Opinions on when the next property crash may happen

veryangryman

Im thinking soonish, especially in the city. Basically if you were doing a wager now, do you think house X in city would be worth more or less in 5 years.

For me, 20% less

Neon_Lights

veryangryman wrote: »

Im thinking soonish, especially in the city. Basically if you were doing a wager now, do you think house X in city would be worth more or less in 5 years.

For me, 20% less

Curb in supply is propping up house values, purposefully done in my opinion. Cough politicians property portfolios***

If houses start to get built in significant volume I can see an adjustment in relation to this and prices will go down. That's a big if currently though

Hollister11

2030

Victor

The effects of Brexit may see things go in either direction.

LirW

The truth is, nobody really knows how the whole thing will go on. At the moment there are so many if's and Factors outside of our hands that there is no real prediction of how this current mess will turn out.

Samuel T. Cogley

20% less in five years time isn't a crash it's what you'd hope would happen from the supply side. Brexit is the first stumbling block. If that goes tots up for us 50% off current values - not that it will matter, no one will be selling.

Interest rates are another, coupled with supply, we might see a sudden drop of 20% but that will be on levels 5-7 years hence so will still be higher than today.

morrga

Dublin relative to most other first world cities is at the lower end of the scale in terms of property cost. As the economy grows and stabilises who's to say there will be any short to medium term crash. Reckless lending and naieve borrowing created the last crash world wide. Banks are stress tested more than ever now. From what I hear, CBI are demanding more and more regulatory reporting from financial institutions. This is exactly the structure the lending and property sectors need to ensure an incrementally growth phase rather than the crash and boom policies of years gone by.

People seem to think that spiralling house prices means people are borrowing beyond their means again. This is not necessarily true. The population is growing, jobs are growing, salaries are growing and people who want to live in urban areas can afford to, while those who cant are unfortunately been squeezed out.

There is no telling what the future holds but as an economy we should be hoping for stability rather than trying to predict downturns.

Ms Doubtfire1

morrga wrote: »

Dublin relative to most other first world cities is at the lower end of the scale in terms of property cost. .

What makes you think that?

Amstelveen, suburb of amsterdam ( 10 km perfect public transport
http://www.funda.nl/koop/amstelveen/appartement-49171483-eikenrodelaan-83/

similar property in santry

http://www.daft.ie/dublin/houses-for-sale/santry/11-knightswood-santry-dublin-1437640/

Berlin
https://www.immonet.de/angebot/30835034?drop=sel&related=false

Theboinkmaster

and what reasoning/calculations do you have to support your 20% reduction :rolleyes:

every significant property crash globally has involved cheap credit to cause the boom.

that's not happening in Ireland, even though we've relaxed the CB rules there is still sensible lending going on the past few years.

the surge in prices is simply supply and demand. the supply is creeping up slowly but with an increasing population the demand is always going to keep going up and surpass supply.

therefore all we can hope for is price increases ease back, but no I don't think there's going to be any kind of crash at all.

Samuel T. Cogley

Ms Doubtfire1 wrote: »

What makes you think that?

Amstelveen, suburb of amsterdam ( 10 km perfect public transport
http://www.funda.nl/koop/amstelveen/appartement-49171483-eikenrodelaan-83/

similar property in santry

http://www.daft.ie/dublin/houses-for-sale/santry/11-knightswood-santry-dublin-1437640/

Berlin
https://www.immonet.de/angebot/30835034?drop=sel&related=false

What are the sizes of the first two there?

LirW

I'm more than surprised that Vienna is never called there.
Vienna suburb:

https://www.willhaben.at/iad/immobilien/haus-kaufen/wien/wien-1220-donaustadt/provisionsfrei-einfamilienhaus-in-1220-wien-202340084/

Ms Doubtfire1

woops wrong dutch link

http://www.funda.nl/koop/amstelveen/huis-49855960-turfschip-167/

morrga

Ms Doubtfire1 wrote: »

What makes you think that?

Amstelveen, suburb of amsterdam ( 10 km perfect public transport
http://www.funda.nl/koop/amstelveen/appartement-49171483-eikenrodelaan-83/

similar property in santry

http://www.daft.ie/dublin/houses-for-sale/santry/11-knightswood-santry-dublin-1437640/

Berlin
https://www.immonet.de/angebot/30835034?drop=sel&related=false

London, Paris, New York, Sydney I was more thinking.

