The most popular question I am asked as of late is whether or not we are at the bottom of the housing market, and the answer is ‘no…. but perhaps closer than we think’. Today we will consider a few of the things we will need to see in order for ‘recovery’ to occur.
First of all we need to see a reduction in the massive overhang of housing stock, even if the number reduces, they all need to be sold and a degree of scarcity will need to develop in order to make prices go up again, currently supply is swamping demand and that dynamic will leave uncertainty in its wake.
However (and here is part of the ‘perhaps closer’ bit), NAMA will likely take a lot of housing off the market, in particular it will take it off the market and drip feed it back in, if this happens then it will avoid devastating fire sales, it might also lead to stagnation however if people believe that there is still more price drops to come and they are not arriving due to NAMA holding them back. In any case, it is fair to say that NAMA will change the market landscape in the near future.
Currently the market is in a position where buyers think the prices are too high and sellers can’t afford to drop their prices (unless they realise a loss in the process), so the two sides of the equation are at odds.
Jobs will need to recover as well, I can’t think of a single property market that went into an upswing during a period of rising unemployment. Housing also needs to recover its confidence, as well as job market growth we’ll also need to see wealth grow too. Unfortunately the precipitous drop in the jobs and housing markets have been accompanied by an equal erosion in wealth.
There are four key pillars we will need to see improvements in before widespread recovery comes along:- employment, production, personal income, and sales. At the moment it doesn’t seem there are any indications that any of these factors are improving.
Of course, that doesn’t mean the property market is totally dead any more than the stock market is, there are profitable ventures out there, the trick however, is to find them and to make the right choices from the outset of the project, if you want to call and talk to us about what those decisions are feel free to call on 01 679 0990.