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Property Market 2019

The_Conductor

As is now becoming a custom- we'll start a new thread to discuss all topics as they pertain to the property market in general, alongside people's predictions and experiences- for the year 2019.

Its going to be an interesting year- with Brexit, if it comes to pass, at the end of March- and to misquote Donald Rumsfeld - the unknown unknowns that are likely to jump out at us, when we least expect them to.

2018 thread is now closed.

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Samuel T. Cogley

Lefty Bicek wrote: »

Why not ?

If your rent is €1000 a month (for the sake of example) and you get a mortgage with a repayment of €1000 per month and you're not in a position to save, you're not in a position to pay for maintenance of the home and/or any interest rate rises.

Lefty Bicek

Samuel T. Cogley wrote: »

If your rent is €1000 a month (for the sake of example) and you get a mortgage with a repayment of €1000 per month and you're not in a position to save, you're not in a position to pay for maintenance of the home and/or any interest rate rises.

Ah, right.

I misread your initial phrase of 'same level' to refer to 'same type of property' rather than 'same amount of money'.

Thanks for clarificaion.

Mickiemcfist

Great that's sorted. Anyone any thoughts on this 2019 property market?

Cuddlesworth

Mickiemcfist wrote: »

Great that's sorted. Anyone any thoughts on this 2019 property market?

Its a definite maybe.

Graham

Mod Note

Some posts split into a new thread: The Rent or Buy Debate

sabat

airportgirl83 wrote: »

How many square meters is ideal for 2 people in late 30s, no kids? Is it a crazy idea to be looking at 4 bed houses?
.

Depends on the actual size rather than the number of bedrooms. Roughly I would say 100 sqm would be enough to fit yourselves and your stuff and not feel cramped, above 120sqm might be more of a burden than useful. If you plan to travel for extended periods maybe something in a more central, lettable location could provide an extra income while you're away.

voluntary

An extra bedroom is usually around 50k. Quite an expense for a pleasure of keeping a second spare bedroom just because family or friends may stay over once or twice a year.

50k is like a summer destination holiday every year for 25 years paid for! So, whatever's your preference

OwlsZat

OECD spelling out the current risks. A disorderly Brexit, a change in international corporation tax policy or a relaxing of credit lending rules.

https://www.irishtimes.com/business/economy/irish-property-market-at-risk-of-new-boom-to-bust-cycle-oecd-warns-1.3899358

flintash

OwlsZat wrote: »

OECD spelling out the current risks. A disorderly Brexit, a change in international corporation tax policy or a relaxing of credit lending rules.

https://www.irishtimes.com/business/economy/irish-property-market-at-risk-of-new-boom-to-bust-cycle-oecd-warns-1.3899358

if and buts... the economy will grow fastest , but !
im hearing doom and gloom since 2012, these economists are the biggest bulls**ters ever. especially when they start predicting years ahead. i dont understand how these people still have a job, from economists to fund managers on tv predicting recessions all the time. i was waiting and waiting.
recession will come for sure and then somebody come out and loudly announce " i told you so" . And he will be a new messiah.
i used to read all of these threads since 2012 in here and on pin, not anymore. nobody can predict.Nobody.
it will happens when it happens.

Mad_maxx

flintash wrote: »

if and buts... the economy will grow fastest , but !
im hearing doom and gloom since 2012, these economists are the biggest bulls**ters ever. especially when they start predicting years ahead. i dont understand how these people still have a job, from economists to fund managers on tv predicting recessions all the time. i was waiting and waiting.
recession will come for sure and then somebody come out and loudly announce " i told you so" . And he will be a new messiah.
i used to read all of these threads since 2012 in here and on pin, not anymore. nobody can predict.Nobody.
it will happens when it happens.

My eight month olds nappy in the morning has more valuable content than the property pin website

It's a site for permabear cranks who in 2012 were predicting three bed semis in Dublin 9 would average 120 k eventually

voluntary

This time will indeed be different

It means that if big funds come under stress in their home markets, they would become forced sellers of Irish assets - potentially flooding the market.

https://www.independent.ie/business/personal-finance/property-mortgages/oecd-calls-for-property-tax-hike-as-murphy-comes-under-fire-over-coliving-gaffe-38136273.html

Graham

I'm trying to get my head around how such a flood would work.

