Irish Property Market chat II - *read mod note post #1 before posting*

The problem with a 30% drop in house prices is what drives it. Take the last crash house and rent prices plummeted. Taken completely in isolation from that point of view the last crash was a good thing. However what caused the last crash was a banking and wider economic crisis that resulted in large numbers of people unemployed and others emigrating. That was something people were definitely not happy with.

There were also large numbers of people complaining about negative equity and the negative equity situation did impact directly anyone who was unemployed and couldn't keep up with their mortgage repayments. I know the central bank rules have changed dramatically but a mortgage is still an asset backed loan. A house is that asset/collateral. The value of the house matters,banks don't ask for property valuations for the fun of it. Any significant drop in that assets value is going to impact the banks balance sheet. At some point this then impacts the banks lending capacity and ability to lend to the wider economy. Again thank the ECB for tightening up banks capital requirements. You could easily end up with a negative feedback loop that impacts the wider economy. Remember due to how hard it is for Irish banks to repossess houses(IE collateral) Irish mortgages are already considered relatively risky as mortgages go in a European context. A large drop in house prices will not improve things.

It's very easy to say house prices need to drop 30%/another large amount, it's far far harder to achieve a drop anything remotely like that without messing up the entire economy.

Plenty of people - and I've noticed it on threads on here - appear to think "negative equity" just means the price went down. They could have a house paid for, that was valued at 400k last year, it's valued at 500k this year, and then next year if it's valued at 480k they think they are suddenly 20k in "negative equity"

Yes, it is beneficial to those looking to trade up, but not to anyone downsizing, or anyone that has bought around the peak and wants flexibility in life. I don't see why you wouldn't care about a 50% drop, just because you had no plans to sell at that moment in time, who knows what could happen in the future. It would also probably attract even more high earner immigrants, as one of the main things stopping people from buying in Ireland is the price of property, and then you're back to square one with rising house prices again.

Focusing on delivering on housing supply promises and other things like proper transport infrastructure to commuter towns is going to be far more beneficial than just talking about how prices have to drop by some huge number.

And why do you think pension funds invest in property?

If house prices are to fall by 30% then we would need to be building at least twice the number of houses we currently do and would need a massive oversupply of housing

If your mortgage is higher than the value of your house if you want to move you need money to fund the shortfall and you need a deposit for the new house.

On the LPT at present it's set for a five year period it will neither go up or down in that period

As did those who chose not to buy when property was 20% cheaper, wouldn’t you say?

Modular homes is an interesting one.

I assume there must be a lot of objections to these schemes, or perhaps they dont fully meet Ireland's building requirements?

For instance, what would stop the govt building modular estates on the outskirts of towns and cities?

It must be quicker to deliver these homes and could really peg back the housing shortfall.

Nimbys will object, but they object anyway. If the schemes are out of town and subject to a strategic planning order that mitigates a lot of objections, we might get somewhere.

There must be ways to deliver these schemes to market at a rapid rate vs standard new home construction.

Sounds like non-buyers remorse. You are now looking for more intervention to bring the price down.

One person gets in, gets a job, then calls the whole family.

I have seen it couple of times. These people are in no position to support their family with their Irish salary. Who will pick the tab I wonder? Hmmmm. State will pay for their house by hap or similar. Then we will wonder why state provide vital services for the citizens who paid in the coffers forever

What timespan are people fitting this 30% drop in house prices into?

I don't disagree with anything you've written. I was actually thinking about how slow a burn the 30% would need to be in order to not to wreck the lending criteria of banks.

Imagine the scenario where from 2026-2027 there is a 10% drop in house prices and Taoiseach Mary Lou McDonald says "We are on course" etc. In this scenario, with the stated goal being another 20% drop, how many 90% mortgages are banks going to hand out?

That second year, where the former €430,000 home is now worth €390,000 with legislation lined up to help bring it down further, would be very interesting.

It is easy to say "they can take the negative equity on the chin" to a subset of homeowners, but I can see it impacting borrowers, too, if the reduction in prices was fast. There's a whole other story if it is too slow!

What legislation will result in house price drop? Sorry bit aloof on this topic