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Do you think property will crash again?

LambDev

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?

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Andrew Beef

There is no crash imminent. Price increases are being driven by fundamentals this time; there is simply huge demand and a lack of supply, with no sign of meaningful supply coming on stream. If you advertise a place to rent out, 30 punters arrive at your door. And rental yields aren’t at dangerously low levels.

bilbot79

ittakestwo wrote: »

I can't see it crashing anytime soon. I saw the last crash. Building 90k houses a year in 07 was insane. If we had a European average for our population it would have come in around 25k. Also in 07 personal debt (which is mostly made up of morgages) was at 100% of GDP and was growing at 30% per year and this had to end in a bang. Europe had an average of 60% and growing at 10% then and economists were giving out about how unsustainable Europe's numbers were which made ours look ridiculous.

However now there is no building boom, in fact the construction industry is below that of Europes in terms of our GDP. Personal debt has been falling in the last few years so I can't see what can cause a crash just now as from a macro piont things don't seem to bad.

Sure intrest rates could rise but Europe's economy is still weak with an aging population and ridled with debt so surly could not handle a quick rise although most would say they do have to come up away from their exceptionally low level. If Ireland lost its coperation tax advantage then I think it could crash as a lot of money would leave.

I think there is a lot of money in this country and this is driving prices up.

Your figures for then are super impressive. Do you have the comparative figures for now!?? That's what's really interesting.

Bob24

theboringfox wrote: »

Agree. And there are controls on lending from Central Bank that were not there in 2007. Of course as an open economy we are vulnerable to shocks but that would affect overall economy. Key is people don't stretch themselves with a mortgage they can't afford and CB rules help there.

The issue in market is supply.

Fully agreed. There could well be a crash as we are vulnerable to economic shocks and demand for housing is directly connected to economic performances, but (at least in the current situation) it wouldn't be in good part due to crazy lending practices as we had last time.

Having said that, the government has been playing a dangerous game quite a few times in the past few years, either acting to force the hand of the central bank to relax lending rules or taking measures obviously targeted at circumventing those rules.

theboringfox

Miss Russell wrote: »

That's not fair given market conditions.
People have to live somewhere. Unless you want to live on the streets, the only alternative to buying is renting which is completely dysfunctional the last few years. Even 2 bed apartments in Dublin are €2,000+/month now.
I work in Dublin city centre so can't live in Longford or Leitrim where property is cheap.
Why do I "deserve to be stung" as you put it?
What is the alternative?

Agree. And there are controls on lending from Central Bank that were not there in 2007. Of course as an open economy we are vulnerable to shocks but that would affect overall economy. Key is people don't stretch themselves with a mortgage they can't afford and CB rules help there.

The issue in market is supply.

Pawwed Rig

Miss Russell wrote: »

Why do I "deserve to be stung" as you put it?
What is the alternative?

We just have to play the hand we are dealt. It is pure luck whether you are in a position to buy at the low points are the high. Most people have the funds when property is high for obvious reasons.

Miss Russell

KwackerJack wrote: »

I had a lot of sympathy for people in the last crash but for this one I will have zero sympathy and why? Well if we haven't learned our lesson then we deserve to be stung again.

That's not fair given market conditions.
People have to live somewhere. Unless you want to live on the streets, the only alternative to buying is renting which is completely dysfunctional the last few years. Even 2 bed apartments in Dublin are €2,000+/month now.
I work in Dublin city centre so can't live in Longford or Leitrim where property is cheap.
Why do I "deserve to be stung" as you put it?
What is the alternative?

Bob24

KwackerJack wrote: »

Instead of protesting against lack of supply, vulture fund's or media brainwashing we rush to hand over nearly half a million for a 3 bed semi and worry more about the soaps, Big Brother and that family who are famous for nothing bar their massives rear ends!

Vulture funds are a side effect of bad lending practices and imprudent borrowers. I don't like having them around but I am not sure what there is to protest about.

