Auditor #9 wrote:

A 900k mortgage will end up as around 2 million so the buyers would expect their house to at least have that value by the end of the 30 years.

You do get to live in it for those 20 years which is its main value. that makes the end value to you as €1million + 20 years accommodation.

Also, you have not mantioned inflation. All things being equal the later payments should be a lot cheaper and it is the current payments which have the highest real value. The end value will also be likely affected by inflation. It is hard to estimate how the curve will work. The bottom line is that if you have a job of equal standing to your current job for the next 20 years then you should be ok. Unless of course you got screwed into buying a 110% LTV, interest only for five years mortgage in which case you are now being screwed and will probably not be able to affor children until you are 45.

Auditor #9 wrote:

That's slavery.

That's the capitalist system. You're free but you're not really free unless you're really really rich. Plus ca change.

Inflation - yep Zhou I forgot to mention that. Seeing as my theory is that there will be inflation for as long as the world population is inflating (until c. 2050) then those with the 30-year mortgage will get away with it. Phew. The IMF and ECB and the whole general idea is to keep inflation down, generally but you'd wonder if some of this financial crisis at present isn't down to the fact that inflation is seen as something to control and what if, just what if, one day they control it?

I think that just below 2% is the goal, i.e. 0% would be a failure. Deflation isn't pretty.

I am only the fortune teller's apprentice so my skill at reading tea leaves needs more practice.

I can only guess a few years ahead.
House prices generally are not going to increase between now and 2012 unless they really plunge now, and I think that is unlikely 25-30% yes 60% I doubt it.

Shares will bottom out this Autumn early winter. (in Ireland).

Inflation should be on the up and with it interest rates. At the minute It does not seem that massive increases are likely but the levels of borrowing do not inspire optimism.

We have had warnings about oil before and done nothing so why should this time be radically different. Oil and energy costs are going to increase. This radically impinges on how we should organise and plan. Don't go buying a cheap house in the country unless you aim on self sufficiency.

The era of US dominance is over. The really big question is just how far will its decline drag others with it and will it be able to off load a lot of its liabilities onto others? Also how will the new administration cope with that relative decline? Are we going to see a much more isolationist USA? I think they have run right out of good will and suckers. Would you buy US bonds or invest in a US Bank! Would you even want to hold US dollars? I am optimistic and think Europe will move forward but UK and Ireland are more exposed that the rest of Europe.

I must disagree with Youngdan I don't see the value of precious metals holding unless we really are heading for depression. Couple of years ago great idea, right now not so sure.

Now is the time to at least start to plan for the recovery which will be a few years out. Once there is a bottom then will be the time to invest getting in low is generally the secret to making money. Making a business run efficiently and marketing goods is so much harder.

Unfortunately FF will win the next election because FG don't seem to know the meaning of getting the boot in and because the electorate are so forgiving and have not a clue what they are really voting for. (I have my doubts about Democracy)

It seems the Americans have really made an effort with the electrical vehicles/windfarms talk as I said on another thread. Could the talk that was around which got coupled with action by GM and Ford have provoked the oil market into losing confidence? The transition from oil to other energy sources will be slow and I'm surprised that oil has been falling. Such a transition will take a lot longer than Gore's ambitious ten years - or will it? Obama seems to be taking the oil crisis seriously too. Maybe the sleeping giant has woken up again - a serious effort by American will could radically transform the energy world, especially with their over-dependence on oil and the size of their debts. Just two or three new technologies or a new combination of old ones coupled with Will could do serious damage to the oil-intensive pattern of industry which exists at present.

Edit
kinda like this quote here

It'll be interesting to see how all of the figures will be after we see the back of Bush.

Yep profit taking? It is heading back down at the moment.

Squire wrote:

Yep profit taking? It is heading back down at the moment.

It's heading back down towards 4350 now and bouncing around there. Can these sellers keep doing that to the index, profit-take or moreso, can buyers keep hoping that the index will ultimately gain? Two steps forward, 1.99 steps back at the moment. Those long-termers will ultimately drive it up I suppose it is hoped.

This medium we're using, the internet, must be a useful too in determining market sentiment or society's sentiment about certain industrial areas. How many instances and mentions of 'alternative remedies' or 'algae oil' or 'free music download' or 'I'm flying with ryanair' are out there in emails or on amazon or googled to influence the markets? It doesn't seem like it might have an effect but maybe it's just a view of sentiment but could lead to the notion of 'information terrorism' if it was a factor at all.

