House Market Weakening?

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Afuera said:
If they alert the market to the fact that sellers are now reducing their asking prices ,then sellers might be willing to place their houses on the market at more resonable levels and some buyers might be willing to bite.
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It does look like they're aiming to please both sides.

'Paul Murgatroyd, DNG economist, said: “We do seem to be moving into a period of soft landing. The downturn, everything will be fine scenario we have been hearing about, it looks like it is coming to fruition."'

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The good old "everything will be fine scenario" !

 
Whether this move will delay the inevitable or not only time will tell.

Even alerting buyers to the fact that house prices are downwardly negotiable might backfire. Up until now, AMVs were regarded as something of a cruel joke and most houses sold for well above this price.

I think you could be right Afuera. One thing is definitely clear - they felt they needed to do something and that in itself is highly significant.
 
exile said:
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The good old "everything will be fine scenario" !
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That's a hilarious press release! Some obvious messages being aimed directly at the potential buyers and sellers out there.

For the buyer they're being told that it's not getting any easier to buy and they also throw in the cautionary tales of how those buyers who set on their hands in the slowdown in 2001 got punished. In other words "Buy now".

For the seller, they're being told to reduce their expectations, it's becoming a buyers market etc. In other words "Only sell if you have to and don't expect too much for it".

For one thing, the fact that they are ruling out any great future capital appreciation will surely scare the potential investors away. I wonder if there are enough "real" buyers (i.e. owner-occupiers) out there to support the amount of houses being built this year?
 
Estate agents would as alluded to earlier prefer a flatish market or short sharp correction and subsequent flat market to a long drawn out correction where volumes fall slowly over longer period. Dont think they are in a position to manipulate the market in such a way though.
 
Afuera said:
For one thing, the fact that they are ruling out any great future capital appreciation will surely scare the potential investors away. I wonder if there are enough "real" buyers (i.e. owner-occupiers) out there to support the amount of houses being built this year?
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There was a report done by Sherry Fitz (I think) early this year, stating that around 40% of all homes purchased in 2005 were done so by 'canny' or 'savvy' investors.
 
redo said:
There was a report done by Sherry Fitz (I think) early this year, stating that around 40% of all homes purchased in 2005 were done so by 'canny' or 'savvy' investors.
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EDIT Correction, they did not use 'canny' or 'savvy'.

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redo said:
There was a report done by Sherry Fitz (I think) early this year, stating that around 40% of all homes purchased in 2005 were done so by 'canny' or 'savvy' investors.
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41% ... unbelieveable... What now for them?
 
Investor psychology appears to develop through
a market cycle in a fashion something like this:

Investor emotion through a market cycle;

Optimism
Excitement
Thrill
Euphoria
Anxiety (we are about here)
Fear
Denial
Depression
Panic
Capitulation
Desperation
Despondency
 
sonar said:
How can they call a soft landing so fast ???



http://www.rte.ie/business/2006/0703/houses.html


We go from 33.8% YOY to a safe-soft landing in one month ?
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Very strange indeed,could it be that the "vested interests" have shifted all their own investment/commercial property and are now quite happy for a correction to occur at this point.

From the sherryfitz report below it was interesting to note that while 40% of properties were bought by investors,it was other investors that shifted 30% of the properties bought.
To my mind these are the "canny" investors, the rest are just speculators.
 
33+% in 1998 may have been justified with celtic-tiger fundamentals but it smacks of trouble in the debt-fueled fantasy that we currently have.

Perhaps we've just had the final steep segment of our upward parabolic "japanese" phase.
 
Last year according to Sherry Fitz, FTBs comprised 36% of purchasers. Even if prices come down I don't think this figure will increase much and it may even decrease. Many of the FTBs bought before they were ready to settle down, for fear of prices increasing, although I'm sure some stayed away because prices had already got too high.

41% of the market were investors and presumably the other 23% were trader-uppers. I do wonder how many of the trader-uppers hung onto their existing houses, thereby becoming de facto investors who wouldn't be included in the existing figures. Based on anecdotal evidence I'm betting its a significant number of them.

So perhaps half of last year's houses are held for investment purposes. Couple this with a 15% overhang of unoccupied houses and an output of 80,000 houses a year and I can see why REAs are worried. I've read we only need 65,000 houses a year but I cannot remember where this figure originated from. If its true though, that means we have enough empty houses to service the market for three years without any new houses coming on stream. Though of course, many of these speculator houses may be in completely undesirable areas.

Posters who rubbished the existence of this thread must surely soon eat their words.
 
room305 said:
Last year according to Sherry Fitz, FTBs comprised 36% of purchasers. Even if prices come down I don't think this figure will increase much and it may even decrease. Many of the FTBs bought before they were ready to settle down, for fear of prices increasing, although I'm sure some stayed away because prices had already got too high.

