When is a property crash a crash?

RATM

Just a thought that occurred to me today. When is a property crash called a property crash?
I was just looking at the house price charts here
http://www.statusireland.com/statistics/property-house-price-statistics-for-ireland/3/Irish-House-Prices-Since-1996.html
and was wondering if there a certain slant/angle a curve has to take before it is labeled as a 'crash'?
Its just everywhere I turn in the media- print, TV or radio- it seems to be called a 'downturn' or a 'correction' and a whole myriad of other terms but there's never any mention of the term 'crash'.

Am I missing something ?

Senna

Dont think there is any set decrease that would be classed a "crash", having said that the property market has crashed, or maybe that should be crashing, as a crash would imply that its over. I have heard the term crash being used by some branches of the media, but its mostly politicians and people that have a vested interest in property that use terms like, slight corrections, realignment, stabilisations, soft landing:rolleyes: hard-soft landing:rolleyes::rolleyes:

Its natural that these types wont use severe terms, as the Irish public need to be spoon fed information in small doses, so as to not spit out their tea by alarming truths.:rolleyes:

dan_d

It's less of a crash and more of an avanlanche gaining momentum......

SkepticOne

I liked the description a builder gave a couple of years ago "prices are settling and are likely to settle further in the future".

Nate--IRL--

RATM wrote: »

Am I missing something ?

Those are ASKING prices in that graph, not the sale price. There is no information about actual SALE prices achieved in Ireland.

Nate

The_Conductor

Nate--IRL-- wrote: »

Those are ASKING prices in that graph, not the sale price. There is no information about actual SALE prices achieved in Ireland.

Nate

Because estate agents were told they could be sued if they published false figures......

And they wonder why estate agents are held in such disrepute.......

RATM

Nate--IRL-- wrote: »

Those are ASKING prices in that graph, not the sale price. There is no information about actual SALE prices achieved in Ireland.

Nate

True but its the only data we have to go on so anything else is speculation. I think there is an Irish Times article knocking about in one of the other threads about real selling prices achieved for a certain area of Dublin. Made for interesting reading.

Nate--IRL--

RATM wrote: »

True but its the only data we have to go on so anything else is speculation.

What? The Asking price is not Data, it is pure speculation. Especially in a market as over supplied as the property market.

Nate

johnnyskeleton

As defined by people who want to see property prices keep going up, a crash is:

A) In 2005 house prices only going up in line with inflation
In 2006 house prices going up by just under inflation
C) In 2007 house prices staying flat in nominal terms and decreasing in real terms
D) In 2008 house prices dropping by more than 10% before "correcting"
E) In 2009, those that still survive say house prices dropping by more than 50% is a crash.

In each case, a crash is what they think is the most extreme doomesday scenario.

I think a more realistic definition of a house price crash is house prices are reduced by several grand, or enough to make a difference to people's pockets. So after the bubble, even a slight (~1%) drop in prices would, in my view, be a crash. It would also be highly improbable because of all the speculation, but that's another story.

The_Conductor

Nate--IRL-- wrote: »

What? The Asking price is not Data, it is pure speculation. Especially in a market as over supplied as the property market.

Nate

It could be considered data- if you amalgamated it with the length of time it took to sell the property- compared to similar properties in the vicinity. Not very scientific- but its barking up the right tree- as it were.....

jmayo

When is a property crash a crash?

I'd say it depends on who you ask.

The vested interests in selling property would probably say we are experiencing a temporary realignment of house prices due to tightening credit and adverse publicity from certain sections of the media.
To them property is always a good long term investment and house prices have not crashed or are not going to.
It is probably a softish hard landing of sorts.

The vested interests in buying, or having a normal economic model for determining house prices, would say they are on the downward slope of a complete crash, but haven't reached anywhere near the bottom yet.

The last group would probably say we will reach the bottom when sellers start becoming desperate to sell, finally realising that their expectations are too high and banks start to put the sqeeze on borrowers to repay some of their outstanding loans.

Personally I would say we are crashing, we just haven't hit the wall yet.
We are in denial.

seamus

If you think in terms of the real world, a "crash" is when you are travelling at some speed and you hit something solid and stop suddenly.

So if you were to ask what contributes a "crash" in property terms, it's when prices are increasing steadily and significantly, and then suddenly "stop" doing so. In which case, the market crashed in late 2006/early 2007.

Where we are now is the period after the crash, where the vehicle bursts into flames and is waiting for the fire brigade to extinguish it.

Once the fire is extinguished, it's not going to get any worse, but you're still left with the burnt-out shell of your vehicle and you need to start the process of getting back to where you were before you crashed. Without insurance.