Property Market 2020

Villa05

OneMoreBabadee wrote:

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.

I would agree with you on asset price inflation, that's why I've been harping on about housing being in a bubble here for years

Usually I have a look at shares looking for value in times like this, naturally Netflix crossed my mind. In the middle of a lock down, one would expect Netflix to be at peak earnings. There share price is over 80 times earning, that means if you bought at today's prices it would take Netflix over 80 years to make that money
Elon musk had to communicate that his company Tesla is overvalued
Berkshire hathaway disposed of all their shareholdings in airline stocks, owning over 10% of them
Companies all over the world are conserving cash abandoning share buy backs, dividends etc

Have we created the mother of all bubbles? Will it be found out in this recession?

JimmyVik

combat14 wrote: »

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

Public sector are mostly still at the level they were cut to over a decade ago now.
While everyone elses wages have been increasing, theirs havent.

I took a pay but of 10% in 2009. By 2012 I was back up higher again than what was cut. The last few years have been very big increases in my salary.
Im probably going to be getting a cut this year



The public sector were only just starting to get pay restoration. It would be hard to argue a cut for them now.

Cyrus

Villa05 wrote: »

There share price is over 80 times earning, that means if you bought at today's prices it would take Netflix over 80 years to make that money

assuming their earnings dont grow at all of course, which is not the assumption of someone buying into a stock trading at a high multiple.

Claw Hammer

cnocbui wrote: »

There are weird people who believe the market is the sole determiner of price. This is fallacious. The market can not dictate price below intrinsic cost, other than briefly, without supply ending.

That assumes demand is constant, which is completely eroneous. The market is always right.

Housing or land have no intrinsic value.

JimmyVik

Assetbacked wrote: »

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.

National broadband plan will be deferred or cancelled. National childrens hospital will be cut back big time for a few years. All capital projects will be put on hold for several years.
Budgets for everything that can will just be cut to zero for a couple of years.


What we have to do now is go on a no spending anything at all budget for a few years. Of course some things will need money spent, but they would want to be seriously important and impossible to do without.

Graham

JimmyVik wrote: »

What we have to do now is go on a no spending anything at all budget for a few years.

I'd argue the exact opposite.

We're not going to kickstart the economy with austerity.

Hubertj

Graham wrote: »

I'd argue the exact opposite.

We're not going to kickstart the economy with austerity.

agreed, the government can only do so much, especially with "talks" ongoing at European level. A lot so going to depend on the nature of the stimulus package as it will determine what the national governments have to play with. Sadly the likes of SF have already resorted to populist crap. I expect nothing less from their type but in such unprecedented times they could have been more responsible.

Also, hopefully over the coming months there will be positive developments on treatments for Covid (vaccine likely more medium terms). Espeically treatments that do not require hospitalisation (i think remdesivir is IV?) This will begin to restore consumer confidence.

SozBbz

JimmyVik wrote: »

National broadband plan will be deferred or cancelled. National childrens hospital will be cut back big time for a few years. All capital projects will be put on hold for several years.
Budgets for everything that can will just be cut to zero for a couple of years.


What we have to do now is go on a no spending anything at all budget for a few years. Of course some things will need money spent, but they would want to be seriously important and impossible to do without.

I tend to disagree. I think there will be cuts for sure, but I think certain big infrastructure projects will go ahead as a stimulus.

Surely theres a bigger argument for improving broadband infrastructure than before in the case of future waves of the virus, so more people can work/learn from home.

Also I think the childrens hospital is too far gone to be mothballed at this stage.

We're just going to borrow loads to fund it all via ECB mechanisms.

Marius34

Villa05 wrote: »

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

Depends on what it is discussed, Asking Price or Sale Price. And if it's compared Quarter to previous Quarter change or Annual. If it's Annual, it has no difference as long as its traditional annual events.

