7 years to the next property crisis
After 1 year and a half since I bought my property in Finglas, I checked again on Daft our area: there are currently 7 properties for sale in the surrounding streets, with a price increase of at least 9% (€15.000) and up to a 25% (€50.000). We're talking about 3-bed terraced houses, in varying conditions of renovation.
According to the Irish Examiner the next property crisis will be in 7 years; taking into consideration the current inadequate market supply and the extraordinary demand - not to mention the evidence right in front of my eyes regarding the rising prices - I'm very much inclined to believe this.
For those who are unfamiliar with the Irish housing bubble (as I was), here's a quick (non-expert) summary:
- After the economic boom and before the 2007 crash, banks were giving out easy credit to anyone.
- This lead to an increase in housing demand and the prices soared by 270% in a decade.
- The government enabled the housing development through incentives, because of the high property revenue it received.
- With the global economic crisis in 2007 the unemployment rate doubled in the country, especially among construction workers who found themselves out of work. Consequently, 1 in 10 mortgage holders were in trouble with their repayments.
- Banks started to go after the housing developers who were millions, if not billions, in debt.
- In 2008 banks were facing a collapse and the government decided to bail them out. However this, in turn, threatened to collapse the Irish economy (because of the huge debt), so the EU stepped in with loans.
This year it seems that we're on our way to repeat this circle again, starting with easier credit by banks and government incentives.
If you were considering buying a property in the next few years, don't delay before the prices get even higher!