Irish Property Market 2020 Part 2

The_Brood

Marius34 wrote: »

Big recession is already here and will stay for a while. 2020 Q2 reported largest economy contraction in our lifetime.
Currently, the chance of severe impact on the house price is quite low. Simply due to Supply/Demand economics. But many things can change down the line within years, that no one can tell exactly what will happen in the years to come..

So basically it is safe to say that no matter how bad things get for the broader economy (and this is even in the worst case scenario if a vaccine is not found soon), the supply is so little and demand so great in Ireland that there can be no realistic expectations of significant house price drops?

fliball123

brisan wrote: »

People said the exact same thing in 2007

Yeah but there was a lot more choice for buyers back in 2007 as in you had people having to sell due to distressed mortgages, this wont happen this time as family home wont be touched the whole left learning homeless narrative in this country means no Political party will force a family out of the family home. Lot less houses built, a lot more people in the population 2020 this is a different beast to 2007 as the fundamentals of supply and demand are still skewed away from supply

fliball123

Newbie20 wrote: »

You might come on here making up stories but I don’t. 3 different people I personally know that had all gone sale agreed were told by 3 different solicitors to offer less. So you are talking rubbish when you say none would. And they are the only people I know of at that stage. How is it rare inside knowledge? The people in question just told me that’s what their solicitors told them, very simple.

Well for a start most EAs or economists cant predict the housing market I would hazard a guess that a solicitor would not know their a$$ from their elbow when it comes to house prices. Maybe the solicitors know something we don't? I mean

fliball123

The_Brood wrote: »

So basically it is safe to say that no matter how bad things get for the broader economy (and this is even in the worst case scenario if a vaccine is not found soon), the supply is so little and demand so great in Ireland that there can be no realistic expectations of significant house price drops?

That is how it is looking at the moment I mean if you believe KBC we should be somewhere down the line in that 12% price drop it is almost coming into August??

brisan

fliball123 wrote: »

Yeah but there was a lot more choice for buyers back in 2007

And with the upcoming credit squeeze there will be a lot less choice for sellers

fliball123

brisan wrote: »

And with the upcoming credit squeeze there will be a lot less choice for sellers

True that will dampen some demand but remember at the moment demand is competing on a global level and REITS and other investors looking globally at the rental yeilds in Ireland will be thinking its a safe enough bet being able to give your property to the gov who will look after it for 10 to 25 years guaranteed from the time you give to them and give you 85% of the rental income. That to me is a no brainer for me if I was investing and this is what is happening

fliball123

brisan wrote: »

And with the upcoming credit squeeze there will be a lot less choice for sellers

Yeah but there was a lot more choice for buyers back in 2007 as in you had people having to sell due to distressed mortgages, this wont happen this time as family home wont be touched the whole left learning homeless narrative in this country means no Political party will force a family out of the family home. Lot less houses built, a lot more people in the population 2020 this is a different beast to 2007 as the fundamentals of supply and demand are still skewed away from supply

brisan

fliball123 wrote: »

That is how it is looking at the moment I mean if you believe KBC we should be somewhere down the line in that 12% price drop it is almost coming into August??

The Government subsidies are propping up the economy
Practically every day we are seeing job losses.
Come September when subsidies end we will see a lot more.
Houses being bought now are with mortgage approvals given earlier in the year.
Mortgage approvals for April and May at record low levels (for various reasons ) both in volume and in amounts.
Things could go bad very fast
Every First world country has said they are going into recession,some saying the worst since the great depression (USA),some saying since the foundation of the state (iRELAND) and some saying the biggest recession in the last 300 years (Britain )
Add Unknown outcome of Brexit into the mix and who knows where we will end up.
Banks will apply very strict rules to mortgages and the Central Bank will ensure this
Supply might stay low but if demand is even lower than prices and rents have to fall.
In every recession house prices fall
Its up to the Government now to put its money where its mouth is and actually build not buy houses.
If they do not SF are waiting at the ballot boxes and FF-FG know this
They got away at the last election ,they may not be so lucky the next time

MrMusician18

brisan wrote: »

