Property Crash

[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.

[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=3861

Can 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?

[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.

[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.