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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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combat14

fliball123 wrote: »

Same goes with our tourists and students and young hospitality workers its only in the last decade that we have had more people emigrating into the country than out of it. So its a zero sum game not much of a plus or minus for demand

irish universities alone are looking at a funding drop of €350 million over the next year due to reduction in foreign students coming here and paying fees

Hulk Hands

How big a factor in the housing shortage is lack of construction workers? Is it fair to assume that less corporate work with increased WFH and higher numbers unemployed will lead to an increase in workers on residential sites and a fall in construction costs as a whole? Obviously finance of projects will be slightly affected also

fliball123

combat14 wrote: »

irish universities alone are looking at a funding drop of €350 million over the next year due to reduction in foreign students coming here and paying fees

That is only one small part of this and when you look at the whole scheme of things, we will have as many people in this country next year as we do this year. Also I doubt if a lot of these students would of been in the market to buy, but it would have some sort of knock on effect for rent

OttoPilot

fliball123 wrote: »

No I never made that the point of my argument. I have stated many times the factors leading into the supply and demand sides of which make up a market price, will I go through them again. OK one more time just for you but just the 2 main reasons on both supply side and the demand side why I dont think prices will go down too much (5/10%) and that will not be for another 12 months and then prices will bounce back up, but I wouldn't advise anyone on here to buy or sell that is too reckless.

Demand
There is a chronic under supply of housing, you only have to look at how well the shinners done on the back of building houses. Also this will be significantly worse due to the restrictions I know they are going to be lifted shortly but builders still have to adhere to social distancing I believe so it is going to slow the process up. Then when the builders look at anywhere up to 10% drop in price for a new build why the hell would they build when their margins for profit where already tight?

The emigration release valve is not available to people as corona is everywhere as will the recession. Also Ireland's high welfare rates will trap people to stay here.

Supply side
People have the knowledge that banks are toothless for repossessions and know they can stay years in their house not paying a mortgage, why would you sell. The option to rent for BTLs is still currently looking attractive. It will be interesting to see if rents come down significantly over the next 2 years or so if it does we may see some of the BTLs coming on stream.

Some people have the means to decide I will just take my property off until the market bounces back. As can be seen on myhome and daft currently, people on here can say what they want about you cant view a house blah blah blah, but forgot to mention that it is currently free to advertise your house on myhome or daft you would have nothing to lose by having ad for your house on there, I know if I was selling that is the least I would be doing.

"Why would builders build if prices fall?". Do you think they will just stop working? As you said yourself, emigration is not an option so they will cut costs (I.e. wages) to keep building, rather than make themselves unemployed. This goes right across the industry, from labour to materials. In case you didnt know, margins in construction are always tight, good times and bad.

fliball123

OttoPilot wrote: »

"Why would builders build if prices fall?". Do you think they will just stop working? As you said yourself, emigration is not an option so they will cut costs (I.e. wages) to keep building, rather than make themselves unemployed. This goes right across the industry, from labour to materials. In case you didnt know, margins in construction are always tight, good times and bad.

They will just keep the land that they own and not build and lay off staff, this is currently happening. So you think that a margin of 10% less is going to increase output? The lefties in this countries want more housing but dont want anyone to pay for it. Its an impossible task to even contemplate..

GreeBo

schmittel wrote: »

Yes

We will have to agree to disagree so.

The most recent sales I can see for the road (26th Feb 2020) are €450k.
So anyone who bought one of those houses, peak or otherwise still did ok, some obviously did far better than others, but so what?
How much would renting the same house have cost them over the 12 years?

eagle eye

fliball123 wrote:

Where are you getting you info from, not saying your right or wrong just wondering what your source is?

From some people in the financial game. One guy involved in currency, another a financial planner, two in the banking sector, a couple in pensions.

OttoPilot

fliball123 wrote: »

They will just keep the land that they own and not build and lay off staff, this is currently happening. So you think that a margin of 10% less is going to increase output? The lefties in this countries want more housing but dont want anyone to pay for it. Its an impossible task to even contemplate..

And the loans they took out to buy that property will just wait then, yes? Investors who gave money to developers will be happy to earn a negative return for uncertain future profits than complete sooner and recoup some money?

Costs will fall because workers across the industry are getting paycuts or in some cases laid off as you said, and will then work for less.

