Are our lives as well as our property on hold, asks Isabel Morton.
HAS THE WORLD stopped turning? I was just wondering because nothing appears to be happening in the property world. Have people stopped dying, divorcing, marrying, shacking up together and procreating? Have we stopped living? Or are we all just holding our collective breaths?
Based on the number of times I have heard people say "well, we'll wait and see what happens in September", we're all obviously expecting something definitive to happen in six weeks time. What exactly, I wonder?
Is God going to part the clouds and make a public announcement - that it was all a bad dream and it's over now, we've reached rock bottom and from now on, the only way is up?
In the meanwhile, we are floundering about, not knowing quite which way to turn. We need guidance, and those who normally give it are at a loss for words. The recent report by Jim Power, head of investment strategy and chief economist with Friends First, was given a lot of press coverage and air time, mainly because he is one of the few who have the knowledge (and the nerve) to make predictions about the economy.
Mr Power said "markets now look cheap, but they could get cheaper before a meaningful recovery takes hold, possibly later in 2008". No, the only trouble with that statement is that both the press and the public only latched onto the fact that property prices may drop further. They didn't pay too much attention to the bit about it getting better, let alone the fact that Mr Power was predicting that this may start happening before the end of the year.
If an announcement was made to the effect that there was going to be an imminent shortage of bread, we would rush out, buy up all the bread and stuff it into our freezers. Then we would buy up all the flour and pack it into our store cupboards. Within a week of the announcement, there would indeed be a shortage of bread.
Mr Power's predictions are very likely to be confirmed as they were made to a nation in dire need of some form of direction. If Mr Power says that property prices will drop further, then they will. No one will buy now until the predicted price drop happens. Therefore, those who really need to sell, will have to lower their prices further in order to satisfy the expectations of potential purchasers. And the end result will be that Mr Power will be proven to be correct.
In the meanwhile, our lives are on hold. Those who want to get divorced, sell their house and share the proceeds are stuck in their marital home. One just wants to sell it now, whatever the loss, and move on with their lives. The other refuses to sell, as they see it, at a discount price.
Siblings who inherited the family home from deceased parents battle amongst themselves over whether the property should be sold in the current climate, and whether it should be renovated before sale. Estate agents can't even advise them as they can't guarantee that the property will sell at all, renovated or not.
Parents with young families argue about whether the timing is right now to upgrade to a larger family home. Not confident about selling their existing property, they hate the idea of having to sell first, move into rental accommodation and move again if and when they find a suitable home. They feel unsure, unsettled, uncomfortable and unable to get on with their lives.
And there are elderly people who have, after much consideration, eventually made the decision to downsize. Having encouraged them for years, their children deter them from selling now, as a lower sale price would reduce their potential inheritance.
Young people, who always fare worst, are caught in a catch 22. Property prices may have decreased, but so has their chance of obtaining a mortgage. And landlords, who tolerated low yields because they were being balanced out by their property's increase in capital appreciation, are now resentful that rents are not covering their costs let alone making them a profit. A new breed of reluctant landlord has been created by those who are unable to sell their properties and are being forced into the role.
We are all suffering, to a greater or lesser extent, just as we did in the 1980s. However Jim Power put his finger on it when he commented that "the key vulnerability is the excessive public sector debt in the 1980s has been replaced with excessive personal sector debt today".
It says it all, really. This time around it's not just the Irish exchequer which is feeling the pinch, but Paddy's own pocket.
Now that's real pain.