Current public sentiment towards the housing market?

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BigM

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batty;277581Nooooooo- Can you all keep quite please for the next month or so?? I'm trying to sell a house here!! (only joking)[/quote said:
I know you're only joking but I still think if there are signs of a serious 'wobble' (as I think bank economists call it - they just can't bring themselves to admit it's going to be a crash) then Cowen will bring in some FTB-friendly Stamp Duty changes in December which will prop up the lower end of the market... for a while.
I reckon there will still be time to get out in the Spring '07 season - but I wouldn't want to be selling my house this time next year.....
 

edo

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I couldn't agree more with SHARP

A property crash in a well developed diversified economy is one thing - ie Japan in the early 90s - a property crash in modern day Post- Celtic Tiger Ireland is going to be interesting to say the least.

It still amazes me how much of the entire economy and workforce is dependent on the Property sector. I have heard figures of 10-15% of the workforce , but IMO that is on the low side - if you take all aspects , Construction, financials, EAs , advertisers , interior decor and all the retail associated with it, all the deli shops selling jumbo breakfast rolls and the like - I would put it at closer to 30% myself .

I was down in the home place (South County Carlow) over the weekend and damn near every small business or recent startup is in something to do with property - be it builders, tilers , builders providers , drain unblockers , capital equipment hires , painters , landscape gardeners, etc etc . Every corner you go around there is a site for sale - there are 3 estate agents in a village with a population of 900!- I guess everybody down there must be on their 3 of 4th property by now! - if the property market slows - the knock on effect will be tremendous .

Another observation is that there is widespread displacment going on in small businesses throughout the Irish countryside - despite official denials to the contrary - 2 businesses I know down there cleaned out their Irish workforce and hired in Eastern Europeans - Doesn't really matter as most of the Irish I know want to work in the property sector where the money is better - no competitive challenges to worry about there . Again if the property market slows and the property jobs dry up - we will really see how tolerant the Irish really are - once the middleclass start squealing the game will be up.

Im in export manufacturing and this sector has technically been in recession for the previous 2 years - take away the property sector and public sector and with some honorable exceptions there has been Sweet Fanny Adams job creation in this country since 2001. The whole property boom literally has created this "bubble economy " in which the majority of the population of this island are dependent for their livelihoods.

For those of us who have to make a living in the "real world" it is quite apparent that we are , as the Chinese insult would put it, are about to enter interesting times . the US is about to enter recession , if its not there already , the result of which will put us all in uncharted territory , Europe's tentative recovery this year could be stillborn , dependent as it is on Germany's export sector . China's booming exports have masked a multitude of sins , which may become apparent when the American consumer decides the splurge is over and its time to repay the mortage or lose the house - it will be a long long time before China will be in a position to replace the US as the motor of World economic growth - oh yeah they also have a property bubble too!.

Irelands competitive position on the world stage has gone to the dogs over the last few years - ok we dodged a bullet over Intel, but its a stay of execution , not a pardon. With inflation spiralling , more competitive rivals opening up in the far east and eastern europe , our export industry better start diversifying soon because when the Multi's move on - theres gonna be a lot of empty 3 bed semi ds in County Dublin and Limerick.

From a purely economic Darwinist point of view - A shakeup was overdue and t what the market gives , the market takes away , if you get complacent. It will seperate the chaff from the wheat and what is still left standing will be something to build on when the dust settles - It will also hopefully cure the Irish peoples illusions of getting a lot for very little effort - that there is no subsitute for hardwork allied with good planning and vision to create wealth and prosperity that will last.

No use blaming the government - we live in a democracy and in democracies you normally get (as much as it pains me to say this) governments that are broadly representative of the citizens who voted for them - poor planners and money managers, the greed and short term thinking, the im alright Jackism etc etc. Hopefully people will remember that when they go to the polls next time - maybe a property crash might make them brave enough to actually do something about it , rather than the usual bitching, whinging and moaning that takes place between elections , yet when the opportunity arises to take positive action , they fall for the same ould S***E and chicken out. A Property crash will be tough , taxes will go up etc etc , yet there could be a silver lining to it all - its not the end of the world , just a particular part of our economic history that people will look back on fondly saying " Do ya remember how much that gob****e paid for that.................................................

Im Done
 
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SHARP

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I was just thinkg the same thing myself tententwenty. Obviously a recession would affect each of us, but those who have already cashed out of the housing market and are sitting on a pile of money will be kings of the new world in 6 years. All the people who are swimming in debt and owe the bank 300,000 on a house that is now only worth 175,00 won't be much fun to be around. People with a safe gov't job should be able to sleep pretty well at nights. The only way to crash proof yourself is to have more cash and less debt.


