Property Market 2020

The Belly

Assetbacked wrote: »

The other thing to note on this recession is that immigration is also likely to drop significantly. This feeds more into the rental market but of course BTLs are dependent on this inflow of people to ensure the rental market returns stay inflated. Without this demand, perhaps the BTLs get offered at lower rents (which makes it more attractive to rent rather than buy, e.g. because it's cheaper) or even sold to individuals (which increases supply to the market).

Add in Holiday rentals Airbnbs etc along with a reduction in ther 18500 non EU foreign students which are city based.

Billythekid19

Assetbacked wrote: »

The other thing to note on this recession is that immigration is also likely to drop significantly. This feeds more into the rental market but of course BTLs are dependent on this inflow of people to ensure the rental market returns stay inflated. Without this demand, perhaps the BTLs get offered at lower rents (which makes it more attractive to rent rather than buy, e.g. because it's cheaper) or even sold to individuals (which increases supply to the market).

A lot of people who will be leaving the country live in 3 bed houses with 10 or 12 people occupying that space. There will be higher overall demand if only 1 family take such properties. Todays paper reports that there will be 20% less new build houses built this year than anticipated. This is really going to impact on demand. As we are entering a recession I reckon house prices will dip but nothing above 10% as we simply dont have the supply.

Graham

Villa05 wrote: »

Nama prevented dumping

The UK property market fell by 30% was there a massive Oversupply there

They didn't.

They might have slowed down the second wave after the initial tsunami of dumping.

The Belly

Billythekid19 wrote: »

A lot of people who will be leaving the country live in 3 bed houses with 10 or 12 people occupying that space. There will be higher overall demand if only 1 family take such properties. Todays paper reports that there will be 20% less new build houses built this year than anticipated. This is really going to impact on demand. As we are entering a recession I reckon house prices will dip but nothing above 10% as we simply dont have the supply.

That demand may fall as mortgage rules tighten.

People who are looking to buy are still living somewhere at the moment some may not qualify for a mortgage if one has lost their job or had hours reduced or decide to wait and see.

If or when job losses and paycuts begin to bite rents will be renegotiated own. And that house purchase that was on the cards might just be put on hold.

What will the landlord do? If enough landlords decide to sell then property falls even faster. The legislation is fairly tight on removing tenants now.

Are they going to spend 5,000 or 10,000 doing up the house to get tenants out? Doubt it.

Add all that together and you have falling prices and falling rents.

Assetbacked

Billythekid19 wrote: »

A lot of people who will be leaving the country live in 3 bed houses with 10 or 12 people occupying that space. There will be higher overall demand if only 1 family take such properties. Todays paper reports that there will be 20% less new build houses built this year than anticipated. This is really going to impact on demand. As we are entering a recession I reckon house prices will dip but nothing above 10% as we simply dont have the supply.

That single family won't be able to pay the same level of rent as the 10/12 who return to their country though. Therefore the rent would have to drop or else the property could be sitting vacant until 2022 (expected return to similar 2020 capacity for air travel).

Donald Trump

Necronomicon wrote: »

Added to that, our mortgage broker says he can't remember the last time he was this busy, even pre-COVID. His mortgage applications are through the roof.

That's not really surprising. I'm sure that there are plenty of people who want to rush to get their approval now in case their circumstances change in the Autumn.



I know it sounds stupid but people often don't process that they are supposed to be able to pay the money back

The Belly

Donald Trump wrote: »

That's not really surprising. I'm sure that there are plenty of people who want to rush to get their approval now in case their circumstances change in the Autumn.



I know it sounds stupid but people often don't process that they are supposed to be able to pay the money back

Through in a wife putting the pressure on for the new house too:)

awec

Donald Trump wrote: »

That's not really surprising. I'm sure that there are plenty of people who want to rush to get their approval now in case their circumstances change in the Autumn.



I know it sounds stupid but people often don't process that they are supposed to be able to pay the money back

It could also be people who are rushing to get approval now knowing that in a few months now they may not get it, even if their circumstances do not change at all.

This is a lot more likely, especially given how up-tight the banks are being at the moment around covid payments etc. There won't be too many high-risk people getting mortgages at the moment.

Villa05

Bass Reeves wrote:

10% gets houses below building costs.

House building costs adjust to economic environment and are most affected by the cost of land which will fall in recession

Bass Reeves wrote:

Credit was another huge issue every bank was broke. In 2008 everybody taught they could own 2-3 houses, every business mantra was to expand, developers were completing developments before selling a single house. We even had businessmen buying banks and insurance companies

Banks work off volume on small margin loans to property. A small wave of defaults would push them over the edge again. Any help to them would be after a bail in which put those saving at risk

Greyian

Assetbacked wrote: »

The other thing to note on this recession is that immigration is also likely to drop significantly.

