The bubble could absolutely collapse. The big issue at the minute is supply side caused by the following:

1) The number of people in negative equity who cannot afford to sell their houses, even though they might need to, to get bigger or smaller houses etc;
2) The fact the banks are not lending to builders or developers to construct new properties in Dublin despite the fact they are necessary;
3) (following on from above) the fact that there is still little money to be made in developing: even with a free site, the cost of building a 50 apartment block would be similar to or more than the amount you could get from selling them at current prices;
4) The fact a number of banks are refusing to crystallise losses and repossess houses in negative equity, sell them, and write off the difference.

Also, a lot of the buyers out there are cash buyers. There are some demand side issues (banks being reluctant to give mortgages to people who can well afford them, banks not giving buy to let mortgages) that should, theoretically, have a depressing effect on the market but, frankly, the huge issue at the minute is still the tiny number of properties coming to the market. The question is whether that situation is likely to change: that is the great unknown. If Ulster Bank pulls out of the market (or, more likely, is sold) then, given the number of mortgages they have (they have always been more focused on mortgages than AIB and BOI), things could get interesting and it would probably have a downward effect. But could the bubble burst again? Yes, absolutely. The reason for the current bubble (and it is only a small one) is the tiny number of dwellings for sale. It's not market fundamentals (rising salaries, rising employment, profitability of building, cheap finance availability) that are contributing to the rise but short to medium term issues.

These are just my thoughts on the matter and I could be wrong (very wrong) but there is a very low level of transactions at the minute.


Edited by SuperDave84 - 11 Mar 2014 at 4:14pm

Well, that's the great unknown. I can't see prices falling that much further, but it's just a guess. I know they have risen a little bit over the last year and I think we have seen the bottom of the market. I wouldn't panic buy just yet, though. Second hand homes are unlikely to fall that much as owners in negative equity are unlikely to want to sell and, if they have jobs and are meeting repayments, are unlikely to be forced to either. That will harm supply of second hand homes until such time as prices rise a bit more and mortgages get paid down. It's just not economic for many people to sell at the minute, regardless of market fundamentals, which is causing the issue. If the banks were lending to people who can afford mortgages, prices would be only likely to go up, but for the time being, it seems the market is going to remain dysfunctional. It's really hard to know. It's odd to say it, but there are people who cannot afford to sell their homes and it is going to be like that for a while.

I mean, if building recommences, you'd imagine it would be because banks were lending to builders. And if they were lending to builders, you'd imagine they'd be lending to buyers too. And if that happened, you'd imagine demand and supply would both increase, returning some normality to the market (and making the data set bigger, making trends easier to establish properly). And if demand increased, so too would prices, assuming constant supply. But, of course, if prices rise, those currently unable to sell but who need to, might be able to, which would increase supply further, having a potentially levelling effect on prices..... it all depends on the banks, but at the minute, there isn't enough data to really know what is going on.

The other issue is their losses - if they start repossessing houses with distressed loans (there are loads of those) and selling those houses, they could greatly increase supply, which would drop prices further. As you can see, there is an obvious desire on their part not to do that unless they have to - which is why Ulster Bank's position in the market is so interesting. If RBS decide to wind it down, it will fock us up completely. If they can sell it, or if they decide to hold onto it, we might be okay. And with UK politics the way they are, they might not be too happy at having a UK taxpayer majority owned bank continuing to make massive losses in the Irish property market.... There are a lot of unknown variables out there, put it like that.


Edited by SuperDave84 - 11 Mar 2014 at 4:49pm

I dont know what a tracker mortgage is!!!

Also, Dublin's population is continually growing, while there isn't a lot of land for nice new homes.

Cheers lads

Whelo, anywhere in South Dublin

Have viewed houses in walkinstown, kimmage, knicklyon, firhouse, rathfarnham

Don't want to go to high. Want to live a lot and pay a mortgage

http://www.irishtimes.com/life-and-style/homes-and-property/irish-house-prices-undervalued-by-13-says-commission-1.1714195

Irish house prices undervalued by 13%, says commission

Government needs to boost the supply of housing in Dublin

ZinedineKibane wrote: Lots of cash buyers (especially in London) looking to buy in Dublin as the rental yields are so good. Around 8% whereas in London they are around 2%. Outside of Dublin they have no interest.

Ye heard the Chinese are also investing

Should there not be some law to stop them inflating the market?

The GerK wrote: ZinedineKibane wrote: Lots of cash buyers (especially in London) looking to buy in Dublin as the rental yields are so good. Around 8% whereas in London they are around 2%. Outside of Dublin they have no interest. Ye heard the Chinese are also investing Should there not be some law to stop them inflating the market?

Pfft. We live in the free world. Ironically, that just makes things more expensive. But whatever. Once it is in the EU, there should be no capital controls (leaving aside the whole Cypriot banking thing).

there is ways and means such as massive taxes on Investment properties but this impacts the rental market then.