Property Market 2020

voluntary

Lower prices create a great opportunity to upgrade. Less capital gains tax on BTLs and less money you need to put on top of your old gaff to get a better one. It's way more beneficial to upgrade in bear markets than in peaks.

Of course, ideally, you'd sell in the peak and buy at the bottom, but that's not a realistic strategy unless you're some kind of a Nostradamus.

Why would such sellers wait? To get more money but also spend way more money on a new house? Makes no sense.

BillyBiggs

Logan Roy wrote: »

I'm actually amazed how many economists there are on Boards. Is there somewhere I can go to read their work in depth or do they only post on here?

It’s a mixed bag of both economists and homeowners who won’t accept a fall in the value of the houses they own.

landofthetree

bubblypop wrote: »

The whole economy is going to go down, of course property will be affected. How anyone thinks otherwise is beyond me.

It's the usual Irish delusion. As David McWilliams explained in 2009.

https://thepropertypin.com/t/david-mcwilliams-house-prices-likely-to-fall-by-another-50/20176
International comparisons bear out these forecasts. Until now, many Irish people have clung to the myth of what I call ‘Dunnes Stores economics’. You know it: it is the school that suggests ‘‘the difference is we’re Irish’’.

BillyBiggs

The real question in this time of lockdowns, is when will the pandemic end? That will be the determining factor as to how many businesses go bust and how far house prices fall. What if the lockdowns last till Christmas? Not so implausible as a timeline if you think about it.

Padre_Pio

BillyBiggs wrote: »

The real question in this time of lockdowns, is when will the pandemic end? That will be the determining factor as to how many businesses go bust and how far house prices fall. Think if the lockdowns last till Christmas, not so implausible if you think about it.

Who knows, no country in Europe is out of the woods yet.

People are looking at Italy's declining numbers with optimism, but thier death rate isn't declining.

Much like us, I doubt they're testing half the people they should be.
We're going to be locked in until the end of the month at the very least and after that it'll be another month or two of all clear before they start slowly opening pubs and restaurants.

0gac3yjefb5sv7

BillyBiggs wrote: »

The real question in this time of lockdowns, is when will the pandemic end? That will be the determining factor as to how many businesses go bust and how far house prices fall. What if the lockdowns last till Christmas? Not so implausible as a timeline if you think about it.

Sorry but Christmas? Are you joking...you can't even honestly believe it will be even a quarter of that time...

cd76

Deleted User wrote: »

Very doomsday outlook.

The areas that are struggling now, will bounce back, without doubt. Pubs, hotels, travel, etc. will be the first to have a resounding bounce back. People are sitting at home scratching their holes, but they still have money coming in, and nowhere to spend it. Many are still being paid by employers, some are getting €350 off the dole.

People will be crying out for holidays, nights out and a meal with the family.

Retail in general will come back okay from this, in my view. The Government are already after introducing great measures to tackle exactly the issues you outline above.

House prices will not drop. They'll just remain the same as they are at the moment, as people will look at this as a 'temporary' issue, and many will presume the market will pick up right back where it started. That may not actually be the case, but you could be a long time waiting to prices to come down. Rents in the meantime are unlikely to drop much at all, so for every month you pay rent, you'd have likely been better off buying the house you wanted along the way.

I think of the big issues with people and property from the 'bubble', was that everyone was hellbent on 'trading up' and working their way up the property ladder. So they got stuck with houses and apartments they would never have wanted to stay in. Instead, this time around, most people are still looking just to buy their lifelong home, and as a result, things like negative equity won't mean as much this time around as people won't be actively looking to sell as much.

No I'm not saying Covid19 won't have any lasting impact. But It won't be the end of the world predictions that many are making it out to be, in my opinion.

House Prices are already dropping. I've been contacted by numerous EAs this week asking if I want to throw in a number on some properties that had gone Sale Agreed and where the purchasers have withdrawn. It's happening now .. it'll continue for months.
My view - as much as I don't like to see the social impacts of it - is welcome in the housing market. The only factor that could be argued is the exodus from Ireland due to unemployment. That will depend on the health risks posed in the UK and elsewhere. Traditionally during recessions Irish people emigrate 1930s/50s/80s. The rental market is collapsing and will continue that way.

cnocbui

BillyBiggs wrote: »

The real question in this time of lockdowns, is when will the pandemic end? That will be the determining factor as to how many businesses go bust and how far house prices fall. What if the lockdowns last till Christmas? Not so implausible as a timeline if you think about it.

The virus has a maximum incubation period of 14 days, but 4-5 days is the average. If infected people are locked down with other people, it would be extremely difficult for those people to not also become infected. So realistically, all locked down clusters should have gone through the process of infection, incubation and disease and recovery, in about a month. Households without infections just continue as normal.

