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Property Market - Is there a Buyer Overhang?


EvotingMachine0197

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Notwithstanding the huge property overhang we all know about, and all the factors which continue to depress the property market such as unemployment, lack of credit and new taxes, there must be some constituency within our population which are biding their time for an opportunity to purchase new homes for their families.

The housing market stopped dead in 2007, so coming on for 5-6 years later, I would wager that there is a significant amount of potential buyers with reasonable savings and good credit potential waiting to buy, either for a first home or to upgrade.

I think in the last full year of boom time, there were approx 90,000 houses built. But at least half of these were for BTL investment and maybe a further 20k houses purchased by massive mortgages by those who simply could not afford the repayments.

So, even if one were to assume a natural, sustainable demand of 10k houses per annum, that would indicate a pent up demand of some 50k buyers - waiting and saving. Waiting and saving for an indication that the prices have bottomed, whatever that indication may be.

I suspect there is a buyer overhang, I think it would be weird if there wasn't. Not everyone got caught with their trousers down. The question is, what effect will this hoarded demand have when the market floor has been called?
 

Thomaso12

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Sep 25, 2012
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Well since the property market is still bust leading house prices to be low its very good for new buyers. Since they will be able to buy cheap and sell later for higher. and if lots of house are sold it will bring back up house prices leading resurgent in the property market.

So if we can get people with good amounts of money to buy lots of house we can then get people living in house not worth alot to be worth lots then.
 

seabhcan

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There was some trade going on in Dublin in the last 3 months of 2012 - but so far as I understand, houses will effectively become 30% more expensive on Jan 1st.

Thats because the tax allowance on mortgage repayments is scrapped for houses bought after 1 Jan.

I expect the market to be dead for a few months before people get used to the new costs.
 

Dan_Murphy

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There is a market for everything, its just a question of price, and at the moment all the governments efforts are focused on keeping prices as high as possible regardless of how detrimental it is for the ordinary person.

No one is willing to buy into that, best wait until they can no longer keep it up and the price falls.
 

anationoceagain

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Well since the property market is still bust leading house prices to be low its very good for new buyers. Since they will be able to buy cheap and sell later for higher. and if lots of house are sold it will bring back up house prices leading resurgent in the property market.

So if we can get people with good amounts of money to buy lots of house we can then get people living in house not worth alot to be worth lots then.
Presuming you're being serious.....

And off we go again...the mindset that got us into the mess in the first place...that high house prices are a good thing.
We've had the "prices rising in good areas" nonsense...and now this notion that there is a huge group of people chomping at the bit to buy houses.

To assume a "buyer overhang" means one would assume the following;

That people want to buy not rent

That they can access money

That there is limited supply:- nobody ever mentions the huge amount of mortgage free houses owned by babyboomers that will be inherited by offspring over the coming decade or so
 

oggy

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Presuming you're being serious.....

And off we go again...the mindset that got us into the mess in the first place...that high house prices are a good thing.
We've had the "prices rising in good areas" nonsense...and now this notion that there is a huge group of people chomping at the bit to buy houses.

To assume a "buyer overhang" means one would assume the following;

That people want to buy not rent

That they can access money

That there is limited supply:- nobody ever mentions the huge amount of mortgage free houses owned by babyboomers that will be inherited by offspring over the coming decade or so
I am one of those baby boomers and hope to deprive the kids of their inheritence a lot more than a decade

If there is an overhang then I want more measures to restrain it being unleashed in a way that will promote another property boom. In fact I am confident there will not be a return for decades to crazy property prices and believe the new property is one of the measures that will be used in prevention
 

anationoceagain

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I am one of those baby boomers and hope to deprive the kids of their inheritence a lot more than a decade

If there is an overhang then I want more measures to restrain it being unleashed in a way that will promote another property boom. In fact I am confident there will not be a return for decades to crazy property prices and believe the new property is one of the measures that will be used in prevention
Would you not move into the granny flat and let the kids party on down? But seriously, a lot of so called economic forecasters don't factor in the point that people older than yourself will be bequeathing property..especially the staple 3 bed semi. This will act as a dampener on any imagined pent up demand in coming years. Sadly, many mainstream media still portray falling house prices as a bad thing
 

Johnnybaii

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I believe you are correct there is an overhang, the market dictates there must be, people keep getting married, having more kids, move to a new job etc.

The factors keeping this cohort on the sidelines though are currently strong enough to counterbalance this overhang demand. How long that will remain the case is an interesting question.
 

Tea Party Patriot

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Oct 31, 2010
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Notwithstanding the huge property overhang we all know about, and all the factors which continue to depress the property market such as unemployment, lack of credit and new taxes, there must be some constituency within our population which are biding their time for an opportunity to purchase new homes for their families.

The housing market stopped dead in 2007, so coming on for 5-6 years later, I would wager that there is a significant amount of potential buyers with reasonable savings and good credit potential waiting to buy, either for a first home or to upgrade.

I think in the last full year of boom time, there were approx 90,000 houses built. But at least half of these were for BTL investment and maybe a further 20k houses purchased by massive mortgages by those who simply could not afford the repayments.

