Stagnation in the Irish Property and Mortgage Market

As I write this news has just flashed saying that the Dollar has weakened on the basis of new woes in the sub-prime market in the USA and the other stories of the day are of property melt-downs, negative equity and other doom and gloom forecasts.

Firstly I’d like to say that people have been predicting a property bust for at least (well… this is how long I’ve given them any degree of attention) the last 8 years. And now it seems that because property didn’t miraculously rise in value that all of these tales of woe are in fact true. I don’t support this attitude though for several reasons. Quite frankly the first reason being that our firm Irish Mortgage Brokers is as busy as ever and if we are doing more mortgages than this time last year then it shows me that the market has not entered free fall, however, this is of course a micro-attitude, on the reverse side there are houses that are not selling and rates that are getting higher.

I just want to say one thing…. welcome to reality, thats how the property market should actually work, the past years of house prices going up ‘just because’ and of having to enter bidding wars for tiny apartments is over and along with many others I’m delighted, estate agents who don’t do a quality job won’t last in the industry any longer, nor will anybody in the property industry (mortgage brokers included!) who don’t do the job right every time.

In the real world (basically almost everywhere else) if a property goes on the market for above its value it won’t sell, and alot of properties here were doing that, they were not based on value they were based on sentiment and thats the exact kind of sentiment which gave internet companies such impetus in the late 90’s, however that doesn’t mean there wont’ be winners and can’t be winners in the future. Google for instance proved that a stock can be highly profitable and internet based.

what I think has happned is that first time buyers are getting a bigger squeeze, granted, there is no more stamp duty – nice move government! : that came about four years too late, and the increase in mortgage interest relief – instantly wiped out by rate rises. So whats left is the affordability of loans and because banks do them based on stress tested rates and affordability models (remember that every time the ECB -thats European Central Bank – goes up money gets more expensive) its harder to afford to buy a property, and the uplift in the market over the previous years exacerbates that.

Otherwise I think most people will do o.k., we have a tendency to complain about anything, be it a 15¢ charge for a plastic bag or otherwise that will cost us money. Its human nature as far as i’m concerned, and no, I don’t like paying more every month for a mortgage loan that was €200.00 cheaper last year but thats life. So todays article says just a few things, firstly if you are worried about rates then get a fixed rate or at least call us and see whats out there. Secondly if you don’t want to buy and feel the market is at risk just remember, the U.K. bounced back fairly quick from their negative equity, renting puts you in the ‘no equity’ market which is even worse again as far as i’m concerned. Feel free to call me anytime!

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