Softening house market?

OEP

Lots of interesting comments here but what I really don't see is the comparisons between this and the 2008/2009 crash. Is that just because that's the only recession a lot of people have memories of so they're equating recession = 2008 crash? A crash like that hadn't been seen since the great depression and it almost brought down the entire global financial system.

Subzero3

The last recession forced people to leave the country. Many Polish ect went home. Lots of people with negative equity gave the houses back to the bank.

This time around its a housing crisis. We have a massive shortage and that shortage is only getting worse (uncapped immigration) ect is only adding to the shix show.

The way the Euro currency is going many people are still trying to buy a house to hedge against that to as it's safe, and you can rent it to atleast make a return.

awec

https://www.boards.ie/discussion/comment/119609977#Comment_119609977

https://www.boards.ie/discussion/comment/119610039#Comment_119610039

You can always spot who has never been in the market on this forum. This is how it has always worked. There is no surge.

You pay your booking deposit. You sign the contract and pay the remaining deposit within 21 / 30 days. You wait for them to build your house.

Paying a house 6 months in advance in the current times is very equivalent to what has been happening in China where people were paying pre-construction houses

Pretty much every single person who has bought a new build house in the past 10 years has bought it before it was constructed. As someone who is supposedly in the market, I am a bit confused as to how you are not aware of this.

ARJn

https://www.boards.ie/discussion/comment/119610586#Comment_119610586

Not true anymore , maybe was true in 2020 , 21 days to sign contract , at the max they would wait for maybe 1-2 weeks more for some specific delays like bank loan offers pending etc . They usually had in 2021 a list of cancellations ready with loan offer waiting for each house . That has slowed down in 2022

Kitchen appliances are included no matter what (although they say 21 days signing contract in terms but that's just for moving quick) .

Also I recently lost a new build house due the my loan offer delay from bank and the new build EA did not wait (30 days since booking)

ARJn

https://www.boards.ie/discussion/comment/119610966#Comment_119610966

I am not saying that 6 months is a bad time , I am saying paying 6 months in advanced in this current situation where nobody knows what the next month is going to be wrt to uncertainty in interest rates and house prices falling by the day , the EA and developers are moving their risky bets onto the buyers

Also the last house I booked which I could not get due to my loan offer delay was ready for snag within 4 weeks of launch .6 months was common during peak covid . I can give you atleast 3 examples in South Dublin where time between phase launch and snagging were <2 months

wassie

https://www.boards.ie/discussion/comment/119610780#Comment_119610780

Correct. The GFC resulted in a credit crunch, meaning that no one could get a mortgage leaving only cash buyers and prices subsequently reflected this. This time lending has been prudent (thanks to tight Central Bank rules) and banks (those that are still here) remain well capitilised.

Former Former Former

https://www.boards.ie/discussion/comment/119610977#Comment_119610977

They usually had in 2021 a list of cancellations ready with loan offer waiting for each house . That has slowed down in 2022

Also I recently lost a new build house due the my loan offer delay from bank and the new build EA did not wait

These don't really stack up. I'm guessing your EA wouldn't have cancelled your new house if he didn't have someone else lined up to take it.

awec

https://www.boards.ie/discussion/comment/119611001#Comment_119611001

The time between launch and snag really depends on the developer (how big they are) and can also vary hugely by which specific house you buy in the phase. Some people can get in within weeks, others can be waiting 18 months.

Buying a new build has always been exposed to an element of risk due to the delta between committing to buy and actually getting the keys, if you are very uneasy about this risk you're probably better sticking to the second-hand market.

Developers and banks got seriously caught out in 2008, when they had a built a load of stock that wasn't yet sold. There was even the ghost estates etc.

So after the crash the methodology changed to reduce the risk. Developers no longer get away with taking out huge loans and paying them back far in the future when a development is finished. Nowadays, the developers get the money released to them in phases, and they have to pay back in phases too. The majority of new houses in Ireland are sold before a block is laid.

Claw Hammer

https://www.boards.ie/discussion/comment/119608659#Comment_119608659

https://www.boards.ie/discussion/comment/119608448#Comment_119608448

It has nothing to do with the 08 recession. There have been 3 long recessions in the last 50 years. mid 70s, mid 80s and 08 to 13. They had different causes and effects but all had features in common. Business failures. High unemployment consequently higher government spending on social welfare, lower tax revenues and more expensive government borrowing. When these factors combine they exacerbate one another and the banks become increasingly risk averse. The result is falling house prices.

