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walktothewater

'going Japanese' In Ireland

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The bubble is expanding, not contracting in Ireland.... market peak in prices nowhere to sight... 6.2% yoy price growth, Dublin high end properties increasing much faster... this is probably the most fascinating global bubble around...

from todays Sunday Business Post.

http://www.sbpost.ie/post/pages/p/story.as...8430-qqqx=1.asp

text:

Record surge of 20% in value of mortgages

02 October 2005 By Eamon Quinn

The value of new mortgage lending continues to set record levels in recent weeks with some lenders recording growth rates of over 20 per cent, according to new figures from mortgage brokers.

The new record level for loans suggests that the Irish house market could see yet another spurt of growth and defy predictions that house prices could slow.

“Business volumes of all the lenders are talking about figures between 15 and 20 per cent in terms of loan completions for the year to date compared with this time last year, said Michael Dowling, president of the Independent Mortgage Advisers' Federation (IMAF).

“Some lenders are performing extraordinary well. Most are doing well.’' Dowling said the record business volumes had again raised the issue of whether lenders could cope with the applications they are generating.

In a presentation to brokers last week, IIB Bank said it had closed off over €2.5 billion in new business so far this year and that it expected to close €3.5 billion by the end of the year, said Dowling.

The figures suggest that IIB has expanded its mortgage loan book rapidly from last year, when it closed about €2 billion in new business.

“Bank of Ireland has confirmed in excess of 20 per cent increase in value of loans and Permanent TSB, while not at that level, certainly has hit double-digit growth as well,” Dowling said.

Ulster Bank as a group, which includes First Active, also reports “very positive'‘ numbers, he said.

“Bank of Scotland Ireland is also up, obviously from a lower base, but they are doing double what they were doing this time last year.

“They could do an awful lot more if the service was much better,” Dowling said.

Brokers say that some lenders are recording growth in volumes in the lower double digit range, but that all are privately confirming significant increases in business mortgage lending.

The value of new business is likely to reach €21 billion this year and reach above €25 billion when refinancing and equity release is accounted for, mortgage brokers forecast.

However, latest figures show that growth in the number of mortgage applications continues to show a slowdown - applications are growing by only 2 or 3 per cent a year.

Dowling said he expected the number of applications to total more than 101,000 this year, up only slightly from the total of 99,000 applications in 2004.

This means that overall growth is being driven by larger average loan values.

Dowling said the market for adverse credit mortgages - for people who have had financial problems in the past - has climbed in recent months.

Both IFG and new entrant Start Mortgages report very good business volumes as they chase a market estimated to be worth €2 billion, he said.

Central Bank figures released on Friday showed that residential mortgage lending rose €1.9 billion in August - this was the second highest monthly increase on record, the bank said.

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The bubble is expanding, not contracting in Ireland.... market peak in prices nowhere to sight... 6.2% yoy price growth, Dublin high end properties increasing much faster... this is probably the most fascinating global bubble around...

from todays Sunday Business Post.

http://www.sbpost.ie/post/pages/p/story.as...8430-qqqx=1.asp

W2TW,

From that article it appears the that huge growth in mortgage borrowing is coming from people borrowing more and not from more people

borrowing. i.e the number of borrowers appears to be close to stagnating.

Looks like in order to get this number up, they are having to chase people who have had financial problems in the past therefore the reference

to 'IFG' and 'Start Mortgages'..

More signs of the coming crack-up perhaps ?

p.s. Over the weekend I learned that a neighbours house in the area where I rent (Terenure) has gone up 1000% in value in the past 10 years. Did sweet FA to improve the house - they just lived in it!

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Even though the Irish property boom seems to be unstoppable, I think

that Irish people are beginning to wise-up a little. I know that some of

my friends who have bought recently in Dublin look quite

twitchy when I mention that I don't want to buy (in Edinburgh), because

house prices are falling in the UK.

They are aware of the slowdown happening over here, enought to

plant a little seed of doubt in their minds.

