Is the Irish Property Market about to Crash?
Is the booming property market in Ireland finally in trouble? After a particular fervent Spring house buying frenzy, there was talk of the prospect of a soft landing at the start of July. However, speculation regarding the housing market has gone into overdrive throughout the traditional summer slowdown period. Can all this attention really be explained by editors needing to fill column inches, and property junkies having too much time on their hands during sleepy August?
The excellent Ask About Money forums are always debating issues surrounding the property market. However, the Current Public Sentiment towards the Housing Market thread warrants special attention. At the time of writing, the discussion contained over 2,000 posts, and the consensus to date is that there are major changes afoot. Posters have reported evidence of the asking prices for some properties dropping, and some are considering selling up to maximise their capital gains now and going back to renting.
Eamon Quinn’s article in the last edition of the Sunday Business Post entitled “Brokers predict major slowdown in housing market” added fuel to the fire. Gone was the talk of soft landings. Mortgage Brokers, with constant access to mortgage application data, are well placed to detect the first signs of trouble in the property market. The Independent Mortgage Advisers’ Federation are predicting no growth in houses prices next year, and suggest that prices could even fall.
Of course, this is the umpteenth time that the housing market slowdown has been forecast. Time and time again, property prices have surged regardless. While newspaper front pages and the man on the street can surmise endlessly about the state of the property market, only those on the ground will detect notable fluctuations first.
Winds observed recently that on house hunting at Daft, several properties did not show an asking price. Instead they were marked “Price on Application”. My mother, a complete myhome.ie addict and property market junkie since the start of the year, detected something awry as far back as May, a bit early for the summer slowdown. She announced one evening that she had this feeling that the market had slowed down a lot. This was based on daily analysis of My Home and frequent observation of the For Sale signs in our area. She had seen that properties had their For Sale signs and My Home adverts up a lot longer than they used to.
An estate agent told me recently that he was glad that the crazy New Year rush had finally abated, so perhaps we are just seeing an automatic correction. In 2005, the first half of the year was slower and the market picked up greatly in the second half. This momentum increased further throughout the first half of 2006. In prime Dublin areas, house hunters were typically bidding on houses immediately after just a quick initial walk round! This hyperactivity could never be sustainable in the long term.
The recent spate of interest rate hikes will have a major effect. So many are mortgaged to the hilt already, and first time buyers will find it even harder to get on the ladder unless prices fall. There is evidence of investors starting to get out. With pathetic rental yields, rising interest rates and increasing unease within the property market, the astute appear to be opting to take their massive capital gains and run.
Then there is the immigration effect. While I had presumed that the vast majority of migrants are renting, Young Hearts Crying reported recently that a significant chunk of mortgage applications could be coming from non-Irish nationals. When our economy finally cools off, if these migrants head off to stronger economies, that could further impact property prices here.
Personally, I can never see the central Dublin property market crashing. Demand is just too strong and supply too low. The Irish are obsessed with owning their own home, and owning a house if at all possible. While so many new builds are now apartments, getting anyone other than singletons, young couples and investors to warm to these requires a major shift in traditional attitudes. This social change is not helped by the fact that most of these apartments are glorified shoeboxes. With Irish life still revolving around Dublin, many are forced to endure ridiculous daily commutes from far flung commuter counties, just to afford a reasonably spacious home.
As far as Dublin is concerned, while the boom cannot last forever, I think there is only serious cause for concern if you paid a crazy boomtime price for an apartment on the furthest outskirts of Dublin. 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.
August 14th, 2006 at 7:43 pm
Nice post.
I talk to people regularly about the property market (who doesn’t?). I also do some research on the residential new build market as part of some work I do for a number of companies.
I find it amazing that people still know the price of everything and the value of nothing. Recently I was walking with a friend who is quite deeply involved in the new build sector and after discussing (or as he pointed out, re-discussing) whether prices are set to fall, I asked him one question - are house prices over-valued? He thought for a minute and had to reply yes.
As my friend reminded me on that occassion, I have believed for quite some time that prices have to come down (cry wolf syndrome
).
