Recession: Which falls first - rent or house prices?

We're heading for a deep recession.

What is known about how this affects property prices and rents? Both will fall, but which falls first and fastest?

cgcsb

Deleted User wrote: »

We're heading for a deep recession.

We're really not.

Deleted User wrote: »

What is known about how this affects property prices and rents? Both will fall, but which falls first and fastest?

rent seems to have fallen somewhat, you can now rent a bedsit (albeit substandard) on DAFT for about €800 a month. The average full time net salary is about €2,900 a month, so the average person can now snap up a dingy bedsit for just under 30% of their income. It's better than pre corona, but still we have a poor standard of living due to high housing cost.

As for purchasing, I've not noticed significant movement in prices, kip apartments with newspaper walls in kip suburbs still cost 200k. The average worker can afford a €185,000 home as a single person or €370,000 as a couple.

I hope you're right about the (lack of a deep) recession but the Central Bank says it will be the 'worst in history'. Hopefully it will be short.

Thanks for the observation on rents/prices. So, rents are softening but house prices stable enough.

Was there anything about the previous recession that could help predict the next 12 months? Access to credit/mortgages might be a factor.

BrokenArrows

[Deleted User] wrote: »

I hope you're right about the (lack of a deep) recession but the Central Bank says it will be the 'worst in history'. Hopefully it will be short.

Thanks for the observation on rents/prices. So, rents are softening but house prices stable enough.

Was there anything about the previous recession that could help predict the next 12 months? Access to credit/mortgages might be a factor.

It seems to be the "worst recession" is more a technicality due to businesses being prevented from trading which recover immediately once restrictions are lifted.

Past recessions were because of other longer lasting factors.

cgcsb

https://www.thejournal.ie/central-bank-forecast-2-5139456-Jul2020/

By 2022 we'll be back to normal in a pessimistic view. The job loses that have occurred are almost all in retail/hospitality. The higher earning workers were able to work from home with very low job losses. Once everything is open again and that higher earning group can spend again, the lower paid jobs will reappear very quickly.

Governments are looking to stimulus based policies, we'll gain more debt of course but the economy will be fine. Institutional investors are still building BTR apartments here so they see a market for renters that is still massively profitable.

Ray Palmer

BrokenArrows wrote: »

It seems to be the "worst recession" is more a technicality due to businesses being prevented from trading which recover immediately once restrictions are lifted.

Past recessions were because of other longer lasting factors.

Once restrictions are lifted it will be a struggle to get customers to go. I won't go to a pub or restaurant for the rest of the year.

Coffee shops frequented by office workers will close permanently as they aren't coming back for a while and not all of them will go even if open.

There is going to be a very uneven distribution of effects with the low paid in much more danger. People who could buy houses before can still afford them so house prices may not be effected but rent could drop but it may not be much.

People wishing an outcome they want is where things are being discussed rather than what is actually happening and who it effects.

awec

Ray Palmer wrote: »

Once restrictions are lifted it will be a struggle to get customers to go. I won't go to a pub or restaurant for the rest of the year.

Coffee shops frequented by office workers will close permanently as they aren't coming back for a while and not all of them will go even if open.

There is going to be a very uneven distribution of effects with the low paid in much more danger. People who could buy houses before can still afford them so house prices may not be effected but rent could drop but it may not be much.

People wishing an outcome they want is where things are being discussed rather than what is actually happening and who it effects.

Will it?

I think recent events have shown us that there is plenty of people happy enough to go back to pubs.

SozBbz

Ray Palmer wrote: »

Once restrictions are lifted it will be a struggle to get customers to go. I won't go to a pub or restaurant for the rest of the year.

I think you're conflating what you think with what other people think.

Ray Palmer

awec wrote: »

Will it?

I think recent events have shown us that there is plenty of people happy enough to go back to pubs.

There will always be idiots. You can fill the Point with people to watch West Life they don't feed the economy long term. It really wasn't that many people in the pubs. If it happens again they will close them.