Higher interest rates automatically reduce business profits and tax revenues as well as increasing the cost of servicing government debt. The only response is higher taxes to meet the higher welfare bills. There might be record high employment levels now but as winter kicks in and business failures rise that will change. I was in two shops in the last fortnight and the lighting was reduced to a very low level. In both cases similar outlets in the same areas had already closed up. If the can't afford light, how will the manage when the heat has to go on?

For over a decade the property market has been propped up by foreign funds. they have has easy pickings during that time. As that comes to and end they will vanish from the scene and the full horrors of the reckless lending of the Celtic Tiger will manifest themselves.

lordleitrim

Recruitment in tech sector on brink of freeze, says new report

https://www.independent.ie/news/recruitment-in-tech-sector-on-brink-of-freeze-says-new-report-41983789.html

I wonder if this rather than any EU intervention will soften house prices. If we no longer have an infinite supply of super earners in Irelands massive tech sector outbidding each other and everyone else, this could lead to property prices(and crazy rents) dampening somewhat?

Shedite27

https://www.boards.ie/discussion/comment/119611987#Comment_119611987

The only thing that will reduce house prices is less demand, the only thing that weakens demand is unemployment (I don't think Interest rates go up enough the change demand, people don't really care between a 2% and 3% mortgage), and until we see the Unemployment rate go up, currently at it's lowest point since 2000, I can't see a recession that's gonna impact house prices massively.

mcsean2163

I find some of the writing here very puzzling. We had really good employment before the last recession but fortunately our government borrowing was low and we could borrow our way out.

This time if we have a recession, we are the third most indebted per capita in the world. This time who's going to lend us money to support 52% of the rental market?

Claw Hammer

https://www.boards.ie/discussion/comment/119612431#Comment_119612431

Reduced affordability will also reduce house prices. Supply and demand is too simplistic. As interest rates go up, taxes go up and earnings fail to keep pace with inflation it is inevitable prices will fall. Demand from vultures will also reduce since they will lose interest in Ireland altogether when the gravy starts running thin.

Donald Trump

https://www.boards.ie/discussion/comment/119612431#Comment_119612431

Demand means the price people are willing to pay. Of course it can decrease.

One of the biggest, and self-fulfilling, drivers of house price increases is the fear/confidence that the same house will sell for more next year. That can change very quickly

SummerK

Elmbury, Cork was launched yesterday, and Heathfield today. Haven't received 'all home reserved' email yet while 3 months ago received it in 3 hours or so after launch. Although it's early to say, it appears softening in new builds.

Ozark707

https://www.boards.ie/discussion/comment/119613137#Comment_119613137

Interesting anecdote and somewhat of a leading indicator maybe. It is quite interesting to see what is happening in the markets where IR rises have been passed onto the end customer. It has resulted in prices dropping somewhat (US) and to quite a large extent (NZ, OZ, parts of Canada). I find it intriguing that posters here seem to think that increases in borrowing costs won't cause prices to drop here. I know they cite increases in immigration but many of these countries are also increasing the amounts that are coming to live there.

awec

https://www.boards.ie/discussion/comment/119613083#Comment_119613083

But again, this is just looking at one aspect.

People keep looking at this as if buying a house is like buying a car. If I think cars will be cheaper next year, I just stick my money in the bank, don't buy a car and forget all about it with very little consequence.

If I think houses will be cheaper next year, I am then committing to pay rent instead. I have to weigh up whether:

1. I will even be able to find rental accommodation that meets my requirements. The rental market is even tougher than the buyers market right now, particularly for families / older renters who don't / can't share to the same level.
2. Whether house prices will fall sufficiently to offset the rental payments I will make while I wait, knowing that house prices traditionally move slowly.
3. Whether I am likely to get mortgage approval in recessionary times when banks will inevitably reduce their lending, running the risk of getting stuck renting for a lot longer than I had originally planned.
4. Finally, if I have a family, I need to consider the worst case scenario of losing my income, and weigh up whether I'd rather end up in mortgage arrears if I own a house, or if I'd rather end up homeless because I can't pay rent.

