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Property prices falls: Could a correction or a crash be coming?

Karl Deeter has studied property patterns over three centuries and has identified a key change made by the Central Bank

Supply shortages and strict Central Bank lending rules suggest a property collapse echoing 2008 is highly improbable but a price correction could be on the cards, according to one financial analyst who has detailed peaks and troughs in the sector spanning three centuries.

Writing in 2017, broker and chief executive of mortgage application website Karl Deeter predicted that the next big downturn in property in Ireland would happen at some point between 2023 and 2026.

He made that assessment after conducting comprehensive research into the house prices of 10 key streets across Dublin city, along with Frank Quinn of the Blackrock Further Education Institute and David Duffy of the Economic and Social Research Institute, over 300 years which pointed to multiple highs and lows.

In the wake of findings this week from which that suggested that asking prices for homes in Ireland declined by 0.3 per cent in the first three months of the year, the first time such a decline has been recorded nationally between January and March since 2013, Mr Deeter did not pull back from his earlier view that a correction was on the way.


However, he said it would be wrong to read too much into the figures that have been published in recent days.

He pointed to strict Central Bank lending rules that were introduced in the wake of the last crash, which have gone some distance to stopping people from over-extending themselves and banks from lending in a reckless fashion, as a key change from 2008.

“What we know at the moment is that supply is not outstripping demand and not only that, but that future supply is also at risk,” Mr Deeter told The Irish Times.

As well as highlighting falling prices, the housing market report also indicates that the pace of supply to the market continues to show signs of slowing.

The number of houses available to buy stood at 13,000 on March 1st – up 30 per cent on the same date in 2022 – but the stock of properties remains “significantly below” the 2019 average.

“That is still barely half the level of supply that prevailed before Covid-19,” said report author Ronan Lyons, associate professor of economics at Trinity College Dublin. “Between 2015 and 2019, when the market was tight in most parts of the country, there were an average of 25,000 homes to buy at any point in time.”

Mr Deeter said some major upheaval could change the landscape dramatically. “If something systemic happens, all bets are off but at the moment, we lack the fundamental ingredients to have a repeat of 2008.”

He also suggested that it would not be natural for prices of houses “to just go up forever in one direction. Not even stocks of good companies always go up every day. Property has peaks and troughs the same as every other asset class and that is not something that is any more weird than there being a winter at some point after the summer.”