Proabably isn't.

It is a bear market you would be a brave soul to plonk a large amount in any company just yet. As I said some time ago it is a quick in out that makes the money or keeps the loses to a minimum.

If there is a sharp fall and some good news coming up the bet is that there will be some correction, you get in early and get out fast. Because there are these recoveries does not mean the market is as yet stable, or bottomed out. Each trough tends to be lower than the previous so the trend at the moment is gradually down. So the trip point to get in keeps getting notched down. Was 4200 now we are looking at close to 4000.

The question now is will it go through 4000 in a meaningful way? I hate these round numbers they should mean nothing, but they are physiological trip points. It can trigger a rally and sharp rise or everyone feels gutted and down it goes. I think the declines are starting to meet some resistance, but a few items of bad news would quickly blow that away.

Frankly, we need the oil prices to stabilise or drop for at least 6 consecutive months before the downward asset price spiral could even be stalled, never mind reversed. Increasing layoffs in debt ridden societies (UK, US, us, Spain etc) are going to start pushing defaults way up and there may be a second wave of bank devaluations or worse. Stabilising the energy price (whether by finding/extracting more oil or, preferably, by the slow increase in amounts of nuclear and renewables coming onstream) is key to halting market volatility. Once energy prices are less volatile, people can begin to rebuild businesses.

Property prices need to be allowed to fall such that they represent approx 3x income, then they should be stabilized to prevent any further asset bubbles (stop the banks from lending more than 3x joint income, whack up stamp duty in the event of spiralling prices). The one big plus of a wage freeze and/or severe property crash is that it may increase competetiveness and make us more of an attractive target for investment, but in order for this to work its way through the system, we may need 2-3 years at least. Infrastructural investment in public transport may well stabilise house prices in some parts of Dublin, providing the Govt can adhere to at least some of its capital spending plans. The slump in prices near the Dart seems much less severe than away from it.

One of the good things about this crisis may well be that it may act to bring Ireland, Spain etc back into synch with the German and French economies, meaning that ridiculous house price increases with essentially negative interest rates may well be consigned to ECB history. With any luck, the falling fuel prices will feed into inflation, as will the dismal Eurozone figures, meaning the ECB may be able to cut rates. This might stabilise Irish banks' share prices (and mortgage lending here).

Allow house prices fall to 3x joint income - that could mean a lot of 7-800k houses overvalued by 100% ... jaysus.

I agree with you on the wages - we are getting paid highly here and that can't last. We'd be better off with a more flexible attitude to work and a more diverse set of employment opportunities which a competitive market might bring. There should be no shame in going back to wash the dishes if that's what it takes.

I can't see Al Gore's ten year energy dream coming true so I'd feel that oil won't stabilise for a generation so if you're right about the dependency of our financial systems on oil then we could be seeing a mute 10-15 years.

There will have to come a big and proper technological or political break to deal with the oil.

Fannie Mae just posted another quarter of losses greater than expected. They had expected losses of 40c per share but they are in the region of $1.20 a share. Will be interesting to see how the markets here react once Wall Street opens in an hour.

Zhou_Enlai wrote:

Auditor #9 wrote:

A 900k mortgage will end up as around 2 million so the buyers would expect their house to at least have that value by the end of the 30 years.

You do get to live in it for those 20 years which is its main value. that makes the end value to you as €1million + 20 years accommodation.

Indeed. If you accept a €1250 rent on that property per month, that would be €15,000 in saved rent in the first year and that would be €300,000 in saved rent. That's assuming rents stay constant for 20 years, which is very unlikely. The saved rent would compensate you for the excess of the debt over the "value" of the property.

johnfás wrote:

Fannie Mae just posted another quarter of losses greater than expected. They had expected losses of 40c per share but they are in the region of $1.20 a share. Will be interesting to see how the markets here react once Wall Street opens in an hour.

Do you have a link there Johnfas?

johnfás wrote:

Fannie Mae just posted another quarter of losses greater than expected. They had expected losses of 40c per share but they are in the region of $1.20 a share. Will be interesting to see how the markets here react once Wall Street opens in an hour.

Standard Chartered and SocGen had better than expected results though. The financial sector seems to be slowly struggling out of this mess.

Auditor #9 wrote:

Allow house prices fall to 3x joint income - that could mean a lot of 7-800k houses overvalued by 100% ... jaysus.

I can't see Al Gore's ten year energy dream coming true so I'd feel that oil won't stabilise for a generation so if you're right about the dependency of our financial systems on oil then we could be seeing a mute 10-15 years.

