Dublin property prices falling by €4,500 a month

[rockofcashel]

I think all the signals that the housing market is banjaxed are beginning to manifest themselves.

A friend of mine who wished to re-mortgage his property a few years back to release equity had a valuer out to check it out for the bank. The valuer did a quick driveby, valued the house at what the person asked him to for the bank, and then flippantly told him he could add an extra 50k to the house, unless the "inside was falling asunder".

Same guy is re-mortgaging again, and told me that this time, the bank want the valuer to go inside the house, and go over it with a fine tooth comb, because they want to assure themselves of the exact value of the house.

Thats the banks giving up on "paper valuations" if I ever heard it.

Also, there now seems to be a phenomonal amount of literature coming to me lately about changing my mortgage to a Tracker Mortgage. BOS are offering 1% above the ECB rating over the lifetime of the mortgage, with others offering 1.25-1.5%.

This to me is the banks way of guarenteeing fixed return on peoples mortgage, a sign that they are sensing serious volatility in repayment schedules.

However, what really interested me talking to my mate, is that they are offering him a special rate for changing to their bank if the Loan-to-Value of the re-mortgage is less than 60%.

Now if that doesn't signal that the banks are afraid that some properties are 40% over-valued, (i.e even if the house falls by 40% in value, it will still cover their mortgage outlay), what does it mean ?

I think all this might just need a bad luck story and a few panicky sellers, and the whole house of cards could start tumbling.

(and fecking Arsenal are 1 down to Hamburg... whats the world coming to )

[ibis]

well, I suppose the easy way to avoid this would be to refuse to move out until the landlord told in writing you which particular relative was going to move in to replace you, and then all you have to do is check if the new resident is the person the landlord told you it would be. Of course, all of that requires foresight and dedication

And of course a willingness to forgo any chance of a reference - something often required to rent your next place.

[Conor]

However, what really interested me talking to my mate, is that they are offering him a special rate for changing to their bank if the Loan-to-Value of the re-mortgage is less than 60%.

Now if that doesn't signal that the banks are afraid that some properties are 40% over-valued, (i.e even if the house falls by 40% in value, it will still cover their mortgage outlay), what does it mean ?

Dude, them 60% LTV rates have always been around.

[cyberianpan]

However, what really interested me talking to my mate, is that they are offering him a special rate for changing to their bank if the Loan-to-Value of the re-mortgage is less than 60%.

Now if that doesn't signal that the banks are afraid that some properties are 40% over-valued, (i.e even if the house falls by 40% in value, it will still cover their mortgage outlay), what does it mean ?

Dude, them 60% LTV rates have always been around.

They have , the issue with them coming to the fore now is that due to implementation of various EC legislation/regulation (CAD, Basle even the IAS etc) means that banks were forced to create more rigorous regulatory capital reporting systems. The extra transparency afforded by these mandatory insights has caused the banks to start focusing on "safer" loans. You need proportionately less capital to back the issuance of lower LTV loans, so they can make more money.

I've made the point on p.ie before that what is really interesting is that when the banks float their securitised loan books (in order to shift loans off their balance sheet & thus be able to make more loans against existing capital) as Asset Covered Securities that they only float the first 20-30% of the LTV in order to maintain a AAA rating on the bonds. This means that the properties would have to fall order 75% before these international institutional investors would lose money. Any LTV on ACS above 30% & it seems institutional investors would want a higher yield... that's interesting.


cYp

[Sidewinder]

Dude, them 60% LTV rates have always been around.

Yeah, but NIB (I think) have just started a major push and promotional campaign for them, suggesting they are worried and trying to tighten up their loan quality. I think by this time next year there'll be a real credit crunch underway, and the banks will start calling in debts, especially unsecured overdrafts, credit cards and personal loans. Don't go mad this Christmas, and try to get your non-mortgage/car loans under control between now and April, would be my advice.

If things continue to look increasingly dodgy by Christmas, plan to offload that 06 car immediately in the New Year and buy a decent 4/5 year old car instead with hard cash. Before the herd get the same idea.

[jady88]

The real question is - has every deviation from the long-term trend returned to the trend, with overshoot?

Of course not, sometimes there are very good reasons - technological innovation, demographics, structural change in the economy - that do actually support a permanently higher revaluation of an asset's value.

I think this was the case with the Irish property market between 1995 and 1999. 2000 was the natural peak of that cycle - driven by real fundamentals - and a "soft landing" could have occured there (except it wouldn't really be a "soft landing", just a fundamental readjusment. Soft landings do not, and have never, existed - and are only ever mentioned by VIs in a bubble scenario). In fact the evidence is that in Q4 00 - Q2 01 property prices in Ireland peaked and then declined by a few percent to what may have been a long-term new sustainable level (assuming we never return to the bad old days of the 80s economically).

Then came the Great Liquidity Splurge (thanks Mr Greenspan!). Then came Laddermania.

Everything since has been pure bubble. I fully expect house prices to return to Q2 01 levels, adjusted for inflation of course. And if the worst happens, and we have a large downturn in the economy as a whole, and we do end up in a major recession, then prices will revert to (in real terms) 1995-6 levels.

Side winder you have to be the most patrhetic poster on this site without opposition. You above anyone else have been hoping for a decline in the economy for so long now that it must be like breathing for you.