If entire blocks or developments hit the market, I'd expect them to do so as fully-let developments. Other than putting downward pressure on the price of similar developments I'm not sure what sort of impact this would have on Irish homeowners, renters/tenants or financial institutions.

The property funds would take a hit but I though many are financed out of country.

voluntary

Graham wrote: »

I'm trying to get my head around how such a flood would work.

If entire blocks or developments hit the market, I'd expect them to do so as fully-let developments. Other than putting downward pressure on the price of similar developments I'm not sure what sort of impact this would have on Irish homeowners, renters/tenants or financial institutions.

Pension / investment funds need to sell whenever investors ask to withdraw money. If there's enough fear in the markets then pension holders move funds from higher risk stock/property to safer bonds/deposits. When the withdrawals go over the liquidity then these funds have to fire sale assets to meet their customers' demand.

Sometimes things like this happen too:
https://uk.reuters.com/article/aviva-idUKLNE50L05L20090122

beauf

They don't need to raise taxes, they need to increase supply by building more property and increasing competition and easing demand (population growth).

Raising taxes without addressing supply and demand will do nothing. Will raise more tax in the short term which might their objective.

beauf

flintash wrote: »

if and buts... the economy will grow fastest , but !
im hearing doom and gloom since 2012, these economists are the biggest bulls**ters ever. especially when they start predicting years ahead. i dont understand how these people still have a job, from economists to fund managers on tv predicting recessions all the time. i was waiting and waiting.
recession will come for sure and then somebody come out and loudly announce " i told you so" . And he will be a new messiah.
i used to read all of these threads since 2012 in here and on pin, not anymore. nobody can predict.Nobody.
it will happens when it happens.

Its constantly changing. They can only suggest possible outcomes and trends.
Expecting accuracy is bit optimistic.

Graham

voluntary wrote: »

Pension / investment funds need to sell whenever investors ask to withdraw money. If there's enough fear in the markets then pension holders move funds from higher risk stock/property to safer bonds/deposits. When the withdrawals go over the liquidity then these funds have to fire sale assets to meet their customers' demand.

and if those bondholders/funds/pension funds are overseas where's the fallout here?

voluntary

Graham wrote: »

and if those bondholders/funds/pension funds are overseas where's the fallout here?

It's quite straightforward.

1. Investors request to withdraw money from these pension and investment funds.
2. Funds lose liquidity and need to sell to meet the investors requests.
3. Funds flood the market with properties.
4. Market crashes.

OECD warns us about such risk.

Fan of Netflix

Brexit Party under Farage about to top the polls Sunday. No deal Brexit under PM Boris Johnson is coming. China-US trade war is worsening. Our economy depends entirely on US and Britain. Global recession imminent economic forecasters say.

Our deck of cards economy about to collapse. Thick Paddy will vote for a tree if it had a Fine Gael badge on it. The time to sell is now and sell fast, get rid of your overpriced property especially in Dublin. Anyone buying a house now at these prices has to be some sort of masochist. Don't say you weren't warned.

awec

voluntary wrote: »

It's quite straightforward.

1. Investors request to withdraw money from these pension and investment funds.
2. Funds lose liquidity and need to sell to meet the investors requests.
3. Funds flood the market.

OECD warns us about such risk.

It also warned us about potential further surges in house prices.

But the Indo left out that bit. The Irish Times coverage of it seems a bit better.

voluntary

awec wrote: »

It also warned us about potential further surges in house prices.

But the Indo left out that bit. The Irish Times coverage of it seems a bit better.

Yeah, especially in case the lending rules would be relaxed. Such scenario would be devastating.

Graham

voluntary wrote: »

It's quite straightforward.

1. Investors request to withdraw money from these pension and investment funds.
2. Funds lose liquidity and need to sell to meet the investors requests.
3. Funds flood the market with properties.
4. Market crashes.

