Property Market 2020

Mike3287

JJJackal wrote: »

Of note for your 100,000 car (presumably you would be borrowing in this scenario), you will only likely be able to get a loan for 5 years (I cant imagine a bank giving you a 100,000 loan for a car). If at end you wanted to own it fully, your repayments would be over 2,000 a month and the cost of financing the loan ie interest would be north of 23,000...

Interestingly your car will only be worth, if your are lucky after 5 years, 30,000 to 40,000 - likely 15% depreciation at minimum per year - limited number of people who want to buy a 5 year old car for the same price as a new one. Your house outside Dublin will have increased a little in value at best in current climate. You will have spent an extra 2 hours a day commuting plus fuel plus parking. If you work 40 weeks a year ie 200 weeks or 1000 days over 5 years you will have spent an extra 2000 hours in your car!

Plus in 5 years your car has alot of miles on it and you could need to consider changing - lucky you have 200k left to buy another car!

100k car is a bit ott, he makes a valid point though

If the same house is €200,000 less 70km away he could buy a new 400km range 35k electric car like a VW ID3 and spend €12 a week in electricity to do that commute

He will never get those hours back though, but maybe quality hours over quantity hours in his house in the country makes up for it, dont know

JJJackal

Mike3287 wrote: »

100k car is a bit ott, he makes a valid point though

If the same house is €200,000 less 70km away he could buy a new 400km range 35k electric car like a VW ID3 and spend €12 a week in electricity to do that commute

He will never get those hours back though, but maybe quality hours over quantity hours in his house in the country makes up for it, dont know

2000 hours (conservative estimate) is the equivalent of 40 plus weeks of work. If he is in a job where he can convert these types of hours to money and career progression living closer definitely makes sense.

Personal loans and car loans (some PCP deals aside) are an expensive form of finance

Edit - buying a car is a guaranteed loss of money; buying a house is not guaranteed loss (traditionally over time lets say 20 years more likely a gain)

Villa05

lastusername wrote:

Yes, there is a widespread unemployment and the economy is being propped up, but many people still have significant savings and even more since lockdown. There is €180 billion on deposit in Irish banks. Many businesses are thriving due to the current crisis and many others are largely unaffected. Hundreds of thousands of people are still in jobs, with savings, still really wanting a home of their own.

Do you think the money on deposit belongs to people who are paying high rents and trying to scrape together a deposit for a house
Or
Would it be more likely that it is belonging to the business who are "doing well" and there employees who most likely have secured there accomodation needs by now

lastusername wrote:

That's still the competition when you want to buy a house which means I don't see any major drops. It's not like the last recession which was primarily the result of property speculation and reckless lending. It's the complete opposite this time, especially on the latter.

Is keeping completed units empty in order to choke supply and maintain high rent prices a sign of robust speculation within the market?

Has money printing and favourable but unsustainable interest rates and tax policy replaced reckless lending in the commercial sector buying resedintial units?

Comparing to the last time as if its is over is highly naieve considering we haven't even started paying back for the damage caused back then. We are also adding considerably to the debt load with every affected sector expecting a bailout as that was the precedent set down from the last crash. Those having difficulty with mortgages will feel that not paying is a viable option as that was the precedent from the last crash

We reap what we sow

Villa05

Smouse156 wrote:

In similar situation, WFH and no rent. Going to wait until next year and the overall picture is clearer

Anyone in this position is in a sweet spot do not give it up. Hold out, save and be patient. See how all this pans out, we have Brexit to come afterwards.

guyfawkes5

stayback wrote: »

That’s a very sweeping statement . I have a so called “good job” but have been on the COVID subsidy and my wife is on the COVID subsidy. We bought a house for 450k we are managing because we have savings but only for that we were fuc***. We will hopefully go back to pay without subsidy soon.
This pandemic has hit everyone bar some public servants.

To be fair, you're making a sweeping statement yourself. I'm in a tech job and given the service my employer provides and customer base they have, they are technically doing better than they normally would be right now. There is no hint of the Covid subsidy and its share price is at its highest ever.

This isn't to brag or to say there isn't huge swathes of people and employers struggling. But is very true to say there are large sections of society that haven't been as drastically effected as others. This is why Varadkar is talking about the danger of a 'two tier' recovery in the news lately.

lastusername

Shelga wrote: »

I agree with all you say, but also when the baseline predictions for the economy are a massive decline, how can that not have an impact on prices?

I am going back and forth on this every few hours to be honest!

For all the reasons I mentioned! I think housing is in a bubble of its own to an extent, largely unaffected by the rest of the economy.

