Opinions on when the next property crash may happen

scouserstation

123shooter wrote: »

Your house market and prices have nothing to do with any so called crash. If the money is available and people can pay it back they will borrow to buy what they think they can afford.

The crash in 2008 was not caused by house prices it was caused by banks giving out money they didnt have and actually borrowed it from other banks. When this chain was broken then the system falls apart as it did which then caused job losses which resulted in people not repaying their loans etc etc.

So it was outside forces/events which eventually broke the back of scheme which was in operation............same could happen now.........next week.......next year.

I understand what you are saying but the point im trying to make is that property prices are only vulnerable to outside forces if they are over valued, which they are not at the moment.

Arcade_Tryer

scouserstation wrote: »

What was it like to live in this country 100 years ago? You wouldnt have owned your own house thats for sure, likewise 100 years from now what we are talking about here will seem trivial, some people may opt not to own a house but rather live within their workplace

Often wonder why more modern workplaces don't offer this facility to workers; would be especially beneficial to young workers such as graduates who may be struggling significantly with the rental market in places like Dublin?

MICKEYG

scouserstation wrote: »

That is why a crash will not happen, because of the cost of actually building a home. If it costs almost 300k to build a house in Dublin, why would a developer sell for any less than that, under normal market conditions they will look to make a profit. Even when house prices dropped back in 2008/2009 they did not drop much below construction costs, and if wages rise in the construction sector then so do house prices.

The days of government backed subsidized housing stock are gone unfortunately we now have to pay cost price for housing.

Where does the 300k figure come from?
What does it include/exclude? Land prices?

Spirogyra

I believe in Germany that some properties are now built without Bricklayers, new 'Printing Technologies' and increasingly controlled from an Office. Why haven't we adopted newer building technologies here ? Would reduce costs ? (But also increase unemployment )

123shooter

Spirogyra wrote: »

I believe in Germany that some properties are now built without Bricklayers, new 'Printing Technologies' and increasingly controlled from an Office. Why haven't we adopted newer building technologies here ? Would reduce costs ? (But also increase unemployment )

Very good point.

Actually the way of building has always been in the UK and Ireland to suit what could be described to suit 'traditional' methods. Which is to plunder around in muck and mess trying to stick thousands of bits of construction materials together very inefficiently.

Houses as with other products should and can be made in factories where they can be produced very efficiently and at much less cost and then easily erected on site.

This was actually done in the UK and Europe after WW2 to house the populations which were homeless after 5 years of fighting and in the most it was very effective except these homes were only supposed to be temporary until more traditional homes were built.

You can buy factory made homes here in Ireland now and some are exported from Germany and are amongst the most efficient low cost homes to heat (passive) and install and look just like similar traditional types.

A switch to these type of homes would solve the housing supply problem and create many jobs and possibly reduce the cost as well.

I haven't a clue why this doesn't happen.

Cuddlesworth

Because the actual cost of materials and time for construction isn't bad and we don't build "traditional houses" anymore. The standards for a new house are ridiculously high, you can't throw some blocks down, lump some plasterboard on top and call it a day.

"The actual cost of building the house – known as the hard costs or construction costs – is less than half of the overall cost. That figures comes in at €150,000 just 45% of the total."

123shooter

Cuddlesworth wrote: »

Because the actual cost of materials and time for construction isn't bad and we don't build "traditional houses" anymore. The standards for a new house are ridiculously high, you can't throw some blocks down, lump some plasterboard on top and call it a day.

"The actual cost of building the house – known as the hard costs or construction costs – is less than half of the overall cost. That figures comes in at €150,000 just 45% of the total."

The building industry has had prices laid down available for every part/job of building a house for over 30 years. It is how estimates of projects are calculated.

Houses are still mainly built on site and its not an efficient way of building a project such as a house.

Cuddlesworth

123shooter wrote: »

The building industry has had prices laid down available for every part/job of building a house for over 30 years. It is how estimates of projects are calculated.

Houses are still mainly built on site and its not an efficient way of building a project such as a house.

Your thinking in terms of building "a house". The problem with economies of scale in this context, is that the costings are different.

A house build involves constructing the house itself and a small amount to connect it to existing infrastructure.

An estate involves building houses. And roads, sewerage, power, water, green spaces, street lighting and a ton of other things I can't remember. That's not including the requirements put upon the developers to upgrade the existing infrastructure in the surrounding areas to accommodate the increased numbers of people. For example, the original developer of Cherrywood had to build a bridge and 3 stops for the Luas, the new developer has had to redesign an entire intersection and the surrounding roads. The council doesn't pay for any of that.

