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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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Cyrus

GreeBo wrote: »

Erm I didnt challenge you?
That was what we in the English business would call "a paragraph"...

Unless of course you consider yourself a spokesperson for the "people"?

what people? i speak for myself thanks.

anyway i gave my opinion as to why i think that particular property won't sell at that level.

and ill either be right or wrong!

fliball123

Ozark707 wrote: »

In effect you are suggesting as sellers strike. This of course could happen but I would think it is quite unlikely. Even if supply continues to shrink at the rate you cite there will be some sales and I would contend due to the credit restrictions that it will cause prices to fall.

There have already been quite a number of anecdotes on boards of people securing reductions on already agreed prices, what is going to happen where a price has not already been agreed?

I know of one person in a chain who is happy to reduce his price if the place he wants to buy will do likewise.

Once again I must remind you the options a seller has the rental market is still a viable option for people with btl why would you crystallize your losses and if your in trouble paying your primary residence you can just stop paying your mortgage I keep saying that the supply side is coming down just as quickly as demand is.

The simple question is why would you sell as asset at 10/15 or 20% less now when you don't have to?

TSQ

joe123 wrote: »

How so? Most folk now who would have been going to work in the morning, now eat a breakfast at home. Rather than a slice of toast and coffee on the way out, People are eating lunches at home and then the usual dinner. Spending more time at home = more time eating the food you have at home.

Massively saving on take away coffee, breakfast rolls and shop bought sambos.... unless you work in Google or FB where everything is free. The cost of making sandwiches at home 5 days a week is not going to increase the grocery bill that much, but will reduce your Overall living expenses, a lot.

fliball123

Deleted User wrote: »

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.

When you have a stalemate which is what we have , demand is going to reduce, supply is also reducing and social distancing means its hard to get a property purchase over the line with the amount of moving parts and actors involved.

SozBbz

TSQ wrote: »

I find it bizarre that your grocery bill has increased

I find it bizarre that yours hasnt! Did you work from home anyway or religiously bring a packed lunch?

The supermarkets are all reporting massively increased sales.

We're a 2 person household but instead of me having lunches out maybe 4 days a week (I always WFH one day per week). We'd also have gone out 1/2 nights at the weekend as well as going to alternative parents for dinner on Sunday. Theres also the little things like increased speed in going through tea and coffee, milk, snacks etc that I would have previously gotten in the office. It also means you go through toilet paper, kitchen roll etc much quicker. I'd say we're easily eating twice as much at home as we did previously. Now we probably get one take away per week just for a change and a break from cooking, but all other meals are being made from scratch, and we're going through a lot more than usual.

Obviously we've also not spent other money that we otherwise would have spend - obviously there has been no restaurant or pub spending, but we've also not gone on 2 holidays that we'd otherwise have had. I've not put petrol in my car in about 7 weeks (although I will need some soon) and more besides I'm sure.

Ozark707

fliball123 wrote: »

Once again I must remind you the options a seller has the rental market is still a viable option for people with btl why would you crystallize your losses and if your in trouble paying your primary residence you can just stop paying your mortgage I keep saying that the supply side is coming down just as quickly as demand is.

The simple question is why would you sell as asset at 10/15 or 20% less now when you don't have to?

If you don't have to sell then you are fine as you state...but if you want to sell or have to then you are looking at having to reduce your price now.

fliball123

Ozark707 wrote: »

If you don't have to sell then you are fine as you state...but if you want to sell or have to then you are looking at having to reduce your price now.

Yeah I can see the want to sell at the moment taking their foot off the gas why would you go through with so much uncertainty. If you have to sell then yes your right but tell me what situation you view as a person needing to sell? Like I say rentals are still pretty generous even with the small drop in asking rents and if you are living in a property that is your primary place of residence all you have to do is stop paying your mortgage and you can live rent free for years...So the need to sell pool of sellers is very very very small there will be some btls that people will have to get rid of.