The absence of office workers has a huge economic effect on local shops and businesses. They are going to close.

JimmyVik

Even if you keep your job, if you get hit with higher taxes then your rent/mortgage will be a bigger chunk of your take home.

SozBbz

Ray Palmer wrote: »

There will always be idiots. You can fill the Point with people to watch West Life they don't feed the economy long term. It really wasn't that many people in the pubs. If it happens again they will close them.

The absence of office workers has a huge economic effect on local shops and businesses. They are going to close.

I've no intentions of going to a busy pub but would go to a pub if it was being managed well. I plan to head west for a staycation at some point this month or next, will probably eat in pubs along the way.

I've also been out to a restaurant and plan on going to more.

Am I an idiot?

Ray Palmer

SozBbz wrote: »

I've no intentions of going to a busy pub but would go to a pub if it was being managed well. I plan to head west for a staycation at some point this month or next, will probably eat in pubs along the way.

I've also been out to a restaurant and plan on going to more.

Am I an idiot?

As far as I am concerned yes you are.

Isn't the gist of the next government's budgetary plan to pump money in for a year or two, and then rein things back in for a few years after that?

Talking to people in pubs and cafes this week, they are glad to be open but a bit pessimistic about making it work over the next 12 months unless there are handouts/tax cuts etc.

Feels like we should expect higher taxes when the 'worst' is over. But maybe there will be a kind of post-war feeling once COVID is tamed by a vaccine or effective treatment, and we can safely go back to full speed.

awec

Ray Palmer wrote: »

As far as I am concerned yes you are.

It's pretty stupid to think people should just not go to pubs or restaurants from now on. They are open, once you observe social distancing and the appropriate hygiene measures then go for it.

JimmyVik

SozBbz wrote: »

I've no intentions of going to a busy pub but would go to a pub if it was being managed well. I plan to head west for a staycation at some point this month or next, will probably eat in pubs along the way.

I've also been out to a restaurant and plan on going to more.

Am I an idiot?

I had planned not to go to a pub until next year.
I was walking past one the other day and there was 1 person in it. So I went in for a sneaky pint. Now that ive gone once, im going back again tonight.

Every recession is different, but is there no standard pattern to whether rents fall and this drags down prices - or vice versa?

For example, it was obvious from the last crash that Dublin sales prices dipped first and bounced back first; apartments sank fast but recovered (if memory serves).

Ray Palmer

awec wrote: »

It's pretty stupid to think people should just not go to pubs or restaurants from now on. They are open, once you observe social distancing and the appropriate hygiene measures then go for it.

You can do what you like but no control over others. Given the scenes shown you would be stupid to think you could maintain social distancing. Seeing as you can't then it us stupid to go there. Until there is proper actions being taken I and many others will avoid such places. Just because they are open doesn't make them safe

JimmyVik

Deleted User wrote: »

Every recession is different, but is there no standard pattern to whether rents fall and this drags down prices - or vice versa?

For example, it was obvious from the last crash that Dublin sales prices dipped first and bounced back first; apartments sank fast but recovered (if memory serves).

Only way house prices will fall are


if the market gets flooded with houses for sale. If it does they will come from the rental market. Landlords selling up. Because there is no oversupply at the moment.


or b)
If the supply of buyers dries up. That would require major job losses.
So maybe rents would fall then. But the country and all of us would be in some state.

SozBbz

Ray Palmer wrote: »

As far as I am concerned yes you are.

Well, with that perspective and your exceptional interpersonal skills on display here, the feeling is mutual.

awec

Ray Palmer wrote: »

You can do what you like but no control over others. Given the scenes shown you would be stupid to think you could maintain social distancing. Seeing as you can't then it us stupid to go there. Until there is proper actions being taken I and many others will avoid such places. Just because they are open doesn't make them safe

The scenes shown in a handful of pubs.

There will be pubs and restaurants open up and down the country without issue, and they'll have more than enough custom to sustain opening.

SozBbz

awec wrote: »

The scenes shown in a handful of pubs.