Builders are not stupid. If buying pre-fab houses en-mass was genuinely that much cheaper of course they would do it. It would save them money.

__..__

The builder must give away a certain percentage of their houses so that has to be averaged out too to get the cost.

LirW

__..__ wrote: »

The builder must give away a certain percentage of their houses so that has to be averaged out too to get the cost.

If that's in relation to the social housing percentage, the council gets it at a reduced rate (building cost + a small margin). They don't give them to the council for free.

__..__

LirW wrote: »

If that's in relation to the social housing percentage, the council gets it at a reduced rate (building cost + a small margin). They don't give them to the council for free.

As I said the builder must give away a certain percentage. Give away for less than market = less profit. All goes into the end price that the other buyers have to pay and also how worthwhile it is for the builder to build.

commited

Fliucharbith wrote: »

House prices are far too high when matched against income, and especially when compared to previous generations.

Unfortunately, past performance is no indication of future performance...

There is one vast societal difference compared to previous generations - it is now commonplace for 2 parents to work and for a large percentage, not because they have to work but because they want to work. This in turn changes affordability and affordability will then dictate house prices in the most desirable areas. Then in turn the adjacent areas are influenced etc etc.

Current house prices are dictated by lack of supply, not access to easy credit (further proven by the huge percentage of cash transactions taking place at the moment). Until supply is corrected, there will be no fundamental change to prices and supply will only correct if developers can make a decent return and continue to build more housing (knock-on effect, land gets more expensive in Dublin as there is less to access) or population decreases (unlikely).

Fliucharbith wrote: »

15 years of a persons life is, to me, a reasonable amount of effort. 30 years is practically a productive lifetimes worth, which leaves the only conclusion that a person starting out with little or nothing should devote their life to buying a home, pop their clogs soon thereafter and then the process begins again for their children.

I'm confused by your logic here? Working life is approximately 45 years so 30 years is a very realistic term for a mortgage. Typical duration for "previous" generations was 20-25 years, however their life expectancy was also lower than is today, so likelihood of dying shortly after paying off a 30 year mortgage seems unlikely. They also endured sustained double-digit interest rates which nearly crippled many families financially.

You're latching onto the 30 year mortgage length but with central bank lending rules as they are (and stress tested), many people could overpay and easily reduce this to 20 years. Many will elect not to as they make lifestyle choices such as multiple holidays, new cars etc. The bottom line is that people have options and choices, I certainly won't spend 30 years paying off a mortgage because I will make a choice to prioritise it over other things.

So 50% of the money is reasonable, and 50% of the time is reasonable. You cant have an economy that is based off each persons lifetime equating to a single house purchase. And rightly so, its easy to say that 50% less is lower than construction costs. That's not an indication that houses would be too cheap, that's merely proof that construction costs are equally as overpriced. Every facet of this housing problem is equal to its neighbouring factor. That is to reiterate that contructio costs are too high and house purchase is too high. Is it the chicken or the egg? Add in any other factor, whether it be land, zoning, vulture speculation etc.....they all equal this mess, equally so.

So how do you correct prices in a desirable area where land is scarce? Your whole argument is based on what you think is "morally" correct, not on basic economics

It appears that there is a real motivation out there to be "the one who predicted the crash" now, a lot of people are willing it on too in the hope that they'll be right and be able to buy that Georgian house in D4 for €20 and a packet of Tayto. It's just not how it works.

Fliucharbith wrote: »

I remember thinking about 2012-ish that there was no way on earth the same thing was going to happen again, that house prices would balloon out of control again, that governments would be at best ineffective and at worst complicit again etc. But it has happened again, memories are very short, shockingly so.

House prices have not "baloon[ed] out of control" Yes they are higher than they were in 2012 but there are credit controls in place. Pretty sensationalist language.

So yes, I do hope there is a crash, but my hopes are entirely separate from my reasoning that it will likely happen. The sole reason I hope it happens is that its for the general good, not only for people now but for the future of the country.

It will have the opposite effect and will punish everyone, just as 2008 did. It's pretty sad and vindictive to wish for a "crash", stabilisation and a secure housing market is the only win possible - boom/crash cycle will just drive more mania and misery for future generations.

I love Sean nos

Where's Realitykeeper? He always had an opinion on this kind of thing and it was always in the next 1 - 2 years.

amcalester

I love Sean nos wrote: »

Where's Realitykeeper? He always had an opinion on this kind of thing and it was always in the next 1 - 2 years.

