Property Market 2020

Idbatterim

The twenty percent fall could be possible over twelve to eighteen months. I just think the 50% etc fall claims ate highly unlikely... also these lending rules are saving people a fortune. People dont view property rationally, they will pay virtually anything to own via borrowing , up the lending multiple, house prices just increase . People will it at nearly any cost they certainly will with the outrageous rents here in dublin.

JimmyVik

schmittel wrote: »

Can someone explain to me why the whole country will go bankrupt if prices drop 50%?

People say this as if we will all be at soup kitchens if the property market tanks 50% again, but I don't really understand what the doomsday scenario is.

Anybody who does understand how it would damage Average Joe care to spell it out for me?

I think its more the general state the economy would have to be in to have a drop of 50%.
The sheer number of unemployed or salary cuts to have that effect on the property market is bound to be catastrophic to the economy as a whole.

Idbatterim

Hulk Hands wrote: »

Where do you fall on that spectrum, considering you've almost 300 posts on the thread and all you've contributed is to repeatedly call people clowns or spoofers while offering zero insight of your own.

If Boards is the last place to come to get advice on property, as you state above, then why do you come back here multiple times every single day?

It's more impartial here than believing the media with the fortune they make from pimping property. It all depends on your circumstances, if you're being done on rent in dublin, buying now might make sense if you cant move home etc to save quicker. If you are currently living rent or near rent free, I'd be saving my ass off and hoping to benefit from expected price decreases...

hometruths

Cyrus wrote: »

the only way prices will drop 50% is if peoples ability to buy them also drops, so average joe probably doesnt have a job any more, he is now social welfare joe.

For sure but obviously falling property prices did not cause Average Joe to lose his job.

That will be the deepest recession in Irish history according to today's Irish Times.

hometruths

JimmyVik wrote: »

I think its more the general state the economy would have to be in to have a drop of 50%.
The sheer number of unemployed or salary cuts to have that effect on the property market is bound to be catastrophic to the economy as a whole.

For sure but we are told repeatedly on this thread that this idea the economy is facing huge unemployed or salary cuts is overblown.

Personally I think it is inevitable.

hometruths

Idbatterim wrote: »

The twenty percent fall could be possible over twelve to eighteen months. I just think the 50% etc fall claims ate highly unlikely... also these lending rules are saving people a fortune. People dont view property rationally, they will pay virtually anything to own via borrowing , up the lending multiple, house prices just increase . People will it at nearly any cost they certainly will with the outrageous rents here in dublin.

If this is how people buy property then inevitably some of them will get burnt with price falls. A sad reality of market forces.

Hubertj

schmittel wrote: »

For sure but obviously falling property prices did not cause Average Joe to lose his job.

That will be the deepest recession in Irish history according to today's Irish Times.

The ESRI numbers say this will be the worst recession in history as per this morning. However, last week their view on property was a 12% ish decrease? Why the disconnect? Is it because they estimate the recession will not last as long as previous recessions?

Idbatterim

schmittel wrote: »

For sure but obviously falling property prices did not cause Average Joe to lose his job.

That will be the deepest recession in Irish history according to today's Irish Times.

It seems so weird, like the amacing weather , in a way, a break for many from the ridiculous rat race. That in a few months, we could be back to doom and gloom central again. Like last recession. If they reopen the economy as quick as possible , the fall out may not be catastrophic. I saw figures bandied about in the irish times. I've kind of stopped relying on the media in general, loads of people making guesses at what might happen . As if anyone has a fcuking clue. Low and behold, some peoples speculation with the endless predictions, will be right....

Claw Hammer

schmittel wrote: »

If a bank borrows money at 1% and lends it out at 3.5% why will that business model be untenable if property prices have fallen 50%



.

take the banks overheads out of it, branch network, staff salaries etc an get a net profit figure to start with. The banks might be as tight as 15 on mortgages. In order for the banks to make their margin they need virtually all of their borrowers to pay up on time. The Great Depression in the 1930s was triggered because 5% of mortgagors stopped paying meaning the banks were losing rather than gaining on mortgages.
people in negative equity are less likely to meet their repayments and it also makes the banks more cautious about lending for new purchases, thus aggravating the downward trend.

eagle eye

This WFH thing is going to be the biggest factor in the housing market I think. Lots of people are going to leave Dublin for a bigger house down the country I think.