There will be pubs and restaurants open up and down the country without issue, and they'll have more than enough custom to sustain opening.

Exactly.

People are capable of exercising good judgement and cop on.

Personally I'll be very much taking things as I find them. If I'm not happy that good practices are being observed, then I won't go in.

Ray Palmer

SozBbz wrote: »

Well, with that perspective and your exceptional interpersonal skills on display here, the feeling is mutual.

You asked and I answered what interpersonal skills would you like applied to that? Do something I consider stupid and ask if it makes you stupid that is the answer you get.

Why am I stupid? Not wanting to catch or spread a virus, is stupid?

Ray Palmer

SozBbz wrote: »

Exactly.

People are capable of exercising good judgement and cop on.

Personally I'll be very much taking things as I find them. If I'm not happy that good practices are being observed, then I won't go in.

Except we have seen people can't exercise good judgement and cop on. Are the staff some of these people who went out and didn't socially distance? You don't know and can't possibly know to make a judgement call.

At the start of this a shop worker though him wearing gloves kept me safe even though he had just rubbed his face while wearing them.

cgcsb

Ray Palmer wrote: »

Once restrictions are lifted it will be a struggle to get customers to go. I won't go to a pub or restaurant for the rest of the year.

Coffee shops frequented by office workers will close permanently as they aren't coming back for a while and not all of them will go even if open.

There is going to be a very uneven distribution of effects with the low paid in much more danger. People who could buy houses before can still afford them so house prices may not be effected but rent could drop but it may not be much.

People wishing an outcome they want is where things are being discussed rather than what is actually happening and who it effects.

You'd be an extreme outlier there. restaurants/bars around me are booked solid, can't get a table.

cgcsb

Ray Palmer wrote: »

As far as I am concerned yes you are.

At this point in Ireland you're as likely to die in a road traffic accident than you are to contract corona virus, you're the idiot I'd say.

SozBbz

Ray Palmer wrote: »

You asked and I answered what interpersonal skills would you like applied to that? Do something I consider stupid and ask if it makes you stupid that is the answer you get.

Why am I stupid? Not wanting to catch or spread a virus, is stupid?

So you can call me and idiot, but it doesnt work the other way around - gotcha.

In the spirit of asking and answering questions - why are you stupid?

Unless you are in a high risk category, there is no need to go beyond government guidelines that are based on public health advice.

What I have done and what I intend to do are fully within what has been allowed. I wear a mask to the shops and carry hand sanitizer and follow and have followed all of the advice throughout the pandemic so far. I would love to go on holiday somewhere sunny, but I won't until the advice to do so is clear and unambiguous.

I am continuing to follow the advice, by doing what is now permitted. Yet according to you, that makes me an idiot.

To me, locking myself up over and above the public health advice is pretty stupid. Also, calling someone who is fully playing by the rules and idiot, is pretty idiotic in itself.

Please provide evidence of your academic qualifications that are superior to those of Dr. Holohan, that I may disregard his advice in favour of yours.

Ray Palmer

cgcsb wrote: »

You'd be an extreme outlier there. restaurants/bars around me are booked solid, can't get a table.

No I am not. They are working on a reduced capacity. There is no restaurant in Dublin that I am aware of that has toilets where social distancing can be achieved.
There are loads of idiots refusing to wear masks on public transport too. Even if it is the majority of people being stupid they remain stupid.

cgcsb

Honestly it's like the karens commenting on Dublin Live.

On a separate note: it is estimated that the propulation of Dublin City will increase 60,000 between now and 2026. Say 10,000 per year between now and then. There were 1,800 housing completions in the city in 2019 (with no signs of that picking up), so unless all the new residents live 6 people to a dwelling, then the housing crisis will get worse.

Smouse156

cgcsb wrote: »

https://www.thejournal.ie/central-bank-forecast-2-5139456-Jul2020/

By 2022 we'll be back to normal in a pessimistic view. The job loses that have occurred are almost all in retail/hospitality. The higher earning workers were able to work from home with very low job losses. Once everything is open again and that higher earning group can spend again, the lower paid jobs will reappear very quickly.

