Future Shock: Property Crash

[pennypincher]

Any chance this is available somewhere to download,tried google video this morning but it's not there.

 

[Dreamerb]

So the Euro is going to hit €1.70 against the USD and while the Euro rockets, the ECB is going to keep increasing rates?

Yeah, that's one I picked up.

I also found it irritating that in discussing the UK crash in the '90s they made reference to interest rates doubling, without mentioning what those rates were, which is surely relevant. A doubling from, say, 7 to 14 percent will have a much more painful (indeed, potentially calamitous) effect for the people at the margins that 3.5 to 7. It's disingenuous, or lazy, or possibly both, to leave out such pertinent information. Predictions had a high degree of utterly spurious accuracy, while facts were sometimes thin on the ground.

I did wonder, too, when they'd start invoking the 2008 outbreak of bubonic plague for further market unease, causing an extra 2.741 per cent drop in prices.

 

[pinkyBear]

I am also thinking of holding off, negative equity, no thanks

Colly I would disagree with you on this, if it is a home you are buying. At the moment there appears to be alot of speculation about stamp duty and at the end of the day life is life and peoples situations change. A move up the ladder or down the ladder occurs in most peoples lives.

If you were to try and buy you could put in an offer well below the asking value..
Stamp Duty changes may / not come in to force in the next buget - either way the market will get back to normal... And possible short term dips will recitify itself...

 

[delboy159]

Did they mention the softer landings other countries have experienced perhaps?

An academic on the programme stated that of the 49 (correct me if I'm wrong) property booms researched, not one had a soft landing. Saying that, maybe they just omitted examples of booms where a soft landing did occure or couldn't find examples even if they are out there.

 

[Duplex]

I watched snippets of the programme but had to switich if off so many times, to watch something more believebale.....like LOST on RTE 2

In my view, the programme was sensationalist and alarmist tabloid journalism at its very worst.

Richard Curran has made a complete fool of himself and has done his career damage by trying to create a name for himself by producing a one-sided, opinionated piece of trash. When you read the bulletins from late last night and this morning, and if you listened to Newstalk this morning, you will see that he has single-handedly managed to create panic amongst the common people. First-time buyers, and people seeking to move up the property ladder, have been sucked in by his report and fear that the end of the property world is nigh.

Well he has certainly ignited the fire that may just bring about the fallout that he so naievely predicted.

I used to enjoy Monday nights on RTE 1 - they had some good investigative journalism features, but what they broadcast last night was less investigative and more one-sided and opinionated. And it has created a reaction akin to the 'War of the Worlds' radio broadcast in the US.

Shame on RTE for broadcasting it.

I'm curious as to how you have formed an opinion on a programme, you only partially watched.

 

[Guest118]

Its funny listening to some of the opinions on here, why dont yous all go and give your expert opinions on what is goin to happen.

Its about time someone told the country what can happen on the flipside of the coin, rather thatn listen to the jingle jangle of the EA's piggy banks as they get bigger and bigger.

 

[monkeyboy]

Its funny listening to some of the opinions on here, why dont yous all go and give your expert opinions on what is goin to happen.

Its about time someone told the country what can happen on the flipside of the coin, rather thatn listen to the jingle jangle of the EA's piggy banks as they get bigger and bigger.

How do you propose how Joe Bloggs AAM poster gives their expert opions if not on AAM.
People here are in the majority , if at all, not in the press or media and thus do not have the oportunity apart from finacing their own TV show to express their opions.
AAM, internet generally, phone in shows and our votes are about the only way Jo Bloggs gets their voice heard.

It does show the power of the media.

 

[ubiquitous]

just thinking
the first gulf war was the worlds first live telivised war from hundreds. Perhaps with the media interest in the Property crash Irelands will become the first live telivised property crash

Er...,As well as the Texas property crash in the mid-80's (mentioned by Markjbloggs above), the UK and Japanese crashes of the 1990s were covered to death on TV.

