Property Market 2019

Experience_day wrote: »

But contrarians are inevitably right at some point...

There is nothing inevitable about contrarians being right. Sometimes they can just be wrong.

Experience_day wrote: »

But contrarians are inevitably right at some point...

Political shenanigans don’t change facts. It’s just a fact that this credit bubble will pop. It tried to pop in 2008 and was reflated by trebling the national debt of the USA and taking the fed balance sheet from 500 billion to 4 trillion in trash assets. The fed tried to unwind this in 2016 and the market crashed. They have returned to quantitive easing recently and will not be able to stop it not raise interest rates without crashing the phony economy. These are the facts.

hmmm wrote: »

It's certainly not facts. It must be scary holding all that gold when there is the nothing but good economic news eh?

Actually I agree with you partly - if we see a big runup in equities as the US & China deliver a trade deal, it could be very bad for the bond market (and very very bad for gold). Risk will definitely be on. Trump seems to measure financial success through the stock market, so everything will be pointed in the direction of pumping that up if he is still President in 2020.

The impact on Irish property prices - not sure, but certainly a Brexit deal would remove a lot of overhang. On the other hand the CBI rules seem to be working well, and supply certainly seems to have caught up with demand. Hopefully it gets a bit boring for a few years.

What’s not factual here? You believe the fed can run a ten trillion dollar balance sheet...a 100 trillion? You believe because the US can run a 1 trillion deficit, it can clearly run a 3 trillion one? 5 trillion? The obvious problem is this new money printing (QE4)has nowhere to go now but into commodities and hence into the CPI. Once that happens (QE for the people) the nightmare these central planners have imposed on us will become evident for all to see.

riddles

Once that happens (QE for the people) the nightmare these central planners have imposed on us will become evident for all to see.

What does this mean in terms of outcome?

pearcider wrote: »

What’s not factual here? You believe the fed can run a ten trillion dollar balance sheet...a 100 trillion? You believe because the US can run a 1 trillion deficit, it can clearly run a 3 trillion one? 5 trillion? The obvious problem is this new money printing (QE4)has nowhere to go now but into commodities and hence into the CPI. Once that happens (QE for the people) the nightmare these central planners have imposed on us will become evident for all to see.

It gets really really boring on these threads listening to people regurgitating the latest news they hear on zerohedge, or whatever blog they're on these days. Telling us in absolute certainty what the economic system is going to do, despite the best Economists and Central Bankers in the world having no such certainty as to how the system works.

It's frustrating to think that there are people watching who may even be listening to this - if they have been listening to this for the past 10 years they'll be still renting, have spent all their money on gold which has done nothing, and their friends and relatives who had done the boring thing of putting money into pensions are up 200 or even 300%. People who have bought houses have mortgages of 3% or so, many locked in for the long term, paying half of what rent would cost.

We've had people on these threads who really knew their stuff - I remember before the big crash of 2006/2007 people talking about how Bear Stearn's CDOs were selling for a lot less than what they were being carried for on the Balance Sheet - real figures, real facts, real hard evidence that something unusual was happening. Those were people I listened to. People throwing around vague figures about deficits, at a time when investors are paying governments for debt, could mean absolutely anything, particularly when they use words like "the market crashed in 2016" (hint - it didn't).

So yeah I have no idea what a US deficit of that size means, or whether it will ever mean anything, and I really don't care. Can we get back to talking about the real influences on Irish property prices now?

hmmm wrote: »

It gets really really boring on these threads listening to people regurgitating the latest news they hear on zerohedge, or whatever blog they're on these days. Telling us in absolute certainty what the economic system is going to do, despite the best Economists and Central Bankers in the world having no such certainty as to how the system works.

It's frustrating to think that there are people watching who may even be listening to this - if they have been listening to this for the past 10 years they'll be still renting, have spent all their money on gold which has done nothing, and their friends and relatives who had done the boring thing of putting money into pensions are up 200 or even 300%. People who have bought houses have mortgages of 3% or so, many locked in for the long term, paying half of what rent would cost.

We've had people on these threads who really knew their stuff - I remember before the big crash of 2006/2007 people talking about how Bear Stearn's CDOs were selling for a lot less than what they were being carried for on the Balance Sheet - real figures, real facts, real hard evidence that something unusual was happening. Those were people I listened to. People throwing around vague figures about deficits, at a time when investors are paying governments for debt, could mean absolutely anything, particularly when they use words like "the market crashed in 2016" (hint - it didn't).

So yeah I have no idea what a US deficit of that size means, or whether it will ever mean anything, and I really don't care. Can we get back to talking about the real influences on Irish property prices now?

