Irish Property Market 2020 Part 2

plibige

Would it be fair to say we are still to close to the event to actually have a good idea where its going?

Like on the one hand there is tremendous demand due to lack of supply. Also due to covid people are saving far more so there will inevitably be a lot of ability to buy whenever things do get back to some sort of normality.

On the other hand the economy has been put into a semi self induced coma. Some sectors are still doing well, others are close to wiped out. When the government funding does stop these sectors either going to struggle at best, or some businesses will close all together. This will have a knock on affect to other parts of the economy, naturally. Which in turn could affect peoples ability to borrow in the short to medium term.

Like I can easily say "I think it could dip by 10% -15%" but it could easily not and just stagnate. Then again it could be far worse. And then there could be no dip at all.

Am I wrong in saying "until the government takes the economy off life support, we can't actually predict where this is going"

And just FYI I am hoping for a 10-15% dip for selfish reasons

PropQueries

Bubbaclaus wrote: »

There was somebody in this thread predicting 70% crash last week. Could buy a 500k home for 150 then!

I wouldn't entirely dismiss it. Depends over what timeframe they are looking at. It's well known here that I would be in a similar prediction camp, but over a 5 - 10 year timeframe. I've never denied that.

Timing belt

PropQueries wrote: »

It's impossible to back up what comprised of the €200 billion in property and business loans the investment funds purchased between 2012 and 2016 due to the secrecy of those deals. But, it's reasonable to assume that it mostly comprised of property investment and property related loans as the banks weren't exactly eager to sell their performing non-property related loans.

Once the investment funds owned the loans, they owned the assets that those same loans were secured on unless of course the developers and other property investors did indeed manage to repay those loans. Maybe all those property developers in rural Ireland did repay all those loans. Entirely possible but not very probable.

There is a separate thread for this and am happy to prove yet again that you are talking rubbish there.

PropQueries wrote: »

In relation to the ECB cash finding its way into the mortgage market. It may not have found its way into the mortgage market, but I would guess you would agree that it has found its way into the property market via the back-door?

No I don't agree that it has found its way into the residential property market via a back-door. Yes it has found its way into Commercial real estate, the stock exchange, the bond market but it has not found its way into the retail property market.

HotDudeLife

Marius34 wrote: »

It definitely would mean a significant correction/fall, but this would not be enough to destroy a whole Property market. I believe most residential construction companies and banks would handle 10-15% fall. Which I wouldn't call a huge crash.

I was referring to comment:

Sigh, I've stated before that i predict a huge economic crash, the crash of the property market will lag behind the general economy, hence why i think it'll drop around 10-15% next year and possibly more the year after.




My post from earlier:
" i predict a drop of around 10-15% in property by this time next year and a huge economic crash (which there already is)"

HotDudeLife

schmittel wrote: »

Indeed it would. And if that occurred no doubt you'd have a number of posters on here like Marius saying "I told you it would not be significant, 10% falls totally expected, exactly as I said all along, I am right as usual"

Pretty sure that's the criteria required to become a mod

Timing belt

plibige wrote: »

Would it be fair to say we are still to close to the event to actually have a good idea where its going?

Like on the one hand there is tremendous demand due to lack of supply. Also due to covid people are saving far more so there will inevitably be a lot of ability to buy whenever things do get back to some sort of normality.

On the other hand the economy has been put into a semi self induced coma. Some sectors are still doing well, others are close to wiped out. When the government funding does stop these sectors either going to struggle at best, or some businesses will close all together. This will have a knock on affect to other parts of the economy, naturally. Which in turn could affect peoples ability to borrow in the short to medium term.

Like I can easily say "I think it could dip by 10% -15%" but it could easily not and just stagnate. Then again it could be far worse. And then there could be no dip at all.

Am I wrong in saying "until the government takes the economy off life support, we can't actually predict where this is going"

And just FYI I am hoping for a 10-15% dip for selfish reasons

Yes you are correct to say that we don't know the full fall out of the economic crash. If it is short and sharp then there will probably be no impact on the housing market.

If it is a slow then the probability of a implosion in the financial market increases.

HotDudeLife

PropQueries wrote: »

I wouldn't entirely dismiss it. Depends over what timeframe they are looking at. It's well known here that I would be in a similar prediction camp, but over a 5 - 10 year timeframe. I've never denied that.

If i had to put my money where my mouth is i think that most 3 bed semis in Dublin that are currently selling for 350k will be going for around 275k by 2023/24.


A serious correction is long overdue and anyone buying now (if they absolutely don't have to) is completely mad.

Timing belt

HotDudeLife wrote: »

If i had to put my money where my mouth is i think that most 3 bed semis in Dublin that are currently selling for 350k will be going for around 275k by 2023/24.


A serious correction is long overdue and anyone buying now (if they absolutely don't have to) is completely mad.