The Government subsidies are propping up the economy
Practically every day we are seeing job losses.
Come September when subsidies end we will see a lot more.
Houses being bought now are with mortgage approvals given earlier in the year.
Mortgage approvals for April and May at record low levels (for various reasons ) both in volume and in amounts.
Things could go bad very fast
Every First world country has said they are going into recession,some saying the worst since the great depression (USA),some saying since the foundation of the state (iRELAND) and some saying the biggest recession in the last 300 years (Britain )
Add Unknown outcome of Brexit into the mix and who knows where we will end up.
Banks will apply very strict rules to mortgages and the Central Bank will ensure this
Supply might stay low but if demand is even lower than prices and rents have to fall.
In every recession house prices fall
Its up to the Government now to put its money where its mouth is and actually build not buy houses.
If they do not SF are waiting at the ballot boxes and FF-FG know this
They got away at the last election ,they may not be so lucky the next time

It's not just demand, as in the numbers of people that need housing, but the capacity to borrow that will fall and drive prices down.

So while it's correct to say that demand, in a raw numbers population sense will remain regardless of covid, that doesn't matter if they can't get mortgages.

fliball123

brisan wrote: »

The Government subsidies are propping up the economy
Practically every day we are seeing job losses.
Come September when subsidies end we will see a lot more.
Houses being bought now are with mortgage approvals given earlier in the year.
Mortgage approvals for April and May at record low levels (for various reasons ) both in volume and in amounts.
Things could go bad very fast
Every First world country has said they are going into recession,some saying the worst since the great depression (USA),some saying since the foundation of the state (iRELAND) and some saying the biggest recession in the last 300 years (Britain )
Add Unknown outcome of Brexit into the mix and who knows where we will end up.
Banks will apply very strict rules to mortgages and the Central Bank will ensure this
Supply might stay low but if demand is even lower than prices and rents have to fall.
In every recession house prices fall
Its up to the Government now to put its money where its mouth is and actually build not buy houses.
If they do not SF are waiting at the ballot boxes and FF-FG know this
They got away at the last election ,they may not be so lucky the next time

I agree with all of that but how much of that stops REITS and global investors looking for a return on their money from buying? What stops people who are still working from buying? People still need somewhere to live what is the alternative to buying?

Buying cheaper and further away from where you want
Renting - sometimes paying more than a mortgage
moving back in what mam and dad (not really an option for a couple with a few nippers)

As I said this is a different beast and while you rightly point to what will affect demand as in driving it down . other things will drive it up and will also decrease supply as in:

No option for emigration
Houses currently being built are at a very slow rate and a high % being snapped up off the plans by REITS
Current stock of supply is p1ss poor anything half decent is being snapped up
From 2007 to 2020 a lot more people to house as the population has increased year on year
Family homes are protected meaning very few evictions.
Government cannot afford to build houses they cant afford the current expenditure sure we only started breaking even last year before this happened.
Banks have already had strict lending practices the last decade they have been a lot more prudent in their lending.


Like there are a lot of what ifs, and the biggest factor will be a cure for the virus and every top scientist in the world is working on solving this with billions being pumped into finding a cure.

Who knows all I know is currently if I was putting my gaff up I would want what it is worth before Covid if I got an offer of less I would say "thanks" but "no thanks"

Marius34

The_Brood wrote: »

So basically it is safe to say that no matter how bad things get for the broader economy (and this is even in the worst case scenario if a vaccine is not found soon), the supply is so little and demand so great in Ireland that there can be no realistic expectations of significant house price drops?

No, I wouldn't say like this at all.
The crisis has a big impact on the price. The thing is that current crisis is very unique. One of the thing about this crisis while it cause unemployment for some, for others it's helps with savings.
So in the worst case scenario, if economy further goes down, and we see massive unemployment in coming years, I would definitely think property price would fall significantly. But there is no reports/data/forecast to suggest that, only typically by the ones, who see crisis coming every year of their life.

brisan

MrMusician18 wrote: »

It's not just demand, as in the numbers of people that need housing, but the capacity to borrow that will fall and drive prices down.

So while it's correct to say that demand, in a raw numbers population sense will remain regardless of covid, that doesn't matter if they can't get mortgages.