Sweet.Science

eagle eye wrote: »

This WFH thing is going to be the biggest factor in the housing market I think. Lots of people are going to leave Dublin for a bigger house down the country I think.

Their salary will be determined by where they live though. So you probably won't get a lot moving away if their salary will take a big hit

TheSheriff

eagle eye wrote: »

This WFH thing is going to be the biggest factor in the housing market I think. Lots of people are going to leave Dublin for a bigger house down the country I think.

And consequently the prices of big houses down the country will shoot up?
Presumably so if there is increased demand?

SozBbz

eagle eye wrote: »

This WFH thing is going to be the biggest factor in the housing market I think. Lots of people are going to leave Dublin for a bigger house down the country I think.

Doubt it. People like living in urban areas for a variety of reasons.

thomasdylan

eagle eye wrote: »

This WFH thing is going to be the biggest factor in the housing market I think. Lots of people are going to leave Dublin for a bigger house down the country I think.

I think a big loser here could be commuter towns in Kildare and Meath.

There's a few of these towns that have very little in them but loads of housing built for people commuting to Dublin. But the houses can be relatively expensive (in part helped by the HTB for those struggling with a deposit).

cnocbui

schmittel wrote: »

Can someone explain to me why the whole country will go bankrupt if prices drop 50%?

People say this as if we will all be at soup kitchens if the property market tanks 50% again, but I don't really understand what the doomsday scenario is.

Anybody who does understand how it would damage Average Joe care to spell it out for me?

A 50% drop puts house prices back under their basic construction costs, so new houses stop being built. Developers, builders and tradesmen leave for greener pastures. People in negative equity are effectively trapped and the property market grinds to a virtual halt, which impacts solicitors REAs and the economy in general.

A sick construction industry usually equates to a sick economy. The government sees a reduction in revenue from stamp duty and property tax both because of the fall in values and transaction amounts, but also because of the fall in the number of transactions. Likewise, the fall in construction sees a significant decline in VAT receipts. Either the government reduces it's workforce or it increases taxes elsewhere to compensate. Around one third of the cost of a new build house in Dublin is due to Government and council taxes and charges.

There is also a reputational damage for the country. If, say, I worked for UK based company that was looking to relocate to Ireland due to Brexit, I wouldn't dream of selling my house and moving to a country where the property market goes under every few years. The company would likely get very negative feedback from it's employees and would probably change it's plans.

L1011

TheSheriff wrote: »

Only 65k

Appears to be a ghost ad and it sold for 185k in July

https://bidx1.com/en/en-ie/auction/property/35405


I can only assume the bit about the tenancy is not accurate there though!

TheSheriff

cnocbui wrote: »

A 50% drop puts house prices back under their basic construction costs, so new houses stop being built. Developers, builders and tradesmen leave for greener pastures. People in negative equity are effectively trapped and the property market grinds to a virtual halt, which impacts solicitors REAs and the economy in general.

A sick construction industry usually equates to a sick economy. The government sees a reduction in revenue from stamp duty and property tax both because of the fall in values and transaction amounts, but also because of the fall in the number of transactions. Likewise, the fall in construction sees a significant decline in VAT receipts. Either the government reduces it's workforce or it increases taxes elsewhere to compensate. Around one third of the cost of a new build house in Dublin is due to Government and council taxes and charges.

There is also a reputational damage for the country. If, say, I worked for UK based company that was looking to relocate to Ireland due to Brexit, I wouldn't dream of selling my house and moving to a country where the property market goes under every few years. The company would likely get very negative feedback from it's employees and would probably change it's plans.

One of the most logical posts in this thread lately.

We all (as FTB'ers) want a cheaper house. No denying it. Who wouldn't! I'd love to have 200k knocked off the price of a house in Dublin by August.

But, be careful how cheap you want it, current sellers might stomach a 5%, 10% or 20% drop if they can equally get a reduction on a larger property.

But if you start picking up houses with a 50% haircut we are collectively screwed as a country. You might have your house, but it will impact all other areas of your life, your family and friends etc.

JimmyVik

eagle eye wrote: »

This WFH thing is going to be the biggest factor in the housing market I think. Lots of people are going to leave Dublin for a bigger house down the country I think.

Sure half the problem is people who dont even work insisting on living in Dublin.

JimmyVik

JimmyVik wrote: »

Sure half the problem is people who dont even work insisting on living in Dublin.