OECD warns us about such risk.

Are many REITS operating like a deposit account where investors can deposit/withdraw funds on demand?

I (perhaps mistakenly) understood equity REITS were more common in which case shares in the REITS would be traded either publicly or privately.

awec

Graham wrote: »

Are many REITS operating like a deposit account where investors can deposit/withdraw funds on demand?

I (perhaps mistakenly) understood equity REITS were more common in which case shares in the REITS would be traded either publicly or privately.

I'm also not really sure if #3 leads to #4 in the list.

voluntary

awec wrote: »

I'm also not really sure if #3 leads to #4 in the list.

It really depends on the scale of the sell off and the market sentiments at the time.
Knowing these funds are mostly American in origin, if US economy gets into trouble, we can quite safely assume that Irish economy gets hit with a ricochet. A property selloff + increasing unemployment + bad prospects etc.

Mind, this is a recognized risk. It does not mean this will happen. It's recognized by OECD that this may happen.

voluntary

Graham wrote: »

Are many REITS operating like a deposit account where investors can deposit/withdraw funds on demand?

I (perhaps mistakenly) understood equity REITS were more common in which case shares in the REITS would be traded either publicly or privately.

I believe you're correct. There are various investment funds operating in various ways.

REITS are good example though. When investors run away the share price drop and the likely decision of the board would be to sell off it's assets and distribute proceedings to shareholders.

here's one example:
https://www.irishtimes.com/business/commercial-property/green-light-for-sale-of-reit-1.3861325

Graham

So the REIT investors take a hit, if a large proportion of these are overseas I don't see a major impact.

Large scale build-to-let developments are unlikely to hit the market broken into individual units so another fund is likely to pick them up based on the value of the rent-roll rather than the underlying asset value.

Wasn't this exactly one of the aims for attracting 'professional landlords', it removed some of the property speculation (capital appreciation/release) element.

voluntary

Yeah, The direct impact would be on foreign investors. But the local property market would be severly affected, therefore assets held by local investors would also be impacted. It's all related to each other, like domino tiles. You push one and all of them fall down.

Graham

According to your earlier post the stress in the REITs home markets is the risk.

Assuming no change in the Irish market in terms of rent-rolls, I can't see a major impact. Somebody would pick up the rent-rolls (maybe at a discount in a fast sale) and life here would go on.

Unless the underlying asset for the REITs stops producing the rent-rolls, overseas REITs liquidating their portfolios should have limited domestic impact.

beauf

Graham wrote: »

...Large scale build-to-let developments are unlikely to hit the market broken into individual units so another fund is likely to pick them up based on the value of the rent-roll rather than the underlying asset value.....

Only if the rent or the property hold their value.
If either was to drop significantly then that would have a knock on effect.
Funds might try to cash out early, if there is better potential somewhere else.

But I think that unlikely to happen suddenly or in the short term. Because demand and supply isn't likely to radically change overnight.

Marcusm

Graham wrote: »

According to your earlier post the stress in the REITs home markets is the risk.

Assuming no change in the Irish market in terms of rent-rolls, I can't see a major impact. Somebody would pick up the rent-rolls (maybe at a discount in a fast sale) and life here would go on.

Unless the underlying asset for the REITs stops producing the rent-rolls, overseas REITs liquidating their portfolios should have limited domestic impact.

A large scale exodus without replacement investors would have a significant impact on values. Those investors could not be replaced at scale in a shortened time period. That would have an impact on the domestic market. Since GFC, QE has led to a releveraging of investor markets. The eventual deleveraging, unless managed over a long period, will have a dramatic effect on asset values for less liquid assets.

Marcusm

beauf wrote: »

Only if the rent or the property hold their value.
If either was to drop significantly then that would have a knock on effect.
Funds might try to cash out early, if there is better potential somewhere else.

But I think that unlikely to happen suddenly or in the short term. Because demand and supply isn't likely to radically change overnight.

It’s not the supply or demand for the assets but the consequence of deleveraging in foreign markets. It is a systemic risk where there is a disconnect between the financing and asset situses.