So, even if one were to assume a natural, sustainable demand of 10k houses per annum, that would indicate a pent up demand of some 50k buyers - waiting and saving. Waiting and saving for an indication that the prices have bottomed, whatever that indication may be.

I suspect there is a buyer overhang, I think it would be weird if there wasn't. Not everyone got caught with their trousers down. The question is, what effect will this hoarded demand have when the market floor has been called?
While credit is a problem the elephant in the room is that a lot of the unused stock of housing is not in desirable locations, think ghost estates in Leitrim.

I would suspect that there could well be a slight buyer overhang in Dublin shortly, but in the city, not seventy miles away for ridiculous commutes.
 

Ribeye

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Yeeessss I'd say that there's an army of people who dream about anchor themselves to an overpriced liability in a dying country!
 

EvotingMachine0197

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Would you not move into the granny flat and let the kids party on down? But seriously, a lot of so called economic forecasters don't factor in the point that people older than yourself will be bequeathing property..especially the staple 3 bed semi. This will act as a dampener on any imagined pent up demand in coming years. Sadly, many mainstream media still portray falling house prices as a bad thing
Good point about bequeathments, but I would answer that by saying that bequeathments have always been part of the natural sustainable housing market. The population growth has not wavered from the usual 1%, it has to be said.
 

EvotingMachine0197

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Yeeessss I'd say that there's an army of people who dream about anchor themselves to an overpriced liability in a dying country!
Many people don't have your barrel of sh1t outlook, thankfully.

Any reasonable modern state would have property construction and transactions at about 10% of its GDP. That's reasonable and sustainable. During the boom, ours went up to 25% or something ridiculous. Now it's at ************************ all percent.

It's not being stupid to try and get things back to a sustainable and natural level, commensurate with population growth.
 

asknoquestions

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I believe you are correct there is an overhang, the market dictates there must be, people keep getting married, having more kids, move to a new job etc.

The factors keeping this cohort on the sidelines though are currently strong enough to counterbalance this overhang demand. How long that will remain the case is an interesting question.
you don't have to buy a house to have kids and get married. Doing so probably brought security years ago but now it just brings uncertainty, with increasing property tax, water etc. At least renting you know what you'll be paying for the length of the lease.

also, public service jobs are not there for new entrants, nor are there many private sector jobs.
 

Ribeye

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Many people don't have your barrel of sh1t outlook, thankfully.

Any reasonable modern state would have property construction and transactions at about 10% of its GDP. That's reasonable and sustainable. During the boom, ours went up to 25% or something ridiculous. Now it's at ************************ all percent.

It's not being stupid to try and get things back to a sustainable and natural level, commensurate with population growth.
My outlook may be negative, and I could be wrong*

But this I can say with certainty, Ireland will never have a functioning property maket as long as the doors remain open at NAMA!

*not wrong:)
 

asknoquestions

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My outlook may be negative, and I could be wrong*

But this I can say with certainty, Ireland will never have a functioning property maket as long as the doors remain open at NAMA!

*not wrong:)
did Ireland have a well functioning property market before NAMA?
 

Ribeye

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asknoquestions

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Of course not,

But I didn't say "well functioning"

I just said "functioning"
The property market was dysfunctional for much of the early part of the decade. It's functioning better now. If prices are dropping it's a better reflection of reality than the earlier rising of prices imho.
 

Truth.ie

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Weren't a lot of the new stock built to accomodate the increase in foreign workers in Ireland.
I.E building house to sell to the Polish plumbers/Construction workers.
I'd imagine a lot these people will have moved back to Poland/Slavakia or wherever the new building boom is.
We're talking thousands of construction workers (foreign and Irish) migrating to look for work.
I've no idea which demographic is going to be buying all this stock.
Outside of certain areas in Dublin near large centres of employment, I don't see any pent-up demand for a generation.
 

Ribeye

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The property market was dysfunctional for much of the early part of the decade. It's functioning better now. If prices are dropping it's a better reflection of reality than the earlier rising of prices imho.
"functioning better now"

That like a doctor saying, the man injuries are no longer causing him pain,

Coz he's dead!

And if ye like failing prices, just wait till the damn bursts,

Plummet:)
 

EvotingMachine0197

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Feb 17, 2006
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Weren't a lot of the new stock built to accomodate the increase in foreign workers in Ireland.
I.E building house to sell to the Polish plumbers/Construction workers.
I'd imagine a lot these people will have moved back to Poland/Slavakia or wherever the new building boom is.
We're talking thousands of construction workers (foreign and Irish) migrating to look for work.
I've no idea which demographic is going to be buying all this stock.
Outside of certain areas in Dublin near large centres of employment, I don't see any pent-up demand for a generation.
You're conflating and/or confusing stock overhang with buyer overhang. Obviously a huge amount of the stock will never be bought. It's wrecked junk in dreadful locations. Eventually it will be flattened and the losses taken somewhere.

That's not my point. I'm talking about those people with real buying ability, and who want to buy.
 
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