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Property Market 2020

Bigmac1euro

Maybe an article for “Property Market 2020”
Anyhow looks like developers are going to start strangling supply in order to keep prices in check.

Worth a read anyway.

https://www.independent.ie/business/personal-finance/property-mortgages/developers-now-fear-flooding-market-as-house-prices-in-decline-38820967.html

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Hubertj

Ozark707 wrote: »

That would mean only about 13 houses per development on average, would seem low?

There are a few small projects underway/complete near me - 12 apartments up in donnybrook and another with 9 houses/apartments down in Sandymount. Maybe they are considered developments as well?

Zenify

The_Conductor wrote: »

There are currently (as of right now) 548 new homes for sale on Myhome.ie

Link here: https://www.myhome.ie/residential/ireland/new-homes/property-for-sale

There are in the region of 7,400 properties in various stages of completion nationwide in addition to this (according to the Construction Industry Federation).

The supply of new property in the immediate pipeline is more constrained than many people realise.

I suppose it depends on what you consider "under construction". Theres a good few mega sites that were supposed to start finishing homes this year (obv delayed now). Cherrywood being one beside me. That site alone is supposed to be something like 4,300 homes. They built all the parks and everything already. I doubt they are included in the stats. Probably just the properties that were due this year. I wonder what will happen to these sites. Surely they couldn't close them for another 10years? Property is now seriously a political hot potato

The_Conductor

Zenify wrote: »

Property is now seriously a political hot potato

Proposal is to restart construction of social and local authority housing units, ahead of the general construction sector- and ideally solely on publicly owned land. Anything else- gets put on the long finger.

Villa05

ittakestwo wrote:

The builders will still have to sell. The dead will also lead to sales. The people most likely not to sell are people trading up or down. But in that case, every less seller will equal one less buyer.

there was alot of trading up/down 2012 to 2014 as traders understood the dynamics of the market. the sales took that bit longer, but they were occuring

popular scenarios were where older people were looking for single floor living accomodation due to mobility issues while families were looking for there 3/4 bed houses with large garden

awec wrote:

Imagine right now you are hypothetically looking to buy a house in say, Ranelagh. Next year houses could be 20% cheaper, but there could be next to no houses for sale in Ranelagh. There could be a glut of cheap houses in say Swords.

awec wrote:

Imagine you go ahead an buy the Swords house for 20% less than the house was worth in 2020. Have you played the waiting game an won? Purely financially, yes. Bigger picture, taking into account everything else? Maybe, maybe not.

if the earlier posted house sold for 775k and this is normal pricing for Ranelagh one would need a household income of over 200k to afford it

This is far in excess of average income and surely an outlier in the property market
The person buying in swords may have been looking further out and may well have gained signicantly in terms of cost and time commuting

bilbot79

My prediction is that house prices in Dublin will go south.

The greens will get into government and incentivise work from home. Consequently everyone will buy a bigger better house in the country easing pressure on Dublin housing stock and rejuvenating town centres everywhere

awec

ittakestwo wrote: »

There is 548 developments advertised on myhomes nationwide. One development could be selling over 100 homes.

For the past number of years the majority of new homes are sold before a brick is laid.

That is to say, the developments that developers currently have their builders working on are likely to have the majority of the stock already gone. Developments are built and sold in phases.

If developers stopped building tomorrow, they would have relatively little unsold stock that actually exists to get rid of.

tabby aspreme

The_Conductor wrote: »

Proposal is to restart construction of social and local authority housing units, ahead of the general construction sector- and ideally solely on publicly owned land. Anything else- gets put on the long finger.

Restarting tomorrow on one site I know of.

awec

Villa05 wrote: »

there was alot of trading up/down 2012 to 2014 as traders understood the dynamics of the market. the sales took that bit longer, but they were occuring

popular scenarios were where older people were looking for single floor living accomodation due to mobility issues while families were looking for there 3/4 bed houses with large garden

if the earlier posted house sold for 775k and this is normal pricing for Ranelagh one would need a household income of over 200k to afford it

This is far in excess of average income and surely an outlier in the property market
The person buying in swords may have been looking further out and may well have gained signicantly in terms of cost and time commuting

Or they could be the people that despite no change in their own financial circumstances, are no longer able to get credit to buy a house.

That house in Ranelagh is not really an outlier. 200k combined, while a good bit above average (which is a pretty useless number, truth be told) in Dublin is certainly not mega money, you're talking 2 mid-to-high level professionals.

The point is, it is way too simplistic to think that because the top level average house price shows a decline that you'll be buying the house you want with that saving factored in. It is far too nuanced for that.

