Irish Property Market chat II - *read mod note post #1 before posting*

Where is this crash coming from?

The idea that anyone in that poll is cheering for a crash is the biggest strawman of the day.

As I said before, price rises due to market scarcity impact almost the entire market. There is very little value to be had whereby your PPR has gone way up but the area you want to move to has not.

"instantly"

Nobody has claimed instantly, or a sudden fall or crash in prices. The poll claimed that 60% of people think that Dublin house prices should be cheaper, even if it means their own home falling in value. A crash/recession/instant price fall was never mentioned, only by yourself as a strawman argument.

People with existing mortgages can also benefit from rising property prices, as they can more quickly move into lower LTV bands => lower interest rates on their mortgages. Also if someone is moving to a property of a comparable value, stable or rising prices means they can move with no risk of negative equity, which may not be the case if prices have fallen. People looking for an equity release also benefit from high (and increasing) property prices.

It's overly simple to say falling prices only benefit people trading down or out (i.e. selling without buying) of the market.

I know of one particular example also where a family here sold their house to pay for their child's (late 20s) cancer care at a specialist location in the US. Had property prices fallen, they would not have been able to get enough money from the sale of their property to get that specialist care. It's definitely a very niche example, but it is another example of when someone might sell a property and benefit from higher prices without treating their property as a financial asset ordinarily.

That is an extreme niche example

how so? It's one reason among thousands why someone selling their house benefits from high house prices.

The notion that increasing house prices is zero benefit to homeowners applies only if one is selling up to buy an identical house next door.

P

Ok, if you believe a poll like that carries any weight then I actually feel sorry for you. Classic head in the sand stuff.

And to say that someones home increasing in value has no advantages to them too. What are you on.

Your need to be right in your own head is stronger than your need to be objective. So you are blind to anything else but your own single argument.

Here are just a few things that are good about your home rising in value, besides those mentioned by others in the post above.

• Increased Equity: A rise in home value means the homeowner builds equity, providing a financial cushion and potential borrowing power.
• Profitable Investment: Rising home values can result in profitable returns if the homeowner decides to sell in the future, especially if they bought the property at a lower price.
• Improved Net Worth: As the home's value increases, the homeowner's overall net worth also grows, contributing to long-term financial stability.
• Better Loan Terms: With higher home value, homeowners may qualify for better loan terms and interest rates if they decide to refinance their mortgage.
• Enhanced Creditworthiness: Increased home value reflects positively on the homeowner's creditworthiness, potentially opening up access to other financial opportunities.
• Sense of Security: A rise in home value provides homeowners with a sense of security and stability, knowing that their investment is appreciating over time.
• Potential for Upgrading: Higher home value may enable homeowners to afford upgrades or renovations, further enhancing their living space and quality of life.
• Increased Market Appeal: Rising home value makes the property more attractive to potential buyers, increasing the likelihood of a quick and profitable sale if desired.
• Wealth Accumulation: Appreciating home values contribute to long-term wealth accumulation, serving as a valuable asset in the homeowner's financial portfolio.
• Potential for Generational Wealth: Higher home values can be passed down to future generations, providing a foundation for building generational wealth and financial security.

And also a few reasons why it would be bad home owners if their property value was to fall

• Loss of Equity: A decrease in home value results in reduced equity for homeowners, impacting their net worth and financial stability
• Negative Equity: Falling home values can leave homeowners with mortgages worth more than the value of their homes, leading to negative equity and financial strain
• Difficulty Selling: Decreased home value may make it challenging to sell the property, especially if the homeowner needs to relocate or downsize
• Impact on Borrowing: Reduced home value can limit homeowners' ability to borrow against their home equity for renovations, emergencies, or other financial needs
• Negative Wealth Effect: Declining home values can lead to a negative wealth effect, affecting consumer confidence and spending habits, which may contribute to economic slowdowns
• Increased Foreclosure Risk: Lower home values increase the risk of foreclosure, as homeowners may struggle to make mortgage payments or refinance their loans
• Limited Access to Home Equity Loans: Falling home values can restrict access to home equity loans or lines of credit, reducing homeowners' options for leveraging their property for financial needs
• Diminished Retirement Savings: Homeowners relying on equity from downsizing their home as a significant portion of their retirement savings may experience diminished funds if home values decline
• Community Decline: Decreasing home values can lead to community decline, affecting schools, local businesses, and infrastructure, potentially reducing overall quality of life

