Originally Posted by JamesMason
There will be further "cooling" of the market IMO. There is an election looming with housing one of the main issues. Also, Brexit is hardly sewn up - and the fallout at home, in the EU and UK has yet to be seen...we are not out of the woods. Dublin prices are falling as well, there can be no denying that.
Not to veer too far off topic into economic speculation, but you have raised a key point on Brexit and the impact the wider economic and political climate will have on the market. The asset management sector appears to be in bubble territory which is particularly evidenced by the hyper valuations of tech companies (Google, Facebook, Microsoft etc.) - the bubble arises from the demand for investment products which reference the performance of the equities of these companies (regulators cannot even measure how deep the rabbit hole goes), meaning an increase in the share price of these tech companies results in an increase in the value of an investment which directly or indirectly takes exposure to such companies. The concerns that there is a bubble is seen in regulatory publications being issued at the moment (calling for greater scrutiny into the shadow banking industry).
Of course, while the going is good, everyone has FOMO and wants a piece of the pie so no one knows when to press stop with their appetite for investment products which reference the performance of these big tech companies. The nature of the bubble is that no one knows what will cause it to go pop, when it will go pop and whether they would be impacted (their managers would tell them that they are satisfied with the liquidity of the investments).
Notwithstanding all of this, to take it back to Irish property - the institutional investors are building offices which are then being sold or let to the likes of Facebook, Google etc. and the institutional investors are also building apartment blocks to rent to the employees of these companies.
Therefore, if the asset management bubble pops, the hyper valuations of these tech companies could potentially take a hit meaning, at the very least, a freeze on expansion and in worst case scenarios, large job losses (most of these workers are non-Irish and likely are renting so would have no stake in Irish property). The institutional investors would be left with apartment blocks which cannot be rented out or at least not rented out without significant drops in asking prices for rent and a lot of the shiny offices will sit idle. They would be the big losers in the property market in such a scenario. Meanwhile, Irish people are only limited to borrowing 3 1/2 times their salaries so have not lost the run of themselves and over-leveraged beyond their means (most likely). Accordingly, the impact of this potential bubble popping would likely not cause seismic shocks to Irish property prices.