So is now the right time to buy a property? God only knows – and maybe Morgan Kelly
Published 20/03/2014 | 02:30
To buy or not to buy – that is the question. Taking liberties with some lines from good old William Shakespeare is of no consolation to Ireland's growing band of dithering potential housebuyers. The vast majority are beside themselves with uncertainty, as to whether now is the right time to make their move.
A kind of itchy angst, redolent of a feeling so many succumbed to in Celtic Tiger madcap days, is back tormenting would-be purchasers. They are haunted by the old mantra – get on the property ladder now before prices are out of your reach. But is that good advice? Was this not the kind of thinking which, in the all-too recent past, plunged so many into serious negative equity, and others into an unsustainable debt spiral?
This angst is fuelled by growing evidence that house prices in certain parts of Dublin are going up almost by the week. Already parts of Galway, Cork, and other urban locations are showing a similar trend. We are assured by many pundits that things have definitely "bottomed out'' in the property market.
Therefore the obvious logic is that if you can raise a mortgage, go for it. Get a foothold on that famous ladder – on whatever rung – before it moves out of your reach. That belief is rooted so deep in the Irish folk memory and consciousness, it will always be with us, regardless of how many property crashes we experience.
And yet! And yet! There does seem to be a bit more caution this time round. One obvious reason is that finance in general is hard to come by. Another restraining factor is that so many have been burned, because they allowed, in the famous Richard Nixon phrase, "their zeal overcome their better judgment". This is most manifest in those who are lumbered with apartments – worth far less than what they paid for them in the Tiger days – and which now can't be sold other than at a whacking loss.
As everybody knows, the apartment ploy to get on the ladder seriously backfired for thousands of Irish people. Some are caught in a nightmarish bind, where their freedom of movement is seriously restricted. They are ensnared in a Catch 22 dilemma, that if the value of their apartment moves up to something akin to the price they paid for it, so too will the aspirational house they hanker after, which seems ever further out of reach.
And so we return again to the central question – is now the right time to buy a property because of a general feeling the market has bottomed out? But has it really? As always we live in an uncertain world with an unknown future.
Those who believe in such matters assure us that only God knows exactly what is down the line.
However, in the absence of taking guidance from some higher power, perhaps on a more earthly basis, acknowledging what our futurologist economist Morgan Kelly has to say, just might be the next best thing.
Morgan is of course credited with predicting the property price crash which signalled the death of the Celtic Tiger. He has now ventured out once again from the rarefied world of the UCD economics department to warn us of further perdition to come. He is convinced an alarming number of our small businesses are severely in hock, because of their speculation on the property market during our crazy days.
We are burying our heads in the sand on this issue according to his latest warning. There is a real risk many businesses will go bust, pushing a huge number of workers on to the dole queue.
And because it's Morgan Kelly who is making the prediction, the politicians are slow to dismiss him this time round. Even the ever-crafty Michael Noonan insists he is more than welcome to share his concerns with our central bankers. But that is also a real shrewd move by the minister. It forces the watchdog for our excesses to come up with some solutions, as well as telling us what are our problems.
Morgan Kelly also has his critics, and the naysayers point out not all of his predictions have come to pass.
There is also the cynical view that if he is so good at reading the economic tea leaves, how come he is still working for somebody else? Knowing when to buy and when to sell – when a market is approaching the bottom or is about to hit its peak – has been the cornerstone of many a fortune make by a self-employed millionaire.
But maybe at the end of the day, only the aforementioned God really knows if Irish property prices have hit the bottom, and if now is a good time to buy.
So perhaps getting on your knees, and praying for some guidance from on high, before you bid for that house, just might be as good a bet as any.