OneMoreBabadee

I heard Karl Deeter on the radio last week basically saying yes a shock like this impacts all asset prices negatively, but it doesn't change the fact we still have a property supply shortage. Going into the last recession in 2008 we had a massive oversupply, the opposite is true now. He also mentioned that building will become more difficult now so any hope of addressing the shortage will be set back. There's 70,000 people on housing lists in the country, and 10,000 homeless. When the shock (probably 10-20% drop) is realized, property prices could actually start rising again afterwards if the fundamentals affecting supply aren't addressed. There certainly won't be any drops on the 2008-2012 scale but volume of transactions, liquidity, mortgage approvals, etc will all go down.

Donald Trump

fliball123 wrote: »

Once again I must remind you the options a seller has the rental market is still a viable option for people with btl why would you crystallize your losses and if your in trouble paying your primary residence you can just stop paying your mortgage I keep saying that the supply side is coming down just as quickly as demand is.

The simple question is why would you sell as asset at 10/15 or 20% less now when you don't have to?

Less than what? Less than you thought that you might be able to get for it in the past?

Maybe you were going to sell your house for 500k before and now it's worth 400k. Why would you sell it for 400k now? Well let's extend that time-traveling logic and say why on earth would you sell it for less than 2m now? Sure there's bound to be another bubble over the next 30 years where the price will hit 2m. :rolleyes:

House is only worth what someone else is willing to pay for it. Even if you don't *need* to sell it now, maybe you still want to sell it so that you can buy a different house, or put your money into something else if you think that the price could fall further

If you think it's a temporary over correction then don't sell. That's fine. Others might have a different view and want to sell

AlmightyCushion

OneMoreBabadee wrote: »

I heard Karl Deeter on the radio last week basically saying yes a shock like this impacts all asset prices negatively, but it doesn't change the fact we still have a property supply shortage. Going into the last recession in 2008 we had a massive oversupply, the opposite is true now. He also mentioned that building will become more difficult now so any hope of addressing the shortage will be set back. There's 70,000 people on housing lists in the country, and 10,000 homeless. When the shock (probably 10-20% drop) is realized, property prices could actually start rising again afterwards if the fundamentals affecting supply aren't addressed. There certainly won't be any drops on the 2008-2012 scale but volume of transactions, liquidity, mortgage approvals, etc will all go down.

Varadkar has said that if he forms a new government they will be using capital spending to create jobs and stimulate the economy. He specifically mentioned housing as part of that so hopefully, that helps take care of the supply side of things.

SozBbz

OneMoreBabadee wrote: »

I heard Karl Deeter on the radio last week basically saying yes a shock like this impacts all asset prices negatively, but it doesn't change the fact we still have a property supply shortage. Going into the last recession in 2008 we had a massive oversupply, the opposite is true now. He also mentioned that building will become more difficult now so any hope of addressing the shortage will be set back. There's 70,000 people on housing lists in the country, and 10,000 homeless. When the shock (probably 10-20% drop) is realized, property prices could actually start rising again afterwards if the fundamentals affecting supply aren't addressed. There certainly won't be any drops on the 2008-2012 scale but volume of transactions, liquidity, mortgage approvals, etc will all go down.

I can absolutely see prices rising in the next 18/24 months once the initial strangeness is worked out of the market.

I'd agree that anyone selling now is probably going to find their sale price coming under pressure, but as long as the supply shortages remain unaddressed, I don't see prices going that far down and certainly not for long.

If inflation comes as a consequence of quantitative easing and other economics stimulus measures, then we could see prices going in in a nominal sense anyway. If the real value/purchasing power of €1 goes down, then the cost of a house could easily go up. Those who have already purchased with mortgages would see their homes effectively becoming cheaper (assuming interest rates remain steady - which of course is not a given and is another variable).

I'm not saying this will definitely happen, but its one possible outcome.

fliball123

Donald Trump wrote: »

Less than what? Less than you thought that you might be able to get for it in the past?

Maybe you were going to sell your house for 500k before and now it's worth 400k. Why would you sell it for 400k now? Well let's extend that time-traveling logic and say why on earth would you sell it for less than 2m now? Sure there's bound to be another bubble over the next 30 years where the price will hit 2m. :rolleyes:

House is only worth what someone else is willing to pay for it. Even if you don't *need* to sell it now, maybe you still want to sell it so that you can buy a different house, or put your money into something else if you think that the price could fall further

If you think it's a temporary over correction then don't sell. That's fine. Others might have a different view and want to sell

Well less than what the property was selling at, there is a trend of data that you can follow up until Feb 2020 that would give you a price of what a seller could reasonable expect to get for his/her property using previous sales and following the ups and downs of property overall.

