Irish Property Market 2020 Part 2

Bass Reeves

PropQueries wrote: »

I believe interest rates will rise more quickly and sooner than many believe. Once interest rates start rising, property values fall very quickly.

Maybe I'm wrong.

Just to show the impact of interest rates on the value of a property, I put some numbers into a mortgage repayment calculator. As you can see, a couple that may be approved for a maximum €300,000 mortgage today would only be approved for a mortgage of €200,000 in 5 years times if mortgage interest rates did increase by 3% in the next 5 years.

Monthly repayments on a typical 30-year mortgage of €300,000 at 3% = €1,264.81

Monthly repayments on a typical 30-year mortgage of €200,000 at 6% = €1,199.10

Mortgage lending is scoped for a minimum of a 2% rise in rates. Lending is predicated on if rates increase by 2% borrowers can cope. At present new lenders are putting downward pressure on borrowing rates. Even if ECB rates increase 3-4% we might end up with only 2-3% increase in mortgages rates. Lending ratio's will not decrease unless ECB interest rates increase in the 4-6% bracket minimum.

At present our ratio's are on the conservative side.

PropQueries wrote: »

That's true. Even the building lobby admits we are currently building enough homes to meet natural population growth (I think they stated recently 18,500 to meet this demand) and we were building over 20,000 per-covid.

As you said, the rest of the housing demand projections were primarily dependent on immigration.

So, I guess it depends on what side of the debate you are on regarding future eastern european growth. I'm currently on their side given their low debt, no pension timebomb coming and low cost base. I think they can grow very very rapidly with the right policies. They're still relatively young countries and getting used to the western way of doing things so my bet would be on them over the next 10 to 15 years.

Yes, eastern european countries do have an old population too, but they haven't promised them any meaningful pensions, so it shouldn't impact their finances. They're young people are on the western side at the moment and if they decide to return, the growth rates may make the 1990's growth rates in Ireland look low.

The Irish home builders put out a report lately that we needed 36K houses every year for the next 20 years.

https://www.rte.ie/news/2020/0826/1161322-home-building-market/

It hard to see supply meeting demand in the short term. It hard to see building prices fall unless the Government decides to do on a house building spree. Even if they do supply from private builders may reduce as labour moves to Government funded projects

JJJackal

PropQueries wrote: »

By eastern european countries, I mean all countries from Estonia to Poland and down to Bulgaria.

Regarding the 18,500 figure, it was in a report last week from the property industry body Irish Institutional Property (IIP), whose members include most of the biggest property firms and landlords in the State from Cairn Homes to Ires Reit.

According to the Irish Times: "The IIP analysis conducted by property economist Ronan Lyons bases its 47,000 figure on four key drivers of housing need: the natural increase in population (projected to be 18,500 a year); the continuing reduction in average household size (which creates the need for 12,500 units a year); net inward migration (put at 8,000 a year ); and a housing obsolescence rate (resulting in the loss of some 8,000 units a year).

The Irish Times article titled "Claim that 47,000 new homes needed a year isn’t credible" is here: https://www.irishtimes.com/business/economy/claim-that-47-000-new-homes-needed-a-year-isn-t-credible-1.4333525

So no evidence?

PropQueries

JJJackal wrote: »

So no evidence?

Well, if even the building lobby stated we only need 18,500 to meet "natural population growth" and the debate was on what would happen if immigration reversed due to eastern european immigrants returning home...

The Irish Times article basically debunked the 47,000 figure and another poster after provided a link to another report from another building lobby in the same week stating we only need c. 35,000 units.

Maybe I read the article wrong... but I don't believe the 18,500 demand figure for "natural population growth" is quoted incorrectly (I read it again) and may be probably on the high side given who commissioned the report.

JJJackal

PropQueries wrote: »

Well, if even the building lobby stated we only need 18,500 to meet "natural population growth" and the debate was on what would happen if immigration reversed due to eastern european immigrants returning home...

The Irish Times article basically debunked the 47,000 figure and another poster after provided a link to another report from another building lobby in the same week stating we only need c. 35,000 units.

Maybe I read the article wrong... but I don't believe the 18,500 demand figure for "natural population growth" is quoted incorrectly (I read it again) and may be probably on the high side given who commissioned the report.

I was more referring to the EU immigration component

PropQueries wrote: »

So, I guess it depends on what side of the debate you are on regarding future eastern european growth. I'm currently on their side given their low debt, no pension timebomb coming and low cost base. I think they can grow very very rapidly with the right policies. They're still relatively young countries and getting used to the western way of doing things so my bet would be on them over the next 10 to 15 years.

Yes, eastern european countries do have an old population too, but they haven't promised them any meaningful pensions, so it shouldn't impact their finances. They're young people are on the western side at the moment and if they decide to return, the growth rates may make the 1990's growth rates in Ireland look low.

If there isnt the growth you speak of immigration will continue esp after Brexit

PropQueries

JJJackal wrote: »

I was more referring to the EU immigration component



If there isnt the growth you speak of immigration will continue esp after Brexit

Well, of course I don't have 'evidence' of eastern european growth rates in 10 years times. It hasn't happened yet. But, I did put forward some valid reasons (I think they're valid, maybe not) as to why I believe it's a very strong possibility.

