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Why Ireland's housing bubble burst

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Re: Why Ireland's housing bubble burst

#51

Post by TulliusCicero »

randomdata wrote: post #46
TulliusCicero wrote: post #29

Earlier quoted context omitted.

Rising prices will usually indicate a supply shortage, but for property there's also the element of speculation. In contrast, rents are a more reliable indicator of a shortage, no speculation there.

The most reliable indicator of a shortage is abandonment of a price-based mechanism in favour of something else, like a lottery or needs-based selection. If price is able to select the buyer, then you can't possibly have a shortage.

That simply isn't the colloquial definition of a shortage. If rent is $20,000/month for a studio, going "well technically you can always get one if you can pay $20,000 a month so there's no shortage" is kind of a uselessly pedantic comment.

Re: Why Ireland's housing bubble burst

#52

Post by chii »

tmnvix wrote: post #33
TulliusCicero wrote: post #29

Earlier quoted context omitted.

Rising prices will usually indicate a supply shortage, but for property there's also the element of speculation. In contrast, rents are a more reliable indicator of a shortage, no speculation there.

Strictly speaking, rents (for long term rentals) can be an indicator of a shortage of available housing, but not necessarily a shortage in the total housing stock.

What's the difference between

> shortage of available housing

and

> a shortage in the total housing stock.

I dont think there is any.

Re: Why Ireland's housing bubble burst

#53

Post by chii »

xeromal wrote: post #43
tmnvix wrote: post #5

> 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. (emphasis mine) That wasn't the accepted wisdom at the time. Prices going up spelled 'supply shortage' to most. When the tide went out (i.e. credit availability) it revealed an oversupply. We should learn fr…

Your second demand is what China is going through right now. It's causing a massive upheaval.

The situation in china has a difference between the situations you find in the west (like canada/australia).

The local gov't in china does not have any NIMBY's at all (they have no rights like that in china), so the local gov't allows developments as long as somebody is willing to pay the price of the land. After all, this is how the local gov't gets their funding.

The central gov't decided to pop the bubble early (before it became the Japan level of bubble back in the late 90's early 2000's). It's hurting of course, but probably a right sort of hurt as it's really investors that lose out (and china actually, imho, doesn't want an investor class being large and demanding more rights as they become richer and richer).

In the west, such a bubble is difficult to form if NIMBY's stop high density development.

Re: Why Ireland's housing bubble burst

#54

Post by flextheruler »

randomdata wrote: post #49
all2 wrote: post #4

Earlier quoted context omitted.

Proponents of what is called the "real estate cycle" say it is about 18 years long (plus or minus, and discounting its disruption due to wars), from peak to peak. They say the next peak is due in late '26 or early '27 (October or March, if the month matters). There are some that say they can predict the movements of land speculation based economies. I'm familiar with old blog posts from back as far as maybe 2005 that…

> I'm familiar with old blog posts from back as far as maybe 2005 that predicted the crash in 2008 accurately. The housing crash happened in 2006, though. I suppose being able to predict the crash even a few months in advance is impressive, but as you're hazy about the years, it is possible that it was really 2006 and the crash had already happened, which isn't so impressive. 2008 was the securities crash. That is wh…

On December 30, 2008, the Case–Shiller home price index reported the largest price drop in its history.

Re: Why Ireland's housing bubble burst

#55

Post by randomdata »

chii wrote: post #50
randomdata wrote: post #46

Earlier quoted context omitted.

The most reliable indicator of a shortage is abandonment of a price-based mechanism in favour of something else, like a lottery or needs-based selection. If price is able to select the buyer, then you can't possibly have a shortage.

> If price is able to select the buyer, then you can't possibly have a shortage. unless you cannot produce regardless of the price. This is sometimes called a market failure. And it recently did happen, during covid. A lot of goods went up in price - and even then unable to procure it regardless.

What do you mean unless? If no amount of money can produce something then you cannot select a buyer based on price. You have not found an exception. You're parroting the rule.

Re: Why Ireland's housing bubble burst

#56

Post by [deleted] »

flextheruler wrote: post #54
randomdata wrote: post #49

Earlier quoted context omitted.