JimmyVik

GreeBo wrote: »

Everyone says that about everything though. The irony here is that we have people laughing at others for saying that this recession will be different than the last one. Yet you are doing *exactly* that yourself. We recovered from the last one, we will recover from this one.

How many depressions or "this has never happened before, it will never recover!" has the stock market been through?

Depressions, great depressions, .com boom to bust, 9/11, covid19
They always bounce back, this time wont be any different, unless you think people are going to fundamentally change how they have behaved.

My old man used to say to me that the worst recession ever might happen but give it max 10 years and things will be back. I had my doubts there a few years ago, but he was right.

fliball123

OttoPilot wrote: »

And the loans they took out to buy that property will just wait then, yes? Investors who gave money to developers will be happy to earn a negative return for uncertain future profits than complete sooner and recoup some money?

Costs will fall because workers across the industry are getting paycuts or in some cases laid off as you said, and will then work for less.

The banks will not be too quick to collect as they might have to take a bath if they wait for prices to rise they know they will get their money. Investors will be just as likely to wait to get a profit as to rush in and take a loss

hometruths

GreeBo wrote: »

We will have to agree to disagree so.

The most recent sales I can see for the road (26th Feb 2020) are €450k.
So anyone who bought one of those houses, peak or otherwise still did ok, some obviously did far better than others, but so what?
How much would renting the same house have cost them over the 12 years?

Of course we can agree to disagree but stop clutching at straws.

JimmyVik

schmittel wrote: »

Clearly none of the purchases were a sound investment!

But there were plenty people who bought decent properties in desirable parts of Dublin in 2007 with 110% mortgages, still deep in negative equity now with prices about 20% shy of what they were then.

But on the plus side they've saved a fortune in rent. It's dead money you know. Unlike mortgage interest.

The real winners are the ones who thought "feck that, mortgage interest in negative equity is a lot like dead money, I'll just stop paying it."

Most of them are still living in their houses!

In 2006 I watched my friends buying houses and wished I had bought one too when they did.

In 2009 I felt very sorry for my friends who had bought houses and was glad I hadnt.

In 2016 I was starting to think that maybe I should have bought a house before but was still on the fence.

In 2020 I was looking at my friends who bought houses in 2006 and 2009 and 2016 and envied them. I wished I had bought one at any time.

In 2019 Im starting to save for a deposit becuase its likely I will buy one in the next year or 2. I still wish I had bought before, even in 2005 or 6 when my friends started buying their houses.

In 2020 I am looking forward from today and I still wish I had bought a house at any time that my friends bought theirs.

I dont think I know anyone who has regretted buying their house even just before the crash. A few might have regretted it for a few years, but they are all very happy with their purchases now.

OttoPilot

fliball123 wrote: »

The banks will not be too quick to collect as they might have to take a bath if they wait for prices to rise they know they will get their money. Investors will be just as likely to wait to get a profit as to rush in and take a loss

Yeah banks are not just going to let developers sit on land. It didnt happen last time with Nama and it wont happen this time. They are better capitalized now so we shouldn't need Nama.

Investors will want their money. Sitting there doing nothing while your developer goes bust? Meanwhile you are missing out on buying at the bottom?

Browney7

fliball123 wrote: »

The banks will not be too quick to collect as they might have to take a bath if they wait for prices to rise they know they will get their money. Investors will be just as likely to wait to get a profit as to rush in and take a loss

Most institutional and professional investors aren't averse to taking a loss if they identify better opportunities to deploy their capital. They approach their current holding and value it taking the approach of "would I buy my current holding in X property company for the price I can currently get". If the answer is no and they deem it overvalued they sell. People shouldn't be wedded to the "I paid X for my holding and will wait come hell or high water until I'm back to where I was". Sometimes the easiest way to make money is to stop losing more of it

fliball123

OttoPilot wrote: »

Yeah banks are not just going to let developers sit on land. It didnt happen last time with Nama and it wont happen this time. They are better capitalized now so we shouldn't need Nama.

Investors will want their money. Sitting there doing nothing while your developer goes bust? Meanwhile you are missing out on buying at the bottom?