People should realise that the longer the period of above trend growth in prices, the more likely that any reversion to the mean will overshoot to the downside. For anyone who doesn’t believe this take a look at the Japanese property market which declined for over a decade after a long period of sustained growth and speculation. (Yes Japan may have had other problems, but the Irish psyche seems to think that property is a one-way bet - ‘It couldn’t possibly happen here. Sure we’re the Celtic Tiger’.)
I’m quite sure that many of those who bought during the last couple of years are going to feel further pain over the coming months as interest rates rise to offset inflation. Recent growth rates across the EU only strengthen the possibilites of further rate hikes by the ECB.
I think that yor views WRT Dublin may hold some water but if there is any major slowdown in the market your going to see big problems everywhere because the economy has become so relaint on the construction sector. It’s really a house of cards were talking about.
August 14th, 2006 at 8:23 pm
Hi Richard,
Thanks for the impressive comment - I might copy and paste it and add it as a post in its own right - it beats the junk I put up here any day!
I agree with you about the “house of cards” in the main. Our economy is hugely reliant on the construction sector. My clever economist sister tells me that roughly an eighth of workers are directly employed in construction. So, if the crash does happen, we’re all in trouble!
I can see prices in prime Dublin locations stagnating for a period, but I just think that the fundamental demand will always be strong enough to prevent an actual crash. Houses will be slower to sell, and vendors won’t be getting the 10%+ premium on already outlandish asking prices, but the market should still hold up fairly well.
I take your point about houses being over valued, but what are first time buyers supposed to do - wait until houses become good value before getting on the ladder? You could be waiting a very long time for that! I am horrified by the asking prices at the moment, but I want a home so I have no option but to pay those prices. If I don’t, there is a long queue of people waiting to step in.
Even while I do not think the whole market is collapsing around us, I do think that prices cannot get much higher in some sectors. I feel I am buying at the peak, but I just can’t take the chance of waiting around for prices to fall. People thought they were paying top whack a year ago and look what happened! If someone held back then, the chances are they priced themselves out of the market as a result. Even if a crash does happen, it’s always going to be a drawn out process in a property market, and I can’t afford to hang around a couple of years (best case) in the hope that prices may be a little more reasonable.
August 14th, 2006 at 8:47 pm
Hello Jannie
I feel for you if you face the predicament of buying a house. The good news is that if you are happy to live in the home you buy for the next number of years and you don’t over-stretch yourself with debt then there’s really no problem. Short term prices wont really bother you.
I can tell you that there are a large number of speculators (many of whom would not be sophisticated investors) in the market and many are leveraged very highly. The big problem is that their debt is being financed by the equity they have built up in, yep you guessed it, property. So the risk is magnified by the lack of diversity in many investment portfolios. I have to wonder if Irish property will suffer a similar fate as Dutch tulips!
Best of luck with your house-hunting!
August 14th, 2006 at 9:25 pm
I have to say my chief concern on the day was Kildare being suddenly West County Dublin. But the whole thing with POA is also interesting - it speaks of hedge betting.
August 14th, 2006 at 10:44 pm
You said “pathetic rental yields”, that is not my experience. I had to re-rent an appartment recently after 3 months (problems with the tenants). I thought I was doing well with the first rent (the first people in the door offered me cash on the spot), but I had no problem renting it again at a higher rent. Again it was almost the first people through the door.
From other people who own and rent in teh building that I have talked to this is not unusual. The rental market is actually booming at the moment. My mortgage is covered, and then some.
There were 19,000 new immigrants from ascession states last month. A new record. They all have to live somewhere and that is driving rental income up again.
I understand where you are coming from though. But the facts on the ground are that the demand is still there in a lot of the market.
August 15th, 2006 at 11:53 am
it’s naive to assume that the property purchase/rental markets are affected uniformly across location. How your rental yield is depends on when you bought - so that if you are investing in property for rental now - right now - yield is prone to be negative, for example. Demand also varies across location, and so that also has an impact on price.
Rental around where I am is fairly static. From a lot of people I have spoken to, they have options to negotiate rent downwards, or not have increases applied on a year on year basis. I’ve been paying the same rent for nearly four years now.
