Academic: 80% Fall in House Prices

[Oppenheimer]

Yes, the windows were hard to close. The builder just slagged him off to his face though, for bringing in his own tools to check out the place he had just bought.

Yes, I think the builder was laughing at the fact that your friend should have checked the windows before he bought the place. I bought in 2002, second house here, after the first time we bought, in 1995 (a new house with similar carry on to your friend) I damn well made sure nobody got money until I was happy all was ok.

[kerrynorth]

Kelly also referred in his presentation as to how a bunch of 'amateurs' on the Property Pin had called it correctly all along compared to the so-called 200 professional economists in the room!

[NapperTandy]

I congratulate his prediction of the property bust in 2006 but I think 80% is a bit much to come off prices. This would be out of kilter of his analysis of past property booms.
Certainly 40%-50% is likely from the peak on average but there will be cases either side of this depending on location.

House prices tend to overshoot on the way down, they become way undervalued. House prices are either overvalued or undervalued, there is usually no in between. Where are people going to get the money to buy them? There is also huge oversupply on the market at present this will take years to clear. I think Morgan is spot on here, it might kill our love of property for good, no harm either we need to put money to better productive use.

[constitutionus]

irish people will always want to own their own home.

its ingrained in us.

that said i think you can kiss goodbye the 2nd property plus market. no ones going to be buying for "investment" purposes for the next 10yrs at least (baring of course the type of people kingkane alluded to who'll buy properties in good locations at the bottome of the market and sit on em till theres a recovery)

[NapperTandy]

irish people will always want to own their own home.

its ingrained in us.

that said i think you can kiss goodbye the 2nd property plus market. no ones going to be buying for "investment" purposes for the next 10yrs at least (baring of course the type of people kingkane alluded to who'll buy properties in good locations at the bottome of the market and sit on em till theres a recovery)

There will be property taxes and energy rating in the future. Anyone holding a 100 properties up to now had very little running costs. This is going to change in the future. Up to now people could hold onto property and it was going up every day, now it is going down every day that passes. Up to now a fool could make money on property , in the future it will be a select few who will make the money.

[kellsangel]

To forecast house prices you need a context such as:

The unemployment rate

The population growth rate

emigration

immigration

The trends in the rate of change of the cohort of the population under 35 years of age.

The level of dependency ie pensioners & unemployed to employed.

The amount of zoned land

Policy framework on housing policy ( property tax, taxing unused development land, stamp duty, spatial strategy, rural housing policy etc)

Level of direct taxation.

Ability of the government to borrow for capital purposes

Whether mortgage rationing continues

[constitutionus]

There will be property taxes and energy rating in the future. Anyone holding a 100 properties up to now had very little running costs. This is going to change in the future. Up to now people could hold onto property and it was going up every day, now it is going down every day that passes. Up to now a fool could make money on property , in the future it will be a select few who will make the money.

it'll definetly be the preserve of the sean quinns of the world doing it with their spare million here or there.

dont know about the property tax though. on the surface you'd say yes, and its already there in effect with the 200 quid a year lenihan stuck on 2nd properties in the budget, but remember there are ministers in the dail who have 80 plus properties to their name.

turkeys dont vote for christmas.

[H.R. Haldeman]

So what actual drops would produce a fall of 80% in real terms?

40% , 50% , 60%?

My reading is if a house was €100k at peak, then an 80% fall means it drops to €20k by trough. As we are already down 30% since peak to, say, €70k, that would mean we still have some 70% to come off today's prices, bringing us down to the €20k. You may need to tweak that calculation a wee bit to allow for inflation/deflation, but that's the ballpark.

I am a massive, massive bear on the Irish property market, but even I find the idea of another 60%/70% to come off very hard to envision. Not saying it won't happen, just that it is very hard to wrap your head around.

[constitutionus]

could he be factoring in apartments too?

i can see that collpasing to 20k for a 1 bed.

[kerrynorth]

I am a massive, massive bear on the Irish property market, but even I find the idea of another 60%/70% to come off very hard to envision. Not saying it won't happen, just that it is very hard to wrap your head around.

Those kind of fall a very possible at the very upper end of the market where the effect of the absolute wealth destruction we have seen in the last 18 months is most acutely felt. You are talking about €10million asking prices falling to €3-4million. There are already examples of this occuring already on the Property Pin.