--mary

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The reason for Irish exuberance is Irish temperament.

Ive known a few Irish B2L over the years and it always strikes me what an optimistic race they are.

They are very much more inclined to 'take the plunge & ask questions later' risk - taking in my experience (Im not knocking them for this, I actually think its an admirable traite). They tend to take the attitude that if it all goes pop, "life goes on, no matter".

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Even though the Irish property boom seems to be unstoppable, I think

that Irish people are beginning to wise-up a little. I know that some of

my friends who have bought recently in Dublin look quite

twitchy when I mention that I don't want to buy (in Edinburgh), because

house prices are falling in the UK.

They are aware of the slowdown happening over here, enought to

plant a little seed of doubt in their minds.

--mary

I've noticed a few nervous ticks and twitches as well with regard to UK property. A lot of people over here have purchased in the UK.

Also this website got a mention one of the big Irish newspapers today:

The dizzy height of UK property prices got too much for Greg Sutton, a London fund manager who set up a website called www.housepricecrash.co.uk. It claims 15m visitors per month.

"I am a frustrated first-time buyer, I have a job earning a reasonable amount of money and can't buy a house at these prices," Sutton explained to the Financial Times. The website offers comfort to anyone left out of the housing market, with questions to ask conceited home-owners, as well as explanations of arcane property terms like the 'dead cat bounce' and 'boiled frog syndrome'!

http://www.unison.ie/business/stories.php3?ca=80&si=1480632

(reg required)

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"Ive known a few Irish B2L over the years and it always strikes me what an optimistic race they are."

dogbox, correct you are. but there's a fine line between optimism and utterly deluding oneself, and our (the irish) achilles heel is not knowing the difference. we obstinately want to believe X and will ignore Y until such time that ignoring Y becomes too painful to ignore any longer. this collective delusion ("sure you cant lose on property") is causing the most fascinating property boom anywhere... the ride down will be equally if not more fascinating...

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They are very much more inclined to 'take the plunge & ask questions later' risk - taking in my experience

Dogbox is pretty close on his assessment of the mentality of many Irish investors. An unconscious fatalism seems to run deeply in the Irish psyche, best summed up in the oft used idiom ‘ah sure’. Ahsurism, in some ways, is an attractive philosophy and in the past was used to market Ireland as a laid back, easygoing holiday destination.

In Ireland’s meagre past the unfortunate consequences of actions tempered with an ahsuristic mindset bore little economic cost, however in a new wealthy Ireland exposed to perfidious high powered marketing and a cynical compliant media, ahsurism has lead to an absurd asset bubble that dominates and threatens the economy.

Ah sure, going Japanese might be as good as we can hope for.

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Dogbox is pretty close on his assessment of the mentality of many Irish investors. An unconscious fatalism seems to run deeply in the Irish psyche, best summed up in the oft used idiom ‘ah sure’. Ahsurism, in some ways, is an attractive philosophy and in the past was used to market Ireland as a laid back, easygoing holiday destination.

In Ireland’s meagre past the unfortunate consequences of actions tempered with an ahsuristic mindset bore little economic cost, however in a new wealthy Ireland exposed to perfidious high powered marketing and a cynical compliant media, ahsurism has lead to an absurd asset bubble that dominates and threatens the economy.

Ah sure, going Japanese might be as good as we can hope for.

Dublin 2nd hand house prices up 17.5% for the year so far.

http://www.rte.ie/business/2005/1003/houses.html

So even an unlikely near term 20 - 30 % property crash isn't going to make much difference as prices have been absurd for years now.

F*** it, I'm off to Australia if I can convince the missus.