Yourself isit

What's the definition of "first world city"? Newcastle? Bristol? Berlin? Athens? Dallas?

Ms Doubtfire1

Theboinkmaster wrote: »

and what reasoning/calculations do you have to support your 20% reduction :rolleyes:

every significant property crash globally has involved cheap credit to cause the boom.

that's not happening in Ireland, even though we've relaxed the CB rules there is still sensible lending going on the past few years.

the surge in prices is simply supply and demand. the supply is creeping up slowly but with an increasing population the demand is always going to keep going up and surpass supply.

therefore all we can hope for is price increases ease back, but no I don't think there's going to be any kind of crash at all.

There is sensible lending alright.But what you don't see/take into account is that the houses financed won't keep their value.They aren't built to last. I remeber renting a semi-d in Cork/ballincollig at the height of the boom and I was thinking of buying it.they wanted over 500k if I recall correct.And you could drive a hammer through any of the walls except the main ones with near no force.The interior walls were paper thin.I couldn't believe how much the owner wanted for it...and am so glad I never bought a house.Never will either. Irish property is overvalued. Thats whats going to cause the crash.

Ms Doubtfire1

morrga wrote: »

London, Paris, New York, Sydney I was more thinking.

Really? comparing dublin with any of those?? :pac::pac:
uhm...>smh<

Heisenberg.

This post has been deleted.

LirW

Ms Doubtfire1 wrote: »

There is sensible lending alright.But what you don't see/take into account is that the houses financed won't keep their value.They aren't built to last. I remeber renting a semi-d in Cork/ballincollig at the height of the boom and I was thinking of buying it.they wanted over 500k if I recall correct.And you could drive a hammer through any of the walls except the main ones with near no force.The interior walls were paper thin.I couldn't believe how much the owner wanted for it...and am so glad I never bought a house.Never will either. Irish property is overvalued. Thats whats going to cause the crash.

Aren't you living in Leitrim though? :pac:

(To be perfectly honest, I envy you so much living there, I would go in a heartbeat but everyone else is like NO)

Yourself isit

morrga wrote: »

London, Paris, New York, Sydney I was more thinking.

Ah right. The most expensive cities in the world. Dublin (pop 1M) should be compared to these? Why?

And the wheel is coming off Sydney and London

zl1whqvjs75cdy

Ms Doubtfire1 wrote: »

There is sensible lending alright.But what you don't see/take into account is that the houses financed won't keep their value.They aren't built to last. I remeber renting a semi-d in Cork/ballincollig at the height of the boom and I was thinking of buying it.they wanted over 500k if I recall correct.And you could drive a hammer through any of the walls except the main ones with near no force.The interior walls were paper thin.I couldn't believe how much the owner wanted for it...and am so glad I never bought a house.Never will either. Irish property is overvalued. Thats whats going to cause the crash.

A property is worth what the market is willing to pay. People are desperate to buy here, a combination of social pressures and the cost and difficulties of renting. Irish people will always place a very high value on property, and the actual build quality will not affect the price that can be achieved to any great extent. Certainly not enough to cause a property crash.

morrga

Ms Doubtfire1 wrote: »

What makes you think that?

Amstelveen, suburb of amsterdam ( 10 km perfect public transport
http://www.funda.nl/koop/amstelveen/appartement-49171483-eikenrodelaan-83/

similar property in santry

http://www.daft.ie/dublin/houses-for-sale/santry/11-knightswood-santry-dublin-1437640/

Berlin
https://www.immonet.de/angebot/30835034?drop=sel&related=false

London, Paris, New York, Sydney I was more thinking.

morrga

Yourself isit wrote: »

Ah right. The most expensive cities in the world. Dublin (pop 1M) should be compared to these? Why?

And the wheel is coming off Sydney and London

Yes after a very long time with out a crash. My point been short to medium term Ireland should be ok.

Yourself isit

Theboinkmaster wrote: »

and what reasoning/calculations do you have to support your 20% reduction :rolleyes:

every significant property crash globally has involved cheap credit to cause the boom.

that's not happening in Ireland, even though we've relaxed the CB rules there is still sensible lending going on the past few years.

the surge in prices is simply supply and demand. the supply is creeping up slowly but with an increasing population the demand is always going to keep going up and surpass supply.

therefore all we can hope for is price increases ease back, but no I don't think there's going to be any kind of crash at all.