The problem with depending on new immigrants to drive rental income up is that we are dependent on the wider economy to also be booming. If our economic growth slows down - and as much of it is internalised/construction based, I can’t imagine it will continue indefinitely - along with our rapidly rising inflation - we will cease to be attractive very quickly.
August 15th, 2006 at 1:39 pm
Richard: however the property cool down happens some of the speculators you speak of are going to finally get burned. To be honest, I don’t have much sympathy! A lot of people have got very greedy, and if they are highly geared and do not know what the hell they are doing, then it serves them right. Ooh, I’m harsh I know …
I’m not a landlord or tenant myself, so thanks for the word on the street Winds and SK
From the few people I know who are renting near the city centre, their recent experience has been of pretty static rents too Winds.
I completely agree with you about location differences also. Those national house price reports really annoy me. They don’t mean a thing! Sure, even the stamp duty system is crazy. The FTB zero threshold in Dublin gets you next to nothing, whereas you can still get practically a mansion in some rural areas of Leinster with it. I only have on the ground knowledge of the current Dublin market (and specifically Dublin 2,4,6,8 and 15 at that!), but the mammoth Ask About Money thread has nationwide input by now and the newspaper articles reflect national concern, so my post was a combination of the lot. Any personal opinions expressed just relate to Dublin. I try to remember to say that, but as a Dub I often forget!
SK: I assume you bought your apartment a few years ago now? While an ample supply of tenants and your rent easily covering the mortgage sounds like an attractive arrangement, I’d assume that if you sold it now that you would make a nice capital gain. The rent compared to the market value makes for a low yield for your typical investor. By just putting their money on deposit, they could be doing nearly as well with no risk or hassle, so if they want a more exciting return, they are starting to wheel and deal elsewhere…
Just out of interest where does the figure of 19000 new immigrants in a month come from? No wonder those damned buses are getting more and more crowded
August 15th, 2006 at 1:54 pm
I bought my place in 1999. It’s in Ranelagh. And I am pretty sure that if I was buying in the area today I would not be recoverign my money. Unless of course I had an interest only mortgage. But that is a whole other can of worms…
What was interesting when I was renting it recently was the people viewing it were telling me how much difficulty they were having finding places. By the time they got to view them the were gone. It makes me glad I don’t have to rent these days.
August 15th, 2006 at 2:14 pm
I find the same thing in the states. The moment someone predicts softening markets, the prices jump higher. Where i live the market has been incredibly high for the last decade adn a half. Only know are property taxes catching up with people and their expensive houses.
It seems with rising taxes and a series of ridiculous loans that people took, the market is on a downfall contrary to the pundits.
Just my observations, though.
August 15th, 2006 at 3:04 pm
Ranelagh, eh? Very nice! If you’re ever selling up give me a shout
August 15th, 2006 at 3:04 pm
I have just stumbled upon your website and I must say that it is very well presented / laid out.
My overriding impression from the messages posted so far is one of acceptance… acceptance that ridiculous house prices are to be put up with. Yes, in the short term that may be the case; surely as the young people of this country (I’m 26 myself) we need to start thinking of our own futures… not to that of the 50+ year olds who are making all the decisions in anticipation of their retirement in a few years time.
What can we do? Well, we could start by voting: by showing the incumbent government that we need change. i am not saying that the State owes us a standard of living… we owe that to ourselves. However, I (like most of your subscribers) did everything right (everything we were told): we went to school/college, we did well; we got good jobs and we are paid resonably well. What else is there to do? I feel, sometimes, it is as if socitiey lied to us. I know we need places to live, but I feel by buying a property at the moment I am simply feeding the beast: I am admitting that ‘it’ has won.
It are all those faceless people who hide behind twenty feet square placards saying “a once in a lifetime opportunity to own a [really, really small] part of this prestigous development. They get away with it because we live is a country that lauds wealth and disregards how it was accumalated. John O’Shea may walk across Africa or SE Asia to raise money for the poor, but Michael Smurfit receives the accolades for bringing the Ryder Cup to Ireland. Why can we not get a grip of ourselves and supplant this greed with basic cop-on?
