coronavirus and the property effect

Snow Garden

Commercial property prices will take a plunge after years of shortages. WFH arrangements will reduce the capacity required. I already heard one large US IT company letting a building lease lapse in Dublin.

Dav010

Snow Garden wrote: »

Commercial property prices will take a plunge after years of shortages. WFH arrangements will reduce the capacity required. I already heard one large US IT company letting a building lease lapse in Dublin.

Don’t think there was a shortage of commercial properties, vacant unit numbers were high even before this.

Snow Garden

Dav010 wrote: »

Don’t think there was a shortage of commercial properties, vacant unit numbers were high even before this.

There was a shortage of large office spaces in urban areas. Some companies were hot desking before Covid.

Hubertj

Snow Garden wrote: »

There was a shortage of large office spaces in urban areas. Some companies were hot dealing before Covid.

Yea I read that in 1 of the reports over last few weeks. There needs to be x% of vacant grade A office space to have a competitive market but Dublin especially is /was a good but off the required %. Presume the same would apply to residential as well?

thunderdog

ittakestwo wrote: »

Banks dont care about putting money in people's back pockets, they rather the money was in theirs.

Over the next few months a lot of people and bussiness will be defaulting on loans which the bank will have to take the hit on and pass on to other customers through higher rates in the future.

S&P rating agency has downgraded irish banks as they expect them to be hit from the C-19 effect on the economy. If they do take a big hit from defaults, that can only lead to higher rates in the future.

Yeah I’d definitely echo that point. Anyone getting a mortgage this year should go for a long term fixed rate if possible. Banks NPLs are going to start rapidly increasing again, and similar to the last crash there will be very limited repossessions given the political landscape.

As ittakestwo mentioned, the cost of these NPLs will be spread out among paying mortgage holders

Eric Cartman

Snow Garden wrote: »

There was a shortage of large office spaces in urban areas. Some companies were hot dealing before Covid.

+1 , leasing of single hot desks is predicted to basically evaporate completely after this. Even companies needing 2-3 desks in an office are looking to go 'meeting room access and post forwarding only'

there was fast track planning for office space thats now no longer needed. Dublin commercial prices are about to fall through the floor especially when players like wework go bankrupt as soon as the rent moratoriums end.

Snow Garden

Hubertj wrote: »

Yea I read that in 1 of the reports over last few weeks. There needs to be x% of vacant grade A office space to have a competitive market but Dublin especially is /was a good but off the required %. Presume the same would apply to residential as well?

Yes I expect the Dublin house prices to reduce quite significantly as a result of Covid. Other urban areas too.
Employers now know that they can attract resources with lower wage expectations in places like Leitrim once they have broadband.

Ozark707

Hubertj wrote: »

Yea I read that in 1 of the reports over last few weeks. There needs to be x% of vacant grade A office space to have a competitive market but Dublin especially is /was a good but off the required %. Presume the same would apply to residential as well?

That is interesting, did they indicate the % vacancy?

Hubertj

Ozark707 wrote: »

That is interesting, did they indicate the % vacancy?

No sorry I tried to find the article but can’t and am unable to remember the specifics. I was surprised as there has been and is so much construction going on....

Ozark707

Hubertj wrote: »

No sorry I tried to find the article but can’t and am unable to remember the specifics. I was surprised as there has been and is so much construction going on....

Yes does seem odd all right.

The_Brood

Nothing has dropped at the moment though high prices still as bad as ever, maybe it will be later in the summer that significant drops will be seen?

The_Brood

Nothing has dropped at the moment though high prices still as bad as ever, maybe it will be later in the summer that significant drops will be seen?

OttoPilot

The_Brood wrote: »

Nothing has dropped at the moment though high prices still as bad as ever, maybe it will be later in the summer that significant drops will be seen?

We entered recession in 2008 and house prices didnt reach their bottom until 2011 or 2012, patience.

Hubertj

OttoPilot wrote: »

We entered recession in 2008 and house prices didnt reach their bottom until 2011 or 2012, patience.

