Comments on: Is the Irish Property Market about to Crash?

By: D

Wed, 15 Oct 2008 22:46:24 +0000

Also, I guess you’ll just have to trust me on the hindsight comment

You make an interesting point about experts though and I just thought of something else - the difference between in critical analysis and discourse between Ireland and the UK (where I now live). I think there’s far more raw information on the housing market available in the UK compared to Ireland - and far more critical analysis available about “fundamentals” and what it means for the market. Not saying its perfect, but I’d say I learned more here about property and market behaviour than I ever did from the media/”experts” in Ireland…do other ex-pats feel the same way?

By: D

Wed, 15 Oct 2008 22:30:04 +0000

“…will be worth at least double its equivalent in a field in Lucan, Offaly, or other crap places outside the pale” is probably true in relative terms, but in absolute terms every property in Dublin has a long way to go down yet IMHO. If banks are not lending (or more accurately, tightening up their lending criteria), then that’s less cash chasing more properties. How long can people hold out looking for the prices they want, as recession looms on the horizon and jobs continue to disappear? How long before the market can recover and what factors need to be in place to enable that to happen?

I am completely discounting what is apparently a way for the gov to prop up the market, in the most recent budget….if a bank doesn’t want to give you all the money you think you need, you have to ask yourself why.

I hope I don’t come across as gloating when I say all this. It’s not hindsight particularly either (though I was out about 18 months when predicting this bubble bursting to friends….) I’m a mid-30s Irish unashamed renter who lived in countries that went through a similar boom-bust as us, and who is concerned about his friends back home that bought in near the peak….

I do hope I’m wrong, but living outside Ireland now and looking in, I’m concerned as to how this is going to end for a lot of people.

By: ro

ro — Thu, 25 Sep 2008 09:29:41 +0000

No. I think you were right Janine. Once this has blown over, and people can look and think for themselves with regard property and its value, a house in Dublin city (its such a great city. I love it.) will be worth at least double its equivalent in a field in Lucan, Offaly, or other crap places outside the pale. See my previous post no. 38… I think it’s all to do with perceived value of the piece of land the property sits on.

By: janine

janine — Sun, 10 Aug 2008 20:56:14 +0000

Hindsight is a wonderful thing D That was just my hunch as someone who was buying their first home back in the summer of 2006. I don’t think that very many saw such a downturn starting so soon afterwards - even the so called experts! LOL Since I’m not in the market, I’m fairly out of the loop on property these days, I’d still stand by the general thrust of my argument that those living close to Dublin city centre will be least affected - but I own a home there so I accept that’s biased, and wishful, thinking!

By: D

Sun, 10 Aug 2008 15:00:40 +0000

“If you have bought anywhere remotely near the city centre, you have little to fear. Prices may well stagnate in the future, but unless transport improves radically, property prices close to the city are never going to collapse.”

I’m pretty sure, now, that this isn’t the case…..

By: William

William — Tue, 15 Apr 2008 13:05:24 +0000

I am a foreigner married to an Irish national. We’ve been forced to live in Belgium as Ireland was not affordable and too be honest pretty daft looking at price/quality. We looked and looked, hoping to find a nice property in Cork for the 250-300k mark. All we could get was either depressing old run down properties in areas we wouldn’t raise our children or glorified shoeboxes which were mass produced in the last 5 years by money grabbing developers who got away with it by your government and the buyers.

Now the IMF reported Irish property market is Europe’s most expensive and overrated market. I am just thinking basic law of economics tell that any excess will be corrected. It happened in the UK in the 80’s. It happens in the UK right now. It happens in the US right now. Ireland is nothing special, you can’t sustain this type of tulip trade. Over here, for 300k I own a magnificient property with a nice big garden, close to Brussels. Ok, appreciation is not 10-20 % per year, but at least I know that I can offer my family a roof over their head without being robbed for it.

