Predicting the next Irish property bubble crash

From what I can see, by end 2021 Ireland will have spent as much on the Covid economy bailout as we did for the banking crisis - c.30bn.

But we haven’t had a property bubble collapse or world market collapse…yet. The China property meltdown may cause a worldwide markets contagion but who knows.

The Irish Govt are hopeful to bounce back in 2022, with record Corporation Tax (now at 15%) again being used to hand out all the sweeties. No more austerity Budgets despite borrowing 30bn, even though the hole in the National Debt just got much bigger.

Inflation appears to be taking off in certain sectors but may be temporary according to some. But if you print that much money in the EU surely there will be consequences.

Hosing supply is currently at 20K homes per year but this is only meeting annual population growth needs and not meeting the pent up demand. See here

So will we see a crash anytime soon? If so, when and why?

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I can’t see a housing property crash in Ireland happening at all for a number of years.
Certainly not without a sharp recession.
There’s simply too much demand and not enough supply.

I could possibly see a commercial property crash at the higher end especially if the multi-national IT companies allow people to “work from home” in countries far far away.

The global question now is simply China.

Way too money in the system for a crash now.

Any decent housing (anything in Dublin) will be bought regardless by investors / hedge funds / Blackrock types whether there is recession or not. The ordinary punter will not get a chance to purchase a house in Dublin for a reasonable price in the near future.

The mountains of cash that have been pumped in just the last 20 months - what could possibly induce a drop in house prices?

The only thing I could see is if people’s faith in the currency was tested. Not an impossibility but house price drops would probably be down the list of priorities if we get to that situation.

City centre retail has already crashed at all levels of the market, it just hasn’t fully manifested in valuations yet, with many juicy tenants just running down their leases. For example, I can see the former Debenhams on Henry St becoming a “ghost” department store for the next decade unless they come up with some radical rejigging of the space. There’s also the real possibility of areas like Balbriggan dropping 70%+ if the government runs out of cash and we have mass youth unemployment. How much is a house in some English or French exurb sink estate filled with ethnic minorities worth?


Alive or Dead?

Who or what is going to fill the Central Bank development or ‘Clery’s Quarter’? All of these new faux-chic instagrammable 3 star hotels are worth vastly less than the developers had envisaged too. Going forward, you’ll be able to get a room in one of them for about €50 most of the year, compared to the c.€200 similar rooms were getting 3 years ago.

Shure we could always just Print People to fill unwanted spaces built with unwanted printed money . 3d printing is a real thing.

Your money. Yours. Not so sure.

Problem. Reaction. Solution.

I think it’s Stagflation and all the consequences of that. We will have imported inflation from the UK.

There will be an extensions boom making builders feel rich for a year or two. That will absorb labour and take people off the dole.

There has to be distressed sales - but what assets? There is so much govt intervention making everything unreal

It will worth something to an investment fund.
Buy it, rent it back to the Local Authority at the market rate you’ve just created from the purchase.

Its already happening - anecdotally I have heard of a couple of people who’ve sold houses very very quickly this year. One told me there was one phone call made to estate agent “leave it with me” and was sold to Saudi fund within a week. One builder came round to look at it. Similar with a neighbour - builder told him he had been involved with 10 purchases this year. These are entry level houses.

There’s lots of people on here who are good with data - how is it possible for property to drop in value when there is so much money in the system? Where is the money going to go if not to inflate everything?

Property crashs in low inflation and high inflation periods look very different. In low inflation its a nominal price crash in high inflation it a real price (adjust to a base year) crash. Plus during high inflation people’s real disposable income falls so affordability etc also crashes.

The inflation curve over the decades.

So a typical Dublin semi which would have sold for around 6K quid in the late 1960’s would be around 9K quid in the late 70’s and at least 11K quid by the early 1980’s. But cumulative official inflation was close to 300% compounded in the same period. In purchasinsg power even more. So in 1969 real terms price had gone down by quite a bit. But the home mortage market was pretty much gone by then so total sales volume was a small fraction of what it had been two decades before. Basically a cash only market with very slow sales and very low transaction count. Which is pretty much it satyed till the 1990’s.

The one wild card is mortgage interest rates tracked inflation last time around but as governments cannot afford these high interest rates due servicing costs of 100% plus GDP national debts interest rates will be held low. So mortgage liquidity will disappear for individual buyers. Unless governments explicitly nationalize the home mortgage markets. Or one or more central banks breaks and most of the cash they inject in to the fiscal system disappears.

What the inflation curve does dont show is the hugh ramp in interest rates in the early 1990’s. I knew people paying close to 20% mortage rates back then. It the only time in my life I’d seen these people crushed by circumstances and close to despair…

Another new variable is outside investment funds. They may keep up nominal prices and volume as long as the cheap central bank money keeps flowing. After that?.. But the net effect will be to price out individaual buyers purely due to access to funds. Expect this fund owner property to be rented out as a longer term version of AirB&B’s…

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That’s the exact point I was trying to make on the possibility of a total collapse in values in these areas. It is a fact that HAP and not incomes determines the rents in these areas-€1900 is the going rate for a 3 bed because that’s what the LA pays.

My parents bought their first house in 1970 for 5 i think, sold it for 45 in 1986 so not sure if that fits your figures there. Suburban Dublin semi D, at its peak I believe the street went as high as 850k, now about 550-650k

In terms of what you are saying about inflation. I get it but as much as I hate to say this time it’s different we do have the added novelish factors of mobility of money and people. It seems to me if a property asset is under priced in a decent size city in a functioning state (that is to say under a price rather than under valued) money flows in from outside and up it goes. Then import some people to fill it.

In terms of Ireland if I open my front door and lob a stone in any direction I won’t land too far from a HAP house where the rent being paid is extortionate. Unless Dublin becomes Detroit (a distinct possiblity some years down the line) I cannot see how that will change. There’s certainly no will for it to. I just do not see anything being cheaper next year than it is now.

I wonder will I ever own a house in Dublin :disappointed_relieved: Only other option is a physical move but most likely needing to career switch if I do that.

I moved to Cork from Dubin in Dec 2013 for just that reason. Changed from audit to data analytics.

Best decision I ever made…


The Planters are back.

You know what to do.

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