Excuse me you brought up a Chinese US trade deal as reasons to be bullish about Irish housing. But now I can’t bring up the huge deficits that the US is running to artificially stimulate growth as a reason to be bearish? How does that make sense? There’s nothing vague about the huge stimulus the US is giving their economy. These are the facts. You’re the one using unproven market rumours as reasons to be bullish.

https://www.apnews.com/5e107e95d7fd422bbcf1bbdf0cd12454

But you pretend it’s ok and Irish property is not massively exposed to the US and massively overpriced.

riddles wrote: »

Once that happens (QE for the people) the nightmare these central planners have imposed on us will become evident for all to see.

What does this mean in terms of outcome?

Hard to say which option they will choose. As corporate America is already maxed out on debt (hence stock market all time highs) and property also has no room to grow, QE4 will mean massive increases in government transfer payments which are consumed. The CBO predicts trillion dollar deficit are here to stay which means the fed must continually fund the treasury market and this will transfer directly into consumer inflation. They could also refuse to buy the debt, let interest rates rise and destroy the financial markets. If you look around Dublin, Cork and Galway you can see the massive student apartment boom that is nearing completion. My guess is when these are completed, the economy will enter recession and rents and property prices will be crushed.

pearcider wrote: »

Hard to say which option they will choose. As corporate America is already maxed out on debt (hence stock market all time highs) and property also has no room to grow, QE4 will mean massive increases in government transfer payments which are consumed. The CBO predicts trillion dollar deficit are here to stay which means the fed must continually fund the treasury market and this will transfer directly into consumer inflation. They could also refuse to buy the debt, let interest rates rise and destroy the financial markets. If you look around Dublin, Cork and Galway you can see the massive student apartment boom that is nearing completion. My guess is when these are completed, the economy will enter recession and rents and property prices will be crushed.

So your solid prediction is a massive crash in both rents and house prices in the next 12-24 months?

Assetbacked

With minimal properties being built, prices have gone up very quickly and have not been matched with a similar increase in wages. The increases are purely based on demand outweighing supply. As supply is finally picking up, prices will come down steadily, not because of a recession or lack of growth etc. but as part of the correction of the imbalance between supply and demand.

In addition, as rents continue to rise, it gets harder for people to save for the deposit to purchase a house so either prices fall or demand falls away as a result of this. Again, it's safe to say rents have gone up too quickly and not in line with wages and the cost of living, it's purely to due demand outweighing supply.

As for the great recession people talk of, there are certain creaks across the global economy which start to feed into a change in mood and mindset (e.g. Brexit, Deutsche Bank's massive derivative exposure to Wall St banks, S&P 500 growing consistently perhaps artificially due to funds based on it, US China trade war), but it is impossible to pinpoint the point in time a recession will occur and how it might impact different countries. As such, it's a rather moot point in the context of the Irish residential property market.

Assetbacked wrote: »

With minimal properties being built, prices have gone up very quickly and have not been matched with a similar increase in wages. The increases are purely based on demand outweighing supply. As supply is finally picking up, prices will come down steadily, not because of a recession or lack of growth etc. but as part of the correction of the imbalance between supply and demand.

I'm not sure there's much scope for price falls. Developers are not making huge profits, and there's a minimum price beyond which it is not economic to build housing - so supply falls if prices fall. It would take something dramatic to make a big impact e.g. a huge drop in levies or the price of land.

The rental market certainly has plenty to fall, and hopefully it will - there's lots more supply being built, and student apartments etc will free up space, but unfortunately there is also a lot of NIMBY-type opposition which is holding things up. I see that the Minister is talking about making some changes which may help to speed up the process, and that can only be good.

beauf

.. And the population still increasing...

rosmoke

hmmm wrote: »

I'm not sure there's much scope for price falls. Developers are not making huge profits, and there's a minimum price beyond which it is not economic to build housing - so supply falls if prices fall. It would take something dramatic to make a big impact e.g. a huge drop in levies or the price of land.

The rental market certainly has plenty to fall, and hopefully it will - there's lots more supply being built, and student apartments etc will free up space, but unfortunately there is also a lot of NIMBY-type opposition which is holding things up. I see that the Minister is talking about making some changes which may help to speed up the process, and that can only be good.

How many developers you know?
They do make loads of money, at least the ones I know.

Mic 1972

hmmm wrote: »

I'm not sure there's much scope for price falls. Developers are not making huge profits, and there's a minimum price beyond which it is not economic to build housing - so supply falls if prices fall. It would take something dramatic to make a big impact e.g. a huge drop in levies or the price of land.

The rental market certainly has plenty to fall, and hopefully it will - there's lots more supply being built, and student apartments etc will free up space, but unfortunately there is also a lot of NIMBY-type opposition which is holding things up. I see that the Minister is talking about making some changes which may help to speed up the process, and that can only be good.

