ESRI: Irish House Prices Overvalued by 10%, Risk of "Painful Correction"

Asset prices follow global liquidity, when 08 crash happend global liquidity fell off a cliff that what caused the deflation throughout the world. It took the central bank over a year and a half before the came up with Quantitative easing (printing money) to bail the system out. For context, Signature bank, Silicon Valley bank and credit suisse bank all failed in early 2022, a Bank lending arm was set up over night by the central banks to print money and be the lender of last resort to bail the banks out and save depositors. Printing money using QE programs to buy mortgage backed securities will do nothing bar inflate house prices and all assets.
My bet watch global liquidity, if that’s trending upwards, so will everything else including inflation so I wouldn’t be expecting a 08 deflationary crash

Who can say that a house is worth 200k, 240k, 300k?

Surely it's worth whatever someone is willing to pay for it?

House prices have been rising rapidly in this country for maybe 4 or 5 years now. Why are they now suddenly overpriced?

True, but there's only a problem when those buying the houses can't really afford them. Like in the Celtic Tiger days.

These days, the people paying daft money for houses more than likely have big incomes and good jobs. Plenty of savings. Of course these people could lose their jobs, but the way the economy is going now, it doesn't look likely anytime soon.

Let's be honest, which way do we think these already inflated house prices are going to go in 2025?

Yes.

https://www.esri.ie/publications/quarterly-economic-commentary-winter-2024

https://www.esri.ie/system/files/publications/QEC2024WIN.pdf

I can see that correction happening any day now.

If house prices collapsed tomorrow, it would be answering the prayers of many people up and down the country. Of course, that wouldn't happen in a vacuum, but if the choice is between being perpetually unable to buy a home whilst paying enormous rent for poor accommodation or seeing the whole thing collapse……

Well I don't especially want to see another 2008-2012 recession, but if I were a young man again, I'd probably think "f**k it" and take my chances.

No, it's a big purchase and most are funded by borrowing so it's worth what banks are willing to lend on it and what you are willing to put down as a deposit.

You are limited by your cash on hand and ability to borrow.

The banks are limited by, central bank rules, on how much they can lend to you and on the risk of default.

They have to ensure that you have sufficient equity in the house that if you default they can sell it and cover the debit. So of you bought for 400k with a 10% deposit and prices fell 15% and you default, they lose money.

If we had a credit crunch and falling house prices then you'd see an over correction so if they are 10% over valued they could drop 15 to 20% easily.

Timing it is impossible, if you are looking to buy - just do it and get on with life

Not a bubble. Not yet at least since prices are fully justified by rents. Before the last crash, rents though high for the time, did not keep up with house prices.

--->CREDIT<--- bubble

Yet again, nothing of substance is being said. I'll respond to anyone who offers anything of substance. If I don't respond, it means I believe you're talking nonsense.

Genuine demand for housing outstripping supply is not a bubble though, and prices returning to normal after supply catching up is not the same as a bubble bursting.