Whacky conspiracy theory . . .

  1. The DOF release stamp duty figures which show that monthly sales volumes of secondhand houses are down over 50 per cent on last year Link

  2. The monthly Permanant TSB/ESRI report is released 1-2 weeks earlier than normal showing that secondhand houses have dropped 4.5% in value in 2 months. Link

  3. The EA’s and the normally bullish bank economists are gone all quiet and some are even talking down the market. Even media commentators are getting in on the act.

Could it be that the VI’s who stand to lose most when sales volumes are low (e.g. banks, EA’s, newspapers, government etc.) are breaking ranks with the developers and encouraging the crash in order to get the market back up and running in the minimum time?

:open_mouth: :open_mouth: :open_mouth:

Well spotted Banjo. However, I think dropping the stamp duty is not gonna happen this budget. Cowen has said so even after all the sneaky VIs applying pressure.
Here’s another conspiracy theory.
Cowen knew what would happen when the expected crash happened so he didn’t close a little loop hole whereby builders can avoid paying 2 million Euros on sites. He didn’t close off the loop hole last budget despite it being well highlighted by the media. The reason he let it be is so he has some bargaining power with the builders when he refused to drop stamp duty. Listen for the builders complaining about stamp duty. See, nothing. You get the other VIs but the builders have been very quite. Cowen has told them to shut it or he’ll close this little loophole.

I didn’t mean to imply it would. More that a group of VI’s are resorting to encouraging a housing crash in order to get things moving. Now that Cowen as made it clear that he is not going to provide a market boost in the form of a stamp duty drop they may even have concluded that a crash is the only answer.

But how would builders benefit from a drop in SD? New builds under 125Msq are exempt from SD so all a reduction in SD would do is make 2nd hand properties more desirable.

a quick crash suits me better.
long drawn out germany or japan scenarios are too agonising.
a quick, sharp bust and recovery is a lot more survivable. I dont mean financially, just ive no patience.

Unfortunately I see the long drawn out scenario occuring here.

quick busts are normally brought about by a sharp and sustained increase in interest rates, followed by the inevitable reduction once the market bombs.
Look at the USA, 1% went to 5.25% (i think this was the high), market suffered and now rates are falling again. When rates fall the market becomes viable to invest in again … and the cycle resumes.

Ireland, on the other hand, went from 2% to 4%. so while the market suffered, its not as sharp. But the biggest problem for us lies in the fact we do not control our rate, so when the market falls to the level that necessitates a cut, we cant, prolonging the fall.

All brings me to concluse that the UCD professor (whose name escapes me) will be proven correct.

As do I…not least because of the Irish propensity to owning property, whatever the cost. God knows how many people on this board alone have said they have the money to buy but are just waiting for prices to fall a bit further.

This means in practice that prices will stagger slightly before these mass of homeowner-wannabes rush in. And repeated ad infintium.

Morgan Kelly was it? And his 70% prediction (in real terms over the duration of the crash).
irserver.ucd.ie/dspace/bitstream … ap_001.pdf

I begin to think that Ireland is more like Finland or the US, that we are already in the beginning of a short, sharp crash, that will in full charge once developers bite the bullet and lower prices (based on the large falls in the second-hand market - heading towards 10%+ for the year).

The worrying implication of this is the effect it will have on the banking sector. In Finland it precipitated a banking crisis. In the US, many smaller banks have already collapsed (as the FDIC protects depositors better, it’s not such big news). With a short-run (in years) collapse, there is less scope for banks to write-off the losses against profit from other activities.

On a separate note, I was wondering how our politicians have been able to fly round the world extolling the virtues of the Celtic Tiger. I wondered how they fit the Tiger in their suitcase. Now I know how; it’s collapsible!

I agree 100%

Not me, the banks are so illiquid now that it will be quick. I reckon it will be over by 2010. Bottom. Japan took 15 years I think and Germany 10.

How far down do you think the bottom is?

People who want to move to a bigger place would potentially buy a new build bigger than 125m2.
This is a foolishly small number but builders aren’t good at maths. They have proved that by deciding to rent out their new builds rather than sell.

Crash. Tennants rights are so poor in this country there is no option but to buy. Especially if you have kids.

They have staggered. When does the rush start?

And how can this be repeated ad infinitum if everyone will then have bought?

Before this is over we’ll have more ways of describing a drop in house prices than we do for describing rain.

We now seem to be drawing on the other great irish passtime (drinking until you fall over) for inspiration.

After the celebration and the binging comes, dizziness, then sleight staggering, then picking fights, then the collapse (hard landing if it’s in the street, soft landing if it’s into bed).

Finally the promise to never ever drink/buy property again.

-Rd

I have a wacky idea, is there some way someone cleverer than me could work out what the average actual real selling prices are now, by using the amount of stamp duty collected and the amount of houses sold and some kind of average for the different thresholds? Then stamp duty yields would tell us what the houses are actually selling for instead of us having to rely on asking prices. :laughing:

Don’t think that can be done.

Knowing how many houses sold doesn’t tell us who bought them. Depending on who bought them the Stamp Duty payments could have been very different.

E.g.
If FTB’s stopped stopped buying completely, but everyone else continued as normal, the stamp duty take would be relatively unaffected, but volume of houses sold would be down dramatically.

But, perhaps there is someone cleverer than both of us who can figure it out.

-Rd

Ah yes… I didn’t think of that :blush:

We’ll have to think of something else then so…

Investors !!!

The SD exemption is only for owner occupiers. Seeing as less potential owner occupiers seem to be interested in one-bed shoeboxes, the best way of flogging these is to investors. And a change in SD here would certainly help the developers

“Everybody” will never have bought unless the fertility rate drops to zero and we prevent all immigration. True that there will be less people looking for property in the next few due to fall off in birth rate after 1980, but it will be a gradual fall off with a corresponding gradual drop in prices IMHO.

Persius wrote

68,000 students sat the Leaving cert in 1995

50,021 students sat the Leaving cert in 2007

The government’s promotion of safe sex campaign is really taking hold. They say it is to stop the spread of disease. House price increases. It is an ill wind that does not blow somebody some good!

There’s no such thing as “safe sex”