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Duplex

The Madness Of Crowds

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The Irish market is still bubbling along in the face of a global energy crisis, consumer debt that is growing at twice the rate of the UK ( we will become the most indebted European country this year), falling competitiveness, record housing output, which seems to be slowing and record numbers of empty properties. Mortgage fraud, nauseatingly negligent lending is endemic (several cases of mortgages being granted on non existent properties are before the courts). Meanwhile rents continue to fall; watch this space and clear a space for a new chapter in ‘The Madness of Crowds’

Key findings in the report indicate that while the Irish rental market has stabilised following two years of decline, the growth predicted in Quarter 1 has failed to materialise. As a result rental incomes look set to remain at the current levels for the immediate future. Rents are still 15% lower than the highs of 2002, which compounded by the continuing rise in house prices means rental yields are falling.

Daft rental report

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The Irish market is still bubbling along in the face of a global energy crisis, consumer debt that is growing at twice the rate of the UK ( we will become the most indebted European country this year), falling competitiveness, record housing output, which seems to be slowing and record numbers of empty properties.  Mortgage fraud, nauseatingly negligent lending is endemic (several cases of mortgages being granted on non existent properties are before the courts).  Meanwhile rents continue to fall; watch this space and clear a space for a new chapter in ‘The Madness of Crowds’

Daft rental report

true, true. But how will it end? I have a the beginnings of a theory (and I'm thinking out loud here- so help please) that maybe Ireland is 'different'. And I mean different in the sense that perhaps there is a very powerful collusive or cartel-type outcome possible for the Irish market that will engineer, by whatever means legal or otherwise, the 'soft landing'.

* clamping down on the media, tsb index etc. to rule out any headlines with the words 'crash' etc. Most of whats reported as business news in Ireland is either managed press releases or advertising anyway

* private agreements to manage how and to whom lower prices are worked through the market. example of this might be,

-banks not flogging repossessed houses at low prices in a visible way, but rather selling them to collusive buyers/insiders for opaque prices

-mysterious 'bulk sellers' trading with 'bulk investors' at reported prices that bear no relation to effective price paid

*politicians, most of whom are up to the eyeballs in the property ponzi scheme, twisting every last trick possible to support the notion of a 'soft landing'

Clearly I havent thought through this fully and I know I sound like a bit of kook.. but it's just a gut feeling. Ireland is small place, everyone knows everyone, and collusion and 'back scratching' is a way of life. There's a free market in Ireland only so long as the rich as getting richer. There are very powerful people in Ireland, the most powerful perhaps, who simply cannot tolerate an uncontrolled unravelling of prices.

WTTW

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population 10 years ago = 3 million

homes built in last 10 years 600,000 !!!!!!!

population now = 3 million

unbelievable

half of dublin must be empty houses

its a classic pyramid scheme and it has reached the top.

so unless ireland can get 2 million very very rich immigrants to come there and fast, there is realy only one outcome.And i just dont see that many millionaire immigrants willing to sell there 2000 acre farms to buy a 1 bedroom flat over looking a sewage pipe on the liffe.

do you?

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population 10 years ago = 3 million

homes built in last 10 years 600,000 !!!!!!!

population now = 3 million

unbelievable

half of dublin must be empty houses

its a classic pyramid scheme and it has reached the top.

so unless ireland can get 2 million very very rich immigrants to come there and fast, there is realy only one outcome.And i just dont see that many millionaire immigrants willing to sell there 2000 acre farms to buy a 1 bedroom flat over looking a sewage pipe on the liffe.

do you?

i'm not disagreeing... there is a bubble, and its levelling off, and yes prices are insane...

but do not underestimate the ability of the rich elite in this country to engineer the outcome they need... repeat after me "there will be a soft landing", "prices will stagnate","people have to live somewhere", "renting is paying someone elses mortgage", "doomsayers and undesirables will be eliminated"

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Walktothewater.

It is true that a cabal of Irish banks and developers earnestly hope that the current bubble in the housing market is kept inflated, not at all surprising when you consider the importance of the building industry to the debt industry and vice versa.

It would suit the cabal to manufacture a scenario where confidence was maintained in the market ie a soft landing. But this ignores the degree to which this all consuming bubble has permeated the Irish economy. If demand is satisfied and we stop building homes, selling mortgages and three piece suites etc. the central plank supporting the economy is removed. This would be a classic Wily Coyote Realisation Moment (WCRM), the moment where he runs over the canyon’s edge, looks down to find that he’s in mid air, looks up with an ‘Oh sh1t!’ look on his face and vanishes at speed towards the dried up river bed a thousand feet below.