We still have cheap credit you know. At least historically. The limit doesn't affect that.

Ms Doubtfire1

LirW wrote: »

Aren't you living in Leitrim though? :pac:

(To be perfectly honest, I envy you so much living there, I would go in a heartbeat but everyone else is like NO)

I am indeed. But I lived in Amsterdam,Munich,Brussels,hamburg and Berlin in my non hermit years.Oh and Dublin and cork. And those experiences are the main reason I'm now living in the middle of no where..;-)

morrga

Yourself isit wrote: »

What's the definition of "first world city"? Newcastle? Bristol? Berlin? Athens? Dallas?

Opinion. Freedom of speech.

What's the definition of a bell...... pedantic pat.

Ms Doubtfire1

donkeyoaty0099 wrote: »

A property is worth what the market is willing to pay. People are desperate to buy here, a combination of social pressures and the cost and difficulties of renting. Irish people will always place a very high value on property, and the actual build quality will not affect the price that can be achieved to any great extent. Certainly not enough to cause a property crash.

I'd be willing to bet that property prices are coming down massively in the inflated places in the country in the next 24 month...wait and see..:-)

Selik

Ms Doubtfire1 wrote:

There is sensible lending alright.But what you don't see/take into account is that the houses financed won't keep their value.They aren't built to last. I remeber renting a semi-d in Cork/ballincollig at the height of the boom and I was thinking of buying it.they wanted over 500k if I recall correct.And you could drive a hammer through any of the walls except the main ones with near no force.The interior walls were paper thin.I couldn't believe how much the owner wanted for it...and am so glad I never bought a house.Never will either. Irish property is overvalued. Thats whats going to cause the crash.

Ms Doubtfire1 wrote:

There is sensible lending alright.But what you don't see/take into account is that the houses financed won't keep their value.They aren't built to last. I remeber renting a semi-d in Cork/ballincollig at the height of the boom and I was thinking of buying it.they wanted over 500k if I recall correct.And you could drive a hammer through any of the walls except the main ones with near no force.The interior walls were paper thin.I couldn't believe how much the owner wanted for it...and am so glad I never bought a house.Never will either. Irish property is overvalued. Thats whats going to cause the crash.

That is called dry lining and most modern houses are built this way. It generally shouldn't affect the longevity of a house ahead of other factors like genuine structural issues.

Samuel T. Cogley

So I'm not convinced on the Netherlands - looks fairly similar to me.

London, Paris, New York.. err

However Oxford, Manchester, Belfast, or regional capitals in France, Germany perhaps. But I think that Dublin is probably middling - it's certainly not as mental as some places!

Ms Doubtfire1

Selik wrote: »

That is called dry lining and most modern houses are built this way. It generally shouldn't affect the longevity of a house ahead of other factors like genuine structural issues.

Might be In dublin and cork. Never seen that happening in any of the other cities I lived in.or have visited as recently as last year....but hey...if you are of the opinion that a house that can be huffed and puffed over by the next big storm is worth 300 grand or more...be my guest. Ain't my money.
either way we're off topic.As outlined, those are my reasons to predict the next crash within 24 month.:-)

Tombo2001

People are always informed by the last thing that happened.

There doesn't have to be a crash; prices could fall a little bit, then shuffle sideways and then go back up again.

SeanSouth

Crashes only happen when there is an over-supply of houses and no demand.

At the moment we have the opposite, Much demand and no supply. There's no
crashes on the horizon but there are increasing amounts of people with no houses
so the situation will get a lot worse before it gets a lot better

What needs to happen to correct the current situation is for more houses to be built. But here's the problem. The problem arises because all new houses must be A rated Rolls Royce and not D rated Ford Focus as most of the existing housing stock is. If the builder builds a high standard Rolls Royce as is required by the building regulations, he wont be able to achieve enough margin to make it worthwhile. So there is a stalemate. The fact that the government is insisting on taking 13.5% vat on top and the local authority and Irish water are clawing in excessive levies to feather their own nests means that its just not feasable to build.