PropQueries

JJJackal wrote: »

If there isnt the growth you speak of immigration will continue esp after Brexit

In relation to the possibilities of immigration due to Brexit, it may actually have the opposite effect. RTE last year reported (article posted by another user some time back) "We saw some banks moving offices but not the boost that was expected at all. Anecdotally, a number of jobs that did migrate to Dublin were filled from with the [bank's] network so there was no net gain for banking jobs here."

Most banks in the UK have already decided where they are going in the event of a hard Brexit and it's continental Europe, not Ireland.

As an aside to the hoped for banking related jobs boost from Brexit, many of the jobs in the IFSC are back-office support jobs e.g. fund administration etc. for British based funds.

If the EU plays hardball, it works both ways. The fund administration jobs in the IFSC may return to the UK. The other big back-office fund administration centre in the EU is Luxembourg. That's where many of the back office support jobs for continental based funds are already administered from.

So, there's actually a strong possibility that we may actually lose highly paid service based jobs in the event of a hard Brexit notwithstanding the impact on agriculture etc.

Link to RTE article here: https://www.rte.ie/news/2019/0722/1064429-job-vacancies-drop-brexit/

hometruths

PropQueries wrote: »

In relation to the possibilities of immigration due to Brexit, it may actually have the opposite effect. RTE last year reported (article posted by another user some time back) "We saw some banks moving offices but not the boost that was expected at all. Anecdotally, a number of jobs that did migrate to Dublin were filled from with the [bank's] network so there was no net gain for banking jobs here."

Most banks in the UK have already decided where they are going in the event of a hard Brexit and it's continental Europe, not Ireland.

As an aside to the hoped for banking related jobs boost from Brexit, many of the jobs in the IFSC are back-office support jobs e.g. fund administration etc. for British based funds.

If the EU plays hardball, it works both ways. The fund administration jobs in the IFSC may return to the UK. The other big back-office fund administration centre in the EU is Luxembourg. That's where many of the back office support jobs for continental based funds are already administered from.

So, there's actually a strong possibility that we may actually lose highly paid service based jobs in the event of a hard Brexit notwithstanding the impact on agriculture etc.

Link to RTE article here: https://www.rte.ie/news/2019/0722/1064429-job-vacancies-drop-brexit/

The idea of the big banking and finance jobs moving from London to Dublin was always wishful thinking.

Very few of those top level employees would be happy swapping London for Dublin.

Hubertj

schmittel wrote: »

The idea of the big banking and finance jobs moving from London to Dublin was always wishful thinking.

Very few of those top level employees would be happy swapping London for Dublin.

It wasn’t wishful thinking, other locations were chosen in some cases while other banks are hedging best on more than 1 location.

Employees will relocate if the package offered is appropriate. It also enhances career progression and opportunities.

edjkdkjdhjkd

<snip>

edjkdkjdhjkd

Islander13 wrote: »

I think this is the first year in a few we might see some proper price inflation in dublin housing. 5/10% up over next 12 months I'd predict. So much cash on the sidelines and people will be prioritising home expenditure more than ever now thats where we're spending all our time

You do realize we are facing the biggest recession in history, which won't properly unfold until the Covid payments from the government are curtailed.


During the GFC of 2008 the global economy did not stop for even a single day, the global economy has been in lockdown and severely hamstringed for 6 months now.



Let that sink in

hometruths

Hubertj wrote: »

It wasn’t wishful thinking, other locations were chosen in some cases while other banks are hedging best on more than 1 location.

Employees will relocate if the package offered is appropriate. It also enhances career progression and opportunities.

Exactly my point. There was never going be an influx of top bankers coming here because the package was never going to be appropriate.

For top level employees relocating from London, in terms of amenities, facilities, lifestyle etc Dublin cannot compete with Paris, Frankfurt etc.

Islander13

edjkdkjdhjkd wrote: »

You do realize we are facing the biggest recession in history, which won't properly unfold until the Covid payments from the government are curtailed.


During the GFC of 2008 the global economy did not stop for even a single day, the global economy has been in lockdown and severely hamstringed for 6 months now.



Let that sink in

I've considered that and it has sunk in.

The scale of both existing cash in the system (Irish deposits at all time high) combined with future central bank liquidity mean plenty of firepower available to households. Yes, certain sectors of the economy in trouble (retail hospitality etc) but not enough to counterbalance the fundamentals.

Plus the supply shortfall in Ireland should amplify the solid footing of the market

Now a good time to buy in my opinion

hometruths

Islander13 wrote: »

I think this is the first year in a few we might see some proper price inflation in dublin housing. 5/10% up over next 12 months I'd predict. So much cash on the sidelines and people will be prioritising home expenditure more than ever now thats where we're spending all our time

Fair play to you for sticking your neck out and saying it. I think there are others on here who agree with you but too shy to say it given economic lockdowns, pandemics, recessions etc etc.

