Do you think property will crash again?

LambDev · 21-02-2018 4:28pm #1

I was reading the thread on prices in Ashbourne increasing by 55k, and the comments were interesting. eg ("Similar happened in 07", "Here we go again").

During the last boom and subsequent crash, I was only a child/young teenager. I'm 22 now, but I didn't really experience the last one.

It's not going to happen soon, but does anyone predict a crash long term, and what market conditions will cause it?

Interested Observer · 21-02-2018 4:30pm

If you wait long enough it's basically 100% certain property will crash again. How/when/why are the million dollar questions that nobody can really answer.

Nika Bolokov · 21-02-2018 4:33pm

LambDev wrote: »

I was reading the thread on prices in Ashbourne increasing by 55k, and the comments were interesting. eg ("Similar happened in 07", "Here we go again").

During the last boom and subsequent crash, I was only a child/young teenager. I'm 22 now, but I didn't really experience the last one.

It's not going to happen soon, but does anyone predict a crash long term, and what market conditions will cause it?

Probably a rise in interest rates from 2019 on leading to a reduction in disposable incomes which will depress consumer spending and cost jobs.

Hopefully prices level soon and everything doesn't drop from a height again though as bad as the last time with the new Central Bank rules in place.

Ashbourne isn't the only country town that's become attractive as big daily commutes become the norm........again.......remeber in the last boom people sold houses in Dublin to buy a big house in Offaly to commute ...to Dublin

tedpan · 21-02-2018 4:42pm

Isn't there already a current thread on this?

UsBus · 21-02-2018 4:42pm

Prices will never level off and remain steady.

You'll wake up some morning, and there will be a report about something leading to a financial shock to the markets. There will be a gradual increase in disposing of properties, investments and holiday homes first.

By the time it sinks in here, the beginning of the crash will have already started. Ireland will never be in control of its own economy completely.

Pawwed Rig · 21-02-2018 4:44pm

Might be a 'soft landing' this time around

jimmycrackcorm · 21-02-2018 4:48pm

Property will crash again in the next recession. People currently stretching to pay mortgages then losing jobs means arrears.

Our collective heads have been in the sand regarding repossessions for several years, but as we can now see, that cannot last and the flood gates will open.

Sleeper12 · 21-02-2018 4:48pm

We've only ever had one property crash in the history of the state. Doesn't mean that there won't be more but with only one in the last 100 years or so you definitely can't rely on one in time for you to buy your house.

Internet rates are due to increase in the next 12 to 18 months & this may help slow the price increases.

Last thing to factor in. Its highly unlikely that we will have a crash or even slow reverse of prices as long as we have a housing shortage. It's going to take 5 to 8 years to cat up on demand

lorcand1990 · 21-02-2018 4:51pm

There will be some form of a 'crash' again in the future, although with the bank rules on min deposits & max amounts to borrow on Mortgages they are protecting themselves better than what was the case back in the height of the Celtic Tiger.

This time around it has created a situation where rents are going through the roof, due to lack of housing supply. House prices are still below what they were back in 2007 (not that we should be using 2007 as a benchmark)

Samuel T. Cogley · 21-02-2018 5:01pm

During a crash it's probably more difficult to buy than during a boom, unless you're paying cash.

Bob24 · 21-02-2018 5:06pm

The question is not to know if there will be a crash, it is rather when it will happen.

I personally don’t know have a definite answer might gut feeling is that we are heading that way but it is hard to tell when. If no external factor comes in to spoils the party (a global financial crises or the likes), I think we might still have a few years to go with slightly more moderate but still unsustainable price increases.

Bob24 · 21-02-2018 5:09pm

Samuel T. Cogley wrote: »

During a crash it's probably more difficult to buy than during a boom, unless you're paying cash.

There is also less to choose from as no one wants to sell.

But having said that someone who was reasonable and saving during the good times and still is in stable employment during the crash will eventually find something and get a great deal.

Samuel T. Cogley · 21-02-2018 5:12pm

Bob24 wrote: »

There is also less to choose from as no one wants to sell.

But having said that someone who was reasonable and saving during the good times and still is in stable employment during the crash will eventually find something and get a great deal.

Possibly, but we found it near impossible to find anything decent. You'd need enough for a deposit and enough to do up the place ort risk ending up in a bidding war with other people trying to score a bargain - which turns out not to be such a bargain.

Ush1 · 21-02-2018 5:22pm

Samuel T. Cogley wrote: »

During a crash it's probably more difficult to buy than during a boom, unless you're paying cash.

During the last crash it was more difficult to get a mortgage but still possible if you had decent deposit.

