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Money Moving Out Of Financial Shares In Ireland

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http://www.thepost.ie/post/pages/p/story.a...4882-qqqx=1.asp

Housing warning as shares drop

11 June 2006 By Kathleen Barrington

It is hard to reconcile the fall in share prices on the Dublin market this year with the sharp increases being achieved for property in the Irish market.
At the time of writing, Irish shares had fallen by 2 per cent since the beginning of the year on fears about interest rate hikes and inflationary pressures, yet house prices are up 13 per cent on last year.
In particular, investors have been dumping Irish financial shares, judging that the Irish banks are heavily exposed to rising interest rates due to their heavy reliance on mortgage and construction lending.
Irish financial shares have dropped this year as foreign investors have taken their money elsewhere due to concerns about how the Irish banks will weather a change in the interest rate environment
.

Seems that investors are following the golden rule--buy low and sell before things get rough. A lesson for the speculators and investors in the UK bubble market.

http://www.thepost.ie/post/pages/p/story.a...4944-qqqx=1.asp

Think-tank fears house prices set to hit peak

11 June 2006 By Eamon Quinn, Business Editor

The economists at the Paris-based think tank attempted to answer the question on many Irish people’s lips: just when will house prices peak?
The study was published as Irish and global stock markets reeled last week under renewed fears that interest rates would rise faster than expected. It provides predictions on the likelihood that house prices across the OECD will soon reach their peak
.
The headline findings from the 33-page report have already been reported by this newspaper, but the full report makes for sober reading.
The figures for the housing market were collated late last year and had already identified Ireland as a country where prices had almost peaked. Extrapolating the OECD figures to take account of the huge price rises in the past five months, the probability has increased that Ireland is even closer to the danger zone where prices will start to fall.

My guess is that when the Irish market turns it will be a short, sharp and sudden crash leaving people shocked and disoriented. The IMF will be proven right--US Coastal Markets, OZ, UK, Spain and Ireland are headed for a serious correction in house prices and the press are starting to print the warnings so that they can take credit for the heads up warnings.

http://www.thepost.ie/post/pages/p/story.a...4976-qqqx=1.asp

First-time mortgage limits will fall by €100,000 if rates rise

11 June 2006 By Louise McBride

A couple earning €76,000 a year which qualified for a mortgage of €430,000 last week would only qualify for a mortgage of €327,462 early next year, if rates continue to rise as expected.
Interest rates are expected to reach 3.5 per cent next year, which would make it even more difficult for first-time buyers to purchase homes, particularly in Dublin.
The Financial Regulator said this weekend it would still insist that lenders apply the same strict rules on borrowers’ ability to repay new mortgages, regardless of the rise in interest rates.
Further interest rate hikes could see borrowers spending more than half of their income paying off personal and mortgage debts.

Credit tightening will strangle the life out of the bubble markets. :o

http://www.thepost.ie/post/pages/p/story.a...4898-qqqx=1.asp

Interest rate squeeze here to stay

11 June 2006 By Austin Hughes

The European Central Bank (ECB) announced a quarter percentage point rise in its key policy rates for the third time since last December, but there had been considerable nervousness that the increase might have been as much as half a percentage point.
ECB interest rates stand at 2.75 per cent and are set to rise further. They remain low by international standards; similar policy rates are at 5 per cent in the US while their British counterparts are at 4.5 per cent.
In Europe, with emerging signs of a clear improvement in economic activity in long moribund economies such as Germany, a fairly clear-cut case for higher ECB interest rates has emerged.

IR hikes look set to go up up and away on a full collision course with houses as they fly off the EA shelves. :o

http://www.thepost.ie/post/pages/p/story.a...4927-qqqx=1.asp

Economic warning signals get louder

11 June 2006

The latest inflation figures showed that the annual rate had climbed to 3.9 per cent, while the European Central Bank (ECB) increased interest rates by a quarter of a percentage point,with the clear indication that there is more to come.
Neither will bring the economy shuddering to a halt - but the indications are that we are entering a period when there will be
some checks on our economic growth and when the resilience of the property market will be tested
.
Much of the increase in inflation comes from factors beyond our control - principally the increase in oil prices.
However, the risk now is that this higher rate becomes built into the economy, with implications for our competitiveness.

With negative press like this the Irish may stampede before the UK sheeple do?

Edited by Realistbear

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It is hard to reconcile the fall in share prices on the Dublin market this year with the sharp increases being achieved for property in the Irish market.

Err... no it's not. By the time everyone else realises why it will be too late!

