Property Market 2020

Melanchthon

cnocbui wrote: »

Even Linesight refer to the the SCSI replacement costs for residential: https://www.linesight.com/en-us/reports/ireland-2019/

Who are also quaoted by these architects: https://isabelbarrosarchitects.ie/blog/building-costs-ireland-2018/



I will welcome your no doubt soon to be provided figures on house construction costs vs current prices in Dublin. If you think my methodology is unsound, let's see yours.



No, my sample average is within 2% of the actual figure for the average Dublin house price in 2019 of €366,000 in and around Sep 2019.

Picking Brisbane wasn't because it fits my argument, quite the opposite, it was because it handicaps my argument considerably. Using the real asking price for vacant land in Dublin makes established houses in Dublin look positively cheap, but I didn't use Dublin prices because I knew there would have been an almight whinge that Dublin land prices are too steep, so I chose a non capital city land price that's probably a third to a fifth of actual Dublin land prices.

The bottom line is that Dublin was not overpriced before the pandemic, so expecting a 40% drop in prices is barking mad, especially given the supply shortage.

But is Australia a good example compared to Ireland, higher wage and higher cost country, Australians get famously ripped of for everything but also seem to earn good wages

combat14

Bass Reeves wrote: »

The last recession was about 60+billion for property and banks gross at the time. The net cost was 45-50billion as Nama managed the outcome and there is equity in the banks to be recovered but we struggled with the amount on the day.

The deficit was heading for 30billion + one year. It was 10billion+ for 2-3years as well before we got it finally under control. This was in a scenario where construction was at a standstill for 4-6years. As well a lot of MNC's were going because if our cost base and this fed into the indigenous sector. This time we will still have a construction and MNC sectors. Tourism will really struggle as will the hospitality sector. But the rest of the service sector may recover to 70-90% of present capacity

I think in 2002-4 house prices fell 15-20% but recovered it was not a huge shock to property

how many work in tourism- 200,000 people?

addaword

combat14 wrote: »

how many work in tourism- 200,000 people?

In other recessions Irish people could emigrate to USA, UK, Oz wherever. This time that option will not be there. The Irish economy will have to sustain them. Taxes will go up, public sector wages will go down. It is inevitable house prices will crash too.

Marius34

1) Production costs has a big impact on Supply side. Supply has a big impact on the Price, it's basic economics...
2) For the previous discussion on the Property price, Average is not a great measure when it comes to the price, you should look at the Median price, it tells much more about the Market. In Dublin Co. 3-bed house median price are around 340-360K for second hand & 400K-420K for new Builds. New builds a normally larger than second hand.

eagle eye

The other thing which I kept hearing from experts was how the Euro is likely to be devalued. This will affect house prices because your euro is worth less so a house price staying the same means it's actually worth less but we don't see that change because we are all dealing in the Euro.

cnocbui

eagle eye wrote: »

The other thing which I kept hearing from experts was how the Euro is likely to be devalued. This will affect house prices because your euro is worth less so a house price staying the same means it's actually worth less but we don't see that change because we are all dealing in the Euro.

House prices would be affected if the Euro was significantly devalued and Chinese and others with foreign currency that appreciated, were allowed to flood in and start buying properties en mass. This is what drove prices up in Australia, New Zealand and Canada. The Chinese show no sign of being silly enough to buy Irish properties, they would be far more likely to buy up goodies where the weather is actually tolerable, like the French Riviera, French vinyards, Chateaus and the same in Italy. They would probably buy up ski resorts as well.

bdmc5

addaword wrote: »

In other recessions Irish people could emigrate to USA, UK, Oz wherever. This time that option will not be there. The Irish economy will have to sustain them. Taxes will go up, public sector wages will go down. It is inevitable house prices will crash too.

Far from inevitable in fact, comments like this are just wild guesses for now. On the flip side the last recession was driven by insane levels of property speculation and oversupply housing Of poor quality housing. Entirely different now with a chronic shortage of good quality housing and 3.5x rule and lending rules.

