IN today's housing market an asking ‘price' is about as accurate as a drunk surgeon with a rusty blade.
The value of a house is only what someone is willing to pay for it and in the Irish property market the indications are that the value of houses is set to decrease significantly below current levels in the coming year.
The country's largest mortgage provider is abolishing fixed-rate home loans which leaves any new customers with no option but to go variable and be exposed to future interest rate increases.
This change will without doubt spread to other mortgage providers and depress any potential borrowings.
Who are the potential customers? With unemployment at 13.4pc and a generation of educated Irish leaving the country, it is hard to see any buyers in today’s market.
The surge in purchasing in the boom years drew in younger first-time buyers who were talked into a now-difficult situation. Families hoping to trade up to a larger home will only sell their existing home by reducing their expectations.
Another reason why house values will drop is they are still hugely overvalued.
NAMA feeds into the mix as indications are that it will be forced to sell blocks of houses which will quickly draw the market down to appropriate levels. Ireland’s forfeiting on the bailout will also be another factor as the external investors who were despised for ramping up prices in the boom years will remain away from the market.
Down they must come and down they will come. Anyone considering buying now needs to consider the future value which could be a 50pc reduction in six months. Anyone selling should drop their price and get out now.
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