That collective WCRM moment is doubtless drawing closer for Ireland (it’s happening in the UK, Australia and Spain), the old sod has lost much of it’s low cost competitive advantage, has debt creation levels unequalled by any nation in the western world; and has a political and business establishment infested with a post colonial ‘grab it while you can’ sharp elbowed furtiveness, best likened to a Ballina bar five minutes after closing time. (Have ya no homes to go to!). For now the banks, driven (to be fair) not only by salivating greed but also a myopic prospective (which permeates all organisations when the good times role), are willing to lend to mirror test standards and below.

What I find surprising is the utter absence of organised field trips by the research departments of world’s leading schools of economics. It’s all very well reading about ‘efficient market hypotheses versus ‘heuristic simplification in asset markets’ from some dusty text book, but here we have a small island nation with no control of its monetary policy in the grip of a speculative mania, surly a perfect opportunity to witness first hand a classic asset bubble, plus we could do with the tourist dollars.

Heavenly Jesus have mercy on us!. :unsure:

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Duplex,

the "collective WCRM" doesnt seem near the horizon does it?.. a simple extrapolation says the tsb index should go flat around the new year... however I fear it will never go -ve as it will be adjusted officially and unofficially to remain close to zero... enormous pressure will be brought to bear by to doctor the tsb index... meanwhile debt levels, while high, presumably can go higher. Theres still room, even with higher ECB rates, to start MEWing and start the borrow-from-peter-to-pay-paul game in earnest... the banks, well the banks presumably have seen the writing on the wall and are taking steps to prolong the life of the patient (while pedalling ever creative amortisation schemes)... footloose professionals and anyone else out of the property game who might seek discounts and hence ratchet prices down will exit stage right (as they always have done)... all the while media and spin is carefully fed to the masses (split between 'owner' and the 'never-have-been-never-will-be-an-owner-anyway' classes) to maintain the positive 'soft landing' sentiment... the big boys backslapping can continue...and the status quo can be perpetuated for a very long while yet...

I hope Im wrong

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but do not underestimate the ability of the rich elite in this country to engineer the outcome they need

In Ireland the euro will prevent inflating their way out of it. Ireland might consider ditching the euro if things get as bad as I think they will.

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Well Japanese banks did introduce 100 year mortgages just before the bubble bust there, so I imagine anything is possible, but Ireland would be an investment black spot long before we reached that level of lunacy, not to mention the damage Irish investors are taking in Spain, the UK etc.

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In Ireland the euro will prevent inflating their way out of it. Ireland might consider  ditching the euro if things get as bad as I think they will.

Maybe the EURO will ditch Ireland ?

Godawful country which has picked up all the bad habits of the English over 700

years of occupation.

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population 10 years ago = 3 million

homes built in last 10 years 600,000 !!!!!!!

population now = 3 million

unbelievable

half of dublin must be empty houses

if they have built an average of 60,000 new homes per annum with a population of 3 million.

this copares with UK where we average 180,000 new homes per annum for 60 million inhabitants.

the new build programme in ireland is therefore 7 times that per capita in UK.

what a difference!!

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I think the property market in Ireland will crash sooner rather than later,

and it will crash. Ireland is no longer an isolated society - people are

up to date with what's happening in the UK with property. Some of

my friends who have recently bought property in Dublin have been worried

by the news of falls/stagnation in the UK.

The euro interest-rates are not going to keep prices high either.

Prices in ireland are so high that even with these tiny interest

rates, there are many examples of "renting cheaper than interest-only

mortgage", especially in Dublin.

--mary

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I think the property market in Ireland will crash sooner rather than later,

and it will crash.  Ireland is no longer an isolated society - people are

up to date with what's happening in the UK with property.  Some of

my friends who have recently bought property in Dublin have been worried

by the news of falls/stagnation in the UK.

The euro interest-rates are not going to keep prices high either.

Prices in ireland are so high that even with these tiny interest

rates, there are many examples of "renting cheaper than interest-only

mortgage", especially in Dublin.

--mary

Interesting to hear those anecdotes Mary... but who will force prices down in ireland? Which brave buyers will refuse current asking prices, put in low bids and dig their heels in for a discount? Who will 'break ranks' from the social norm and will tell their pals down the pub, all of whom up to their eyeballs in mortgages, that they're refusing to buy at todays prices??? behaviour like that will lose you friends in short order and maybe grounds for a good beating!! (ok joking)

...yes the builders may through in free cookers, fridges, furniture, whatever as concealed price cuts or the banks may offer 'payment holidays' or free property insurance etc., but can you really see people directly asking for 10% or more off at the retail level, and then insisting on this position? I can't see it in Ireland, especially when parents are providing downpayments and pressure to buy in equal measure. I think you underestimate the herd instinct in this country, the stubborness of sellers and the enormous social pressures to fit in and 'get on the ladder'...

it's possible that sales volume will drop to a trickle, but vendors will 'pull the moat up' and refuse to budge. In Ireland we could be in a very very protracted waiting game.

