You’re right actually, sometimes people don’t want to hear good advice… There’s going to be some mess after all of this…
I agree because the masses only listen to info that happens to wash over them as they go about their daily delirium happy in the knowledge that what they dont know cant hurt them (they wish).
There is gonna be one hell of a wake up call just down the line folks.
Nod and Smile. Do nothing else.
If someone genuinely wants your opinion and is willing to listen then give it. If they just want an argument then really who does it serve to give them one?
You can explain that paying more in mortgage interest than you would in rent is nuts but people still won’t get it. I know people who still don’t get the fact that borrowing at a high rate while saving at a low rate is a bad thing.
Perhaps for a start you could update these ones posted by PA ElGrande in 2006 ( Marian Finnegans ghost writer - I think not)
275,000 empty properties in April 2006.
Professional people on good wages are priced out.
Numbers of first time buyers is declining.
Construction output is at all time record levels.
Interest rates set to increase further this year.
A record 1 in 8 of us work in construction, highest ratio in the EU.
Debt levels continue to increase.
Manufacturing employment continues to decline.
Inventory for sale has increased in Autumn 2006
Fitch estimated that bank credit to the private sector would increase to 190 per cent of GDP this year, one of the highest ratios of 100 countries surveyed.
Rental yields at current prices are down to 3.75% and even lower.
Or you could try
This is a worrying one
I reckon that by the dead of next winter we will have the majority accepting the true state of affairs.
However I think non of us can truly measue how painfull and how long we are going to linger at the bottom as we will witness across the board knee jerk reactions and poorly half baked solutions to problems compounding the crisis rather than releaving the pain.
With human nature playing a critical role I see matters remaing bad for some number of years.
Excellent, thanks very much. I really am trying to get through to some people before it’s too late, but am not forcing it on them.
Sorry noz but it is already too late.
a 2pc fall doesn’t seem very large given the big increase in supply, what’s holding rents up?, how much are they likely to fall by before the end of 2008?
pure price-stickiness I’d say. The mainstream media are only starting to report that is isn’t all light and music in the rental market. LLs are going to need a while to catch on that they’ll need to be dropping prices to shift properties. And they’ll need a while after they realise it to actually submit to market forces.
The facts on rent are very questionable. I’m very sceptical on the reports coming from daft. As far as I can see rents have been coming down for the last year. Thier statement that rents had held up in country areas is just not credible. The 2% drop reported is just a sop, it is not at all reflective of the facts. Yes, maybe they fell 2% since Jan, but the point is that they had fallen considerably in the previous 6 months. It seems that the only true figures are those used on Daftwatct.atspace.com.
I’ve corresponded with Ronal Lyons on this and his answers were not convincing.
The CSO get thier figures on rent rates from the Estate Agents and local authorities!!! I tried to get this fact exposed by the mainstream media but no one would run with it.
There are many reasons why the Daft index is only a guide to trend (and a lagging one at that) on other threads. Remeber that the Daft Report is by Defintion based on small percentage of properites that are not actually rented.
IF anything the rents being agreed now will be less than what is asked for on daft.ie. as it is a declining market.
It should be remembered that these are merely asking prices - there was the same lag in official reports when it came to asking prices on sales initially. The real decreases will only feed through when landlords realise that they have to compete for tenants. This is not the case as of yet. Id say some will even be holding out until August/September when swathes of stidents will be expected to ride in to their rescue. I dont think that is going to happen.
There have been some notable decreases in asking prices on house shares over the past month and a half. I would interpret that to be a reflection of people who want to choose who they live with coming under a bit of pressure from landlords to get tenants in and deciding to drop the price of the extra room and fork out another 15/20 odd euro each. I know someone currently looking for a place in the Dublin 6 area and shes pleasantly surprised by the price and quality of whats on offer as compared with 6 months ago.
That’s wrong way round, I’m afraid - the report is based on properties posted for rent, not sitting around to rent (the flow, not the stock, so to speak) - so it’ll cover the vast majority of rental properties in the country and be a lead, rather than a lag, because you’re getting landlord’s expectations based on how they are experiencing their market just as they enter the market again. If the typical landlord rents out many properties, this should be quite a good indicator of rental trends.
So you do accept they fell 2% since Jan? I thought that didn’t reflect your “facts”.
But you don’t accept the index when you don’t like its findings? Oh dear…
There are two problems with this argument. First it assumes that a typical landlord rents out many properties. While this may well be true overall, my experience has been that there are many small time landlords out there (kept the apartment when they bought a house, etc.) and I suspect that these may make up a large sector. Secondly for this to be a leading indicator you would have to assume that landlords will put in ads at a reduced price based on past experience. In my experience again this doesn’t tend to happen - instead I generally see people put in an ad at say €1500 even if they know they’re chancing their arm and €1400 is the going rate. If no-one bites at that price then either the rent is dropped in the ad, or a reduced rent agreed in person with the tenant. In the latter case the stats will be skewed upwards as the reduced price won’t be reflected in the system.
