Opinions on when the next property crash may happen

Shurimgreat

Uncertainty with the EU causes banks to stop lending to each other and to customers. No-one can get mortgages. House prices come down. I can't see it happening any time soon though. Our economy is far more sustainable today than it was in the 2000-2006 era when building played a huge part in the economy and employment. We are in a better place to weather the storm.

MICKEYG

SeanSouth wrote: »

Crashes only happen when there is an over-supply of houses and no demand.

At the moment we have the opposite, Much demand and no supply. There's no
crashes on the horizon but there are increasing amounts of people with no houses
so the situation will get a lot worse before it gets a lot better

What needs to happen to correct the current situation is for more houses to be built. But here's the problem. The problem arises because all new houses must be A rated Rolls Royce and not D rated Ford Focus as most of the existing housing stock is. If the builder builds a high standard Rolls Royce as is required by the building regulations, he wont be able to achieve enough margin to make it worthwhile. So there is a stalemate. The fact that the government is insisting on taking 13.5% vat on top and the local authority and Irish water are clawing in excessive levies to feather their own nests means that its just not feasable to build.

The government wont withdraw the levies or taxes because some clever civil
servant has said that the money will go to the builders instead. The civil servant
is absolutely right however this is irrelevant as the main objective is to get
the houses built. Market forces and finance restrictions will keep the prices under
control. The developer wont build unless he can sell within the 1st time buyer's affordability level

A crash cant happen unless there is some 'air' between the cost of building and the price of the house. There is no 'air' at the moment. To build a 3 bed semi detached house in Dublin costs around 400,000 on average depending on the area. The maths dont work.

Here's what the government needs to do to get building moving

1) All taxes, levies and local authority charges need to be abolished for
new builds in Dublin Cork, Limerick and Galway for a finite period of five years.
The five year stipulation will draw out builders in force and we will get houses
built quickly and where they are needed.
2) Building Regulations need to be relaxed so that, not only A rating houses are
allowed but also B rating and C rating too. A, C rated house is still a very fine house but is much cheaper and more affordable
3) The planning system needs to be dragged into the new millenium and the
old inflexible and archaic system needs to be abolished

400,000 to build. Does that include land cost?

LirW

Shurimgreat wrote: »

Uncertainty with the EU causes banks to stop lending to each other and to customers. No-one can get mortgages. House prices come down. I can't see it happening any time soon though. Our economy is far more sustainable today than it was in the 2000-2006 era when building played a huge part in the economy and employment. We are in a better place to weather the storm.

Now there is a whole generation of FTB entering the market, they couldn't get mortgages a few years ago, now they can. Lots of them saved. Also a lot of these buyers are relatively young professional couples with good salaries or well-paid singles and they won't have a problem finding something suiting their needs. Where the real pressure is on is when you're not part of, I call it "the perfect applicant".
That hits hard working people on low salaries having families. These families struggle getting mortgages and if they get them, there is very little supply in their price bracket (just to clarify I'm talking about "working class areas" here but a lot of them are going mental price wise), leaving only property in REALLY bad areas sitting on the market and they sit there for a reason. Leaves these people to rent for horrifying prices with the predicament of where to go if they get turfed out or the lease ends.
There is no social housing either to house these people.
And I'm not talking about entitlement here but this is a problem.

danko82

so, regarding the topic, is still a good investment to buy an apt in Dublin with prevision to live here for other 3-5 years?

I am thinking at worst scenario, where you buy an house, you want to sell in 5 years, but the price are down so you cannot sell and you cannot move country as you will get lower salary outside ireland..

Cyrus

Ms Doubtfire1 wrote: »

Might be In dublin and cork. Never seen that happening in any of the other cities I lived in.or have visited as recently as last year....but hey...if you are of the opinion that a house that can be huffed and puffed over by the next big storm is worth 300 grand or more...be my guest. Ain't my money.
either way we're off topic.As outlined, those are my reasons to predict the next crash within 24 month.:-)

you are in any thread going predicting a crash but your rationale is skewed.

Maybe you feel houses are expensive but they arent over priced.