Think about it - if say 5000 people in an area are looking to buy in the 400-500k range, and 30% of them are no longer in a position to buy due to Covid, that still leaves 70% of them still looking and still ready to buy...

I think a significant increase in supply, where there isn't such demand for nice houses in nice areas, is the only thing that will really bring prices down over time. And in the meantime, waiting for those drops means more money spent living in someone else's place, paying money you'll never get any return on.

neutral guy

Darc19 wrote: »

And at 6pm after an hour in traffic and still not past Rathcoole, that smile will be gone.

And that's why people pay a premium for living in a city.

When 200K left will be invested in renting property which will cover my travel/car expenses/kidz education and will be my pension on end of the days I will still smiling even in traffic !

neutral guy

The mostly only the big cities recovered from last recession.Many shops in many small towns are still closed since those days and more for closures on way.Naturally people started moving to big cities were more jobs,less competition and better wages.For that reason property markets in cities started booming and prices went up.When prices went up to sky high level many people started moving out of the cities to other areas were properties are cheaper.Do you remember what happened during the last recession ? Same.This thing I keep first sign of property bubble because people does not earn enough for life in city.So we could forget about things like prices will rising and last year property prices in Dublin was stagnating already ( google search will refresh your memory )
Many property investors bought houses/apartments for short term and long term rents.Those property owner has pay mortgages to the banks,because this is them second/third/fourth property I think bank will not have big problems take houses from owners.
So at the moment we have second problems
Property already overpriced
There is no turists in Dublin what will hit short term property owners
There is no jobs what will hit long term property owners
So I think there will be no problem with supply in nearest future
I would like remind that economy are dead and many people still has jobs because government pay Covid payments and wage subsidies.
Also I am absolutely sure that PA spreading them comments all way around including boards.ie trying move multimillion property market forward same as they did before 2008 recession.

Deub

lastusername wrote: »

I think anyone who thinks there will be big price drops is dreaming. The one big factor determining whether big drops will happen is simply affordability - whether people can afford the prices sellers want.

Yes, there is a widespread unemployment and the economy is being propped up, but many people still have significant savings and even more since lockdown. There is €180 billion on deposit in Irish banks. Many businesses are thriving due to the current crisis and many others are largely unaffected. Hundreds of thousands of people are still in jobs, with savings, still really wanting a home of their own.

That's still the competition when you want to buy a house which means I don't see any major drops. It's not like the last recession which was primarily the result of property speculation and reckless lending. It's the complete opposite this time, especially on the latter.

You can also combine all of the above with increased consumer sentiment as people get more confident about getting out and about and spending their money, helping to get the economy back up on its feet for more businesses. Developments on the Covid treatment and vaccine front will (hopefully) accelerate all this too.

From you post, it looks like you don’t expect a drop at all and maybe even an increase.
You think the unemployment will have no effect?

Walnut Salad

Smouse156 wrote: »

In similar situation, WFH and no rent. Going to wait until next year and the overall picture is clearer

Sensible approach.

I would advise any first time buyers to avoid the housing market until early next year. Going by previous economic downturns worldwide, it is highly highly unlikely they will miss out financially.

JJJackal

neutral guy wrote: »

T
There is no turists in Dublin what will hit short term property owners

This is likely correct

However, there are no Irish people on holidays abroad - consequently if they want a holiday it will be in Ireland

Tourists from abroad are not as essential if all Irish people holiday at home

Walnut Salad

JJJackal wrote: »

This is likely correct

However, there are no Irish people on holidays abroad - consequently if they want a holiday it will be in Ireland

Tourists from abroad are not as essential if all Irish people holiday at home

11 million people visited Ireland in 2019.

Every sector is getting hit here, even Pharma, IT and Agrifood. Reduction in demand will lead to significant jobs losses or salary cuts.

JJJackal

Walnut Salad wrote: »

11 million people visited Ireland in 2019.

Every sector is getting hit here, even Pharma, IT and Agrifood. Reduction in demand will lead to significant jobs losses or salary cuts.

Irish people 7.5 billion on foreign trips in 2018 (some of this will now be spent here)

https://www.irishexaminer.com/breakingnews/business/irish-people-spent-almost-75bn-on-foreign-holidays-in-2018-931676.html

Walnut Salad

JJJackal wrote: »

Irish people 7.5 billion on foreign trips in 2018 (some of this will now be spent here)

https://www.irishexaminer.com/breakingnews/business/irish-people-spent-almost-75bn-on-foreign-holidays-in-2018-931676.html

Indeed but I think they will spend a lot less in Ireland, especially an Ireland that was 'closed' for 4 months and will have much less capacity in pubs/restaurants etc. So many pubs have not opened in my area. Consumer confidence is in tatters and more than 1 million people in Ireland are receiving some sort of State income support.

