Property Market 2020

TheSheriff

schmittel wrote: »

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:



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.

But if 'not all of us are eating gruel' why would proeprty be down 50% ?? I can't equate these two: either we are all fecked and the market tanks, taxes increase etc. Or, a certain cohort of society are fecked , the rest get on with it, prices drop maybe 5-20% to around for this bottom ring being knocked off and the cycle starts again.

Anyway all speculation now ! Nobody knows what'll happen.

FVP3

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.

And not high house prices? The housing stock is fine, the prices are not.

Transport is shocking in Ireland and we have the mouthy right wing economists with their fetish for buses and bus connects, as well as an easily persuadable political class, for that.

Hubertj

schmittel wrote: »

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.

i still don't follow. So the ESRI economic forecast is acceptable but the property market forecast is not? I don't know what happened last time but i find it difficult to accept the ESRI will compromise its integrity to such an extent..... you're saying they did in the past and are doing so again?

Villa05

Hubertj wrote:

i still don't follow. So the ESRI economic forecast is acceptable but the property market forecast is not? I don't know what happened last time but i find it difficult to accept the ESRI will compromise its integrity to such an extent..... you're saying they did in the past and are doing so again?

There saying the covid payments will help to prevent mortgage defaults, and increased household savings may help the property market

Notable that they say a stimulus programs should have an "obvious" focus on affordable housing and green initiatives.

Clearly programs that have payback potential for the state

Zenify

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?

I remember the esri predicting a soft landing for property in 2007/2008. I'm not sure why but they seem to always talk up the economy and property market.

Zenify

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?

I remember the esri predicting a soft landing for property in 2007/2008. I'm not sure why but they seem to always talk up the economy and property market.

hometruths

TheSheriff wrote: »

But if 'not all of us are eating gruel' why would proeprty be down 50% ?? I can't equate these two: either we are all fecked and the market tanks, taxes increase etc. Or, a certain cohort of society are fecked , the rest get on with it, prices drop maybe 5-20% to around for this bottom ring being knocked off and the cycle starts again.

Anyway all speculation now ! Nobody knows what'll happen.

Prices were down over 50% in 2013, and sure my taxes were higher, but I wasn't eating gruel.

We have seen what happens to the country when prices are down 50%. We weren't all still flying to New York to do our Christmas shopping but life carried on.

No matter what happens to the economy in 2021, we'll be better off as a society than we were in 1995 when the economy was booming.

If prices fall 50% again, big deal. It's only a problem for those who get a confidence boost from their paper wealth.

Cyrus

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.

no but he will have lost his job if factors that result in a 50% decrease in house prices prevail.

anyone hoping for a > 15-20% decrease in house prices in the near term is thinking only of their own desire to buy, it would be a bad thing for the majority (not in and of it self but again the prevailing conditions that would give rise to such a scenario)

PommieBast

FVP3 wrote: »

And not high house prices? The housing stock is fine, the prices are not.

I am quoting Londoners here. For them six figures is the price of a car, not a house

Villa05

Zenify wrote:

I remember the esri predicting a soft landing for property in 2007/2008. I'm not sure why but they seem to always talk up the economy and property market.

The reason is simple
Self fulfilling prophecy.

They also gave several warnings in the tiger years, but the media chose to only amplify the parts that suited there agenda

hometruths

Cyrus wrote: »

anyone hoping for a > 15-20% decrease in house prices in the near term is thinking only of their own desire to buy, it would be a bad thing for the majority (not in and of it self but again the prevailing conditions that would give rise to such a scenario)

To be honest I don't think any less of somebody who wishes to see prices drop >20% simply because of their own desire to buy, than those who wish to see them rise simply because of their own desire to increase their property wealth.

Both are predominantly motivated by selfish reasons and are perfectly understandable.

I have a far bigger problem with anybody who encourages other people to buy property regardless of the macroeconomic environment, purely motivated by the desire to preserve their own property wealth.