This is something people seem to completely ignore, which is crazy.

In the year to April 2019, our population growth was 64,500.
Of this, 30,800 was natural increase (births exceeding deaths).
33,700 was a result of net migration into the country.

In the year to April 2018, our population growth was also 64,500.
Of this, 30,500 was natural increase.
34,000 was a result of net migration into the country.


If we have a recession and no-one leaving the country because of Covid-19, you can be pretty sure we'll have no-one entering the country either, so the net effect will be reduced population growth and reduced demand for new housing stock (relative to what it would have been had there been no change in migration patterns).

cnocbui

Villa05 wrote: »

It's not just Boeing, Tourism sector is gone for some time. Hospitality, entertainment, Public transport, sporting events, concerts amongst others

I don't get your theory, why did this theory not work in other downturns? Unemployment hit a high of 16% in the last recession. This meant that 84% were still employed. How come the 84% were not able to stop a 50% drop in house prices.

In the last downturn, there was a huge over-supply of houses and apartments, so the buyers to properties ratio was low. The prices of those properties were also high. That is not the case this time, quite the reverse, there is a significant shortage of houses because post the last recession, very few were built due to construction cost being higher than the finished product market value. They buyers to properties ratio is currently high.

I live in a tourist area and have started to see handful about. I saw a string of 3 continental looking camper vans just this morning. I feel sorry for them, given the Autumnal levels of precipitation out there.

Villa05

fliball123 wrote:

No option to emigrate and people know they can stay in the family home without paying a mortgage for years.

Emigration would normally be seen as an aide to recovery. If they have nowhere to go, The state has a much higher social welfare bill. Given our national debt levels, anymore excessive borrowing will put pressure on those interest rates we are paying

Mass mortgage default will push the banks back into bankruptcy

Your so called positives have the potential of ruining the country

Hubertj

Villa05 wrote: »

House building costs adjust to economic environment and are most affected by the cost of land which will fall in recession


Banks work off volume on small margin loans to property. A small wave of defaults would push them over the edge again. Any help to them would be after a bail in which put those saving at risk

So are you now saying the banks are in trouble as well?

cnocbui

Villa05 wrote: »

House building costs adjust to economic environment and are most affected by the cost of land which will fall in recession

Banks work off volume on small margin loans to property. A small wave of defaults would push them over the edge again. Any help to them would be after a bail in which put those saving at risk

Would you have a chart showing house building costs falling post 2007? Personally I think you are just quoting conventional economic theory, which has been dead for a decade at least.

I don't keep my savings in this country as the Irish mindset is basically socialist and the risk is too high.

fliball123

Villa05 wrote: »

Emigration would normally be seen as an aide to recovery. If they have nowhere to go, The state has a much higher social welfare bill. Given our national debt levels, anymore excessive borrowing will put pressure on those interest rates we are paying

Mass mortgage default will push the banks back into bankruptcy

Your so called positives have the potential of ruining the country

I agree it would in theory be a release valve for people losing their jobs and going to a different country to set up, yet what it actually does during this recession is it blocks family homes with the mortgage holder who is in distress from being taken back by the banks. All due to the nature of corona and flying and moving etc.

cnocbui

Hubertj wrote: »

So are you now saying the banks are in trouble as well?

Well if they aren't lending, they aren't making money. I'd say they could be in trouble very soon. The only saving grace is money is now free.

Hubertj

cnocbui wrote: »

Well if they aren't lending, they aren't making money. I'd say they could be in trouble very soon. The only saving grace is money is now free.

They poster is saying “a small wave of defaults” would put them in trouble. I don’t see that based on capitalisation etc. Profitability is impacted...

The Belly

Hubertj wrote: »

They poster is saying “a small wave of defaults” would put them in trouble. I don’t see that based on capitalisation etc. Profitability is impacted...

April 2020

Standard & Poor’s

The ratings firm has a BBB- rating on the holding companies of AIB and Bank of Ireland, which is the lowest level of what it considers investment grade. Its Permanent TSB rating is three notches lower. It previously had “stable” outlooks on its ratings for the lenders

Villa05

Hubertj wrote:

They poster is saying “a small wave of defaults†would put them in trouble. I don’t see that based on capitalisation etc. Profitability is impacted...

fliball123 wrote:

I agree it would in theory be a release valve for people losing their jobs and going to a different country to set up, yet what it actually does during this recession is it blocks family homes with the mortgage holder who is in distress from being taken back by the banks. All due to the nature of corona and flying and moving etc.

