Housing price crash can't be ruled out despite prevailing forecasts of big price increases

Patslatt1

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The sharp recovery of housing prices from the trough of the crash was unexpected given the bleak economic outlook at the early stage of austerity. Likewise, a housing price crash can't be ruled out despite prevailing forecasts of big price increases reflecting supply shortages in the next few years.

There are five major factors that could depress housing prices:
[]The seven year holding period for tax free capital gains on investment in housing will expire in a few years, prompting many investors to sell.
[]The ending of the help to buy scheme is likely next year because the gold rush mentality it created is having a big inflationery effect on house prices. The scheme has brought future buying into the present, so its ending will mean less future buying.
[]The government has been facing persistently bad press over homelessness and soaring rents; this should force it to cut the housing planning red tape of councils and to invest serious money in social housing.
[]The big drop in sterling and Brexit uncertainties are likely to depress exports to the UK,possibly causing an economic recession in rural Ireland.
[]The European Central Bank is likely to end massive bond purchases, so interest rates will rise. That will increase housing mortgage payments, especially on tracker mortgages which represent the majority of Irish mortgages.

Recently, a UK economist noted that the drop in mortgage interest rates didn't reduce mortgage housing costs because it drove up housing prices in the UK's typically tight housing market. He expects that rising interest rates will have the opposite effect, depressing housing prices given that many UK home owners on big mortgages have limited capacity to absorb higher mortgage payments. In Ireland, housing prices are about 90% of the UK level and the situation is similar.
 
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Voluntary

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None of the above singularly would cause a housing price crash in my opinion, maybe a slight (10-20%) correction or slow trend reversal. I'd also add adaptation of automation in sectors like manufacturing, transport, house delivery, retail to your list.

There are 2 reasons which however could cause a crash:

1. Global economic downturn, possibly caused by increasing protectionism or hard to predict events like nuclear destruction (e.g. North Korea missiles hit Japan or US)

2. Local economic downturn, caused by shift of multinational corporations abroad. Two big risks for that: First, Trump. Second, EU's drive towards fairer taxation to benefit more countries where companies actually sell products or perform business, rather then where they're registered and report profits.
 

making waves

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Jaysus - I saw the headline and thought to myself 'is patslatt finally coming to his senses?'

But no - he gets the headline right - but his reasoning is way off base.

Yes - a property crash could happen - because - capitalism thrives on bubbles which all burst eventually leaving working class people to carry the can.
 

Sync

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Jaysus - I saw the headline and thought to myself 'is patslatt finally coming to his senses?'

But no - he gets the headline right - but his reasoning is way off base.

Yes - a property crash could happen - because - capitalism thrives on bubbles which all burst eventually leaving working class people to carry the can.
Yup. A crash could occur in any investment area. Don't invest all your investment cash in 1 area, be it shares, property or minerals. If you're buying for your dream home that you'll never leave, then a property crash isn't really relevant to you.
 

gleeful

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I see no prospect f a crash in purchase prices any time soon. But a crash in rental prices could happen.
 

fat finger

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Yup. A crash could occur in any investment area. Don't invest all your investment cash in 1 area, be it shares, property or minerals. If you're buying for your dream home that you'll never leave, then a property crash isn't really relevant to you.
All this bullshít about house prices cannot collapse because demand for property is strong. Bullshít. Demand for oil has increased every year in the last ten years, didn't stop the price of a barrel collapsing. The price of property is about the amount banks will lend, period, and even banks have a limit on how much they can magic up. The coming crash is going to be horrible, really horrible, horrible in a way few people in this country have ever witnessed or thought could happen here. Really really horrible
 

OrderoftheDragon

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This all happened in the late 90's, growth started to take off we had our first ever immigration/asylum invasion, queues everyday outside molesworth st.

Pre direct provision rents in Dublin started to take off as councils started renting anything with a roof.......our 1st "housing crisis".......building started en mass.....to relieve said housing crisis. House prices double and then triple over a few short years.
Every "smart arse" is "into" property. Prices are rising so fast that there is no need for the hassle of renting, capital appreciation is where its at.

Then 2nd phase, housing supply now outstrips demand, we are now building houses to house the eastern Europeans who are building the houses, but that's ok because prices continue to rise. The headlines read " the Irish to take over the world".

Then one morning......around June 2006......Boom, it took another 9 months for the sheep to catch up.

We've been here before and this time it is not different, I see absolutely nothing that has changed since the last time.
 

Voluntary

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Well, the planning permissions in Q1 were still down ~ 60% of what we could call a sustainable number. This doesn't take into account increasing population, especially evident in Dublin.
 

dundealing

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All this bullshít about house prices cannot collapse because demand for property is strong. Bullshít. Demand for oil has increased every year in the last ten years, didn't stop the price of a barrel collapsing. The price of property is about the amount banks will lend, period, and even banks have a limit on how much they can magic up. The coming crash is going to be horrible, really horrible, horrible in a way few people in this country have ever witnessed or thought could happen here. Really really horrible
Worse than the crash of 2016 ? , ogh wait :roll:
 

GDPR

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The ECB will very slowly ease off on QE and will very slowly raise interest rates. When this will happen, nobody knows and Crystal balls are a tad unreliable.

2 things re infrastructure need to be ramped up massively. Social housing and public transport.

Sent from my SM-A320FL using Tapatalk
 

bokuden

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Yup. A crash could occur in any investment area. Don't invest all your investment cash in 1 area, be it shares, property or minerals. If you're buying for your dream home that you'll never leave, then a property crash isn't really relevant to you.
A crippling mortage on a completely overpriced house is pretty relevant though, especially as people are increasingly having to use their property to fund their care in old age.
 

Watcher2

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A crippling mortage on a completely overpriced house is pretty relevant though, especially as people are increasingly having to use their property to fund their care in old age.
That's as it should be really though. What needs to happen there is tackle the cost of nursing homes. It's ridiculously over priced.
 

Sync

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A crippling mortage on a completely overpriced house is pretty relevant though, especially as people are increasingly having to use their property to fund their care in old age.
So then not buying their dream house that they'll never leave then. Your house's value only matters if you plan to sell it. If you don't, it's irrelevant. If you're buying a house with the logic of "sher the market will keep going up so I can afford it in the long run" then you shouldn't be buying a house.
 

gijoe

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If Brexit goes wrong from our perspective - as I think it will. Then we will have another economic crash in Ireland and housing will follow suit.
 

Kevin Parlon

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Jaysus - I saw the headline and thought to myself 'is patslatt finally coming to his senses?'

But no - he gets the headline right - but his reasoning is way off base.

Yes - a property crash could happen - because - capitalism thrives on bubbles which all burst eventually leaving working class people to carry the can.
Capitalism doesn't thrive on bubbles. They are a side-effect of combining human nature with a free market. The rather sad thing about this post is that it shows you've chosen to build your entire political stance around opposition to something you simply don't understand.
 

Voluntary

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We had ECB rates at over 5% and housing boom still going strong. Some interrst rates increase will shrink mortgage holders disposable income but should not stop the 'boom' going.
 

Kevin Parlon

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Call that a bubble? This is a bubble.

 

Voluntary

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If Brexit goes wrong from our perspective - as I think it will. Then we will have another economic crash in Ireland and housing will follow suit.
Our future in hands of few homofobic british lords. We need to kill dependencies on UK markets to bare minimum. Once and for all. Ireland is not alone, the EU will support Ireland in case the UK choses the hard way.
 

Kevin Parlon

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