But please, tell me Im wrong!

WTTW

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but do not underestimate the ability of the rich elite in this country to engineer the outcome they need... repeat after me "there will be a soft landing", "prices will stagnate","people have to live somewhere", "renting is paying someone elses mortgage", "doomsayers and undesirables will be eliminated"

Rich elites can get even reacher by exploiting property cycles. And there's one thing the rich appear to like: getting richer.

The rich buddy network will not like to stagnate - they could sell at the top, engineer a fall through the media cartel, leverage short key stocks on the way down and then start buying and expanding when they are ready.

Net outcome in a few years the rich will be richer and the amateurs will be still nursing their wounds...

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Rich elites can get even reacher by exploiting property cycles. And there's one thing the rich appear to like: getting richer.

The rich buddy network will not like to stagnate - they could sell at the top, engineer a fall through the media cartel, leverage short key stocks on the way down and then start buying and expanding when they are ready.

Net outcome in a few years the rich will be richer and the amateurs will be still nursing their wounds...

OK so my theory has firmed up a bit. It goes like this, there wont be an Irish property crash, at least not in nominal terms, just a very very protracted drop in real prices.... exactly like what happened 1979-86

At the top, the elite wont allow any negative news. Period. Irelands only house price index, the TSB permanent index, won't go negative... instead it'll be discreditted as not 'reflecting reality'.... another index created by a prominent UCD/TCD think tank of property economists will replace it... The Irish Times will never print a doom-mongering 'crash' article... The constant story will be 'stagnation, stagnation, stagnation'... IT property section will be expanded to include Saturday and will be devoted to article thats explain the stupidity of paying someone elses mortgage... banks will offer government-backed loans to bail out 'disadvantaged mortgage holders'... the government will apply a special tax to renters so that they can 'fully pay their way'

and at the bottom of the scale, 'ordinary decent' people will close ranks... any mention of seeking discounts at the retail level will be seen as anti-social behaviour... resulting in loss of friendships/spouses, reduced job prospects, outright hostiliy... families will close ranks- children struggling with higher interest rates will be bailed out no matter what... offspring can avail of special government assistance to move back home, so as to free up their properties to be rented out to Polish house construction workers... the middle class will be the 'mortgage class' and their mantra be will NO DISCOUNTS!

(tongue in cheek, a little)

WTTW

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I'm no economist and am wondering what effect a countries trade surplus/deficit has on its' economy, i.e. Jobs, house prices, etc.

I have just noticed the following from the National Statistics Office pink paper for 2005:

Trade in goods and services

The trade in goods account recorded a net surplus in the years

1980, 1981 and 1982, largely as a result of exports of North

Sea oil. Since then, however, the trade in goods account has

remained in deficit. The deficit grew significantly in the late

1980s to reach a peak of £24.7 billion in 1989, before

improving in the 1990s to a level of around £12 billion. Since

1997, the deficit has widened sharply, reaching a record £58.6

billion in 2004.

Does this mean that the UK government is getting into serious debt and have no cushion to fall back on in the case of a worldwide recession or has it nothing to do with the actual amount of money the government has at it's disposal.

In contrast, I notice that Ireland has a trade surplus. The following is taken from the central statistics office in Ireland:

Annual External Trade

Year Imports Exports Trade Surplus €m

1990 15,832 18,204 2,372

1991 16,317 19,070 2,753

1992 16,754 21,260 4,506

1993 18,900 25,179 6,279

1994 21,945 28,891 6,946

1995 26,181 35,330 9,149

1996 28,480 38,609 10,129

1997 32,864 44,868 12,004

1998 39,715 57,322 17,607

1999 44,327 66,956 22,629

2000 55,909 83,889 27,980

2001 57,384 92,690 35,306

2002 55,628 93,675 38,047

2003 47,865 82,076 34,211

2004 51,015 84,281 33,266

Does this mean anything with regards to the sustainability of e.g. house prices or am I "way off"

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-mysterious 'bulk sellers' trading with 'bulk investors' at reported prices that bear no relation to effective price paid

I hear there are some nice guys with a nice wedge looking for a safe home ;)

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Hello All,

Just replying to the 3 million figure - think the population of the 26 counties is over 3.5 million and probably approaching 4 million as there's been significant immigration / return migration in recent years. I'm pretty sure I'm correct on this as a contact, who works for the Irish Government, was going on about how the population of the island of Ireland had risen significantly over recent years.

People in Ireland are definitely becoming jittery about the possibility of a crash - people talked about how much their house were worth until recently. Now people often look concerned when you raise the subject - reality is hitting home at last!

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  • 339 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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