Do we have another property crash coming?

riclad

Outside dublin Prices went down 50-60 per cent in 2007, they never went up since then .If you think ,i,ll save up and wait for a crash and buy a house in dublin for 60k it,ll never happen.
the crash happened cos banks were lending too much in every county ,
lending based on rising prices and a thriving economy based
on money lent for building .
Now the economy is based on exports, intel,google, farming,tourism etc
its no longer based on the building industry so there,s no reason to expect
a sudden crash.
Its only in certain area,s and citys that prices have risen since 2008.

Graham

i can't help but think this is all going to be rather academic for the OP. Life usually gets in the way of the best laid financial plans.

It would be an interesting exercise to calculate the probability of a downturn in property prices coinciding with peak-personal-savings and the accommodation requirements of an as yet unforeseen family.

The J Stands for Jay

goz83 wrote: »

In my specific case, there was less than zero additional risk, as they would have been getting a higher value asset, in the same locality on their books, funded by cash from the mortgage holder, while receiving the same monthly payments, with no addition, or loss with respect to the mortgage

This is similar to the proposal I put to my bank and had accepted earlier this year. Are you able to go into the new loan at a LTV <100%?

Villa05

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.

There is an abundance of credit, all that money printing has to end up somewhere

ThisRegard wrote:

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.

They rose 300% in the preceding 10 years, the crash was a correction

asteroids over berlin wrote:

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!

Availability and price of property both residential and commercial has been flagged as a major issue in business locating to Ireland

Graham wrote:

I spotted that too, hold the land for 7 years (expiring 2019/2020) to avail of the CGT tax breaks.

Policy to keep competition away from Nama controlling price

athtrasna wrote:

OP I find it unsettling that you are hoping for a crash in the knowledge of the devastation that previous crashes have brought on families.

The devastation was caused by the 10 years of madness before the crash

That madness has returned. 20% plus increases are not sustainable

ThisRegard

Villa05 wrote: »

They rose 300% in the preceding 10 years, the crash was a correction

You don't know that as you don't know where the poster is talking about.

beauf

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.

Few problems with that. In a market where you make more by buying and selling than renting, there's no incentive to get into the rental market. Unless it's done high cost rental like student halls etc.

Even if you wanted to, the rising market and the shortage of supply means there isn't anything to buy.

Considering that there's a massive decreasing supply of rental properties. What sense does it make to discourage buy to let even further. It's like cutting the branch you are standing on.

listermint

listermint wrote: »

Begrudgery?

Stupidest term on this island.

Where did I say they were wrong to get help?

Explain.... Oh wait you can't you were just waiting from your grib.


I live in reality where friends and family paying 1300 to 1800 rents are getting assistance for deposits not really sure what reality you live in.

Oh wait the one were Begrudgery is a respected term and not one used by folks who can't articulate a valid response.



Enjoy

You reckon couple on 6 figure combined incomes with cash for a deposit got gifted the deposit.

That's not reality.

You didn't say they are wrong nor did I claim you did. Begrudging does not mean that, do you have a correct understanding of the word?

Your circle of friends and family are not representative of the majority of couples on 6 figure incomes. I'd say the people you refer to don't have those incomes anyway, you just mention they are getting help with deposits, you didn't clarify they are on the wages mentioned.

As well as being closed to the view that there are people earning good money who are prudent with their cash you seem to be a tad jealous of your own friend and family who pay high rent and get handouts.

You can't blame the government for people who are doing well

just waiting from your grib. - what's that in English? Sounds like a line from a 50c tune

beauf

Considering last boom and crash was caused by unsustainable credit, borrowing, it's lunacy to want the current rules and regulation lifted.

The govt has been warned for years about the severe shortage of housing stick. Its done almost nothing to prevent the crisis. Now it's reacting too little and too late.

The problem is supply. People will have to move to where there is affordable supply.

Right2Write

Graham wrote: »

Good plan, get saving. As others have pointed out such crashes are usually accompanied by a severe shortage of financing.

Ideally you'll want the price of a house in the bank.

Saving?? Is there not a lesson in the recent crash that those who were prudent and saved were called on to bail out the reckless borrowing of fellow citizens??

Au contraire. I'd advise the OP to get in as deep as they can. Borrow as much as possible, leverage your loans and build a small property empire based on paper. If everyone does this, sure we'll all be in it together and someone else can carry the can and bear the cost when it all goes pear shaped. You'll get burnt a bit but overall come out the far side with some valuable assets.