Firstly how could it possibly be a leading indicator? Any analysis of the subject in question has to be lagging as the data exists and then it is analysed. Leading indicators only apply when you know that a trend in something will have an effect on another. i.e. increased supply will lead to decreased price or oil price increases would feed into higher food prices etc.
Also my point about it only being based on small percentage of properties that are not actually rented is based on Number of Properties for Rent on Daft / Total Number of Rented Properties is small (but getting bigger by the day God Bless)
Exactly - these are asking rents… If they rise, one can expect actual rents agreed to rise after them. If they fall, one can expect actual rents to fall after them. There is of course a valid point about the stickiness of the rents in coming down - that certainly seems to have happened with Daft’s house price index.
Hence the focus on stock…
Again, this is way off. If we look at all 2 million or so properties in the country, we have for simplicity two groups - those being rented and those that are owner-occupier.
Only a small fraction of those are ever going to be on the market at any given moment. If we’ve say 1.7 million properties in the non-rental sector and 0.3 million in the rental sector, Daft’s figures would suggest that maybe one in 20 is on the market at the moment (and that is a high watermark, or close thereto… presumably it could be much lower in normal market conditions).
It is that 3-5% of the properties in a particular sector that are on the market that “reveal” price and therefore value of the rest. Naturally if all properties were for sale at the same time, the “revealed” value would collapse.
Right well using Pa ElGrande’s fundamentals from September 2006 and trying to update them (please feel free to contructively criticise)
->Longest running boom ever recorded by the OECD - the boom is quickly disintegrating ->Construction and public sector have been the jobs engine for the five years to 2006, now with construction contracting and less taxes to fund a larger public sector, employment and GDP will fall - hence knock on effect to demand.->Ireland rated just behind Azerbaijan as country most vulnerable to sudden economic shocks.->Fitch estimated that bank credit to the private sector would increase to 190 per cent of GDP of 2006, one of the highest ratios of 100 countries surveyed (where is this at in 2008???).->Debt levels continue to increase/Interest rates set to increase further this year(2008/09) - hence knock on effect to demand.->Construction sector remains heavily funded by debt - meaning that many developers cannot hold onto housing stocks too long - hence supply will continue to increase as months go on.->Currently there is enough zoned land to accommodate 460,000 new homes, though as housing density figures continue to rise each year existing land has the potential to provide an even greater number of housing units.->Banks tightening their lending criteria as securitisation becomes more difficult - hence knock on effect to demand->Record personal debt levels that continue to increase - hence knock on effect to demand as people’s have less equity to trade-up.->Obsession with foreign property, failing to take into account local economic conditions and prospects - will continue to divert money from Irish properties and hence reduce demand as MORE money is sent out of the economy.->We have leveraged our own property in Ireland to fund foreign property assuming Irish growth continued - will reduce demand by making it harder for people to trade-up given the liquidity problems.->Large number of unoccupied units across the country (275,000 in April 2006) and still increasing in 2008.->Construction output was at all time record level in 2006, 90,000+ units completed in 2006 and now falling to only 45,000 expected in 2008 which is reducing the demand for immigrants - hence reducing demand for housing.->A record 1 in 8 of us work in construction, highest ratio in the EU - with a strong dollar manufacturing and tourism will be unable to absorb many of these workers(MORE money sent out of economy), cut-backs in financial services and lower levels of work in solictors offices due to less conveyancing work coming their way, unemployment to continue - hence demand will reduce.->Migration of manufacturing eastwards, with some major employers lining up to move - wages will remain constant if not fall in REAL terms - so demand will be reduced.->Heavy involvement of speculators in the property market, Rental yields at current prices are down to 3.75% and even lower according to DAFT, many landlords will sell if possible, thus increasing supply.->Professional people on good wages are priced out, Numbers of first time buyers is declining as greater deposits are being required at a time real wages are falling, fewer buy-to-let buyers getting involved in the market - hence demand will reduce->Government revenue growth dependent of construction - Lack of growth in income tax receipts despite more people that ever working that ever before (i.e. wages are not growing fast) - there are more people being employed part-time etc on lower wages hence the AVERAGE income will fall bringing down PAYE, less VAT and stamp duty receipts for the Government, with falling house prices CGT will be less than expected->Higher fuel prices(home heating oil, petrol, diesel and gas) will continue to drive down people’s disposable income and hence reduce demand in the economy as more money is sent OUT of the economy to pay for the fuel->Higher fuel prices will begin to play a bigger part of people’s consciousness when purchasing a house - hence lower demand for many second hand houses->Continued illiquidity in the financial market will cause banks to continue to offer high rates of interest rates on savings thus absorbing more money OUT of the economy - further reducing demand-> As more immigrants leave, the number of houses per head of population increases and given the average Irish household size is greater than than of continental europe, we can expect more exces supply