The definition of insanity is doing same thing over and over again and expecting different results each time, well said: Einstein.
Quite what he would make of Ireland’s return to boom-time property prices is anyone’s guess. Remember how just a short while ago, everybody laughed at the panic-buying of the Celtic Tiger era: purchasing off the plans, sleeping overnight in cars ahead of viewings, bidding wars, 110% mortgages? Well, it’s not so funny any more. Or maybe it is, if you were fortunate enough to buy during the market’s lean years. If that’s the case, you certainly have a nice little earner on your hands.
In any case, it transpires that your property is now earning more than you do.
This week’s figures from houseish.com and rentinireland.com are as eye-watering as they were 10 years ago. House prices are rising by an average of €4,000 a month, while the likely abolition of the Government’s help-to-buy scheme looks set to make things worse. That works out as a cent a second, incidentally. The report suggested property prices nationally rose 5% in the second quarter of the year and were up 8.9% year on year.
Property owners are evidently keen to get in on the new gold rush, and more than 6,000 properties were listed for sale in Ireland in May: the highest monthly total since 2008. And no wonder. Who wouldn’t want to benefit from a situation where you make money – and tax-free, too, if it’s your principal residence for doing pretty much nothing!
Economists are also noting that prices could easily continue to rise for the next 5 to 10 years. Million-euro bedsit, anyone?
Of course, alarm begets alarm, and this is what is likely to got us into a bind. But the rising panic around this news doesn’t look set to quell any time soon.
“12 London firms moving to Dublin post-Brexit. Hey Dubs, get ready to become culchies, because ye will not be able to afford to live there.”
All that most people feel they can do is sit back and watch the drama unfold.
James, a property owner find myself in a unique position. He bought at the height of the market first time around. Within six months of moving in, he saw the value of his apartment drop to about a third of its purchase price. Call it pure naivety, but it didn’t worry him as much as it should have. No matter, he thought at the time, he won’t be selling any time soon, and surely prices only really matter when you’re thinking of selling anyway?
But now, a blessed escape from negative equity is just over the hill. That’s a nice feeling.
Does he feel more secure? Relief? Not especially. These are not figures he take any real comfort in. He’s not a property mogul; never wanted to be. He knew this sort of thing as madness a decade ago, and as sure as night follows day, there will be a moment of reckoning. In fact it seems even more like blithe insanity now, because we know all too well what happens to property bubbles. And yet, we never seem to learn.
At the same time, James is a renter in Dublin, soon to be looking for another property to live in. News of this gold rush has clearly reached his current landlord, so he will soon be at the mercies of the vagaries of the rental market. And, really, what a thing of wonderment that is right now. A one-bed apartment (with a single bed) in Rathmines, at €1,450 a month, has probably been rented by now. Elsewhere in the area, a two-bed apartment with (how best to put this?) fixtures and fittings that have seen better days, is available at €2,000 a month.
Looking on houseish.com and rentinireland.com takes an iron stomach these days: beds wedged into sitting rooms, bunk beds, short lets galore (perhaps so a landlord can avoid the obligations that come with long-term tenants) check this CHICKEN COOP FOR WOMEN: Another Homeowner Renting 16 Beds In Three Rooms For Up To €445 Each. And that’s before you get to the “sex for rent” ads (where a room is offered in exchange for sexual favours) that have started to crop up from time to time. When the figures start to rise, as they are doing now, the slimy opportunist landlord really does come into his own.
And when the rental market becomes this inhospitable for renters – who wants to be at the mercy of Irish landlords when things are like this? – thoughts invariably turn to buying. And when the market is this strenuously massaged, with demand far outstripping supply . . . well, you already know that tune.
Unless, that is, you’re an investor who bought big during the lean years, or are a property owner planning to clock out of the Irish property market altogether. In that case, congratulations. You really are, as they say, in clover. But here’s a word of warning: perhaps it’s best not to get seduced by such numbers. €4,000 a month makes for a very nice little earner, but I wouldn’t bank on it. It’s an arbitrary figure in many ways, as likely to change as the capricious Irish weather. You only need to look back a few short years to know that.
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