I also found it irritating that in discussing the UK crash in the '90s they made reference to interest rates doubling, without mentioning what those rates were, which is surely relevant. A doubling from, say, 7 to 14 percent will have a much more painful (indeed, potentially calamitous) effect for the people at the margins that 3.5 to 7.

That thought occurred also to me. Someone last night mentioned a calamity in the UK when rates went to 14-15%. Nobody has suggested that eurozone rates will reach anywhere near these levels in the foreseeable future so the point was pretty much irrelevant.

Richard Curran has made a complete fool of himself and has done his career damage by trying to create a name for himself by producing a one-sided, opinionated piece of trash .... he has single-handedly managed to create panic amongst the common people.

Really? I doubt it. David McWilliams, for one, has been making the exact same points on RTE for several years now and the sky hasn't fallen as yet. Neither has his career or credibility suffered.

 

[Betsy Og]

Feck it, my reply got wiped somehow so he goes again ......

Main points of programme I thought were:

• Building must slow down - couldnt go on forever at rates it was.
• Rents may start to soften as supply starts to meet demand and some of immigrant workers decide to go home.
• Interest rates could go to 5% or so - not historic peaks and if the stress testing actually goes on like it should then this, of itself, shouldnt crucify borrowers.

I dont think any of the above points are surprising, havent they been fairly clear for 18 months or more.

Lessons I'd take from it:

• Not a great time to be entering the market as a speculator as capital appreciation uncertain or low and rents softening.
• Mightnt be the worst time for first time buyers presuming they can take a good few interest rate hikes (this should go without saying). I dont think theres any point in first time buyers waiting because of stamp duty because most of them are exempt anyway and even if stamp duty gets abolished altogether then they'll still pay that extra money to the builder. FG's plan to stage a 3 year lead in looks disastrous to me.

The one piece of the puzzle I dont buy into from last nights programme is that theres some other major shock going to cause the tumble. US economy was primarily used last night - I thought it was doing fairly well of late. Also big scaremongering about exports and manufacturing - it seems obvious enough that in recent decades (so plenty of warning) and into the future Ireland is not going to be a manufacturer - so why is this now trumpeted as new dangerous phonomenon.

Last night was mostly about talking ourselves into a crash.

 

[KalEl]

One salient point was the academic who thought prices should go down but admitted he wouldn't consider selling his house and renting it back...we've always got to remember the great intangible when it comes to the Irish Property market ; Most of us are obsessed with owning our own home and a rake of other properties, more so than almost any other nation.
Thought my old lecturer Moore McDowell was quite amusing criticising government policy and intervention...just ring your brother and sort it out!

 

[Glenbhoy]

IIn my view, the programme was sensationalist and alarmist tabloid journalism at its very worst.

Coldn't agree more, dire stuff - it reminded me a lot of 'the great global warming swindle' in that it probably had some decent points, but it was so unbalanced that they got lost somewhere. As for the look at the future, well, I had to laugh, cringeworthy.
Why will programme makers not show us balanced debate?

 

[soma]

Why will programme makers not show us balanced debate?

Again were you (or others) calling for a balanced debate during the years when coverage was almost exclusively positive & optimistic towards property?

Parts of the program (I didnt watch the final quarter or so) that I saw were undoubtedly awful tabloid journalism (how I cringed during that 'brain tumour' scene), but it did seem to raise some salient issues that your average punter should at least consider when pondering their (most likely) largest ever financial transaction.

 

[AKA]

I didn't like the 2 examples given of people finding it tough.

1. One girl borrowed 215K at 100% mortgage on a 1 bed apartment - her repayments are supposed to be 1500 a month...

I borrowed 210K over 39 years - with mortage interest relief my repayments are less than €900 a month at rate of 3.8% (1.05% over ECB). Now even with an interest rate of 5% over 20 years you are looking at approx €1420. Hardly a typical FTB.

2. And the idea of a couple on 56K combined income borrowing approx 370K with an additional deposit of 40K or so just silly. Who would give approval or what broker would even suggest figures like that?

