And what do FINANCE readers think of the prospects for the Irish property market? In a survey conducted amongst the 10,000+ readers of the publication, the majority, at almost 70 per cent, believed that the property market is not heading for a crash. However, a sizeable proportion, at over 30 per cent, believed that market factors would lead to an imminent crash. Within the 70p.c., the majority believe there will be a 'soft landing'. Thus over 80p.c. of our poll believe house prices are on the slide. They split 3-5 on whether the 'landing' will be 'hard' or 'soft'.
The bulls amongst the respondents saw continuing demand driven by demographics as being key to the underlying strength in the property market, with the very strong culture of house ownership in Ireland also playing a key role, as one respondent said, 'Irish people love owning property too much'. The ongoing confusion over stamp duty was cited as stalling the market, along with interest rate hikes, which some of the bulls now expect to stabilise.
However, many of those who believed the market would escape a crash, also expected prices to fall in a 'soft landing' scenario, as prices fall down to more 'realistic' levels.
Of those who saw house price values drop dramatically, some of the reasons given included the over-valuation of property in a national and international context and reducing rental yields.
Interest rates were also cited as being a factor, and when combined with the current overhang in the housing market, they led some respondents to believe that a crash was imminent. This overhang is leading to considerable difficulty in selling property, as one respondent so succinctly put it, 'try selling a house'.
The post-election announcement by Minister for Finance Brian Cowen that the Government will no longer impose stamp duty on first time buyers is unlikely to change the doomsayers' minds. As one respondent said, 'Stamp duty reform may provide a temporary band aid as more first time buyers break into the market. The issue is whether top MNCs like Microsoft, Dell, Intel, Wyeth etc. stay here. I fear a domino effect which would have catastrophic effects on the property market'.
The doomsayers also believed that the value of property in Dublin is at the extreme, with one respondent declaring that, 'it is led by greed and government interference'.
Another factor in a crash is the banks' increasing insistence on stress testing, with across the board testing of ECB+3 per cent. This will impact on affordability say respondents, leading to houses remaining on the market for longer, and house prices dropping as buyers become more anxious to sell. |