Well for a start why would you sell it for less than what it cost to build? Why would you sell now when there is feck all other properties out there available for you to move into and the supply is dropping on a daily basis. Why would you put yourself through the stress of moving during a pandemic.

The why would be for financial reasons. But I have given 2 safety valves people have who are would of been sellers a month or so ago and are no longer in the market to sell their place, mainly renting and just stop paying the mortgage.

I agree with you a house is worth what a person is willing to pay but that is only one side of the equation, as in does that mean if someone thinks my house is worth 100k but was built at a price of 400k that its worth 100k? answer = no. So to restructure your statement a house is only worth what a buyer is will to pay and what a seller is willing to accept..2 parts and parties to every sale.

fliball123

AlmightyCushion wrote: »

Varadkar has said that if he forms a new government they will be using capital spending to create jobs and stimulate the economy. He specifically mentioned housing as part of that so hopefully, that helps take care of the supply side of things.

Really they have been in gov 8 years and have been saying that since the got in and that was before the bill for Covid was on their table. Supply side is not going to be meet for at least another decade

Ozark707

fliball123 wrote: »

If you have to sell then yes your right but tell me what situation you view as a person needing to sell?

Maybe someone is relocating (abroad especially), probate, trading up or down, someone who made quite a bit of capital appreciation in last 6 years and wants to get out quickly if they felt the market might completely nosedive? I suspect there are a few other categories but that is what I can think of off the top of my head

fliball123

Ozark707 wrote: »

Maybe someone is relocating (abroad especially), probate, trading up or down, someone who made quite a bit of capital appreciation in last 6 years and wants to get out quickly if they felt the market might completely nosedive? I suspect there are a few other categories but that is what I can think of off the top of my head

Yeah I agree there will be some sales and purchases no doubt , but you can bet the amount of properties sold from say June onward will be minuscule the only properties selling at present were mostly sale agreed and deposit paid pre covid.

The 2 main subsets of buyers would be first time buyers who in the majority will be thinking we might get a bargain in the next year lets hold off and upsizers and downsizers who will be now thinking moving during a pandemic, trying to get a surveyor , trying to meet with an EA to see a house, meet the solicitor, meeting the bank for the mortgage and all this with social distancing and trying to move, think about the different things that people would need such as moving vans, painters, plumbers , sparks, tilers not to mention new furniture and appliances. It would be an absolute nightmare to move in the current situation.

But I agree there will be some sales but very few

Roberto_gas

2008 - Housing prices will rise in next 18-24 months
2010 - Prices crash 40-50%
2012 - Prices finally rise 2-4%

2020 - Housing prices will rise in next 18-24 months
2022 - ??
2023 - ??

2008 was financial system collapse on back of subprime
2020 is economic collapse on back of a pandemic

Which one is worse ? Are people thinking there would be a V shape recovery ? Is Gov pumping money to support economy a good thing ? Are stock markets rising due to election in US in Nov a good thing ? Can high unemployment rates and record jobless claims be ignored ?

People talking about supply was more in 2008 do not take into consideration many people emigrated out of Ireland in search of jobs which increased the supply !

Donald Trump

fliball123 wrote: »

Well less than what the property was selling at, there is a trend of data that you can follow up until Feb 2020 that would give you a price of what a seller could reasonable expect to get for his/her property using previous sales and following the ups and downs of property overall.

Well for a start why would you sell it for less than what it cost to build? Why would you sell now when there is feck all other properties out there available for you to move into and the supply is dropping on a daily basis. Why would you put yourself through the stress of moving during a pandemic.

The why would be for financial reasons. But I have given 2 safety valves people have who are would of been sellers a month or so ago and are no longer in the market to sell their place, mainly renting and just stop paying the mortgage.

