Property Market 2020

ShedTower

I think many forget that there was an argument long before Covid strunk that we were approaching a downturn.

Globally, interest rates continue to go lower and lower. A couple of months before the virus we had a Danish bank offering negative interest mortgage. Paying you to take a mortgage! Others offering 0% mortgages. Strange times. What will money be worth in 5 years, 10 years? There were arguments that we were witnessing the collapse of the financial system. It may not be that extreme just yet but what way was/is it going?

At home we have Brexit to deal with shortly.

Now it's all about the virus. And if the virus goes we'll be fine. There are other issues!

awec

Brianmwalker wrote: »

If people are holding off then prices must fall or there's no sales.

Yes but his point is when those who wait actually go to buy prices will instantly shoot up again.

Price drops can only be sustained when people cannot buy for a sustained period of time. You need the pool of potential buyers to drop.

Ush1

Brianmwalker wrote: »

If people are holding off then prices must fall or there's no sales.

Asking prices may drop but once bidding begins the prices will quickly be back up, often beyond asking prices, at the moment anyway.

It's a question of affordability.

Hubertj

Villa05 wrote: »

Best of luck. Are you in the Dublin market?
Might be prudent to keep an eye on:
Vaccine progress
New Gov plan and delivery mechanisms on homes if any
Stimulus plan
WFH evolution and effects on market
The propertypin discussion board, called the last crash, identified the oversupply long before it was in general media here and called the bottom of the market in Dublin and Galway markets the first to bottom

Propertypin - i've only looked at it for some of the drops in rental prices when people post links. You're saying there are discussion boards similar to here? Are they named analysts/experts? Or random punters on the internet like here? If they are random punters are you honestly saying someone should take advice on purchasing a property from a randomer on the internet?

Rew

Hubertj wrote: »

Propertypin - i've only looked at it for some of the drops in rental prices when people post links. You're saying there are discussion boards similar to here? Are they named analysts/experts? Or random punters on the internet like here? If they are random punters are you honestly saying someone should take advice on purchasing a property from a randomer on the internet?

Its turned into conspiracy nut heaven TBH I rarely look at it anymore and the property threads are not contributed or maintained much.

Villa05

Hubertj wrote:

Propertypin - i've only looked at it for some of the drops in rental prices when people post links. You're saying there are discussion boards similar to here? Are they named analysts/experts? Or random punters on the internet like here? If they are random punters are you honestly saying someone should take advice on purchasing a property from a randomer on the internet?

Have not been on there much since I purchased, but Karl Deeter of Irish mortgage brokers and Ronan Lyons of Daft and author of there reports were regular contributers. Ronan moreso for getting bearish feedback on his analysis

JimmyVik

Hubertj wrote: »

Propertypin - i've only looked at it for some of the drops in rental prices when people post links. You're saying there are discussion boards similar to here? Are they named analysts/experts? Or random punters on the internet like here? If they are random punters are you honestly saying someone should take advice on purchasing a property from a randomer on the internet?

There is certainly enough of it anyway.
I always wondered how these people arent obscenely rich at this stage.

Villa05

Hubertj wrote:

If they are random punters are you honestly saying someone should take advice on purchasing a property from a randomer on the internet?

There is a difference between random punters/posters and Strong arguments backed up with facts and stats.

Most "property experts commentators" on general media are paid cheerleaders of vested interests, you need to do a bit of digging to find the truth

1sttimebuyer20

JimmyVik wrote: »

If I see drops of 10% thats my trigger point.
Im buying then, if there is any supply. Too long have I waited Time to get off the fence

I’m sure it will, my thoughts are a 5-10% dip next year, it could be worse than that however as there is an undersupply, I can’t see it being much worse.

Keep an eye on the market now, if you feel you have a good understanding of prices in the area you want and you see a house you like, just offer 10% under what you feel the pre Covid market value was.

I’ve been searching in a very small km2 area since October, any 2nd hand in decent condition has gone for mad money, the only things available at decent prices are ex-rentals but I really don’t fancy doing the upgrading required

1sttimebuyer20

Augeo wrote: »

I doubt plenty buyers are in that position tbh

€4000 net wage/month and €600 mortgage payment......
€2000 net wage/month and €300 mortgage payment......

I’m sure most couples would be taking home more than €4K a month? Apologies if I am wrong

shatners bassoon

There's a special place in hell reserved for estate agents who post a 'video' of the property that is in fact a slideshow of the photos already posted with a few panning shots thrown in for good measure. They look like something a 1st year student would knock out in computer science class.

Assetbacked

ShedTower wrote: »

I think many forget that there was an argument long before Covid strunk that we were approaching a downturn.

