Do we have another property crash coming?

Hollister11

With Dublin booming again, and with construction happening, when do people think house prices will come crashing back down.
5, 10 even 15 years?

Personally on between 5-10 would suit me.

L1011

I suspect that the mortgage rules, the rapidly increasing difficulty of getting planning as well as higher standards both required and expected in construction means there's more chance of the "soft landing" happening this time. Further supply will start to push prices down purely because that'll be the only way to sell them.

Chuchote

Yes. Houses on my road have doubled in price. Insanity. How can people earn enough to pay a mortgage in these circumstances? House and apartment prices need to be tied to wages or you get a dangerous inflation spiral.

seamus

No, the same conditions don't exist this time. There isn't an abundance of credit flooding the market nor a tonne of investors (foreign or domestic) pouring their cash into property.

This is purely demand driven and prices will begin to level off once supply catches up. Second-hand homes in lower demand areas will likely see flat or slightly negative drops for ~5 years after supply has caught up.

That's assuming no future government makes the mistake of a major intervention into the market. If that happens, all bets are off.

Barely Hedged

Hollister11 wrote: »

With Dublin booming again, and with construction happening, when do people think house prices will come crashing back down.
5, 10 even 15 years?

Personally on between 5-10 would suit me.

Crashing back down to what?

TENHNY

I think the property market wouldn't drop much in the next five, It may become staggant as people struggle to get mortgages. I do think do the economy is in for a tumble, With rising health & Motor insurance a failing health system,
upwards rents, lack of jobs & no incentive to employers to hire. Once you drive out from the bigger cities and towns you see there really noting happen and no plans to help boast smaller towns.

goz83

While the same conditions don't exist this time around, there is already hugely inflated prices. Yes' getting a mortgage is harder now, but memory is short and the same mistakes will be made. When people can't afford homes, government is pressured, banks start handing out money like it's on fire and we get another boom bust. I call 2018 for a crash

Sleeper12

Hollister11 wrote:

With Dublin booming again, and with construction happening, when do people think house prices will come crashing back down. 5, 10 even 15 years?

Hollister11 wrote:

Personally on between 5-10 would suit me.

They have to go up higher in price if you expect to see a fall. They won't be falling from the level that they are now.
Historically we don't usually get bubbles. Usually house prices slow down & pick up again. Just because we had one property crash in the history of the state doesn't mean it's the norm.
Outside forces like britex are an unknown

ThisRegard

Chuchote wrote: »

Yes. Houses on my road have doubled in price. Insanity. How can people earn enough to pay a mortgage in these circumstances? House and apartment prices need to be tied to wages or you get a dangerous inflation spiral.

If they came from a low base a doubling might just be a correction what part of the country? If people are getting mortgages for them, they've gone through stress tests and a much stricter approval process. Rents for the most part, in Dublin anyway, are more expensive than the mortgage payment for the house being rented.

goz83 wrote: »

banks start handing out money like it's on fire

Not a chance.

Stealthfins

Iv a house in a village in Clare which was valued at 280,000 during the height of the Boom.
4 bed detached.
It went down to 140,000 now it's around 159,000.
So more than likely when it hits near that again I may cash in,rent for a year and buy something again when they drop off.

asteroids over berlin

Personal opinion -- no not at all.
Dublin house prices (more so central Dublin and say d1 - 16 areas) will steadily rise. What were once poorer areas, will now be sought after and over the years will transform into nice places to live, naturally there will be a few ropey areas left (usually is) .
Quite a similar trend to London, i doubt prices will go up to such levels but they will definitely get up there. Whilst Brexit may impact us, i see more companies setting roots in Ireland instead of the UK.
Commuter life will be the reality in 10 - 15 years time (it's already in progress). We will see proposals for new motorways and transport systems in general - obviously we are woeful at such planning!

Chuchote

My impression is that the market is being deformed by people buying for cash as investments.
Only way to support home buyers while stopping investment buying is to do something like removing stamp duty if the house is being bought as a family home (but the stamp duty to be paid on it if it is sold within 10 years, and the house/apartment to be liable to compulsory purchase by the State if this rule is abused).

goz83

ThisRegard wrote: »

Not a chance.

Why? If you're not going to give more than that, you don't have an argument.

Banks have never been known to be anything but profiteers (as expected, money and profit is the name of the game) and they are governed by greed, rather than long term sustainability and prudent lending. If they are allowed to lend and the belief is that the numbers will stack in their favour, they will lend, even if a few loans turn bad. Foolish lending pushes up prices and then...well, look a few years back. Already, the rules are being bent to accommodate first time buyers buying new homes. It's just another step in the wrong direction.