A few thoughts on business that shouldn't suffer too much in a recession:
1. Pubs (Ireland will never change)
2. Chippers and any cheap eats
3. Career Counsilors (all the unemployed builders and auctioneers will need to do something with their lives.)


Businesses that will be hurt badly by a recession
1. Upscale restaraunts (sorry Lemongrass, I love ya, but I won't be able to afford ya)
2. Luxury car dealers (not a big demad for hummers and Land Rovers)
3. Builders and everyone involved in the housing industry (a little obvious)
I think the Spar's/ centra's/ convience shops will be hugely hit and buying in Lidl/Aldi wiill sky rocket!(people need food, but will need to watch the pennies) I also think shopping centre's in general will be hit in a big way, Although shopping is Ireland's biggest hobby, I just think people will continue to travel to them (i.e. the north side visting Liffey Valley and the south side travelling to Blanchardstown) but it will be their day out and the buying will dry up (well especially in comparision to the lunatic buying that's going on now)

The construction industry impacts so much and most things will get a big hit. I really don't want a downturn/recession, but want people to cop on and face up to the fact that we are not Footballers and Footballers wifes!
 
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tententwenty

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PS. Could get messy if room305 and tententwenty get their beer fueled hands on each other.
Not to worry, whathome will start his own thread in the chipper afterwards about the petty bickering and we'll all have a good larf. :D
 

batty

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Well Somerset, Looks like you have your first house...Batty's!
In anticipation of falling prices I've priced my house myself at €690. EA was suggesting that I put it on at €750!! It won't be officially "launched" until next Tuesday but should be interesting.
 

whathome

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Well its an ill wind in fairness. Some businesses will do well, others will utterly collapse. How would you go about crash-proofing yourself (if this really is the last gasp)?
Anyone selling bicycles in the west of Ireland should do very well!

;) ;) nudge nudge :)
 

CelloPoint

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To what extent do people agree with Edo's observation that: not only are we playing out a property bubble, we're also going through an economic bubble?
 
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baby_tooth

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First time posting here but have been following this thread amongst others for some time.

I think Edo has done a great job surmising my sentiment as to the direction things will spin.

Coming from an area where following and pricing interest rates and inflation I can see nothing but increases in rates up to 3.5% with a pause to see if the US can sort out their deficit and what role China will play with regard to their currency.

At the moment the euro has been day on day depreciating against the dollar and pound, pulling surpluses out of eu and into these countries which I can't see being allowed to continue in the short to medium term.

Add to that the fact that Irish Energy regulators are slow to adjust prices as per market views, we will see us paying higher than markets rates for energy which will squeeze margins (be that take home pay or company profits) and further reduce sentiment even further.
 

BigM

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not a bad idea. maybe some new websites could be started www.maybebears.com or www.anotherbull.com and there could be some new sections in the classifieds ""Bull seeks Bull" or "Bear seeks Bull"
e.g "long time Bear on reasonable rent seeks self satisfied Bull for heated discussion on advisability of selling and reinvestment in cocoa beans. ( no messers please, min three investment properties required)
and www.myhome.ie could introduce a private members area with previews and pictures of new developments .
Brilliant.
 

whathome

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A downturn might be good news for employers...
Harnessed by the banks, employees up to their neck in mortgage debt will be very eager to please the boss when things get a little tighter.
 

soma

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To what extent do people agree with Edo's observation that: not only are we playing out a property bubble, we're also going through an economic bubble?
I have long since stopped actually caring about/paying attention to house prices and affordability etc - the penny dropped about 10 months ago that what I was looking at was a Paper-Tiger economy, one that will not have a leg to stand on over the next few years IMHO.

So yes I'd subscribe to the theory that we have a 'bubble economy'.
 
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SHARP

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I agree we have a bubble economy and not just property.

Our spending is out of control and I don't think people realise how much. Many of my friends are in their 30's and have 300k+ mortgages over 30+ years, credit card bills in the low 1,000's, extra loans for the new plasma/re-done decorating, 2 car loans, credit unions loans.

Not all people in Ireland at the money have "real money" Yes, there are 50year old plus that have real money in the bank as their "meagre" 15-20 years mortgages are now paid off and all their wages can be used for spending.

The people you see in the new BMW's, Merc's, Landrovers in their 30's - you can nearly be right in thinking that a large percentage of them have huges unaffordable loans out on them or even worse - they are re-mortgaged loans on the huge increase on the price of their homes. What happens when jobs are lost and these loans can't be met?