People can afford them, generally with more than 20% equity and 25-30 year mortgages. Also the supply isnt there and it will take probably the best part of a decade to catch up.

The last bubble was caused by irresponsible lending. we arent in that situation.

jamesthepeach

I think the crash is coming soon. Maybe the next couple of years. Any economic event will cost jobs and pay. Any pay reductions mean less mortgagesgiven out and defaulting on current mortgage s. Then there will be nobody to buy the crazy amount of houses that we are ramping up to build. And the tax payer will be bailing out the builders and the banks again.

An economic crisis can come from anywhere. It may have nothing to do with property. You won't see it coming. So it's all about how exposed you are at the time it happens. And history tells us that they come often and silently until it's too late.

jamesthepeach

danko82 wrote: »

so, regarding the topic, is still a good investment to buy an apt in Dublin with prevision to live here for other 3-5 years?

I am thinking at worst scenario, where you buy an house, you want to sell in 5 years, but the price are down so you cannot sell and you cannot move country as you will get lower salary outside ireland..

You might be in competition with vulture funds on apartments. The price of apartments is starting to rise fast after being static for ages. Suddenly apartments are in again. Is it people giving up on buying a house and just buying what they can afford before they can't afford it anymore?

Theboinkmaster

jamesthepeach wrote: »

I think the crash is coming soon. Maybe the next couple of years. Any economic event will cost jobs and pay. Any pay reductions mean less mortgagesgiven out and defaulting on current mortgage s. Then there will be nobody to buy the crazy amount of houses that we are ramping up to build.

Nope - even if we have another economic downturn there will still be enough demand to swallow up the short supply of very expensive houses. The ramping up we're doing is still nothing close to the demand and the population is only increasing more.

I still see no serious reasoning why there will be a crash here, seems like wishful thinking for many or "sure they're so expensive"....

Every property cash globally has been precipitated by cheap credit - that's not the case in Ireland currently.

Less jobs and cut pay in current environment won't slash house prices, the demand is too high.

People forget there's a lot of money in Ireland passed through families so many people are buying houses with significant cash deposits.

The best we can hope for is growth back in line with overall inflation and interest rates (1-3%).

Yourself isit

As usual people tend to extrapolate. And buy the industry line. 400k to build? Amazing that houses lower in price than that are bring built.

Reduce taxes? No effect on prices.

And yes the bust this time won't be caused by over lending as much but by increases in interest rates. And supply.

mariaalice

There will be a correction sometime but a crash like the last time I can't see that.

Yourself isit

Theboinkmaster wrote: »

Nope - even if we have another economic downturn there will still be enough demand to swallow up the short supply of very expensive houses. The ramping up we're doing is still nothing close to the demand and the population is only increasing more.

I still see no serious reasoning why there will be a crash here, seems like wishful thinking for many or "sure they're so expensive"....

Every property cash globally has been precipitated by cheap credit - that's not the case in Ireland currently.

Less jobs and cut pay in current environment won't slash house prices, the demand is too high.

People forget there's a lot of money in Ireland passed through families so many people are buying houses with significant cash deposits.

The best we can hope for is growth back in line with overall inflation and interest rates (1-3%).

I think you're assuming here that retail rates won't increase if interest rates increase. Which they will.

It's more accurate to say that it's generally interest rate increases that cause property bubbles to collapse.

Graham

Yourself isit wrote: »

I think you're assuming here that retail rates won't increase if interest rates increase. Which they will.

I too expect interest rates to increase marginally, I don't expect they will increase as much in Ireland as we already have relatively high rates compared to the rest of the eurozone.

Yourself isit wrote: »

It's more accurate to say that it's generally interest rate increases that cause property bubbles to collapse.

That wasn't the case at the end of the most recent bubble.

Cyrus

Yourself isit wrote: »

As usual people tend to extrapolate. And buy the industry line. 400k to build? Amazing that houses lower in price than that are bring built.

Reduce taxes? No effect on prices.