Zenify

I remember looking at a site around 2 years ago. Was asking 390k (roughly) and went sale agreed around that price. Sale fell through and came back on market over a year ago at 360k, then 325k again 280k. Now it going for digital auction amv 180k.

https://www.myhome.ie/residential/brochure/brides-glen-cottage-brides-glen-road-rathmichael-rathmichael-dublin-18/4428170

Cuddlesworth

Zenify wrote: »

I remember looking at a site around 2 years ago. Was asking 390k (roughly) and went sale agreed around that price. Sale fell through and came back on market over a year ago at 360k, then 325k again 280k. Now it going for digital auction amv 180k.

https://www.myhome.ie/residential/brochure/brides-glen-cottage-brides-glen-road-rathmichael-rathmichael-dublin-18/4428170

I'm going to assume there are some issues there not stated in the AD. I would assume zero broadband or TV options, or TV aerial reception would be one of them.

Hubertj

Cuddlesworth wrote: »

I'm going to assume there are some issues there not stated in the AD. I would assume zero broadband or TV options, or TV aerial reception would be one of them.

it is strange considering the price going for some houses in that area.... You could build a large house on a site that big. I presume large houses in that area would generally go €1M +?

Graham

SozBbz wrote: »

We're just going to borrow loads to fund it all via ECB mechanisms.

I hope so, will it need to be via the ECB though?

If I'm reading it correctly we recently raised €6billion at 0.242% over 7 years in an offering that was over subscribed to a total order book of €33billion.

JimmyVik

Graham wrote: »

I'd argue the exact opposite.

We're not going to kickstart the economy with austerity.

So where are you going to get the money to do that?

fliball123

Villa05 wrote: »

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

Like I say mortgage holders who know possess the knowledge they cant be forced out of their property by the bank will stay there and this will lead to a huge reduction of properties coming on stream and available for people to buy which would typically be there in other countries and during other recessions. The point I am trying to make is that the dynamics of supply and demand for property is a lot different this time around.

Demand will not decease as much as it should as it cannot run off to Oz for a few years till the recession is over

Supply will not increase as much as it should due to owners just not paying the mortgage and staying put rent free for years and can wait till property starts to rise before even contemplating engaging with the banks.

These 2 factors will have a lot of sway in property

Graham

JimmyVik wrote: »

So where are you going to get the money to do that?

See previous post.

If it were up-to me we would be undertaking the largest infrastructure program ever seen in the state, offering subsidised loans/tax-incentives to businesses, incentivising construction, R & D and job creation.

Conveniently, we're able to borrow at pretty much record low interest rates.

The Irish equivalent of the Marshall plan.

fliball123

combat14 wrote: »

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

Well we need to get the spending side of this equation down its now higher than it was back in 2008 cant keep looking at the squeezed middle to prop up everything they will have to give something there were more or less cushioned in the last recession.

JimmyVik

Zenify wrote: »

I remember looking at a site around 2 years ago. Was asking 390k (roughly) and went sale agreed around that price. Sale fell through and came back on market over a year ago at 360k, then 325k again 280k. Now it going for digital auction amv 180k.

https://www.myhome.ie/residential/brochure/brides-glen-cottage-brides-glen-road-rathmichael-rathmichael-dublin-18/4428170

Thats less than 50 feet from the M50 Not surprised.
When you stand in that garden you wouldnt be able to hear what the EA is saying to you.

smndly

Graham wrote: »

I'd argue the exact opposite.

We're not going to kickstart the economy with austerity.

Completely agree. Thankfully government can borrow almost for free at present given bond market and rates.

If GDP is significantly higher than servicing the debt after the recovery it will essentially result in the slow erosion of the debt as the economy grows - provided we don't take on loads more debt...

hometruths

fliball123 wrote: »

Like I say mortgage holders who know possess the knowledge they cant be forced out of their property by the bank will stay there and this will lead to a huge reduction of properties coming on stream and available for people to buy which would typically be there in other countries and during other recessions. The point I am trying to make is that the dynamics of supply and demand for property is a lot different this time around.

