This is the key factor that was missed in the above analysis. The reliance on construction employment cannot be ignored. If you stop building, yes on the face of it supply will be restricted so demand will go up leading to increasing prices. However, the economy has been kept in a spiral for the last number of years of house construction fuelling employment fuelling house buying fuelling house construction. Slow construction, you slow employment and so slow demand too.Originally Posted by OneRedArmy
Where I'd differ is that whether the foreign builders will return home. On the contrary, the developers will probably increase the numbers that they can shaft on agreed terms and conditions, instead letting go the workers that want and insist on the agreed rates of pay. They'll be allowed to do this by the Government with the support of IBEC/ISME/Every media organisation - like they have the last number of years.
If you attack me with stupidity, I'll be forced to defend myself with sarcasm.
Average price paid for a house down again in June both nationally and in Dublin. Average price paid for a house now down €8,000 from the start of the year: http://www.rte.ie/business/2007/0810/houses.html
It'll be interesting to see how the market goes if Trichet doesn't hold back on that rate increase for September.
8,000 is not much & IMO a good thing. It will help the bubble have a softer landing rather than bursting.
Are we still grasping at completely unprecendented makey-uppey "soft landings"?
2.6% over 6 months is soft.
It is no ones interest that the market crashes (maybe say 15% drop over 12 months). A soft landing as the market adjusts is a good thing as it is unsustainable for prices to rise so much higher than wages especially combined with interest rate increases (looks like will be some time before the ultra cheap German cash is available again)
If we continue to listen to the view of "economists" employed by estate agents who most radio and TV stations tend to drag in as their experts........then yes!!
Nothing to see here, move along everyone, keep buying property....
6 months in the property market is roughly equivalent to a month in mainstream industry. House prices are sinking, and the rate at which they're sinking is increasing, not decreasing. House and car repossessions are up, as are credit defaults and bridging loans in the credit unions. Nothing is in place to slow the rate - the Irish government is clutching at straws at best - but it's unlikely anything put in place would succeed anyway.
Because there's no such thing as a "soft landing". There's never been a "soft landing" in recorded economic history,and if there ever is, this isn't going to be the precedent. It just can't happen in our current economic state. All we can do is sit back and hope that it doesn't drag the entire economy into recession and us back to where Fianna Fail picked up the reins as we dragged ourselves out of a recession the last time.
At least this time the moronic Fianna Fail voters won't be in a position to blame the Opposition for the stupid situation Bertie and the rest of his scheming, selfish muppets have put us in.
adam
Pete if you look at seller behaviour, we are still in the early part of a downturn where stubborn human nature kicks in and people refuse to lower their asking price despite little interest.
This is reflected in the fact that there is very little activity in the market, despite summer being the prime season for second-hand sales.
Therefore the true drop in prices is understated by all those people who have had unsold properties on the market for ages with asking prices that are simply never going to be met.
It will take at least another 6-12 months for the real effect to be felt and I personally don't think the drop in the supply of new homes will be enough to halt the slide.
As dahamsta has said, the idea of a "soft landing" is dreamt up by politicians, bankers and estate agents, all of whom are hardly honest brokers in the great property swindle.
We need to believe a soft (or softish) landing is possible otherwise the economy will depress itself. Credit is good for economies as ensures people have to work to pay it back. When we stop spending money in an economy that relies on indirect taxes we are all screwed.
I don't believe the house repossessions are too large yet & mainly restricted to the sub-prime high risk sector.
Firstly, the economy isn't depressing itself!!! There are real fundamental reasons why growth is slowing such as interest rates, inflation, poor infrastructure, competition from low cost countries, changes in US tax law etc. This was happening before the property market turned. Also, publications like the Economist have been showing concern about Ireland's economy for years. We've just been brainwashed by a combination of a FF govt, banks, estate agents and a print media who were making too much from their property supplements (anyone notice they've disappeared in the last two months?) to report objectively.
Secondly, repossessions are an uncharted water in Ireland. A combination of the Family Home Protection Act, an uncharacteristic unwillingness of the large Irish banks to forceably repossess and a rising market meaning everyone was overcollateralised and you could hand back the keys without further action means that repossessions in Ireland have been verging on non-existant. The sub-prime market (which is still very small) is changing this and negative equity may also change the large banks attitudes.