And if you want to hear the really sad part: one of your ’speakers’ Richard Hearne (I think) says that the same fate may happen property as did the dutch Tulip industry. however, if (or when) the market here does crash it will not be the speculators who suffer, it will be those individuals, those friends of ours, whom will be stuck with the negative equity. The ‘big guys’ will not suffer… they never do: those at the top seldom fall.
It has gotten out of control and we need for it to stop. The money (the life long committment) that is being asked for these reinforced cardboard dog houses is absolutely insane. Property prices have risen simply because those who would have invested in shares have instead invested in peoples lives, i.e. in peoples homes. Thereby driving up prices. If you have invested in property… there is little I can or want to say that you would like to hear. however, if you have invested in your home, I wish you well with it.
We have to make a choice: are we building a society or an economy? If it is a society then we will be able to sustain the hardest of economic shocks. e.g. If housing was reasonably affordable, then the market should not collapse in times of hardship. On the otherhand, if, as we appear to be doing, we are hell-bent on building an economy (an imaginary one at that) then the economic downturn will hit us very hard indeed. When the American companies decide to pull-out (as they do), the banks will not forget what is owed to them… and they will collect. Not to worry though, the tax exiles will be on those islands where little tax is paid.
I’ll go for i am beginning to rant… but if we could all just stop and think for five minutes. Fair enough if we continue… but at least think.
August 15th, 2006 at 3:12 pm
Paulspeaking, I would disagree with the comment about “reinforced cardboard dog houses”. The quality of houses being built to today is far ahead of 10 or 15 years ago. My friends working as Planners and Architects will say the same thing.
There was a slap them up any auld way attitude back in the late eighties/early ninties *cough* Zoe Developments *cough*, but building standards are much stronger and better enforced.
As for your post, do you have any concrete suggestions for what you would like to see done?
August 15th, 2006 at 3:16 pm
Lol - sorry I feel for this guy above.
The really smart money is long gone - the speculators I refer to are the middle-aged, middle class housewives who go to a property expo in the RDS and buy 3 aprtments in the south of Spain of the plans.
Voting wont get you anywhere - yep the govt. could reduce stamp duty or introduce limited additional relief for first time buyers. The real problem lies in the fact that our interest rates are probably 2-3% below what the economy requires. ECB sets for Germany and France - Ireland doesn’t enter the equation.
Unfortunately as time goes on and prices continue higher the best cure will be a bust. Pain in the short term but relief in the long. Just my €0.02!
August 15th, 2006 at 3:20 pm
hmm SK beat me in the queue.
@SK ‘The quality of houses being built to today is far ahead of 10 or 15 years ago’ relativity is a fine thing except that todays construction methods are still very poor. Few if any new builds meet the forthcoming EU directive on energy efficiency.
It is generally agreed that in northern Europe only the UK builds worse quality houses than Ireland.
August 15th, 2006 at 3:46 pm
I agree with you there Richard, interest rates explain a lot. If we set our own rates, a much of this property hysteria could have been avoided.
Actually, I would also favour a short sharp crash, but I just cannot see that ever happening in central Dublin, where I want to live. I can see stagnation, but not a collapse.
Paulspeaking - thanks for taking the time to leave such a lengthy comment. I think you need to get your own blog fast and start letting rip on whatever is bugging you!
I’m always first in line to vote, and I wish more people would vote these days. I hear what you are saying but what do you suggest we do to improve things? I know that the current system whereby buyers are held to ransom is wrong. I know that if buyers did not pay the crazy prices, or buy based on some sketchy plan ages before their home is even built, that would be a lot more sensible. But, what are buyers supposed to do - refuse to buy until a more civilised market emerges??
August 15th, 2006 at 3:56 pm
I did not expect such a fast response… anyway thank you.
If I take the last response first: I think you have nailed it in a nutshell. ‘Smart Money’ is exactly what we as a society are referring to. I was looking at it from a societal perspeactive. You are right, there is no doubt that ’smart money’ is going abroad, which in itself makes you think how greedy we have become. How would we like it if ‘X’ amount of foreigners came into our country buying up property (or to put it another way) people’s homes.
it is funny how some people justify it. Some ‘friends’ of mine say that they are doing people a favour by buying up property; it gives an opportunity for those who cannot buy to rent and; by buying property abroad, they are boosting their economies… how very altruistic of them.