And yes the bust this time won't be caused by over lending as much but by increases in interest rates. And supply.

how quick do you see supply coming on, every year that passes more and more unmet demand is building up.

unless interest rates goto above 6% in a very short period that wont create a crash, rates increasing will be a response to rising inflation and wages will increase also

Theboinkmaster

Yourself isit wrote: »

I think you're assuming here that retail rates won't increase if interest rates increase. Which they will.

It's more accurate to say that it's generally interest rate increases that cause property bubbles to collapse.

No of course retail rates are going to increase, sure the only way is up.

I just don't think a rise in rates is going to cause a crash, will just curtail demand and suppress the rises but demand will still strongly outstrip supply.

To say a rate rise will cause a crash is to assume low interest rates are what's driving the surge in prices, but that's not the case it's demand.

Theboinkmaster

Cyrus wrote: »

how quick do you see supply coming on, every year that passes more and more unmet demand is building up.

Exactly - the problem is just getting worse and compounding each year.

Cyrus wrote: »

unless interest rates goto above 6% in a very short period that wont create a crash, rates increasing will be a response to rising inflation and wages will increase also

This is true in a normal economy but our interest rates are ECB linked not to the overall economy. Our inflation rate in Ireland is higher than interest rates as our economy is outperforming the central European economies, whereas normally they should be the same.

But assuming if European interest rates rise our economy will improve also and thus drive wage inflation, hopefully.

jimmycrackcorm

Ms Doubtfire1 wrote:

Amstelveen, suburb of amsterdam ( 10 km perfect public transport

Compare to Jobstown maybe?

jamesthepeach wrote:

I think the crash is coming soon. Maybe the next couple of years. Any economic event will cost jobs and pay. Any pay reductions mean less mortgagesgiven out and defaulting on current mortgage s. Then there will be nobody to buy the crazy amount of houses that we are ramping up to build. And the tax payer will be bailing out the builders and the banks again.

The gap for silly is still too wide and I can't see it even remotely closing by the time the guaranteed shock of Brexit actually happening occurs.

Tigerandahalf

There is definitely potential for a correction in Dublin.

Trump today announced that he will reduce corporate tax to 15% from something like 35%. It will have to go through congress it seems first but it is likely to happen.

There is also a tech bubble with shares in tech companies at very high levels. Year old companies are suddenly being valued in the billions as old money is chasing a profit and the next big thing because interest rates are so low.

I think we will see a big crash in tech shares once interest rates start to rise.

Will this then have a big effect on tech companies in Ireland? We will have to wait and see.

The banks here are not meant to be big lenders for commercial property projects at the moment. It is equity funds from abroad that are building in Dublin. Thus our banks should not be as exposed.

A lot of uncertainty surrounding Brexit and the EU trying to control our tax rates.

As long as employment is spread across a wide area we shouldn't get a major shock but interest rate rises will certainly hit people's ability to spend in the local economy.

The big thing being exposed is the huge gap emerging between the wealth and assets of the older versus younger generations. It is going to become a huge issue at some stage in the future.

jamesthepeach

It's kinda funny.
This thread reads like the ones in 2005, reads the same on both sides of the argument too.
Definitely a crash coming

Yourself isit

Graham wrote: »

I too expect interest rates to increase marginally, I don't expect they will increase as much in Ireland as we already have relatively high rates compared to the rest of the eurozone.

Maybe. Of that doesn't happen even an increase in 2% in ECB rates would seriously harm the market. It might cause a recession anyway as trackers would be affected

That wasn't the case at the end of the most recent bubble.

No but I said generally.

Cyrus

jamesthepeach wrote: »

It's kinda funny.
This thread reads like the ones in 2005, reads the same on both sides of the argument too.
Definitely a crash coming

How can it read the same when the conditions were polar opposites loads of supply and loose lending v limited supply and tight lending

Yourself isit

Cyrus wrote: »

How can it read the same when the conditions were polar opposites loads of supply and loose lending v limited supply and tight lending

It reads the same because

1) this time is different.
2) what about london? Sydney?
3) this will always continue.

At least from the bulls.

Cyrus

Yourself isit wrote: »

It reads the same because

1) this time is different.
2) what about london? Sydney?
3) this will always continue.