Will prices drop faster than last time given the type of shock to economy? Some clowns on other thread spouting 30% drop by end of summer.

Assetbacked

Hubertj wrote: »

Will prices drop faster than last time given the type of shock to economy? Some clowns on other thread spouting 30% drop by end of summer.

Everything is going to be frozen until at at least August but perhaps even until the end of the year. Then into next year we will have a tentative recovery with the economy slowly getting going again. Of course, people may be wary of buying and banks may be wary of lending. People who held off selling this year may test the water next year and there could be a decent amount of homes on the market. However, expectations may be too high for the beginning of the recovery and they might not sell. We already saw prices starting to correct towards the end of last year, it is probably towards Q3 next year when we start to see the beginning of the covid19 impact on house prices. I just can't see any meaningful data, not skewed by the covid19 freeze on the market, before then.

Of course, reports will be published in the coming weeks on Q2 2020 activity which will likely be accompanied with a narrative in certain quarters that the end of the housing market is coming, but it's so important not to buy into the hysteria we are likely to see. Equally, not to buy into the hopeless optimism of other commentators. We just need to realise that all that's happened is that the market is currently paused.

handlemaster

Assetbacked wrote: »

Everything is going to be frozen until at at least August but perhaps even until the end of the year. Then into next year we will have a tentative recovery with the economy slowly getting going again. Of course, people may be wary of buying and banks may be wary of lending. People who held off selling this year may test the water next year and there could be a decent amount of homes on the market. However, expectations may be too high for the beginning of the recovery and they might not sell. We already saw prices starting to correct towards the end of last year, it is probably towards Q3 next year when we start to see the beginning of the covid19 impact on house prices. I just can't see any meaningful data, not skewed by the covid19 freeze on the market, before then.

Of course, reports will be published in the coming weeks on Q2 2020 activity which will likely be accompanied with a narrative in certain quarters that the end of the housing market is coming, but it's so important not to buy into the hysteria we are likely to see. Equally, not to buy into the hopeless optimism of other commentators. We just need to realise that all that's happened is that the market is currently paused.

Unemployment at 28 % hard to imagine a return to.prices where they were. How many people are now getting mortgage assistance from their banks ?

NIMAN

It was tough timing on a lot of people who were putting their houses on the market in the lead up to CV19.

We were being told the economy was flying, they probably thought they'd get X for their houses.
I seen a couple of very nice properties up around Derry going on for 400k+.

Not a chance those folk are going to find people willing to spend that sort of money on a house when we have massive unemployment and a dodgy looking future for a while, with possibly a worst recession than '08 on its way.

Assetbacked

https://amp-independent-ie.cdn.ampproject.org/c/s/amp.independent.ie/business/personal-finance/property-mortgages/state-home-building-fund-to-expand-its-loans-for-developers-39192231.html

Finance Minister Paschal Donohoe said the new measures would "help large and small firms resume housebuilding activity quickly and bring new developments to completion as soon as possible

This is a no brainer to kick-start the economy. It will hopefully mitigate against any slowdown caused by covid19. For the first time in a long time supply may be allowed to increase more than demand.

Snow Garden

There was evidence in the Irish construction sector before Covid19 that experienced tradesmen/workers weren't available in the same numbers as previous years. It seemed many Eastern European construction workers were returning home for 3 reasons: (1) Rental costs were too high here (2) Buying a permanent property in Ireland was too expensive (3) Salaries and Welfare (esp child benefit) were improving significantly in their home countries.
It will be interesting to see if that 'emigration' continues. I guess the hospitality sector could also see a major exodus. Many hotels, restaurants and cafes will not open again.

Roger the cabin boy

Assetbacked wrote: »

https://amp-independent-ie.cdn.ampproject.org/c/s/amp.independent.ie/business/personal-finance/property-mortgages/state-home-building-fund-to-expand-its-loans-for-developers-39192231.html



This is a no brainer to kick-start the economy. It will hopefully mitigate against any slowdown caused by covid19. For the first time in a long time supply may be allowed to increase more than demand.

