October 06 Bubble News Articles
Some of the latest media articles relevant to the bubble:
Added 24-10-2006
Indo: Up to 20pc of homes built since 2002 are empty
"The vacant homes are mainly owned by investors who have yet to rent or sell them on"
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Added 22-10-2006
House sellers in Dublin have slashed prices by as much as a third in an effort to secure a sale
"A survey found that a couple on the average industrial wage will still need to raise €163,000 - on top of a mortgage - to buy a house in Dublin"....nuff said
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Added 21-10-2006
20-10-2006: RteNews: Cowen rules out stamp duty move
Hmmm, were McDowells stamp duty remarks calculated to both take the heat out of the market and to keep their their fingernails on the political ladder, reminding voters that it was an election manifesto proposal
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Added 18-10-2006
Finfact: Central bank reckons on a soft landing
"Ireland remained "under-housed" compared with other European countries" - is that still the case, considering the number of vacancies and does it include apartment counts? If you have any links to these stats send them in.
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Added 16-10-2006
Sunday Independent: House market stalls on stamp duty prospects
From an auctioneer: "You only have to count the property pages to see that an awful lot of people now want to sell"
Madness: "In August, a Bank of Ireland property review forecast that by year-end the average cost of a house nationally would be €395,000 and that in Dublin the average price would reach €532,000. "
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Added 14-10-2006
Bloomberg.com: ECB's Stark Expects Growth at Top End of Forecasts This Year
"Futures trading shows investors expect the ECB to take its key rate to 3.5 percent in December and possibly raise it one more time in the first half of next year"
Dailyfx.com: EUR/USD Q4 Outlook
Some interesting analysis amongst alot of boring financial facts. One point to take is that oil is at a low price now - if it starts rising again, inflation will rise and then interest rate
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Added 11-10-2006
Irish Independent: Home loan price war as bank cuts back profits
- Good news there for the desperate few which the banks are now fighting over. I say run for the hills!!!
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Added 10-10-2006
Sunday Times: Prepare for a bang when the property bubble bursts
Sunday Business Post: Irish property market living on borrowed time
Bloomberg: European Bonds Decline on Signs Economic Growth Is Quickening (i.e. interest rates to rise)
posted by JaneyMackers @ 8:40 pm
25 comments
25 Comments:
would it be worth putting in the positive stories too? Just so we can track the reducing number of positive stored and increasing number of negative stories?
whats a positive story? Increases are surely negative? unless you view people being squeezed for more money as positive?
I suppose the only positive market stories would be regarding the "soft landing" white elephant. I might include these, but not any produced by estate agents and their groupies.
Note: a positive for me would be an honest to goodness crash
"a positive for me would be an honest to goodness crash"?
There are only three ways this could be seen as a positive for you.
Either:
1. you badly want to buy a house cos you feel that the security and value offered by long term ownership of property is well worth the effort and money, but just at the moment you can't afford one.
2. you are a raving left wing loonie who views private ownership of any asset as evil, selfish and immoral and that cooperative ownership of all assets in the state is the only truly fair and moral way to live our lives. As such, a large crash in the property market would serve property owners right, whether they be evil speculators, pensioners withdrawing built-up houseing equity to make up for a moderate pension and an ever increasing cost of healthcare, or naive selfish newly wed first time buyers (how dare they plan for a family and the future!), for having the gall to use their hard earned money to buy property in the first place. Never mind the resultant thousands who would be made unemployed as a result. Damn the all, the heathens!
3. ur really one of those 'end-of-the-world' watchers, ala Iranian President Mahmoud Ahmadinejad, and a crash in the irish property market would be a sure sign of the impending apocalypse.
Hey, how 'bout this? Why don't u just move to North Korea and live in their Stalinist uthopia, and save urself the time and effort in waiting for the crash here? I hear grass and tree bark are delicacies on their menus at the moment...
Hi Anon,
None of the above.
I can afford a house and am one of the lucky few that can without a needing a partner's income. I choose not to simply because the value is not there. I do badly want a house but will not pay those prices.
You must be living in a dream world if you don't believe that there is a bubble. And if you do think that there is a bubble - what do you think happens to bubbles? They rarely sag.
I didn't create this bubble, nor did all the teachers, cops, nurses, etc that cannot now afford a house. When the average employee cannot afford a house something is very wrong. We need this corrected.
