One reason (not the only one admittedly) that the property market has stalled is that house prices are still way over priced. It’s bizarre to listen to the likes of some vested interests urging government to introduce stimulus packages to boost the property market. Look, you could boost it tomorrow if the prices would only fall to a realistic level. An ORDINARY house in Dublin is still more than 8 times the ORDINARY wages.
If a pound of butter was double what it should be, everyone would eat Flora. If a pint of milk cost 5 Euro, people would be drinking black coffee. But if houses are double what they should be, heavens above, shock horror, what’s going on at all? Why aren’t people buying? We need a “stimulus package”!
Read my lips, BRING THE PRICES DOWN - that’s all the “stimulus package” you’ll ever need!
It’s not rocket science.
And hey! They’ll have to come down eventually anyhow. The only way you’ll sell that house is to make sure you’re the first on the block to do so!
An ORDINARY house in Dublin is still more than 8 times the ORDINARY wages.
Read my lips, BRING THE PRICES DOWN - that’s all the “stimulus package” you’ll ever need!
It’s not rocket science.
ABSOLUTELY AGREE!! When will Irish house buyers realise that they are comparing prices of 2006/07 to now…indicating to them that they are getting a bargain because they’re getting a ‘discount’ of 35 to 50% - when actually they are paying 4 times more than houses are worth, in some cases.
It takes time for everything to adjust, If prices crashed overnight then most of the country would be forced to recognised the loss now. this shock would not be easy to deal with and would lead to a huge increase in Bankruptcies, Defaults, Suicides, Crime and Social unrest. This is not something to wish for. By falling slowly we get boiled frog effect, no-one over-reacts as they can adjust to the new situation.
I can’t believe that there are still people out there who think that it doesn’t matter that the property market has stalled. If the market were kick-started, the entire economy would benefit.
One main reason that the market has stalled is that buyers know that the prices are still too high and they are waiting for the prices to come down.
The point of greatest frustration usually translates into the point where you get maximum return.
What I mean is we are nearly there whether the VI’s like it or not property prices are going to collapse even further.
12-18 months.
If you are a cash buyer, rent payer of circa 10K+ this could be the point of maximum return.
Property prices will probably still go down, but the negative decline (,000’s) will be close to or slightly higher than your rent paid.
Bottom line it depends on your own circumstances (Age, loan requirement, capital, etc etc)
eg I can see a 300k house going for 70-80K sometime in the future (sometime???)
Now in a 18 months time that house could be 100k, do I wait another 2-3 years and pay 10k per yr rent if cash buyer to get my house for 70-80K,
if it was me personally it wouldnt be worth the money, does not justify it and more importantly I coudl not justify the time required to wait for such a decline. But thats me…
Time is more important.
Change the circumstances if you were looking for a mortgage with small deposit and it wasnt me…totally different scenario…
Everyones different…
Add
Agree Spinnaker, but heh its like buy teh dips buy the dips, still thinking with old rules.
Good point, a lot of people, even here on the pin seem to think once we roll back the excesses of the boom everything will be grand again and we can all get on with life as normal again.
The mistake they are making is not recognising that the roots of the boom itself, or perhaps better the roots of how the boom was allowed/enabled to happen, go back way way further, and whether we default or not, the future is going to force us back to square one to confront those basic economic facts that have been ignored for way, way too long.
The boom was only the icing on the cake.
But what you’ve got to remember is, in the end the cake was inedible!
And it’s no good just changing the ingredients when the real problem is the oven was broken!
Great Points Inisman,
Life will never be like it was again.
There will be a serious move to investing in Industires/manufacturing/services that actually produce something of value that can be traded in exchange.
Property is dead and buried as an investment vehicle for now.
Most live to have what ones calls their own.
Waiting til property hits the all time bottom aint what life is all about for me.
A Rapid adjustment would be very Bad (ie 50% fall over a few weeks). The human cost would be massive.
All the The banks would go bust, as they have to recognise the loss immediately.
Businesses would Fail (no cash, no confidence)
Government income falls, They have to cut Public jobs.
Unemployment would soar.
A wave of mortgage defaults hits as people just emigrate,
Social unrest, Riots, Looting.
Dispair Grips the country,
Suicides Rise dramaticly.
They don’t get the message that “Fianna Fail and the Green Party have now compromised Ireland’s soverignity” because it’s not been told to them by the media organizations.
