Ireland warned property slump looming

[murf13]

He's right never listen to the over educated

You omitted a comma and the period at the end of your sentence.

[shiel]

People who raised questions during the Celtic tiger period were scoffed at and taunted. They were told to suck it up and get used to being underlings.

I remember it well and still resent it.

[Big Brother]

People who raised questions during the Celtic tiger period were scoffed at and taunted. They were told to suck it up and get used to being underlings.

I remember it well and still resent it.

I remember it differently: People who used warnings as a way of getting publicity were initially listened to.

Then they were treated with scepticism when they turned out to be the boy who cried wolf.

What happened was that glory hunting publicity merchants destroyed the credibility of warnings by issuing them too early and without evidence.

When professionals started to issue warnings - when the Wolf really was coming to the door - people were fed up with the message.

The rest, as they say, is history.

[Spirit Of Newgrange]

People who raised questions during the Celtic tiger period were scoffed at and taunted. They were told to suck it up and get used to being underlings.

I remember it well and still resent it.

resent it ? with all my properties held outside ireland, i have done very well from the crash. During the boom i was poor in irish terms, now i am rich. There are winners in every crash.
.
On another topic, the next time an estate agent says he sees the green shoots of recovery in house prices (in ireland), will somebody give him a slap ?

[Jack White]

with all my properties held outside ireland, i have done very well from the crash.

And then your signature... ''Ireland for the Irish''

[shiel]

I remember it differently: People who used warnings as a way of getting publicity were initially listened to.

Then they were treated with scepticism when they turned out to be the boy who cried wolf.

What happened was that glory hunting publicity merchants destroyed the credibility of warnings by issuing them too early and without evidence.

When professionals started to issue warnings - when the Wolf really was coming to the door - people were fed up with the message.

The rest, as they say, is history.

Quote from an insider pouring scorn on those who were critical of things during the Celtic tiger period.

'Well culchies it's high time to suck it up get over it and get on with your miserable contentious lives!'

[disillusioned and angry]

Jim Power is pontificating on the radio every other day as is Brendan Keenan (to a much lesser extent). I wonder do they cringe when they watch this clip? Morgan Kelly Warning IMMINENT COLLAPSE, 2007 (Prof. UCD) - YouTube

[DuineEile]

The seven stages of a property boom:

Stage One – Displacement

Every financial crisis starts with a disturbance. It might be the invention of a new technology, such as the internet. It could be a shift in economic policy. For example, interest rates might be reduced unexpectedly. Whatever it is, the world changes for one sector of the economy. People see the sector differently.

Irelands experience:

Rapidly falling interest rates due to correction to become part of EMU


Stage Two – Prices start to increase

Following the displacement, prices in the displaced sector start to rise. Initially, the price increase is barely noticed. Usually, these higher prices reflect some underlying improvement in fundamentals. As the price increases gain momentum, people start to notice.

Irelands experience:

People start to notice neighbours getting big prices for houses, and start going into estate agents to get quotes on their own homes.


Stage three – Easy Credit

Increasing prices are not enough for a bubble. Every financial crisis needs rocket fuel and there is only one thing that this rocket burns - cheap credit. Without it, there can be no speculation. Without it, the consequences of the displacement peter out and the sector returns to normal.When a bubble starts, the market is invaded by outsiders. Without cheap credit, the outsiders can’t join in.

Cheap credit is the entrance ticket for outsiders. For example, gas prices have risen sharply in recent years. However, banks aren’t giving out loans so that people can store gas in their garages in the hope that the price will double in three months. The banks, however, are prepared to give loans to people with poor credit to hold condos in the hope that they can be quickly flipped.

The rise in easy credit is also often associated with financial innovation. Often, a new type of financial instrument is developed that miss-prices risk. Indeed, easy credit and financial innovation is a dangerous cocktail. The South-Sea Bubble started life as new-fangled legal innovation called the limited liability joint stock company. In 1929, stock prices were propelled into the stratosphere with the help of margin calls. Housing prices today accelerated as interest-only mortgages emerged as a viable means for financing overpriced real estate purchases.

