Comments on: HOOKE AND MCDONALD: TURTLES ALL THE WAY DOWN http://dublinopinion.com/2007/11/24/hooke-and-mcdonald-turtles-all-the-way-down/ It's a group blog. What more do you need to know? Mon, 21 May 2012 15:43:52 +0000 http://wordpress.org/?v=2.2.1 By: sonofstan http://dublinopinion.com/2007/11/24/hooke-and-mcdonald-turtles-all-the-way-down/#comment-47204 sonofstan Sat, 24 Nov 2007 16:31:44 +0000 http://dublinopinion.com/2007/11/24/hooke-and-mcdonald-turtles-all-the-way-down/#comment-47204 Came across this while looking for something else; a report in the Tribune from about 18 months ago about the prospects for the property market this year and 'going forward' as these kind of people always say - it reads like something from another world..... http://www.tribune.ie/2006/05/21/75354.html Came across this while looking for something else; a report in the Tribune from about 18 months ago about the prospects for the property market this year and ‘going forward’ as these kind of people always say - it reads like something from another world…..

http://www.tribune.ie/2006/05/21/75354.html

]]> By: Conor McCabe http://dublinopinion.com/2007/11/24/hooke-and-mcdonald-turtles-all-the-way-down/#comment-47195 Conor McCabe Sat, 24 Nov 2007 12:39:53 +0000 http://dublinopinion.com/2007/11/24/hooke-and-mcdonald-turtles-all-the-way-down/#comment-47195 Thanks Andrew and Tomaltach. I think that the international credit markets have been all but ignored in explaining the Irish property bubble. The explanations, mainstream media-based ones anyway, have given us everything from the famine to the Irish psyche to explain the Irish obsession with property. While it is true that there are historical reasons for this 'obsession', they have more to do with a 40-year government policy of privatising the housing market through grants and, until the 1980s, local government interest-free loans, than any farcical property-obsessed DNA explanation. That culture of home ownership (backed by substantial government assistance) has survived, but it operates now in uncharted, private market, waters. The bubble came about, in part, through the availability of easy credit which allowed investors in one hand to borrow to build (aided by massive government tax breaks and incentives) , and buyers to borrow to, well, buy. That's a lot of money floating around with no correlation to the actual (earned) purchasing power of the Irish population. Once house prices breach 4 to 5 times the average industrial wage, you're into bubble prices. In Ireland we have reached prices that are up to 13 times the wage earning power of firemen and nurses. Now what is going to sustain those prices when they are clearly unaffordable? That magic Irish-property-obsessed DNA? Well, for one thing, banks can't give out those unsustainable mortgages as they themselves have been hit, and hit badly, by the international credit crisis. It's very telling that the slow-down in the Irish property market occurred at around the same time that average prices in Dublin breached €425,000 - roughly the absolute mortgage that the average earner could squeeze from his/her bank. So, if the availability of credit was pushing prices up, and not demand per se, we're into real property madness. And the biggest problem now is that the very people who got us into this mess have been elected for another five years, and are still financed by the same vested interests that saw the laws of this country cut to suit their (concrete) cloth. Thanks Andrew and Tomaltach. I think that the international credit markets have been all but ignored in explaining the Irish property bubble. The explanations, mainstream media-based ones anyway, have given us everything from the famine to the Irish psyche to explain the Irish obsession with property. While it is true that there are historical reasons for this ‘obsession’, they have more to do with a 40-year government policy of privatising the housing market through grants and, until the 1980s, local government interest-free loans, than any farcical property-obsessed DNA explanation. That culture of home ownership (backed by substantial government assistance) has survived, but it operates now in uncharted, private market, waters. The bubble came about, in part, through the availability of easy credit which allowed investors in one hand to borrow to build (aided by massive government tax breaks and incentives) , and buyers to borrow to, well, buy. That’s a lot of money floating around with no correlation to the actual (earned) purchasing power of the Irish population. Once house prices breach 4 to 5 times the average industrial wage, you’re into bubble prices. In Ireland we have reached prices that are up to 13 times the wage earning power of firemen and nurses. Now what is going to sustain those prices when they are clearly unaffordable? That magic Irish-property-obsessed DNA? Well, for one thing, banks can’t give out those unsustainable mortgages as they themselves have been hit, and hit badly, by the international credit crisis. It’s very telling that the slow-down in the Irish property market occurred at around the same time that average prices in Dublin breached €425,000 - roughly the absolute mortgage that the average earner could squeeze from his/her bank. So, if the availability of credit was pushing prices up, and not demand per se, we’re into real property madness. And the biggest problem now is that the very people who got us into this mess have been elected for another five years, and are still financed by the same vested interests that saw the laws of this country cut to suit their (concrete) cloth.

]]> By: Tomaltach http://dublinopinion.com/2007/11/24/hooke-and-mcdonald-turtles-all-the-way-down/#comment-47182 Tomaltach Sat, 24 Nov 2007 09:57:34 +0000 http://dublinopinion.com/2007/11/24/hooke-and-mcdonald-turtles-all-the-way-down/#comment-47182 We know that the Irish construction sector became far too important to the economy. In terms of jobs and investment. As mentioned before, when you mention the word "investment" in Ireland it is taken to mean "in property". Because of its size in the economy, construction took on a life of its own and politicians (esp FF), already far too close to the industry, were afraid to take any corrective action. In fact, they kept blowing more air into the bubble. As demonstrated repeatedly on this site, property too became powerful in media circles owing to the percentage of the advertising market that it is comprised. It's not putting it too strongly to say that property assumed an importance to the life of the nation that is terribly unhealthy. The question is: will the current downturn prove to be enough to correct this malaise? Or will it be no more than a blip after which it will recover its preponderant position in Irish life? So can we shake off this obsession with property or not? We know that the Irish construction sector became far too important to the economy. In terms of jobs and investment. As mentioned before, when you mention the word “investment” in Ireland it is taken to mean “in property”. Because of its size in the economy, construction took on a life of its own and politicians (esp FF), already far too close to the industry, were afraid to take any corrective action. In fact, they kept blowing more air into the bubble. As demonstrated repeatedly on this site, property too became powerful in media circles owing to the percentage of the advertising market that it is comprised. It’s not putting it too strongly to say that property assumed an importance to the life of the nation that is terribly unhealthy. The question is: will the current downturn prove to be enough to correct this malaise? Or will it be no more than a blip after which it will recover its preponderant position in Irish life? So can we shake off this obsession with property or not?

]]> By: andrew http://dublinopinion.com/2007/11/24/hooke-and-mcdonald-turtles-all-the-way-down/#comment-47178 andrew Sat, 24 Nov 2007 09:12:18 +0000 http://dublinopinion.com/2007/11/24/hooke-and-mcdonald-turtles-all-the-way-down/#comment-47178 Great post Conor. This is desperation mode, and since they can't make a buck shifting their overpriced shoeboxes, owners and estate agents are trying to at least make a little more money renting the flats. it's amazing how the irish media never let the facts get in the way of good spin. i would not have been surpirsed if Hooke & McDonald announced they were taking the Alliance flats off the market because they were too attached to them, and wanted only to rent them. Great post Conor. This is desperation mode, and since they can’t make a buck shifting their overpriced shoeboxes, owners and estate agents are trying to at least make a little more money renting the flats.

it’s amazing how the irish media never let the facts get in the way of good spin.

i would not have been surpirsed if Hooke & McDonald announced they were taking the Alliance flats off the market because they were too attached to them, and wanted only to rent them.

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