In other words, after a month, the vast majority of currently locked down infected people should have recovered, as well as anyone who became infected by them. So the lock-down ought not to last more than a month.

Die Hard 2019

cnocbui wrote: »

The virus has a maximum incubation period of 14 days, but 4-5 days is the average. If infected people are locked down with other people, it would be extremely difficult for those people to not also become infected. So realistically, all locked down clusters should have gone through the process of infection, incubation and disease and recovery, in about a month. Households without infections just continue as normal.

In other words, after a month, the vast majority of currently locked down infected people should have recovered, as well as anyone who became infected by them. So the lock-down ought not to last more than a month.

But the youth are simply not locked down

cnocbui

voluntary wrote: »

Lower prices create a great opportunity to upgrade. Less capital gains tax on BTLs and less money you need to put on top of your old gaff to get a better one. It's way more beneficial to upgrade in bear markets than in peaks.

Of course, ideally, you'd sell in the peak and buy at the bottom, but that's not a realistic strategy unless you're some kind of a Nostradamus.

Why would such sellers wait? To get more money but also spend way more money on a new house? Makes no sense.

It's a zero sum game - there is no practical advantage to trading up in a downturn because you get less for your existing house so the difference between new and old wont change much. Also, in a depressed market, the sellers of better properties who don't have a mortgage will pull them off the market leaving mostly the chaff from distressed sales, so the selection of properties will be far more limited.

Padre_Pio

cnocbui wrote: »

It's a zero sum game - there is no practical advantage to trading up in a downturn because you get less for your existing house so the difference between new and old wont change much. Also, in a depressed market, the sellers of better properties who don't have a mortgage will pull them off the market leaving mostly the chaff from distressed sales, so the selection of properties will be far more limited.

I would disagree with both those points.

There's more value to be got in larger, more expensive houses than the 3 bed semi market, simply as they're out of the range of the average couple earning 100k a year, and less in demand.

Also, depending on how market drops scale, if the market drops by 10% and you're moving from a 300k property to a 400k property, you'll save an extra 10k. Not an exact science but our get the jist.

To your second point, it's easier to rent for an extra year if you need to buy than it is to sit on a property for a year that you need to sell.

No one is going to be giving their property away, but I would expect sellers will have to suck it up.
We could easily find ourselves in mass emigration again, with a lack of buyers and sellers who can't afford their mortgages.

I wouldnt be optimistic if I was selling.

I am sale agreed and willing to pull out and wait a year if it looks like there's savings to be made.

MrMusician18

Browney7 wrote: »

There's some truth no doubt in what you say but to think that house prices in an already flat market won't drop after this shock is fantasy. I'm not expecting a major crash but a 10 to 20% fall in the next 18 months.

Pay rise and bonus next year? "Sorry mate lost a full quarter's worth of earnings, need to tighten things up". Those stock options you were given a few years ago you were banking on - worth nothing now, sorry. Tax cuts we promised, sorry, we all have to tighten our belts and marginal rate has to go up.

Very difficult to see other European governments continuing to tolerate our race to the bottom tax haven model for the likes of Facebook and Google after this. God knows what "America First" policies Trump is going to do in the run up to the election.

This is a transformational black swan event.

That is putting it mildly. The UN had described it as the greatest crisis since the second world war.

In the short term, the market has ceased to function. The number of transactions complete in the last week must be close to nil.

The global economy was stuttering before this and the is the event that is the trigger to generate a global recession of unprecedented size. This alone will likely mean a sharp drop in property prices in the medium term.

That's before we get to the other crises this could precipitate -like a sovereign debt/Eurozone crisis.

There is every reason to have a bearish outlook on Irish property.

pearcider

cnocbui wrote: »

The virus has a maximum incubation period of 14 days, but 4-5 days is the average. If infected people are locked down with other people, it would be extremely difficult for those people to not also become infected. So realistically, all locked down clusters should have gone through the process of infection, incubation and disease and recovery, in about a month. Households without infections just continue as normal.

In other words, after a month, the vast majority of currently locked down infected people should have recovered, as well as anyone who became infected by them. So the lock-down ought not to last more than a month.

What throws that off is the continuous local and international travel upon which our current society and economy depends and which has only been reduced. The only way this will end is when we get a vaccine. We are talking at least 18 months to make and deploy it and that’s being optimistic. Either way the current economy and society will be different then. It is at the very minimum, the end of globalization.

Back in 2001 Operation Dark Winter simulated a smallpox epidemic in the USA and they found there was no surge capacity in the health system and no industrial capacity to make large quantities of vaccine.