Irish experience:

Continuing poor performance in the Eurozone in part due to German re-unification, drives interest rates even lower in a bid to kick-start economic growth. German investors have nowhere to get a decent return on huge accumalated savings. Irish banks loan out the money cheaply. Anyone who wants a loan gets one, no matter what the size. Former need for deposits on houses disappear as banks begin giving out 100% mortgages.



Stage Four – Over-Trading

As the effects of easy credit kicks in, the market starts to overtrade. Overtrading stimulates volumes and shortages emerge. Prices start to accelerate, and easy profits are made. More outsiders are attracted, and prices run out of control. Accelerating prices attract the foolish, greedy and the desperate to enter the market. As a fire needs more fuel, a bubble needs more outsiders

Irish experience:

Not enough houses being built for new couples, immigrants, returning migrants. Emigration from Ireland goes to almsot zero. Investors see money in property and pile into the market. People buy houses as pensions. Dutch auctions by estate agents. Buying off plans.


Stage Five – Euphoria

The bubble now enters its most tragic stage. Some wise voices will stand up and say that the bubble can no longer continue. They put together convincing arguments based upon long run fundamentals and sound economic logic. However, these arguments evaporate in the heat of the one over-riding fact – the price is still rising. The wise are shouted down by charlatans, who justify insane prices by the euphoric claim that the world is different and this new world means higher prices.

Irish experience:

Central Bank and IMF shout warnings. People like Frankie shout them down. Sure can't everyone afford 6 apartments in this great new Ireland.

Addendum to stage 5

Of course, the “new world” claim is true; the world is different every day, but that doesn’t mean that prices run out of control. The charlatan wins the day and unjustified optimism takes over. At this point, the charlatans bolster their optimism with the cruelest of all lies; when prices finally reach their new long run level, there will be a “soft landing”. The idea of a gentle deceleration of prices calms the nerves.The outsiders are trapped in knowing denial. They know that prices can’t keep rising forever, but they rarely act on that knowledge. Everything is safe so long as they quit one day before the bubble bursts.Those that did not enter the market are stuck in a terrible dilemma. They can not enter but neither can they stay out. They know that they have missed the beginning of the bubble. They are bombarded daily with stories of easy riches and friends making massive profits. The strong stay out and reconcile themselves to the missed opportunity. The weak enter the fire and are damned.


Stage Six - Insider Profit Taking

Everyone wants to believe in a new brighter future but a bubble takes that desire and turns it upside down. A bubble demands that everyone believes in a brighter future, and so long as this euphoria continues, the bubble is sustained.However, as madness takes hold of the outsiders, the insiders remember the old world. They lose their faith and start to panic. They understand their market, and they know that it has all gone too far. Insiders start to cash out. Typically, the insiders try to sneak away unnoticed, and sometimes they get away with it. Other times, the outsiders see them as they leave. Whether the outsiders see them leave or not, insider profit taking signals the beginning of the end.

Irish experience:

Last year the Bank of Ireland and AIB sold off substantial amounts of their property assets. So did the ESB.

If property is such a long term investment (and who would know better than the banks), why did they suddenly divest ?



Stage Seven - Revulsion

Sometimes, panic of the insiders infects the outsiders. Other times, it is the end of cheap credit or some unanticipated piece of news. But whatever may be, euphoria is replaced with revulsion. The building is on fire and everyone starts to run for the door. Outsiders start to sell, but there are no buyers. Panic sets in; prices start to tumble downwards, credit dries up, and losses start to accumulate.


Irish experience:

Watch this space.


Sorry about the lenght of the post, but it needs to be said.

From before the crash.


All those Shinners and other left wingers who don't understand economics.


The lie about right wing competency is so strong that even today, people trust right wing parties to "fix" the problems that right wing policies created.


D

[WTTR]

Here is a glimpse at a future warning

Property crash – a lot done, more to do
By Proinsias O'Mahony Saturday February 18th, 2012

Now if somebody could turn the page for tomorrow’s Dundalk Race Results, I will be eternally grateful.

[Dunlin3]

Here is a glimpse at a future warning

Now if somebody could turn the page for tomorrow’s Dundalk Race Results, I will be eternally grateful.

A good, common sense article. Thanks for sharing.