Defaults and missed payments is a much better measure than repossessions (in any case repossessions take years to go through the courts so will lag significantly).
http://www.rte.ie/business/2007/0905/houses.html
About time this thread got going again. Are any of the "soft landing" happy clappers ready to admit they were wrong yet?
Interesting article on arandomwalk.com that the market benchmark PTSB/ESRI houseprice index of property prices are...shock horror......based on valuations and not actual sales.
Its highly likely therefore that the index, which has still shown significant falls over the last year, is overstated.
Log on to Daft.ie and have a look around and the drop in prices is staggering.
My girlfriend's sister bought a house in Sundale, Tallaght about 2 years ago paying just under 300,000 from what I can remember.
About 12 months ago the asking price for houses in the area had risen to 335,000.
Now log on to daft and there's a load of houses for around 285,000.
If that's not a crash I don't know what is.
Same kind of thing in Springfield in Tallaght, houses that were close to 350,000 12 months ago now asking 300,000.
I make that more than 15% of a drop (and my maths are not the best).
[SIGPIC][/SIGPIC]
Tallaght Stadium Regular
The drop in new home starts will reduce supply which according to the laws of demand & supply will increase prices, all things being equal of course.
I make that 5% drop in 2 years which is not a crash . Obviously the drop is a lot more if you bought at the top end.
I would guess 15%+ reductions year on year would be a crash?
Bought my house for €218k in Nov 04. Houses in my estate going for €300k now. I see it as more of a finding our level rather than it being a crash
Last edited by Dodge; 06/09/2007 at 1:06 PM.
54,321 sold - wws will never die - ***
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You're embarassing yourself now pete. There are over 200,000 unoccupied properties in Ireland, not including holiday homes. Supply and demand will drive prices down even further, not up.
adam
Pete, as a matter of interest do you work in the property sector? Your optimism is somewhat out of kilter with reality.
Prices will only increase when supply drops below demand. We had 250,000 empty properties at the last census, the vast majority of which are not holiday homes. So factor that in and supply still looks excessive.
In terms of a year on year drop, 10% seems to be the norm rather than the exception in certain areas of Dublin, so 15% appears not unlikely in those areas.
As for defining a crash, it need not happen over one year to be defined a crash. We appear to be in a slow, continual slide, which is even more dangerous to the economy. A short sharp shock would actually be preferable as the recovery could start quicker.
Nope. Little or no connection to the industry either.
When I said reduction in supply would increase prices I did quantify with the "all things remaining equal". I don't have much facts on the market (I think we can agree that estate agents & banks not the most reliable) but prices will or fall less based on a huge decrease in new homes.
200k empty houses does seem a lot but it would be interesting to know how many empty say 2 years ago. Again I am no expert but I would guess it is reasonable to assume 100k empty houses even in a buoyant market?
If we honestly believed a big crash was on the way then the logical move would be sell up & rent for a couple of years & buy back house when the market picks up.
I do get the impression a lot of people are holing off due to uncertainty & the rising interest rates. If the pesky Germans would go back into recession the cheap cash could return
Maybe my opinion skewed by the fact my mortgage is relatively low percentage of value (I could only guess at its value) & its a home not an investment.
where are they hiding all these properties? ...... im not doubting you or being smart id just like to see if this is true. as in a country of 4 million people approx.. thats a massive percentage of houses to be empty
Last edited by MojoPin; 06/09/2007 at 4:41 PM.
Well beside laytown station there's half a developement empty that has been on the market for a year for a start.
TO TELL THE TRUTH IS REVOLUTIONARY
The ONLY foot.ie user with a type of logic named after them!
All of this has happened before. All of it will happen again.
Look at any apartment development in Dublin. There's a lot of empty places in most of them. Friends I know who bought have frequently been the only occupied apartment on their floor.
Not sure on houses as the investment market tends to prefer apartments, but I'd say their are lots of places empty in the commuter belt.
Agreed. But as long as prices were going up in didn't really matter that it was empty, capital gains meant the mortgage wasn't really important.
Last edited by OneRedArmy; 06/09/2007 at 6:33 PM.
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