House prices still falling

[ibis]

We can take it that the powers that be - Italians call them "i poteri forti" (strong powers) - knew all this was going to happen. We have 250k (conservative estimate) unoccupied houses in Ireland, with owners drowning in debt. There is no way that this is heading anywhere other than meltdown, with even the major commercial banks needing to be bailed out with taxpayers' money.

So then what is the real plan? Could it be to allow real visible suffering, IMF intervention with the usual massive privatisation, and then a modest proposal for the occupation of these vacant houses? Wal-mart manufacturing, co. leitrim, anyone?

Alternatively put, can it be that the immigration to date has just been a rehearsal for the real influx?

Or could it just be that instead of there being a real plan, the government had their heads just as firmly up their holes as the rest of us? I've met Ministers, and CEOs, and they don't come from any other species but our own. They're just the same people as the posters on these boards, aged about 30-40 years.

[Abaddon]

Hopefully this crash will happen in the next year then maybe my family and I can live in the city I was born and raised in! Houses in Dublin are still about 100k too expensive.

How about 1 million too much!

Maybe I should have said 100k out of our reach.

At this point in the family finances that 100k might as well be a million.

[needle_too]

Buyers are waiting to see if house prices fall more and sellers are starting to rent the houses rather than sell them cheap. However I see signs that supply is starting to seriously tighten.

6 months ago there were probably 10 for sale signs in my estate. Today there are 2. A large number of builders who have simply completed their current projects and stopped building. The guy who built my estate is off for two years with his Polish crew to Croatia where he picked up a couple of fields with planning permission for next to nothing.

I know there is a theory that there are all these sellers desperate to unload their houses and who will sell at half the price they would have gotten a year ago. However in reality very few will be backed into a corner like that. Most of these sellers are trading up and they are also in the catch 22 of holding out to see if the house they have their eye on drops in price. Some investors may try to get out but as the market has dried up they are also having difficulty shifting their houses. At the same time rents are rocketing because people aren't moving from being renters to being first time buyers because George Lee has convinced them that if they wait they will pick up that nice 500K mansion down the road for around 120K in 6 months. Investors are looking at rents that now make a tidy profit above their mortgage payments. Most of them are smart enough to know that a bust this year will be rectified by boom next year. That's the economic cycle. So many houses that would have been sold this year are instead having new leases signed for another year.

The US sub prime market has put the frightners on many people but most of the market in Ireland isn't sub prime even if some of the doom sayers try to convince us of that. Most first time buyers have two incomes and house prices are not that far ahead of 5 times their salaries (other than in parts of Dublin).

As a huge bottleneck of first time buyers develops thanks to the wait and see advice of Lee and as builders stop the flow of new houses into the market and investors up the rent I think there is a real risk of house prices starting to rise steeply again before the end of the year. Sellers have had a tough 9 months but those that rode through the storm and didn't sell their property cheap or rent it out could be about to cash in.

If I was a buyer looking for an investment property for 1-2 years then I would hold out just in case. But if I was in the market for a family home I plan to live in for 10+ years where the risk of negative equity for a year or two isn't a problem then I would be getting itchy feet as prices are good right now and just as there are indications that the market may fall more there are growing signs that the market may take care of itself just as it did in 2000 and 2001 during the last "end of the world" and it could swing back to being a sellers market before the end of the year.

Oh dear...where to even start with this one.....

You obviously dont understand markets do you?

Put simply, markets are set at the margins.
For the purposes of this discussion that means that prices are determined by the more extreme circumstances, not by those in the 'middle ground'.

So, all it takes is one person in our hypothetical estate to need to sell a property for whatever reason - debt, relocation, divorce...whatever.

This hypothetical person is motivated beyond maximising profit and will therefore sacrifice some 'profit' for a quick sale.
In doing so they set a new price level.
Why should one house be worth €150k when the other (hypothetical persons) house was sold for €100k?
Thus the price point in that market moves lower.

Its exactly the same as the boom-mentality only in reverse.

But it is crucial to remember that markets are set at the margins - not in the centre ground. Thus a 'crash' in value does not require a huge number of people to have problems. It requires very, very few.

The problem now is how long the market will fall for, how many will panic and try to 'offload' property and chase the market down.

The pragmatic ones will realise that having a €500k mortgage on a €450k house is ridiculous but will be prepared to take it on the chin.
The real losers are the ones who will try to 'defy' the market and end up with a €500k mortgage on a €250k house.

[MookieBaylock]

i can't wait to watch this - it's going to be great fun... that's why i was so glad FF 'won' the election.. they will spend at least 10 years out of power when this game is over..

[feargach]

It's never been a better time to buy!!! (according to every vested interest economist who have been swarming the airwaves)

Think about the logic of that. In 1995, for instance, a buyer would see a 300% increase in 10 short years. So for the above vested interest statement to be true,, there would need to be an even bigger increase over a comparable time period.

So that would be a 300.0001% increase by 2017. So the average Dublin house would then cost 1.2 mill.

Does anyone want to do the sums on what the monthly repayments would be on that, assuming 3% interest rates?

[erigena]

We can take it that the powers that be - Italians call them "i poteri forti" (strong powers) - knew all this was going to happen. We have 250k (conservative estimate) unoccupied houses in Ireland, with owners drowning in debt. There is no way that this is heading anywhere other than meltdown, with even the major commercial banks needing to be bailed out with taxpayers' money.

So then what is the real plan? Could it be to allow real visible suffering, IMF intervention with the usual massive privatisation, and then a modest proposal for the occupation of these vacant houses? Wal-mart manufacturing, co. leitrim, anyone?

Alternatively put, can it be that the immigration to date has just been a rehearsal for the real influx?

Or could it just be that instead of there being a real plan, the government had their heads just as firmly up their holes as the rest of us? I've met Ministers, and CEOs, and they don't come from any other species but our own. They're just the same people as the posters on these boards, aged about 30-40 years.

I respectfully disagree. Debert is a creature of the builders, who probably still can't believe their luck. Secondly, there is undoubtedly an Irish state emphasis on making us participate in corporate globalization. Thirdly, Ireland's debt figures are just way off the page, and even the ECB (with its head famously ......) just called us on it.