There was a lot of that going on in 07. This time will be no different.

Marius34

schmittel wrote: »

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.

No, 50% fall is not positive at all, in current environment. To drop 50%, that would mean House price should get lower than in 2013.
We have much lower supply than we had in previous crisis, this means to keep price that low, we should get much lower demands than previous crisis, thus the crisis should be deeper and longer.
In long term:
1) 50% drop, would kill the private residential construction, reducing already low supply.
2) 50% drop, would reduce average(median second hand) property price in Ireland from around 240K to 120K. There are more people having bigger saving in bank than in previous crisis, some of them, in particular older generation would be able to get property as a Cash buyer, weather for their kids, or for renting. Reducing supplies for FTB.
3) If price fall 50%, but rents fall less, REITs and BTL cash buyers may find as opportunity.
Meaning 50% drop could happen if FTB buyers are totally screwed... which is bad for long term economy and stability.

All in all 50%, is possible only in total collapse of Irish economy, due to current Supply/Demand issue, which we had quite different in previous crisis.

hometruths

Marius34 wrote: »

No, 50% fall is not positive at all, in current environment. To drop 50%, that would mean House price should get lower than in 2013.
We have much lower supply than we had in previous crisis, this means to keep price that low, we should get much lower demands than previous crisis, thus the crisis should be deeper and longer.
In long term:
1) 50% drop, would kill the private residential construction, reducing already low supply.
2) 50% drop, would reduce average property price in Ireland from around 240K to 120K. There are more people having bigger saving in bank than in previous crisis, some of them, in particular older generation would be able to get property as a Cash buyer, weather for their kids, or for renting. Reducing supplies for FTB.
3) If price fall 50%, but rents fall less, REITs and BTL cash buyers may find as opportunity.
Meaning 50% drop could happen if FTB buyers are totally screwed... which is bad for long term economy and stability.

All in all 50%, is possible only in total collapse of Irish economy, due to current Supply/Demand issue, which we had quite different in previous crisis.

My main point on the 50% drops thing is not that l think prices will drop 50%, but if they do it's not some apocalyptic melt down that some claim - life will go on and as a society we will get past it, just as we did 7 years ago.

Having said that if prices did to fall to this sort of level I would hope to see government support the construction industry, not with bail outs, but by paying them to build social housing. That would undoubtedly be a positive for all.

I think prices will fall in excess of 20% and if downward momentum gets going, it certainly could go to 50% from peak to trough. You say this is impossible barring total collapse of Irish economy, due to the current Supply/Demand issue.

I have a slightly different take on the supply/demand issue to most on here.

Everybody keeps going on about the supply problem - i.e shortage of supply is what has been pushing up prices in the last few years and until this supply issue is addressed prices won't fall.

I think that view is nonsense because it completely ignores the demand effect on supply.

The "supply problem" will be solved overnight if demand drops - ie. supply is obviously only an issue if demand outweighs it.

Demand recently has been driven by confidence in the market, the economy and the impact of high rents.

We have unemployment forecasts worse than 09-14, 50% of the workforce on some sort of welfare subsidised wages, 1000s of SMEs going bust, tourism and hospitality industries wiped out in the short term, banks pulling up the drawbridges, getting very conservative in both their lending and valuing etc etc.

Marius34 wrote: »

All in all 50%, is possible only in total collapse of Irish economy, due to current Supply/Demand issue, which we had quite different in previous crisis.

The current forecasts are as bad as it gets for an economy, and before the previous crisis prices rose because confidence was high and demand outstripped supply.

Then confidence took a knock demand dropped, and dropped, and dropped. Thus so did prices.

This time is not different, but in many ways it's worse.

Marius34

schmittel wrote: »

Everybody keeps going on about the supply problem - i.e shortage of supply is what has been pushing up prices in the last few years and until this supply issue is addressed prices won't fall.

I think that view is nonsense because it completely ignores the demand effect on supply.

