How long more will Property Prices Decline?

[Auditor #9]

There are many who live on cloud cookoo land and believe that Bricks&Mortar is always an appreciative investment and as such any blip in the property market will be short lived.

It appears to be a uniquely Irish phenomenon in that they believe there is such a strong desire to own property that collectively the national psyche will not allow a crash to persist beyond a year or two.

This is of course nonsense. People cannot get their hands on the crazy amounts of money that banks etc where doling out at multiples of income that where quite frankly obscene and astonishingly irresponsible.

Thats the crux, house prices will drop to previous levels in line with the amount of money people can raise to buy them. This will be a drawn out process as slowly the realists begin to outnumber the deluded.

Given the serious nature of oversupply in the Irish market together with the state of the financial markets and finally with the level of denial that exists across the whole spectrum of the housing sector, whether through sheer ignorance or though an unwillingness to inform themselves properly, I see it taking a number of years and much blood letting before the market reaches anything close to equilibrium and without doubt prices will by that stage have fallen to levels that will be much more realistic both in historical and international terms.

When all the new housing developments that are now dotted around the country half empty, become vibrant communities and not investment gimmicks, not much better than condo developments in Florida, will I be convinced that we have reached that stage and when that occurs the prices attainable will be based on sound fundamentals but in the meantime, my advise is …….buy at a price having built in the discounts that will be forced into the market between now and that point where reason and reality have gained the upper hand of the market.

What's the best way of keeping my eye on prices in rural Ireland?

[ibis]

[quote=Ard-Taoiseach]

Stagnant or worse for the next decade

They are anything but stagnant. Developers are slashing the price of new-builds and second-hand homes are reducing their prices 100+ per week. This is all part of a market correcting itself.

Dropping the price of 2nd hand homes is not proof of a decline rather its proof that valuers for estate agents have been over inflating prices.

If you bought a house for €100k 10 years ago and now want to sell it for €690k because a valuer told you it was worth it then having to sell at €600k is not a decline becuase the €690k was an estimate only.

But it's not a situation which can be described as stagnant. The seller is reacting, they're making it more attractive to the market. Stagnation would be leaving the asking pirce unchanged.[/quotela5xrb1]

Well, no. Stagnation would be where prices remain more or less the same overall, as a result of the sellers' responses to the market. Stagnation is meaningless in terms of the asking price of any individual house, because the term refers to the market. Come on, AT, you know better than that.

[Coles]

What's the best way of keeping my eye on prices in rural Ireland?

Irish Property Watch.

[Michael_Moloney_MCC_I]

[quote=Auditor #9]

There are many who live on cloud cookoo land and believe that Bricks&Mortar is always an appreciative investment and as such any blip in the property market will be short lived.

It appears to be a uniquely Irish phenomenon in that they believe there is such a strong desire to own property that collectively the national psyche will not allow a crash to persist beyond a year or two.

This is of course nonsense. People cannot get their hands on the crazy amounts of money that banks etc where doling out at multiples of income that where quite frankly obscene and astonishingly irresponsible.

Thats the crux, house prices will drop to previous levels in line with the amount of money people can raise to buy them. This will be a drawn out process as slowly the realists begin to outnumber the deluded.

Given the serious nature of oversupply in the Irish market together with the state of the financial markets and finally with the level of denial that exists across the whole spectrum of the housing sector, whether through sheer ignorance or though an unwillingness to inform themselves properly, I see it taking a number of years and much blood letting before the market reaches anything close to equilibrium and without doubt prices will by that stage have fallen to levels that will be much more realistic both in historical and international terms.

When all the new housing developments that are now dotted around the country half empty, become vibrant communities and not investment gimmicks, not much better than condo developments in Florida, will I be convinced that we have reached that stage and when that occurs the prices attainable will be based on sound fundamentals but in the meantime, my advise is …….buy at a price having built in the discounts that will be forced into the market between now and that point where reason and reality have gained the upper hand of the market.