I got lucky buying in 2012, things were at the bottom. House went up for sale across the road from me this week for 135,000 more then I paid for mine in December 2012.

uck51js9zml2yt · 21-02-2018 5:36pm

Pawwed Rig wrote: »

Might be a 'soft landing' this time around

Pigs might fly as well:)

Claw Hammer · 21-02-2018 5:43pm

Sleeper12 wrote: »

We've only ever had one property crash in the history of the state. Doesn't mean that there won't be more but with only one in the last 100 years or so you definitely can't rely on one in time for you to buy your house.

There has been far more than one property crash in the history of the state. There was a lengthy slump in the mid 80's when prices fell dramatically. There was a serious slump throughout the 1950's. Boom has followed bust for decades.
It will not be any different next time. The last crash may have been the most sudden and dramatic but it was not the only one. The problem is that during crashes it is hard to get cash and credit so buying can be very difficult.

cfuserkildare · 21-02-2018 5:48pm

Definitely going to be another crash,
Property prices are spiraling out of control,
No-one can afford to Rent properties now as they are 15-20% higher than they were in 2007.
This country is in Serious trouble!!!

seamus · 21-02-2018 5:56pm

It may. But it's hard to see how.

The last crash was effectively the result of a speculation bubble. This happens when people buy something just so they can see its value increase, rather than buying it as something to use. The same as the recent Bitcoin bubble. Once the majority of those buying are doing it as investment, it's a bubble. And like all bubbles, it pops eventually.

That doesn't exist at the moment. Actual demand for housing to use is high, and supply is low. A crash would require a sudden change in either.

So the conditions that could cause such a scenario;

- A sudden increase in supply. Virtually impossible in housing markets because houses take time to build. Lending and planning tends to put an unintentional cap on how much can be produced at a given time. Unless legislation is passed making it legal to sell shipping containers on any old piece of land as homes, there's no way for supply to suddenly explode.

- Sudden contractions in demand. Definitely possible. Another banking crisis could strangle mortgage lending again, ejecting everyone but cash buyers from the market. Or, a national recession on a par with the last could send 10% of the population searching for work overseas, and reduce what anyone is able to borrow.

Excepting any major external shocks or stupid government interference, we're unlikely to see a sudden crash in prices. Most likely they will continue to rise until supply catches up (and catching up it is), at which point prices will plateau then decrease slightly year-on-year as the supply/demand rebalances.

That's not to say however, that it couldn't develop into a bubble again. Investors are surprisingly short-sighted and dimwitted. A flood of foreign capital into building projects could have us back producing 60,000 units a year in 2023, and then we're boned again.

One would hope that planners have learned something from the last event though.

Sleeper12 · 21-02-2018 5:59pm

I'm sorry to correct you but you are mixing up terms. A slump is not a crash. We have only ever had one crash.

Edit: we didn't have boom either until the 90s. Ireland struggled from its independence right up to the 90s. There were no booms or good times before this

Samuel T. Cogley · 21-02-2018 6:27pm

Ush1 wrote: »

During the last crash it was more difficult to get a mortgage but still possible if you had decent deposit.

I got lucky buying in 2012, things were at the bottom. House went up for sale across the road from me this week for 135,000 more then I paid for mine in December 2012.

Had both, couldn't find a decent place. 135K increase is nice but it's all relative. If you wait until the crash to move again it'll be worth (hopefully) what you paid in 2012.

Claw Hammer · 21-02-2018 6:28pm

Sleeper12 wrote: »

I'm sorry to correct you but you are mixing up terms. A slump is not a crash. We have only ever had one crash.

Edit: we didn't have boom either until the 90s. Ireland struggled from its independence right up to the 90s. There were no booms or good times before this

Rubbish. There was a boom in the 60's and up to the oil crisis of 73. High inflation masked effects of the recession the 1970's on property.

spaceHopper · 21-02-2018 6:29pm

You're 22, have to live somewhere, you've 4 choices, live at home, rent, buy or leave the country, then what if you meet somebody...

What if you took out a 40 year mortgage, over the life of it you'd payback a lot but it would be affordable. Even a 30 year on you'd be 52 by the time it's paid off. Assuming you never move...

You could pay rent and when a crash comes buy but now you've lost time repaying somebody else's mortgage... During the crash there will be a squeeze on credit, what if your job looked riskey....We rented during the last crash and it cost us 75K house prices dropped by more than that but we'd have had 5 years paid off and probably gotten a tracker.

It's all a guessing game, except when it's right time to buy for you it's right, it feels right, and if it feels wrong then listen to your gut and don't.