The rental market doesn't have plenty to fall. Renting is risky and is heavily taxed, if rents fall below a certain amount a lot of landlords will stop renting out and people will be stuck with fewer properties to choose from

hmmm wrote: »

Developers are not making huge profits

Where ye getting this observation from?

pearcider wrote: »

Hard to say which option they will choose. As corporate America is already maxed out on debt (hence stock market all time highs) and property also has no room to grow, QE4 will mean massive increases in government transfer payments which are consumed. The CBO predicts trillion dollar deficit are here to stay which means the fed must continually fund the treasury market and this will transfer directly into consumer inflation. They could also refuse to buy the debt, let interest rates rise and destroy the financial markets. If you look around Dublin, Cork and Galway you can see the massive student apartment boom that is nearing completion. My guess is when these are completed, the economy will enter recession and rents and property prices will be crushed.

Hyper inflation looks the most likely ending.

Mic 1972 wrote: »

The rental market doesn't have plenty to fall. Renting is risky and is heavily taxed, if rents fall below a certain amount a lot of landlords will stop renting out and people will be stuck with fewer properties to choose from

There's lots of money to be made in the current market by REITs etc building thousands of apartments to rent. The market is obviously frothy - even with a substantial decrease on current rent levels, it would still make sense to build buy-to-rent. It might be risky for individual landlords, but the government has clearly decided that it wants to favour corporate lenders over individual investors (a good thing in my view, but hamfistedly implemented).

That froth doesn't appear to me to be in the for-sale market. A substantial fall in prices would very quickly see supply being cut, as it is we seem to be at or about meeting current demand.

OwlsZat wrote: »

Where ye getting this observation from?

Read the glenveagh or cairn annual reports to get an understanding of the margins they expect on an average project

Unless the land was purchased very cheaply margins aren’t big

Cyrus wrote: »

Read the glenveagh or cairn annual reports to get an understanding of the margins they expect on an average project

Unless the land was purchased very cheaply margins aren’t big

Margins quoted at 17% give or take. This would suggest they are making plenty money.

OwlsZat wrote: »

Margins quoted at 17% give or take. This would suggest they are making plenty money.

Gross margins at that level suggest nothing of the sort

Cyrus wrote: »

Gross margins at that level suggest nothing of the sort

What would you like to see the margins being? Property is already at an affordability ceeling at many levels. The cost of building won't be dropped by Government policy I think that much is clear.

Compak

OwlsZat wrote: »

What would you like to see the margins being? Property is already at an affordability ceeling at many levels. The cost of building won't be dropped by Government policy I think that much is clear.

Well half the people here think a 20 - 25% haircut is to be expected to new property prices.
Whether 17% is a rich return or not it clearly shows anything into a double figure drop and developers will cease building or start building cheaper.

Lumen

Cyrus wrote: »

Gross margins at that level suggest nothing of the sort

Are they self financing? i.e. does that 17% include cost of capital?

The 17% means little without a timeframe for the capital expenditure. 17% over one year is great. Over 10 years terrible. This is why "vulture" funds prefer to get out quick. Hanging around destroys annualised returns.

OwlsZat wrote: »

What would you like to see the margins being? Property is already at an affordability ceeling at many levels. The cost of building won't be dropped by Government policy I think that much is clear.

Those margins are sustainable but a large drop in prices mean they won’t be a production will stop again

Lumen wrote: »

Are they self financing? i.e. does that 17% include cost of capital?

The 17% means little without a timeframe for the capital expenditure. 17% over one year is great. Over 10 years terrible. This is why "vulture" funds prefer to get out quick. Hanging around destroys annualised returns.

Read the annual reports answers are all there for you

Lumen wrote: »

Are they self financing? i.e. does that 17% include cost of capital?

The 17% means little without a timeframe for the capital expenditure. 17% over one year is great. Over 10 years terrible. This is why "vulture" funds prefer to get out quick. Hanging around destroys annualised returns.

Both the homebuilders Iisted are plcs. They sold shares to raise their cash. The capital is effectively free. No price on loans. Both those a fore mentioned home builders have also bought close to a billion euro worth of land they current are sitting on.

Compak wrote: »

Well half the people here think a 20 - 25% haircut is to be expected to new property prices.
Whether 17% is a rich return or not it clearly shows anything into a double figure drop and developers will cease building or start building cheaper.

I'd be very surprised if one if the home builders would stop building. They have sizable work forces built up and and assets that wont stop depreciating. Not to mention all the prepaid land. Its more likely they will keep building even if the enivitable happen and prices get a small "haircut". Stopping building isn't really an option in the short term.

OwlsZat wrote: »

Both the homebuilders Iisted are plcs. They sold shares to raise their cash. The capital is effectively free. No price on loans. Both those a fore mentioned home builders have also bought close to a billion euro worth of land they current are sitting on.

They have no borrowings ?