Dublin property prices falling by €4,500 a month

[cooperation]

Where are the government going to get the money for the NDP if one third of employment is construction linked?

[the-analyst2007]

I agree that it will not be a zero sum game, but at least some of the slack could be picked up by infrastucture.

Also my point that such project's costs will be a lot more controllable as wage inflation falls in the sector is reasonable.

As for the dough for the projects, yes the stability pact restricts us, but borrowing should not be ruled out. The infrastructure deficit needs to be rectified in order to return some efficiency back into the ecomomy vis-a-vis transport costs etc.

And yes, these projects are once-off's but at least it buys us time in reordering the economy in a different direction, easing off the reliance on the construction sector.

Maybe we should get the Germans over to plan all this. (Joke).

[cooperation]

Raed the above

[blindjustice]

Maybe we should get the Germans over to plan all this. (Joke).

Not a bad idea if it was 5 years ago

And yes, these projects are once-off's but at least it buys us time in reordering the economy in a different direction, easing off the reliance on the construction sector.

The problem with all these projects is they are simply nowhere near as labour intensive as building 80,000+++ houses a year.

Also my point that such project's costs will be a lot more controllable as wage inflation falls in the sector is reasonable.

If we to interfere with the employees pay rates and decrease wages then people wont be able to make mortgage repayments - worsening a crash

Anyway as has been said before we are gonna need to borrow to pay for these projects which could have us in trouble with Europe and Europe has ways of dealing with this kind of thing - and leaving the Euro and devaluing an Irish currency kicks up more problems like how do you pay back a mortgage that was in Euros with a currency that doesnt get many Euros per pound??

Its all very very messy

[Sidewinder]

As for the dough for the projects, yes the stability pact restricts us, but borrowing should not be ruled out. The infrastructure deficit needs to be rectified in order to return some efficiency back into the ecomomy vis-a-vis transport costs etc.

*sigh*

Yer still not thinking this through.

At least 100,000 people going on the dole just from the end of house-building. From the end of house-building and house-selling flows all sorts of reduced income taxes, VAT, stamp duty...we're talking billions every year. And that's the direct effect. Factor in job losses in builders merchants, architects, DIY stores, furniture stores, electrical stores (nobody moving house, see?) and that's many more billions in income tax and VAT down the drain. And then they all stop spending money too, so even more lost VAT and more job losses in cafés, Dunnes, sandwich bars, hairdressers....plus a few more interest rate hikes cutting into the disposable income even of the civil servants and other protected classes...

We're talking a massive hole in the government finances and a massive rise in welfare spending. We can only borrow €5bn a year due to Maastricht, and we're barely in surplus now. Residential property stamp duty alone is what, €1.8bn a year?? There is just no way there'll be enough money to fund a ramp up of infrastructure spending. Not while remaining inside the Eurozone anyway.....

But hey, FF/PD are geniuses at "managing the economy", so I suppose it'll all be grand...

[dub006]

What they didnt discuss in the programme was the housing collapse in the US.
Last year they were at the point we are at now.
The US housing market is on the floor right now and there is 130,000 foreclosures per month,the highest in history.

While employment figures last month showed an increase in the US,most off the underlying indicators such as an evolving credit squezze ,a contraction in construction, and a debt burden which is adding less to GDP than in previous booms have a 5 to 6 month lag behind official figures.

The point about the debt burden is that debt has been used to purchase items such as houses which are unproductive rather than in previous credit booms when debt was used to invest in value added businesses.

[Coles]

The other point is that property prices do not turn on a penny; they take years to turn from a bull market to a bear. This was the case in the Great Depression and the Tokyo crash.

What this means is that even if a generalised economic crash starts right now, property will continue to rise for a couple of years. If you can, get in on it, because profits will be there for the taking for the next 18 months at least.

I think the general sentiment has changed since then.

[JCSkinner]

What they didnt discuss in the programme was the housing collapse in the US.
Last year they were at the point we are at now.
The US housing market is on the floor right now and there is 130,000 foreclosures per month,the highest in history.

While employment figures last month showed an increase in the US,most off the underlying indicators such as an evolving credit squezze ,a contraction in construction, and a debt burden which is adding less to GDP than in previous booms have a 5 to 6 month lag behind official figures.

The point about the debt burden is that debt has been used to purchase items such as houses which are unproductive rather than in previous credit booms when debt was used to invest in value added businesses.

They didn't dwell on the point, but falling US house prices was mentioned at least twice.
Your point about our diversion into property puffing rather than genuine wealth generation is well made.

[the-analyst2007]

As for the dough for the projects, yes the stability pact restricts us, but borrowing should not be ruled out. The infrastructure deficit needs to be rectified in order to return some efficiency back into the ecomomy vis-a-vis transport costs etc.

*sigh*

Yer still not thinking this through.

At least 100,000 people going on the dole just from the end of house-building. From the end of house-building and house-selling flows all sorts of reduced income taxes, VAT, stamp duty...we're talking billions every year. And that's the direct effect. Factor in job losses in builders merchants, architects, DIY stores, furniture stores, electrical stores (nobody moving house, see?) and that's many more billions in income tax and VAT down the drain. And then they all stop spending money too, so even more lost VAT and more job losses in cafés, Dunnes, sandwich bars, hairdressers....plus a few more interest rate hikes cutting into the disposable income even of the civil servants and other protected classes...

We're talking a massive hole in the government finances and a massive rise in welfare spending. We can only borrow €5bn a year due to Maastricht, and we're barely in surplus now. Residential property stamp duty alone is what, €1.8bn a year?? There is just no way there'll be enough money to fund a ramp up of infrastructure spending. Not while remaining inside the Eurozone anyway.....

But hey, FF/PD are geniuses at "managing the economy", so I suppose it'll all be grand...

Your analysis, which i agree with, is the worst possible outcome, but Im more optimistic.

[blindjustice]

Your analysis, which i agree with, is the worst possible outcome, but Im more optimistic.

Crash or no crash we dont need to build 80,000 houses a year - so job losses are inevitable in that sector.

Now unfortunately asset bubbles are merciless in their ups and downs and once on the way down they will not stop until they hit the floor so to speak - its the nature of speculative bubbles: Buy if its going up - hold off if its going down. Why buy something now if you can get it cheaper in 6 months time etc
You get a stand off until prices level off and the cycle begins again - only next time we should have learnt our lessons about letting bubbles grow out of proportion!!

EDIT: Im off to bed now - good night all!