Unless you are a 100% cash buyer it will be as difficult to buy a 275k house in 2023/24 as it is to buy a 350k house today if your prediction is correct.

Marius34

plibige wrote: »

Would it be fair to say we are still to close to the event to actually have a good idea where its going?

Like on the one hand there is tremendous demand due to lack of supply. Also due to covid people are saving far more so there will inevitably be a lot of ability to buy whenever things do get back to some sort of normality.

On the other hand the economy has been put into a semi self induced coma. Some sectors are still doing well, others are close to wiped out. When the government funding does stop these sectors either going to struggle at best, or some businesses will close all together. This will have a knock on affect to other parts of the economy, naturally. Which in turn could affect peoples ability to borrow in the short to medium term.

Like I can easily say "I think it could dip by 10% -15%" but it could easily not and just stagnate. Then again it could be far worse. And then there could be no dip at all.

Am I wrong in saying "until the government takes the economy off life support, we can't actually predict where this is going"

And just FYI I am hoping for a 10-15% dip for selfish reasons

I think it will make not much difference on how and what we predict with government support or without. As the right forecast will be "Future will tell", there is never certainty in the world.

kravmaga

Ive noticed a lot of 2 bed apartments going up for sale in the last few weeks recently in North County Dublin.

Looks like a lot of Landlords/ Investors are getting out of the property game.

Most of the apartments had been previously rented out.

Appliances left but no furniture in a lot of the apartments I have looked at on Daft, My home and various other property websites

What's the mad rush in selling up now? 2 bed apartment prices have been falling since August.

Are investors/ landlords just deciding to get out because of market volatility due to Covid/ recession biting in.

hometruths

Timing belt wrote: »

Unless you are a 100% cash buyer it will be as difficult to buy a 275k house in 2023/24 as it is to buy a 350k house today if your prediction is correct.

Is this because nobody will be able to get a mortgage in 2023/24?

Of course the banks will lend less in a recession, but they won’t stop lending completely.

If you have good job security, good savings history and qualify within LTV and LTI limits you will no problem accessing a mortgage in 2023/4.

Thoroughly disingenuous to suggest otherwise, happens on here a lot.

awec

HotDudeLife wrote: »

The question is by how much, I'm predicting an average of 20% drop across the board by late 2022.

HotDudeLife wrote: »

If i had to put my money where my mouth is i think that most 3 bed semis in Dublin that are currently selling for 350k will be going for around 275k by 2023/24.


A serious correction is long overdue and anyone buying now (if they absolutely don't have to) is completely mad.

In the space of 1 month you've gone from a 20% drop by 2022, to a 20% drop by 2024.

What has changed in those 4 weeks that you now believe the market is more resilient?

Taylor365

If any of us knuckle heads can predict it, it won't happen.

Everyone saying a drop in prices is to come = it's already priced in

fliball123

schmittel wrote: »

Prices were dropping when the students and tourists were in town, before anybody had ever heard of COViD 19.

Seems like Covid is the only thing propping the prices up right now.

So why has it gone up 3 months in a row now? Tourists and students are still not here? There has been feck all of a drop when all decreases and increases have been taken into account over the last year. How do you reckon Covid is propping prices up ??

Timing belt

schmittel wrote: »

Is this because nobody will be able to get a mortgage in 2023/24?

Of course the banks will lend less in a recession, but they won’t stop lending completely.

If you have good job security, good savings history and qualify within LTV and LTI limits you will no problem accessing a mortgage in 2023/4.

Thoroughly disingenuous to suggest otherwise, happens on here a lot.

If you look at the economic data of the last recession you will see that unemployment grew, wage cuts were common and banks reduced their lending.

If houses prices were to drop by that much due to a extended recession/depression then the vast majority of workers would be impacted and would not meet the criteria.

Yes if you are luck enough to have good job security and are not impacted by a wage cut you will get a mortgage. But if you already meet that criteria you are more than likely on the housing market already and will be reluctant to move house as it will crystallise the negative equity.

fliball123

PropQueries wrote: »

It's impossible to back up what comprised of the €200 billion in property and business loans the investment funds purchased between 2012 and 2016 due to the secrecy of those deals. But, it's reasonable to assume that it mostly comprised of property investment and property related loans as the banks weren't exactly eager to sell their performing non-property related loans.

Once the investment funds owned the loans, they owned the assets that those same loans were secured on unless of course the developers and other property investors did indeed manage to repay those loans. Maybe all those property developers in rural Ireland did repay all those loans. Entirely possible but not very probable.

In relation to the ECB cash finding its way into the mortgage market. It may not have found its way into the mortgage market, but I would guess you would agree that it has found its way into the property market via the back-door?

Through which back door the guy has put up a graph with appropriate data proving you wrong can you elaborate?