Well thats the risk to both banks and developers rush in now and force the developers hand and take your loss or wait it out and wait for prices to rise and get your profit

fliball123

Browney7 wrote: »

Most institutional and professional investors aren't averse to taking a loss if they identify better opportunities to deploy their capital. They approach their current holding and value it taking the approach of "would I buy my current holding in X property company for the price I can currently get". If the answer is no and they deem it overvalued they sell. People shouldn't be wedded to the "I paid X for my holding and will wait come hell or high water until I'm back to where I was". Sometimes the easiest way to make money is to stop losing more of it

How does that model work in a recession or the threat of a depression?

Villa05

GreeBo wrote:

Mortgage interest gets you a house at the end of the term. What does rent get you at the end of the term?

GreeBo wrote:

Unless your rent is *significantly* lower than mortgage repayments would be on the same house, then it is dead money. Also, how many people who are renting are planning to rent for their entire lives? How many are planning from a financial point of view to *always* have rent to pay until they die, including 20+ years after they have stopped working?

For many renting is the only option as they do not qualify for a mortgage. Buying a 100 miles from their place of work is not realistic, as the price of houses rises more and more people fall into this category.
As their rent rises these people have less disposable income and become basically slaves working to survive. In addition they are unable to provide for their retirement. In such circumstances the state will have to intervene to provide their income, health care and housing in retirement.

In short high House prices/rent act as a parasite on an economy hoovering up wealth and resources and eventually kills the economy ala 2008 when the IMF had to come into to resuscitate the economy

Once the IMF left, Gov pursued a policy of driving up house prices

A policy of picking your punishment of extortionate rents or House prices will not resolve this

GreeBo wrote:

Making a poor decision is always a poor decision, you cant blame the markets for not bailing you out of it.

Banks, Developers, Government, Financial Regulators, Auditors all made poor decisions, with little/no accountability. No lessons were learned except those that were imposed on them by outside entities

The cost of their poor decisions was and is borne by those who merely seek to put a roof over their heads

I think many just want a system where they are not paying for the mistakes of the most powerful and wealthy in society. Is that a populist lefty looney aspiration?

c.p.w.g.w

Seen 2 house listed near mine, for 180k & 205k both smaller than mine and in worse areas(IMO)...I paid in the region of 100k-110k for mine 3 years ago...I realise I got a great deal on mine, but looking at those other houses has left me wondering what is my place worth now

Mic 1972

I received an email from an Estate Agency to arrange for a viewing in town, so apparently viewings are taking place again. Does anyone know if we can drive further than 2km for a viewing?

amyed198

Hi,

We just had to pull out of a house we were sale agreed on as the bank withdrew the exemption, it is now back to square one on a lower budget and in a more competitive price range, after thinking about it we really don't want to spend more than 300k for a house in a decent area of Dublin.

What do you people foresee happening to the prices of property within the next 3-6months? People we have spoke to and family members have advised us that prices will likely increase as people have pulled stock from the market resulting in less supply. We think prices may drop but could take some time.

The reason i am asking is we are currently renting in Dublin and it is an absolute rip off, our lease ends in January and breaking it now to move somewhere cheaper is now feasible. We really need somewhere in the next 6 months max.

GreeBo

JimmyVik wrote: »

In 2006 I watched my friends buying houses and wished I had bought one too when they did.

In 2009 I felt very sorry for my friends who had bought houses and was glad I hadnt.

In 2016 I was starting to think that maybe I should have bought a house before but was still on the fence.

In 2020 I was looking at my friends who bought houses in 2006 and 2009 and 2016 and envied them. I wished I had bought one at any time.

In 2019 Im starting to save for a deposit becuase its likely I will buy one in the next year or 2. I still wish I had bought before, even in 2005 or 6 when my friends started buying their houses.

In 2020 I am looking forward from today and I still wish I had bought a house at any time that my friends bought theirs.

I dont think I know anyone who has regretted buying their house even just before the crash. A few might have regretted it for a few years, but they are all very happy with their purchases now.

+1
This is exactly what I'm saying.
If you make a decision that you are happy with at the time and make a purchase, then your best bet is to just stop looking at prices.

[Deleted User]

Mic 1972 wrote: »

I received an email from an Estate Agency to arrange for a viewing in town, so apparently viewings are taking place again. Does anyone know if we can drive further than 2km for a viewing?