Donald Trump

https://www.boards.ie/discussion/comment/119613188#Comment_119613188

You are not the only person buying a house. Your personal circumstances will not apply to everyone.

Your type of logic feeds into the self-fulfilling part. It will continue to do so until it doesn't anymore. - "It doesn't matter if I overpay by 20k and push prices up by that amount.....shure I'll save it on rent." Then the next person comes in and pushes it up by another 20k on top of yours. And so on and so on.

I don't mind what people do as long as the government doesn't reward them and bail people out again for making bad decisions like the last time

timmyntc

https://www.boards.ie/discussion/comment/119611072#Comment_119611072

The majority of new houses in Ireland are sold before a block is laid.

Sale agreed maybe, but not paid. No bank will let you drawdown mortgage and pay for a house not yet built.

Buying a house outright off plans with cash is a stupid boomtime move - thankfully it doesnt happen much (or at all?) anymore.

awec

https://www.boards.ie/discussion/comment/119613215#Comment_119613215

They are not my personal circumstances, but they are the circumstances for a huge number of wannabe homeowners out there.

Too many people look at this through a purely theoretical lens, nothing but the actual price of the house matters.

There are too many other real world, real life factors at play for it to be that simple.

Donald Trump

https://www.boards.ie/discussion/comment/119613734#Comment_119613734

One of which being that purchasing a house will tie you to a location for the foreseeable future. Grand if you are settled, not so much so if an opportunity might come up for you to travel to work in a different location for a while.

Shedite27

https://www.boards.ie/discussion/comment/119612820#Comment_119612820

What taxes do you think go up with interest rates? Do you think taxes will rise in this budget?

drogon.

https://www.boards.ie/discussion/comment/119613188#Comment_119613188

Well you also forget the aspect that, buying is out of reach of many.. renting is now also out of reach of many. What do you expect to happen next ?

Government to step in and subsidise both buying and rental market ?

https://www.boards.ie/discussion/comment/119613137#Comment_119613137

Yeah, viewed a new build development in North Dublin at the weekend and I wasn't sensing any great urgency from anyone there. Got a call from the EA today to say they're doing more viewings during the week and again at the weekend.

However, we're also interested in a second hand property in the same town and it's in a bidding war now, already higher than any comparable house on the PPR for the same estate.

awec

https://www.boards.ie/discussion/comment/119613905#Comment_119613905

I don't forget this, that's the point I'm making over and over again.

The rental market in Ireland is such a complete **** show right now, and it's likely to get worse before it gets better. This is why I take issue with this notion of "we'll just keep renting and wait for house prices to drop".

The government already subsidise both buying and renting, it is hard to see how this can stop.

IWW2900

This is starting to accelerate. Todays US CPI print was much worse then expected and now they will increase rate hikes at quicker pace.

ECB will of course eventually follow suite. Hikes now looking likely to escalate. Falling rates is the very thing that played biggest role in pushing up property prices across the world and now it will play out in reverse.

Not to mention the effects we will see on the economy. And all while we are facing an energy crisis. Hold on tight, its gonna be a bumpy ride.

drogon.

https://www.boards.ie/discussion/comment/119613979#Comment_119613979

Fair enough, al least you see that the current market isn't sustainable. The idea that an economy can just hum along with such fundamental issues without cracking is what I am worried about. Subsiding buying and renting is great during good times, but since we are so reliant on MNC. If anything happens far off - US, China, Germany, we certainly will feel the pain.

markodaly

Crazy house prices guy put up this question the other day.

https://www.instagram.com/p/CiYRdsmMZg6/

Seems to be a sense from the comments that the market has changed somewhat. Mix feelings of course, but the madness of 6-9 months ago appears to have passed in many cases. Still mad bidding going on in some cases but in other cases little to no action on houses that would have sold easily earlier on in the year, according to the comments.

Kind of echos the sentiment here as well.

We will see of course what the data shows but we wont know for months yet due to the lag.

lisasimpson

While not massive in terms of employee numbers he here, Patreon have announced closure of their Dublin office. Will it be the start of smaller tech firms reassessing operations esp with the slowdown of venture capital many would depend on.

Sierra Oscar

Still no sign of the property market collapsing just yet. Price growth slowing, but prices still on the increase for now nonetheless.

https://www.rte.ie/news/business/2022/0914/1323340-cso-house-price-index/