James 007

Zenify wrote: »

That article could be from 2010 for all we know. Please provide a better source or a link. Something with a date even...

Yes, its funny I was cleaning up a few boxes of stuff that I had stored away and came across that article, its from the Irish Independent, 19th August 2008, interesting to see the article prior to me reading boards earlier. It goes to show that choking lending will lead to a decrease in house prices

ittakestwo

awec wrote: »

For the past number of years the majority of new homes are sold before a brick is laid.

That is to say, the developments that developers currently have their builders working on are likely to have the majority of the stock already gone. Developments are built and sold in phases.

If developers stopped building tomorrow, they would have relatively little unsold stock that actually exists to get rid of.

I thought buying off plans was less popular these days than the boom years.

The Cherrywood development which has a few thousand homes currently being developed has no advertising tho maybe some hedge fund has bought them already?

hometruths

It seems everybody is agreed that prices will fall, because there will be higher jobless numbers, a recession, corresponding drop in confidence, and tightened mortgage lending.

All factors that were present in 2008, whilst the causes may be different.

Those posters who think that we are not facing big drops like 08-12 what is different this time?

Marius34

schmittel wrote: »

It seems everybody is agreed that prices will fall, because there will be higher jobless numbers, a recession, corresponding drop in confidence, and tightened mortgage lending.

All factors that were present in 2008, whilst the causes may be different.

Those posters who think that we are not facing big drops like 08-12 what is different this time?

It's very different, when it comes to Irish Property Market.
First of all, and most important 2008 was Financial/Credit crisis combined with Housing Bubble.
There were over 3 times more homes under construction, and Banks was in much worst situation. Today people has less Credits than before previous crisis, and more in their deposits.

Villa05

One reason not mentioned here yet, The central bank lending rules are very Conservative and acted as a drag on prices going up, had they not been there or had politicians succeeded in getting in work arounds, this would be 2008 all over again. As a consequence, banks should be stronger going into this and experienced at getting out of it

hometruths

Marius34 wrote: »

It's very different, when it comes to Irish Property Market.
First of all, and most important 2008 was Financial/Credit crisis combined with Housing Bubble.
There were over 3 times more homes under construction, and Banks was in much worst situation. Today people has less Credits than before previous crisis, and more in their deposits.

So if there is no housing bubble now then houses are not overpriced?

Financial/credit crisis in 08 blew up leading to recession/job losses etc
Coronavirus in 20 expected to lead to recession/job losses etc

Job losses and recession led to people being unable to pay their mortgages, so banks tightened lending, meaning less people able to access credit leading to less buyers.

And granted banks balance sheets are healthier now, but I cannot see how that will directly affect the property market if they are unwilling to lend from those healthy deposits.

hometruths

Villa05 wrote: »

One reason not mentioned here yet, The central bank lending rules are very Conservative and acted as a drag on prices going up, had they not been there or had politicians succeeded in getting in work arounds, this would be 2008 all over again. As a consequence, banks should be stronger going into this and experienced at getting out of it

If there is a recession and wide scale job losses thanks to the corona virus how will strong banks cushion falls on the property market?

I take your point that prices will not have as far to fall thanks to central bank lending rules.

[Deleted User]

3 options, prices fall, they stay the same or they go up.

I've seen lots of arguments on why they might fall, i haven't seen any for why they might go up and as for staying still. When have house prices ever stayed still in the country over the last 25 years. They are either going up or down.

Marius34

schmittel wrote: »

So if there is no housing bubble now then houses are not overpriced?

Financial/credit crisis in 08 blew up leading to recession/job losses etc
Coronavirus in 20 expected to lead to recession/job losses etc

Job losses and recession led to people being unable to pay their mortgages, so banks tightened lending, meaning less people able to access credit leading to less buyers.

And granted banks balance sheets are healthier now, but I cannot see how that will directly affect the property market if they are unwilling to lend from those healthy deposits.

To the first question. It's difficult to define what is overpriced. Even if it's overpriced, if there is low supplies, unfortunately it may well stay overpriced.

Regarding the banks, I don't think they will stop lending this time. It might be more strict on the lending, maybe introduce additional requirements, but I don't think they would not lend to let say someone with secure job and having 20% of deposit.

hometruths

Marius34 wrote: »

Regarding the banks, I don't think they will stop lending this time. It might be more strict on the lending, maybe introduce additional requirements, but I don't think they would not lend to let say someone with secure job and having 20% of deposit.

