I have little doubt, sadly, that there will be a property crash in Ireland. While trying to 'predict the market' is indeed generally a mugs game I'm prepared to put a time-frame of 18-24 months on it.
Theres a large variety of reason for this but amongst them are:
I've seen the figure of Ireland having one of the lowest 'dwellings per 1000' in Europe of 337 being bandied about. Being a cynical one I checked on the website of the UN Economic Commission for Europe and the last year they had figures for was 2002 at 384 per 1000. Add on 03/04 and 05s predicted 80000 new houses and you're suddenly at 440 odd, a massive increase in a few years.
ECB president Jean-Claude Trichet has stated that although they have held the ecb rate at 2% again recently they would prefer to move it slowly over the next two years to a more 'normal' rate for Europe of 3-4%. A 250k mortgage today at 3.3% is roughly costing you 1094 a month, at 5.3% that will go up to 1388 a month almost 300 euro a month extra, this is by no means an unreasonable expectation.
'Affordability' is again often throw about as being much the same as it was 20 years ago while interest rates were at an all time high. What you don't read is that 'affordability' is often based on some very unstable factors. I find it astonishing how easy it is to get mortgages for higher and higher amounts these days. Don't make enough? No prob can Daddy go guarantor? Hey don't forget the 'magic' extra 7k a year you earn from rent-a-room tax free, a little poke here a little pull there and all is well. No deposit? Not a prob either the wonderfull Credit Union is there to help. It goes on and on, I know of no-one in recent years that has managed to buy without some questionable 'help' in some way or other (and I include in that gifts from parents etc.)
As stated before the average wage to house price ratio in Ireland is at ridiculous levels and is imho unsustainable in the long run. Are we condeming these youngsters to NEEDING two full time incomes to raise a family and afford the mortgage repayments? Have any of these more recent buyers stopped to consider the sheer expense of having a family in the future.
Of course not since never in the history of the State has credit been easier to come buy. Unfortunately most of the young people buying their own homes have never known the 'bad times' and assume it can never happen, try paying that 'affordable' mortgage on 1 income instead of 2.
It's been predicted to happen many times in the past but the vested interest circle of builders,banks,estate agents and newspapers have ensured that no-one is really prepared to cry wolf until it is too late.
Forget the figures though, most recent home buyers I know don't ask questions like; location, proximity to services or schools, living space, gardens, lifestyle etc.. etc.. the only question is 'Can i afford it?' if not then keep going further out until you can, after all you better do it now while you still can afford it and sure you'll have made 25k on it by next year.
The day ftbs started to confuse the word 'home' with the word 'investment' was a bad day for Ireland. And thats before I even get started on the 2nd, 3rd and 4th house buyers instead of pensions!
