Property Market 2020

Villa05

Villa05 wrote:

It was either pat Kenny or the competition on rte, will have a look later

Hubertj wrote:

I'd like to listen to that - which station?

Sarah mcInenery rte radio 1 yesterday
2 sections
1 general construction
2 children's hospital

It was a developor that rubbished Tom parlon claims

GreeBo

Marius34 wrote: »

What do you mean by "always"?

"sometimes"

awec

Covid19 and social distancing is going to drive up costs for almost every sector of the economy, I'm not sure why some think construction will be immune from this.

Whether this translates to higher prices, or to developers scaling back on their plans as they struggle to make margins (more likely) is another thing.

GreeBo

awec wrote: »

Covid19 and social distancing is going to drive up costs for almost every sector of the economy, I'm not sure why some think construction will be immune from this.

Whether this translates to higher prices, or to developers scaling back on their plans as they struggle to make margins (more likely) is another thing.

At a minimum it will take them longer to build things, which will likely increase their costs so they will pass them on to buyers.

Auctioneera

addaword wrote: »

In a recession, prices always drop 20% minimum.
I heard that in 2006 and like most people did not believe that fully then, I swolled the 10 to 15% soft landing theory advocated by all the vested interests. "Ah, but this time its different".

It is a bit different this time in fairness though - we've never seen a pandemic before

awec

GreeBo wrote: »

At a minimum it will take them longer to build things, which will likely increase their costs so they will pass them on to buyers.

They can try pass them on to buyers but they may not be successful if the money isn't there.

It's far more likely that they scale back plans to drive down costs. Reduce the number of houses being built and lower the spec of new houses to get cost savings.

For anything that they've already started building and sold they'll have to eat the cost themselves. But they aren't idiots, they aren't going to continue to absorb costs indefinitely.

Pivot Eoin

Auctioneera wrote: »

Thought this chart might be of interest.https://drive.google.com/file/d/1xlY6Xw7oCZ8yIVdq1g07-h854xb9rg0Z/view?usp=sharing
It's our daily website traffic during the pandemic. Yesterday was our best day since this all kicked off, with 832 users. This is down from a high of a high of 1280 users on February 18th but up from the bottom of just 331 on April 11th. We're trying to decide if it looks more like a U shape or a V shaped recovery! Definite uptick of late though - hopefully confidence slowly coming back into the market!

LOl, it was probably because you joined Boards yesterday and started posting, so board viewers who didn't know you went to your site.

Auctioneera

awec wrote: »

They can try pass them on to buyers but they may not be successful if the money isn't there.

It's far more likely that they scale back plans to drive down costs. Reduce the number of houses being built and lower the spec of new houses to get cost savings.

For anything that they've already started building and sold they'll have to eat the cost themselves. But they aren't idiots, they aren't going to continue to absorb costs indefinitely.

I fear you may be right here - construction will slow down now and we'll all pay for that with less supply over coming years.

Canyon86

I m based in East Cork, FTB currently looking,

I have noticed sellers willing to lower prices during these times, at the same time I ve noticed a complete deadlock with no new properties appearing on daft etc etc,

GreeBo

awec wrote: »

They can try pass them on to buyers but they may not be successful if the money isn't there.

It's far more likely that they scale back plans to drive down costs. Reduce the number of houses being built and lower the spec of new houses to get cost savings.

For anything that they've already started building and sold they'll have to eat the cost themselves. But they aren't idiots, they aren't going to continue to absorb costs indefinitely.

I'm just not sure scaling back will help their costs, if it takes them longer to build a house because they have 25% fewer builders, then it takes 25% longer (lets say). I dont think their costs will drop proportionally, since only potentially wages will decrease.

Claw Hammer

GreeBo wrote: »

I'm just not sure scaling back will help their costs, if it takes them longer to build a house because they have 25% fewer builders, then it takes 25% longer (lets say). I dont think their costs will drop proportionally, since only potentially wages will decrease.

There will be rolling interest charges on top of labour costs. The longer it takes to get to market, the more capital is tied up. Most of the time it will be at high interest rates.

awec

GreeBo wrote: »

I'm just not sure scaling back will help their costs, if it takes them longer to build a house because they have 25% fewer builders, then it takes 25% longer (lets say). I dont think their costs will drop proportionally, since only potentially wages will decrease.

