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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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Reversal

eagle eye wrote: »

Yeah comparing this to the last major crash and the banking crisis is ludicrous.
We didn't have a housing shortage then, we had a glut of empty houses and a mass exodus of young people. We also had a banking crisis which isn't the case this time around.
Fact of the matter is this has been a disaster but they'll solve it by making the people pay for it. There won't be mass emigration because every country is suffering and there's no booming economy anywhere.
So we still have a housing crisis.

Your posts are indicative of the psychology at work here.

AFTER deciding to proceed with a purchase, you have become steadfast in the opinion that prices can't fall. Basic human nature, but it's important to at least be aware when suffering from confirmation bias.

[Deleted User]

theballz wrote: »

The apartment I looked at pre-Covid listed at 450k.

.....................
The buyer purchased this in 2012 for 425k. ...........

Pre Covid there weren't many properties that were in or around their 2012 sale price.

Bass Reeves

timmyntc wrote: »

No we will not have the Apple tax, as has been debated to death already.
The money would likely be borrowed, as interest rates are already at historic lows.

I be I inclined to think we will time will tell. Most consider this am Ireland only problem . It is not it is a world wide economic issue that will have to be addressed.

theballz

Augeo wrote: »

Pre Covid there weren't many properties that were in or around their 2012 sale price.

Meaning?

Deub

Cyrus wrote: »

Our banks are about as well capitalised as they could have been , they will have issues post covid no doubt but it’s not even close to the same situation as before

Irish banks are a small part of the economy. However EU systemically important banks are the ones to watch.

You can find the list here: https://en.m.wikipedia.org/wiki/List_of_systemically_important_banks

If one goes down, It could have a significant impact on property market.

Hubertj

Deub wrote: »

Irish banks are a small part of the economy. However EU systemically important banks are the ones to watch.

You can find the list here: https://en.m.wikipedia.org/wiki/List_of_systemically_important_banks

If one goes down, It could have a significant impact on property market.

thanks for sharing, wasn't aware of this..... is there a risk of one going under?

landofthetree

Bass Reeves wrote: »

The last two big recessions we entered in the early 1980's and in the late noughtiry we were after government's that had allowed out of control spending. This time FG has kept the lid on it up until now. In the late noughties we had too many houses this time we have a housing shortage.

If you look at all the hints coming from government formation both FG and FF talk about a house building program. We will have the NAMA surplus and the Apple tax. As well if the bank share recover we will have that as well.

This time as well this recession will effect all economic activity accriss all countries so there will be an effort to.pump prime economic activity with in 12-18 months. I actually think we could enter a period of high inflation with low interest rates for 3-4 years.

They haven't kept a lid on public spending.

It has increased by 13 billion since 2016.

No other government in Europe has increased public spending as much in the last 4 years.

Somehow the loony left in Ireland convince a lot of people that we haven't significantly increased our spending. They even point to Portugal as a good example yet we have outspent them!

We haven't got good value for our money at all. No party seems to reform the system but just spend more.

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liamjames1

theballz wrote: »

Meaning?

I think what the poster is referring to is that average house price is up 56% (in Dublin for example) since 2012 so if it was €425k then and €440k now it would be unusual.

fliball123

The Student wrote: »

Not necessarily. Investors are concerned with ROI so if you can get a better % return after tax and expenses via property than banks people will go for it.

Property at the right price is a safer bet than a bank. We could be heading to negative interest rates for any savings over €100k.

I think if this happens people will take out their savings and put it under the mattress. I dont think banks would mess with their life blood of savings at the moment

Deub

Hubertj wrote: »

thanks for sharing, wasn't aware of this..... is there a risk of one going under?

Once lockdown is over, we will start seeing the true extent of the damages on companies and loans. Banks are making provisions of 1 billion or more (barclays has made a provision of over 2 billions) for bad loans. However Deutsche bank reserved 500 millions. If their scenario is too optimistic they could be in trouble.

cnocbui

Hubertj wrote: »

i would have thought LPT would be increasing in the next few years?

Sinn Fein just about got into power on the back of promising to reduce or eliminate property tax, I doubt any other party is going to be viewing it as a future cash cow.

Cyrus

cnocbui wrote: »

Sinn Fein just about got into power on the back of promising to reduce or eliminate property tax, I doubt any other party is going to be viewing it as a future cash cow.

are they advocating that? jaysus

youd have to assume that as a cohort sinn fein voters pay a relatively small % of property taxes.