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yes I agree, emigrate to Australia!! if you havent bought in Ireland by now, chances are it'll be a very long time before you will be able to. people arnt joking when they say 'prices wont fall in ireland'-- what they mean is that the normal market mechanism currently at work in Uk/Aus/USA will not be allowed to happened in Ireland. the most likely scenario IMHO is for an extremely slow, perhaps decades slow, unwinding of prices, accompanied by extremely low turnover. This stagnation scenario will be engineered (economic and politically incentivised) by those that run Ireland Inc. Rem ireland Inc is the size of a large Uk city, with the additional attribute of a ingrained collusive/collective mentally among the inhabitants. The long historical pattern of economic cleansing will repeat itself, but this time it'll be lack of affordable property/land to buy rather than a job that will be the cause. The current 10-20yr old cohort will either (a) live in their parents properties, (B) rent, © emigrate. The owners and renters in Irish society for the next 20yrs has been largely decided right now today.

This is the 'other' outcome, and one not likely (nor even debated) in the UK or elsewhere. It's a peculiarly Irish thing because of our peculiar attachment to land/property.

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yes I agree, emigrate to Australia!! if you havent bought in Ireland by now, chances are it'll be a very long time before you will be able to. people arnt joking when they say 'prices wont fall in ireland'-- what they mean is that the normal market mechanism currently at work in Uk/Aus/USA will not be allowed to happened in Ireland. the most likely scenario IMHO is for an extremely slow, perhaps decades slow, unwinding of prices, accompanied by extremely low turnover. This stagnation scenario will be engineered (economic and politically incentivised) by those that run Ireland Inc. Rem ireland Inc is the size of a large Uk city, with the additional attribute of a ingrained collusive/collective mentally among the inhabitants. The long historical pattern of economic cleansing will repeat itself, but this time it'll be lack of affordable property/land to buy rather than a job that will be the cause. The current 10-20yr old cohort will either (a) live in their parents properties, (B) rent, © emigrate. The owners and renters in Irish society for the next 20yrs has been largely decided right now today.

This is the 'other' outcome, and one not likely (nor even debated) in the UK or elsewhere. It's a peculiarly Irish thing because of our peculiar attachment to land/property.

"it'll be a very long time before you will be able to"

To be honest I could buy now but I refuse to take the risk.

If you believe 'prices wont fall in ireland' then what are your plans ?

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"it'll be a very long time before you will be able to"

To be honest I could buy now but I refuse to take the risk.

If you believe 'prices wont fall in ireland' then what are your plans ?

well Im able to buy as well :).. if I wanted to pay thru the nose for a crap property that is... I'm exchanging my euros to can$$ and am returning to Vancouver as soon as my current contract expires (18mths)... in a sense, Im one of the 'economically cleansed' I refer to... a forerunner to many whowill have leave to better themselves in the future... even with the run up in Vancouver property prices i can buy twice the property for half the price back there... the property "market", and i use that term lightly, in Dublin is truly something to behold...

like i said in above post, the breakdown of renters and owners in Ireland for the next 20yrs has already been determined...

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well Im able to buy as well :).. if I wanted to pay thru the nose for a crap property that is... I'm exchanging my euros to can$$ and am returning to Vancouver as soon as my current contract expires (18mths)... in a sense, Im one of the 'economically cleansed' I refer to... a forerunner to many whowill have leave to better themselves in the future... even with the run up in Vancouver property prices i can buy twice the property for half the price back there... the property "market", and i use that term lightly, in Dublin is truly something to behold...

like i said in above post, the breakdown of renters and owners in Ireland for the next 20yrs has already been determined...

Ah yes, Kitsilano, Whistler, Blackcomb - the fog'n'suds know them all well.

The thing that put me off going back to Vancouver was the lack of IT jobs there. (That was over a decade ago). Are you in this field ? Are there more opps there now ?

p.s. Vancouver property looks a bit bubbly at the moment but it does have a history corrections !