Building each house will be more expensive (relatively), which means they'll be able to build less of them. It not going to be half the price, so it's not proportional, but building 50 houses is cheaper than building 100.

It is probable their hand will be forced by their lenders anyway who are less likely to fork out the money needed to maintain current building rates.

Auctioneera

Claw Hammer wrote: »

There will be rolling interest charges on top of labour costs. The longer it takes to get to market, the more capital is tied up. Most of the time it will be at high interest rates.

Exactly - time is money when onsite!

Auctioneera

Canyon86 wrote: »

I m based in East Cork, FTB currently looking,

I have noticed sellers willing to lower prices during these times, at the same time I ve noticed a complete deadlock with no new properties appearing on daft etc etc,

You've answered your own question here. There is an proportional relationship between price and supply. As price goes down, so does supply ie if potential vendors fear prices going down, they decide "now is not the time to sell". Builders behave similarly. The constrained supply means more buyers fighting over fewer properties which over time pushes price up, which generates more supply until market finds an equilibrium. Low prices aren't as good for buyers as they think as it means less properties to choose from - as you are seeing first hand.

DM1983

Tallback wrote: »

My situation is that we are sale agreed on a property since Jan and likely to proceed. I'm fully aware of the macro economic situation etc but for the non economic factors i.e need to get on with life, need space with kids, jobs secure we'll prob proceed with our eyes open. If prices drop (an I think that's more likely than not) to my thinking they'll take a while to do so.

We've been looking for the last couple of years (South Dublin area houses circa €600-850k asking price) and in order to get my own sense of price trends in the market I've been keeping a database of pretty much every property that comes on in that search and then tracking through to when they sell and for how much.

Looking at that today, I see that there are 46 properties in that cohort that have SOLD in March/April/May i.e. these are properties that completed in full knowledge of Covid. This is not scientific but gives some sense of the trends

- 46 Properties sold. All came on the market in Jan or earlier
- 23 went for at or above asking. 23 went for below asking
- Average sold price vs asking was -1%, the range was 23% below asking to 16% above asking
- There was a slight trend (r2 0.28) between the length of time they were on the market (i.e. first seen to sold date) and the price change i.e. the longer they were on the market the more likely they sold below asking
- There was a very mild trend (r2 0.08) of the house condition ranked by me vs the price change. i.e. the better condition a house was in the more likely it would go for above asking
- No trend between changes in price and asking price of houses
- There are a further 75 houses in this search criteria that have gone "Sale Agreed" as marked by Daft/Myhome in March/April/May. 55 of these are since Mar 12 (first lockdown announcement) i.e. Sales activity is continuing at some reasonable level

As I said, this is not scientific but gives some sense of houses that have actually sold and market activity. To my mind - there doesn't seem to be much impact to date on sold prices from Covid but I wouldn't expect there to be at this stage either.

Amazing to find such a brilliant post among all the **** conjecture and opinions. Well done Sir.

Villa05

awec wrote:

Covid19 and social distancing is going to drive up costs for almost every sector of the economy, I'm not sure why some think construction will be immune from this.

Outside of critical services and products. Construction is the first sector back, this would imply least risk and consequently cost.

If costs are driven up elsewhere, there will be less profit, less wages and a higher cost of living. As house prices/rent appear to be calculated as a percentage of income and Ireland is at the max level of that percentage then a significant fall in rent and prices would be inevitable

Auctioneera wrote:

You've answered your own question here. There is an proportional relationship between price and supply. As price goes down, so does supply ie if potential vendors fear prices going down, they decide "now is not the time to sell". Builders behave similarly. The constrained supply means more buyers fighting over fewer properties which over time pushes price up, which generates more supply until market finds an equilibrium. Low prices aren't as good for buyers as they think as it means less properties to choose from - as you are seeing first hand.

I hear Mcwilliams consistently arguing the opposite. Why would I sell while prices are rising also people are sitting on development land doing nothing with it. Inaction leads to undersupply leads to increase in price of development land.