A small wave gathers momentum as it reaches land. if that land is still underwater from the previous wave we are in trouble

Iceman29

Necronomicon wrote: »

Added to that, our mortgage broker says he can't remember the last time he was this busy, even pre-COVID. His mortgage applications are through the roof.

Funnily enough one of my close friends is a Dublin based broker and was saying the complete opposite. He is finding it extremely difficult getting banks to even entertain most of his clients. Banks might have said one thing in the paper but they are more than likely doing the opposite when it comes down to it

I would imagine your broker was telling porkies because he makes a living out of getting sales...wouldn't be good for business if he was telling potential clients the truth.

The Belly

Villa05 wrote: »

A small wave gathers momentum as it reaches land. if that land is still underwater from the previous wave we are in trouble

The problem with the banks has not been solved which is why we pay the most for mortgages in Europe apart from Greece.

Which stifled recovery the last time and will again. ECB liquidity is not and will not find its way down to the high street as Banks tighten lending again. Some say this is prudent but all it does is choke off spending and investment which is exactly what is needed in a downturn.

They should not be the main sourse of mortgage supply.

Brianmwalker

The Belly wrote: »

April 2020

Standard & Poor’s

The ratings firm has a BBB- rating on the holding companies of AIB and Bank of Ireland, which is the lowest level of what it considers investment grade. Its Permanent TSB rating is three notches lower. It previously had “stable” outlooks on its ratings for the lenders

They probably just didn't pay for a higher rating. S&p are a joke.

The Belly

Brianmwalker wrote: »

They probably just didn't pay for a higher rating. S&p are a joke.

Thats true i suppose but it still is a guide that big investors and pension funds follow.

Amirani

The Belly wrote: »

April 2020

Standard & Poor’s

The ratings firm has a BBB- rating on the holding companies of AIB and Bank of Ireland, which is the lowest level of what it considers investment grade. Its Permanent TSB rating is three notches lower. It previously had “stable” outlooks on its ratings for the lenders

Holding companies aren't the appropriate company level to look at, because you're just looking at the rating level of their bail-in debt. Holding companies were created to issue debt to absorb losses before the OP-COs were impacted. Hold Cos of all the GSIBs and other institutions are rarely much above investment grade.

So it's more appropriate to look at the senior debt/deposit rating for the main operating entities.

Necronomicon

Iceman29 wrote: »

Funnily enough one of my close friends is a Dublin based broker and was saying the complete opposite. He is finding it extremely difficult getting banks to even entertain most of his clients. Banks might have said one thing in the paper but they are more than likely doing the opposite when it comes down to it

I would imagine your broker was telling porkies because he makes a living out of getting sales...wouldn't be good for business if he was telling potential clients the truth.

I'm inclined to believe him. He's had our money for a while now. Also, processing a ton of applications doesn't mean that the banks are saying yes in all cases - it's more an indicator that people are looking to buy (which tallies with my experience on the house hunting side).

But we're both giving anecdotal evidence that shouldn't be generalised.

Deub

GreeBo wrote: »

Yeah, but the numbers are usually not at all the same.
1 high paid guy = multiple low paid guys
1 high paid guy is harder to replace than multiple low paid guys

The numbers can’t be the same since the number of low paid people is way higher than high paid people. I would say the percentage of people let go in each salary brackets is more or less the same.

ELM327

The Belly wrote: »

The problem with the banks has not been solved which is why we pay the most for mortgages in Europe apart from Greece.

Which stifled recovery the last time and will again. ECB liquidity is not and will not find its way down to the high street as Banks tighten lending again. Some say this is prudent but all it does is choke off spending and investment which is exactly what is needed in a downturn.

They should not be the main sourse of mortgage supply.

We pay the highest rates as there are no/minimal recourse available to the lender to liquidate the asset in the event of non performance.

cnocbui

As I said, Ireland is basically a socialist country. Those with mortgages are slugged to pay for the housing security of those who default.

ELM327

cnocbui wrote: »

As I said, Ireland is basically a socialist country. Those with mortgages are slugged to pay for the housing security of those who default.

Yes, a socialist banana republic.
Agree.




But, this has always been the way, so what is the impact on the market now?

The Belly

ELM327 wrote: »

We pay the highest rates as there are no/minimal recourse available to the lender to liquidate the asset in the event of non performance.

It takes 42 months to repossess a property here and 24 in Finland our average mortgage interest rate is 2.99% theirs is .98%.

I cant see the justification in a 2% difference due to an 18month differnce in the time to reposses a house