Dublin is quite a 2 tier spot ........... total sh1tholes and then very nice areas. Lots of the so called in between areas are fairly sh1t also. Years ago I lived in a nice part of Clondalkin, property prices were loony high in the "nice" parts and if I'd kids I'd have been slow to send them to the local schools tbh. And I'm from a not overly affluent part of Cork City.

Villa05

cnocbui wrote:

If there was a second 50% fall in property prices within a decade of the first, no one would invest in property in this country; period. I can't see that helping the rental market or construction industry or the economy in general. Other than go bust, I don't know what the banks would do in a market where lending money for housing was obviously untenable.

ShedTower wrote:

We're talking about a housing issue here and not the stock market.

This is the nub of the issue. Our property market is dysfunctional. Boom and bust will nearly always end in tears for the person who is just looking to put a roof over their heads. One way or the other you will be paying more for it than you should
Be it high House prices
Bank bailouts
Higher interest rates
Budget cuts to reign in high wages as result of high prices
Usc
And on and on

Below is a post from another thread, it would equally be at home here.
A functioning market is not about capitalism or socialism, more about common sense that protects you and the people you need around you to live a relatively comfortable life

Villa05 wrote:

The Netherlands is one of the most densely populated countries in the world, they in some cases have to reclaim/make land to build.
Over a third of housing is social (not that they call it that) and 70% of rentals are controlled by housing associations and the beauty is that it is all self financing.
Holland has some of the most expensive cities in the world, yet they can protect key workers who make those cities great places from high accommodation costs. Austria and some of the scandanavian countries operate similar models

hometruths

Hubertj wrote: »

The ESRI numbers say this will be the worst recession in history as per this morning. However, last week their view on property was a 12% ish decrease? Why the disconnect? Is it because they estimate the recession will not last as long as previous recessions?

Because in this country, when it comes to property prices, you'll be vilified for having anything other than a rose tinted view of the property market.

You can say unemployment will be in excess of 30%, 1000s of businesses will go bust, people will die because of healthcare cuts etc.

That's all fair game if you can back it up with numbers but woe betide you if you dare to talk down the property market even if the numbers are staring you in the face.

hometruths

Claw Hammer wrote: »

take the banks overheads out of it, branch network, staff salaries etc an get a net profit figure to start with. The banks might be as tight as 15 on mortgages. In order for the banks to make their margin they need virtually all of their borrowers to pay up on time. The Great Depression in the 1930s was triggered because 5% of mortgagors stopped paying meaning the banks were losing rather than gaining on mortgages.
people in negative equity are less likely to meet their repayments and it also makes the banks more cautious about lending for new purchases, thus aggravating the downward trend.

It was something of a rhetorical question, and I agree 100% with your answer, which is exactly why I believe prices are in for a far bigger fall than most realise.

In Ireland the chances of the majority of borrowers, never mind virtually all, paying up in time are zero.

hometruths

TheSheriff wrote: »

One of the most logical posts in this thread lately.

We all (as FTB'ers) want a cheaper house. No denying it. Who wouldn't! I'd love to have 200k knocked off the price of a house in Dublin by August.

But, be careful how cheap you want it, current sellers might stomach a 5%, 10% or 20% drop if they can equally get a reduction on a larger property.

But if you start picking up houses with a 50% haircut we are collectively screwed as a country. You might have your house, but it will impact all other areas of your life, your family and friends etc.

I just don't see how we are "collectively screwed as a country" - there will be individual winners and losers for sure, but the country will survive the latest impact of economic cycles.

A dysfunctional market with sort of prices rises we're used to collectively screws the younger generation, which is far from the ideal basis for society.

I'd argue that we are collectively screwed if we see another 5 years of price rises similiar to the last 5.

Amongst other undesirable outcomes we will have an ultra hard left government.

Ronin247

A lot of properties bought in 2013-2014 will have to be sold to avail of the capital gains tax relief. I don't know how many properties would fall into this category, but along with the unemployment rate, WFH and college students studying from home, lack of tourists killing the air bnb and holiday homes market and the general uneasiness about any kind of investment at the moment, I cannot see the market not dropping 15%+.

TheSheriff

schmittel wrote: »

I just don't see how we are "collectively screwed as a country" - there will be individual winners and losers for sure, but the country will survive the latest impact of economic cycles.

A dysfunctional market with sort of prices rises we're used to collectively screws the younger generation, which is far from the ideal basis for society.

I'd argue that we are collectively screwed if we see another 5 years of price rises similiar to the last 5.

Amongst other undesirable outcomes we will have an ultra hard left government.