Demand will not decease as much as it should as it cannot run off to Oz for a few years till the recession is over

Supply will not increase as much as it should due to owners just not paying the mortgage and staying put rent free for years and can wait till property starts to rise before even contemplating engaging with the banks.

These 2 factors will have a lot of sway in property

Do you have a view on how much sway these factors will have - i.e in price movement terms % up or down?

SozBbz

Graham wrote: »

I hope so, will it need to be via the ECB though?

If I'm reading it correctly we recently raised €6billion at 0.242% over 7 years in an offering that was over subscribed to a total order book of €33billion.

Oh who's to say- I hope we get the money wherever is cheapest for us - the point I'm making is that we're going to borrow, not go the austerity route this time.

People are freaked by the memory of the last recession, but;

1. Ireland was one of the most effected countries in the world, so it was particularly severe for us.
2. We had a perfect storm in terms of our housing bubble being right at the top at the same time that world markets collapsed.
3. There was a moral hazard argument against anything but austerity. The system was built on sand and propping it up with all the underlying issues would never have rooted out all the bad apples (soz for the mixed metaphors).

None of this is true for the Covid 19 crisis.

None of the above is true this time.

Graham

It's also easy to forget that at the start of the GFC the impact on property prices was massively amplified by the shear volume of unsold new builds.

Estimates vary between 35,000 and 100,000 new build houses in 2009. There's nothing like that number today.

fliball123

JimmyVik wrote: »

Public sector are mostly still at the level they were cut to over a decade ago now.
While everyone elses wages have been increasing, theirs havent.

I took a pay but of 10% in 2009. By 2012 I was back up higher again than what was cut. The last few years have been very big increases in my salary.
Im probably going to be getting a cut this year



The public sector were only just starting to get pay restoration. It would be hard to argue a cut for them now.

Thats not correct there were increments still being paid even during the last recession and some of the pay cuts were restored what should happen is PS should be told to fund their pensions themselves and not have the tax payer do it, I think it is very unfair to ask one subset of workers (private sector and self employed) to contribute to another subset of workers (the public sector) pensions when the vast majority of the first sector cannot afford their own and even with the pension levy it comes no where near enough to cover the costs

fliball123

schmittel wrote: »

Do you have a view on how much sway these factors will have - i.e in price movement terms % up or down?

No I wouldnt even hazard a guess and I think it would not be fair to say otherwise. Everyone on here is guessing people are saying property will drop 50% others 30% and others 10-15% and some 5% then there are those who are saying it wont drop. To be honest the dynamics at play here are not the typical recession, it could be full 80/90% drop it might be 0% I wouldn't advise anyone to buy or sell on my advice or on anyone elses on here. Anyone stating any of the opinions above should be more prudent and tell people its a guess unless they have some tangible evidence that they are using for the guess work at least that's a start.

My GUESS is there will be a drop of maybe 5/10% in about 12 months time you will see the drops and then in the next year prices will start to recover once the economy bounces back. But like I say this is just gut no facts or figures to back it up so don't make a decision on it. Anyone looking to buy I would factor in what your paying for rent and what the mortgage would be, how long you intend to live there as in 10/20 years + and if I was selling I would consider the option of do I have to sell as in if its a BTL can I rent it out for the foreseeable future and getting through the recession and then selling when prices rise again. If I own a house and I am living in it and say I have lost a job and no longer able to afford the mortgage I would stay put as you will not be turfed out by the bank no matter how much you pay or do not pay.

Villa05

SozBbz wrote:

Surely theres a bigger argument for improving broadband infrastructure than before in the case of future waves of the virus, so more people can work/learn from home.

Not to every backwater in the country, bring it as far as town Village centres. Subsidise 50/50 cost share to anywhere else, this will drastically reduce cost

fliball123 wrote:

Demand will not decease as much as it should as it cannot run off to Oz for a few years till the recession is over

Disagree, these countries always looking for workers in specific sectors and will absorb the cream of the crop from poorly run countries

fliball123 wrote:

Supply will not increase as much as it should due to owners just not paying the mortgage and staying put rent free for years and can wait till property starts to rise before even contemplating engaging with the banks.