Prices will decrease but likely to be slowly as sellers are not going to suddenly start accepting offers far below asking unless highly motivated to sell. Still thousands of people working from home on full wages so I still see demand for housing as restrictions ease in the summer. Next few months will tell a lot once the true cost of all this comes into view

ittakestwo

eagle eye wrote: »

The other thing which I kept hearing from experts was how the Euro is likely to be devalued. This will affect house prices because your euro is worth less so a house price staying the same means it's actually worth less but we don't see that change because we are all dealing in the Euro.

No. There will be no meaningful inflation in Europe for years. All the bond buying the ECB is doing is trying to prevent deflation and even at that they probably wont be able to.

Under Masstrict the ECB have to try and keep inflation near 2% but nobody sees anything near that inflation in Europe anytime soon. And if it ever did go over that all the ECB would have to do is sell the bonds they bought and therefore take money back out of the system.

Yesterday the German court ruled that what the ECB is currently doing is illegal. There is contention building between member states about how the ECB bond buys.

Villa05

fliball123 wrote:

The bailout to the bank figure does not really matter we had to borrow 200billion this time its 30billion big big difference already between the 2 recessions and every bank were chasing down people who were not paying mortgages looking for repossessions and they went after everyone who stopped paying a mortgage regardless of if the person couldn't pay or decided not to pay. A lot of the times people who had no equity or in neg equity just jingle mailed the keys back. But this time people know they can get away with years not paying the mortgage and even if their house goes into negative equity they can stay there without paying for as long as they want.. They will be up the cost of renting, why would they go anywhere?

A That 200bn debt is still there

B 30bn is the initial cost not the total

C The recession hasn't officially started yet ie 2 quarters of negative growth the cost is not established yet. Social distancing will remain until a vaccine is found. This will hinder most economic activity so a return to normal is some way off

D Banks were in denial and had to be dragged kicking and screaming to sort out their arrears issues. Jingle mail was popular initially where the customer sent back the keys, mainly btl after rents and prices collapsed

E mortgage customers strategically defaulting on their loans is not positive for anything and will lead to an accelerated collapse in the housing market

futonic

ittakestwo wrote: »

No. There will be no meaningful inflation in Europe for years. All the bond buying the ECB is doing is trying to prevent deflation and even at that they probably wont be able to.

The bond buying is not trying to prevent deflation, its trying to prevent a total collapse, calm markets and protect the euro-area economy. They are essentially debasing our currency to safe society in the long term. Fair deal.

In my opinion it is likely that all governments around the world will do similar, but maybe in different ways, bonds, qe, printing, etc. It will lead to the real value of all our euros, dollars, pounds, yen being less, which in time will lead to stagflation. I don't think property prices will fall so much as, the value of our money will.

ittakestwo

futonic wrote: »

It will lead to the real value of all our euros, dollars, pounds, yen being less, which in time will lead to stagflation. I don't think property prices will fall so much as, the value of our money will.

The value of money falls by inflation. If there is no inflation then your money has not lost value. Inflation in Europe is now expected to turn negative despite the bond buying by the ECB. If the rate did go over 2% the ECB would be obliged to bring it down under..... which would be very easy for them to do. Sell back into the market the bonds they bought. The problem for the ECB is deflation not inflation at the moment. Money is not going to lose value.

Hubertj

So what do the “experts” on boards make of this?

https://www.irishtimes.com/life-and-style/homes-and-property/what-will-happen-to-house-prices-after-lockdown-1.4245520

greendom

Glenveagh are talking a good game ...

https://www.irishtimes.com/business/construction/glenveagh-eyes-recovery-as-covid-19-restrictions-set-to-be-eased-1.4247215?mode=amp&utm_source=dlvr.it&utm_medium=twitter

Brianmwalker

cnocbui wrote: »

House prices would be affected if the Euro was significantly devalued and Chinese and others with foreign currency that appreciated, were allowed to flood in and start buying properties en mass. This is what drove prices up in Australia, New Zealand and Canada. The Chinese show no sign of being silly enough to buy Irish properties, they would be far more likely to buy up goodies where the weather is actually tolerable, like the French Riviera, French vinyards, Chateaus and the same in Italy. They would probably buy up ski resorts as well.