The government wont withdraw the levies or taxes because some clever civil
servant has said that the money will go to the builders instead. The civil servant
is absolutely right however this is irrelevant as the main objective is to get
the houses built. Market forces and finance restrictions will keep the prices under
control. The developer wont build unless he can sell within the 1st time buyer's affordability level

A crash cant happen unless there is some 'air' between the cost of building and the price of the house. There is no 'air' at the moment. To build a 3 bed semi detached house in Dublin costs around 400,000 on average depending on the area. The maths dont work.

Here's what the government needs to do to get building moving

1) All taxes, levies and local authority charges need to be abolished for
new builds in Dublin Cork, Limerick and Galway for a finite period of five years.
The five year stipulation will draw out builders in force and we will get houses
built quickly and where they are needed.
2) Building Regulations need to be relaxed so that, not only A rating houses are
allowed but also B rating and C rating too. A, C rated house is still a very fine house but is much cheaper and more affordable
3) The planning system needs to be dragged into the new millenium and the
old inflexible and archaic system needs to be abolished

Shurimgreat

Uncertainty with the EU causes banks to stop lending to each other and to customers. No-one can get mortgages. House prices come down. I can't see it happening any time soon though. Our economy is far more sustainable today than it was in the 2000-2006 era when building played a huge part in the economy and employment. We are in a better place to weather the storm.

MICKEYG

SeanSouth wrote: »

Crashes only happen when there is an over-supply of houses and no demand.

At the moment we have the opposite, Much demand and no supply. There's no
crashes on the horizon but there are increasing amounts of people with no houses
so the situation will get a lot worse before it gets a lot better

What needs to happen to correct the current situation is for more houses to be built. But here's the problem. The problem arises because all new houses must be A rated Rolls Royce and not D rated Ford Focus as most of the existing housing stock is. If the builder builds a high standard Rolls Royce as is required by the building regulations, he wont be able to achieve enough margin to make it worthwhile. So there is a stalemate. The fact that the government is insisting on taking 13.5% vat on top and the local authority and Irish water are clawing in excessive levies to feather their own nests means that its just not feasable to build.

The government wont withdraw the levies or taxes because some clever civil
servant has said that the money will go to the builders instead. The civil servant
is absolutely right however this is irrelevant as the main objective is to get
the houses built. Market forces and finance restrictions will keep the prices under
control. The developer wont build unless he can sell within the 1st time buyer's affordability level

A crash cant happen unless there is some 'air' between the cost of building and the price of the house. There is no 'air' at the moment. To build a 3 bed semi detached house in Dublin costs around 400,000 on average depending on the area. The maths dont work.

Here's what the government needs to do to get building moving

1) All taxes, levies and local authority charges need to be abolished for
new builds in Dublin Cork, Limerick and Galway for a finite period of five years.
The five year stipulation will draw out builders in force and we will get houses
built quickly and where they are needed.
2) Building Regulations need to be relaxed so that, not only A rating houses are
allowed but also B rating and C rating too. A, C rated house is still a very fine house but is much cheaper and more affordable
3) The planning system needs to be dragged into the new millenium and the
old inflexible and archaic system needs to be abolished

400,000 to build. Does that include land cost?

LirW

Shurimgreat wrote: »

Uncertainty with the EU causes banks to stop lending to each other and to customers. No-one can get mortgages. House prices come down. I can't see it happening any time soon though. Our economy is far more sustainable today than it was in the 2000-2006 era when building played a huge part in the economy and employment. We are in a better place to weather the storm.

Now there is a whole generation of FTB entering the market, they couldn't get mortgages a few years ago, now they can. Lots of them saved. Also a lot of these buyers are relatively young professional couples with good salaries or well-paid singles and they won't have a problem finding something suiting their needs. Where the real pressure is on is when you're not part of, I call it "the perfect applicant".
That hits hard working people on low salaries having families. These families struggle getting mortgages and if they get them, there is very little supply in their price bracket (just to clarify I'm talking about "working class areas" here but a lot of them are going mental price wise), leaving only property in REALLY bad areas sitting on the market and they sit there for a reason. Leaves these people to rent for horrifying prices with the predicament of where to go if they get turfed out or the lease ends.
There is no social housing either to house these people.
And I'm not talking about entitlement here but this is a problem.

danko82

so, regarding the topic, is still a good investment to buy an apt in Dublin with prevision to live here for other 3-5 years?