PropQueries

fliball123 wrote: »

Through which back door the guy has put up a graph proving you wrong can you elaborate?

The whole purpose of QE was to make lending to governments less attractive (by forcing down interest rates) and thus encouraging investors to invest in other assets. There's only two other asset classes with scale that normal investors can invest in i.e. shares and property.

By encouraging investors back into the property market, this resulted in a back-door bailout of the retail banks whose assets were primarily comprised of property related loans e.g. mortgages etc.

It worked. But, too well. In relation to Ireland, the investment funds bought €200 billion in property and business loans from Irish banks between 2012 and 2016. Even if only 50% of those purchases related to property in Ireland, that would mean they control a minimum of c. €50 billion in property (residential and commercial) in Ireland today, allowing for an average 50% discount on the purchase price. Say even, they control c. €25 billion of property in Ireland if allowing for a 75% discount on the purchase price of the original loans. I believe this is significant market power over the property market in such a small country.

Another poster says this is not true and says he can prove it. Maybe he can and well done to him if he can.

hometruths

Timing belt wrote: »

If you look at the economic data of the last recession you will see that unemployment grew, wage cuts were common and banks reduced their lending.

If houses prices were to drop by that much due to a extended recession/depression then the vast majority of workers would be impacted and would not meet the criteria.

Yes if you are luck enough to have good job security and are not impacted by a wage cut you will get a mortgage. But if you already meet that criteria you are more than likely on the housing market already and will be reluctant to move house as it will crystallise the negative equity.

I don’t need to look at the economic data to know how it is happened in the past. It follows a fairly simple path.

1) recession hits
2) unemployment rises and earnings fall
3) less demand for and supply of credit
4) less confidence and credit in the market
5) prices fall.

Most people predicting 5 (prices fall) are doing so because they think 1-4 will happen.

They think prices will fall precisely because of the fact that there will be less mortgage credit available.

But time and again posters reply to a post about falling prices to point out that mortgages will be harder to get. Er, yes, exactly, that was my point, what’s yours?

The point seems to be to suggest that if prices fall nobody will get a mortgage, which is nonsense.

If that is not the point, what is it?

Banks will still lend to people with secure jobs and incomes who can comfortably afford the mortgage. That’s what happened in the last recession.

Timing belt

PropQueries wrote: »

The whole purpose of QE was to make lending to governments less attractive (by forcing down interest rates) and thus encouraging investors to invest in other assets. There's only two other asset classes with scale that normal investors can invest in i.e. shares and property.

This statement is 100% incorrect QE makes government lending more attractive and hence why vast sums have flowed into the bond market the one asset class that has grown more than any.

If yields drop it is because there is demand for bonds so governments have to pay less to entice investors.

HotDudeLife

awec wrote: »

In the space of 1 month you've gone from a 20% drop by 2022, to a 20% drop by 2024.

What has changed in those 4 weeks that you now believe the market is more resilient?

I like how selective you are in choosing 2024 (in an attempt to undermine my contribution to this thread) when my post stated late 2022 and 2023/24. Newsflash, there is not much time between late 2022 and 2023.


May i ask how exactly are you a mod? All you seem to do is try embarrass and vilify posters who expect property prices to drop.

PropQueries

Timing belt wrote: »

This statement is 100% incorrect QE makes government lending more attractive and hence why vast sums have flowed into the bond market the one asset class that has grown more than any.

If yields drop it is because there is demand for bonds so governments have to pay less to entice investors.

Less attractive in the sense that the return is reduced so significantly on the so-called risk-free assets (i.e. government bonds), that investors are then enticed into investing in either the stock market or property assets to achieve higher returns. More demand from investors for these asset classes equals higher prices which was the point of QE. But... you know this?

Timing belt

schmittel wrote: »

The point seems to be to suggest that if prices fall nobody will get a mortgage, which is nonsense.

If that is not the point, what is it?

My point was that it will be as difficult for the vast majority to get onto the housing market as it is today if prices fall due to a recession as house prices are not the only thing impacted. (e.g. wages are impacted)

brisan

plibige wrote: »

Would it be fair to say we are still to close to the event to actually have a good idea where its going?

Like on the one hand there is tremendous demand due to lack of supply. Also due to covid people are saving far more so there will inevitably be a lot of ability to buy whenever things do get back to some sort of normality.

On the other hand the economy has been put into a semi self induced coma. Some sectors are still doing well, others are close to wiped out. When the government funding does stop these sectors either going to struggle at best, or some businesses will close all together. This will have a knock on affect to other parts of the economy, naturally. Which in turn could affect peoples ability to borrow in the short to medium term.

Like I can easily say "I think it could dip by 10% -15%" but it could easily not and just stagnate. Then again it could be far worse. And then there could be no dip at all.