Looking at their case load and doubling time, I would say we are looking at 1.5 US million cases by the end of April. If this happens, then we are on track for 250 million people dead worldwide over the next 18 months. By that time one third of the world will be infected and have either recovered or died making the vaccine pointless anyway. I’m assuming a 10% fatality rate once the healthcare system collapses against the current rate of 3.4%.

fliball123

cd76 wrote: »

It is different to 2008 .. a lot worse!
The shortage will evaporate. Already lots of Googlers/Linkedin/Facebook types who were renting are gone, never to return. Airbnb is gone for at least 2 years thus flooding the market with rentals. Comparing prices to 2006/08 is irrelevant. We are facing mass unemployment akin to the 80s. Likely that there will be an exodus of youth and highly qualified people thus dampning demand.
Great for you if you want to proceed. Having sold and bought multiple times my strong advice to anybody in a position to pull out of a Sale Agreed (on a purchase) is to do so. Go ahead on your sale if the buyer is happy and then rent for a year and then pounce. The EAs are stressed and getting desperate.. even in the past 48 hours I have got multiple calls from EAs looking for me to bid on some houses I viewed 3 months ago.
It'll be a great opportunity in a years time to buy.

The only problem with your argument is that you think there is somewhere in the world that our youth will go to. Last I checked Corona was a global event so unless the youth are jumping on a space shuttle and heading to Mars. Unlike the 80s there is as much opportunity here as anywhere else in the world Ireland is no longer a poor relation to England we have shown to be a leader in tech and pharma and in other areas of industry otherwise we would not of been importing people for the last decade into the country to work here

Captainsatnav

pearcider wrote: »

I’m assuming a 10% fatality rate once the healthcare system collapses against the current rate of 3.4%.

This guy,😀

pearcider

Captainsatnav wrote: »

This guy,😀

Spanish flu killed relatively more and we had a much younger and fitter global population then. No obesity no diabetes and few OAPs. The only thing keeping the current death rate “low” at 3.4% is the modern intensive care we can provide but that will collapse in most countries in the next month or so because the cases are doubling every 5-8 days. In Italy it has collapsed hence the death rate of 11%. It’s just mathematics.

ittakestwo

https://www.rte.ie/news/business/2020/0401/1127933-fitch-downgrades-outlook-on-boi-and-aib/

AIB and BOI downgraded by rating agency Fitch. They believe they will be hit by bad loans. This would probably lead to tougher lending criteria towards the end of the year?

lalababa

University of Hong Kong studied the Wuhan stats. Where there was a lot of testing and deaths, more so than anywhere else, and came up with a figure of total death rate to infection of 1.4%. I'd be inclined to go with this figure.

pearcider

lalababa wrote: »

University of Hong Kong studied the Wuhan stats. Where there was a lot of testing and deaths, more so than anywhere else, and came up with a figure of total death rate to infection of 1.4%. I'd be inclined to go with this figure.

It’s hard to know at such an early stage in the pandemic but I’m looking at the non sugar coated outcome. Italy and Spain fatality rates are high and I would tend to think they are more transparent than China. Of course the real case study is the US. Either way to think the lockdown will be over in a few weeks is delusional in the extreme.

cnocbui

pearcider wrote: »

Spanish flu killed relatively more and we had a much younger and fitter global population then. No obesity no diabetes and few OAPs. The only thing keeping the current death rate “low” at 3.4% is the modern intensive care we can provide but that will collapse in most countries in the next month or so because the cases are doubling every 5-8 days. In Italy it has collapsed hence the death rate of 11%. It’s just mathematics.

With 61 Italian doctors, and likely many more nurses, having died fighting this, I'd say it's not just mathematics.

Cyrus

pearcider wrote: »

Spanish flu killed relatively more and we had a much younger and fitter global population then. No obesity no diabetes and few OAPs. The only thing keeping the current death rate “low” at 3.4% is the modern intensive care we can provide but that will collapse in most countries in the next month or so because the cases are doubling every 5-8 days. In Italy it has collapsed hence the death rate of 11%. It’s just mathematics.

It’s not mathematics because they have no idea of how many people actually have the virus, death is 10 percent of the number they know have it but that number is likely to be out by a factor of 10 or 100

voluntary

cnocbui wrote: »

It's a zero sum game - there is no practical advantage to trading up in a downturn because you get less for your existing house so the difference between new and old wont change much.

No, it's not a 'zero-sum game'

First,

20% of 300k is 60k, but 20% of 600k is 120k.

Upgradeing from a former 300k house to a former 600k house after 20% drop saves you (600-300) - (480-240) = 300-240 = 60k

So even assuming low-end and high-end properties drop equally by 20% you already save 60 thousand Euros upgrading in the downturn as opposed to upgrading before the pandemic.