I am thinking at worst scenario, where you buy an house, you want to sell in 5 years, but the price are down so you cannot sell and you cannot move country as you will get lower salary outside ireland..

Cyrus

Ms Doubtfire1 wrote: »

Might be In dublin and cork. Never seen that happening in any of the other cities I lived in.or have visited as recently as last year....but hey...if you are of the opinion that a house that can be huffed and puffed over by the next big storm is worth 300 grand or more...be my guest. Ain't my money.
either way we're off topic.As outlined, those are my reasons to predict the next crash within 24 month.:-)

you are in any thread going predicting a crash but your rationale is skewed.

Maybe you feel houses are expensive but they arent over priced.

People can afford them, generally with more than 20% equity and 25-30 year mortgages. Also the supply isnt there and it will take probably the best part of a decade to catch up.

The last bubble was caused by irresponsible lending. we arent in that situation.

jamesthepeach

I think the crash is coming soon. Maybe the next couple of years. Any economic event will cost jobs and pay. Any pay reductions mean less mortgagesgiven out and defaulting on current mortgage s. Then there will be nobody to buy the crazy amount of houses that we are ramping up to build. And the tax payer will be bailing out the builders and the banks again.

An economic crisis can come from anywhere. It may have nothing to do with property. You won't see it coming. So it's all about how exposed you are at the time it happens. And history tells us that they come often and silently until it's too late.

jamesthepeach

danko82 wrote: »

so, regarding the topic, is still a good investment to buy an apt in Dublin with prevision to live here for other 3-5 years?

I am thinking at worst scenario, where you buy an house, you want to sell in 5 years, but the price are down so you cannot sell and you cannot move country as you will get lower salary outside ireland..

You might be in competition with vulture funds on apartments. The price of apartments is starting to rise fast after being static for ages. Suddenly apartments are in again. Is it people giving up on buying a house and just buying what they can afford before they can't afford it anymore?

Theboinkmaster

jamesthepeach wrote: »

I think the crash is coming soon. Maybe the next couple of years. Any economic event will cost jobs and pay. Any pay reductions mean less mortgagesgiven out and defaulting on current mortgage s. Then there will be nobody to buy the crazy amount of houses that we are ramping up to build.

Nope - even if we have another economic downturn there will still be enough demand to swallow up the short supply of very expensive houses. The ramping up we're doing is still nothing close to the demand and the population is only increasing more.

I still see no serious reasoning why there will be a crash here, seems like wishful thinking for many or "sure they're so expensive"....

Every property cash globally has been precipitated by cheap credit - that's not the case in Ireland currently.

Less jobs and cut pay in current environment won't slash house prices, the demand is too high.

People forget there's a lot of money in Ireland passed through families so many people are buying houses with significant cash deposits.

The best we can hope for is growth back in line with overall inflation and interest rates (1-3%).

Yourself isit

As usual people tend to extrapolate. And buy the industry line. 400k to build? Amazing that houses lower in price than that are bring built.

Reduce taxes? No effect on prices.

And yes the bust this time won't be caused by over lending as much but by increases in interest rates. And supply.

There will be a correction sometime but a crash like the last time I can't see that.

Yourself isit

Theboinkmaster wrote: »

Nope - even if we have another economic downturn there will still be enough demand to swallow up the short supply of very expensive houses. The ramping up we're doing is still nothing close to the demand and the population is only increasing more.

I still see no serious reasoning why there will be a crash here, seems like wishful thinking for many or "sure they're so expensive"....

Every property cash globally has been precipitated by cheap credit - that's not the case in Ireland currently.

Less jobs and cut pay in current environment won't slash house prices, the demand is too high.

People forget there's a lot of money in Ireland passed through families so many people are buying houses with significant cash deposits.

The best we can hope for is growth back in line with overall inflation and interest rates (1-3%).

I think you're assuming here that retail rates won't increase if interest rates increase. Which they will.

It's more accurate to say that it's generally interest rate increases that cause property bubbles to collapse.

Graham

Yourself isit wrote: »

I think you're assuming here that retail rates won't increase if interest rates increase. Which they will.

I too expect interest rates to increase marginally, I don't expect they will increase as much in Ireland as we already have relatively high rates compared to the rest of the eurozone.