You are also right when you say the best cure will be a bust… it is unfortunate that that is how we are going to learn, but I do believe that low interest rates (surely) should work to our advantage and not squeeze everyone as they seem to do. Remember those 50+ people… they have really benefitted from those low interestrates: down from 13 & 14% to lows of 2 & 3%. The guys making the decisions will surely not want to see change of any sort.
As for SK and building standards… I think the reality is a little different. Sure, things have improved but when I see balconies made from pallets and cracks appearing in the walls of new houses that could take a two-euro coin; timbers warping and floors bulging, then I think the regulations need updating. Indeed, an example that springs to mind is the housing estate in Rathoath with 100 houses… and only 40 car parking places.
What can be done. Competition through affordable housing? Any tax breaks or incentives will be absorbed by the builders. We should shift some industry away fromt he capital down to the country and this would alleviate problems around Dublin?
If there is a will for it to happen it can happen. As the French say (in French!) ‘If you think ahead; you move ahead’. And, I do not blame the powers that be for not having this political will. Why should they when there is such an apathetic populace. I heard a comment on the radio on Saturday that if you took twenty of the TD’s from either party and switch them around, the public would never notice: worse still the politicians themselves would not notice for they are all singing the same song!
It is hard not to feel disheartened at times. But then, when you live in a county that spends €1.6 billion on guiness (and solely guiness) per annum and €1.4 billion on primary school education… then what does that tell us?
There has to be another way. we have a population of less than that of Manchester (6 million within 30 mile radius). We have great potential and we continue to squander ‘most’ of it.
Anyway, back to the houses. There is a problem… then a SSB with the power to build affordable housing with social amenities and alottments to grow their own food. Improbable: Yes… impossible No.
August 15th, 2006 at 3:58 pm
Housing co-operatives are another option of course.
August 15th, 2006 at 5:17 pm
paulspeaking, the regulations were updated - as recently as 2005. they were also updated yearly from 1997.
you are misinformed when you say regulations aren’t in place and building standards and regulations need updating. they have been.
as a recent purchaser, i can tell you that i am more familiar with standards in place in developments i considered buying in. i live a well built, well finished, property, where building regulations were observed. maybe i got lucky, with a developer with a conscience and a track record, but then again, it was incumbent upon me the buyer to make sure that i wasn’t buying a pig in a poke.
as for housing estates in rathoath with 100 houses and only forty car parking spaces, i find that difficult to belive. are you willing to name this partiuclar estate? most places (even apartment developments) come with one space per house.
August 16th, 2006 at 7:59 am
I have a feeling the 19,000 EU10 migrants migh be based on PPS numbers, which greatly overstates immigration inflows (especially during the summer months) as it fails to take account of exit rates e.g. the fact that lots of students come over to work for the summer but return home after a couple of months. The latest CSO data afaik shows a net inflow of about 40,000 from the EU10 in Q1 2006 y-o-y in the 15+ category (presumably those under 15 won’t be doing that much renting ;)) so 20,000 in a month is probably a little OTT imho.
August 16th, 2006 at 11:47 am
Discussions like this make me feel that I really should pay some attention to the housing market. But, I know I can’t afford a house, am happy enough renting, and so I’ll ignore all the problems.
Until they end up bringing down the economy of course
August 16th, 2006 at 2:13 pm
Nothing like the property market to get the Irish chattering!
But listen everybody - Bertie told us it would all be OK so there’s absolutely no need to worry
August 16th, 2006 at 2:15 pm
Apologies Richard and Will: my anti-spam measures seemed to dislike a couple of comments but they are up now!
Fence: I know how you feel! I was in much the same boat until my family property consortium came to my rescue. While I’m very lucky to be in a position to buy, house hunting can be all consuming and sould destroying in the present climate.
If the rent is handy enough for you, it may work to your advantage that you can’t afford to buy yet with the crazy prices. Hopefully in a year or 2 you may be able to bag a (relative) bargain and get on the ladder! 