Is that not the lesson of the last crash?

Walter H Price

asteroids over berlin wrote: »

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) .

You can already see this happening in allot of parts perticularly around Glasnevin , the North Circular Road , Stoneybatter , Cabra , parts of Finglas ... Mature former councill housing stock being hoover up by young professionals and areas somewhat gentrified , certainly improving on what they were.

Would love to see this continue over the next 10 or 15 years

beauf

Right2Write wrote: »

Saving?? Is there not a lesson in the recent crash that those who were prudent and saved were called on to bail out the reckless borrowing of fellow citizens??

Au contraire. I'd advise the OP to get in as deep as they can. Borrow as much as possible, leverage your loans and build a small property empire based on paper. If everyone does this, sure we'll all be in it together and someone else can carry the can and bear the cost when it all goes pear shaped. You'll get burnt a bit but overall come out the far side with some valuable assets.

Is that not the lesson of the last crash?

Seems to have worked for some at least.

Graham

Right2Write wrote: »

Saving?? Is there not a lesson in the recent crash that those who were prudent and saved were called on to bail out the reckless borrowing of fellow citizens??

Has someone been dipping into your savings account?

Right2Write wrote: »

You'll get burnt a bit but overall come out the far side with some valuable assets.

Or enough negative equity to make your eyes water for the next 10 years.

goz83

McGaggs wrote: »

This is similar to the proposal I put to my bank and had accepted earlier this year. Are you able to go into the new loan at a LTV <100%?

This was a stumbling block. The current NE stands at circa 60k.

My thinking was that the full value of the current mortgage could be transferred to the higher value asset, with the capital increase being covered by my own funds....so no change in mortgage amount and the NE would be naturally erased by adding the higher value asset to the books, leaving a positive LTV of 40k. Nice and clean.

It has been suggested that if I have that kind of funding, to throw it at the mortgage and lower the repayments, but I think this would be a bad idea and such money could be used more effectively. For example; it could be used to purchase an apartment and let it out. Of course, I would not likely buy one right out, as the taxes would be higher....but that's just one property based idea.

If I can't use funds to upgrade the family home (getting a larger home for a larger family), then I won't be appeasing the banks by lowering their risk with a lump sum payment.

The J Stands for Jay

goz83 wrote: »

This was a stumbling block. The current NE stands at circa 60k.

My thinking was that the full value of the current mortgage could be transferred to the higher value asset, with the capital increase being covered by my own funds....so no change in mortgage amount and the NE would be naturally erased by adding the higher value asset to the books, leaving a positive LTV of 40k. Nice and clean.

It has been suggested that if I have that kind of funding, to throw it at the mortgage and lower the repayments, but I think this would be a bad idea and such money could be used more effectively. For example; it could be used to purchase an apartment and let it out. Of course, I would not likely buy one right out, as the taxes would be higher....but that's just one property based idea.

If I can't use funds to upgrade the family home (getting a larger home for a larger family), then I won't be appeasing the banks by lowering their risk with a lump sum payment.

What the bank went with was:
1 sell the existing property
2 pay the proceeds to the existing loan.
3 use a large deposit and a new loan to buy the new property.
4 add the outstanding balance from the first lian to the new loan.

The combination of a more valuable asset and the deposit (I think it was just shy of 25% of the value of the new property) left us out of NE.

goz83

McGaggs wrote: »

What the bank went with was:
1 sell the existing property
2 pay the proceeds to the existing loan.
3 use a large deposit and a new loan to buy the new property.
4 add the outstanding balance from the first lian to the new loan.

The combination of a more valuable asset and the deposit (I think it was just shy of 25% of the value of the new property) left us out of NE.

If I make further enquiries, I think I will speak to someone with half a brain. The bank manager who was also the mortgage advisor seemed a few beans short of a decent cup of coffee.

Thanks for your input.

GreenFolder2

The market's no where near as overheated but the prices are too high due to lack of supply.

If Brexit has a major impact on the economy, a lot of people could be left in negative equity again who've just bought recently.

Right2Write

Graham wrote: »

Has someone been dipping into your savings account?

Or enough negative equity to make your eyes water for the next 10 years.

Yep, DIRT tax.

I can think of people who came out of the recent crash both ways. One in particular lost a large property and is now obliged to live a much more marginal life, renting. But that was as much due to marriage breakdown as the recession.