Yourself isit wrote: »

It's more accurate to say that it's generally interest rate increases that cause property bubbles to collapse.

That wasn't the case at the end of the most recent bubble.

Cyrus

Yourself isit wrote: »

As usual people tend to extrapolate. And buy the industry line. 400k to build? Amazing that houses lower in price than that are bring built.

Reduce taxes? No effect on prices.

And yes the bust this time won't be caused by over lending as much but by increases in interest rates. And supply.

how quick do you see supply coming on, every year that passes more and more unmet demand is building up.

unless interest rates goto above 6% in a very short period that wont create a crash, rates increasing will be a response to rising inflation and wages will increase also

Theboinkmaster

Yourself isit wrote: »

I think you're assuming here that retail rates won't increase if interest rates increase. Which they will.

It's more accurate to say that it's generally interest rate increases that cause property bubbles to collapse.

No of course retail rates are going to increase, sure the only way is up.

I just don't think a rise in rates is going to cause a crash, will just curtail demand and suppress the rises but demand will still strongly outstrip supply.

To say a rate rise will cause a crash is to assume low interest rates are what's driving the surge in prices, but that's not the case it's demand.

Theboinkmaster

Cyrus wrote: »

how quick do you see supply coming on, every year that passes more and more unmet demand is building up.

Exactly - the problem is just getting worse and compounding each year.

Cyrus wrote: »

unless interest rates goto above 6% in a very short period that wont create a crash, rates increasing will be a response to rising inflation and wages will increase also

This is true in a normal economy but our interest rates are ECB linked not to the overall economy. Our inflation rate in Ireland is higher than interest rates as our economy is outperforming the central European economies, whereas normally they should be the same.

But assuming if European interest rates rise our economy will improve also and thus drive wage inflation, hopefully.

jimmycrackcorm

Ms Doubtfire1 wrote:

Amstelveen, suburb of amsterdam ( 10 km perfect public transport

Compare to Jobstown maybe?

jamesthepeach wrote:

I think the crash is coming soon. Maybe the next couple of years. Any economic event will cost jobs and pay. Any pay reductions mean less mortgagesgiven out and defaulting on current mortgage s. Then there will be nobody to buy the crazy amount of houses that we are ramping up to build. And the tax payer will be bailing out the builders and the banks again.

The gap for silly is still too wide and I can't see it even remotely closing by the time the guaranteed shock of Brexit actually happening occurs.

Tigerandahalf

There is definitely potential for a correction in Dublin.

Trump today announced that he will reduce corporate tax to 15% from something like 35%. It will have to go through congress it seems first but it is likely to happen.

There is also a tech bubble with shares in tech companies at very high levels. Year old companies are suddenly being valued in the billions as old money is chasing a profit and the next big thing because interest rates are so low.

I think we will see a big crash in tech shares once interest rates start to rise.

Will this then have a big effect on tech companies in Ireland? We will have to wait and see.

The banks here are not meant to be big lenders for commercial property projects at the moment. It is equity funds from abroad that are building in Dublin. Thus our banks should not be as exposed.

A lot of uncertainty surrounding Brexit and the EU trying to control our tax rates.

As long as employment is spread across a wide area we shouldn't get a major shock but interest rate rises will certainly hit people's ability to spend in the local economy.

The big thing being exposed is the huge gap emerging between the wealth and assets of the older versus younger generations. It is going to become a huge issue at some stage in the future.

jamesthepeach

It's kinda funny.
This thread reads like the ones in 2005, reads the same on both sides of the argument too.
Definitely a crash coming

Yourself isit

Graham wrote: »

I too expect interest rates to increase marginally, I don't expect they will increase as much in Ireland as we already have relatively high rates compared to the rest of the eurozone.

Maybe. Of that doesn't happen even an increase in 2% in ECB rates would seriously harm the market. It might cause a recession anyway as trackers would be affected

That wasn't the case at the end of the most recent bubble.

No but I said generally.

Cyrus

jamesthepeach wrote: »

It's kinda funny.
This thread reads like the ones in 2005, reads the same on both sides of the argument too.
Definitely a crash coming

How can it read the same when the conditions were polar opposites loads of supply and loose lending v limited supply and tight lending