House Values outweigh Debt

Well they would want to, wouldn’t they? :unamused:

That would be all very comfortable if house prices were at a sustainable level.

Interestingly this sounds like someone trying to say “the entire market is worth more than the debt so there is no negative equity”. This makes no sense at an individual level. “Your house isn’t in negative equity as no-one else on your road is”?!?! Trying to give peopel warm fuzzy feeling about house price safety I think.

Imagine if the entire house market was worth less than the debt, how messed up would that be?!


There is no possible way that the debt could outweigh the value for the entirety of the market.

It’s Monday though and thus, it’s time to draw some cold false comfort with another soundbite that completely misses the fricking point.

Drove out to Bray on Sunday, leaving Swords and entering Bray I noticed up to about 20 or so for sale signs just from the road. You can browse from the main road, these days… :open_mouth:

Bray is an interesting one alright, I have seen a lot of for sale signs there myself. There is a block on the Dargle road that seemed to take a long time to shift the units. Not a terrible location in reality, right by the motorway. Lets see if “for sale” sign trees come into bloom this spring :wink:

There were about 8 for sale signs from various agents at the entrance to our estate in south Dublin - some had been there for up to six months. They were all taken down within a few days last week - but not one of the properties has been sold or sale agreed.

I’m thinking it can be one of three things:

  1. They blew down in the stormy weather
  2. The residents association requested removal
  3. Agents decided that having so many for sale signs up for so long damaged the market in the estate and collectively decided to take them down.

Thing about the overall debt levels are that they are increasing by 20-30% per annum while values at best will rise by low single digits for next few years. even if values of property remained unchanged for next 5 years and debt continues to grow at a lower rate of say 25% then after 5 years the debt has doubled and house values remained the same if it happens over ten years then debt would be twice the value of the housing stock! Unless the bubble unwinds soon i can see debt being close to total property values within next decade.
The figures are distorted by the high numbers that have no mortgages or very small mortgages. Probably about 25-40% of the houses have all the debt.
Values are arbitrary, debt is real.

Premier Square in Finglas had loads of signs outside last autumn but they seem to be all gone now but theres still loads of these apartments for sale on myhome and daft. I think its more for aesthethics as anyone can check online and see the large inventory in the development. Maybe they are hoping some less internet savy older people will buy as are’nt aware of the large numbers for sale in development.

An interesting, but ultimetly, totally useless stastic. Why? Because no one entity owns all the debt and all the asset.

Many houses will have no debt associated with them. Some will have a little, others will have lots. Regardless of your position on where the market is, to collect everyones houses together and compare it to the total level of everyones debt is silly, it means nothing and is just a useless stastic that creates a nice headline to make people feel that eveythings OK.

The only reasonable metric is to look at each individuals position, their own personal debt to asset ratio. The “group picture” means nothing.

Blue Horseshoe

Basically those shouldering the dam debt! Who is going to help them when they fall?

Yeah group means nothing in the context of housing. If the property market was a quoted company it would be different - if its value fell below a “fair” value, then the company would be a takeover target. On the flipside, if it rose above fair value, it would be a shorting target.

There is no buyer out there for the entire housing stock, no matter what it is valued at. If the housing stock was worth 600 billion and was valued at 200 billion, no-one steps in and launches a takeover bid. These reports add nothing but fluff imho.

…an fluff in the form of finger waggin POLITIKOS spewing like a candy floss machine at a muddy Irish Carnival, is about all we can look foward to. I feel a belly ache already.

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On edit: I pressed the submit button by mistake before completing this post…so I was going to edit it to include a considered opinion on the quoted sentence…but on second thoughts, I think my original post sums up my opinion just fine.

No one, nor should anyone. As grown up adults they decided to borrow money from the choice of terms offered to them. Their call, their choice, their risk. Under no circumstances should there be any cavalry to come over the hill to the rescue just because you borrow yourself into oblivion.

No one forced them to borrow, no one foreced them to buy. It was a choice made … either with or without condideration to all the available information.

