Monday, May 21, 2012

Mark Keenan: The only problem now is finding a mortgage -

POSITIVE sentiment is one of the most vital ingredients necessary for a property market revival -- which is why Ireland's estate agents will be optimistic after the results of the Millward Brown survey which demonstrates that 78pc of the populace now believe it's a good time to buy a house.

Most experts are now united in believing that Ireland's massive property crash will begin to end this year or early next year. By this they don't mean that prices will start soaring again, but that they will stop falling and may even rise very slightly -- as some reports have already shown.

Price levelling will spread outward across the country from Dublin, in the same way the recent crash started in the capital and moved outward in waves during 2007 and 2008.

Apartments will take far longer to recover, however, as will properties in those remoter regions where boom era development was at its craziest.

Ireland's property market recovery won't happen as a straight-upwards line on the graph chart. More likely it will be a series of judders -- price rises and dips -- as occurred in the UK from 1994 after that country's 1989 crash.

The result will be a crooked, albeit slowly-rising line, with prices eventually rising by "normal" levels of 3pc to 6pc per annum.

Millward Brown also shows that we agree with many property experts who say that prices have 10pc more to fall before finding the bottom.

A hefty 68pc of those surveyed by Millward Brown said they thought prices would continue to fall over the next year.

How can we believe it's a good time to buy a house when we also know prices will continue falling?

To understand what's going on we need to ditch our boom-and-bust mindset of property solely as an investment. To a generation of gainfully employed young couples who have long intended to buy -- and there are by now thousands who have spent the past three to six years in rental accommodation and put their lives on hold -- a house is primarily a home.

Most of these couples will own one house at a time, and right now they want to buy their first one. They want to buy sooner rather than later.

What's important to the "property postponed" generation of Ireland's crash is that the worst is now over. They will tolerate a short-term fall in their new home's value for the sake of having more choice in the market and finding the right house.

They know they'll still be living in their purchase in 10 years' time. So being in the right area and near the right schools will supersede any short-term loss of value.

This is why homes sold in the 1980s -- even when property values were falling in value in real terms.

And this is why some couples have already started buying semis again in better parts of Dublin.

Rents are currently quite high with a three-bed semi in the city now setting a family back €1,300 per month.

Many of our "postponed" couples also believe they'd be better off buying now to stop any more payment of "dead money" and instead channel a larger sum into a property which they will eventually own.

For many of these couples, the property sentiment balance has already been tipped -- the problem now is finding a mortgage.

- Mark Keenan

Posted via email from quirkeproperty's posterous

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