Wouldn't be so sure about that. The house I rent is owned by a Chinese person that lives in China.

SteelyDanJalapeno

greendom wrote: »

Glenveagh are talking a good game ...

https://www.irishtimes.com/business/construction/glenveagh-eyes-recovery-as-covid-19-restrictions-set-to-be-eased-1.4247215?mode=amp&utm_source=dlvr.it&utm_medium=twitter

Can you paste the article in here?

greendom

SteelyDanJalapeno wrote: »

Can you paste the article in here?

Not sure I can do that. Essentially they claim they have a healthy balance sheet, a growing list of reservations and are foreseeing profits for the second half of the year

combat14

addaword wrote: »

In other recessions Irish people could emigrate to USA, UK, Oz wherever. This time that option will not be there. The Irish economy will have to sustain them. Taxes will go up, public sector wages will go down. It is inevitable house prices will crash too.

Not sure they will cut public servant I.e. healthcare, nurses, doctors, guards etc wages so quickly this time- would be massive resistance

More likely stealth tax rises for all or not so stealth once the greedy greens are back in power again

topmanamillion

An emergency budget is highly likely, probably late summer, early Autumn.
They're talking about a €40 billion hole being blown in the national finances. No one truly knows until the economy starts up again and permanent job loses and businesses closures are better known but it is going to be a very large figure.
There's 2 ways the government/EU can cover their loses. Either devalue the Euro meaning everyones money is worth less and/or increase taxes.
Another USC style national emergency tax appearing next year on workers payslips seems very likely.

Bass Reeves

topmanamillion wrote: »

An emergency budget is highly likely, probably late summer, early Autumn.
They're talking about a €40 billion hole being blown in the national finances. No one truly knows until the economy starts up again and permanent job loses and businesses closures are better known but it is going to be a very large figure.
There's 2 ways the government/EU can cover their loses. Either devalue the Euro meaning everyones money is worth less and/or increase taxes.
Another USC style national emergency tax appearing next year on workers payslips seems very likely.

This cannot happen as the Euro is a world wide base currency that is too strong. The only way this would work is to leave the euro, Italy might try it as an option. it is moot if we should have done it the last time but even Greece at the height of its financial crash did not do this. Italy might consider it. There is a thinking that they have the capability to print there own currency in place with a while.

But devaluing the Euro is not possible, who do ou devalue it against, the dollar, Japanese yen. They value of the Chinese Yuan is set by the Chinese government which pegs it at a low level against the dollar so that they can continue to export and expand there economy

Reversal

Hubertj wrote: »

So what do the “experts” on boards make of this?

https://www.irishtimes.com/life-and-style/homes-and-property/what-will-happen-to-house-prices-after-lockdown-1.4245520

A piece on the property market, exclusively featuring the opinions of EAs and published in a paper that owns a property website, and they are still predicting a drop. Things must be bad

Browney7

greendom wrote: »

Glenveagh are talking a good game ...

https://www.irishtimes.com/business/construction/glenveagh-eyes-recovery-as-covid-19-restrictions-set-to-be-eased-1.4247215?mode=amp&utm_source=dlvr.it&utm_medium=twitter

I would be very interested in the breakdown of their 570 "Sold, signed or reserved" units and what reserved actually means for enforcing a sale.

The market seemed to like the update with a 6% bounce in the share price but still 30% lower than the share price in mid Feb pre Covid

Hubertj

topmanamillion wrote: »

An emergency budget is highly likely, probably late summer, early Autumn.
They're talking about a €40 billion hole being blown in the national finances. No one truly knows until the economy starts up again and permanent job loses and businesses closures are better known but it is going to be a very large figure.
There's 2 ways the government/EU can cover their loses. Either devalue the Euro meaning everyones money is worth less and/or increase taxes.
Another USC style national emergency tax appearing next year on workers payslips seems very likely.

where are you getting the €40bn number from? First i heard of it being that high.

hometruths

Reversal wrote: »

A piece on the property market, exclusively featuring the opinions of EAs and published in a paper that owns a property website, and they are still predicting a drop. Things must be bad

In the same paper the MD of SherryFitz chooses her words carefully, saying volumes will fall, whilst not quite straying into bearish territory on price falls but acknowledging "there is some downside risk while the economy and labour market adjust."