Oh and just for full disclosure....higher prices would suit me just fine, taking my mortgage out of NE and making it possible for me to sell/move, but I am against the culture of greed and high prices and mortgages for life.

A couple of months ago, I made a general enquiry about moving to a larger home, which is/was 100k more expensive than my mortgage. I was offering to cover the difference in the property value in cash, but the new rules currently disallow people in my situation (people looking to upgrade and who have children) to move. According to the bank, we are way below the poverty line and should not be "surviving" on our income :pac:

The mortgage advisor/bank manager couldn't defend the rules and said they are far removed from reality. There would have been no material change in our payments and there would have been a higher value property on the books, but the rules stopped any progression, because our earnings were not high enough on paper when you take into account our children. This despite never missing a mortgage payment in 8 years. I suspect if I ask in a years time, the answer will be different.

It's this blunt, uninsightful attitude from the top that makes me confident that we will indeed see another crash and soon. I am a baby boomer of the early to mid 80's. There were similar numbers born in the late 80's who will now, or soon be looking for their own home, especially after returning from their jobless exiles after college. When prices are too high for them, there will be interference. Then we will have another 5-7 years of recession followed by another slow increase of what I hope would be sustainable growth in prices.

I'm not an expert, but from what I have absorbed in the last few years, this is my opinion.

Graham

goz83 wrote: »

Why?

Central bank rules.

goz83 wrote: »

The mortgage advisor/bank manager couldn't defend the rules and said they are far removed from reality. There would have been no material change in our payments and there would have been a higher value property on the books, but the rules stopped any progression, because our earnings were not high enough on paper when you take into account our children. This despite never missing a mortgage payment in 8 years.

Some people would call that prudent lending and may even go as far as suggesting if this approach had been enforced 15 years ago the property bubble wouldn't have been anywhere near as devastating.

Terrlock

I think what we have if much worse then a simple crash.

What we have is everyday people not being able to afford accommodation.

Rent prices are crazy....Unless you have an extremely well paid job, it's likely most of your income is going to pay rent and bills.

No one has the luxury of being able to save money in these circumstances...or it can take a very long time. As a result they can't get a mortgage for there own homes where the monthly payments would be lower then rental.

We don't really have a government that is in any hurry to help fix the problems.

We have more and more people becoming homeless.

No one cares until it effects them and people they care about.

I think we are running head first with eyes closed into very bad times.

FrancieBrady

Graham wrote: »

Central bank rules.



Some people would call that prudent lending and may even go as far as suggesting if this approach had been enforced 15 years ago the property bubble wouldn't have been anywhere near as devastating.

Did Colm McCarthy not say on Claire Whatshername show last night that with the budget measures taken into account that we are back to borrowers being able to get unsustainable loans again?
He seemed quite animated about it.

*Caveat, I did get to hear the whole exchange with Simon Coveney.

alane20

seamus wrote:

No, the same conditions don't exist this time. There isn't an abundance of credit flooding the market nor a tonne of investors (foreign or domestic) pouring their cash into property.

How can you say there isn't tons of investors flooding the market when vulture funds are buying whole estates & apartment blocks, there will absolutely be another crash, property to irish people is like a drug, a get rich quick scheme, intrest rates can not stay at current levels, and when they rise the amount of defaults will be huge, and the vultures will pick the market clean,

Graham

FrancieBrady wrote: »

Did Colm McCarthy not say on Claire Whatshername show last night that with the budget measures taken into account that we are back to borrowers being able to get unsustainable loans again?
He seemed quite animated about it.

*Caveat, I did get to hear the whole exchange with Simon Coveney.

Can't say I watched it. I'd be interested in the 'unsustainable loans' discussion as that's something I'd expect the current central bank rules to limit.

Atlantic Dawn

The lack of available properties is keeping prices up as there's enough land within the M50 to build over a million homes but there's not the access to cash for builders to build them.

FrancieBrady

Graham wrote: »

Can't say I watched it. I'd be interested in the 'unsustainable loans' discussion as that's something I'd expect the current central bank rules to limit.

About 25 minutes in, in response to the landlord in the audience.

Interesting segment overall.

*Only in Ireland would the minister for housing be called SIMON.
http://www.rte.ie/player/ie/show/claire-byrne-live-extras-30003215/10637487/

ThisRegard

goz83 wrote: »

Why?

Answered below, plus the fact that banks were pretty strict before the central bank rules came in anyway, they don't want to loan and be at risk of not getting their cash back. Even if they are greedy and profiteers, such a place is not going to loan to anything other than a sure thing are they, especially with the bankruptcy changes.