August 16th, 2006 at 4:28 pm
It also isn’t that practical for me to look into buying a house/apt. Simply because I’m not sure I’ll be in Dublin next year, and while I could then rent it out, or sell, it seems like too much hassle for something I may never get to enjoy.
September 5th, 2006 at 2:07 am
the fools will soon all have bought and then we see what happens !
September 7th, 2006 at 11:44 pm
If there is such a shortage of housing in the country why is there little or no upward pressure on rents. I know of nobody who has found it difficult to find a property to rent. The Irish phenomenon we are experiencing is purely based on greed and a fear of being left behind. As day follows night the situation will correct itself. Indeed I believe it has already begun since May. With only one direction for interest rates for the next few years I expect to hear the groans of pain from a country full of amateur Landlords becoming getting louder and louder. At the top end of the property market rental yields are now ittle more than 1% - For some , Lessons are about to be learned and it looks like the tuition fees will be very costly indeed.
September 26th, 2006 at 2:27 pm
Just to add a wee bit of petrol to the fire…
A small birdy has told me that an as-yet unpublished report *may* reveal a very pronounced decline in property prices over the last 3 months.
Cant vouch for the authenticity of this *cough* but it might be worth holding off if you are considering a purchase.
November 17th, 2006 at 1:59 am
I don’t know…all this talk about a bubble bursting yet so many property websites doing very well, myhome.ie sold for millions. New launches too - Funda is the new kid on the block
November 17th, 2006 at 3:45 pm
Ah good ‘oul Jim Smith - the Funda.ie link building, marketing, seeding and SEO alter ego.
Haven’t checked in a while, but must go and see if I still outrank Funda for the term funda.ia
Very quiet over here Janine?
November 17th, 2006 at 3:47 pm
Oh well, they’ve regained there #1 for ‘funda.ie’ and ‘funda ireland’. Well done Jim.
But I still have #3 and #4 for both terms
November 25th, 2006 at 5:59 pm
Not a spam but I’m trying to give my new website a bit of a push. All Irish estate agents, whether in the North or South, are on Online Properties Ireland. Have a look!
November 29th, 2006 at 7:01 am
The Irish property market is fueled on blind greed and facilitated with; nonsensically low interest rates; the world’s most lenient mortgage underwriting guidelines/borrower criteria; 600+ American corporations who’re directly responsible for 30+ percent and, some estimates, indirectly responsible for 50+ percent of the Irish economy. With the bubble stretched as far as it is, if one of these change (and they will), it will be the much overdue needle piercing the taut balloon of self-indulgence… KABOOM!!! On that note, I got a great apartment for sale!!!
December 21st, 2006 at 1:21 am
Guys: Very well done on this post. It is one of the most informed and honest conversations I have witnessed on this subject. Anytime I raise the subject over a guiness, my mates/family/next of kin groan in a Basil Fawlty “don’t mention the war” type of way.
Ok here’s my story.
I left ol Oireland 20 years ago and yes I experienced the London property meltdown first hand. Bought a flat in January 1987 for 95K and sold it for 80K in May of the same year!! Ahh the good ol’ days when you knew where you stood. Nowhere!!
I still live in the UK, but these days I run a highly successful global internet business but I still lay awake at night dreaming of returning to the Fazzerland. But here’s the rub.
As Richard so rightly points out, only an investor with velcro up the back of their neck would touch the Irish property market. I say this for all the reasons so eloquently put above, in this blog. But there is an even more insidious under-current that would keep any self respecting businessman from entering the fray. Here are just two of those reasons…
1. The tax breaks offered to investors (not buyers) by your wonderful govenrment creates an unnatural market dynamic. That is to say, first time buyers are being beaten over the head by government endorsed investors. Any market that is oiled or geared in this fashion is a “dodgy” one to give it it’s correct financial term. At this juncture, there is an estimated 240K uninhabited houses in Ireland. Let me say that again 240K uninhabited houses. A large proportion of which are “holiday” investments or capital gains investments. Ireland appears to be importing immigrants to build houses for investors to rent to immigrants. you should read that again..Our national resource appears to be focused on building the worlds largest rented housing estate for our eastern european cousins. hmmm. Dont get me wrong I could go on all day about that pyramid buying fiasco but I know you guys know all this from the well-informed blogs above.