I think we have to wait another few months until he pops back up claiming it'll happen in 12 months.

He'll be right eventually, and then we'll all wish we'd listened to him.

utmbuilder

a friend of mine was in the pub last week, and he over heard a friend of his talking to a man in a pin stripped suit who said it was all going to crash march 18th 2019..
..
that's as good a date as any


apart from all the above, there is a big shortage of houses, which wont be filled for 10 years I guess we have gotten crap a building houses,

banks are lending very moderately so a credit squeeze is unlikely anytime soon, as will be defaulters as mortgage repayments are much lower now due to less lending

prices are still a long way off the peak, by what ? 35%

rents are exceptionally high so there is demand, I would be exceptional surprised if a crash came in the next decade


I think some of the asking prices this month are chancing their arm based on what they where asking for in June 2017, so will be interesting to see what asking prices kick off at in say February/March 2018, not being able to borrow a **** load of money is effecting things going up

waiting for a boggie man to come along and crash the market without even having an indicator or something thats a risk , is not really a good strategy,

hey there is always the hope they build too many houses for people to buy ! but again we seem to be crap at building houses, as the banks are not loaning the construction company's enough for say 100 builds at a time like they use to.

Spirogyra

How sustainable are 30 year mortgages when Job Security is ever declining ?.

utmbuilder

Spirogyra wrote: »

How sustainable are 30 year mortgages when Job Security is ever declining ?.

Unemployment is at 6% and never so low in the history of the Irish State. Even most of the rest of Europe is below double digits.

The problem is its a different type of employment if you are a trades man and **** hits the van you may have to well change carears and its harder for the older generation , although for 30 year olds now they should be well use to it.

Sierra Oscar

utmbuilder wrote: »

Unemployment is at 6% and never so low in the history of the Irish State. Even most of the rest of Europe is below double digits.

The unemployment rate was 3.7% in 2000.

It's important to keep in mind that the unemployment rate went from 5% to 13% in the space of 1 year when the financial crisis hit.

draiochtanois

This post has been deleted.

DublinWriter

Crash events in Ireland tend to happen as a delayed consequence to wider, global economic downturns.

I'd wager on late 2019 myself once the full effects of Brexit come into play globally.

BoatMad

DublinWriter wrote: »

Crash events in Ireland tend to happen as a delayed consequence to wider, global economic downturns.

I'd wager on late 2019 myself once the full effects of Brexit come into play globally.

Brexit has no global effects outside of the uk, which will suffer and Ireland.

The last recession was sparked by a lending crisis that largely stemmed from a collapse of interbank lending.

That situation is unlikely to arise again in the medium term

High or even excessively high houses prices are not the foundation of a crash. Money supply is.

CorkonianBoy

jive wrote: »

Ayuntamiento wrote: »

Never understand the point of these threads. OP seems to be rubbing their hands in glee at the thoughts of a crash...but why do you care?

We just bought an amazing house in Dublin that gives myself and my husband a less than 20min commute into the city centre for work. It's big enough that we can have a family if we choose to. We love the area. It's cheaper than our previous rent. The mortgage repayments represent 1/8 of our monthly income.
Basically we bought ourselves a home. I couldn't care less if the market collapsed tomorrow and our house was worth nothing. It's our home and our shelter.

Cheaper to buy during a crash which is why OP probably cares. Another crash is inevitable, all these things are cyclical. Ultimately if you buy now and it crashes in 10 years then who cares, if you were wanting to sell then you'd be buying in the same market anyway.

The only gripe you'd have is if you bought at peak levels and a crash followed a couple of months/years following as then you'd have spent more cash than you needed to had you have waited a little longer to buy... but good luck trying to time the market.

You rare right, jive.  Timing the market is impossible.  But I also agree with Ayuntamiento.  Buy a house you can afford and then live there for 10-15 years.  Chances are you will ride rout any downturns.  At least as long as you can keep your job.  No guarantees in life but good rules to follow are: 1) don't over-speculate with the most important things in your life - home, family, job and 2) long-term property investments seldom go wrong.

Villa05

Graham wrote: »

Fliucharbith wrote: »

That wasn't exactly my point. More to the fore however, is the 30 year mortgage becoming (already?) standard. 30 years of labour is 30 years of labour, no matter the difference in terms of amount.

House prices aside, I don't see a huge issue with someone paying for a home over 30 years when they're likely to see the benefit of it for 40/50+ years.

