Property Crash

**BohsPartisan** · 27/04/2007, 11:12 AM

Where are net wages falling? If net wages are declining it is because of high inflation

Thats kind of implied by the word "net"

**Ceirtlis** · 27/04/2007, 12:34 PM

[QUOTEWhere are net wages falling? If net wages are declining it is because of high inflation][/QUOTE]

Originally Posted by BohsPartisan

Thats kind of implied by the word "net"

Read the post again and you will see that the second line is an explanation for the point i was about to make. I know the meaning of net. What i want you to show me is where are net wages falling.
The minimum wage has certainly not fallen in "net" terms, in June 2003 it was €6.35, in June 2007 it will be €8.65, €8.65-€6.35= €2.30. €2.30/€6.35= 36% increase in the minimum wage.
I dont have the official inflation figures but i will use 4% for each year, this would be a high inflation rate,
1.04 to the power of 4 gives a compounded inflation for the 4 years of 17%.
36%>17%= Net increase in wages.

**pete** · 27/04/2007, 12:34 PM

Originally Posted by Dodge

Can't go a thread in here without mentioning civil servants, eh Pete?

My point was related to guaranteed job. I suppose a semi-state job may be similar. People in the private sector may have strong job security but there are no guarantees. If you don't lose your job then as long as you can make mortgage payments then you can ride out the reduction in house value. The decentralised reference was to lower price house than the major urban areas.

On the otherhand someone who might need to move across the country because he/she lost their job would not be able to ride out the price fall as need to sell the current house & will be selling at time when value has reduced.

**Dodge** · 27/04/2007, 1:01 PM

But what if your govet department moves again? Or you get promoted and have to move?

**pete** · 27/04/2007, 1:04 PM

Originally Posted by Dodge

But what if your govet department moves again? Or you get promoted and have to move?

Reasonable point but at least there would be a choice to improve your lot. I don't think the government have successfully forced any civil servant to move location yet?

Maybe my decentralised point not a good one so. The advantage of large urban areas is that can hopefully find a different job without moving home.

**Dodge** · 27/04/2007, 1:10 PM

No one's been forced yet but it is a live possibilty. Several of the specialists in my department will be forced to move. And they will not be getting similar job outside of Dublin

**Macy** · 27/04/2007, 2:14 PM

Originally Posted by pete

Reasonable point but at least there would be a choice to improve your lot. I don't think the government have successfully forced any civil servant to move location yet?

They're just trying to use tools of compulsion like no promotion without signing to go somewhere, no career prospects and the threat of whitewalling if you don't go*. They won't come out and say "move, or else" as then redundancy is due, as it would be in any employment, private or public. FF/PD have successfully spun the supposed voluntary nature as some consession to civil and public servants when it's them trying to avoid redundancy payments and moving expenses that would be due.

*Shame on the CPSU, PSEU and to some extent IMPACT for rolling over on these issues

**pete** · 28/04/2007, 11:39 AM

Originally Posted by Macy

FF/PD have successfully spun the supposed voluntary nature as some consession to civil and public servants when it's them trying to avoid redundancy payments and moving expenses that would be due.

Decentralisation is a political campaign and not a policy one so and when your job location moves you should be entitled to redundancy. Anyway i think this going way off topic.

Everytime i switch on the news there seems to be a property report. I suppose if a crash not due the media will help manufacture.

**BohsPartisan** · 28/04/2007, 11:42 AM

Originally Posted by Ceirtlis

1.04 to the power of 4 gives a compounded inflation for the 4 years of 17%.
36%>17%= Net increase in wages.

Most peoples wages will increase by 2% this year (partnership). inflation is around 4% and rising. net decrease of 2% this year.

**Poor Student** · 28/04/2007, 9:19 PM

The national house price average has fallen for the first time in 5 years this month. Still crawling at a snail's pace in Dublin but dropping elsewhere.

**OneRedArmy** · 29/04/2007, 12:03 AM

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** · 30/04/2007, 8:04 AM

Originally Posted by pete

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** · 06/06/2007, 8:56 PM

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** · 06/06/2007, 11:21 PM

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** · 07/06/2007, 2:44 PM

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** · 07/06/2007, 2:53 PM

Originally Posted by 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 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** · 07/06/2007, 2:58 PM

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** · 07/06/2007, 3:00 PM

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

**Bluebeard** · 07/06/2007, 3:01 PM

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.