Globally, interest rates continue to go lower and lower. A couple of months before the virus we had a Danish bank offering negative interest mortgage. Paying you to take a mortgage! Others offering 0% mortgages. Strange times. What will money be worth in 5 years, 10 years? There were arguments that we were witnessing the collapse of the financial system. It may not be that extreme just yet but what way was/is it going?

At home we have Brexit to deal with shortly.

Now it's all about the virus. And if the virus goes we'll be fine. There are other issues!

For the previous 2/3 years the narrative around Irish house prices was that Brexit was stalling the market. Now perhaps there is some truth to it but it was touted as the sole reason for the "price growth slowdown" (i.e. prices not continuing to rise and starting to decrease). Brexit happens at the end of the year and it is looking like a hard Brexit (possible even confirmed that this is happening). However, the fallout for the pandemic will be blamed into next year when prices are stalling or falling, with complete ignorance to the more pressing issues of the mismatch between prices, salaries and borrowing limits. But also, there is an ignorance to the fact supply was muted for a decade so the house price increase was to a large extent artificially inflated due to this lack of supply.

Graham

Assetbacked wrote: »

For the previous 2/3 years the narrative around Irish house prices was that Brexit was stalling the market. Now perhaps there is some truth to it but it was touted as the sole reason for the "price growth slowdown"

I don't think that's accurate.

I'd argue central bank lending rules have been a significant factor in keeping a cap on house prices. Pretty sure I wouldn't be alone in that line of thinking.

The Belly

Graham wrote: »

I don't think that's accurate.

I'd argue central bank lending rules have been a significant factor in keeping a cap on house prices. Pretty sure I wouldn't be alone in that line of thinking.

It could also be argued that this cap has pushed many into the renting cycle trap and driven up RE prices and rents.

In some cases the rent is twice what the mortgage would be.

Graham

The Belly wrote: »

It could also be argued that this cap has pushed many into the renting cycle trap and driven up RE prices and rents.

How does capping property prices cause upward pressure on rents?

errlloyd

Graham wrote: »

How does capping property prices cause upward pressure on rents?

LTV restrictions and deposit requirements effectively prevent any individual or couple with a family income of less than around 80k per year from ever buying near Dublin. Forcing them to continue renting.

Villa05

Local University saying students on campus for only 4 weeks per semester for the coming year. This is for food science course with strong practical element. Little demand for student accomodation

Villa05

Graham wrote:

I'd argue central bank lending rules have been a significant factor in keeping a cap on house prices. Pretty sure I wouldn't be alone in that line of thinking.

They've been a help but with the amount of cash sales it is limited. The supply issue as a result has created a bubble in price and rent. These bubbles are very prone to bursting in recessions

Vikings

errlloyd wrote: »

LTV restrictions and deposit requirements effectively prevent any individual or couple with a family income of less than around 80k per year from ever buying near Dublin. Forcing them to continue renting.

Or buy elsewhere? What's forcing them to buy in Dublin?

I know of many people commuting to Dublin from Laois, Carlow, even Wexford.

cnocbui

1sttimebuyer20 wrote: »

I’m sure it will, my thoughts are a 5-10% dip next year, it could be worse than that however as there is an undersupply, I can’t see it being much worse.

Keep an eye on the market now, if you feel you have a good understanding of prices in the area you want and you see a house you like, just offer 10% under what you feel the pre Covid market value was.

I’ve been searching in a very small km2 area since October, any 2nd hand in decent condition has gone for mad money, the only things available at decent prices are ex-rentals but I really don’t fancy doing the upgrading required

Sounds like you want something, but are not prepared to pay for it. Good luck.

Graham

errlloyd wrote: »

LTV restrictions and deposit requirements effectively prevent any individual or couple with a family income of less than around 80k per year from ever buying near Dublin. Forcing them to continue renting.

I disagree.

Remove lending caps would push prices up further so they'd still be out of reach for your potential buyers.

Hubertj

Villa05 wrote: »

Local University saying students on campus for only 4 weeks per semester for the coming year. This is for food science course with strong practical element. Little demand for student accomodation

https://www.irishtimes.com/news/education/ul-says-most-students-will-be-allowed-on-campus-for-just-one-week-each-month-1.4299487

that must be Limerick. Most other universities plan to have students on campus much more.

Villa05

Hubertj wrote:

that must be Limerick. Most other universities plan to have students on campus much more.

The overflow covid 19 hospital is on campus also so this may be a factor.

Other universities are expecting 50% of normal on campus numbers, this should also affect demand for student accomodation
Wonder if accomodation sharing could be viable

cnocbui

Hubertj wrote: »

https://www.irishtimes.com/news/education/ul-says-most-students-will-be-allowed-on-campus-for-just-one-week-each-month-1.4299487

that must be Limerick. Most other universities plan to have students on campus much more.