The article shows a helpful graph, confirming there may indeed be some downside risk:



https://www.irishtimes.com/life-and-style/homes-and-property/new-to-market/residential-property-sales-could-fall-25-this-year-1.4245574

OneMoreBabadee

Bass Reeves wrote: »

This cannot happen as the Euro is a world wide base currency that is too strong.

Of course it can happen and the ECB have already done this through an extensive quantitative easing program from 2015-2018. In 2016 they were printing €80 billion/month.

Villa05

schmittel wrote:

In the same paper the MD of SherryFitz chooses her words carefully, saying volumes will fall, whilst not quite straying into bearish territory on price falls but acknowledging "there is some downside risk while the economy and labour market adjust."

She describes the first quarter as positive despite price appreciation being flat. This is the quarter where traditionally banks use most of their exemptions so most of the price rises for the year should be achieved in the first quarter
A little economical with the truth in typical estate agent fashion

Villa05

OneMoreBabadee wrote:

Of course it can happen and the ECB have already done this through an extensive quantitative easing program from 2015-2018. In 2016 they were printing €80 billion/month.

I wonder how this never led to any inflation of note

Assetbacked

Hubertj wrote: »

So what do the “experts” on boards make of this?

https://www.irishtimes.com/life-and-style/homes-and-property/what-will-happen-to-house-prices-after-lockdown-1.4245520

The stake in MyHome definitely creating strong bias in that article, to the point I would classify it as a bit irresponsible.

Some quotes;

The bodies representing valuers say that while they have begun adding a Covid-related clause to valuations, they are not altering values based on the virus. Meanwhile the banks are saying the matter is one for valuers, but there is concern an implicit Covid-19 discount will be factored in to new valuations.

A concern about lower valuations? That's a very subjective opinion.

A quick recovery in employment levels and the easing of lockdown will be critical to any soft landing for the residential property market.

That is a big assumption and neither will happen quickly unfortunately. It's in the category of hopelessly optimistic.

Ozark707

Reversal wrote: »

A piece on the property market, exclusively featuring the opinions of EAs and published in a paper that owns a property website, and they are still predicting a drop. Things must be bad

If I was an EA the most important thing for me was to ensure that vendors expectations are lowered and pretty sharpish, otherwise they are looking at months and months of reduced income. Better to have deals conclude at say 10% under AP than it just hang about.

Assetbacked

topmanamillion wrote: »

An emergency budget is highly likely, probably late summer, early Autumn.
They're talking about a €40 billion hole being blown in the national finances. No one truly knows until the economy starts up again and permanent job loses and businesses closures are better known but it is going to be a very large figure.
There's 2 ways the government/EU can cover their loses. Either devalue the Euro meaning everyones money is worth less and/or increase taxes.
Another USC style national emergency tax appearing next year on workers payslips seems very likely.

I don't think FF and FG can in good faith tax workers even more, particularly given the state of the economy the past few years with rampant insurance, healthcare and housing costs matched with broken promises on easing the burden on those that get up in the morning. Public expenditure is more likely to be cut than to have new or increased taxes. It's a bit of a weird economic situation; all economies are being saddled with this debt but it is not really functioning like it needs to be repaid, it's interest free and seems like it will just constantly rollover. Any effort to attempt to shackle the economy with it will hamper any prospect of recovery.

OneMoreBabadee

Villa05 wrote: »

I wonder how this never led to any inflation of note

I don't have any stats handy but anecdotally there was significant asset price inflation (stocks/shares and property mainly) during those years. Interestingly it looks like the ECB are expanding QE to deal with the covid19 aftermath. A possible outcome of this is property prices (in absolute terms) remain stagnant but the value of the Euro drops.