The rest, yes we should all complain about the lack of supply and the media being a hype machine (and many people do including myself very regularily). But in the mean time people still need a place to live and protesting doesn't deliver one. So I personally have much more sympathy for someone who stretches their finances to buy a house to live in next to their job now than someone who got 5 investment properties far from anything in ghost estates to be during the mid 2000s with 100% mortgages (and quite many people did - I agree we are not going the right direction but at least for now we are far from being back to that madness).

KwackerJack

Yes

If you think different call the coast guard and ask them to pull your head out of the sand!

I for one cannot wait, it will be great buying a house I want and not one I can "just afford"

I had a lot of sympathy for people in the last crash but for this one I will have zero sympathy and why? Well if we haven't learned our lesson then we deserve to be stung again.

We're buying overpriced dog boxes and again were blind to the fact we're spiraling back into debt and that the media and estate agents are brainwashing us into paying more.

Instead of protesting against lack of supply, vulture fund's or media brainwashing we rush to hand over nearly half a million for a 3 bed semi and worry more about the soaps, Big Brother and that family who are famous for nothing bar their massives rear ends!

This time around we can't blame the banks or the black n tans in the Dail. We are the people and we should be in control.

Imagine, just under 100 years ago we defeated an Empire, but today we're taking it up the rear end and we seem to have no problem with that!!

James 007

You are probably the perfect age for the next crash, assuming it happens in the next 8 to 15 years, then 30 to 37 age would suit your buying time perhaps. Brexit might be the only ripple of concern that could bring it forward to a sooner date.

Bob24

seamus wrote: »

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.

Indeed.

Actually my GF and I are about to buy a property for which an American vulture fund which took over his mortgage forced the sale upon the owner, and in our case this is going to stress the local property market even more: we are buying a 3 beds which used to accomodate 3 tenants in a very high demand area, and only the 2 of us will be replacing them as owner-occupiers while just freeing-up the one bedroom apartment we are currently renting in the same area.

Pawwed Rig

Ush1 wrote: »

I know people who bought quite a few properties with cash during the crash, they've done very well with those investments.

Maybe but think about places like Detroit. If prices collapse again we could have ghost towns never mind ghost estates.
A loss of the 12.5% rate* for example could put Ireland's future as a viable business destination in jeopardy. With little indigenous industry of our own then demand for resi property would collapse and we would be left with derelict high rise in the city centre

*or Cork finally becoming the real capital.

Ush1

Pawwed Rig wrote: »

It took a lot nerve to invest a material amount of wealth in rental properties during the crash. Do not forget that the euro was in trouble, there was talk of the economies of Italy and France collapsing like Portugal, Spain, Greece and Ireland. A return to the punt was muted. Government bonds were essentially junk. There is no guarantee of a bounce back in property prices should they collapse again.

We are blessed to be where we are today tbh.

Nothing is guaranteed but property/land in the right area is one asset that generally appreciates and can make money.

I know people who bought quite a few properties with cash during the crash, they've done very well with those investments.

ittakestwo

I can't see it crashing anytime soon. I saw the last crash. Building 90k houses a year in 07 was insane. If we had a European average for our population it would have come in around 25k. Also in 07 personal debt (which is mostly made up of morgages) was at 100% of GDP and was growing at 30% per year and this had to end in a bang. Europe had an average of 60% and growing at 10% then and economists were giving out about how unsustainable Europe's numbers were which made ours look ridiculous.

However now there is no building boom, in fact the construction industry is below that of Europes in terms of our GDP. Personal debt has been falling in the last few years so I can't see what can cause a crash just now as from a macro piont things don't seem to bad.

Sure intrest rates could rise but Europe's economy is still weak with an aging population and ridled with debt so surly could not handle a quick rise although most would say they do have to come up away from their exceptionally low level. If Ireland lost its coperation tax advantage then I think it could crash as a lot of money would leave.

I think there is a lot of money in this country and this is driving prices up.