But this is all based on a very WRONG assumption that the market moves evenly. The average CSO increase of drop cannot be simply applied to the wide market. Expensive properties in the vast majority drop by a higher percent in general than the cheaper ones. The very low end of the market may not even move that much so you may be talking about getting small hit on your sale price and saving a lot of money on your next property.

lawred2

voluntary wrote: »

No, it's not a 'zero-sum game'

First,

20% of 300k is 60k, but 20% of 600k is 120k.

Upgradeing from a former 300k house to a former 600k house after 20% drop saves you (600-300) - (480-240) = 300-240 = 60k

So even assuming low-end and high-end properties drop equally by 20% you already save 60 thousand Euros upgrading in the downturn as opposed to upgrading before the pandemic.

But this is all based on a very WRONG assumption that the market moves evenly. The average CSO increase of drop cannot be simply applied to the wide market. Expensive properties in the vast majority drop by a higher percent in general than the cheaper ones. The very low end of the market may not even move that much so you may be talking about getting small hit on your sale price and saving a lot of money on your next property.

If you can find a lender

voluntary

No money no deals for your.

Maitguel

voluntary wrote: »

No, it's not a 'zero-sum game'

First,

20% of 300k is 60k, but 20% of 600k is 120k.

Upgradeing from a former 300k house to a former 600k house after 20% drop saves you (600-300) - (480-240) = 300-240 = 60k

So even assuming low-end and high-end properties drop equally by 20% you already save 60 thousand Euros upgrading in the downturn as opposed to upgrading before the pandemic.

But this is all based on a very WRONG assumption that the market moves evenly. The average CSO increase of drop cannot be simply applied to the wide market. Expensive properties in the vast majority drop by a higher percent in general than the cheaper ones. The very low end of the market may not even move that much so you may be talking about getting small hit on your sale price and saving a lot of money on your next property.

I get what you are saying but who is to enforce this strict 20% reduction across the board? I presume we will still have a free market once this is all over and people will be free to decide prices between themselves as opposed to a strict regime of everyone reducing every property by 20%? Some properties could be 20% some could be more some could be less. So you cannot say that someone could save €60k trading up in a downturn.

Also I see other people making the argument that there will be alot of properties sold because OAPs will be dying. This is only true if that OAP is an owner occupier or does not already have inheritance plans for that property. Of course there will be sales from this, but enough to move the market?

I am sale agreed on a property in Limerick. I was bidding on 2 other properties, only 1 EA came back to me and lowered the asked which was still above my bid. In my opinion as long as rents are over mortgages, sellers will hold out. Coupled with the pulling back of supply of new builds, this is an entirely opposite scenario to 2008 crash. IMO properties in good locations will not crash as at the end of the day people will pay a premium to live in the areas they to be in long term.

Graham

voluntary wrote: »

Expensive properties in the vast majority drop by a higher percent in general than the cheaper ones. The very low end of the market may not even move that much so you may be talking about getting small hit on your sale price and saving a lot of money on your next property.

I vaguely recall it was the other way round after the GFC. Smaller/lower-end properties lost significantly more than larger/mid-high.

GreeBo

Graham wrote: »

I vaguely recall it was the other way round after the GFC. Smaller/lower-end properties lost significantly more than larger/mid-high.

Yep, because expensive properties are typically in more desirable areas and hence have more demand.

There are X houses in Ranelagh for example, there will only ever be X house,so if you want to live there you have to buy one of that X.
There are more than X houses in Leixlip and scope to build far more. If you want to live in Leixlip you probably have a choice of houses.

GreeBo

Maitguel wrote: »

Also I see other people making the argument that there will be alot of properties sold because OAPs will be dying. This is only true if that OAP is an owner occupier or does not already have inheritance plans for that property.

Nope, once they die thats another house on the market. Even if its a family member who moves in, thats one less person looking for a house so it still counts.

Unless the inheritance plans are to knock it down to make a field, it adds housing stock.

Summer2020

cd76 wrote: »

House Prices are already dropping. I've been contacted by numerous EAs this week asking if I want to throw in a number on some properties that had gone Sale Agreed and where the purchasers have withdrawn. It's happening now .. it'll continue for months.
My view - as much as I don't like to see the social impacts of it - is welcome in the housing market. The only factor that could be argued is the exodus from Ireland due to unemployment. That will depend on the health risks posed in the UK and elsewhere. Traditionally during recessions Irish people emigrate 1930s/50s/80s. The rental market is collapsing and will continue that way.

Interesting how you’ve been contacted by “numerous estate agents asking if you want to throw in a number”.
I’ve been contacted by none, despite viewing upwards of 20 houses in the last 3 months and placing bids on or above asking on at least 5. I find your posts very suspect to say the least, you’ve clearly got a vested interest in all this.

davedub2015

Im the same have viewed many houses and no calls from any estate agent.