Governments are looking to stimulus based policies, we'll gain more debt of course but the economy will be fine. Institutional investors are still building BTR apartments here so they see a market for renters that is still massively profitable.

This false belief that only low paid workers lost or will lose their jobs is surprising naive! Even though hospitality/retail was undoubtedly the worst effected the knock on effects of loss of business for legal/IT/Finance etc has already lead to salary cuts, hiring freezes and a small number of job cuts in “higher paid” roles. If the downturn continues there will be lots of higher paid job cuts as those companies won’t have sufficient business to pay the high salaries!

To answer the OP, rents should fall first as landlords less likely to wait 12 months plus (Except some REITs) to get a high price. Lower rents will drag on capital values, especially apartments. House price falls will be slower

SozBbz

Ray Palmer wrote: »

No I am not. They are working on a reduced capacity. There is no restaurant in Dublin that I am aware of that has toilets where social distancing can be achieved.
There are loads of idiots refusing to wear masks on public transport too. Even if it is the majority of people being stupid they remain stupid.

Well luckily for us all, you are not in charge.

I ate at a local restaurant last week. No issue with social distancing. Masks worn by staff and no crowding in the toilets.

Lock yourself up, by all means thats your prerogative, but being abusive to people who are following the rules just makes you sound like an angry loon who needs to get out more....

Ray Palmer

SozBbz wrote: »

So you can call me and idiot, but it doesnt work the other way around - gotcha.
.

No, you asked if you were stupid and I answered there is the difference.

You have since explained that following the minimum advice and anybody going beyond that is stupid. Not sure why the minimum became best practice. If you interact with people at risk or live with them you certainly need to above and beyond the minimum.

The cop on and exercised judgment you think you have is limited because you think minimum is the highest standard. It isn't.

SozBbz

Ray Palmer wrote: »

No, you asked if you were stupid and I answered there is the difference.

You have since explained that following the minimum advice and anybody going beyond that is stupid. Not sure why the minimum became best practice. If you interact with people at risk or live with them you certainly need to above and beyond the minimum.

The cop on and exercised judgment you think you have is limited because you think minimum is the highest standard. It isn't.

Nope, I asked if it made me an idiot and you said yes. I said the feeling is mutual, which i think is fair comment and further justified by your subsequent posts.

And no, they are not a minimum standard - they are the standard. There are no gold stars for total isolation. Actually there are a lot of downsides to not living a normal life - social isolation, mental health struggles, poverty etc. We do not need to all lock ourselves away.

Also, you've stated that you're not going to go to a bar or restaurant for the rest of the year. Thats almost 6 months away, there is no need to make sweeping proclamations about the situation months from now. We could be in another wave or we could have a vaccine and/or more effective treatment.

I am following the advice as the situation evolves, and not making rash statements.

ZeroThreat

cgcsb wrote: »

We're really not.



rent seems to have fallen somewhat, you can now rent a bedsit (albeit substandard) on DAFT for about €800 a month. The average full time net salary is about €2,900 a month, so the average person can now snap up a dingy bedsit for just under 30% of their income. It's better than pre corona, but still we have a poor standard of living due to high housing cost.

As for purchasing, I've not noticed significant movement in prices, kip apartments with newspaper walls in kip suburbs still cost 200k. The average worker can afford a €185,000 home as a single person or €370,000 as a couple.

Hmmm, if average take home pay in this country works out at above €720 a week, I really need to find a better job....

Ray Palmer

SozBbz wrote: »

Nope, I asked if it made me an idiot and you said yes. I said the feeling is mutual, which i think is fair comment and further justified by your subsequent posts.

And no, they are not a minimum standard - they are the standard. There are no gold stars for total isolation. Actually there are a lot of downsides to not living a normal life - social isolation, mental health struggles, poverty etc. We do not need to all lock ourselves away.