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yes I agree, emigrate to Australia!! if you havent bought in Ireland by now, chances are it'll be a very long time before you will be able to. people arnt joking when they say 'prices wont fall in ireland'-- what they mean is that the normal market mechanism currently at work in Uk/Aus/USA will not be allowed to happened in Ireland. the most likely scenario IMHO is for an extremely slow, perhaps decades slow, unwinding of prices, accompanied by extremely low turnover. This stagnation scenario will be engineered (economic and politically incentivised) by those that run Ireland Inc. Rem ireland Inc is the size of a large Uk city, with the additional attribute of a ingrained collusive/collective mentally among the inhabitants. The long historical pattern of economic cleansing will repeat itself, but this time it'll be lack of affordable property/land to buy rather than a job that will be the cause. The current 10-20yr old cohort will either (a) live in their parents properties, (B) rent, © emigrate. The owners and renters in Irish society for the next 20yrs has been largely decided right now today.

This is the 'other' outcome, and one not likely (nor even debated) in the UK or elsewhere. It's a peculiarly Irish thing because of our peculiar attachment to land/property.

What about Northern Ireland? I think they share the "peculiar attachment to land/property" with their Southern cousins. Might it be a halfway house between UK and ROI? Prices are still steaming ahead in Northern Ireland at the moment.

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What about Northern Ireland? I think they share the "peculiar attachment to land/property" with their Southern cousins. Might it be a halfway house between UK and ROI? Prices are still steaming ahead in Northern Ireland at the moment.

I'd rather live in Nicaragua (and I did) than NI.... the whole of NI needs to decommission itself...

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What about Northern Ireland? I think they share the "peculiar attachment to land/property" with their Southern cousins. Might it be a halfway house between UK and ROI? Prices are still steaming ahead in Northern Ireland at the moment.

It seems quite a significant portion of boom in the North is coming from the Public Sector i.e the British Taxpayer.

http://www.sbpost.ie/post/pages/p/story.as...8456-qqqx=1.asp

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yes I agree, emigrate to Australia!! if you havent bought in Ireland by now, chances are it'll be a very long time before you will be able to. people arnt joking when they say 'prices wont fall in ireland'-- what they mean is that the normal market mechanism currently at work in Uk/Aus/USA will not be allowed to happened in Ireland. the most likely scenario IMHO is for an extremely slow, perhaps decades slow, unwinding of prices, accompanied by extremely low turnover. This stagnation scenario will be engineered (economic and politically incentivised) by those that run Ireland Inc. Rem ireland Inc is the size of a large Uk city, with the additional attribute of a ingrained collusive/collective mentally among the inhabitants. The long historical pattern of economic cleansing will repeat itself, but this time it'll be lack of affordable property/land to buy rather than a job that will be the cause. The current 10-20yr old cohort will either (a) live in their parents properties, (B) rent, © emigrate. The owners and renters in Irish society for the next 20yrs has been largely decided right now today.

This is the 'other' outcome, and one not likely (nor even debated) in the UK or elsewhere. It's a peculiarly Irish thing because of our peculiar attachment to land/property.

I agree that the government may attempt to "fix" the market, but I believe it will only have limited success. Ireland's economic boom has been built on foreign investment. It's not like the country is floating on oil or anything. If land prices are artificially held high in Ireland when they are falling in other countries, foreign investors may well give up and look elsewhere. Ireland is already looking uncompetitive in many areas of its economy already without making things any worse.

I think I read that construction accounts for 25% of GDP and 20% of employment in Ireland. It is a case of the boom fueling the boom. You cannot unwind that easily. Where will all those workers go?

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I think I read that construction accounts for 25% of GDP and 20% of employment in Ireland. It is a case of the boom fueling the boom. You cannot unwind that easily. Where will all those workers go?

Probably why they've started a series of public works, new roads etc? The problem is this will just inflate building costs even more.

Credit may seem limitless but the ability to service that debt even at 2% is not, where are all these people going to come from? How is some guy from Lithuania going to afford a €500k flat? If they're having problems at 2% then where do we go from here, negative rates by truly 'going Japanese'?

I don't think the government could stich this up even if they wanted to, aside from giving away free money to incentivize people to buy, but that just shifts the subsidy on to crippling public debt.

When does the very things like brought companies over like cheap land, labour, good infrastructure turn against it?