It's a terrible, terrible idea

Assetbacked

handlemaster wrote: »

Unemployment at 28 % hard to imagine a return to.prices where they were. How many people are now getting mortgage assistance from their banks ?

I suppose with the unemployment figures, they look like they are only temporary job losses given the sectors which have suffered (hospitality, retail) and also given that there is not a lot of individual borrowing in the economy which amplifies these kind of shocks. These aren't the sectors where people are buying expensive houses.

I think it was the ERSI economist, John Fitzgerald, who wrote in the IT the past few days that a "surprising" number of people will come out of this economic freeze in a better financial position. The demand could stay strong from FTBs, who are probably looking in the €500k max. price range.

However, in terms of lending, there may be a problem for those looking to buy more expensive houses. Even in the sectors where people still have their jobs and may be saving more money, bonuses and salary increases are likely to disappear. This could lower the amount of money which can be borrowed to fund the purchase of these more expensive properties. Translation, more expensive houses could drop substantially, particularly if they need renovation. I don't see any meaningful evidence of this for closer to two years or more to be honest.

Assetbacked

Roger the cabin boy wrote: »

It's a terrible, terrible idea

Why? We are in an absolutely devastating housing crisis with the only solution to build a shed load of places for people to live. Oversupply is far better than undersupply but we are not even close to having sufficient supply so oversupply is a nonsense concern at this stage.

Hubertj

Roger the cabin boy wrote: »

It's a terrible, terrible idea

I’d be interested to hear your opinion as to why it is a bad idea? I would have thought stimulus into the economy would be a good thing?

PommieBast

Assetbacked wrote: »

I think it was the ERSI economist, John Fitzgerald, who wrote in the IT the past few days that a "surprising" number of people will come out of this economic freeze in a better financial position.

Every time I hear that claim I want to reach for a blunt instrument. Even in technology a lot of people have had pay cuts.

Snow Garden

PommieBast wrote: »

Every time I hear that claim I want to reach for a blunt instrument. Even in technology a lot of people have had pay cuts.

I think he meant Irish Times, not IT.

The IT sector will be significantly impacted by a reduced IT spend amongst large enterprise customers.

Dav010

Hubertj wrote: »

I’d be interested to hear your opinion as to why it is a bad idea? I would have thought stimulus into the economy would be a good thing?

Initially it would, but oversupply in any commodity leads to falling prices and decrease in production. It was one of the reasons why the construction industry collapsed leading to mass unemployment/emigration in the last recession. If developers can’t sell properties or prices fall to much, they won’t build.

Roger the cabin boy

Hubertj wrote: »

I’d be interested to hear your opinion as to why it is a bad idea? I would have thought stimulus into the economy would be a good thing?

Stimulation is great, but do it from the bottom up, not the top down.

It's a bailout for the builders at the taxpayers ultimate expense.

Slydice

Another extension added on the all public participation periods in the planning system

Does someone have experience or example for the types of situations this is covering. Seems important enough with some many extensions. Is it mainly health and safety or planning application appeals or something?

Public participation period in the planning system extended for a further 14 days
Published on Saturday, 09 May 2020
https://www.housing.gov.ie/planning/covid-19-coronavirus/public-participation-period-planning-system-extended-further-14-days

lomb

Roger the cabin boy wrote: »

Stimulation is great, but do it from the bottom up, not the top down.

It's a bailout for the builders at the taxpayers ultimate expense.

Government creams 50% off the top anyway-vat, employment taxes, stamp duties. Buying houses is a great stimulant for the general economy. When you buy a house, you need furniture and electrical appliances ,pay insurance, pay property tax, have and pay for a car as your a commuter and your more likely to have children as you feel secure etc.

PommieBast

Snow Garden wrote: »

I think he meant Irish Times, not IT.

The IT sector will be significantly impacted by a reduced IT spend amongst large enterprise customers.

I was aware of IT vs. IT


Figures are hard to come by but anecdotally it looks like the vast majority of people in Dublin have had a pay cut of some sort. Wouldn't surprise me if Google et al are the only ones who have not.