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The study was published as Irish and global stock markets reeled last week under renewed fears that interest rates would rise faster than expected. It provides predictions on the likelihood that house prices across the OECD will soon reach their peak
.

The Nationwide Chart looks like the sort of peak they are referring to. Not long now. :)

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My guess is that when the Irish market turns it will be a short, sharp and sudden crash leaving people shocked and disoriented.

Exactly.

Your guess.

I wouldn't even put it that strongly. I'd say your hope is that this is what will happen.

The 'big news' in these quotes seems to be that prices in Ireland have reached/are reaching their peak. Fair enough. That's hardly surprising.

It's your extrapolation from that widely accepted fact to the armageddon scenario of financially-ruined property owners being "shocked and disorientated" and, no doubt in your dreams, topping themselves in public, that is laughable.

Once you start distinguishing fact from fantasy, people might start taking you more seriously.

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One of the reasons that markets have fell so heavy is, that much of the money sloshing around them is borrowed, the investors (speculators) are getting a little nervous about the prospect of rising rates and are trying to pull the money before it starts to cost them dear.

As always watch what the pros are doing for an eye to the future,

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First-time mortgage limits will fall by €100,000 if rates rise

11 June 2006 By Louise McBride

A couple earning €76,000 a year which qualified for a mortgage of €430,000 last week would only qualify for a mortgage of €327,462 early next year, if rates continue to rise as expected.
Interest rates are expected to reach 3.5 per cent next year, which would make it even more difficult for first-time buyers to purchase homes, particularly in Dublin.
The Financial Regulator said this weekend it would still insist that lenders apply the same strict rules on borrowers’ ability to repay new mortgages, regardless of the rise in interest rates.
In the land where house prices only go up, a drop in the loan size available to buyers has the effect of making life even more difficult for FTBs. Of course, there is no chance that prices will fall to meet the demand curve.
:lol:
This myth is one of the banks' most powerful weapons - the public ignorance of how equilibrium is achieved in a market. This is why they can tell us that lending more makes it easier for us to buy a home, rather than lending more drives up prices.
Unfortunately most MPs and other representatives are too stupid or greedy to realise the simple connection between mortgage lending and house prices.

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From what I remember from school there is a provision in the Irish Constitution that prevents people from being evicted from their houses. Its a hangover from the days when absentee British landlords evicted people who could not pay rents. There are echoes of this in the 1960's in Northern Ireland.

I would expect very strong resistance in Ireland to repossessions which make people "homeless".

As with any sudden shock people will turn to anyone who appears to defend their interests.

With a general election only a year away, possible losses of homes would drive people into the arms of the crypto-facist Sinn Fein party (already gaining strength in the republic).

That is not in anyones interest.

The alternative scenario sees the banks left holding non-performing loans that they dare not action.

Do not underestimate the effect repossessions ("evictions") would have on the collective-Irish-political consciousness.

There is a great tendency to absolve the stupidity of individuals (over-extending themselves) in favour of some national crusade.

If it comes down to it, I see the banks carrying the bag on this one.

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From what I remember from school there is a provision in the Irish Constitution that prevents people from being evicted from their houses. Its a hangover from the days when absentee British landlords evicted people who could not pay rents. There are echoes of this in the 1960's in Northern Ireland.

I would expect very strong resistance in Ireland to repossessions which make people "homeless".

As with any sudden shock people will turn to anyone who appears to defend their interests.

With a general election only a year away, possible losses of homes would drive people into the arms of the crypto-facist Sinn Fein party (already gaining strength in the republic).

That is not in anyones interest.

The alternative scenario sees the banks left holding non-performing loans that they dare not action.

Do not underestimate the effect repossessions ("evictions") would have on the collective-Irish-political consciousness.

There is a great tendency to absolve the stupidity of individuals (over-extending themselves) in favour of some national crusade.

If it comes down to it, I see the banks carrying the bag on this one.

Interesting POV, but from the FTB perspective it doesn't matter who gets shafted in the fallout, prices will be coming down regardless as the banks contract their mortgage lending.

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One of Ireland's most popular economists, Eddie Hobbs, has just published a best-selling book in Ireland advising people how best to redeploy their funds in a country boasting Europe's most dynamic economy and rapidly expanding population; an average 10,000 immigrants, largely from the recently admitted EU states of Eastern Europe, arrive here each month.

Dublin radio stations have devoted excited hours of air space to discussing how people are going to splash out on parties, luxury goods, trips -- or to pinpoint the next killer investment, often in other parts of Europe or the United States.