No, not necessarily. Think first time buyer. Average industrial wage = 35K... ish. 3x joint income, based on a joint income of 70K, would be about 210K. So that means that classic small 3 beds in first time buyer areas that are neither too downtrodden nor too expensive need to range between 180-240K. Areas such as Swords, Lucan, Blanchardstown, Artane, Raheny, Shankill, Greystones, Bray, Delgany, Ballybrack, Citywest etc need to price their small 3 beds at about that level. It is already possible to get 3 beds in some of these areas for approx 300-400K... maybe another 33% fall over 3 years, which allowing for SOME wage inflation, may not need to be that harsh in nominal terms?? The 7-800K range tends to be for those in their 40s with teenage kids who no longer need childcare and have more cash as a result... different paradigm as some at least will have equity. Apologies for Dublin bias (but I don't know much about the other cities pricing!)

I know I'm right about the financial system and oil. We are completely dependent on the stuff, it is declining in supply while increasing in price... this is making everyone nervous about the relative value of anything that isn't oil/gas/coal (everything else except renewables or stuff that decreases fossil fuel dependency). We are now seeing a drop in oil price (demand destruction, temporary surplus, speculators out for the time being), but even a restoration of price back to 80 bucks a barrel isn't going to calm everyone's nerves even if it falls that far (which I doubt), because we'll all have the jitters about the likelihood of it spiking again (cold winter, war drums, drop in US strategic reserve while usage is declining, you name it). The ensuing market volatility will be the real killer. We won't get another bull market until at least 25% of our energy is non-fossil fuel based, and there will need to be the perception that this percentage is increasing rapidly and consistently

Solow differential.... 50% economic growth down to cheap energy.

The ISEQ has been soaring in the last few minutes with the index up 33 points at this moment in time.

expat girl

I think you have it about right about the cost of first time homes. About 180,000 - 250,000 It will take a right few years to adjust down, but it has to go down and stay down.

This may seem odd, but on that note we need to start to think about future housing needs NOW or somewhere along the line we could run into a supply shortage with resulting increases in price. From land purchase to selling can take 4-5 years.

I share your concern about energy. I think we have hit a psychological turning point and you will see an accelerating movement out of oil dependency, and the sooner the better. What bothers me is how quickly our local admin take to waken up and do something positive. We have a good opportunity to be out in the front of the pack, but with every passing week we are losing ground. We need to encourage investment in this field here and NOW!!


Looks like the ISEQ will do alright today after all.

thanks for the link Johnfas

Squire wrote:

expat girl

I think you have it about right about the cost of first time homes. About 180,000 - 250,000 It will take a right few years to adjust down, but it has to go down and stay down.

This may seem odd, but on that note we need to start to think about future housing needs NOW or somewhere along the line we could run into a supply shortage with resulting increases in price. From land purchase to selling can take 4-5 years.

I share your concern about energy. I think we have hit a psychological turning point and you will see an accelerating movement out of oil dependency, and the sooner the better. What bothers me is how quickly our local admin take to waken up and do something positive. We have a good opportunity to be out in the front of the pack, but with every passing week we are losing ground. We need to encourage investment in this field here and NOW!!


Looks like the ISEQ will do alright today after all.

I very much agree with you Zhou. Unless there is a massive emigration trend, we will start hitting a shortage next year. Infrastructural shortages that Ive talked about on another thread will make it worse. I sadly predict overcrowding and homelessness - there is already some serious overcrowding in social housing and nearly 10,000 on Dublin's Social and Affordable waiting list.

cactus flower wrote:

I very much agree with you Zhou. Unless there is a massive emigration trend, we will start hitting a shortage next year. Infrastructural shortages that Ive talked about on another thread will make it worse. I sadly predict overcrowding and homelessness - there is already some serious overcrowding in social housing and nearly 10,000 on Dublin's Social and Affordable waiting list.

I suspect there may well be a massive emigration trend... the newspapers have covered this. What is interesting about it, though, is that it appears to be mainly hitting the "rural hinterland". Meanwhile.... dunno what's up with Galway but they're bucking the national trend... house prices up 4% this year or something!!