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It has to be said that the property bulls have been right and continue to be right in Ireland. Each year brings newer absurd highs that are enough to drive even the best bears to despair.

lil ol' Dublin is now more expensive then London for residential property.

We have not yet turned the corner as they have in many areas of the UK.

Looking into the future though can we see the perfect storm gathering for Irish property ?

ECB more hawkish on interest rates, balooning personal debt, economy kept afload by massive residential construction, exports going down, manufacturing going down, House prices at unreal levels and no control over interest rates when they start to go down. etc etc.

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Looking into the future though can we see the perfect storm gathering for Irish property ?

ECB more hawkish on interest rates, balooning personal debt, economy kept afload by massive residential construction, exports going down, manufacturing going down, House prices at unreal levels and no control over interest rates when they start to go down. etc etc.

Maybe that lack of control is the get out of jail free card? If the sh*t really hits the fan with the general economy in the UK they have quite a margin to cut from 4.50%, which is already too low now the US Fed is targetting 4.50%. When you're at 2% you've already used up the harvest before winter has hit, so to speak, and inflation is up limiting any further cuts, and at 2% just how drastic could they be anyway?

Any crunch will be blamed on the ECB and Euroland inflation, any signs of insiders bailing in Ireland? Management and owners of many home builders in the US are bailing out of their own stock as we speak.

Edited by BuyingBear

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lil ol' Dublin is now more expensive then London for residential property.

We have not yet turned the corner as they have in many areas of the UK.

The country is on the mother of all credit binges. And, all the time banks are throwing money at people it won't stop. The latest spurt in house prices is due to the widespread introduction of 100+% mortgages. People seem almost to rejoice at this development - as if the banks are being charitable. The fact is that they do this because they have to do this, to keep the party going. Well, come the end of the party, people will see exactly how charitable banks can be!!! This all has the feeling of a runway train now. It's completely out of control.

By the way, if you get a 100% mortgage can really call yourself a home owner?

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As some pointed out we are now in a renter/ownder situation in ireland for the next 20 years.

This scenario would create a cash rich renter class and a house poor owner class.People that can only rent will not spend everything to keep a roof over there heads, but owners with mortgages will.There has to be incentives for renters over just paying the rent.On the other hand a homeowner will skrimp ad save and sell there soul to the devil to keep that house payment getting met.

To me this looks like homeowners will become the new desperate, they will wittle away the best years of there life working for the bank and there pension ie there house.

It will be renters having the holidays and the pizza's, renters will as a known fact only accept a certain % of there wage as payment for rent, thus creating the new consumer class.We on here should probbly be thanking our lucky stars we aint mortgagee's

Edited by homeless

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As some pointed out we are now in a renter/ownder situation in ireland for the next 20 years.

This scenario would create a cash rich renter class and a house poor owner class.People that can only rent will not spend everything to keep a roof over there heads, but owners with mortgages will.There has to be incentives for renters over just paying the rent.On the other hand a homeowner will skrimp ad save and sell there soul to the devil to keep that house payment getting met.

Hrm, doesn't seem to be the same sort of shortage as you see in UK towns, if anyone with the right funding can buy some land get a builder, build 5 bedrooms and not pay any council then why would that person pay through the nose for some old house? Where is the pricing pressure? When you have such scale of new builds there is a large degree of notional pricing, "Ahh, it's really worth 300k but I'm only payin' 200k".

So isn't it a matter of not just running out of people unable to afford the credit (can't be many left) but the simple matter of running out of people?

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Where is the pricing pressure?

Ireland's restrictive land use policy (a la Britain):

http://www.policyexchange.org.uk/uploads/m...age_summary.pdf

http://www.policyexchange.org.uk/uploads/m...ore_-_final.pdf

Caution: the second link is large (1MB+) so dial-up users may want to simply read the summary in the first link.

The third link is also a large file (1.8MB).

Unaffordable Housing

Edited by IPOD

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  • 302 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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