41% of the market were investors and presumably the other 23% were trader-uppers.

Posters who rubbished the existence of this thread must surely soon eat their words.
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Being priced out of the FTB market by about 1-2 years in terms of income, I am of course watching this unravel with a keen interest.

I would like to say though from a FTB perspective, no way José would I buy into a market thats only started falling, it seems this fall may be for five years or even longer, so am perfectly happy to continue to save and wait until I feel its starting to bottom out (will be reading here with rapt attention).
Can't help but think many other FTB'rs will be scared out of buying once there is a hint of blood in the water thus increasing the likelyhood of this soft landing fallacy not becoming a reality.
 
RiceCakes said:
Can't help but think many other FTB'rs will be scared out of buying once there is a hint of blood in the water thus increasing the likelyhood of this soft landing fallacy not becoming a reality.
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I love the image here; estate agents/bankers/builders etc. down one end of the pool shouting "the waters fine come on in!" while climbing out slowly, half way down some investors scrambling out while others are staring at them like they're mental and a few boatloads of ftbs at the other end wondering what the hecks going on while loads more on the sidelines saying "no fecking way i'm getting in there"!.
 
sonar said:
How can they call a soft landing so fast ???

Sherry Fitzgerald says that for the 12 months to June 2006, second hand house prices in Dublin rose by 33.8%, a level not seen since 1998.

We go from 33.8% YOY to a safe-soft landing in one month ?
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Not sure I actually believe this 33.8% figure. From what I understand, the way they work this out is that they have a basket of 500 properties which *they* periodically re-value and then tell us that the market has gone up by x. I think it was a year ago when the ESRI figures said about 12-13% and SherryFitz said 30%! The only thing which matters should be a rolling view of prices of properties which are actually sold over a time period.

I have to say it struck me as comical in the extreme coming back to find out that Estate Agents in Ireland employ economists and that the media report their "insights" as being neutral whilst the OECD and others are slated as "doom-mongers".
 
Afuera said:
I think this is a sign that the estate agents are between a rock and a hard place at the moment.

If they say nothing about a slowing/falling market then they could see a standoff between sellers who feel that their house is worth a lot more than buyers are offering (or able to offer). This standoff could drag out over years with very little selling or buying going on and therefore very little profits being generated by estate agents during this period; they only get paid when the transaction completes after all.

If they alert the market to the fact that sellers are now reducing their asking prices ,then sellers might be willing to place their houses on the market at more resonable levels and some buyers might be willing to bite. The gamble with this move is that buyers could see it as a sign of a turning market and start to hold back and wait for more falls. This could cause a substantial correction in the market; but if you think about it, in the eyes of the estate agents, a quick correction would certainly be better than a long drawn out slowdown.

A ten year slump is the last thing the estate agents want and would pull many of them under altogether.

The next twelve months are going to be very interesting!
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I think this is probably right, but the extreme cynic in me wonders if the government would like to say "here, see - you got your soft landing" prior to the next election. It would be nice for them if the industry argued that, don't you think? :)
 
Neffa said:
Not sure I actually believe this 33.8% figure. From what I understand, the way they work this out is that they have a basket of 500 properties which *they* periodically re-value and then tell us that the market has gone up by x. I think it was a year ago when the ESRI figures said about 12-13% and SherryFitz said 30%! The only thing which matters should be a rolling view of prices of properties which are actually sold over a time period.

I have to say it struck me as comical in the extreme coming back to find out that Estate Agents in Ireland employ economists and that the media report their "insights" as being neutral whilst the OECD and others are slated as "doom-mongers".
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33% was the rate for 2nd hand houses in Dublin which i 'd well beleive, 2 identical houses in my area sold for 40% more in space of 15 months (jan 05-may06)
 
Duplex said:
Investor psychology appears to develop through
a market cycle in a fashion something like this:
Investor emotion through a market cycle;

Optimism
Excitement
Thrill
Euphoria
Anxiety (we are about here)
Fear
Denial
Depression
Panic
Capitulation
Hope
Relief
Optimism
Desperation
Despondency
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Eircon. Been there, done that.
 
I should post a link on the stages of investor psychology, which I quoted from. This is a three page PDF file, the best summary I've ever found on the subject. Required reading that the moderators might consider making a sticky?



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Neffa said:
I have to say it struck me as comical in the extreme coming back to find out that Estate Agents in Ireland employ economists and that the media report their "insights" as being neutral
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In all fairness, it is a widespread practise in the US. However it doesn't lessen the fact that it's patently ridiculous - a REA Economist saying anything negative would be akin to turkeys voting for xmas.
 
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