At least from the bulls.

Sorry but that's nonsense

Who is saying this will always continue? There are specific circumstances at the moment that are under pinning property prices and they won't change any time soon unless lending rules are relaxed but that won't cause a crash

thisonetaken

jamesthepeach wrote: »

It's kinda funny.
This thread reads like the ones in 2005, reads the same on both sides of the argument too.
Definitely a crash coming

There's always a crash coming, just a matter of when. Unless you can buy somewhere with cash though those hoping to pick up a house on the cheap are going to be disappointed, just like the last crash banks won't be lending. I reckon it will happen mid 2019, for those renting in Dublin that means paying rent of about 32k from now to then.

Ayuntamiento

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.

Samuel T. Cogley

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.

+1 but what's the point of any internet conversation - to waste a bit of time!

mariaalice

There is a difference between a correction and a crash.

jive

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.

pangbang

Brexit.
Frexit (? Eurosceptic winner either way).
Corporation tax changes on the way.
NATO.
Many Countries declaring they want their own companies back, and are gonna act on it.
Freedom of movement decreasing across the planet.
Dow Jones due for a wallop.
Tech bubble.
War mongering on the march, Russia, iran, north korea, china, USA...
Unsustainable policies, or non-existent policies to protect our country.
Everyone and their fish striking/soon to be striking.
Flimsy-arse economy that is barely afloat with s**t quality contracts and conditions.
No home economy outside agriculture to rely on.
People in droves getting indebted for 25 to 35 years for a tiny house.
All the defence forces for the "no seriously, everythings great!" are in gear.
And lots more!

When this pops, its gonna make 2008 look like a walk in the park. And it will all happen in the space of a few months this time, who/what will be the domino to kick it off?

Start/keep saving money, don't get into debt, and then you'll get through it. Maybe. Heed the words of this nameless, faceless internet dude....it'll start creaking about Christmas/January, and then get into swing April/May next year :P

No skin in the game at all, not gonna believe something just because I tied myself to it (aka just bought a house therefore it's gonna be rosey)

Cyrus

pangbang wrote: »

Brexit.
Frexit (? Eurosceptic winner either way).
Corporation tax changes on the way.
NATO.
Many Countries declaring they want their own companies back, and are gonna act on it.
Freedom of movement decreasing across the planet.
Dow Jones due for a wallop.
Tech bubble.
War mongering on the march, Russia, iran, north korea, china, USA...
Unsustainable policies, or non-existent policies to protect our country.
Everyone and their fish striking/soon to be striking.
Flimsy-arse economy that is barely afloat with s**t quality contracts and conditions.
No home economy outside agriculture to rely on.
People in droves getting indebted for 25 to 35 years for a tiny house.
All the defence forces for the "no seriously, everythings great!" are in gear.
And lots more!

When this pops, its gonna make 2008 look like a walk in the park. And it will all happen in the space of a few months this time, who/what will be the domino to kick it off?

Start/keep saving money, don't get into debt, and then you'll get through it. Maybe. Heed the words of this nameless, faceless internet dude....it'll start creaking about Christmas/January, and then get into swing April/May next year :P

No skin in the game at all, not gonna believe something just because I tied myself to it (aka just bought a house therefore it's gonna be rosey)

If you need a house and can afford it buy one , if you can't or don't ,don't

But just because you would like there be a crash it doesn't make it any more likely

At least with all the cash you are saving you will have money for the bomb shelter needed if all of the above comes to pass

pangbang

Cyrus wrote: »

If you need a house and can afford it buy one , if you can't or don't ,don't

But just because you would like there be a crash it doesn't make it any more likely

At least with all the cash you are saving you will have money for the bomb shelter needed if all of the above comes to pass

I don't think that's a healthy line of thinking. If you are hungry, buy that 300 quid meal right in front of your face that very moment? This housing situation is being driven out of desperation, and making decisions in desperate situations is not a good idea.

Be pessimistic when everyone is optimistic, and vice versa. Sound advice.

And as I said above, its not that I would "like" there to be a crash, I just see it as an inevitability with warning signs flashing all over the shop