Northern Ireland house crash 'among world's worst'

saverbuyer

warmhands.coldheart wrote: »

Needs a bit of modernising but then its all old fogies that live in South Belfast :rotfl::rotfl:

I like the thought of paying less and making my mark. Hope it goes through for you.

Mistral001

doire wrote: »

What do you mean not looking good? Do you mean that HPI isnt still getting out of hand meaning would be buyers take on a huge debt to own a place to live? What about FTB?

The market is correcting itself and this can only be a good thing

Yes you are correct that house prices coming down will be good news for FTB and perhaps others as well.

If you are a potential FTB you might be a winner, however the property market collapse, could have a wider effect on the economy and not just affect those people who bought houses at over-inflated prices. The interesting thing that I found in the Spotlight programme was that they explained that there was a risk that many businesses could go to the wall because of the yet to be realised problems with the property assets of those businesses. This will result in loss of jobs and a further slow down of the NI economy. By implication this is bad news for everybody.

x12yhp

Chickabee wrote: »

I find it hard to agree with Prof Michael Moores idea that property prices won't recover within the life time of a 25yr mortgage. Even if you bought a house a couple of years ago that cost for example £150k, and even now if it was only worth say £100k in a worse case scenario i think its reasonable to think that by the end of your mortgage in 23yrs time that the property should be worth at least what you paid for it. With inflation etc prices cannot be stagnant. Or am i being too optimistic?

It is hard to believe but look to Tokyo. In the early 90's it was horrendously expensive for almost everything (houses, food, clothes etc.)... I was there 2 years ago and it was probably cheaper than Belfast. They have had 20 years of extremely slow growth which one could consider analagous to a 'non-recovery' like Moore is suggesting.

It is important to quantify 'recovery' - recover to what?

Do some simple calculations... say we have a 2% growth every year (target inflation level...) - it takes a while to double in actual value (35 years actually). At 3% (upper limit for inflation) still implies nearly 25 years. Even at 5% (which is an insane number to consider at present) it is taking nearly 15 year. Given that many properties have lost 50% or more from peak (i.e. need to double to 'recover' to the former level) then Moore's prediction doesn't sound so daft. In fact, if you want a recovery to these levels in 5 years you would need to have nearer a 10% growth... last time we had that, the crash was inevitable (inspite of a great many bulls denying it!!).

motorguy

Mistral001 wrote: »

Yes you are correct that house prices coming down will be good news for FTB and perhaps others as well.

If you are a potential FTB you might be a winner, however the property market collapse, could have a wider effect on the economy and not just affect those people who bought houses at over-inflated prices. The interesting thing that I found in the Spotlight programme was that they explained that there was a risk that many businesses could go to the wall because of the yet to be realised problems with the property assets of those businesses. This will result in loss of jobs and a further slow down of the NI economy. By implication this is bad news for everybody.

Have to agree.

There does seem to be an element of posters on here, and no doubt out in the greater community who use the term 'the market is correcting itself' or a term to that effect to give themselves hope of getting onto or back onto the property ladder, without taking into account the catastrophic pain that is happening and will continue to happen further up the chain for individuals, families and businesses.

I think we're in a position now of people talking the market down which is just as dangerous as the situation we had some years ago where people talked the market up.

I think we need to be careful what we wish for - in case we end up getting it.

x12yhp

pgilc1 wrote: »

I think we're in a position now of people talking the market down which is just as dangerous as the situation we had some years ago where people talked the market up.

I think we need to be careful what we wish for - in case we end up getting it.

If owner/sellers accepted the 30-40% drop or more then I think most potential buyers would feel much less need to talk the market down. As long as owners/sellers refuse to budge because 'it is worth much more than that' then the situation will proceed as it is.

saverbuyer

pgilc1 wrote: »

Have to agree.

There does seem to be an element of posters on here, and no doubt out in the greater community who use the term 'the market is correcting itself' or a term to that effect to give themselves hope of getting onto or back onto the property ladder, without taking into account the catastrophic pain that is happening and will continue to happen further up the chain for individuals, families and businesses.

I think we're in a position now of people talking the market down which is just as dangerous as the situation we had some years ago where people talked the market up.

I think we need to be careful what we wish for - in case we end up getting it.

What's important is that the crash may serve in directing the economy and reshaping general attitudes and long held beliefs that high house prices somehow equate to a health economy. I can understand how you could make this common mistake Paul.

Long-term, high house prices, only serve in making our company weaker and less competitive as so much of our expenditure goes to servicing debt instead of creating wealth.

I take your point about the people involved in the property bubble being effected and having their lives ruined (albeit temporarily). I have great sympathy for the young families who (with similar attitudes to you) feel that high house prices are a good thing and increase their personal wealth (when the exact opposite is true) and bought in the middle of the biggest housing bubble in history, or paid colossal dough for sites and built houses now worth half the build cost. As the Queens Prof said these are unlikely to reach similar value for the lifetime of the mortgage.

But our society provides a means for debt "reset" in the form of bankruptcy. For many it is probably the best choice but the state will even help them "survive" indefinitely through the payment of mortgage interest payment SMI. These zombie household are not what the economy needs.

I have zero sympathy for speculators in the form business taking property loans to make a quick buck or individuals and developers doing similar.

These companies should be allowed to fail and let with people with vision for sustainable growth (not making quick bucks) taking over after receivership. The debt will be gone and the company will have much better prospects.

Debt is not always a good thing Paul. Using it for growth is one thing, using it for risky speculation is another.