CertifiedSimp

https://www.myhome.ie/residential/brochure/38-straffan-grove-maynooth-co-kildare-maynooth-kildare/4373580

2 bed apt in Maynooth.

Advertise at 185k. Sold for 180k.

Mic 1972

EU countries are printing money to keep the economy going, everyone who have savings in the bank right now should worry, as inflation will hit hard

Pelezico

CertifiedSimp wrote: »

https://www.myhome.ie/residential/brochure/38-straffan-grove-maynooth-co-kildare-maynooth-kildare/4373580

2 bed apt in Maynooth.

Advertise at 185k. Sold for 180k.

Interesting....back to 2017 levels.

CertifiedSimp

5 Kingsbry Maynooth.

Advertised 245k. Sold for 242k.

Not massive but properties beginning to be sold for under asking.

CertifiedSimp

Mic 1972 wrote: »

EU countries are printing money to keep the economy going, everyone who have savings in the bank right now should worry, as inflation will hit hard

lol you're talking through your hoop.

What countries are printing exactly?

CertifiedSimp

Would love to see migration stats from non EEA countries for last few months.

Hubertj

CertifiedSimp wrote: »

Would love to see migration stats from non EEA countries for last few months.

I would imagine it was 0 inward for a few months as visas were not being processed.

cubatahavana

CertifiedSimp wrote: »

5 Kingsbry Maynooth.

Advertised 245k. Sold for 242k.

Not massive but properties beginning to be sold for under asking.

Sale agreed my apartment for 30k over asking

TheSheriff

Pelezico wrote: »

Interesting....back to 2017 levels.

Nope ! Still 2020 levels, as you've been told numerous times before.

bulmersgal

CertifiedSimp wrote: »

https://www.myhome.ie/residential/brochure/38-straffan-grove-maynooth-co-kildare-maynooth-kildare/4373580

2 bed apt in Maynooth.

Advertise at 185k. Sold for 180k.

That apartment was awful looking. Anything decent is going for 225k+ in maynooth some coming up a bit cheaper but then bidding war conmences.

I was looking at duplex in Newcastle Dublin went up Thursday for 199k, emailed for viewing immediately, Monday received email saying viewings would be on Saturday, Tuesday it priced changed to 225k. Friday received email informing me current bid was 235k and did I still want to come for first viewing. It's crazy out there at the moment.

TheSheriff

bulmersgal wrote: »

That apartment was awful looking. Anything decent is going for 225k+ in maynooth some coming up a bit cheaper but then bidding war conmences.

I was looking at duplex in Newcastle Dublin went up Thursday for 199k, emailed for viewing immediately, Monday received email saying viewings would be on Saturday, Tuesday it priced changed to 225k. Friday received email informing me current bid was 235k and did I still want to come for first viewing. It's crazy out there at the moment.

Same in Dublin 15.

3 bed in castkeknock, asking was 380 (priced low on purpose I would imagine), currently bidding at 415k and likely to continue.

Bass Reeves

bulmersgal wrote: »

That apartment was awful looking. Anything decent is going for 225k+ in maynooth some coming up a bit cheaper but then bidding war conmences.

I was looking at duplex in Newcastle Dublin went up Thursday for 199k, emailed for viewing immediately, Monday received email saying viewings would be on Saturday, Tuesday it priced changed to 225k. Friday received email informing me current bid was 235k and did I still want to come for first viewing. It's crazy out there at the moment.

No this must be incorrect prices are falling or so we are constantly told by a good few on this thread

Geuze

Mic 1972 wrote: »

EU countries are printing money to keep the economy going, everyone who have savings in the bank right now should worry, as inflation will hit hard

I think you mean the ECB is engaged in QE monetary policy, which started in 2014?

utmbuilder

Ftb down 35% in 2020 on 2019

Second time sales down 40%

Over a million euro sales down like 45%

CertifiedSimp

bulmersgal wrote: »

That apartment was awful looking. Anything decent is going for 225k+ in maynooth some coming up a bit cheaper but then bidding war conmences.

I was looking at duplex in Newcastle Dublin went up Thursday for 199k, emailed for viewing immediately, Monday received email saying viewings would be on Saturday, Tuesday it priced changed to 225k. Friday received email informing me current bid was 235k and did I still want to come for first viewing. It's crazy out there at the moment.

The kitchen looks poor but rest not too bad.

20k would go a loooong way and transform it.

Sam Hain

CertifiedSimp wrote: »

https://www.myhome.ie/residential/brochure/38-straffan-grove-maynooth-co-kildare-maynooth-kildare/4373580

2 bed apt in Maynooth.

Advertise at 185k. Sold for 180k.

That particular apartment must have been on the market for over two years. Not an impressive property by any stretch of the imagination.

CertifiedSimp

Sam Hain wrote: »

That particular apartment must have been on the market for over two years. Not an impressive property by any stretch of the imagination.

When 2 beds in Maynooth are advertised at 240k it's really cheap.

20k investment would modernise it and turn it around.