“First-time and investor purchasers who bought apartments in the years up to the height of the bubble in 2007 will have to wait until well after 2030 to get what they paid for their homes, says ESRI housing expert David Duffy. But the figures show that the outlook is even bleaker when consumer price inflation is accounted for because the housing-price slump will pull boom-time prices back in real terms by 45% to levels last recorded in 1998 and 1999”
It is also wrong. Unless they are on interest only mortgages for the whole period. Negative equity refers to the difference between what you owe on your loan and the sale value of your house. If you pay off the mortgage, you will have equity, however small.
However, I believe the point that is being made is that we will not see a return to bubble prices for another twenty years. I haven’t worked out based on, say, 1998 prices what inflation adjusted prices in 2030 would be, assuming the ECB manages to keep inflation to an average of 2%, but I suspect that is the sort of calculation Mr. Duffy has made. It is a big if about keeping inflation that low, but with the will in place, it can happen, indeed, as we see from Japan, it can go the other way despite efforts to raise it.
If we believe that we have ‘caught up’ with the advanced economies in Europe as a result of the tiger boom up to about 2001-2, there is no reason to believe that we can continue to expand the economy at huge rates into the future (how would we do what our european neighbours have been unable to do?). Therefore, to my mind, the likelihood is that we will see european style growth rates. With this in mind, is there going to be an economic push to raise prices more quickly?
People would do an awful lot of daft things if you gave them access to unlimited funds.
Nobody is going to finance an adventure like this again. If only because we demonstrated that given almost unimaginable amounts of money all we could think to do with it is build poor quality housing where nobody particularly wants to live.
Isn’t this why we should be extremely suspicious of NAMA. It is not in the political interest of the current Government to re-align property prices back to truer values. We keep hearing spin about how there isn’t a functioning market at the moment because there are so few buyers. It’s complete rubbish, everything can be sold if it is at the right price.
There wasn’t a functioning market when every bank went mad lending to speculators yet the government didn’t intervene, why does it feel it’s their duty now to prop up a falling market?
The mad money that was lent to the top developers is not coming back- we have to face that fact, overvaluing bad debts in the hope that we may get some meagre return in the future is stupid.
It is being done mostly for political purposes so that FF can see out this term. When those blood suckers are in opposition watch how they’ll blame the next Government for any losses NAMA finally admits to.