I agree with you a house is worth what a person is willing to pay but that is only one side of the equation, as in does that mean if someone thinks my house is worth 100k but was built at a price of 400k that its worth 100k? answer = no. So to restructure your statement a house is only worth what a buyer is will to pay and what a seller is willing to accept..2 parts and parties to every sale.

It would not make sense to build a house to intentionally sell it for below building cost

But if you have one, already built, and the market crashes and you need or want to sell it, it is perfectly possible that you would sell it for less than it cost to build. It might not be likely but it would not be impossible.

Suppose that you have your house and an investment property. The investment property cost you 400k to build. Market drops and people are only willing to offer you 200k on it. You get very sick with a disease that will likely kill you. But there is a new drug developed which has had a 95% success rate in other countries. It hasn't been approved for use in Ireland, and won't be until next year, by which time you will be dead. But you can get it privately in Mexico. Will cost ya 200k for treatment.....would ya sell?

Or perhaps, a little less drastic, that house you had your eye on for 600k down the road has dropped to 300k (below it's building cost of 500k........very fancy mansion). Maybe if you sold your house for 200k you could get the finance to pay the 300k....

Donald Trump

fliball123 wrote: »

Yeah I agree there will be some sales and purchases no doubt , but you can bet the amount of properties sold from say June onward will be minuscule the only properties selling at present were mostly sale agreed and deposit paid pre covid.

The 2 main subsets of buyers would be first time buyers who in the majority will be thinking we might get a bargain in the next year lets hold off and upsizers and downsizers who who will be now thinking moving during a pandemic, trying to get a surveyor , trying to meet with an EA to see a house, meet the solicitor, meeting the bank for the mortgage and all this with social distancing and trying to move, think about the different things that people would need such as moving vans, painters, plumbers , sparks, tilers not to mention new furniture and appliances. It would be an absolute nightmare to move in the current situation.

But I agree there will be some sales but very few

People will hold out of course. It's usually no problem for people to postpone their plans for a year or even two. Most people will still have the mental block of being told that their house was worth 400k in January so they won't want to sell it for 350k now and are happy to wait it out. If it persists for a year or two then that is when you get a release onto the market

[Deleted User]

fliball123 wrote: »

. Supply side is not going to be meet for at least another decade

In a recession, where does demand come from?

Hubertj

Roberto_gas wrote: »

2008 - Housing prices will rise in next 18-24 months
2010 - Prices crash 40-50%
2012 - Prices finally rise 2-4%

2020 - Housing prices will rise in next 18-24 months
2022 - ??
2023 - ??

2008 was financial system collapse on back of subprime
2020 is economic collapse on back of a pandemic

Which one is worse ? Are people thinking there would be a V shape recovery ? Is Gov pumping money to support economy a good thing ? Are stock markets rising due to election in US in Nov a good thing ? Can high unemployment rates and record jobless claims be ignored ?

People talking about supply was more in 2008 do not take into consideration many people emigrated out of Ireland in search of jobs which increased the supply !

Where would people emigrate to this time? We could could also have people returning to Ireland from places like Australia.... ??

Roberto_gas

Hubertj wrote: »

Where would people emigrate to this time? We could could also have people returning to Ireland from places like Australia.... ??

I am not talking about next month...within next couple of years as real impacts of COVID start to emerge.

Why did people emigrate in last crash ?

fliball123

bubblypop wrote: »

In a recession, where does demand come from?

People still need to live somewhere?

Hubertj

Roberto_gas wrote: »

I am not talking about next month...within next couple of years as real impacts of COVID start to emerge.

Why did people emigrate in last crash ?

To find work.... apologies my point is this is a global recession so Australia and other places are in the same position as Ireland. I don’t think emigration will be a factor this time in terms of increasing supply by reducing demand. Ireland could end up in a slightly better position than many other countries.
On your initial point about price decreases I don’t know enough to comment. I could make stuff up though?

SozBbz

Roberto_gas wrote: »

I am not talking about next month...within next couple of years as real impacts of COVID start to emerge.

Why did people emigrate in last crash ?

Ireland was probably one of the top 5 most impacted countries in 2008. We are a small open economy, property bubble, tonnes of personal debt.

