Iseq falls and somehow the property crash denial continues

On the news today it stated that “the Irish stock market taking a serious blow (by loosing 8.6 Billion Euro) was distracting conversations from the usual debates about the property market”.

Surely these two occurances are completely correlated! The banks took the brunt of the hit and this, as well as being linked to the american banking issues, its because they are so at risk to the property market. People still think that property will level off! Which frankly isn’t possible, who would invest in property that has no probability of gains or cashflow. IMO Its more likely to be a swift and devastating crash (20-40%) and a slow recovery.

It got me thinking why is this property market crash anticipated to take so long? The reason the Stock market droped so quick is cause it’s being dealt with by professionals who make logical decisions based on fact, figures and no emotions. On the other hand, the investment sector of the irish property market is less detached to the investment vehicle. Would you hold on to shares if you were certain that the price would go down over the next two years?? What if your dividends were due to go down too cause the rental market will be following the property market? You’d sell right??

Here’s the facts – Our population is aging, some of the immigrant workers that were here to facilitate to construction boom are no longer needed. They’ll move to England to facilitate the building requirements for the olympics there or somewhere where they’re skills are required! The prices of property are exceptionally over stated – first time buyers can’t afford property on a standard wage. The people that own a major share of small property investments are paye employee’s with one or two properties as a passive investment. These investors bought in under advice of others and based on past market preformance – something a sophisticated investor would never do.

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