Thats basically what I meant
Demand is only proper demand if you have the finances to purchase it
I am sure we would all love to drive Mercs therefore the demand is there unfortunately the finances are not

neutral guy

brisan wrote: »

The Government subsidies are propping up the economy
Practically every day we are seeing job losses.
Come September when subsidies end we will see a lot more.
Houses being bought now are with mortgage approvals given earlier in the year.
Mortgage approvals for April and May at record low levels (for various reasons ) both in volume and in amounts.
Things could go bad very fast
Every First world country has said they are going into recession,some saying the worst since the great depression (USA),some saying since the foundation of the state (iRELAND) and some saying the biggest recession in the last 300 years (Britain )
Add Unknown outcome of Brexit into the mix and who knows where we will end up.
Banks will apply very strict rules to mortgages and the Central Bank will ensure this
Supply might stay low but if demand is even lower than prices and rents have to fall.
In every recession house prices fall
Its up to the Government now to put its money where its mouth is and actually build not buy houses.
If they do not SF are waiting at the ballot boxes and FF-FG know this
They got away at the last election ,they may not be so lucky the next time

There was many words told about Great Recession since Great Depression but I actually started thinking that many voices who said that mentioned not recession coming but recession happened during Covid ! As some of them says that we are on way to recovery after recession not to recession.I understood that about week ago listening many politicians and bank experts.Lets see what will happened next.

brisan

fliball123 wrote: »

I agree with all of that but how much of that stops REITS and global investors looking for a return on their money from buying? What stops people who are still working from buying? People still need somewhere to live what is the alternative to buying?

Buying cheaper and further away from where you want
Renting - sometimes paying more than a mortgage
moving back in what mam and dad (not really an option for a couple with a few nippers)

As I said this is a different beast and while you rightly point to what will affect demand as in driving it down . other things will drive it up and will also decrease supply as in:

No option for emigration
Houses currently being built are at a very slow rate and a high % being snapped up off the plans by REITS
Current stock of supply is p1ss poor anything half decent is being snapped up
From 2007 to 2020 a lot more people to house as the population has increased year on year
Family homes are protected meaning very few evictions.
Government cannot afford to build houses they cant afford the current expenditure sure we only started breaking even last year before this happened.
Banks have already had strict lending practices the last decade they have been a lot more prudent in their lending.


Like there are a lot of what ifs, and the biggest factor will be a cure for the virus and every top scientist in the world is working on solving this with billions being pumped into finding a cure.

Who knows all I know is currently if I was putting my gaff up I would want what it is worth before Covid if I got an offer of less I would say "thanks" but "no thanks"

How many people on 205 euro a week are going to pay 2k a month for a REIT property
If people have no jobs , no money ,no access to credit what will the REITS do
Leave them empty ?,reduce rents? ,not buy any more because the demand is not there .?
Sell them off as Gannon is doing in the Casino in Malahide ??

neutral guy

As me and other people said 2 weeks ago :

https://www.independent.ie/business/personal-finance/covid-19-pandemic-reverses-rise-in-rents-and-sees-drop-in-new-tenancies-registered-39372756.html

Students returning to their parents and some foreign workers going home meant a fall in demand for accommodation. There is also some anecdotal evidence of properties that were being offered for short-term hire through the likes of Airbnb have been offered for rent instead, increasing supply.

SozBbz

brisan wrote: »

How many people on 205 euro a week are going to pay 2k a month for a REIT property
If people have no jobs , no money ,no access to credit what will the REITS do
Leave them empty ?,reduce rents? ,not buy any more because the demand is not there .?
Sell them off as Gannon is doing in the Casino in Malahide ??

Gannon is the origional developer of the Casino. They are not a REIT. Maybe they're selling up to invest elsewhere, who knows. REITs are in the long game.

People on social welfare rent expensive units all the time, its called HAP.

brisan

SozBbz wrote: »

Gannon is the origional developer of the Casino. They are not a REIT. Maybe they're selling up to invest elsewhere, who knows. REITs are in the long game.

People on social welfare rent expensive units all the time, its called HAP.

