agents and see what the bids are on them. There is a gap of about 50+ grand in some cases.Quote:
Originally Posted by NeilMcD
I think it would be a mistake for the government to come in now and prop up a market with over inflated prices. If they did come in they should limit the amount they lend to realistic levels.
People who think the market is gonna fall so bad that they will be able to ride in to town and pick up a house for next to nothing are living in a dream land.
Is this just a blip or a re-adjustment then!!!! These are the terms not too long ago by a few economists and by the construction industry.
Without wanting to sound like a 1st year economics teacher, the "proper" value is whatever someone will pay for it.Quote:
Originally Posted by Billsthoughts
On that basis, Irish property is still way overvalued as sellers vastly outnumber buyers. This is an indisputable fact.
But more importantly using internationally comparable indices and metrics such as rental yield, average income etc. Irish property is still up to 30% overvalued.
?????Quote:
Originally Posted by OneRedArmy
where in my post did I use the term "proper" value?
If the last few years have proved anything here is that people will pay whatever the banks will lend them.
I wonder will the banks be so willing to lend them money so easy over the next few years. Average house price is something like 12 times the average wage here in Ireland which is way too much. That is not sustainable.
we are already seeing that.
And plenty of people here too. Might I remind you of the phrase "soft landing"? :rolleyes:Quote:
Originally Posted by NeilMcD
Relax everybody, the Government have been on the RTE to say that there is no Financial Crisis and asking them (Joe Duffy) to stop talking down the Country.
I reckon we're not far away from getting a good old Soviet type Ministry of Information.
I used the term proper value to highlight that as there currently isn't a real housing market (low volume of transactions) nobody can really value properties.Quote:
Originally Posted by Billsthoughts
Whilst values in the past may have been driven by what lenders were willing to lend, this is no longer the case because of lower LTVs & higher interest rates. But also, buyers had ridiculous assumptions of capital appreciation which led to everyone turning into mini-property magnates. Going forward houses will be bought as homes, not as a speculative assets.
You've said that people won't be able to ride into town & buy something for a song. If arrears & repossessions continue to increase, that's exactly what people will do (particularly buy-to-lets, not covered by FHPA).
In the US the state is setting up a fund to buy the dodgy mortgages. Projected it could cost upwards of $1 trillion! All to be funded by government bonds and more borrowing. Amazing that bankers can mess up so badly they government gives them a free pass as can't accept the alternative.
:eek:
I think the last tow remaining Investment Banks (Morgan Stanley & the other one) have now changed their status so they can take deposits off the public. This means they come under the "regulation" of the Fed.
Bush has been very quiet & really appears to have little control & not even making the decisions that will commit the US taxpayers to so much debt. Imagine if the Irish Central Bank bailed out our banks to the tune of E20billion & Cowen didn't give the ok.
I think it shows the US Governments priorities in all this that they are bailing out the banks directly. Surely the most equitable way of doing it would be to support the mortgage holders in making their payments?
Funny how all these greed is good capitalists are now suddenly in favour of Government interventions rather than the market running it's course. :rolleyes:
I can't believe Section 8 of this so called bailout bill has not been challenged, yet.
'Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.'
Paulson is bailing out his old wall street buddies and he or his successor can't be held accountable for 700 billion dollars of tax payers money! The purchase of dodgy mortgages with this money will be administered by Paulsons Dept, but, who's going to manage and service these mortgages? Ah, maybe they'll find someone on wall street to handle that part for them?
Something smells here, and smells bad.
Edit: Is there any wonder that the republicans wanted this passed asap?