RTE is a government body, the governments communications machine designed to stop at all consequences any change to the ruling methodology that’s been in this country since the 1800’s. Keep power centralized, do not give information to the citizenry that would allow them to do something.
There’s also a massive number of the public with key vestments in the maintenance of the current mess. Take a look at about 300,000 Public Servants, Some 50,000 Civil Servants, Some 130,000 Health workers, some 400,000 persons unemployed, some 100,000 in Semi-State Quangos or Corporations. OK. That’s about 1,000,000 persons.
These people don’t want change. They don’t want to talk or be made aware of the message of economic collapse because it will doubtless negatively affect them.
Better for these people (most of them anyway) to adopt the regular Irish approach of keep your head down, don’t say anthing and sure “they’ll take care of it”.
The other thing that needs to be factored into all this is the discrepancy in house prices whereby neighbouring houses can have a difference of up to 50% (or more).
Obviously when the cheaper house sells then there isn’t just a drop of 15-20% required for the remaining house but there is also a drop of 50% before that drop to take place.
I’m pretty sure life will go on, the state will survive in some shape of form.
Maybe we’ll all have less money, or even much less money, but thats not termimal.
Be honest, there’s plenty of slack,fat, excess, waste in the system.
Overall (though not necessarily individually) we could easily cut 20-30% and not be even close to the bone.
OK watch+wait, I’m going to stand up and be counted here and admit that I’m actively wishing for a complete once off drop to the bottom, say knock 60% to 80% off current prices and a complete collapse of government.
Furthermore, I would like and prefer to see a complete collapse of current government than any attempt at altering it.
Luckily I’m not physicall attached to this country through either debt or property ownership but I do have family here and I also have a job here and I also like Ireland as a country. It’s my home and that’s why I want to be here.
You talk about Defaults, Suicides, Crime and Social unrest but we already have that in this society. You speak about Defaults but many people don’t pay their debts, not to mind mortgage debts, many don’t pay their debts to businesses or don’t pay their bills or don’t pay their car loans.
Suicides you say. Not something that I wish for but if the people involved look at another way, i.e. dealing with the people who brought them to consider suicide they may live and be happy rather than taking a short cut away from their responsibilities.
Crime. Rampant near to where I live. Houses and cars being broken into regularly. No sense of security. Guards may wish to do work but generally investivagtion is preliminary only and unless evidence is blatant there’s little hope of a follow up. You suffer. What gets me is that I believe that a lot of the people who commit crime are living well being funded by the state to live and are doing these crimes as a top up or for fun and thrills.
Social Unrest. This comes in different formats. Terrorism. About 100,000 people marching to protest US involvement in Iraq. Students getting battoned by Guards. Pensioners demanding no change to their benefits. I say bring it on. Let’s deal with this as a community rather than as a self-serving government would wish to deal with it.
You know in that boiled frog experiment the typical result is that the frog dies!.
He’s so insensitive to the rising heat that he just sits there and dies in his own soup.
I don’t want this.
I don’t want boiled frog. I want every frog in Ireland croaking and jumping and taking action because if they don’t do something about the wrongs of this nation then it will simply continue via the civil servant brigade.
The mistake you’re making is thinking that those who hold forth with this genre of unthought care a whit what the truth of the matter is. It’s not about truth or justice or any other such noble desiderata.
The adjustments will happen over time, Patience is required.
There are a large amount of people in a very poor financial health for a variety of reasons. As a society we have a choice here. Let them face cold reality now and see how they react to the full horror of it all, Or, Give them time to adjust and accept the changing situation.
If it all happens too fast then there is a high probability that society will collapse. While things may appear to be bad now they could easily get a lot worse.
But then, following on from that, there are about 450,000 persons unemployed, many of who I guess are getting some form of assistance financially.
Then the group that I forgot, and look at their number, apparently the biggest of all, the number of pensioners in Ireland in 2006 stood at 467,926. lenus.ie/hse/bitstream/10147/45784/1/9138.pdf
So, adding up the above numbers I come out at about 1,250,000 persons who have some financial dependency of the government.
That’s some number of persons who I believe generally don’t want change. Beat that!
I hope we could assume that, of the 450,000 people signing on, most do actually want change. The low point during the boom times was around 150,000, I think, so that would probably be a good estimate of those happy to be on the dole. The other 300,000 would hopefully prefer to be working and would want change. Of course a decrease in unemployment benefits is not the change they want but hopefully a fair chunk of them would be enlightened enough to welcome change that is positive overall.