> I'm familiar with old blog posts from back as far as maybe 2005 that predicted the crash in 2008 accurately. The housing crash happened in 2006, though. I suppose being able to predict the crash even a few months in advance is impressive, but as you're hazy about the years, it is possible that it was really 2006 and the crash had already happened, which isn't so impressive. 2008 was the securities crash. That is wh…

On December 30, 2008, the Case–Shiller home price index reported the largest price drop in its history.

[deleted]

Re: Why Ireland's housing bubble burst

#57

Post by lostlogin »

RowanH wrote: post #40
tmnvix wrote: post #22

Earlier quoted context omitted.

Yes, the author (correctly, in my opinion) raises the issue of tax incentives. There are similar distortions in the Australian and NZ tax systems (mostly around taxation of capital gains). What the author fails to emphasise more - and really should given the title of the article - is the part played by availability of credit. This was the nail in the coffin. It's possible to come away from this article with the impre…

Kiwi checking in ... crossing fingers we're not about to enter the crash stage, but certainly the contrast in the past 2-3 years from property just flying out the door (low interest rates) to now (high-ish interest rates, lots of low rate mortgages rolling over) are very stark. Auction clearance rates are well, well down. Lots of houses getting passed in at auction which would have been unthinkable a few years ago. S…

We have just gone back to landlord welfare with tax durable mortgages possible. We are also circling in on having the country borrowing money to pay for such policies, while also trying to squeeze in tax cuts.

The attitude to housing here is just gross.

No major party is interested in changing it. I find it very hard to imagine this government (or any other in living memory) letting the housing market drop significantly.

Re: Why Ireland's housing bubble burst

#58

Post by randomdata »

TulliusCicero wrote: post #51
randomdata wrote: post #46

Earlier quoted context omitted.

The most reliable indicator of a shortage is abandonment of a price-based mechanism in favour of something else, like a lottery or needs-based selection. If price is able to select the buyer, then you can't possibly have a shortage.

That simply isn't the colloquial definition of a shortage. If rent is $20,000/month for a studio, going "well technically you can always get one if you can pay $20,000 a month so there's no shortage" is kind of a uselessly pedantic comment.

I agree, in the case of "rent is $20,000/month" calling that a "shortage" doesn't say anything. It is no different than a case where "rent is $200/month". There is nothing the reader/listener can learn by adding shortage into the mix in either case.

Pointless, yes, but I'm not sure pedantic is the right term for describing using a word in a way that does not communicate anything. But, to each their own.

Re: Why Ireland's housing bubble burst

#59

Post by lostlogin »

tmnvix wrote: post #23
mytailorisrich wrote: post #19

Earlier quoted context omitted.

Supply soared but I believe that population soared as well and continues to soar. Exuberance may have been created by easy credit and speculation but the root cause was indeed a growing market fuelled by real demand, which is a common pattern. Growth attracts investors and speculators.

I live in NZ. We have a rapidly growing population with one of the highest levels of immigration in the world. From late 2021 mortgage rates went from as low as 2.5% up to around 7%. Subsequently, in my city, prices quickly dropped 20% and both the number of properties available for sale and for rent increased by as much as 50%. Where did those properties come from? In my opinion the increase is representative of the…

There has been an absolutely huge amount of building going on - and while developers are sensitive to mortgage rates, they would have started building prior to interest rate increases.

That said, had building slowed? It’s building sites everywhere I go.

Re: Why Ireland's housing bubble burst

#60

Post by perilunar »

rukuu001 wrote: post #7
wredue wrote: post #2

I’m not sure what’s different, but I will chime in to say that I’ve been reading about Canada imminent bubble burst for 15 years. I mean, eventually someone may be right, but had I let this get to me and not buy my house 12 years ago, I would be in a much worse position today. Be careful with people trying to predict how markets will move.

Same in Australia. I think governments (any party) will pull any lever available to prop up the market because of the role that property plays in the economy.

They’ll also prop up the market because of the role that property plays in their own finances — many politicians own investment properties.
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