2. So finally, this really is the killer. . here’s my final point. The Irish Press probably makes 50-60% of it’s profit from the housing advertising section. Very few publications in 2006 wash their faces through circulation revenue. The next time you see an “expert” opinion on the property market in any of these rags, waxing lyrical about the unfaltering growth and the record prices in Blackrock, check who they work for. In the main they are auctioneers, property analysts (Davy owned by bank of ireland), estate agents etc. In Scotland, where I live, you would be arrested for some of the market inflating articles I have read in the Independent and Irish Times etc .
Post Enron, even the the US insists that investment advisors, experts etc must legally state and disclose their vested interests. In other words, these articles to the casual eye look like editorial, but are in fact advertorial. Adverts !! Selling!! Talking up!!
Several times over the last 2 years I have checked houses for sale in Ireland. Once you get out of the first time buyer market, prices are pretty flat. I’m not talking about Dublin here, but maybe a 30 mile radius. The press and the facts on the street just don’t add up. Some people call it marketing, others call it lying.
You poor buggers didn’t stand a chance. The big boys have moved on and your sister is paying the bill. Janine , I feel for you particularly, as you are in denial with regards to Dublin prices. You obviously have some type of vested interest in this particular post code ,that you would extrapolate that the eventual bang will not affect it. Speaking as a man who once owned a nice flat in central London..this is nothing but a psychological comfort blanket i’m afraid.
I believe history will not shine a flattering light on this episode of Irish mismanagement. People like Bertie Ahern will be answering questions for a long time to come from the comfort of his baronial manse and tartan rug, about his stewardship of the Irish economy through this period . And quite frankly blaming European interest rates will sound as hollow as our man Charlie bluffing his way through 45M Euro..
cheers Mike
April 13th, 2007 at 6:41 pm
I’m holding out for affordable housing schemes….Hey! wait a minute, since when was 317k affordable…think I’ll stay living in my van.
April 17th, 2007 at 11:01 am
I placed a deposit on a 3 bed duplex property a year ago in Adamstown in Lucan.
I’m considering withdrawing the offer and losing my deposit on this property,(€20k- my lifes savings) , As I think I would be exposing myself
to negative equity in the future, and I don’t think I would get a buyer if I bought and sold straight away (due to stamp duty)
I can afford the mortgage repayments even with a further increase in interest rates
Do you think I’m crazy to do this?
June 30th, 2007 at 1:25 pm
At the moment we are told that inflation is 5% yet, the ordinary punter on the factory floor will only get a rise of 4% this year. The vast majority of people in Ireland only earn around 24,000 euro a year so unless a person with children is getting Family Income Supp. they can not afford to live without constant borrowing.
Many experts keep telling us about Guards and Nurses not able to buy their own homes as if they were the poorest paid people in the country. Why don’t wake up and see that factory workers also have to buy homes.
Here in Galway you have so little social or affordable housing that everybody has a mortgage of some sorts but with wage rises below the rate of inflation the future is bleak for people on the lower rates of pay.
When the big medical companies pull out which is inevitable given our rate of inflation which will have to mean greater cost for them who will pay the mortgages? The Government of course as it has no housing stock for people to move into.
The Family Income Supp. is now only way many working people with children can afford to keep their cars on the road etc. as Public Transport outside Dublin is not worker friendly.
I fail to see how we can call ourselves a first class economy if so many people have to keep borrowing to support a modest life style. This is the final nail on the inflated prices people have been paying for houses.
July 10th, 2007 at 1:14 am
Mick,
amazing coincidence - I knew there were still a few expats who did not return to fuel the beast (see entry on David McWilliam’s most excellent site). I see a man who stares harsh reality in the face, get kicked in the teeth (your London flat) and can still laugh.
Billy,
if you can afford a (strong) hike in interest rates and regret is not in your nature, go ahead & buy - but why not take a 100% mortgage to give you the option of doing a future runner with your savings when the economy goes belly up? Would give you a downpayment in Oz.