If people around you are losing their heads, remortgaging to buy an apartment in some country they've never been to with a guaranteed return... then you know it will be 2 to 5 years before it goes BANG

theboringfox · 21-02-2018 6:30pm

The big difference now is the central banking rules placing controls on debt levels. As such I don't see a crash in the same sense as whst happened in 2018. I think the outlook points to an upward path over medium term but it may not be linear so could be dips along way. Everyone just needs to prudently assess the affordability of house. I don't think people should see max permitted lending as meaning it's affordable. At present I only see a big downward move if there's a big external shock, including massive interest rate rise, or when supply recovers that we over shoot and have too much supply. Latter seems unlikely right now but in 3 years who knows.

Supercell · 21-02-2018 6:31pm

I'm with Seamus on this, whilst prices are near Celtic tiger levels again it's not speculative based as back then, it's demand based.
Back then we were building far more houses than needed and people were speculating with easy money from the banks. This time far less houses are being built and rent prices are soaring so it follows demand is very high. I feel sorry for those renting now, it's really the worst of both worlds. Back when we bought in 2011 rental prices were not crazy (we rented a nice 2 bed apartment in Fisherman's Wharf in Ringsend for €900 PM for example) we could afford to save and rent, we simply couldnt do that now, emigration would have to be a serious consideration sadly

emo72 · 21-02-2018 6:34pm

Interest rates will go up and then people will have less disposable income. I remember this happening in 06/07 not sure the exact date, but with high mortgages and rising interest rates there was no spare money. Retail nose dived and it was game over man.

spaceHopper · 21-02-2018 7:02pm

seamus wrote: »

Or, a national recession on a par with the last could send 10% of the population searching for work overseas, and reduce what anyone is able to borrow.

Brexit!

seamus wrote: »

Excepting any major external shocks

Brexit!

seamus wrote: »

stupid government interference,

Vulture funds exit maket after taking advantage of charitable tax loophole sudden increase in houses for sale after kicking out tenants

Sleeper12 · 21-02-2018 7:21pm

Claw Hammer wrote:

Rubbish. There was a boom in the 60's and up to the oil crisis of 73. High inflation masked effects of the recession the 1970's on property.

You must be from a different country. There was never boom.

In the 60's when you moved into your first home your table was a packing crate. Any furnishings were hand me downs or bought 2nd hand. We had no or one car families. People found it hard to put food on the table. We still had massive emigration in the 60's & 70s.

Electric Sheep · 21-02-2018 7:21pm

Claw Hammer wrote: »

Rubbish. There was a boom in the 60's and up to the oil crisis of 73. High inflation masked effects of the recession the 1970's on property.

Yes, a lot of emigrants returned to Ireland in the late 60s/early 70s. Then it all went tits up again.

Gravelly · 21-02-2018 7:33pm

There will definitely be another crash, every country has them at irregular intervals (albeit not as bad usually as our recent one was), the question is when. I think we are in dangerous territory at the moment - housing shortage (or at least a shortage of the type of houses most people want in the places they want them), rents rising way above inflation, low interest rates, and lots of speculation. My fear is that a shock to the economy, even a slight one (Brexit, other countries leaving the EU, US economic crash, etc.), combined with a rise in interest rates, would cause a slump in demand, which could snowball. I'm hearing lots of stories of people paying what I consider crazy money for apartments again, and the familiar "it's madness renting when you can get a mortgage for less" (you can NOW, what about in 2 years or 5 years?). The number of people in mortgage arrears means that a large cohort of the people who would normally be trading up around now isn't there, meaning the market is, in my view, too shaky to risk from an investment perspective. If I was buying a house to live in, I'd be scratching my head as to whether I'd buy now, or wait and see. Probaby buy now, but factor in certain interest rate rises and possible negative equity to my affordability calculations.

Ush1 · 21-02-2018 9:32pm

Samuel T. Cogley wrote: »

Had both, couldn't find a decent place. 135K increase is nice but it's all relative. If you wait until the crash to move again it'll be worth (hopefully) what you paid in 2012.

I've no plans to move again, but should I see another crash in my lifetime, I'll be definitely looking at rental/investment properties.

seamus · 21-02-2018 10:12pm

spaceHopper wrote: »

Brexit!

Brexit!

Vulture funds exit maket after taking advantage of charitable tax loophole sudden increase in houses for sale after kicking out tenants

Brexit won't be anything compared to the last recession. There'll be a contraction in some markets and an explosion in others.

There aren't that many properties I'm being held by "vulture" funds, and in any case as you point out, these properties are occupied. The private owned and private rental markets don't operate in isolation. If you throw 10,000 tenants out and put those properties on the market, you still have 10,000 people looking for somewhere to live. It's all the one market.

Do you think property will crash again?

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