We're not going to be one of the worst off countries this time around. Probably somewhere in the middle of the pack.

fliball123

Donald Trump wrote: »

People will hold out of course. It's usually no problem for people to postpone their plans for a year or even two. Most people will still have the mental block of being told that their house was worth 400k in January so they won't want to sell it for 350k now and are happy to wait it out. If it persists for a year or two then that is when you get a release onto the market

Yeah this happened in 2008 but this is different. We had an oversupply of houses going into the last recession, We built up a lot bad credit due to the banks giving risky loans like 110% mortgages. We built up over 200billion of debt to balance the books. The price for a rental was no where near as high as it is now. People in primary residneces did not realise that the banks are more or less powerless to repossess the family home even if they don't bother there bums paying the mortgage. Also the emigration release valve is not an option as covid is all over the globe meaning demand wont be flying off to Oz for a few years until things get better

So today yes we are going into recession but we have not just an under supply but a chronic under supply of property available. Banks in the decade running up to this have adhered to prudent lending practices. We will not have to borrow even a quarter of what we needed for the last recession some in the DOF are stating maybe 30billion will be the covid bill. Rents have gone very high but starting to drop and will drop further this could be one area if the rents drop significantly some btls will be off loaded. Then as I say a person in their family home can go years even a decade without paying a mortgage and live their rent free. The nature of this recession is very different to the last one. Only those forced to realise a loss or a lower price will do so and that will be a very low number. But sure time will tell

combat14

people might not emigrate this time. but if they are still on the dole they will be a massive drain on the country's resources -》 wont be able to afford house or rent and probably lead to even higher tax rises and possibly pay cuts to social welfare and public servants too

one of the reasons the country bounced back so quick last time was the huge emigration factor to help the state coffers and assist with economic recovery as a result

[Deleted User]

fliball123 wrote: »

People still need to live somewhere?

But cant afford to buy?
Anyway, the housing crisis in Ireland involves homeless people.
Families in hotels etc
It's a social housing crisis.
People who are on lists for social houses are not going to start buying private houses.

JP100

fliball123 wrote: »

People still need to live somewhere?

They do indeed, so what alot of them will be doing is continuing to rent and maybe on reduced rents. One variable that your thesis fails to take into account is the wage subsidy scheme which goes on to peoples' pay slips. This immediately prevents a cohort of people from applying for mortgages as they will need clean payslips so to speak for 6 months prior to mortgage approval. This will knock quite a number of people out of the market for the foreseeable future and have a significant effect on the demand side of things.

Marius34

Roberto_gas wrote: »

I am not talking about next month...within next couple of years as real impacts of COVID start to emerge.

Why did people emigrate in last crash ?

I don't know why Irish emigrated, but I know why East Europeans emigrated after 2008 crisis. I was part of the 2004-2007 immigrant group from East Europe. In 2004 Poland, Czech Republic, Slovakia, Lithuania, Latvia, Estonia entered European Union, and became Full Members. For countries like Ireland and some others EU nations, there were no restrictions, no hurdles to arrive and work, plenty of jobs.
We came in groups, emigration was massive. Many guys ended in the same construction sector. Most of us came purely with idea to earn some money, and return home. I graduate in 2006 in IT, was looking for 250Eur/month in my profession in home country, so why not just take a brake earn almost 10 times working what ever ****y job in Ireland and return with full pockets.
When the crisis started in 2008, most construction workers left without jobs, and returned home or moved to Scandinavian countries and etc, where the construction and other similar jobs has not collapsed.
This time most of East Europeans does not come in Groups anymore, not in big amounts, and they come for various different reasons, different goals, and many with good English as opposite to construction boom immigrants. Majority has settled down permanently, with nowhere to return.

Claw Hammer

Marius34 wrote: »

I don't know why Irish emigrated, but I know why East Europeans emigrated after 2008 crisis. I graduate in 2006 in IT, was looking for 250Eur/month in my profession in home country, so why not just take a brake earn almost 10 times working what ever ****y job in Ireland and return with full pockets.
.

That is the same reason the Irish left in the last recession. Construction workers had no work and left, teachers, nurses and others who would have been employed in the public service either had no work or very poorly paying work and went abroad. The difference this time is that there may not be openings abroad, or openings which are sufficiently attractive to take large numbers.