What I wish for is a properly functioning economy that regards low house prices as a good thing. I don't need to be careful.

On your point of talking the market down I suggest you open your eyes. Our "economy" is on its knees along with the rest of the world. We have zero growth prospects due to our over reliant public sector. We have the inevitable death of the Euro. This isn't talking the market down Paul. If anything most people are still taking it up. Way Way up.

A.L.D.A

saverbuyer wrote: »

If anything most people are still taking it up. Way Way up.

We have different perceptions on that.

Very busy at present and may return to this later. A few points;

1. Most of us benefit from low property prices, very few gain from them being high. It is not good for most of the building industry that people are impoverished by high loans.
2. Cost of new build is what it is, fall below that figure and no one builds. Eventually that has consequences. It is to some extent self correcting, BUT if it cannot correct then the consequences are serious for some at the bottom!
3. Getting accurate and reliable figures for NI is difficult.
4. There is a huge difference between a developer and a speculator. Developers do not want high land prices. Developers produce buildings. Speculators produce nothing.
5. I could never fully understand the value placed on older properties that need repairs, rewired, replumbed, poor levels of insulation etc. The fact that they cost what they do (or have done) and that they make up the bulk of the housing stock has to indicate a pernicious equilibrium that causes what would normally be considered over valuation.
6. For everyone who paid too much, someone was paid too much. Wealth was transferred and some people gained.
7. The really low cost sites are not available to average Joe as they are being sold in large blocks. How many of you want a site for 18 houses or 20 unfinished apartments?

What really and truly annoys me about the current situation is that many of the more astute speculators, who made significant gains in the bubble are well placed to benefit from the fall. These are the people who will really gain. They will buy up (are buying up) repossessed land, property and sites for a fraction of what they may have sold them for. The next generation of property plutocrats are currently being created.



Depressing!

saverbuyer

A.L.D.A wrote: »

We have different perceptions on that.

Very busy at present and may return to this later. A few points;

1. Most of us benefit from low property prices, very few gain from them being high. It is not good for most of the building industry that people are impoverished by high loans.
2. Cost of new build is what it is, fall below that figure and no one builds. Eventually that has consequences. It is to some extent self correcting, BUT if it cannot correct then the consequences are serious for some at the bottom!
3. Getting accurate and reliable figures for NI is difficult.
4. There is a huge difference between a developer and a speculator. Developers do not want high land prices. Developers produce buildings. Speculators produce nothing.
5. I could never fully understand the value placed on older properties that need repairs, rewired, replumbed, poor levels of insulation etc. The fact that they cost what they do (or have done) and that they make up the bulk of the housing stock has to indicate a pernicious equilibrium that causes what would normally be considered over valuation.
6. For everyone who paid too much, someone was paid too much. Wealth was transferred and some people gained.
7. The really low cost sites are not available to average Joe as they are being sold in large blocks. How many of you want a site for 18 houses or 20 unfinished apartments?

What really and truly annoys me about the current situation is that many of the more astute speculators, who made significant gains in the bubble are well placed to benefit from the fall. These are the people who will really gain. They will buy up (are buying up) repossessed land, property and sites for a fraction of what they may have sold them for. The next generation of property plutocrats are currently being created.



Depressing!

With transaction levels at all time lows there's nothing to suggest anyone is buying anything.

Mistral001

saverbuyer wrote: »

What's important is that the crash may serve in directing the economy and reshaping general attitudes and long held beliefs that high house prices somehow equate to a health economy. I can understand how you could make this common mistake Paul.

Long-term, high house prices, only serve in making our company weaker and less competitive as so much of our expenditure goes to servicing debt instead of creating wealth.

This is very well put.

There have always been bubbles. I remember being taught about the South Sea Bubble in History many years ago.

I think this bubble in the property market in NI is still seen by many as just a phase and when house prices hit rock bottom, everybody will be clamouring to get in there again and back to making easy money again. Farmers will be hoping that there will come a time again when they will be able to sell off a field every year for £150k for people to build their bungalows on, or higher-income people with spare cash will be hoping times will return to where they will see a nice little property to make a killing on by buying, renting to the less well-off and then selling to those desparate to buy.

The housing market is still seen in those terms by many. The bubble has done damage to the economy and it has also done damage to people's aspirations. Many people still see it as the only way they can make their money grow. It is familiar. Everybody lives in houses or flats. Most people who have ever gotten repairs or extensions done to their house will have dealt with builders or building trades and many may even have DIY skills near professional standards. It will take a long time for many to see beyond that. To see that there are other businesses that can make money.

saverbuyer

Mistral001 wrote: »

This is very well put.

There have always been bubbles. I remember being taught about the South Sea Bubble in History many years ago.

I think this bubble in the property market in NI is still seen by many as just a phase and when house prices hit rock bottom, everybody will be clamouring to get in there again and back to making easy money again. Farmers will be hoping that there will come a time again when they will be able to sell off a field every year for £150k for people to build their bungalows on, or higher-income people with spare cash will be hoping times will return so they where they will see a nice little property to make a killing by buying, renting to the less well-off and then selling to well those desparate to buy.

The housing market is still seen in those terms by many. The bubble has done damage to the economy and it has also done damage to people's aspirations. Many people still see it as the only way they can make their money grow. It is familiar. Everybody lives in houses or flats. Most people who have ever gotten repairs or extensions done to their house will have dealt with builders or building trades and many may even have DIY skills near professional standards. It will take a long time for many to see beyond that. To see that there are other businesses that can make money.

Well put. +1