About 9 months ago I watched a fascinating documentary on RTE1 called “Future Shock Property Crash” – a frank and honest report by an Irish Journalist called Richard Curran, about what he saw as being an impending properly crash – far worse than the “Soft Landing” that the banks were preaching. the cracks in the market were already starting to show, but he predicted that house prices would falling by up to 40% from their height in latest 2006 – and that it would happen very quickly. He also went into detail about the ramifications of this event.
At the time I was contemplating the thought of buying another property – and I think this cemented my initial gut feeling that the risks were just too high and that I’d be better off staying put for the moment. Boy am I glad I didn’t.
On the radio this morning they were talking about how in Dublin, the average price of houses has fallen by 30% since it’s peak (15% overall across Ireland). This is predicted to fall another 10% this year – and some economists say even greater losses are very probable. Yesterdays an Irish Times article warned that UCD economist Morgan Kelly sent out a warning that “Irish House prices could fall by 80%“. I don’t think a lot of people really believe the latter statistic, but it seems that Mr Curran was bang on the money at least.
I am so so glad I am not one of the very many people in this county now stuck with a massive mortgage that stretches themselves every month, most of it going in interest to the banks who seem to be throwing it away, not to mention being stripped of their freedom in the form of a house they cannot afford to sell. My mother always says she hates to see me paying rent and ‘pouring money down the drain’ but hey, it sure beats 100k of Negative Equity!
I recently into a brand new apartment. Just finished, first let, very high quality build. The builder had awful timing as out of 45 units built he could only sell a handful. He then had to enter an agreement with the bank and rent the rest for 5 years and hopefully get the money he wanted for them then. The rental market took a bit of a dip at the time, and I got a pretty hefty discount on the original asking price for the apartment. If I work out what the first few units sold for, and how much the mortgage would be on this property, I’m renting it for over 30% less than it would cost to buy!
Looks like the recession isn’t always so bad!