October 14th, 2007 at 10:55 am
With the rise in interest rates coming to a stop (for the moment), rents increasing substantially, an oncoming shortage in new properties because of the slow down in the construction sector and the possibility of the Governament doing something for the second hand market by reducing stamp duty in the forthcoming budget, will the slide in property prices come to an end and start moving upwards again? Paul
October 15th, 2007 at 5:07 pm
It wouldn’t surprise me, Paul. It seems to me that with the right economic and financial engineering, accompanied by the right marketing messages to get people to think in the way desired, anything is possible!
It’s probably obvious from my tone that I’m not a happy punter about the situation. I’d like to buy a home, but I’m not ready to pay the price. It just seems so crazy what is being asked of a person.
Look, basically, with current technologies, a basic starter apartment in a complex can be built for at most around 2,000 hours of man labour (including all manufacture of materials and delivery etc).
Then, estimating interest rates very conservatively, it will take someone on the average industrial wage well over 30,000 man hours of their labour to repay it!
That is terribly unjust I think. Most of that additional labour benefit currently appears to go largely to banks, property developers, government, and of course, speculators small and large.
Trying to get to the root of the problem, I can see that the value of a property is all in the actual land itself. But – there are serious philosophical questions that are raised - especially in the current climate - when we see how this value is so badly misappropriated…
Sure – these questions were discussed at length during the 15th and 16th century by such writers and thinkers as Locke, Harrington, Rousseau, Hume, and others… But it often appears to me as if only the sentiments expressed at this time which suited the interests of the property elite were taken as gospel, and other sentiments which did not fit were discarded (eg. Jean-Jaques Rousseau said of the first man who ever enclosed a piece of land as his own, “If only someone had pulled up the stakes and cried to his fellows: ‘You are undone if you once forget that the fruits of the earth belong to us all, and the earth itself to nobody!”)
My point being that it is a legitimate question to ask! – who is entitled to the value that reposes in the land? Our response to it at present is ‘don’t bother yourself with those sort of questions – its already been thought out for you’.
The fact is that there is no ‘scientific’ basis on which to base a value of land. It is like the tulips mentioned earlier in these comments – it could be priceless as the American Indians and aboriginees viewed it. Or it could be any amount of money.
It all depends on the value that the psychology of society as a whole believes it to be.
But when this value is artificially boosted by various interested parties through sophisticated marketing and psychological manipulation, to serve their own financial purposes, while enslaving normal working people, well I think that is wrong.
Then, the phrase ‘property ladder’ is a horrible phrase that is an entirely artificial construction. It serves to push the necessary psychological buttons to make people buy into the myth that property is a method to move higher in one’s overall development.
As human-beings, we all have needs for shelter, security, and status. Sure, land and property can fulfill these needs. But at what price? And is it right that these needs are manipulated so that one has no choice but to be enslaved as discussed above?
And it is not right either that the first time buyer is then encouraged to speculate himself, to the disadvantage of younger generations, immigrants, and people from developing countries. Thus perpetuating the enslavement.
Sure, I’m a malcontent… I just don’t like the property system we have
October 19th, 2007 at 12:08 pm
Hi,
This is a good very discussion page -imformative rather than ranting - makes a nice change. To anyone thinking of buying at the moment check out Wikipedia and search “Irish Property market” this from an unbiased factual encyclopedia! It makes for EXTREMELY scary reading! Note they will automatically redirect you to “Irish Property Bubble.”
wikipedia.org/wiki/Irish_Property_Bubble
Enjoy!
November 6th, 2007 at 11:11 am
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.
November 22nd, 2007 at 7:38 pm
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.
November 24th, 2007 at 2:31 pm
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 .
December 17th, 2007 at 1:05 am
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.
April 15th, 2008 at 2:05 pm
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.
August 10th, 2008 at 4:00 pm
“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…..
August 10th, 2008 at 9:56 pm
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!
September 25th, 2008 at 10:29 am
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.
October 15th, 2008 at 11:30 pm
“…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.
October 15th, 2008 at 11:46 pm
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?