Not getting a '2nd wave' is crucial. That would set us back considerably.

cnocbui

Walnut Salad wrote: »

Sensible approach.

I would advise any first time buyers to avoid the housing market until early next year. Going by previous economic downturns worldwide, it is highly highly unlikely they will miss out financially.

Yes, the range and quality of properties available will be something to behold.

fliball123

The Belly wrote: »

Not entirely correct your forgetting a few others

Property maintenance cost
Property tax
Estate management fees
No flexibilty to move
Negative equity
Interest rate rises

You also have the threat of rent rises on the other side as well as trying to put money by for your deposit.

PommieBast

bbari wrote: »

Being an accidental LL for the past decade and had decided that as soon as current tenants will move out, I'll put the place up for sale. They will be out next week. I have been in 2 minds whether I should put place up for sale or not as wasn't sure what the market is like out there. There are 4 apartments for sales in the block. I called all the agents and 3 of the apartments got sale agreed in last 1/2 weeks 20K (10%) more than the asking price. This tells that there are buyers out there.

Since you've clearly decided to exit the rental sector, may as well put it up and see if you get a decent offer for it.

Dylan94

I would imagine that the government plans to increase the number of Part V houses from 10% of a development to 20% will have the effect of decreasing the number of houses avaliable on the private market and potentially increasing prices in the long run.

The_Conductor

Dylan94 wrote: »

I would imagine that the government plans to increase the number of Part V houses from 10% of a development to 20% will have the effect of decreasing the number of houses avaliable on the private market and potentially increasing prices in the long run.

The proposal is to separate out social and affordable housing rather than have them under the singular Part V umbrella- and have 10% of each. Its to stop developers creating ghettos with 20% of the units in the social housing category.

Brianmwalker

Dylan94 wrote: »

I would imagine that the government plans to increase the number of Part V houses from 10% of a development to 20% will have the effect of decreasing the number of houses avaliable on the private market and potentially increasing prices in the long run.

Ans that extra 10% is now spread over 80%. Joke of a proposal.

neutral guy

JJJackal wrote: »

This is likely correct

However, there are no Irish people on holidays abroad - consequently if they want a holiday it will be in Ireland

Tourists from abroad are not as essential if all Irish people holiday at home

Many people in Ireland take loans for holidays abroad.This year they simply stay at home because some of them does not have jobs.
Some other people like me will not have summer holidays at all because company were I work moved anual leave to Christmas holidays.
I do not think there will be massive holiday spending this summer in Ireland
So for reasons above the short term property investors will badly hit and will have problems after mortgage breaks.

Bass Reeves

neutral guy wrote: »

This time lending cockoo funds and leverage investors from abroad what is a lot higher risk investors than local banks in Ireland.So for that reason I suppose the crisis on property market wll be bigger than in 2008.The next thing we forget another important thing as second hand property market which is play his important part of supply also.There will be plenty unemployed builders when recession will be started and bussines on second hand market will back to usual as per 2008 recession.I know the guys who was buying old houses for 30/40K in County Louth and after "some renovation" was selling them for 90/120K.I could buy 2 beds house in cetral part of Dundalk for 23K in 2010 ! Which now cost 95K ! When similar house in 2005 cost 145K !!!The people who has his own way in life and some cash in pocket will enjoy 2021 recession I think.

First of during the early noughties in Ireland we were building about 25k house a year, this jumped to 40k/year approx from 2006-2008, completion contnued until 2010 when they stopped. From 2011-2016 the net increase in the housing stock was less than 9K. In 2019 we hit 18k new house/apartments, last year about 21K. So there is no overhang of supply as in 2008-2010.

So how many house do cuckoo funds own these are where some think this bubble will burst. Between 20012 and 2018 they bought 9K properties. In 2019 they bought about 5K AFAIK. First off a lot of these are block bought as in a significent number in certain development. most were bought by REITs. these are properties companies that buy huses to rent. Some are PLC's like Green Reit that was taken private lately and more like Hibernian that have remained a PLC. So what happens if one of these go bust. You will not see the house go up for auction on BIDX, the whole company will be sold/taken over by another reit/asset managment company.


So how many 2 beds did you buy in Dundalk for 23K in 2010

neutral guy

I think at the moment government are badly trapped.When mortgage holidays will be ended many people will stop pay mortgages and government will have step in to save or banks or mortgage holders.This gonna be very interesting.Once this will happen then we will see real property prices I think.

fret_wimp2

The_Conductor wrote: »

The proposal is to separate out social and affordable housing rather than have them under the singular Part V umbrella- and have 10% of each. Its to stop developers creating ghettos with 20% of the units in the social housing category.