Claw Hammer

koheim wrote: »

There will never be a crash like 2008, that was extraordinary, real estate will never drop 60-70% value in a couple of years like back then.
Ireland never built more houses than in 2007, think it was 90 000? Guess when prices reach peak? The same year... The more houses we build the more expensive they will get, because cost will only go up (but rent will of course drop).
Ireland is gearing up to build 30-40K houses per year, prices can go only one way the next 10 years. People mention a raise in interest rate, but remember that Irelands banks already charge 100% more than the average European bank to its customers. Even if ECB rates go up, I can't see banks raise interest rates to customers.

Its all politics and a direct result of the right wing policies of FG and FF, this happens when you privatize housing. Nothing will change with the current policies...

The property market is cyclical and the banks are pro-cyclical. There are always events which influence the economy. Sometimes they are negative, sometimes positive. Sometimes the negatives and positives cancel out, sometimes one or other overrides the other. War spreadig from the Middle East of Korea, Brexit or American protectionism, natural disasters, bad weather, revolution in somewhere like China or India and you would have the mother of all collapses.
As night follows day, boom follows bust.

Pawwed Rig

Ush1 wrote: »

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.

It took a lot nerve to invest a material amount of wealth in rental properties during the crash. Do not forget that the euro was in trouble, there was talk of the economies of Italy and France collapsing like Portugal, Spain, Greece and Ireland. A return to the punt was muted. Government bonds were essentially junk. There is no guarantee of a bounce back in property prices should they collapse again.

We are blessed to be where we are today tbh.

bilbot79

This state will do whatever it can to maintain high prices. Name for example.

If it crashes it'll be in spite of the states efforts and because it's such a powerful actor in the process...it could be a while...

riclad

The last crash was caused by speculation,
crazy lending by banks, and the absence of regulation by the central bank.
EG if you earned say 20k, you could borrow 150-200k,
the attitude was sure prices will go up and theres no risk.
Also too many casual landlords were borrowing to buy rental propertys .
We now have fairly strict rules on lending , you can borrow maybe 3-4 times your salary .theres no 100 per cent loans .
Lets say prices go down by 10-20 per cent ,this will not cause a crash.
Prices are mainly going up in urban area,s where theres a shortage of houses for sale .
no one really knows what the exact economic cost of brexit will be for the irish economy .
The uk may come up with a trade deal with ireland to avoid
high tax,s on imports or exports .
in The boom prices went up all over ireland, not just in the citys and in urban area.s
Our economy now is not based on the state of the building industry .
So i think the chances of a crash happening are small ,
we might see a slowdown in the market,
in that price rises will be small .
The central bank and the department of finance has learned from the
mistakes of the boom.
maybe some people want a crash to happen as it will mean they will
be able to buy a house cheaper than 2018 prices .
if prices go down by 10-20 per cent most people will just continue to pay their mortgage .
It,s not like theres 1000,s of empty houses on the rental market.
When prices went down in 2007 by 50-60 per cent some people just stopped paying the mortgage,maybe their
the income was reduced, its tough to be paying a loan for 200k, on a property worth 100k.

koheim

There will never be a crash like 2008, that was extraordinary, real estate will never drop 60-70% value in a couple of years like back then.
Ireland never built more houses than in 2007, think it was 90 000? Guess when prices reach peak? The same year... The more houses we build the more expensive they will get, because cost will only go up (but rent will of course drop).
Ireland is gearing up to build 30-40K houses per year, prices can go only one way the next 10 years. People mention a raise in interest rate, but remember that Irelands banks already charge 100% more than the average European bank to its customers. Even if ECB rates go up, I can't see banks raise interest rates to customers.

Its all politics and a direct result of the right wing policies of FG and FF, this happens when you privatize housing. Nothing will change with the current policies...

seamus

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.

Ush1

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.

Gravelly

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.

Electric Sheep

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.

[Deleted User]

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.

spaceHopper

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

emo72

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.

Supercell

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

theboringfox

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.

spaceHopper

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

Claw Hammer

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.

Samuel T. Cogley

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.