Tuesday 22 October 2019

Worrying trend can't be reversed until economy starts working again

Donal O'Donovan

Donal O'Donovan

MANY homeowners will be disheartened by the Central Bank's new house price forecast. We all should be.

If house prices fall this year, as is now predicted, it will be the sixth successive year of decline nationally.

The figures vary from town to town and county to county, but house prices on the whole are around half what they were in 2007. In a small country, no region – not even Dublin – will escape the main trend for long.

Those falling prices mean no easy escape for the negative-equity generation who bought often unsuitable accommodation at the top of the boom.

It also means it is pointless trying to sell your house to pay off the mortgage, if you are among the tens of thousands struggling to meet the monthly repayments.

It's not great news for people thinking about buying a home. Who wants to buy a house today that will be worth less tomorrow? And how are banks expected to lend to families buying homes in this climate?

The experts surveyed by the Central Bank reckon that we'll see prices rise nationally by the end of 2015. It's getting harder to put much faith in that. Going back two years, I'm sure many of them thought the same about 2013.

Falling house prices are now normal. The fact is that we don't know when house prices will rise again.

But we do know what will make them rise. House prices will go back up when the wider economy starts working.

The housing market will be fixed, at whatever level, when more people are working, and when those who have jobs are working longer hours and taking home more money.

Fix the economy and we'll fix the property market, not the other way around.

Irish Independent

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