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Why Ireland's housing bubble burst

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Re: Why Ireland's housing bubble burst

#51

Post by iso1210 »

e12e wrote: post #28

> Ireland had arguably the world’s largest housing bubble and crash in the 2000s, with prices quadrupling in the decade to 2007, even while supply soared, before crashing by more than half between 2007 and 2012. So, prices doubled in the years from 2000 to 2012 - a little under 5% yearly growth. Is that really a crash? Or am I misunderstanding "quadrupled then halved"?

https://data.cso.ie/

Has price index since 2005, but not before.

For all residential properties it was

2005-01: 125

2007-07: 163 (peak)

2013-03: 73 (trough)

2021-11: 155 (latest)

Even just looking at Dublin houses (where people want to live due to centralisation of economic activity), it follows the same pattern

2005-01: 112

2007-04: 155 (peak)

2012-04: 65 (trough)

2021-11: 141 (latest)

Re: Why Ireland's housing bubble burst

#52

Post by inawarminister »

ashtonkem wrote: post #27
chrisseaton wrote: post #16

Earlier quoted context omitted.

The markets absolutely soared. People saved money rather than spent. Most people's jobs carried on as normal or were protected by the government. As a concrete example, bank account deposits in the UK rose 10% during COVID.

Yes. That’s clearly what happened. But lots of people, myself included, expected prices to go down. The early pandemic was marked by a market meltdown and a shutdown of the timber and housing industry as analysts expected a drastic slowdown in home buying and building. It was perfectly reasonable at the time to assume (or hope!) that house prices were going to fall, and let's not brow beat people over that.

Yeah, similar event happened to the car industry. Analysts and factories forecasted dramatic slowdown in sales, so are rental car companies. Yet after the reduction in investments happened, it turned out consumers in COVID prefer to buy additional cars, or rent to go to smaller towns. Cue pandemonium. (And the supply chain shortages of chips)

To be fair, if COVID happened anytime before broadband is available to homes, the analyses wouldn't miss. Novel pandemic, novel technologies, novel situations all around.

Re: Why Ireland's housing bubble burst

#53

Post by adam_arthur »

mandmandam wrote: post #6

I object to the characterization of Ireland's housing issues as somehow accidental, or solely due to broad market forces. At every major decision point there were intelligent people screaming in the ear of media and politicians that property developers were getting away with murder. I knew teenagers who emigrated as the writing was so clearly on the wall, and the entire time our print and TV media were inflating the…

How can the blame be put on property developers?

Most of property costs can be tied to government policy, re: zoning, interest rates, tax laws etc.

The government is usually always the one that could fix the problem by encouraging building. E.g. in the US we have an 18% tariff on Canadian lumber, which artificially increases cost to build (though is meant to protect domestic lumber industry).

Many municipalities have zoning laws that prevent densification etc.

Government could easily require investors to put more money down in residential (New Zealand just did this), increase tax on non owner occupied, upzone to allow more dense homes/building, office to residential conversions, etc.

Re: Why Ireland's housing bubble burst

#54

Post by [deleted] »

mandmandam wrote: post #6

I object to the characterization of Ireland's housing issues as somehow accidental, or solely due to broad market forces. At every major decision point there were intelligent people screaming in the ear of media and politicians that property developers were getting away with murder. I knew teenagers who emigrated as the writing was so clearly on the wall, and the entire time our print and TV media were inflating the…

[deleted]

Re: Why Ireland's housing bubble burst

#55

Post by mortehu »

nemo44x wrote: post #44
onlyrealcuzzo wrote: post #42

Earlier quoted context omitted.

Canada doesn't have a 30-year fixed rate mortgage, though. So anyone making that trade better be betting that interest rates never go up...

Aren’t the rates fixed? If not then it’s a fairly ridiculous trade to take on. If no one has a fixed rate then without massive inflation any kind of interest surge will decimate the country.

If that is the case, then banks in US are taking the same "ridiculous" trade by offering fixed rates to almost everyone, and will be decimated by any kind of interest surge.

It's not clear to some countries stick almost exclusively to fixed rate mortgages, and others stick almost exclusively to variable rates, but the people in "variable rate countries" have saved a lot of money historically.

Re: Why Ireland's housing bubble burst

#56

Post by FredPret »

vorpalhex wrote: post #14
FiReaNG3L wrote: post #4

Earlier quoted context omitted.

The fun bit is that everything is 'overvalued' now - stock market, real estate, even crazy things (many parts of crypto such as NFTs, but also Pokemon cards and other collectables) are through the roof, where will all this money go? money out of a bubble has to go somewhere... How far are we from the boomer generation leaving the market (one way or another)? This will create a lot of oversupply and negative pressure…

> money out of a bubble has to go somewhere... Inflation. Food, bills, gas, etc. > How far are we from the boomer generation leaving the market (one way or another)? 20-30 years, during which time the younger generations will be entering. They are smaller slightly but most countries have immigration which keeps them fairly neutral. > The answer to that is that we've been doing that already in the past decade with all…

Your food and gas bill goes into the income statement of a corporation somewhere, and thus supports stock values. Even if stock prices decline, they will be better value because the companies will be making money

Re: Why Ireland's housing bubble burst

#57

Post by greesil »

It's like this guy has never heard of a speculative bubble, and sets up a series of straw men to nock down instead. Even though "bubble" is in the title.

Edit: oh I get it, his point is that yes there was a bubble, and that's why prices went up. Without extra supply it would have been worse. I think that's putting the horse before the cart, because without the bubble the extra supply wouldn't have been built.

This post is all over the place.

Re: Why Ireland's housing bubble burst

#58

Post by gruez »

nemo44x wrote: post #44
onlyrealcuzzo wrote: post #42

Earlier quoted context omitted.

Canada doesn't have a 30-year fixed rate mortgage, though. So anyone making that trade better be betting that interest rates never go up...

Aren’t the rates fixed? If not then it’s a fairly ridiculous trade to take on. If no one has a fixed rate then without massive inflation any kind of interest surge will decimate the country.

>If no one has a fixed rate then without massive inflation any kind of interest surge will decimate the country.

I'm sure the central bank would step in to prevent the roughly 60% of homeowners/voters from being negatively affected.

Re: Why Ireland's housing bubble burst

#59

Post by marvin »

nemo44x wrote: post #44
onlyrealcuzzo wrote: post #42

Earlier quoted context omitted.

Canada doesn't have a 30-year fixed rate mortgage, though. So anyone making that trade better be betting that interest rates never go up...

Aren’t the rates fixed? If not then it’s a fairly ridiculous trade to take on. If no one has a fixed rate then without massive inflation any kind of interest surge will decimate the country.

Wonder if we’ll have bailouts for the banks or homeowners if interest rates go up. I’m not confident the answer is no.

Re: Why Ireland's housing bubble burst

#60

Post by xeromal »

onlyrealcuzzo wrote: post #42
nemo44x wrote: post #29

Earlier quoted context omitted.

It’s because interest rates are so low. A combined income of $225 can easily afford a $1m home at todays rates.

Canada doesn't have a 30-year fixed rate mortgage, though. So anyone making that trade better be betting that interest rates never go up...

Is there a limit to a rate hike?
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