I know Gannon is not a REIT
He was quite hapy to rent these out from day 1
Over the last year or so he has had a change of heart.
If the REIT cannot get the returns their shareholders expect they will sell.
The Government finances are in bad enough shape as it is without throwing good money after bad with HAP
They are committed to building affordable housing ,lets see if they keep their word

Smouse156

brisan wrote: »

Nephew had a bid on a house accepted
15K over asking
Second hand but in show house condition
Bank valuer would only value it at 20k under asking
His deposit was maxed as it was so he had to walk
This was on Monday

Lucky him! Valuer, saved him paying 35k over fair value

tobsey

brisan wrote: »

Thats basically what I meant
Demand is only proper demand if you have the finances to purchase it
I am sure we would all love to drive Mercs therefore the demand is there unfortunately the finances are not

That's true, but the supply is definitely not there either. 88k houses were built in 2006, 78k in 2007, source: https://www.cso.ie/en/media/csoie/releasespublications/documents/construction/2008/constructhousing08.pdf

We haven't built that many over the last 10 years combined. When the crash happened in 2008 we had a large number of vacant new houses not yet sold, as well as a large number under construction which resulted in ghost estates, even though they could have been completed for relatively small amounts of money, there was so much supply that buyers could choose their price. That's not the same today. 2008 was the first recession where property prices tanked along with the economy. That wasn't the case with previous recessions, such as in the 1980s. There might be a drop in property values, but not close to what happened in 2008-2012.

brisan

fliball123 wrote: »

I agree with all of that but how much of that stops REITS and global investors looking for a return on their money from buying? What stops people who are still working from buying? People still need somewhere to live what is the alternative to buying?

Buying cheaper and further away from where you want
Renting - sometimes paying more than a mortgage
moving back in what mam and dad (not really an option for a couple with a few nippers)

As I said this is a different beast and while you rightly point to what will affect demand as in driving it down . other things will drive it up and will also decrease supply as in:

No option for emigration
Houses currently being built are at a very slow rate and a high % being snapped up off the plans by REITS
Current stock of supply is p1ss poor anything half decent is being snapped up
From 2007 to 2020 a lot more people to house as the population has increased year on year
Family homes are protected meaning very few evictions.
Government cannot afford to build houses they cant afford the current expenditure sure we only started breaking even last year before this happened.
Banks have already had strict lending practices the last decade they have been a lot more prudent in their lending.


Like there are a lot of what ifs, and the biggest factor will be a cure for the virus and every top scientist in the world is working on solving this with billions being pumped into finding a cure.

Who knows all I know is currently if I was putting my gaff up I would want what it is worth before Covid if I got an offer of less I would say "thanks" but "no thanks"

What if its not your Principal residence
What if its a BTL that you can no longer get a decent rent for
What if its a BTL and you lose your job and cannot afford to subsidise the mortgage anymore.
What if it is your Gaff and you sell it for 20k less and can buy a better property that has reduced by 50k
What if its an inheritance split between 6 people ,little over 3k a head ?
Many reasons people will sell for below asking or sell at all
I/we have bought and sold enough properties to have learned that you never say never

neutral guy

Lets look how house prices and rents started rising
The banks simply closed the mortgage tap
People could not take mortgages and started renting
The property shortage on rent market started rising rents prices up
The property for rents shortage started lifting houses prices up
The government supported rising prices paying rent supplements and HAPs because NAMA got plenty property which had sell it or rent it.
Because banks were government got part had plenty property as well
The only thing the government for it wasted OUR ( tax payers money ) not the own.
What did we got from it ? Nothing except sky high rents and bubble on rent market
What gonna happen next ? The another Eastern Europe does not exist and no jobs for people outside EU.
Will this affect REIT ? The REIT simply will buy less houses,people will not get mortgages and will continue renting the government will continue support REIT trough HAP because if REIT will stop buy houses the builders will stop build houses.
Will rent prices falling ? Yes,because many people will lose jobs same as in 2008 and will go home
Will property prices falling ? Yes,because people will not have jobs and will not get mortgages and paying rents having low incomes they will never save money for deposit.

fliball123

brisan wrote: »

How many people on 205 euro a week are going to pay 2k a month for a REIT property
If people have no jobs , no money ,no access to credit what will the REITS do
Leave them empty ?,reduce rents? ,not buy any more because the demand is not there .?
Sell them off as Gannon is doing in the Casino in Malahide ??

People who are still working will still be in the market to buy some will have increased savings over the covid period due to reduced costs and not being able to spend.

Most jobs lost will be from businesses closing down and those closed down businesses/commercial spaces will be bought and new enterprises will spring up. We have had people on 350 a week for about 2 months now and demand is still there.

If people cant leave the country where do they live?