Yes a crash will hurt people - are people not hurting already?
On reflection, my quote "honest to goodness crash" is a little strong.
I do want a crash, but not one precipitated by a fall in the economy, but rather people coming to their senses and realising that property is hyper over-valued. Yes this will have an effect on the economy - namely due to reductions in contruction, but not as bad as some people might think.
Cops, nurses and teachers aren't 'average employees'. They make up probably 5% of all employees. The average employeee in this country is a clerical/administrative worker, whether private or publicly employed, earning at least 40k per year by the time they are thirty. Singly they would still find it a little bit difficult to buy a house on their own unless they are renting out a room, but really, should the 'average' single worker be able to easily buy a 3 bed terraced house when they are 30 years of age??? A dual earning couple wouldnt find it all that difficult. Is the problem in this country a speculative property bubble, or a more a case of overhyped expectations (oddly from the more left leaning commentators) and a poorly thought out decentralisation of the economy from the centre of Dublin???
Anon, you're living in cuckoo-land if you think that the average couple can easily afford a house.
And yes, I believe that single 30 year olds on average income should be able to afford to buy a house\apt - do we want a situation were both parents have to work to afford a house and maybe even take in a lodger...jeez, this country is going to pot if that's the case.
Regardless of who should be able to buy what, we are in this mess because of investors distorting the supply\demand model, quickly followed by speculative buying...bubble accelerate and then burst.
P.s. if you're the same anon as the last can you make up a name for your next post.
The main crux of your argument is somewhat also somewhat false, or at least needs a lot more consideration.
U say that there is no value in current property prices. Well 'value' is a very subjective and relative term. Value changes from person to person depending on their outlook. U may say that there's little value in a house 50 miles outside of Dublin going for a million euro (for example). But if thats someones idea of a dream home they might consider it cheap. U might consider spending 30% of ur disposable income on a mortgage as bad value, but if u have kids and think ull spend most of ur free time there then that might be considered good value. Im not saying whether houses in ireland offer good or bad value (i personally consider them to be at the upper range of my own personal fair value), but the point is that gauge of value is going to be very different depending on who ur asking.
When i look at the 'average' person, i tend to look at people i know rather than people i hear 8th hand stories from or anonymous newspaper stories i read about or hear quoted, so my following examples are cases of people i directly know of.
Im 27 and from a middle class Dublin family, and so are most of my friends (by chance rather than choice - all went to different schools and live in different areas). I'd say most of our families are above the median in terms of middle class income, but by no means 'rich' in the way the term is bandied about now. We have all lived relatively easy lives but by no means posh or privileged ones. We all would have gotten a bit of a helping hand when going to buy property in terms on deposits, legal fees etc.
Out of my closest 10 friends, 8 have bought a house or apartment, and most of them are finding the mortgages easy enough to pay.
Of my cousins, who would all be from lower than median middle income households, 11 out of 13 of them over the age of 26 own a house/apartment, and wouldnt be too troubled by the mortgage.
Of 10 people working in my office, all are sub 34y/o, and 8 own a house or apartment. We're well paid, but we work long hours and we're not solicitors or accountants or doctors. Again, we'd all manage the mortgage and the bills relatively easily.
Now you're going to say "oh, all your examples are of middle class earners and so don't count as the average". The reality is that Ireland is a middle class country now, the average industrial wage and the average worker as a cop/nurse/teacher/factory worker is becoming meaningless in most contexts. 75% of people in this country work in an a administrative/clerical/professional role or on a building site, and are paid far in excess of the average industrial wage. I consider my socio-economic grouping, as described at the very start above, to be fairly representitive of 35-40% of the population +/-10% in terms of income. This is the 'average' irish worker. These are the people buying the houses.
In most countries in europe 30% or so of people own a property. In Ireland its 70%. Is the irrational demand for home ownership over renting (regardless of income levels) not behind most of the bubble???
Anon,
Of course, the idea of value is subjective. I believe that current prices offer bad value. I'd guess that if you took a poll you would find that most people believe that property offers bad value for money in the medium to long term.
Houses\apts are over-priced - most sane people would agree with this.