The "supply problem" will be solved overnight if demand drops - ie. supply is obviously only an issue if demand outweighs it.

Where did I ignore demand?
I always speak on both side demand/supply side, as this is at the end what dictates the price for private residential market. Which i did in my comment, that there should be lower demands for FTB even than in previous crisis, to reduce it to 50%. Which would probably result in higher proportion for Cash buyers.

doogie!

I am interested in the new build in Clonsilla, St. Joseph’s. Asking price on the 2 bed is 315k. Took a spin there today and got talking to the foreman who stated they were nearly sold out and people have bought through lockdown. Is this a tactic does anyone think or are new estates actually selling out still. Not sure what interest a Foreman would have in whether the houses sell or not. Does anyone have any similar experience, I would have presumed new estates would have stalled sale wise during lockdown,

Wellboy36

doogie! wrote: »

I am interested in the new build in Clonsilla, St. Joseph’s. Asking price on the 2 bed is 315k. Took a spin there today and got talking to the foreman who stated they were nearly sold out and people have bought through lockdown. Is this a tactic does anyone think or are new estates actually selling out still. Not sure what interest a Foreman would have in whether the houses sell or not. Does anyone have any similar experience, I would have presumed new estates would have stalled sale wise during lockdown,

I'm in Cork but had a similar experience today. Was speaking to the estate agent who said that there will be no drop in the house price as they fully expect to sell them at original asking price.

He even said that 2 more people have put deposits down this week but you can't help but wonder whether he made this up to avoid any discussion on a lower price.

WeeCuppaCha

I wonder how many people are making offers and paying deposits, which are based on pre Covid AIPs and exemptions that are now (unbeknownst to themselves), no longer available.

GocRh

Wellboy36 wrote: »

I'm in Cork but had a similar experience today. Was speaking to the estate agent who said that there will be no drop in the house price as they fully expect to sell them at original asking price.

He even said that 2 more people have put deposits down this week but you can't help but wonder whether he made this up to avoid any discussion on a lower price.

I reckon that those who were ready to buy, and with an AIP, had no reason not to go ahead with the purchase.

It will probably take a few more months for the backlog of people who were approved in principle and had already found a property to clear...
Key figure to watch will be the value of drawdowns in the next few months.

doogie!

Wellboy36 wrote: »

I'm in Cork but had a similar experience today. Was speaking to the estate agent who said that there will be no drop in the house price as they fully expect to sell them at original asking price.

He even said that 2 more people have put deposits down this week but you can't help but wonder whether he made this up to avoid any discussion on a lower price.

Would expect it from the estate agent in fairness,

hometruths

Marius34 wrote: »

Where did I ignore demand?
I always speak on both side demand/supply side, as this is at the end what dictates the price for private residential market. Which i did in my comment, that there should be lower demands for FTB even than in previous crisis, to reduce it to 50%. Which would probably result in higher proportion for Cash buyers.

Fair enough, apologies I misread your comment.

So we agree that FTB demand will be a significant driver of house prices.

If house prices fall 20%, and rents fall too, unemployment rises to levels higher than 2013, banks are very strict lending etc etc.

I don’t think it is beyond the bounds of possibility that FTBs will hold off buying (thus reducing demand) in the interests of prudent financial decision making, not because they’re being forced to eat gruel.

It won’t take very many of them to hold off to reach a tipping point that will see prices drop way past 20%, maybe as much as 50%

Villa05

Wellboy36 wrote:

He even said that 2 more people have put deposits down this week but you can't help but wonder whether he made this up to avoid any discussion on a lower price.

I'd imagine the price of a new build is non negotiable until the developer instructs a price change

The estate agent is merely sa sales administrator

Marius34

schmittel wrote: »

Fair enough, apologies I misread your comment.

So we agree that FTB demand will be a significant driver of house prices.

If house prices fall 20%, and rents fall too, unemployment rises to levels higher than 2013, banks are very strict lending etc etc.