Graham wrote: »

Central bank rules.

alane20 wrote: »

How can you say there isn't tons of investors flooding the market when vulture funds are buying whole estates & apartment blocks, there will absolutely be another crash, property to irish people is like a drug, a get rich quick scheme, intrest rates can not stay at current levels, and when they rise the amount of defaults will be huge, and the vultures will pick the market clean,

Banks currently stress test applicants based on such scenarios, I can't remember the percentage rise they stress you at, some are tougher than others.

Right2Write

I think a good policy would be to disincentive the 'casual' buy to let people. The average Irish person who thinks they will invest in a property as a pension etc. or as a better return than savings or other investments. These people have a negative impact overall without contributing much.

Rental property is certainly needed but should be left to people and businesses who run it as their primary business. This would lead I believe, to (1) accommodation being purchased by people who actually want to live there and (2) greater stability in both supply of rental properties and rents.

Time to get rid of those trying to make a quick killing at the expense of others.

Graham

Right2Write wrote: »

I think a good policy would be to disincentive the 'casual' buy to let people.

I think you'll find the current tax rules, RTB, eviction process are already doing that job.

+1 on encouraging large-scale, long-term commercial landlords.

Eric Cartman

Theres somewhat of a soft crash on the way. When prices reach almost boom levels and banks/landlords/funds can dump all their rentals / BTL's without losing money on the outstanding mortgage , they will. There are thousands of properties in this country that accidental landlords, banks and investment funds want rid of, but the stubborn irish wouldnt take a 50k hit on a property if it killed them. This flood of property will upset the market temporarily and set back developpers getting funding.

Cuddlesworth

Terrlock wrote: »

No one has the luxury of being able to save money in these circumstances...or it can take a very long time. As a result they can't get a mortgage for there own homes where the monthly payments would be lower then rental.

There is a substantial number of mid thirtys couples in Dublin with 6 figure combined incomes and deposits.

Right2Write

Right2Write wrote: »

I think a good policy would be to disincentive the 'casual' buy to let people. The average Irish person who thinks they will invest in a property as a pension etc. or as a better return than savings or other investments. These people have a negative impact overall without contributing much.

Rental property is certainly needed but should be left to people and businesses who run it as their primary business. This would lead I believe, to (1) accommodation being purchased by people who actually want to live there and (2) greater stability in both supply of rental properties and rents.

Time to get rid of those trying to make a quick killing at the expense of others.

Anywhere that property businesses are taking over people are complaining about it like crazy, both people living there and certain populist politicians in the AAA etc. A business that takes over a complex and ups the rent to market rate as is their right and their job as a business to maximise profits is branded like some Nazi sympathiser in the media etc.

riclad

i read an article yesterday people who own land are waiting till
2019 to sell it to avoid paying cgt tax.
I Think high taxs and lack of finance is more a problem for builders than lack of acess to land .outside dublin house prices have hardly gone up so i don,t see a crash coming .the casual buy to let investor hardly exists since its harder to get a loan under existing bank lending rules .

listermint

Cuddlesworth wrote: »

There is a substantial number of mid thirtys couples in Dublin with 6 figure combined incomes and deposits.

I dont think that is entirely true either. Those same couples are tied up with high rents etc. 'Substantial' would be over cooking it.

'Some' would be more accurate those some having gotten assistance from family etc.

riclad

riclad wrote: »

.outside dublin house prices have hardly gone up .

This couldn't be further from the truth, house prices have gone up significantly outside of Dublin also.

listermint

Tessa Tangy Plumbing wrote: »

Anywhere that property businesses are taking over people are complaining about it like crazy, both people living there and certain populist politicians in the AAA etc. A business that takes over a complex and ups the rent to market rate as is their right and their job as a business to maximise profits is branded like some Nazi sympathiser in the media etc.

Ehhh, what ?

Outside of your obvious rant. You dont think in the current market it would be a reasonable idea not to incentivise buy to lets ? really ?

Oh and what do the Nazis have to do with property... Some strange people in this forum. Is someone feeling victimised ?

listermint

listermint wrote: »

Ehhh, what ?

Outside of your obvious rant. You dont think in the current market it would be a reasonable idea not to incentivise buy to lets ? really ?

Oh and what do the Nazis have to do with property... Some strange people in this forum. Is someone feeling victimised ?

No idea what your getting at here you have totally missed what I was talking about.

I was simply pointing out that you have people complaining about people who are buy to let LLs and saying they want big property companies in the rental sector and then when big companies come in people go crazy complaining about them and how they are operating you know, like a business and looking for market rent etc. Point being people complain no matter what. As for the nazi comment, have you seen the headlines in papers about property companies raising rent etc, you would swear they were murdering people in their homes.

I personally don't think there is anything wrong with people wanting to own one or two investment properties as a side business etc once they do it properly but that's not really what I was taking about in my post above.