What's the best way of keeping my eye on prices in rural Ireland?[/quote:rk5omjqe]

I assume you are asking this in terms of buying at the right time. Ask me that question this time next year and in the mean time hold tight.

[Destiny's Soldier]

Im wondering if People think prices will recover this year or next? According to Hooke and Macdonald they will recover next year! :mrgreen:

They'll fall in real terms till about 2010 or 2011, when they will have reached 2001/2 levels in real terms.

That would indicate that prices would have to drop by about 18% this year, about 12% next and about 5% the one after that. By the time of the 2012 election the correction in housing will be over and we will be in an era where prices rise by about 1.5% in real terms.

Houses will go down til 2010. By then people will have seen a collapse of the dollar, stock market collapsing, more Northern Rocks and eventually a new cycle will begin and people will turn to property at a much lower base as a safer option to invest their money.

I do believe we're in for financial armageddon globally. Thats why I dropped the price of my house by 40K to get any buyer. Im getting out because we're in for a massive house price correction.

[expat girl]

High oil prices are certainly a challenge, for all economies, but think back to where prices where back in 1998-2000. They were around 20 dollars back then. Now they have quintupled to $100 and yet our economy has yet to show an appreciable response to this changed reality. What I think is that the progressive heightening of the oil price(which is what we're experiencing) is providing more and more incentive to consumers to reduce consumption and improve the elasticity of their individual demand curves.

http://www.rte.ie/business/2008/0225/oil.html

It ain't getting any better
Right, so the massive global credit crunch ISN'T a response to the oil price?? Think about it, the reason the US raised the interest rates that caused all those sub-primes to default is because of rising inflation. Why was inflation rising?? Energy costs, feeding through to food prices and, actually, since goods need transporting... well... everything else. Dodgy lending practices didn't help, but basically, if oil was still twenny bucks a barrel, we wouldn't be in this mess....well, not yet, at any rate

Join the dots..... and I doubt house prices will hit 2006 values in real terms for another century, unless a massive investment in alternative energy is begun NOW.

Oil contributes to the price of everything.... and sure, reducing one's energy consumption will work for a few years, but when the serious shortages hit, the layoffs will begin, which won't contribute to a rise in property values, especially not around Dublin airport!

The good news is that at some point, I would suspect that hyperinflation may make mincemeat of our mortgages.

[Ard-Taoiseach]

[quote=Destiny's Soldier]

Im wondering if People think prices will recover this year or next? According to Hooke and Macdonald they will recover next year! :mrgreen:

They'll fall in real terms till about 2010 or 2011, when they will have reached 2001/2 levels in real terms.

That would indicate that prices would have to drop by about 18% this year, about 12% next and about 5% the one after that. By the time of the 2012 election the correction in housing will be over and we will be in an era where prices rise by about 1.5% in real terms.

Houses will go down til 2010. By then people will have seen a collapse of the dollar, stock market collapsing, more Northern Rocks and eventually a new cycle will begin and people will turn to property at a much lower base as a safer option to invest their money.

I do believe we're in for financial armageddon globally. Thats why I dropped the price of my house by 40K to get any buyer. Im getting out because we're in for a massive house price correction.[/quote:3mr088lm]

Well there certainly will be a great degree of pain in the short term for the residential property market it will indeed be over by about 2010 and then we will have entered a new era of property in which sense and good judgement prevail. The long-term trend is up. We will do better than the average. Keep the eyes on the prize.

[mr_anderson]

If you bought a house for €100k 10 years ago and now want to sell it for €690k because a valuer told you it was worth it then having to sell at €600k is not a decline becuase the €690k was an estimate only.

It is a decline if it would have sold for 700k back in 2006.

[Ard-Taoiseach]

If you bought a house for €100k 10 years ago and now want to sell it for €690k because a valuer told you it was worth it then having to sell at €600k is not a decline becuase the €690k was an estimate only.

It is a decline if it would have sold for 700k back in 2006.

As an estate agent yourself, how do you see property prices panning out in the medium term? I hear South Dublin, your neck of the woods, has received something of a coma-back these past few months. Do you see that continuing out into a full-scale recovery?