Watch out for the law of unintended and unforseen consequences

D

Delboy

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This will shake things up to some degree, probably more so at the lower end of the resi market in the big cities.
But watch out for the law of unintended consequences.....will potential sellers now hold off from next year on, thus choking supply even further and causing prices to continue their current surge into bubble territory in Dublin in particular
 
But with more supply likely to start coming on 18-24 months from now from new builds, any sellers holding off would be taking a big risk (as well as perhaps putting their own lives on hold in the mean time).

The consensus on this site and others seems to be that these rules will see property prices flatline at best or even fall (to some degree) from next year on. So if I was a potential vendor, I'd not risk the waiting game
 
Delboy said:
But with more supply likely to start coming on 18-24 months from now from new builds, any sellers holding off would be taking a big risk (as well as perhaps putting their own lives on hold in the mean time).
Click to expand...

What makes you think there is more supply coming in 18 to 24 months. I know that there has been a lot of talk about this but it seems to me that it is just talk. It is still very difficult to make a profit building and selling a house. See this thread http://www.askaboutmoney.com/showthread.php?t=187743&highlight=build+profit

Delboy said:
The consensus on this site and others seems to be that these rules will see property prices flatline at best or even fall (to some degree) from next year on. So if I was a potential vendor, I'd not risk the waiting game
Click to expand...

I think it is a bit early to talk about a consensus. But if prices do flatline then it will continue to be difficult to make a profit building and selling houses.

Personally I think the proposals would push prices up for those properties currently less than 4 times the average income. Are we allowed speculate on property prices in this context ? Call this speculation not on property prices but the effect of the CB policy!
 
The Consultation Paper specifically asks this question:

Question 10: What unintended consequences do you see from the proposed measures and how could these be avoided?
 
Like any paradigm change, there will be some unintended or unforeseen consequences as well as the intended one of encouraging an orderly housing market into the future.
In the long term, and once the forces seeking to profit from house-price inflation realise the Central Bank isn't for turning, the new credit limits will dampen house-price inflation to something close to the increase in wages and salaries in the economy generally.
In the short term, particularly if people believe the CB or Government will back down or bring in ameliorating measures, vendors, builders and developers will be inclined to wait, and there may even be a short-lived shortage of supply induced surge in house-prices as a result. However, once builders and developers realise that the 'good 'ol days' are not coming back, when land-banks doubled in value between deals, and builders could expect 100% profit-margins, land will come on the market again, builders will accept rational profit-margins, and vendors will know that the price the get for their old home will relate to the price they will be paying for their new home.

Hopefully.
 
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