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Originally Posted by CBRE they feel it is necessary to comment on last nights programme on the basis that such unbalanced negative speculation could ultimately unnecessarily create imbalance in the Irish economy and property market overall |
So unbalanced negative speculation causes imbalance in the Irish economy and property market? Accepted.
But what about unbalanced
positive speculation? What do CBRE have to say about that? Don't they think it exists and that it's been par for the course for the last decade or so? (Property p0rn as David McWilliams calls it.)
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Originally Posted by CBRE the biggest threat to housing market performance is actually confidence |
This is basically an admission that the market isn't built on decent fundamentals. If it was, all the Cassandras in the world couldn't talk it down.
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Originally Posted by CBRE They believe that airing sensationalist programmes like this focussing on ‘what if’ scenarios’ will actually serve to further fuel negative sentiment rather than facilitating the welcome soft landing that has been emerging in recent months. |
So journalists, programme-makers and commissioners of programmes have a duty to facilitate CBRE's chosen economic outcome?
What infantile rubbish.
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Originally Posted by CBRE However, they say that no-one anticipated the negative impact that recent political interference and unfounded negative commentary in the media in recent weeks would have on sentiment and confidence levels. They say that we are now in a situation where all the fundamentals that have been supporting the Irish housing market for the last decade are still intact but the pace of buying activity has essentially halved as a result of nervousness and uncertainty. |
Poor her. Poor CBRE. I will make sure to think of their frail emotions next time I open my mouth, lest I surprise them and upset their predictions.
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Originally Posted by CBRE “The property market is in simple terms a sub-set of economic activity and the fundamentals that have been driving the Irish housing market for many years now are completely unique and cannot be compared to other economies. No other country can boast the levels of economic growth that have been witnessed in Ireland in the last decade; no other country has generated the level of employment generation that Ireland has seen; no other country has seen the phenomenal population growth and levels of immigration that Ireland has witnessed and no other economy can match the decline in the average household size that has materialised in Ireland in recent years. It is simply technically incorrect to assume that that Irish house prices will decline significantly simply on the basis that this has occurred in other economies where the fundamentals were so different. |
The South Sea company was unique, the developments leading to the stock market boom in the late 1990s were astonishing and unique. But that didn't stop investors overvaluing the real economic value that had been added and (importantly) extrapolating it forward. "It's different this time!" is the catch-cry of the person about to lose a lot of money when they caught up in sentiment and easy credit.
The idea that rising property prices cannot be overvalued because of real fundamentals is lunatic. There are real fundamentals behind all pre-bust booms, just as there are starry-eyed muppets saying it's different this time.
Incidentally, what does Ms. Hunt think of residential property investors piling into assets that yield 3 percentage points below the cost of borrowing and maintainence? What would she say to one of her commercial clients who showed interest in a similar arrangement? Or would answering that be unfounded negative scaremongering that upsets her predictions?
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Originally Posted by CBRE It is also irresponsible to suggest that the ‘negative equity’ scenario that occurred in the late 1980’s in the UK could occur in Ireland considering that Irish lending institutions are working under the remit of the Central Bank and continue to stress-test potential borrowers to 2% above ECB rates. |
WTF? Did prudential regulation not exist in the UK in the late 1980s? Sure, there wasn't Basle II, but UK banks were stress-testing away during that period. Incidentally, for somebody quoting Central Bank supervision as evidence of banking prudence, she's very quiet about what the Central Bank has actually had to say on the subject of Irish banks' lending to property. Or perhaps they too were being unfounded.