Personal responsibility (something seriously lacking in modern society) :unamused:

Blue Horseshoe

And we should kick them in the crotch when they’re down too, just for good measure. :unamused:

Permission to speak:

BH is correct in that there is a lack of personal responsibility prevalent in this country. You can see it in lots of things, such as the high accident rate because no one stops us driving irresponsibly. So to some extent, I feel he is not far short of the mark when he suggests that perhaps, a dose of reality shouldn’t be avoided, grosso modo.

That being said, I think that there are a couple of parties to this fiasco who should additionally be lining up for fire. The Central Bank and the Financial Regulator should be shot for allowing the banks to get away with diluting the lending criteria for mortgages to the extent that they did. The banks shouldn’t be allowed to wriggle their way out of putting short term shareholder value ahead of long term financial stability. Not only that, our politicians have been talking up the property market as well, and singularly failing to look at the long term on that front. So a lot of people are going to get burned through idiocy on their own parts, but with the collusion of people who should really have known better and were in a power to reign things in before they went crazy.

I don’t want to see the tax payer have to carry the weight of this mess if it goes critical, if only because as a single tax payer I pay a disproportionate amount of tax already and I was not so stupid as to put myself in the same position.

I don’t think it’s a case of kicking people when they are down, realistically - you could just do nothing and leave the market to sort things out. I mean, the market sorted things out on the way up, and was allowed to. We could, perhaps, avoid increasing income tax on them, or maybe introducing a PPR based wealth tax based on purchase price in a falling market. That would be kicking them when they are down. But at the end of the day, a lot of people have been crying halt on the property market for more than a while now and when the dust settled, people will be demanding to know why no one listened.

Bailing people out, however, has the impact of kicking the people who did know better and who didn’t get themselves into the mess. They will get hammered anyway though because any measures taken to prevent a similar mess in the future will almost certainly impact on their access to credit disproportionately.

In other words, thanks to a lot of unwise people who will end up in negeq or bankrupt, it will be harder for me to get a mortgage even though I’ll be a safer bet than it was for them to get themselves into trouble.

Not fair either.

If you bail people out you not only reinforce the reckless no-personal-responsibility behaviour of those people, but you encourage even more to join them. It’s like reverse evolution, instead of the strong/smart/whatever surviving, they’re just dragged back by the others.

On the other hand, I’d also agree that the financial black-death-bearing mortgage rats need to be burnt out, too.

[Deep breath, deep breath… :wink: ]

Right ) opened a can of worms there, it was a rhetorical quesiton - no one will help them.

However to add to the point, the Banks nor the Government & Vested Interests are innocent here!

Have to agree here, and with BH’s previous comments.
I remember a few years back of a lot of ‘unlucky’ uninsured people who’s houses were flooded in Dublin city centre.
These people may have been unlucky to have had their houses flooded, but I would say they were stupid/reckless not to have house insurance.
The government didn’t think so and paid for all repairs. I’m sure the neighbours with insurance weren’t impressed.

It will be the same with the property bubble bursting. This government, and all governments I remember growing up in Ireland, are reactionary and just out to win some kind of popularity contest.

I wonder the people in Lucan get the same treatment?

Oh yea DO you remember the picture!

(words added by group not connected with Bertie…as Betrie is no friend of the earth folks!)

Its funny when you search for “FLOOD+BERTIE” on google :wink:

Now in the case of if it when the bang goes BOOM where is the government going to get all this money to give back to people?

Exactly from nowhere. Since they derive so much revenue from the property sector in taxes if that dries up so does a massicve chunk of exchequer doh and ypu’ll never see the likes of SSIA again!

DOH! is right.

I wonder will they set up an “Amateur Property Investors Hardship Fund” just like these folks got? :wink:

In fairness, he pays the monies who takes the risks…what’ll be next - a “Depreciating SUV-Owners Hardship Fund”??? :laughing:

This country is gone mad…MAAAAAAD, I tells ye!