Wednesday, December 13, 2006

Now Is The Season.

The autumn property selling season has ended. It was a selling season like no other, due to the fact that very little actual selling took place. The once hectic auction rooms are quite now, apart from the occasional stirrings of dispirited ghost bidders; across the land a multitude of hopeful For Sale signs are buffeted by depression driven winds from across the Atlantic. The market’s melancholy mood is indeed strikingly removed, from the hectic exuberance of blooming springtime.

The banks, auctioneers and the government like dutiful doctors fuss about the ailing market; variously offering comforting words, tinctures of interest relief and placebo like soft landings. But what is remarkable about the vested interests reaction to the utterly inevitable is their zealous denial. Denial in the face world beating indebtedness; rising interest rates, a glut of supply, ‘relaxed’ (to the point of comatose) lending standards and a collapsing real estate market in the United States.

But while I am surprised by this denial, I understand it. The bursting of the property bubble will do damage to this country, as have other speculative property market ‘corrections’ in other countries. Nevertheless, that the bubble was allowed to reach such epic proportions, that’s its bursting will cause misery, is much more than unfortunate.

13 comments:

Damien said...

Great post, please more lampooning of estate agents and the other cowboys as per prime time's exposé.

FRANKENFISH said...

Ship of fools


The whole property scene in Ireland has been way out of control for way too long. There is only one way this whole thing can play out...Badly.

FRANKENFISH said...

Business 101 - What are the two basics of investing?

All economic trends are cyclical. Doesn't matter if it's property, gold, stocks or pork bellies. If it can go up 20% in one year, it can go down 20% in one year, and probably will. I doubt any of the new Irish property moguls understand the downside of this whole scene.

Don't put all your eggs in one basket. Everyone in my age bracket has only one investment....property. No cash, no stocks, no bonds, no diversity.

Duplex said...

Damien I think that the agents et al are doing a pretty good job lampooning themselves, still wont stop me from pointing out the obvious ludicrousness of the property market ;.

Frankenfish, I agree that most markets are cyclical. And given the size of the up trend in this part of the cycle it makes you wonder how severe and prolonged the down trend will be.

Anonymous said...

Don't jump the gun, spring will tell the true state of affairs, if it remains flat by the end of the spring the arse will fall out of it by the winter.

Bricks&Mortar said...

I agree. It may take a good part of the year before we see decent price falls. Hopefully a few ECB rate rises will nudge things along nicely.
I note the Irish Times had a good negative article on property on Wed 27th, which is a welcome change. Hopefully all those investors read it (sick for something to do over christmas).
May it make them nervous to the point of selling....

Propertycrash.net

Duplex said...

I think that the bubble has burst, i.e. I believe that the widely held conviction that housing values would rise at above the rate of inflation in perpetuity has ended. This doesn't mean that prices will fall immediately and sharply, but it does mean that the speculative episode has ended. Housing market valuations will now be exposed to the acid test of fundamental demand, free from the distorting influence of speculation. That test will be long and painful I'm afraid.

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