By: Scott

Scott — Mon, 17 Dec 2007 01:05:47 +0000

The outlook for property throughout the Western world is bleak and Ireland is no exception. Whether or not the Irish property market ever picks up again, it will be only be for a brief period. The cause is simple: the period of continued economic expansion that has continued almost unabated since the end of World War II has been fuelled by an abundance of cheap oil. We are about to undergo a phenomenon called peak oil. Indeed, it is quite possible we have hit that point already. For those unfamiliar with the term, do a google search or watch one of the many documentaries on youtube. Put simply, peak oil is the time when demand for oil starts to outstrip our ability to supply it and goes into terminal decline. We would have reached this point already had it not been for economic stagnation in the 1970s. This had been caused by America reaching its own oil production peak and becoming dependent on Middle Eastern oil. When the Middle East decided to cut supplies to America and its allies in protest at the Yom Kippur War, the American economy (and, as a consequence, the European economy) became crippled. Today, it is the Middle East that is starting to show signs of a peak, and, when it goes into decline, there is nowhere to turn. There is nowhere on earth we can turn to that can replace the oil that the Middle East currently provides. Essentially, you can forget the mobile phone, i-pod, information technology, digital world that we currently live in. The world will start to become a much bigger place. Cheap flights will be the first thing to go, so enjoy them whilst you can. Car transport will be next. Its not simply that petrol will be more expensive in the future. Once petrol prices reach a certain point, we just won’t be able to afford to drive them. And who is going to buy something that is too expensive to run? The result is that car sales will dwindle and manufacturers will go bust. Even the richest among us will not escape this. After all, the design and manufacture of aircraft and cars is simply not economically viable to make for a select niche market. And who will maintain the road network, for this tiny minority? Forget the “I-Robot” vision of the future. America, in particular, will be hit very hard with people stuck out in “suburbs” which can be as much as 50 miles outside a major city and completely dependent on private car transportation to get anywhere. Ireland will not fare well either with practically no commuter public transport infrastructure outside of Dublin. Forget living in a house 5 miles or more outside of towns with no rail link unless you are prepared to resort to the horse and cart in future. Renewables or hydrogen will be not be an option. Nothing on earth can replace the energy yields that oil currenly provides. Switch to nuclear and we run out of uranium in 20 years. Switch to coal and you take us back to the 19th century, not to mention pushing global warming way past tipping point. Hydrogen, for its part, is a net energy loser: it takes more energy to make hydrogen than the energy it actually provides. It only stores energy. Forget your pension, unless you’re about to collect it in the next few years. If you’re in your 20s, 30s or even 40s, I doubt your pension will be worth even thinking about as the value of money will mean very little in the relatively near future. Furthermore, forget the value of your house. Ask yourself this: even without the issue of peak oil, could the value of properties continue to rise in the manner they have? Houses are no different from any other commodity - if their value continually outstrips inflation and the resulting wage rises, sooner or later first time buyers can no longer get on the housing market. When that happens, and it would seem that it has, the market starts to die off. As I’ve said earlier, money really will mean very little in the future. America’s once mighty dollar, for example, is a castle made of sand or, more precisely, paper. The Federal Reserve creates wealth simply by printing paper! It is not backed by gold, or anything else for that matter. Read up on the petro-dollar for more information on this topic. As the saying goes: when America sneezes, the world catches a cold. In essence, be prepared for some major changes in the near future, get out of debt and get yourself in shape physically. Once the last scraps of oil have been fought over, the next wars will be about how we will feed a world population of over 6 billion people in a world that can only support 2 billion (when you take away the input of oil into the production of food). Essentially, the value of your home will mean next to nothing in the future - it is NOT an investment for your retirement, it is a roof over your head and nothing more. Indeed, if you can get out of the property market and still make any money by doing so, do it now.

By: Mick

Mick — Sat, 24 Nov 2007 14:31:21 +0000

Johnboy:

Bang on. I haven’t visited this page for 12 months. See comment above. Even then (1 short year ago) it was nigh on impossible to convince friends of the impending meltdown. Bankers and Politiicans were in Election year bullshit mode. Post election today everyone is very much aware of the Snake-oil double dealing that has occured in the property market. The ordinary man in the street still haven’t realised that it was government endorsed yet. But that will come.