 

[Luternau]

"Er...,As well as the Texas property crash in the mid-80's (mentioned by Markjbloggs above), the UK and Japanese crashes of the 1990s were covered to death on TV."

I said 'Live TV' by that I meant (jokingly) that there would be property crash reporters live and on the ground, with real time reporting on another foreclosure, another repossession, another case of negative equity, from all corners of Ireland....Sky News style...Surely this format was not available pre 2000?
Anyway guys, I was being humerous...after all no one would want to watch that sort of stuff on the news 24hrs a day? Now I am being sarcastic!! ;-)

 

[Dreamerb]

The relative increase in replayments for a 3.5 to 7 % and 7 to 14 % (or 2 % to 4%) increase isn't linear though. The repayment increase is very severe for both.

I know - I ran the numbers.

What people can borrow is based on the cost of repayments, so at 7% they could not borow the same as at 3.5% (hence the decrease in amount in my calculations).

Borrowing potential isn't especially relevant when you're talking about existing mortgages - my point is that the effects are different, depending on the starting point. Yes, a 55% increase is dramatic and painful, and there are people who will not be able to afford it. But 83% is in a different league, and is likely to be the difference between making painful degrees of cutbacks and actually not having enough money to live on for a substantially larger number of people.

Also the calc shows that someone who could borrow €500,000 could only borrow €320,0000 if rates doubled.

I think the comparison with the UK is a good and valid one and I believe the primary factor governing house prices is the cost of borrowing (controlled by interest rates - in our case controlled by Mr Tricket et. al in the ECB).

I disagree, but only in part. Affordability will not drop as far because of the different relevant starting points (and I don't think, in any case, that rates are likely to double from the current levels). But assuming the ECB base rate rises to 5% over the next 18 months - not far-fetched, but not a foregone conclusion either - then affordability will reduce significantly. It's the people at the margins, those with the 95-100% mortgages on one bedroom apartments, who may find themselves in enormous difficulty because they'll have precious little flexibility. I suspect demand for those one beds is particularly vulnerable in a climate where buyers are nervous: they'll seek to buy properties which give them greater potential financial flexibility and I think we'll see the price differential between one and two bed apartments increasing - and not a differential based on increases in either.

d - still, notwithstanding, believing in a soft landing!

 

[ClubMan]

Did anyone watched last nights RTE's Property Crash programme? Any comments?

I am about to sign contracts in a week days time, any suggestions? Should I wait or not.

Your comments are greatly appreciated.

Obviously it makes sense to organise one's life around what was on telly the night before.

 

[demoivre]

Again were you (or others) calling for a balanced debate during the years when coverage was almost exclusively positive & optimistic towards property?

What are you on about? The doomsters were always there, many of them were calling the top in 1999 and repeatedly every year thereafter. When interests rates were heading down in nominal terms post 9/11 did RTE run a programme - Future Surprise: Property Boom ? What I saw of last nights effort was absolute sensationalist garbage and I am not bullish about all property.

 

[demoivre]

Trash journalism is trash journalism, no matter which side of the coin it represents.

Couldn't agree more.

 

[decembersal]

The purchaser of our house has just pulled out...don't think this hypothetical programme helped. Just think it's a bit of a coincidence. am gutted.

 

[Duplex]

-- American Experience, 'The Crash of 1929'

Haven't watched the programme yet but I'll have a look tonight. I will say this though - if it's hyperbole-laden trash journalism, bears only do themselves a disservice by pretending it serves as balance to the kind of faff SherryFitz and their ilk spout on a daily basis. Trash journalism is trash journalism, no matter which side of the coin it represents.

I can’t imagine that any mainstream media organisation would be willing to tackle the big issues, that are the primary drivers of the matter under discussion. The fact that RTE addressed the issue at all, should be lauded no matter what level it was pitched at. That been said the substantive points raised by several learned academics in the program, are comfortably dismissed as doom mongering by those who have a different view. The ultimate proof of the veracity of the arguments will only come with time .