On other hand, I can think of some that got notions and traded up to quite substantial properties (family homes) during the boom, got into repayment difficulties, some debt write down and have gained a more valuable asset at a cheaper price.

The latter seem to have done OK at the end of the day, despite the pressures.

He who dares, wins

Arcade_Tryer

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.

Not quite. The issue isn't rent being raised to market rate or even higher, it's the lack of alternative for people in such situations and the fact that market rate is steadily increasing. Due of course to the lack of supply. It's so simple. And yet seemingly impossible to find the solution.

pwurple

Graham wrote: »

Has someone been dipping into your savings account?

Ahem, pension levy?

riclad

Its not impossible to find the solution,
reduce vat on builders, change some rules, does every apartment need its own parking space in city centre build,s ,raise building heights in urban
area,s ,encourage self building co ops, but we have various groups
with different incentives,
Bankers, civil servants ,builders, land owners ,owners of empty buildings .housing charitys etc

<mod snip>

Its a cliche, we need various groups to work together to find a solution
to the housing crisis .

<mod snip>

I Wonder do the banks, and the people in power want a solution ,do they really care ,
about joe paying 120 for a small flat in cabra.
Are they smart enough to find a solution ?do tds who get a large pension in 3 years ,
think in term of 5-10 year housing plans .

goz83

Graham wrote:

As for the current central bank policy/rules, there's no immediate sign they're going to change despite political pressure for such changes.

goz83 wrote:

Nothing immediate, but the government are already bringing in policies to side step the rules somewhat. And look at the 2-3% cash back stuff. Shivering reminders of steps previously seen, which landed so many in situations that people are still feeling today.

Yesterdays news came sooner than I thought. More loosening of the CB rules. I expected no further changes until early next year, but the lowering of the LTV deposit to 10%, combined with the previous Help To Buy Scheme would make me believe that the belt is getting too loose, too soon.

Now, more and more people are returning to work, but with Brexit on the horizon and Trump in the big chair, times are very uncertain. Lots of people are taking out loans, going on expensive holidays and getting into car loans they can't really afford.....especially with the boom in PCP finance.

Before the end of Q1 2017, there will be another bigger change in the property sector, allowing people to access funds more easily, which might be just about affordable now, but any downturn will have serious consequences on ability to pay.

riclad

Lowering the deposit to 10 per cent is just gonna push up prices in urban ,area.s citys, dublin, area,s where there is high demand and a very limited supply
of 3bed houses for sale.
So it may be easier for you to get a loan, but instead of paying 200k
for a house you,ll be paying 250k.
And there,ll be more bidders on each house for sale than there was 6 months ago.

Irish_rat

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.

Not boomy if demand is outstripping supply

Also I wouldn't be waiting around for the next crash, life is too short for that.

handlemaster

I think you will see the bottom of the housing market in dublin rise with the CB change for FTB s . A typical 3 bed semi will be minimum 250k in dublin

GreenFolder2

A combination of Trump and Brexit is potentially bringing huge risks to the economy. I wouldn't be overly confident in long-term house prices here.

There are a lot of uncertainties about very fundamental things : weak GBP £ and possible disruption to smooth UK-EU trade is going to have a profound impact here regardless.

Trump has said he intends to bring companies and their profits back home. So a huge cut in US corporate taxes could cause a major change to what's going on here with FDI where we are only of use to base EU operations rather than being a hub for a much wider set of international operations for US multinationals.

It could also work the other way if the Trump administration tries to squeeze or compel MNCs to do anything as they could end up just inverting.

riclad

Companys come here because we are in the eu, and have a young population, the corporate tax rate is important too .
IF you buy a house in dublin for 200k ,in 10 years time it,ll be worth 150 or 200k, In the boom years pre 2008 , banks were lending 7 plus times annual income,
you could borrow 200k to buy an apartment in longford ,
Banks were lending in a reckless manner all over the country ,
not just in dublin .
Prices are still low in rural areas , outside the citys .

thierry14

Irish_rat wrote: »

Also I wouldn't be waiting around for the next crash, life is too short for that.

If you need a mortgage crash probably wouldnt be a good thing.

Credit could dry up

Now is a good time to buy for people who need a mortgage, credit is there and prices are not mad

If I was a cash buyer looking to invest I wouldn't buy now, don't see much value.