Sooo... de crystal ball would be seeing... a massive housing surplus in rural areas, especially west of the Shannon (but non-coastal) that will persist for years to come until a) demand for ag labour goes up or b) broadband coverage is such that people only have to check into the office once a week or less. Don't see either happening in the near future

Where you may be right about shortages is in respect to Galway, Dublin, and maybe larger towns such as Athlone...maybe Cork also?? But a 20% vacancy rate may take more than a year or two to clear. You may be right about needing to start planning now, but how is all this going to be financed?? Half the developers are in receivership (or have absconded to Dubai, according to David McWilliams and others), and the other half are in trouble. So the Poles in the construction industry will be off home/to London/Germany to try their chances (incidentally leaving more homes vacant).... and I don't see our glorious banking industry stepping up to the plate to take on yet more developer debt and be panned for it in the papers...and the Iseq. We were, at the height of the building boom, putting up half as many houses as England, with 10 times the population

My feeling is we'll have to let the dust settle and deal with the shortages later (no choice), but now is the time to be banging up the public transport infrastructure to allow Dublin and Galway in particular, to expand sustainably. More Luas/Dart, please!!!

expat girl wrote:

Where you may be right about shortages is in respect to Galway, Dublin, and maybe larger towns such as Athlone...maybe Cork also?? But a 20% vacancy rate may take more than a year or two to clear. You may be right about needing to start planning now, but how is all this going to be financed?? Half the developers are in receivership (or have absconded to Dubai, according to David McWilliams and others), and the other half are in trouble. So the Poles in the construction industry will be off home/to London/Germany to try their chances (incidentally leaving more homes vacant).... and I don't see our glorious banking industry stepping up to the plate to take on yet more developer debt and be panned for it in the papers...and the Iseq. We were, at the height of the building boom, putting up half as many houses as England, with 10 times the population

My feeling is we'll have to let the dust settle and deal with the shortages later (no choice), but now is the time to be banging up the public transport infrastructure to allow Dublin and Galway in particular, to expand sustainably. More Luas/Dart, please!!!

I think we have to look at this slow down as an opportunity, to come up with a proper regional development strategy. Far too many people live in and around both Dublin and Belfast. Large areas of the country are reverting to scrub land. Take a drive through Leitrim! Wildlife reserve. We need to plan where we want to develop, where we need services and transport and some idea as to how we stimulate the economies of some of our County towns.

There are plenty of developers about and if there is money to be made there will be more than enough money to develop. Labour is not a problem if we go at it in a planned and steady way, we need to avoid the booms and the only way to do it is to plan ahead. We are not going to get it all right but it would be better than leaving it to chance.

Squire wrote:

There are plenty of developers about and if there is money to be made there will be more than enough money to develop. Labour is not a problem if we go at it in a planned and steady way, we need to avoid the booms and the only way to do it is to plan ahead. We are not going to get it all right but it would be better than leaving it to chance.

yes, 'tis a nice plan, but it'll be a long time before the banks can be persuaded to put much into building, sadly. We will just have to hope that some of the big boys still have money in the war chest.... or that they owe the banks so much money they won't be let fold.....

Everything up. Overall at 4500.

expat girl wrote:

Squire wrote:

There are plenty of developers about and if there is money to be made there will be more than enough money to develop. Labour is not a problem if we go at it in a planned and steady way, we need to avoid the booms and the only way to do it is to plan ahead. We are not going to get it all right but it would be better than leaving it to chance.

yes, 'tis a nice plan, but it'll be a long time before the banks can be persuaded to put much into building, sadly. We will just have to hope that some of the big boys still have money in the war chest.... or that they owe the banks so much money they won't be let fold.....

The banks have loaned many billions to developers to buy land. They are giving them interest holidays for a couple of years in the hopes that the market will pick up and they will be able to start building. This must be costing the banks a packet - presumably they themselves borrowed this money and are paying interest on it?

Ireland's population is affected far more than most countries by its economy as there is a tradition of economic migration. For that reason I would always look at projections with a fairly cold eye. But the underlying trend is to much higher population growth than in the rest of Europe. Housing demand is also being generated by what seems to be an inexorable trend to small household units - particularly the increase in single person households.

Irish Economy: Two reports offer contrasts in caution and cheer By Finfacts Team Mar 22, 2006, 15:05

Two economic reports published today on the Irish economy by financial services' firms, provide contrasts in outlook.
Friends First economist Jim Power's latest economic outlook says the economy is too dependent on the surging housing market while NCB Stockbrokers' economists Dermot O'Brien and Eunan King, say that the population of the Republic will grow by 30% to over 5.3 million by 2020 with immigrants accounting for a fifth of the population, maintaining housing output at an annual average of 65,000 - more than a third of the UK's current annual housing output.