The tide will turn, but will we learn, asks ISABEL MORTON
STRANGELY, DESPITE the fact that we all know how history repeats itself and that there is a natural ebb and flow to the economic tide, we never appear to learn from it and firmly believe that this time, it will be different.
We’ve all heard about “market sentiment” and how a change in confidence levels, however slight, can cause sudden chaos in the global financial markets, with share prices going up and down like a yo-yo, but the property market is a slower tide to turn.
Sometimes, just when you feel that you will be dragged out to sea and never seen again, the tide will turn and you’ll find yourself slowly being drawn back in to dry land.
Since the beginning of the year, signs are, that the Irish property tide is gradually turning and while most are gasping and spluttering out at sea, a few, such as the lucky cash buyers, have managed to ride a wave and get closer to shore.
Of course, that’s all very fine, if you are one of the lucky few who have cash under the mattress or have miraculously managed to persuade one of our so-called ‘lending’ institutions to give you a mortgage, but for the average person, who couldn’t raise the finance to buy a doll’s house never mind a family home, it might appear somewhat irrelevant.
Somewhat perversely however, the banks will not start lending again, until they see that a few swimmers have made it to shore, so, we are relying on cash buyers, ex-pats and foreign investors to lead the way.
We’ve all heard of the one about it being the time to sell, when everyone else is buying and the time to buy, when everyone else is selling, well, based on that proven theory, now is obviously the time to buy Irish property.
All you need is nerves of steel, a few bob in cash and a little patience. And, you may have to stay quiet about your property investments, as at best, you’ll be scorned by all, and at worst, considered clinically insane.
Having reached the extreme in one direction, when property prices had to hit stratospheric levels before we eventually realised the lunacy of it all, we then had to fall into the depths of despair, with property prices having to overcorrect (by up to 26 per cent according to the recent Central Bank report) before we accepted that we had actually ‘hit the bottom’.
So now, those who rely entirely on having to borrow money in order to buy property will have to stay bobbing up and down out at sea and wait, as there will be a considerable time lag before Irish banks realise what is happening and see fit to start lending again.
No doubt, that the time will come again, when we will recount the dramas of the Celtic catastrophe to our children and grandchildren and either pat ourselves on the back for being clever enough to have had the nerve to buy property at a time when nobody else would dare, or berate ourselves for not having done so.
History will repeat itself, as it always does and memories fade.
Like those of us, who are old enough, and once looked back to the 1980s and wondered why we hadn’t invested more in property then, when prices were so low, forgetting totally, that at the time, banks were slow to lend and when they did, they charged exorbitant interest rates.
And before you shower me with abuse and complain that I am actively encouraging people to invest in Irish property during the worst recession in living memory, let me assure you that I am doing nothing more than reminding people of the tides of life and how you can swim with or against the currents.
Today, people are hurt and angry and can hardly believe that there was ever a time when they aspired to owning property and indeed, considered it to be such a sound financial investment. Tomorrow, (if they survive until then) they might see things quite differently.
A friend of mine, who managed to sell his home just in time to relieve himself of his mortgage debt and has been renting for the last couple of years, recently said that, even if he won the Lotto, he would never ever buy property again. His nerves just couldn’t take it.
I suspect, that he is just one of many, who have been so severely burnt by the property crash that they will never invest in property again, but there are others, for whom this crash has been good, as it has provided them with an opportunity to purchase the house of their dreams.
And, no doubt, the day will come when the banks will start lending once more and a certain air of normality will preside over the property market for a while at least, until the cycle starts all over again and a new generation of property buyers and sellers become caught up in the madness of it all. And they too, will believe that it will be different – this time.