The whole "Keeping up with the Jones" is going to bring this country to its knees (or maybe just the suburban housing estates then) because people are using borrowed money to keep the "Im rich"/"Im loaded" persona up.

I don't know about others - but I have seen signs of Depression rising among family and friends which was not present before. The times of "saving up for something to enjoy" are long gone in Ireland and its going to destroy us all.
 

BigM

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I agree we have a bubble economy and not just property.

Our spending is out of control and I don't think people realise how much. Many of my friends are in their 30's and have 300k+ mortgages over 30+ years, credit card bills in the low 1,000's, extra loans for the new plasma/re-done decorating, 2 car loans, credit unions loans.

The people you see in the new BMW's, Merc's, Landrovers in their 30's - you can nearly be right in thinking that a large percentage of them have huges unaffordable loans out on them or even worse - they are re-mortgaged loans on the huge increase on the price of their homes. What happens when jobs are lost and these loans can't be met?
I'm not sure how prevalent the remortgaging to buy plasmas/BMWs really is - I don't know anyone who has done it. But I do know plenty of people in their 30s with mortgages in excess of 300k - they're not too worried about the paper losses a crash might bring since they're not moving.
The knock-on effect on the economy will be bad but I'm not sure it'll result in wholescale recession a la 80's.
It'll hit the construction (obviously) and its attendant services industries hardest, which have largely been maintained by migrant workers lately. The Banks have already repackaged and sold on most of their debts so there won't be any collapses there.
So overall, it could be a 'hard landing' (i.e. crash) for the property market followed by a 'soft landing' for the economy as a whole.
And then we can get back to 2000 levels when fundamentals actually meant something :)
 
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tententwenty

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Anyone selling bicycles in the west of Ireland should do very well!

;) ;) nudge nudge :)
Haha, sadly thats not me, I just enjoy cycling, thats a mates shop. No SUVs over here.

Someone said that those who made out on the property boom will be the rich in the next 6 years, I would debate that. Money easily gotten is easily lost, as our fine government with its large and well paid civil service has amply illustrated. Most of these people have had good fortune and earned from it, but that doesn't imply any particular economic skill on their part. Whether or not they can hold on to that cash, or burn most of it in a splurge of high living and foreign holidays, is anyone's guess. I doubt that most of them will be investing in equities or local businesses, thats for sure.

Edit: actually if I had to place money on it, most of them will put their cash straight back into property on the first dead cat bounce, and take a belated hiding.
 

Duplex

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In previous market crashes knowledge of the instances of discounted prices would have been limited to vendors, buyers, EA's and their friends until it would be latched upon by the mainstream media. IMHO, the media outlets are taking their lead from a better informed public (AAM users).

Who wants to set up a website for properties that have dropped in prices ? bet that would be popular and get things rolling a bit quicker:p
Something along these lines?
http://flippersintrouble.blogspot.com/

P.S.

Great post Edo.
 

room305

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A downturn might be good news for employers...
Harnessed by the banks, employees up to their neck in mortgage debt will be very eager to please the boss when things get a little tighter.
They'd have to be in a recession-proof industry. The employer mightn't like paying high wages to his employees but he hates it more when he doesn't have customers to buy his products.

Another rather large section of the economy that is going to get spanked in a recession is the debt industry. The home loan, debt consolidation stuff will take a brutal hammering during any period of credit tightening.

Actually so few industries are going to go unscathed that is probably worth trying to identify them. I disagree on the pubs front - your average local may be fine but the superpubs and niteclubs will be in trouble.

- Healthcare and funeral homes generally survive recessions (people never stop getting sick or dying)
- Protected professions by which I mean doctors, solicitors and accountants
- Public service jobs
- Low cost retailers
 

Superman

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I'd question that about solicitors:
From what I've heard - much of the work in offices outside Dublin was made up of wills, conveyancing and personal injury cases. With personal injuries now taken away there is a significant reliance on conveyancing which will be hit by a downturn.

Also don't forget that they charge percentages on certain transactions which will be squeezed if the value of the assets decrease (wills etc.)
 

CelloPoint

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I'd question that about solicitors:
From what I've heard - much of the work in offices outside Dublin was made up of wills, conveyancing and personal injury cases. With personal injuries now taken away there is a significant reliance on conveyancing which will be hit by a downturn.

Also don't forget that they charge percentages on certain transactions which will be squeezed if the value of the assets decrease (wills etc.)
Also, there are loads of legal people pouring out of the universities, Blackhall and Kings Inns. There just ain't enough work for all these 580+ points, perfect life, young people with massive expectations.
 
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