REITS give a lot of properties to the government for the homeless/housing list at 85% of the current rent for 10 to 25 years. They don't even have to bother with the upkeep of the property as the government does this for them.

So in your Armageddon scenario even do the average Joe who has been working and now finds himself unemployed can no longer afford to buy a house Joe can now go on the housing list increasing the demand for a property that way.

As I say its all about supply and demand and moving people who were once working and a saving and looking for a mortgage on to the housing list looking to be housed by the government who in turn get REITS to supply them with property.

where is there a decrease in demand in your scenario??

Iceman29

The_Brood wrote: »

What are the chances the economy will go into a big recession, severely impacting house prices within the next 6-9 months?

It's inevitable, the damage has been done already. its just about when its really going to show on house prices now.

brisan

Smouse156 wrote: »

Lucky him! Valuer, saved him paying 35k over fair value

I think the bank were more worried about what the house would be worth next year rather than its value now.
He was only 1500 euro more than the next highest bidder
Has anybody else details of a bank not valuing a house at the sale agreed price .
First time I have heard of it in 38 years of buying and selling

SozBbz

Smouse156 wrote: »

Lucky him! Valuer, saved him paying 35k over fair value

Not necessarily. We don't know his circumstances.

All we know is he had to walk away because of it. He might find better value elsewhere, he might not. He might end up paying loads more in rent or run out of mortgage approval before he finds something else.

Sounds like there were other bidders who thought it was worth roughtly the same amount.

Cantstandsya

brisan wrote: »

I think the bank were more worried about what the house would be worth next year rather than its value now.
He was only 1500 euro more than the next highest bidder
Has anybody else details of a bank not valuing a house at the sale agreed price .
First time I have heard of it in 38 years of buying and selling

I'm sure it's just an anomaly and nothing to do with the current situation we're in.

Someone should have told the bank that the REITs will just buy everything so prices can't go down.

fliball123

Cantstandsya wrote: »

I'm sure it's just an anomaly and nothing to do with the current situation we're in.

Someone should have told the bank that the REITs will just buy everything so prices can't go down.

Maybe not everything but they are snapping up a lot of the new builds

SozBbz

brisan wrote: »

I think the bank were more worried about what the house would be worth next year rather than its value now.
He was only 1500 euro more than the next highest bidder
Has anybody else details of a bank not valuing a house at the sale agreed price .
First time I have heard of it in 38 years of buying and selling

Happened to a friend of mine when buying in the UK about 12 months ago. AFAIK the different between the sale agreed price and the valuation was £15k, and the vendor accepted the lower price as they apparently really wanted to move for personal reasons.

That was on a property in Manchester and the bank apparently cited Brexit as a reason for their conservative valuation.

I've never heard of or seen it myself in Ireland.

neutral guy

We did not have property shortage because houses were not build
We had property shortage just because coockoo and short term landlords was hoovering property on market
Now we dont will have this problems because as Independent wrote today

Students returning to their parents and some foreign workers going home meant a fall in demand for accommodation. There is also some anecdotal evidence of properties that were being offered for short-term hire through the likes of Airbnb have been offered for rent instead, increasing supply.

Supply already rising and people already lose jobs
So answer is one Plenty property on market with no buyers on it = Price down !

And process STARTED !

brisan

fliball123 wrote: »

People who are still working will still be in the market to buy some will have increased savings over the covid period due to reduced costs and not being able to spend.

Most jobs lost will be from businesses closing down and those closed down businesses/commercial spaces will be bought and new enterprises will spring up. We have had people on 350 a week for about 2 months now and demand is still there.

If people cant leave the country where do they live?

REITS give a lot of properties to the government for the homeless/housing list at 85% of the current rent for 10 to 25 years. They don't even have to bother with the upkeep of the property as the government does this for them.

So in your Armageddon scenario even do the average Joe who has been working and now finds himself unemployed can no longer afford to buy a house Joe can now go on the housing list increasing the demand for a property that way.

As I say its all about supply and demand and moving people who were once working and a saving and looking for a mortgage on to the housing list looking to be housed by the government who in turn get REITS to supply them with property.

where is there a decrease in demand in your scenario??

The unemployment rate will shock you come the end of the year
High street retail,Hotel trade,tourist industry,bar and restaurant business are all on their knees until a vaccine is found