[Sidewinder]

Side winder you have to be the most patrhetic poster on this site without opposition. You above anyone else have been hoping for a decline in the economy for so long now that it must be like breathing for you.

Hoping for? No, but it is inevitable after all these years of atrocious mismanagement by this abysmal Government. I'm too old now to want to have to emigrate (again).

We had a good thing going in the late 90s. We've thrown it all away on Laddermania, inaction and incompetence.

I find it interesting that none of the supporters of the current government are actually able to argue against my position in terms of hard economic analysis. Youse just rely on empty rhetoric and badmouthing.

Youse should have sorted all this out years ago. When our balance of trade and balance of payments started to slide a few years ago alarm bells should have been ringing. We should have had an urgent plan to get the GNP/GDP gap down below 10% years ago. We should have had plans to enhance energy security years ago. We should have reigned in the out-of-control private credit explosion years ago - now we're the most indebted country in the world. We should have had a serious plan for the aggressive development of indiginous industry in emerging industries years ago. We should have sorted out our pathetic planning system years ago. We should have built real infrastructure properly, not wasting billions on roads to nowhere and lumbering the people with no choice but to drive everywhere, and no choice but to pay tolls to private corporations for the next 30 years every single day.

We don't make anything in this country any more. We don't even provide services other people need. Take away the highly-mobile FDI industry, and we've got nothing. No country can sustain wealth by selling their houses to one another at ever-increasing prices, and racking up massive debts, while constantly increasing the scale of a bloated and inefficient public sector.

The Emperor Has No Clothes. And the FF/PD "reputation" for economic management is a cruel sham. Youse don't have a bloody clue how to run an economy. All youse care about is looking after yer cronies - FF for the builders, and the PDs handing out taxpayers money to their corporate buddies. Greedy greasy-fingered trousering gombeens one and all.

[jady88]

Sidewinder we have the greatest job creation rates in teh world, we have more money now then ever before in the history of the state. We are the still the most desirable area for investors in the whole of Europe.
We have the second highest minimum wage, some of the best labour laws. We have one of the best educated societies in the world. We have the second lowest national debt in the world. Only Luxembourg beats us.


No one doubts that there are still problems but hte PDs are the only party capable of continuing to improve the situation.

Those are facts not the random doomsday theories you spit out sidewinder.

[Sidewinder]

Sidewinder we have the greatest job creation rates in teh world,

Almost all the jobs created in the last 5 years have been in the property/construction (and related services) and public sectors. The rest of the economy is slowly collapsing and has been for years. Indiginous manufacturing is on the point of total collapse.

we have more money now then ever before in the history of the state.

Money largely based on an explosion in private credit and hidden, very high, inflation. Funny money not actually based on real value-added wealth generation. We don't do old-fashioned things like adding value and creating real wealth in the brave new PD Ireland.

We are the still the most desirable area for investors in the whole of Europe.

No longer true, we slumped to 80-something in the world last year for inward FDI. We have a high-cost uncompetitive economy in which labour and utility and property costs have spiralled out of control.

We have the second highest minimum wage,

And half the country is on it. Genius.

some of the best labour laws.

If by "best" you mean "non-existant" then yeah, I suppose we do. Hurray for unfettered capitalism, worker's rights be damned!

We have one of the best educated societies in the world.

Also sadly no longer true, the numbers of engineering, IT and science graduates we are producing each year has been declining rapidly for years. Our primary-level education system is an underfunded shambles. Demographics also mean the numbers of people leaving the education system have been declining each year and have some way to fall yet. What company wants to do business in an expensive nation where there is an ever-dwindling pool of Philosophy graduates?

We have the second lowest national debt in the world. Only Luxembourg beats us.

Whoop-de-do, that great reduction in the national debt was achieved before 2000. PD freakonomics have simply transferred the debt burden from the State to the private citizen. We are the most indebted nation on the entire planet. The citizenry collectively owe well over 200% of GNP! Again, a genius and outstanding result. Well done.

No one doubts that there are still problems but hte PDs are the only party capable of continuing to improve the situation.

Bout time youse actually did something then, isn't it? You've only had 10 years, and our entire economy and society is still riddled from top to bottom with monopolies, cartels, vested interests and restrictive practices. The PDs have done nothing in 10 years, except organise Corporate Welfare for private investors in what should be State assets.

All the benefits you speak of are the result of hard work and brave decisions taken by successive government between 1987 and 1997. Ever since Bertie came to power progress came to a shuddering halt, and for the last few years we've been going rapidly into reverse - though euphoric on cheap credit the people can't see (yet) just how badly youse have screwed up this nation for a generation.

[jady88]

The najority oif jobs have be created in construction by foriegn workers who will leave as their jobs evaporate due to the natural erosion of need to the continued supply. I'm sorry you don't think that we the lower and middle classes deserve to own our own houses but you are just going to have to put up with it. We have created more jobs in the past too years in the commerical and high tech sectors as a matter of fact.

No half the nation is not on the minimum wage you fool. That is just a lie. And would you prefer no minimum wage? Personally i don't really mind.

Our education wywtem is still one of the best in the world. FACT. Naturally people drift between courses or would you perfer the goverment forced people into the "right course for them and the nation"?

We are more desirable to American investors and others than any other European country, we are still competitive because we have low taxes, english language and high wages yes but a well trained work force.

Now Sidewinder suggest your alternative>