Claw Hammer

The Student wrote: »

Not necessarily. Investors are concerned with ROI so if you can get a better % return after tax and expenses via property than banks people will go for it.

Property at the right price is a safer bet than a bank. We could be heading to negative interest rates for any savings over €100k.

ROI comes from 2 sources ;- the rental yield and capital growth. Not much point in getting 20k in rent if the capital value drops by 30k!
The first thing investors think about is whether the capital value will hold up. In the longer term the capital gain is more important than rental yield.

stinger31

landofthetree wrote: »

Ive made my suggestions on the economy in the FG thread,

My opinion on the housing market is prices will fall 40% over the next 12 months. I can see house building coming to a standstill. Mortgages will be very hard to get.

You've made a property bull angry....they don't like it when they have to take their head out of there ar$se

stinger31

pearcider wrote: »

It is quite obvious that it is you who contribute nothing to the debate in this thread except childish sarcasm and snide remarks. You come across as someone about to lose their bollix on their property investments.

100% agree

cnocbui

landofthetree wrote: »

They haven't kept a lid on public spending.

It has increased by 13 billion since 2016.

No other government in Europe has increased public spending as much in the last 4 years.

Somehow the loony left in Ireland convince a lot of people that we haven't significantly increased our spending. They even point to Portugal as a good example yet we have outspent them!

We haven't got good value for our money at all. No party seems to reform the system but just spend more.

I'll bet you would find that Luxembourg has. I'ts hard to comprehend how insane they are, but then you just look at that megalomaniac Juncker and it becomes clearer.

It's amazing how Ireland manages to increase public spending so much on the back of us supposedly being a low taxing country, in terms of tax burden per head. :rolleyes:

Claw Hammer

eagle eye wrote: »

Yeah comparing this to the last major crash and the banking crisis is ludicrous.
We didn't have a housing shortage then, we had a glut of empty houses and a mass exodus of young people. We also had a banking crisis which isn't the case this time around.
Fact of the matter is this has been a disaster but they'll solve it by making the people pay for it. There won't be mass emigration because every country is suffering and there's no booming economy anywhere.
So we still have a housing crisis.

While there not be emigration, there will not be immigration. There will way fewer foreign students here in the Autumn. Some Irish students are saying that they will have no summer earnings, their parents earnings have been affected and they would be able to return to college in the autumn. Hotel, bar and restaurant employees won't need accommodation in such numbers in the Autumn either.
mathematically, that will have the same effect as mass emigration and unoccupied newly constructed buildings. Many companies will be cancelling capital projects as well so construction workers may have less work.
As the banks take stock they will once again be concerned about arrears rather than growing business.
The single factor which might make a difference this time is the availability of credit. Last time there was none, this time who knows?

Bass Reeves

Claw Hammer wrote: »

ROI comes from 2 sources ;- the rental yield and capital growth. Not much point in getting 20k in rent if the capital value drops by 30k!
The first thing investors think about is whether the capital value will hold up. In the longer term the capital gain is more important than rental yield.

I prefer a good rental yield that will hold up rather than an assumption based of capital growth. In the noughties lot of people were sold the pup of capital growth with low rental yields below 2-3%. Such an investment will not hold water.

At present I have a property with a yield of nearly 15% on it first day purchase cost about 4 years ago. When I bought it projected yield was 10% but this rose to 13% by the time I first rented it. If this property yield dropped by 50%it is still sustainable it's unlikely to drop below 10%.

When you are in the rental game I would not put too much emphasis on capital growth as very few rental properties grow at high rates due to condition if the property

eagle eye

Reversal wrote:

Your posts are indicative of the psychology at work here.
AFTER deciding to proceed with a purchase, you have become steadfast in the opinion that prices can't fall. Basic human nature, but it's important to at least be aware when suffering from confirmation bias.

Nothing, it's that I've studied it and gotten advice from experts and friends in different sectors of the economy.
I'm not predicting that house prices won't drop either. I'm predicting that it won't be as severe as most seem to think. I think you'll be see a max drop of 20% on less attractive properties and somewhere in the region of 5-15% in more attractive properties.
I made my decision to proceed based on this information.
I've mentioned the factors at play, I don't see anybody challenging them other than saying that financial pain from other sectors will seriously hit the housing market. I disagree with that because we have a housing shortage crisis. Any monies earmarked for solving this issue will now be part of repayments on our debts so I don't see a massive amount of new houses being built anytime soon.
I don't see a mad rush to buy anytime soon but I don't see panic sales happening either

Donald Trump

Claw Hammer wrote: »

ROI comes from 2 sources ;- the rental yield and capital growth. Not much point in getting 20k in rent if the capital value drops by 30k!
The first thing investors think about is whether the capital value will hold up. In the longer term the capital gain is more important than rental yield.

