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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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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...

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.

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...

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.

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.

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.

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.

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.

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.

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.

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!!

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).

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?

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.

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.

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.

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.

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.

Gravelly

Andrew Beef wrote: »

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.

This is, literally, exactly what was said before the last crash. Pretty much word for word.

Graham

Gravelly wrote: »

This is, literally, exactly what was said before the last crash. Pretty much word for word.

Apart from there was plenty of supply back then, a multiple of the current supply and that had been the case for some time.

Andrew Beef

Gravelly wrote: »

Andrew Beef wrote: »

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.

This is, literally, exactly what was said before the last crash. Pretty much word for word.

No it isn’t, and that’s the mistake that commentators are making now.

In the run up to that last crash, credit was being thrown around like confetti; now that’s not the case. Similarly, far too many properties were being built; now far too few properties are being built. And before the last crash happened, rental yields (i.e. rent relative to property value) were ridiculously low; now they’re reasonable enough.

The market as it stands is nothing like 2006/2007.

Bob24

Andrew Beef wrote: »

No it isn’t, and that’s the mistake that commentators are making now.

In the run up to that last crash, credit was being thrown around like confetti; now that’s not the case. Similarly, far too many properties were being built; now far too few properties are being built. And before the last crash happened, rental yields (i.e. rent relative to property value) were ridiculously low; now they’re reasonable enough.

The market as it stands is nothing like 2006/2007.

This.

It doesn't mean we can't get a crash but it would "only" be caused be something like by an economic slowdown causing lowered demand, potentially combining with overshooting supply for some time.

Not the same as people having taken several 100% mortgages to buy houses in places they had never heard of before the only way is up.

i.e. last time we combined a worsening of economic fundamentals and crazy speculation and lending rules. For not we don't have the later and fundamentals are good. The second aspect will probably cause some worries at some point (it is difficult to know when), but for now we haven't gone nearly as mad with the first point and hopefully we can keep it that way.

strange_duck

housing is only gone very expensive again in areas with economic growth , houses in rural ireland are still worth little more than half what they were in early 2007 , im not talking about meath or kildare which is in the commuter belt but the difference between today and the last time is four bed bungalows are not making over 250 k in rural cavan today , they were in 2006 as credit was approved for anything which was bricks n mortar , location didnt matter

ive learned an important lesson in the past year , very few can outsmart the market , i bought an apartment in late 2015 and sold it for a 37% gain in march of 2017 , thought i could turn around and buy two cheaper apartments somewhere else , turned out i couldnt as no property moves up or down in isolation , i was better i held on to what i had for good

oceanman

strange_duck wrote: »

housing is only gone very expensive again in areas with economic growth , houses in rural ireland are still worth little more than half what they were in early 2007 , im not talking about meath or kildare which is in the commuter belt but the difference between today and the last time is four bed bungalows are not making over 250 k in rural cavan today , they were in 2006 as credit was approved for anything which was bricks n mortar , location didnt matter

ive learned an important lesson in the past year , very few can outsmart the market , i bought an apartment in late 2015 and sold it for a 37% gain in march of 2017 , thought i could turn around and buy two cheaper apartments somewhere else , turned out i couldnt as no property moves up or down in isolation , i was better i held on to what i had for good

you can outsmart the market but you have to know where its heading and when its going to turn.....not easy though

Hector Savage

Course it will crash again, you think it can just grow and grow and grow ?

Infinite growth based on finite resources will always crash.

Miss Russell

Hector Savage wrote: »

Course it will crash again, you think it can just grow and grow and grow ?

Infinite growth based on finite resources will always crash.

Depends what you mean by 'crash'. The likes of that was seen in 2008-2011 is what I would classify as a crash.
I definitely think prices can go down in the future, but another crash (50%+ drop in prices over a 3-4 year period) is simply not going to happen, not in the cities and big towns anyway.
I agree with you that infinite growth in prices is not possible, but that doesn't prove a crash is on the way. I don't understand that logic.

Bob24

Miss Russell wrote: »

Depends what you mean by 'crash'.

That's the thing ... people should define what they mean by crash.

strange_duck

oceanman wrote: »

you can outsmart the market but you have to know where its heading and when its going to turn.....not easy though

well to elaborate , my intention was to have sold my residential BTL and buy a second commercial property , i had one shot only at a specific property and missed it due to heeding my constipated solicitor , he was unhappy about aspects of the tile , i should have ignored him as solicitors go into panic mode at anything which isnt pure vanilla , ,missed out on a takeaway in finglas ( subway and four star pizza branch ) for 182 k with an annual rent of 18 k ( agreed in 2012 so huge scope for increase ), went to 181 k on it but had planned to go to 200k until solicitor rang me the day before auction to express his reservations , i then put a 10% discount on my limit to cover potential expenses which were hidden and so missed out , that was the only deal which was superior to what i sold so now im worse off than i was before i sold

my individual foolishness aside , the general lesson is that most wont know for sure when the market has topped or bottomed , beit a person looking to invest or just someone looking to buy a home

Graham

Hector Savage wrote: »

Course it will crash again, you think it can just grow and grow and grow ?

Infinite growth based on finite resources will always crash.

I think the cold weather has frozen my brain.

Surely the price of a finite resource is only ever going to trend in one direction while there is demand for that resource

Surely infinite growth that crashes isn't infinite growth.

strange_duck

Bob24 wrote: »

That's the thing ... people should define what they mean by crash.

a lot of people were proved wrong this past number of years , check old posts from around 2012 and anyone who suggested they were going to buy a two bed terraced house in the likes of stoneybatter for 210 k was lampooned , smug predictions about houses eventually making 100 k in dublin 4 were abound ( though that was mostly over at crank central " the property pin " ) , the same people are now vexed with themselves and want a crash to get in this time round

the last crash was part of a perfect storm of domestic and international economic carnage , even with that reality , we overshot the bottom here by a distance by 2012 , especially in dublin where anyone who bought a two bed terraced house in the likes of oxmantown road stoneybatter is today realising yields of 12% easily having bought for a little along with 200 k