This is why we need intervention from Government to aide the process
Ie zone elsewhere where there is appetite to build and remove development status on land where the owner is sitting on it

Seperatly

If
"Now is not the time to sell as prices are falling"

AND

"Now is the time to buy because prices are falling"

If both statements are true, do they cancel each other out and people who are up sizing/downsizing carry on in the market as normal as they are both buyers and sellers

Will these people lead the market downwards, your thoughts as a market participant would be greatly appreciated

Nika Bolokov

DM1983 wrote: »

Amazing to find such a brilliant post among all the **** conjecture and opinions. Well done Sir.

It's one of the best posts on Boards in years.

Beats I bought recently so I think prices are good value v I live with Mammy and prices are gonna crash 500% muhahahahaha

The Phantom Jipper

On the topic of houses being relisted at higher prices to preempt people seeking COVID discounts; I got two emails in the space of five hours, same property and it had increased by €24,000. As an aside, it had gotten bigger by a sq m or 2 aswell.

Auctioneera

Villa05 wrote: »

Outside of critical services and products. Construction is the first sector back, this would imply least risk and consequently cost.

If costs are driven up elsewhere, there will be less profit, less wages and a higher cost of living. As house prices/rent appear to be calculated as a percentage of income and Ireland is at the max level of that percentage then a significant fall in rent and prices would be inevitable




I hear Mcwilliams consistently arguing the opposite. Why would I sell while prices are rising also people are sitting on development land doing nothing with it. Inaction leads to undersupply leads to increase in price of development land.

This is why we need intervention from Government to aide the process
Ie zone elsewhere where there is appetite to build and remove development status on land where the owner is sitting on it

Seperatly

If
"Now is not the time to sell as prices are falling"

AND

"Now is the time to buy because prices are falling"

If both statements are true, do they cancel each other out and people who are up sizing/downsizing carry on in the market as normal as they are both buyers and sellers

Will these people lead the market downwards, your thoughts as a market participant would be greatly appreciated

I heard the McWilliams podcast on this and he was just plain wrong in our view. Just follow the data. When prices rocketed in the mid 2000's, everyone decided to become a property developer. Prices soared and supply followed until we got to over 90,000 units of supply at the peak. Then prices collapsed as we know and and supply followed prices downward. Then as we started to see prices pick up again from around 2015 onwards, supply again started to pick up. So he's just factually wrong when he says high prices don't stimulate supply - they do! And as we enter this new cycle, if prices drop, supply will follow prices downward.

In terms of "Now is the time to buy because prices are falling" - rational people don't say that. If people think prices are falling, they wait for them to fall further. This is why central banks are mandated to hit 2% inflation per annum as deflation is seen as one of the worst things that can happen to an economy. It is of course self fulfilling. If I see prices falling, I wait for them to fall more before I buy so demand dries up, so prices go down further to stimulate demand and on we go like that until no one buys at all.

So in our view, McWilliams is totally wrong when he says high prices don't stimulate supply - they do and the data bears this out.

Auctioneera

We just had an offer of the guide price on a 3 bed apartment we are selling. Our socially distanced, very careful viewings are being well attended. Vendors are not entertaining lowball offers as they aren't distressed and can always fall back on the strong rental market if buyers won't step up. Full details here:
https://www.auctioneera.ie/property/61-blackrock-grove-eden-blackrock-cork-t12-h424

Thought this might be of interest to this forum. One swallow doesn't make a summer and one offer of the guide doesn't mean prices won't drop but it's an encouraging sign for us in any case. Thoughts welcome.

HodlforWin79

Auctioneera wrote: »

We just had an offer of the guide price on a 3 bed apartment we are selling. Our socially distanced, very careful viewings are being well attended. Vendors are not entertaining lowball offers as they aren't distressed and can always fall back on the strong rental market if buyers won't step up. Full details here:


Thought this might be of interest to this forum. One swallow doesn't make a summer and one offer of the guide doesn't mean prices won't drop but it's an encouraging sign for us in any case. Thoughts welcome.

No offense but it seems like you are firstly trying to convince yourself and secondly others here that the property market will somehow be the only market unaffected by this upcoming recession. Obviously you have skin in the game and are heavily exposed, i do not wish you bad luck but it just seems odd to come out with these flurry of posts to convince rational people that the Irish property market is immune to this.

The canary in the coal mine will be the Q2/Q3 data as right now there has been not much activity in the market, once people see prices are crashing this will cascade into further price reductions.