Now do you still think a poll asking if home owners think property prices should fall would show over 60% of them saying yes and not include a big proportion of them you are just saying yes for the sake of virtue signalling.

"Almost nobody decides to sell their PPR and then rent indefinitely, so they almost always end up buying again. So any gains they have made from asset inflation are offset largely or entirely by inflation in the rest of the market."

This is not true. It would only apply if you're buying the house next door.

In real money terms, property increases are not uniform. Take for instance someone living in a 3 bed semi in Dublin who wished to move to a comparable house in Meath. A 10% rise may mean their 500k house is now worth 550k, but the Meath house has increased from 300k to 330k. Increasing property prices has worked in that person's favour.

Broad house price rises are more likely in nominal terms than % rises.

The idea that 500k goes up 50k and 300k only 30k is not reflected by the market over these past years.

Property price inflation has been double digits outside of Dublin and typically lower priced areas, compared to in Dublin which has been single figure growth or stagnant for the past few years, depending on sub market. The gap in prices is narrowing, price inflation is higher in cheaper homes at lower end of the market.

If you property increases in value it can be used as security for a loan (not just mortgages etc). To say "net worth or built up equity is equally meaningless" is inaccurate. A financial institution will offer loans based in some instances on the assets the applicant has to offer as security/collateral on the loan.

If a property is in positive equity to a value greater than the value of a future loan or even just the remaining outstanding balance on a mortgage is all the financial institution cares about.

While you may have more buyers at lower prices two factors need to be considered for this to happen (1) how do you lower prices? if you increase min specifications of properties eg BER etc somebody has to pay for these costs. (2) if property prices fall existing mortgage homeowners will be disproportionately affected as they may go directly into negative equity and with that you will see a stagnation of the property sector. How many people where in negative equity following the financial crisis who could not trade up (as family grew etc) because of negative equity.

Its a bit like the marketing material from the celtic tiger where the buyers were marching down the streets with bags of shopping from the high street after there home purchase. That worked out well

A home is highly leveraged purchase, it should not be used as a vehicle for further loans. Most owners have learned that lesson from the last crash.

Most buyers buy once

Most homeowners purchased far below current prices

Its in homeowners interests to have property values stable and affordable thereby eliminating/reducing the risk of a price shock thereby reducing the risk outlined by @SharkMX

Nothing coming in south..this 3 bed apartment was bought in 2018 for 383k…listed at 450k..current offer 525 k !

Madness

https://www.myhome.ie/residential/brochure/apartment-21-carmanhall-court-sandyford-dublin/4772165

Very few new builds are actually for sale and I believe only about 6% of new builds are bought by private buyers.

So prices for new builds available to joe public for purchase will inflate, because of demand.

Very few. The proportion of people in negative equity is vastly overestimated time and again

I doubt prices will fall ! The reduction in interest rates will fuel the prices further....see what happened in UK. Prices dipped due to high rates and are bouncing back slowly in UK as they will start to reduce rates too. The biggest risks taken are by people who have purchased beyond their means or have gone full in with very high mortgage or have bought a keep due to lack of supply.

The argument that negative equity stops people trading up is a fallacy - those people most likely to go into negative equity never had much equity to begin with, hence they ended up in negative equity from a price drop. These people are least likely to trade up because even before a price drop they never had equity.

The people most likely to be mover-purchasers are those with significant savings or equity, usually equity. If prices fall across the board but you still have equity in your home you are just as likely to trade up as the gap between your home and that you want will in most cases have narrowed in nominal terms.