Sunday 20 August 2017

Time to be very afraid as overseas property shows and rapid-fire house sales return

'Buying an apartment in Bulgaria, or some other far-flung place, is something that went spectacularly wrong for many people. But it could well be coming back into vogue'. (Stock photo)
'Buying an apartment in Bulgaria, or some other far-flung place, is something that went spectacularly wrong for many people. But it could well be coming back into vogue'. (Stock photo)
Charlie Weston

Charlie Weston

Be afraid, be very afraid. As a journalist, you know the property nonsense is well and truly back when you get your first press release in eight years announcing Irish tour dates for an overseas property show.

Buying an apartment in Bulgaria, or some other far-flung place, is something that went spectacularly wrong for many people. But it could well be coming back into vogue.

Other indications that we are back on the road to property madness come from the fact that a housing scheme in south Dublin sold out within hours of going on the market. Some 49 properties in the Hawthorn development in Clonskeagh were snapped up in less than a day. The properties ranged in price from €400,000 to €770,000.

Then there is the fact that there are more than twice as many people with mortgage approval as there are new properties coming on to the market. And weekend newspapers are again filled with features on whether or not ordinary people should invest in buy-to-lets. All of this means property prices are surging. A lack of properties to buy and strong demand saw prices rise by close to 10pc in the year to March, after an increase of 0.1pc in the month, according to Central Statistics Office figures.

If you look at the first three months of the year, the rise was the strongest first-quarter gain in the property price index since 2007.

The International Monetary Fund (IMF) said this month that the help-to-buy scheme for first-time buyers is pumping up demand in the property sector. The scheme, which gives first-time buyers 5pc tax back of up to €20,000 on the purchase of a new home, has been blamed for fuelling further inflation in the housing market.

Equally worrying is the fact that four-out-of-10 potential first-time buyers don't even know of the existence of the help-to-buy scheme, according to research commissioned by Bank of Ireland. This means people are entering the property market half-cocked, as if being poorly informed did not get us in enough trouble in the past. Although a lack of supply is the chief culprit, the easing of Central Bank rules on the size of deposits for first-time buyers is also playing a role.

Governor of the Central Bank Philip Lane denies we are in the midst of a new property bubble.

The Central Bank rule, where borrowers can get no more than three-and-a-half times their income in a mortgage, means credit is not freely available, he says.

Bubble or not, we are in big trouble.

We love property so much that we are in grave danger of repeating the mistakes of the recent past. It is as if ransomware wiped our memory of the property crash.

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