There's also no use in the capital appreciating 30k over a year or two if the mortgage payments will be 20k and you don't have the cashflow to service them.

Eric Cartman

Augeo wrote: »

Do you honestly think that? I'm just wondering are you venting or do you really believe that.

There are fook loads of people here on €50k or more and they'd have no inclination to not remain here.

I think songles, childless couples and workers from overseas will be looking to leave. Irelands personal taxation on middle and high earners is at breaking point.

JimmyVik

cnocbui wrote: »

Would you continue to operate as a developer in this country if the government did such a thing and effectively started dictating to you the price you should sell at, and when, and how much profit or loss you would be forced to?

Apart from that, this might be unconstitutional.

Thats what they are doing for landlords now.
And why so many are exiting the market.

JimmyVik

Marius34 wrote: »

I'm following this thread. I'd say the average based on the opinions of this thread would be around 15%-20% in fall. There are some looking for over 30%, and even 50% in crash. As far as I have seen, I'm the most optimistic here, expecting only around 5% in property price downturn. although 10% wouldn't be surprise either, as that is not big difference from 5% in current uncertainty.

We are all just internet people.
None of us have a clue if we are honest

Nika Bolokov

There's three sides on this thread.

Those with no property who seem to be taking great pleasure in seeing prices fall and people who were riding high come crashing down with extreme impacts.

Those in the middle who think were in for a bumpy time but well eventually muddle through.

And a third bunch possible recent buyers of in particular new builds who believe nothing will happen at all and the fundamentals are strong.

Im in the middle group. This is a disaster. Mortgage approvals will be torn up, there's an expectation prices will fall so the market will freeze for all sellers who don't cut prices, the next few months will be full of headlines saying prices down xyz.

As anyone who bought in 2011 of 2012 will tell you batch one above will jump all over you saying your a fool for paying more than 10 euro for a house in ballsbridge etc etc

In reality with interest rates so low you'll probably be able to get a house again in Dublin 5 or 7 or 9 etc again for a mortgage of a few hundred a month.

Lots of young buyers in tech companies and the public sector will buy them up and again the same as the last time lack of supply will bring prices back as the economy recovers.

Nothing will be built, the state won't build as the covid debts are too heavy and in 3 to 4 years time we'll be back to a housing shortage worse than this time.

Bass Reeves

Eric Cartman wrote: »

I think songles, childless couples and workers from overseas will be looking to leave. Irelands personal taxation on middle and high earners is at breaking point.

Where will they go?

Eric Cartman

Bass Reeves wrote: »

Where will they go?

That I dont know, but with the irish government trying to extract ever more blood from a stone, somewhere will realise theres opportunity for english speakong skilled workers sick of having every cent stolen from them

landofthetree

Bass Reeves wrote: »

Where will they go?

The crisis won't last forever.

Plus if NZ/Auz/Canada etc wants an Irish worker all they need do is fly them over,do a C19 test and place them in quarantine for 14 days.

Hubertj

JimmyVik wrote: »

We are all just internet people.
None of us have a clue if we are honest

Problem is plenty in this thread aren’t being honest - mixing opinions with facts with lies. Others taking pleasure from the stress this could be causing to some people by intentionally provoking. I’m learning from some and it helping me to better understand the market and some of the macro factors to consider.

Bass Reeves

Eric Cartman wrote: »

That I dont know, but with the irish government trying to extract ever more blood from a stone, somewhere will realise theres opportunity for english speakong skilled workers sick of having every cent stolen from them

England and the US were the release valves until around 2000, the US us no longer an option with its emigration policies and Brexit will limit the UK as an option. During the last recession Australia, NZ and Canada were options. Australia has started to limit immigration, unless you go as a.young worker there imigration policy makes it hard enough to access there. NZ and Canada were options and may still be but NZ is closed at present and Canada has limited options

Hard to see either taking 40k people a year for 3-4 years. On workers returning home most eastern European workers stayed the course last time and I expect will again

[Deleted User]

Eric Cartman wrote: »

I think songles, childless couples and workers from overseas will be looking to leave. Irelands personal taxation on middle and high earners is at breaking point.

There's plenty singles and childless couples earning €50k each who have a small enough mortgage on a nice enough house who can see why it's just hunky dorey to live here.

For every one (Irish person) who will be looking to leave 10 won't even consider it an option.