Property Crash

[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.