Trouble is, that with a 30 year mortgage on top of other essential life expenses there is little room to save for a pension plus its very easy to move down the income scale

Graham

Villa05 wrote: »

Trouble is, that with a 30 year mortgage on top of other essential life expenses there is little room to save for a pension plus its very easy to move down the income scale

As was always the case. I can definitely see the benefit of heading into retirement owning a home though, the alternative is fairly grim.

Villa05

theboringfox wrote: »

UsBus wrote: »

A levelling off in prices...or a soft landing...I don't know any market cycle that works like that, as much as we may want it to. We will reach a tipping point at some stage. Whether it be PCP finance loans, interest rates or some other market shock. And after that market sentiment will only drive things in one direction.

By levelling off I meant the rate of growth in percentage terms would lower and that's been happening. I don't believe there is a bubble at the moment so I agree bubbles don't have soft landings but this is not a bubble. People are using a severe low point in market in 2012 as benchmark for there being a bubble.

Interesting views in this atricle

https://lovindublin.com/news/governments-top-housing-adviser-says-the-housing-crisis-is-completely-normal

2012 may well have been a low point, I dont agree it was a severe low point. A 50% decrease is not unusual after an increase of 300% in the decade preceding the crash
It is worth noting that affodability in Dublin  is worse than it was in 2006 according to the [font=myriad-pro, Arial, sans-serif]EBS-DKM Affordability Index[/font][font=myriad-pro, Arial, sans-serif]  27.4% v 26.4% in 2006[/font]
[font=myriad-pro, Arial, sans-serif]http://dkm.ie/en/publications/affordability_index[/font]
http://www.finfacts.ie/irishfinancenews/article_1027674.shtml

L1011

Sierra Oscar wrote: »

The unemployment rate was 3.7% in 2000.

It's important to keep in mind that the unemployment rate went from 5% to 13% in the space of 1 year when the financial crisis hit.

3.7% is below the natural level (beveredigian full employment) and was a fluke effectively. With modern employment patterns 6% is low - very low. I can't see it going below 4.5% again

mloc123

Villa05 wrote: »

Trouble is, that with a 30 year mortgage on top of other essential life expenses there is little room to save for a pension plus its very easy to move down the income scale

If you cannot save/pay into a pension while paying a mortage... your mortgage is too high. Based on the current lending rules and what % of monthly income people are being approved for... they should have plenty left to live/save/pay into a pension.

You have the added benefit of owning a house and having no rent or mortgage to pay by the time you retire.

Villa05

mloc123 wrote:

If you cannot save/pay into a pension while paying a mortage... your mortgage is too high. Based on the current lending rules and what % of monthly income people are being approved for... they should have plenty left to live/save/pay into a pension.

The criteria the banks apply is to have 200e per dependent child per month. That sum would not cover 1 week in the creche.

Stress tested at 2 % above the current rate is weak. Current rates are emergency rates, normal ecb rates would be 3 to 4 % above current rates.

Banks also stuck with trackers they thought they could get away with plus a liability for compensating those they were taken away from

Mortgage arrears from 2008 bust still a major problem for all banks.

Affordability in Dublin is worse than 2006. This is not sustainable and place huge pressure on taxpayers

Banks lent heavily to milk farmers in advance of milk quotas being abolished. That has the potential to backfire spectacularly. Higher production = lower prices plus the potential damage Brexit could do to there principle market

__..__

mloc123 wrote: »

If you cannot save/pay into a pension while paying a mortage... your mortgage is too high. Based on the current lending rules and what % of monthly income people are being approved for... they should have plenty left to live/save/pay into a pension.

You have the added benefit of owning a house and having no rent or mortgage to pay by the time you retire.

There is a school of thought that says buy your house first and then worry about a pension.
If you can do both great, but house first seems to be the way. I guess because at least you have somewhere to live in retirement and can sell it at some point and rent anyway if you need to. Harder to go the other way as you close in on retirement.
There is the problem of getting a mortgage as you get older too. I certainly you pass 40 your mortgage options get limited. The older you get the more limited they get.
There are a lot of people who were hitting their mid 30s around the time of the crash and while they survived the crash, they will find it very difficult to get a mortgage as time goes on.

CorkonianBoy

In a country the size of Ireland, I do not think there is such as thing as a "soft landing".  But I don't see how the supply issue gets resolved unless land prices decline relative to housing prices enough to permit construction of affordable market price housing. So I worry more about the overall economy than about specific supply or demand issues.  So, one answer to Ireland's housing problem is greater economic development especially outside of Dublin but the only way to achieve this is to develop much better infrastructure which is very expensive, perhaps more expensive than Ireland can afford on its own.