I don’t think it is beyond the bounds of possibility that FTBs will hold off buying (thus reducing demand) in the interests of prudent financial decision making, not because they’re being forced to eat gruel.

It won’t take very many of them to hold off to reach a tipping point that will see prices drop way past 20%, maybe as much as 50%

And that's what I mentioned that I don't see how it positive, if there are no FTB in the market, and without new private residential construction supply. In such scenario, if that's a lost decade in property market, vast majority who are now in their 30's, basically would never own their home.

addaword

Wellboy36 wrote: »

I'm in Cork but had a similar experience today. Was speaking to the estate agent who said that there will be no drop in the house price as they fully expect to sell them at original asking price.

He even said that 2 more people have put deposits down this week but you can't help but wonder whether he made this up to avoid any discussion on a lower price.

If an estate agent told me the day of the week it was I would not trust him, I would check.

hometruths

Marius34 wrote: »

And that's what I mentioned that I don't see how it positive, if there are no FTB in the market, and without new private residential construction supply. In such scenario, if that's a lost decade in property market, vast majority who are now in their 30's, basically would never own their home.

If FTBs hold off buying for a year or two, then they'll never own their home?!

Even if that extreme outcome is the case, which I doubt, then if the price of that is that the current homeless situation is solved then I think that's a price worth paying.

i.e there would be some positives if the government acted for the good of all society rather than just a few key voting demographics.

TheSheriff

schmittel wrote: »

If FTBs hold off buying for a year or two, then they'll never own their home?!

Even if that extreme outcome is the case, which I doubt, then if the price of that is that the current homeless situation is solved then I think that's a price worth paying.

i.e there would be some positives if the government acted for the good of all society rather than just a few key voting demographics.

All you are doing here is pushing the problem onto the next generation, as inevitably, when prices bottom there will come an inflection point where people start competing for properties in good locations...hence starting the process of prices increases again.

Marius34

schmittel wrote: »

If FTBs hold off buying for a year or two, then they'll never own their home?!

Even if that extreme outcome is the case, which I doubt, then if the price of that is that the current homeless situation is solved then I think that's a price worth paying.

i.e there would be some positives if the government acted for the good of all society rather than just a few key voting demographics.

1) Property prices is not as dynamic, you can't get 50% discount in a year.
2) Those who presumably would buy 50% cheaper, would be a cash buyers, so FTB would not get much out of the cheap properties, once FTB are back, prices are back.
3) With 50% crash, you kill residential construction projects, construction is a long process to recover, so you probably take out around 40.000 of new private houses, that would fall to FTB hands over ~5 years period, if there are no property price crash.

Idbatterim

Here is one difference between this situation and the crash. Currently the government morons are CHOOSING to have an extra few hundred thousand unemployed. I really wish the running of this country could be outsourced to non morons, gombeens and teachers...

hometruths

TheSheriff wrote: »

All you are doing here is pushing the problem onto the next generation, as inevitably, when prices bottom there will come an inflection point where people start competing for properties in good locations...hence starting the process of prices increases again.

Eh? I am not sure I understand the point - are you saying future buyers are better off paying much more for a property because there is less competition?

hometruths

Marius34 wrote: »

1) Property prices is not as dynamic, you can't get 50% discount in a year.
2) Those who presumably would buy 50% cheaper, would be a cash buyers, so FTB would not get much out of the cheap properties, once FTB are back, prices are back.
3) With 50% crash, you kill residential construction projects, construction is a long process to recover, so you probably take out around 40.000 of new private houses, that would fall to FTB hands over ~5 years period, if there are no property price crash.

Nobody least of all I said they thought prices would fall 50% in a year, so I think we are misunderstanding each other. Not for the first time. Probably easier to leave it there.

Mic 1972

In theory the market drop prediction makes sense but the reality is telling another story. it's just not happening. We have been living in the Covid reality for 6 months, jobs have been lost, public debt through the roof. But the market isn't moving