Fair enough, did the banks stop lending completely in 09 - i.e even if you had solid income and 20% deposit was the answer still no?

beauf

schmittel wrote: »

Fair enough, did the banks stop lending completely in 09 - i.e even if you had solid income and 20% deposit was the answer still no?

That's my memory and you can find loads of articles about it especially about businesses struggling to get finance. But a few people here claimed they had no problem. I don't think they are representative of the time though.

The market never stops entirely though. Even in a crash.

Marius34

schmittel wrote: »

Fair enough, did the banks stop lending completely in 09 - i.e even if you had solid income and 20% deposit was the answer still no?

No they didn't stop lending, as far as I know there were no very strict requirements on deposits, I guess typically they would have looked for 20% deposit, except 1 bedroom apartments. The issue that they had Liquidity problem, basically no cash available, so they had limited amount how many applicants they can approve.

beauf

awec wrote: »

For the past number of years the majority of new homes are sold before a brick is laid.

That is to say, the developments that developers currently have their builders working on are likely to have the majority of the stock already gone. Developments are built and sold in phases.

If developers stopped building tomorrow, they would have relatively little unsold stock that actually exists to get rid of.

That's very different about this time. I know new schemes on the market 4-5yrs at this point and are still not fully sold out. Back then they sold off the plans, which in the end often never got built.

Mad_maxx

bilbot79 wrote: »

My prediction is that house prices in Dublin will go south.

The greens will get into government and incentivise work from home. Consequently everyone will buy a bigger better house in the country easing pressure on Dublin housing stock and rejuvenating town centres everywhere

the greens oppose the idea of one off housing , they wont encourage rural living , rural towns yes but there are no available houses there

Empty_Space

Hurry up and crash property, ffs, getting impatient.

Villa05

schmittel wrote:

So if there is no housing bubble now then houses are not overpriced?

There is a housing bubble. Asset price bubbles have been around long before banks were lending heavily for assets

The current housing bubble is fueled by lack of supply and central banks printing money for the past decade. This money needs a home and through reits some of this money has fueled house price inflation in Ireland

schmittel wrote:

If there is a recession and wide scale job losses thanks to the corona virus how will strong banks cushion falls on the property market?

There will be a recession and job losses, in relation to banks it might be an exaggeration to say strong, but better shape than in 09 to 12
The nature of the crisis (social distancing) allows banks to significantly reduce the mortgages they give out.

They can cherry pick the best candidates for mortgage drawdown and give approval in principle to the rest with a number of reasons ready for refusing at drawdown. This will keep the bidding process going

With reduced activity the price indexes can be kept looking healthy but on much reduced volumes

You could see in the last recovery, that different cities bottomed at different times, this might imply a targeted lending approach once an upward trend in price was achieved, you can move to the next city

A bit of managing the falls and targeting recovery

Having said this I think people have not grasped how serious this could be. A V shaped recovery looks unlikely and more waves of this virus look inevitable

There is alot of "silly" money left to be lost. The oil price debacle last week shows this. it was obvious that a 10% cut in production was no where near enough and inventories continued to build. Oil went from over 30 to - 35

The p/e valuation on many companies is ridiculously high. I think the stock market will retest there march lows

beauf

Villa05 wrote: »

One reason not mentioned here yet, The central bank lending rules are very Conservative and acted as a drag on prices going up, had they not been there or had politicians succeeded in getting in work arounds, this would be 2008 all over again. As a consequence, banks should be stronger going into this and experienced at getting out of it

Why are they conservative? They are pretty much the same rules banks had before the Celtic Tiger and lost the run of themselves and ditched all logic.

You can't have property devalue to the levels of the last crash and a historic recession and the banks not getting hammered.

beauf

Mad_maxx wrote: »

the greens oppose the idea of one off housing , they wont encourage rural living , rural towns yes but there are no available houses there

We have littered the entire country with one of unsustainable tacky housing. Much of it sat empty for years.

smurgen

Another factor to consider. Australian economy collapse. Due to contract about 10% due to covid 19 and the AUD was already in free fall. Our builders won't be going anywhere this time around and there'll be many returning. I think the skilled labour shortage that helped drive up the cost of building is about to come down.

00benski

ittakestwo wrote: »

I thought buying off plans was less popular these days than the boom years.

The Cherrywood development which has a few thousand homes currently being developed has no advertising tho maybe some hedge fund has bought them already?

They are all allocated for the rental market...

beauf

Empty_Space wrote: »

Hurry up and crash property, ffs, getting impatient.

.. And that premium housing to fall below non premium housing...

PommieBast

Empty_Space wrote: »

Hurry up and crash property, ffs, getting impatient.

That pretty much sums up half the people here