Every economist knows that these types of things have phases. The phase Ireland is in right now is SHOCK and DENIAL. As John highlighted, it was impossible to shut people up about Property 12 months ago. Now they know the facts and the fact is simply that it is just about impossible to sell a house in Ireland at the moment - FACT. There will be panic sells (way below perceived market price) etc, but in the main no-one is buying right now.

The next phase will be compulsary drops in price. Where builders are going bankrupt. Plumbers sparkies and brickies are given their books. It’s already rife, but their appears to be a conspiracy of silence in the media. Why? Because the media are a vested interest, they cull most of their profits from Property advertising !!!! Turkeys don’t vote for Christmas.

The silence is deafening. Even my mum has her fingers in her hears humming la la la la …. and she’s not even affected. Bertie was warned the naughty whingers that they are talking down the economy. Hmmm what a fabulous media coup that is. Are we to believe that the French resistance were talking down Nazism? That Gandi was talking down imperialism? That
Dev and Collins were talking down British Home Rule. “Talking Down” ? that argument can be rolled out to justify any highground it really can. Rather than “talking down” how about “questioning the status quo” how about “questioning the underlying fundamentals of the economy”? …….Are the ISEQ investors that are fleeing like Rats from a sinking ship naysaying doom-mongers? 50% drop on Irish bank share prices since January?? Did wee Molly in Mullingar’s comment in the pub last Christmas that “the housing industry is a scam” create a Butterfly wing Hurricane scenario??

Anyone with half a brain could see this meltdown coming. Ireland and the US have been building houses people do not need because money was cheap… simple as that. Fuelling the middle classes with a superior sense of becoming sofa millinonaires at the expense of first time buyers.

The circus has left town and hopefully the middle-classes are beginning to sense that familiar aftertaste of simple greed.

Folks, you should check our a highly informed property forum called http://www.thepropertypin.com .

By: Johnboy

Johnboy — Thu, 22 Nov 2007 19:38:27 +0000

Well I think I can say with confidence the property meltdown ’er readjustment has begun in earnest. Many people who have bought within the last 3 years are already in negative equity (not a problem unless you or your boss need to move to another town/city/country), and are now committed to spending the next 30-35 years of their working lives for an overvalued, rapidly devaluing millstone ‘er asset.

Friends of mine have been trying to sell their Sth. Co. Dublin for the past 6 months. The asking price of €1 million has been utterly rejected by the market. They’ll be lucky to shift it @ €750k. That’s a quarter of a million in 6 months!

Those that got into the market pre-2003 will be ok imo, but for those poor folk who belatedly decided to become property millionaires the pain has just begun. Further interest rate rises, a construction sector collapse, increasing unemployment and the return of mass emigration are but a few years off.

This may sound like abject gloom ‘n doom. Reality is kicking in, the party’s over folks and the hangover is gonna be a killer.

By: John

John — Tue, 06 Nov 2007 11:11:17 +0000

The thing that annoys me most at the moment, is that you cannot get people to talk about whats happening. Everyone is in denial, no one will talk about the property market, these same people you couldnt shut up a few years ago, like the news papers and your neighbors. Also, an economist told me that there is no such thing as a ’soft landing’ its all pure spin by the government (who also seem to be in denial). The figures that we are seeing now, are old. That is the thing with statistics, so you can add a few % onto what ever the papers are printing (those papers who dare to give you a little info on what is happening) . Property as far off as Dubai is falling (thanks to the Financial Times for telling the truth), and people have borrowed on the value of their Irish homes to buy these places, which is very scary indeed. As far as banking goes, we have only seen the early casualties of the sub-prime debacle, there is more to come. There is a storm coming, so its best to prepare for it rather than pretend its not going to happen. Get as much advice from your Financial Institution as possible on how to get through this tough period.