Also, you've stated that you're not going to go to a bar or restaurant for the rest of the year. Thats almost 6 months away, there is no need to make sweeping proclamations about the situation months from now. We could be in another wave or we could have a vaccine and/or more effective treatment.

I am following the advice as the situation evolves, and not making rash statements.

You called me stupid just for disagreeing with you while I stated a stupid act. You asked me if that made you stupid and I answered in the affirmative. You therefore called me stupid with no logic and call me stupid for maintaining my view.you are moving goal posts while I didn't. Don't ask a question if you aren't going to like the answer


No it is the minimum. They have stated it as such by telling some if the population to remain locked down as much as possible.

There will be no vaccine this year available to the public. It is literally impossible.

You are picking and choosing what to follow and have stated you will use your judgment. Your judgement is off and lacks critical thinking. The idea that you can social distance in these places is false just on toilets alone. You want to take the risk go ahead but don't claim something is possible where it is not.

SozBbz

Nope - you're wrong yet again. I didn't use the word stupid until you brought it up.

It was another poster who said what you'd suggested was pretty stupid. Its all there in black and white.

Anyway, theres no point in engaging with you further, you're a zealot and not open to reason. You're derailing this thread to push a perspective thats at odd with offical advice and I've no time for it.

hardybuck

I have a small portfolio of properties in Dublin. About 75% of them have new tenancies that started last year, and they're all high spec properties in the upper end of the market.

Only one of my tenants asked for a temporary reduction, and they were in a badly affected industry and a reliable tenant so they got it.

50% of my tenants have renewed at last years rent over the past couple of weeks. Of the other 50%, some will be going up by 4% and maybe one might get a minor reduction.

I think the third level colleges will play a large role in demand in many urban centres over the autumn. I see that UL are only going to have students on campus 1 week a month, that's going to result in a lot of young people staying with their parents and not requiring property. Ditto for international students I reckon.

SozBbz

hardybuck wrote: »

I think the third level colleges will play a large role in demand in many urban centres over the autumn. I see that UL are only going to have students on campus 1 week a month, that's going to result in a lot of young people staying with their parents and not requiring property. Ditto for international students I reckon.

DCU have announced that they're going to offer campus accomodation on a short term basis (ie you can book in for 2 days per week).

An Ri rua

SozBbz wrote: »

I think you're conflating what you think with what other people think.

You're clearly wearing the rose-tinted glasses here.
Running any numbers at all as a business owner, it's impossible not to see turnover dropping, going forward. And then taking the hit on 4 months lost revenue.
The people going back to pubs, for instance, are the party animals, binge drinkers, young, barflies etc etc. Even if your common sense social drinker only makes up 10-15% of your turnover, buying rounds etc (or not), that's a devastating turnover hit.
This is simple maths. The knock-on effects of this will be horrendous. Pent-up demand, my backside.

awec

An Ri rua wrote: »

You're clearly wearing the rose-tinted glasses here.
Running any numbers at all as a business owner, it's impossible not to see turnover dropping, going forward. And then taking the hit on 4 months lost revenue.
The people going back to pubs, for instance, are the party animals, binge drinkers, young, barflies etc etc. Even if your common sense social drinker only makes up 10-15% of your turnover, buying rounds etc (or not), that's a devastating turnover hit.
This is simple maths. The knock-on effects of this will be horrendous. Pent-up demand, my backside.

Who said turnover won't drop?

Of course turnover is going to drop. of course there will be lost revenue. Of course the numbers in pubs will be lower. These are all super obvious things, there's no awards for stating the obvious.

A point was made that pubs and restaurants, when they open, will struggle for customers. They won't struggle for customers. They won't have the same crowds as they had pre-covid, but there is clearly going to be sufficient demand to keep things ticking over, albeit at reduced rates.

cgcsb

ZeroThreat wrote: »

Hmmm, if average take home pay in this country works out at above €720 a week, I really need to find a better job....

That would be €683.80 a week net.

