It’s been a while since we reported on the Irish housing market because there has been very little of a positive nature to share with you. But now the Bank of Ireland has released its latest findings and future predictions relating to Irish real estate, and whilst the bank doesn’t cast a sunny glow on the prospective fortunes of Irish property prices for at least the short term, it does at least clarify the situation in Ireland at the moment.
So, if you want to know what’s happening in the Irish property market and whether it’s a market to watch, avoid or dive into, read on for the latest facts, findings and opinions from the experts.
Dan McLaughlin, the Chief Economist from the Bank of Ireland has his own views on the state of his nation’s property market, and let’s face it, he probably has as good an idea about it as anyone. According to Mr. McLaughlin the fall in values that houses across Ireland have suffered so far in 2008 are nowhere near at an end yet. In the glory days house values in Ireland rose for almost a decade before affordability issues crept into the market and the great American fiscal crisis spread its tentacles across the pond and touched the Irish banking industry as well.
According to the Permanent TSB/ESRI index, in the year to July 2008 house prices in Ireland had fallen by 9.4%, and according to our man at the Bank of Ireland, they will fall by around about 8% in 2008 in total.
The falling prices in Ireland have been exacerbated by the European Central Bank’s interest rate increase in July – this coupled with a lack of banks willing, (or able?), to lend has forced would be buyers to reconsider entering the market which has reduced the number of buyers out there and in turn this has forced would be vendors to cut prices even further if they want to be sure of a sale. The situation in Ireland is not one of a crashing market, but rather it would seem to be a market correcting itself from a rather over blown state in pricing terms, and one now suffering from the seemingly global issue called the credit crunch. The credit crunch means that people are more reluctant to borrow and banks are less likely to lend, which creates a state of stagnation in the property market.
Another issue affecting the Irish property market is one we’re also seeing in the UK. Would be buyers are trying to guess the market, (a dangerous sport if ever there was one), and predict when prices are going to bottom out, then and only then will they contemplate a move. According to the Chief Economist from the Bank of Ireland, the bottoming out on the Emerald Isle could occur sometime in late 2009. Those who are timing their move accordingly are also contributing to the fact that the amount of cash lent by building societies and banks has fallen dramatically in Ireland so far in 2008. Whilst lenders are being very cautious about who they lend to which is also reducing the amount of property related loans coming to completion, a reluctance to commit in buyer terms is seeing this dwindling of mortgage financing intensified.
Finally, according to the quarterly Irish Property Review, Dan McLaughlin can foresee that the first half of 2009 will be even weaker in terms of the housing market as a whole. The final criteria upon which he apparently bases his findings is the level of activity within the construction industry – as soon as the downturn began to bite, Irish builders applied the breaks to projects and property completion numbers have fallen off with a further rapid decline predicted for 2009. All round there seem to be breaks being applied to the growth and development of the Irish property market at the current time, and in truth no one can accurately predict when fortunes will change.