Some people will be prepared to pay these prices to put a roof over their family's heads and will love and cherish their house. But they might not be happy with the amount that they had to fork out
Owen,
I have a wide circle of friends from people who purchased 10+ years ago and are quite comfy, others who purchased in the last 5 years and are ok, some who bought 2 years ago and are feeling the interest rates bite and a few who cannot afford to buy now or don't want to pay crazy prices.
Those friends that cannot afford are earning over the average wage.
The average wage is just under 35k. So someone on this will have to take a loan of 9\10 times their salary which the banks will not give.
Point taken on the home ownership point. Maybe if there were some regulation to protect tenants - rent increase restrictions, etc like in Europe this would help
great site
Keep up the good work!
It’s all very well comparing each others stories about the experiences of ourselves or people we know but the real test in establishing the value for money we're getting in the property market by comparing it with other countries whose living standards are as good or better than our own. Ireland doesn't have a particularly high population density, nor is its population very rich when you remove the very rich "few" from the average. Many foreigners from well to do nations who come here for work, inevitably return home rather than fork out their well earned cash to live in a country with mediocre at best national services (education being the exception). But according to current house prices you might be forgiven for thinking that we lived in a country of millionaires with a doctor and nurse to take care of each one. It’s a pity that as Ireland pulled itself together and the quality of life surly got much better that we had to be burdened by in-ordinate house prices. As far as the argument about weather or not a bubble exists, I doubt it. Prices fluctuate all the time and you could easily present a whole barrage of examples of various properties dropping in price (even in an upward market) but the fact is that the Irish love land and will always want to buy so long as we want money. And the influx of migrant workers will provide a healthy rent market for the current and next generation of Irish landowners. A lot of those land owners may not make much from their holdings but that’s not going to stop them.
Strange comment Atman. You start by saying that the "inordinate" house prices could lead people to believe that we are all "millionaires". But then back down and say that it is not a bubble.
Most economists, including the OECD, agree that houses are over-priced, but may not agree that this is a bubble. Some of these might be afraid to admit it is...doing so could cause market instability.
Most people cannot recognise when they are in a bubble, that's one of it's hallmarks.
Great site, can you also track total rental in the reesidential to see if there is a see-saw effect, as more go on sale are we seeing a reuduction in rentals also!
This will give a complete picture. Great work!
Good idea OpenWindow. Will do
Example 42:
76 Tolka Vale Glasnevin (found by phoenix_n)
Old Price: €355k [05-07-2006]
New Price: €335k [17-07-2006]
....note that this might drop further soon - similar apt in same block: €325k
21-10-2006 - Update: Myhome: no movement
That place for 325 has is now 317,500 !!
phoenix_n
the ask about money thread is gone!!
its being continued at
http://tinyurl.com/y5852r
the ask about money crowd very suddenly changed their temperament
made up rules suddenly and banned loadsa people and also deleted many posts...... very suspicious especially since only the other day they began to take "donations" a moderator said "we are now accepting donations due to popular demand"
I saw this article today.
http://www.myhome.ie/advice_news/article_detail.asp?cate_id=&subcate_id=12&news_id=2113
I am wondering if there is a subconscious conspiracy on the part of publications who make their living off the housing market to make things sound better than they are?
The site would work much better if you put in updates as new posts rather than as changes to existing posts. It'd make life easier for people with RSS feeds as well.
Good point anon. The list is getting a little too big now
51 Wilfield Road Sandymount
was 950,000 three weeks ago
now 800,000.
myhome.ie
MaguireFay
I left Dublin in 1984 only to arrive in London to watch the rise and fall of those who would not believe it could happen, that is, a crushing drop in their property values. I could not get on the ladder then. I left for Toronto in 1989 (I'm still here). I bought my first home in 1990. The bubble bust in 1990 and continued to let off steam for 5 long year purchasing my first home. To give all Irish hopefulls the real picture here in Toronto - average price 1986 $158k, 1990 $490k, 1993 $300k, 1996 $310k, 2000 $320k, 2006 $440k. GET THE PICTURE. Oh Forgot to mention I bouugt for $225 in 1989 and sold for $172k in 2003. STILL HURTS. I would hate to see any young person so desperate to get on the bandwagon to jump in now (in Dublin)only to regret it one year later. Based on what I see and every other gret city where it has happened then please hold off buying. A 15 to 20% drop in prices is very possible and highly probable. I'll wait, maybe then will I return and have my cake and eat it. Please hurry up Bubble and Burst- I want to come home!.
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