Am I wrong in saying "until the government takes the economy off life support, we can't actually predict where this is going"

And just FYI I am hoping for a 10-15% dip for selfish reasons

Exactly
Until the patient is taken off life support we will not know the prognosis for a recovery
No one expected FFG to throw the kitchen sink and the cooker and the American fridge and the dishwasher at this
But they seemed to have found the magic money tree that they denied existed despite SF claims and are picking heavily from all its branches

Timing belt

PropQueries wrote: »

Less attractive in the sense that the return is reduced so significantly on the so-called risk-free assets (i.e. government bonds), that investors are then enticed into investing in either the stock market or property assets to achieve higher returns. More demand from investors for these asset classes equals higher prices which was the point of QE. But... you know this?

Yes the yield is reduce but the bond itself is appreciating so the investor is making money from the bond asset. It is for this reason that most of the QE has ended up in the bond market.

If a investor thinks there is greater reward property they will invest in this and the extra liquidity will find it's way into these markets as investors chase yield over asset appreciation. This is why pension/insurance funds have bought blocks of flats and Commercial real estate in Ireland because they want the yield and regular cash flows.

Timing belt

PropQueries wrote: »

The whole purpose of QE was to make lending to governments less attractive (by forcing down interest rates) and thus encouraging investors to invest in other assets. There's only two other asset classes with scale that normal investors can invest in i.e. shares and property.

By encouraging investors back into the property market, this resulted in a back-door bailout of the retail banks whose assets were primarily comprised of property related loans e.g. mortgages etc.

It worked. But, too well. In relation to Ireland, the investment funds bought €200 billion in property and business loans from Irish banks between 2012 and 2016. Even if only 50% of those purchases related to property in Ireland, that would mean they control a minimum of c. €50 billion in property (residential and commercial) in Ireland today, allowing for an average 50% discount on the purchase price. Say even, they control c. €25 billion of property in Ireland if allowing for a 75% discount on the purchase price of the original loans. I believe this is significant market power over the property market in such a small country.

Another poster says this is not true and says he can prove it. Maybe he can and well done to him if he can.

Nama acquired 74Bn of loans in 2010 and the property that these loans were secured on was worth 32Bn and comprised of only 3.7bn residential properties.
https://www.nama.ie/uploads/document...e23May2012.pdf

Of the remaining 130bn this was made up of loan books sold by foreign banks leaving the market and Irish banks selling on Non-Performing Loans.

Anything that was really distressed was bought by Nama when the banks offloaded it and they held onto what they thought that they could make money on which is what makes up this 130bn.

So where explain how the investment funds own 200bn of property in Ireland from this.

hometruths

Timing belt wrote: »

My point was that it will be as difficult for the vast majority to get onto the housing market as it is today if prices fall due to a recession as house prices are not the only thing impacted. (e.g. wages are impacted)

Fair enough, that's obviously true. But not quite the same as the sweeping generalization:

Timing belt wrote: »

Unless you are a 100% cash buyer it will be as difficult to buy a 275k house in 2023/24 as it is to buy a 350k house today if your prediction is correct.

Marius34

schmittel wrote: »

I don’t need to look at the economic data to know how it is happened in the past. It follows a fairly simple path.

1) recession hits
2) unemployment rises and earnings fall
3) less demand for and supply of credit
4) less confidence and credit in the market
5) prices fall.

Most people predicting 5 (prices fall) are doing so because they think 1-4 will happen.

They think prices will fall precisely because of the fact that there will be less mortgage credit available.

But time and again posters reply to a post about falling prices to point out that mortgages will be harder to get. Er, yes, exactly, that was my point, what’s yours?

The point seems to be to suggest that if prices fall nobody will get a mortgage, which is nonsense.

If that is not the point, what is it?

Banks will still lend to people with secure jobs and incomes who can comfortably afford the mortgage. That’s what happened in the last recession.

It didn't follow last time, most of it started around 2008 Q1/Q2

Balluba

HotDudeLife wrote: »

I like how selective you are in choosing 2024 (in an attempt to undermine my contribution to this thread) when my post stated late 2022 and 2023/24. Newsflash, there is not much time between late 2022 and 2023.


May i ask how exactly are you a mod? All you seem to do is try embarrass and vilify posters who expect property prices to drop.

And a poster who is a self appointed Captain of the Irish property market
advised me to ‘grow up’ when I pointed to a year- on -year decrease in house prices 2019 - Aug ‘20

Timing belt

schmittel wrote: »

Fair enough, that's obviously true. But not quite the same as the sweeping generalization:

I don't see any sweeping generalization as I said it will be as hard to buy as today unless you are a 100% cash buyer.

Mad_maxx

thought it somewhat interesting that the IRES reit fell 4% today and is still lower than it was three and a half years ago , dividend is almost 4.5%

are institutions bearish ?