The Central Bank of Ireland is warning that the fun could end in unmanageable debts and, if the housing bubble bursts after an 11-year run, negative equity on mortgages.

On Wednesday, the bank published the latest in a string of reports documenting Ireland's remorseless rise in personal debt, which it linked directly to the spiraling cost of housing and Ireland's place in the euro common currency.

Since the introduction of the euro in 2001, the euro-zone's central interest rates have been kept low to suit the moribund, high-unemployment economies of France and Germany, not inflationary Ireland, which would have benefited from much higher rates.

The bank said Ireland's consumers had accrued debts, largely in mortgages and credit cards, totaling €276.2 billion (US$353 billion), up €63.5 billion over the past year -- or about €70,000 (US$88,000) for every man, woman and child in Ireland. Mortgage debt grew by 29.5 percent, credit card debt by 17.3 percent.

Ireland faces spending spree

http://www.businessweek.com/ap/financialne...me_down&chan=db

To put this in context Ireland is an island on the **** end of Europe, it comprises about 1% of the EU's population.

10,000 people arriving every month is substantial and yet rent prices are static, :blink: , without immigrants the country would have ground to a halt around 2001 due to skills shortages and rising wages across every sector of the economy. In fact the only time my landlord has encountered serious voids in the last ten years was in the two months leading up to the May 2001, when Eastern European states joined the EU.

The Government received just under €17 billion in tax revenues in the first five months of the year, latest Exchequer returns have revealed.

The housing market continues to strongly influence the Government's financial position, the figures show. Stamp duties rose on an annualised basis by 38 per cent in May (compared with May 2005), and by 39 per cent in the first five months of 2006.

Capital gains taxes rose on an annualised basis by 55 per cent in the five-month period, while capital acquisition taxes were up 33 per cent.

Tax take for year to May increases by 16.7%

http://www.ireland.com/newspaper/front/200...1EXCHEQUER.html

The newest deal has secured a 10% pay rise over the next 27 months for the majority of workers, as well as an extra 0.5% for the lower paid. Despite the agreement, the issues of pensions and employment rights protection have not been completely resolved, and must still be signed off on.

Agreement close as social partnership talks resume

http://breakingnews.iol.ie/news/story.asp?...2312&p=7935z6y4

As with any sudden shock people will turn to anyone who appears to defend their interests.

With a general election only a year away, possible losses of homes would drive people into the arms of the crypto-facist Sinn Fein party (already gaining strength in the republic).

That is not in anyones interest.

Sinn Fein are likely to make gains in the next election, for several reasons, primarily because they pander to the people disaffected by the boom, since the parties who have traditionally garnered their support from the welfare class have become champagne socialists (Labour). They also have done some good ground work in constituencies where they have targetted seats. They are also benefitting from defections of long standing party workers of other political parties such as Fianna Fail and others, who are disgusted with the corruption and lack of leadership shown by the current administration. The largest opposition party Fine Gael are ineffective, devoid of any ideas and follow an agenda driven by focus groups (i.e. spin). A key driver of inflation in the economy sector is now driven by the semi-state and public sector, rather that tackle this the government has agreed a deal with the public sector and other unionised companies which will bring wage rises of more than 10 per cent up to early 2008, this despite hourly wages being in the public sector being 40% ahead of the private sector. No party is interested in tackling the problems thrown up by the boom such as the infrastructure problems (Hospitals, Broadband, transport, sewage and water treatment), that are now becoming a bottleneck to continued development. The Irish government derives so much revenue from stamp duty, that no political party dare say anything that might be seen as causing the boom to end.

I certainly won't be voting Sinn Fein, but for the reason's above, they are likely to hold the balance of power in the next government, hence the other political parties smear campaigns to discredit Sinn Fein as much as possible.

Edited by Green Bear

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Exactly.

Your guess.

I wouldn't even put it that strongly. I'd say your hope is that this is what will happen.

The 'big news' in these quotes seems to be that prices in Ireland have reached/are reaching their peak. Fair enough. That's hardly surprising.

It's your extrapolation from that widely accepted fact to the armageddon scenario of financially-ruined property owners being "shocked and disorientated" and, no doubt in your dreams, topping themselves in public, that is laughable.

Once you start distinguishing fact from fantasy, people might start taking you more seriously.

Reality is that all house price bubbles pop. They have been doing it for centuries. The dream or "Miracle Econopmy" holds to the notion that prices only go up. Such a fantasy is akin to the belief in perpetual motion. The UK is a boom and bust economny and we have to accept that fact.

Edited by Realistbear

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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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