Banks will have to make higher provision for bad loans > less to loan out > higher proportion of bad loans to profitable loans > higher % rates to compensate for bad loans > further bad loans due to higher % rates > collapse of mortgage market > collapse in house prices

Billythekid19

fliball123 wrote: »

No I wouldnt even hazard a guess and I think it would not be fair to say otherwise. Everyone on here is guessing people are saying property will drop 50% others 30% and others 10-15% and some 5% then there are those who are saying it wont drop. To be honest the dynamics at play here are not the typical recession, it could be full 80/90% drop it might be 0% I wouldn't advise anyone to buy or sell on my advice or on anyone elses on here. Anyone stating any of the opinions above should be more prudent and tell people its a guess unless they have some tangible evidence that they are using for the guess work at least that's a start.

My guess is there will be a drop of maybe 5/10% in about 12 months time you will see the drops and then in the next year prices will start to recover once the economy bounces back. But like I say this is just gut no facts or figures to back it up so don't make a decision on it. Anyone looking to buy I would factor in what your paying for rent and what the mortgage would be, how long you intend to live there as in 10/20 years + and if I was selling I would consider the option of do I have to sell as in if its a BTL can I rent it out for the foreseeable future and getting through the recession and then selling when prices rise again. If I own a house and I am living in it and say I have lost a job and no longer able to afford the mortgage I would stay put as you will not be turfed out by the bank no matter how much you pay or do not pay.

If I were to buy a house even at current mark rates a mortgage is still going to be cheaper than paying dead rent. This is the same for a lot of ftb's so I reckon that although prices will be 20% lower in 12 months time there will be quite a few bidding wars on properties that are in turnkey condition.

fliball123

Villa05 wrote: »

Not to every backwater in the country, bring it as far as town Village centres. Subsidise 50/50 cost share to anywhere else, this will drastically reduce cost



Disagree, these countries always looking for workers in specific sectors and will absorb the cream of the crop from poorly run countries




Banks will have to make higher provision for bad loans > less to loan out > higher proportion of bad loans to profitable loans > higher % rates to compensate for bad loans > further bad loans due to higher % rates > collapse of mortgage market > collapse in house prices

Well already Oz has shut its borders till the end of the year you cant run away from this virus or this recession its going to be global and other countries do not have the high level of welfare that we do I think this will sway a lot of people to stay put

ittakestwo

Graham wrote: »

It's also easy to forget that at the start of the GFC the impact on property prices was massively amplified by the shear volume of unsold new builds.

Estimates vary between 35,000 and 100,000 new build houses in 2009. There's nothing like that number today.

Very few new builds back in 2009 even hit the market. The builders went bust and NAMA took control of most of their assets and hoarded them releasing them slowly. They also eventually sold alot of new builds in dublin which were apartment blocks to headge funds so there was never a flood of property on the market.

Despite a lot of criticism at the time NAMA was successful in avoiding a flood of property on the market in the last recession.

In Dublin not many of the new builds were houses in the boom. The term "property ladder" was a buzz word and many FTB's were buying apartments. Now a lot of FTB's are going straight for the long term home which is the correct approach. Unfortunately many growing families got caught in negative equity in apartments.

Graham

While NAMA definitely softened the blow by soaking up some of the excess that didn't happen immediately. There was a significant period where developers were trying to offload new builds at anything upto 50% discounts to the original asking prices.

There just aren't the volumes to inflict the same damage now.

tastyt

So there seems to be a general consensus that property prices will drop, anywhere between 10 - 30 percent depending on how severe you think it will be.

My question is, why isn’t is happening already when we are in the worst of the crisis and probably the highest number of people unemployed?

When do people expect these price drops to actually happen and what will be the catalyst? I’m just trying to understand why prices would drop more after the lockdown and crisis is over, and people are back to work more than they have dropped during the crisis ?