I know someone who teaches there and they think it's completely unworkable.

wassie

Assetbacked wrote: »

For the previous 2/3 years the narrative around Irish house prices was that Brexit was stalling the market. Now perhaps there is some truth to it but it was touted as the sole reason for the "price growth slowdown" (i.e. prices not continuing to rise and starting to decrease). Brexit happens at the end of the year and it is looking like a hard Brexit (possible even confirmed that this is happening). However, the fallout for the pandemic will be blamed into next year when prices are stalling or falling, with complete ignorance to the more pressing issues of the mismatch between prices, salaries and borrowing limits. But also, there is an ignorance to the fact supply was muted for a decade so the house price increase was to a large extent artificially inflated due to this lack of supply.

I also think Brexit as a factor in property prices is exagerated. It gives media an ongoing storey. Sir Mervin King, former Governor of the Bank of England (2003-2013) who opposes Brexit, has stated that even in the event of a hard Brexit, WTO framework is in place to allow trade to carry on, the sun will rise and life will carry on.

errlloyd

Graham wrote: »

I disagree.

Remove lending caps would push prices up further so they'd still be out of reach for your potential buyers.

The market would be hotter, that's for sure. But it is clearly wrong to say that making it functionally difficult for someone to buy a home would result in fewer people buying homes than making it legally impossible for them to buy a home. The increased pressure on the renting market created by the reality that there is a large cohort of people who have no other choice DEFINITELY drives up rent (which drives up the ROI on investment properties which drives up house prices anyway). It is ludicrous to suggest otherwise.

I'm not here to comment on whether I think the Central Bank rules are good or bad on a macro-economic level. Without them we'd be in a much larger bubble right now and facing down a significant crash. We may end up being quite glad of them in future.

What is empirically true is that they are very good for someone who makes 100k per year and wants to buy a 350k home. In the past a 350k home would have been available to anyone with a household income of around 65k, now they are only available (exceptions aside) to people with a household income of 100k.

So what happens

Villa05

Graham wrote:

How does capping property prices cause upward pressure on rents?

The lending rules do not cap property prices. They cap what working people can borrow to buy a house. This leads to affordability issue and more people caught renting. Wealthy funds can take advantage of this coupled with the supply issue to maximise rents and drive up property prices

Graham

errlloyd wrote: »

The market would be hotter, that's for sure. But it is clearly wrong to say that making it functionally difficult for someone to buy a home would result in fewer people buying homes than making it legally impossible for them to buy a home. The increased pressure on the renting market created by the reality that there is a large cohort of people who have no other choice DEFINITELY drives up rent (which drives up the ROI on investment properties which drives up house prices anyway). It is ludicrous to suggest otherwise.

Of course limited rental supply drives up rent, no argument.

If central bank lending rules have kept a cap on house prices, it follow that removing the rules will also remove that price cap.

Increased lending limits will drive up prices. Unless supply also increases there will be the same competition to buy and rent. Prices will just be higher.

You are essentially arguing for first time buyers to face even higher prices and larger mortgages.

Assetbacked

Graham wrote: »

I don't think that's accurate.

I'd argue central bank lending rules have been a significant factor in keeping a cap on house prices. Pretty sure I wouldn't be alone in that line of thinking.

A lack of supply absolutely influenced house prices inflating into (in certain segments) a bubble again in combination with the mortgage lending rules (which, by all accounts from the Central Bank) will remain untouched as they are working.

As for Brexit, here are some articles last year which attributed the price declines and fear in the market as being due to Brexit. To me it's a red herring.

https://www.irishtimes.com/business/economy/brexit-blamed-for-fall-in-dublin-property-prices-1.4016549
https://www.irishexaminer.com/breakingnews/ireland/house-prices-fall-by-28-in-three-months-as-brexit-uncertainty-blamed-for-slowdown-953799.html
https://www.independent.ie/business/personal-finance/property-mortgages/hard-brexit-a-threat-to-house-prices-central-bank-warns-38305283.html
https://www.independent.ie/business/farming/farm-property/land-values-down-marginally-as-brexit-continues-to-spook-investors-38789364.html

errlloyd

Graham wrote: »

Of course limited rental supply drives up rent, no argument.

Rental supply is sort of irrelevant, we're talking about rental demand. Which is increased because of the large cohort who can't buy and have given up hope of buying.

I agree that if this cohort could buy through greater LTV exemptions prices would go up, no argument there at all. But keeping house prices down but in a way that only allows well earning professionals to buy them creates a negative externality. A rental trap.

Again. I am not saying the policy is overall bad. I am saying that it is bad for low earners and good for medium earners. It is possible that an alternative policy (free market lending) would be bad for everyone. It is also possible that a third policy exists (state backed mortgages) would be rebalance the equation. Who knows.

All we can say for sure is that creating an institutional blockage to low earners buying homes forces them into the private rental market. And the more people in that market the more the rents go up.