We are all (average Joe's) losers in such a scenario.

For prices to drop 50% it means all other facets of the economy have collapsed. What this means in reality is likely higher taxes, years of austerity, an inability of people to trade up due to negative equity, a consequential inability of FTBers to buy starter homes.

This idea being thrown around that next year houses will be 50% off AND the rest of our lives will be unaffected is ludicrous. There are people here saying 'Wait a year and get it for half price'. There will be a very small number of (cash) winners in that game.

For the rest of us it likely means an inability to access credit, years more of inability to purchase a home, higher taxes, austerity etc. And so the cycle of boom and bust continues.

I welcome a drop which brings houses prices down a bit so that more people might be able to get on the ladder and save some money... Or a stabilsation in house prices as we were starting to see before Covid....... But a 50% drop ? Really ? All other parts of everyone's lives will be impacted, I don't understand how you can't see that and would want that.

Full disclosure btw, I am a FTB, have been looking for over a year so clearly a vested interest.

hometruths

TheSheriff wrote: »

I welcome a drop which brings houses prices down a bit so that more people might be able to get on the ladder and save some money... Or a stabilsation in house prices as we were starting to see before Covid....... But a 50% drop ? Really ? All other parts of everyone's lives will be impacted, I don't understand how you can't see that and would want that.

Full disclosure btw, I am a FTB, have been looking for over a year so clearly a vested interest.

Full dislosure - I am a homeowner with no mortgage, so clearly I have a vested interest too.

I am not saying I want to see the economy screwed, I am saying it is inevitable - the ESRI's baseline scenario is the worst in history:

The Republic’s economy is on track to shrink by 12.4 per cent this year, marking the largest annual slump in its history, as the Covid-19 pandemic wreaks havoc on households, firms and government finances, according to the Economic and Social Research Institute (ESRI).

So the sort of things you discuss are going to happen because we have had a global pandemic, that horse has bolted.

I think one of the consequences of this poor economy will be a fall in house prices, maybe as much as 50%.

I don't wish for any of this to happen but prices are going to fall: I would rather see property prices fall to an affordable level for future generations and the opportunity to wash out all the inherent problems in our market largely caused by vested interests scaremongering saying be careful what you wish for, if property falls by 50%, we'll all be eating gruel.

The economy is screwed one way or another, but we won't be all be eating gruel. On balance if prices drop 50% one way or another I think the long term positives outweigh the negatives.

We could fix the so called housing crisis for a start.

PommieBast

cnocbui wrote: »

There is also a reputational damage for the country. If, say, I worked for UK based company that was looking to relocate to Ireland due to Brexit, I wouldn't dream of selling my house and moving to a country where the property market goes under every few years. The company would likely get very negative feedback from it's employees and would probably change it's plans.

I know people in London who were making decisions about new EU branch locations. Story I keep hearing is how an initially favourable view of Dublin got trashed by poor infrastructure, poor housing stock, and high personal taxation.

cnocbui

SozBbz wrote: »

Doubt it. People like living in urban areas for a variety of reasons.

Except those who don't, like me.

People who live in small, rural towns are EIGHT TIMES happier than city-dwellers, study finds

https://www.theburningplatform.com/2018/05/20/people-who-live-in-small-rural-towns-are-eight-times-happier-than-city-dwellers-study-finds/

cnocbui

PommieBast wrote: »

I know people in London who were making decisions about new EU branch locations. Story I keep hearing is how an initially favourable view of Dublin got trashed by poor infrastructure, poor housing stock, and high personal taxation.

Taxation is the most significant motivating factor seeing me wanting to leave, ASAP.

lalababa

Mic 1972 wrote: »

Utterly miserable is not how I would describe my life, I can have fun without getting plastered at the pubs every week end, and I dont drive an expensive car and during my rent years I was sharing instead of having the place to myself

Now I'm mortgage free and planning to buy a second property. I would feel miserable if I was still paying rent or mortgage at my age

It never fails to amaze me how alot of the people I know and the younger the more so ..equate not spending with having a miserable existence. Or 'not living' or 'not being happy' or ' life is too short' or 'poor quality of life' not to spend etc. I remember when I was in my early 20's , and was not seen out drinking 10pints a night Fri & sat and going to the night club, the usual conclusion was that I was broke and miserable.
Sadly It's really ingrained that living is spending. That's the consumer capitalistic reality of mass delusion by advertising and other effects.