Average full time gross per year is €47,596. Tax is levied at 20% on the first 35k, and 40% on everything after so (35k-20%)=28,000 and then(47596-35000)=12,596 to be taxed at 40% which leaves you at 7,557.6

7,557.6 + 28,000 = 35,557.6 net per anum divided by 12 is €2,963.13 per month, or if you get paid weekly, divide by 52: €683.80 net a week

cgcsb

An Ri rua wrote: »

The people going back to pubs, for instance, are the party animals, binge drinkers, young, barflies etc etc.

:rolleyes:

lighten up there Karen.

kravmaga

Deleted User wrote: »

We're heading for a deep recession.

What is known about how this affects property prices and rents? Both will fall, but which falls first and fastest?

Looks like property prices have dropped 1st and rents are up?

See link to interesting article in Irish Indo below


https://www.independent.ie/business/personal-finance/property-prices-fell-by-over-3pc-in-june-but-tenants-paying-even-higher-rents-39349542.html

An Ri rua

SozBbz wrote: »

Exactly.

People are capable of exercising good judgement and cop on.

Personally I'll be very much taking things as I find them. If I'm not happy that good practices are being observed, then I won't go in.

While I agree that that's a rational approach, the problem with low-paid jobs is that they don't have sick pay. So just wait until late September onwards when colds and flus start circulating. They can't come in, they can't stay off. It will spread like wildfire. Like the winter flu, with bells on.
So enjoy the few summer pints while we are in recess.

Claw Hammer

Rent levels and property prices tend to track each other. Changes in rents tend to
begun apparent more quickly. Rent deals are negotiated and completed within days (in most cases). House prices are negotiated and concluded over several months. As a result, changes don't appear in the statistics for quite some time. Because of the rent cap, some rents may increase by 4% if there below market levels already, whereas newly negotiated rents may be less that would have been the case previously.

awec

An Ri rua wrote: »

While I agree that that's a rational approach, the problem with low-paid jobs is that they don't have sick pay. So just wait until late September onwards when colds and flus start circulating. They can't come in, they can't stay off. It will spread like wildfire. Like the winter flu, with bells on.
So enjoy the few summer pints while we are in recess.

There's more than a decent chance that the government will pay a level of sick pay for workers with confirmed cases of covid19 in order to ensure that they never feel compelled to go to work.

An Ri rua

cgcsb wrote: »

:rolleyes:

lighten up there Karen.

Post reported. It's easy to spot someone with skin in the game. And an online coward who ridicules a current Irish citizen who's mentally ill. You're dirt.
Me, I've skin in the game too. 2k made on gold since May. Stick that where the sun don't shine, in your cobwebbed head.

cgcsb

https://www.daft.ie/dublin/studio-apartments-for-rent/dublin-7/65-aughrim-street-dublin-7-dublin-2029976/

This place is looking for 500 p/m down from 800p/m previously. Imagine the type of scummer who would ask someone to folk out 800 a month for that.

cgcsb

An Ri rua wrote: »

Post reported. It's easy to spot someone with skin in the game. And an online coward who ridicules a current Irish citizen who's mentally ill. You're dirt.
Me, I've skin in the game too. 2k made on gold since May. Stick that where the sun don't shine, in your cobwebbed head.

What are you actually talking about?

An Ri rua

cgcsb wrote: »

What are you actually talking about?

Correction. You're still all those things except I recalled a recent online bully victim as Karen, whereas she's not. Back to your soft landing calculator lad.

SozBbz

An Ri rua wrote: »

Correction. You're still all those things except I recalled a recent online bully victim as Karen, whereas she's not. Back to your soft landing calculator lad.

Geeeez this thread is out of control.

You're the one who just called someone dirt.

Gumbo

cgcsb wrote: »

At this point in Ireland you're as likely to die in a road traffic accident than you are to contract corona virus, you're the idiot I'd say.

Mod Note

Tone down the replies please.
Calling another poster an idiot because they have a different opinion to you is not welcome in this forum.

Consider this an on thread warning.