Auctionera is an estate agent

Blueshoe

The discussion is being affected. It's become more of a q+a

HodlforWin79

bubblypop wrote: »

Auctionera is an estate agent

I know and credit to them they seem to do a better service than most EAs but it's borderline denial stuff posting about vendors not entertaining lowball offers and will fall back on a "strong rental market". It's kind of laughable and i'm not sure if this should be permitted on this forum as it may dilute discussion.

HodlforWin79

Blueshoe wrote: »

The discussion is being affected. It's become more of a q+a

Exactly, it's akin to asking the fish to teach you how to fish.

HodlforWin79

FWIW, we observed 3 types of the same property we have been keeping an eye on recently in and around the same area were added to myhome today. All 3 were listed at roughly around 25% less than similar properties sold for within the past 3 months. Whether they sell at that price or not is a different story, same landlord getting desperate and bailing perhaps?

Mic 1972

Auctioneera wrote: »

We just had an offer of the guide price on a 3 bed apartment we are selling. Our socially distanced, very careful viewings are being well attended. Vendors are not entertaining lowball offers as they aren't distressed and can always fall back on the strong rental market if buyers won't step up. Full details here:
https://www.auctioneera.ie/property/61-blackrock-grove-eden-blackrock-cork-t12-h424

Thought this might be of interest to this forum. One swallow doesn't make a summer and one offer of the guide doesn't mean prices won't drop but it's an encouraging sign for us in any case. Thoughts welcome.

You have a very good website there showing asking price and highest offer, it's very helpful as I would imagine the most frequently asked questions is whether there is currently an offer and how much. I wish more agents did the same

I disagree with your comment about having a strong rental market to go back to as this isn't the case at the moment, rent have plummeted. Also a vendor may not be interested in renting out a property, in many cases LLs are selling specifically to move out of the rental market

HodlforWin79

Mic 1972 wrote: »

You have a very good website there showing asking price and highest offer, it's very helpful as I would imagine the most frequently asked questions is whether there is currently an offer and how much. I wish more agents did the same

I disagree with your comment about having a strong rental market to go back to as this isn't the case at the moment, rent have plummeted. Also a vendor may not be interested in renting out a property, in many cases LLs are selling specifically to move out of the rental market

Agreed, it does appear they do a good service with that much needed transparency feature, i wasn't trying to bash them but we will not be taken for a fool.

Also agree with you regarding the rental property, that is about to take and it is likely that most distressed vendors that sell during a economic recessions is due to events such as divorce, death, debt etc and are not in a position to suddenly become a landlord and play the "strong rental market".

Villa05

Auctioneera wrote:

I heard the McWilliams podcast on this and he was just plain wrong in our view. Just follow the data. When prices rocketed in the mid 2000's, everyone decided to become a property developer. Prices soared and supply followed until we got to over 90,000 units of supply at the peak. Then prices collapsed as we know and and supply followed prices downward. Then as we started to see prices pick up again from around 2015 onwards, supply again started to pick up. So he's just factually wrong when he says high prices don't stimulate supply - they do! And as we enter this new cycle, if prices drop, supply will follow prices downward.

I think to be fair to McW, he was arguing about the individual owner, when prices are consistently rising above inflation, why would they sell, there more likely to buy another one rather than sell their existing one, as was the case in the celtic tiger.
When, collectively, all individual owners are thinking this way, you have less supply from property churn

Supply from property developers is a different supply stream to property churn, (the rate at which existing property changes hand}

In 2012 the majority of our property developers were in NAMA, many were making strong arguments for being released out of it Housing supply was in total control of the state since the creation of NAMA, the first warnings of a supply crisis appeared in 2013.

All actions by the state and NAMA would suggest that they were comfortable with the market having a suppy/demand imbalance.

megabomberman

I've been observing the rental market around Cork City for a while now.

A significant proportion of properties are starting to be listed at a significant discount to pre covid prices. Roughly equating to a 2 bed being priced at the previous cost of a 1 bed, 3 bed at 2 etc...

Also, I am noticing an increasing in listings, a few of the air bnbs around Kinsale and the like seemed to have flushed through so it is mostly just standard rental stock driving the uptick now.

Will be interesting to observe this trend, as I agree with a previous poster that the rental market is likely somewhat of a leading indicator of the wider sales market.