It's not the developers creating "ghettos" it's the council. They are demanding all social housing be concentrated as it's easier maintained and management fees can be negotiated down. Save a few euro now without considering the mistakes of the past.

Sunday business post had an article about it last week.

JJJackal

neutral guy wrote: »

I think at the moment government are badly trapped.When mortgage holidays will be ended many people will stop pay mortgages and government will have step in to save or banks or mortgage holders.This gonna be very interesting.Once this will happen then we will see real property prices I think.

Your positivity is infectious

neutral guy

Bass Reeves wrote: »

So how many 2 beds did you buy in Dundalk for 23K in 2010

I did not buy any because I was stupid believing PA songs and spent my money in 2007 paying for overpriced property abroad which worth now half of what I paid.And when I could buy 2 beds for 23 K I did not have money and job,only things I had bills.Today I not gonna be stupid again and I not believe any PA songs anymore ! In this recession I will step with good bag of cash !

The Belly

neutral guy wrote: »

I think at the moment government are badly trapped.When mortgage holidays will be ended many people will stop pay mortgages and government will have step in to save or banks or mortgage holders.This gonna be very interesting.Once this will happen then we will see real property prices I think.

The property and rental crisis is government policy.

They could solve the problem if they borrowed the required amount necessary and build on a massive scale using a tender process using the major developers. They have the land control the taxation and can borrow money for close zero interest.

But they wont do it.

Why? Homeowners vote and will vote for the status quo as long as property prices are rising. Large scale affordable housing is not good for property or rental prices. What good for society doesnt matter. Its the votes that count.

But it will eventually come to ahead.

The voting in the last election was the start of it with SF getting the most of the 25-50 age bracket vote.

This is the age group badly affected during the last crisis and who struggle to buy an affordable home.

This covid crisis and the subsequent downturn will just speed up the process of FF FG Greens demise.

Bass Reeves

neutral guy wrote: »

I did not buy any because I was stupid believing PA songs and spent my money in 2007 paying for overpriced property abroad which worth now half of what I paid.And when I could buy 2 beds for 23 K I did not have money and job,only things I had bills.Today I not gonna be stupid again and I not believe any PA songs anymore ! In this recession I will step with good bag of cash !

In 2006/7 I was on a night out. For a while I was talking to two lads both a bit older than me telling me the crash was coming and it would sort the men from the boys. I made the point that none of us knew where this would carry us and that it would be very tough on young adults in the range there kids turned out to be. They were all '' bring it on''. Neither them or there's came through it as winners. I came through ok.

Be careful what you wish for. There is a lot if lads out there with bags of cash. The lads that came through the last recession with property are not the type to have left themselves exposed. A lot of them have the pre 2008 property loan's well under control. The shrewd money has not invested in Dublin since 2015, in Limerick/Cork /Galway for the last 18-24 months. They have been picking up sub 100k stuff in smaller town and villages since then.

There chomping at the bit to get back into the cities

Hubertj

The Belly wrote: »

The property and rental crisis is government policy.

They could solve the problem if they borrowed the required amount necessary and build on a massive scale using a tender process using the major developers. They have the land control the taxation and can borrow money for close zero interest.

But they wont do it.

Why? Homeowners vote and will vote for the status quo as long as property prices are rising. Large scale affordable housing is not good for property or rental prices. What good for society doesnt matter. Its the votes that count.

But it will eventually come to ahead.

The voting in the last election was the start of it with SF getting the most of the 25-50 age bracket vote.

This is the age group badly affected during the last crisis and who struggle to buy an affordable home.

This covid crisis and the subsequent downturn will just speed up the process of FF FG Greens demise.

I think I agree with what you are saying but It’s sad that people think SF will solve their problems. If they ever do get into government it will make things a lot worse.

wassie

guyfawkes5 wrote: »

To be fair, you're making a sweeping statement yourself. I'm in a tech job and given the service my employer provides and customer base they have, they are technically doing better than they normally would be right now. There is no hint of the Covid subsidy and its share price is at its highest ever.

The share market is no indicator of how well a company is doing - think Wisecard just over 2 weeks ago was trading around €100. I think its pretty well acknowledged that there is a serious disconnect between the stock prices and earnings at the moment. But that's not to say your firm isn't doing great.

lastusername wrote: »

For all the reasons I mentioned! I think housing is in a bubble of its own to an extent, largely unaffected by the rest of the economy.

Think about it - if say 5000 people in an area are looking to buy in the 400-500k range, and 30% of them are no longer in a position to buy due to Covid, that still leaves 70% of them still looking and still ready to buy...

I don't follow why that makes for a bubble in the housing market?