Firstly, the 2km limit was for exercise. It has been increased to 5km. For your exercise.
So nothing to do with driving anywhere.
The law states that you should stay at home except in certain circumstances, which are listed.
Fairly certain that viewing a house is not in that list.

hometruths

JimmyVik wrote: »

In 2006 I watched my friends buying houses and wished I had bought one too when they did.

In 2009 I felt very sorry for my friends who had bought houses and was glad I hadnt.

In 2016 I was starting to think that maybe I should have bought a house before but was still on the fence.

In 2020 I was looking at my friends who bought houses in 2006 and 2009 and 2016 and envied them. I wished I had bought one at any time.

In 2019 Im starting to save for a deposit becuase its likely I will buy one in the next year or 2. I still wish I had bought before, even in 2005 or 6 when my friends started buying their houses.

In 2020 I am looking forward from today and I still wish I had bought a house at any time that my friends bought theirs.

I dont think I know anyone who has regretted buying their house even just before the crash. A few might have regretted it for a few years, but they are all very happy with their purchases now.

Fair enough and completely understandable given the way the last 15 years has panned out thanks to public opinion and government policy - i.e everybody else other than the individual house purchaser must pay the bill for the bubble bursting - tax payers, future buyers, renters, banks etc etc. We must spread the pain out because God forbid the fella who paid 700k for a flimsy apartment should take the hit.

And unless opinion and policy changes it is probably how the next 15 years will pan out as well.

I suspect in other countries you would have bought a house already, at some stage over the last 10 years, at a cheaper price and a lower interest rate on your mortgage.

Because in other countries they would have lanced the boil and let it all wash through the market. Instead we became world champions of not paying our mortgages!

And judging from some of the wisdom on here the cycle of enthusiastically selling over priced houses to each other will repeat itself, and in 15 years there will be a new generation of JimmyViks saying "I got no reward for my prudence, those who threw caution to wind turned out ok, if you can't beat them join them"

And on and on it goes. And society as a whole, particular the younger members, will be all the poorer for it until eventually it reaches a very ugly breaking point.

Apologies for being so gloomy, it's just an opinion and as I mentioned earlier, I really hope I am wrong.

GreeBo

Villa05 wrote: »

For many renting is the only option as they do not qualify for a mortgage. Buying a 100 miles from their place of work is not realistic, as the price of houses rises more and more people fall into this category.

I have always said that only buy if you are comfortable to buy.

smurgen

fliball123 wrote: »

They will just keep the land that they own and not build and lay off staff, this is currently happening. So you think that a margin of 10% less is going to increase output? The lefties in this countries want more housing but dont want anyone to pay for it. Its an impossible task to even contemplate..

Here's hoping they can pay bills with land.

Billythekid19

BillyBiggs wrote: »

Just took a look at rental properties on Daft in both Cork and Dublin. Sweet Jesus, reality hasn’t hit the rental market at all. Who do they think is going to rent these places for such extortionate rents? Do letting agents not watch the news, or read newspapers?

Fully agree with the cork rental sector. I see on daft that a double room in a shared house in ballincollig is 1100 per month. Thats the price of a monthly mortgage repayment for most people!

The Student

OttoPilot wrote: »

"Why would builders build if prices fall?". Do you think they will just stop working? As you said yourself, emigration is not an option so they will cut costs (I.e. wages) to keep building, rather than make themselves unemployed. This goes right across the industry, from labour to materials. In case you didnt know, margins in construction are always tight, good times and bad.

Rational investors would hold until prices level off, would you take the risk of investing in something when prices are falling?

This is exactly the same for the building industry, most if not all of those working in the building game are sub contractors and are therefore self employed.

If I were a developer I would hold off to see where prices level off at and then factor my costs at that point into any decision to commence building.

To be honest what suprises me the most on this particular forum is how some posters seem to discard the basic laws of economics of supply and demand.

No matter what people say we don't have enough properties. All houses being built will have buyers, especailly those under the €400k mark.

Will developers build in a falling market? Highly unlikely as the risk of not being able to sell is too high.

Will the Govt provide finance to developers to build? again highly unlikely if the developers can't repay the loan who covers the shortfall?

Will the Govt build social housing in large numbers? again highly unlikely as home ownership is what people want? Also the Govt does not want the responsibility of maintence etc.

Perhaps what you will see is the builders engaged in a retrofit scheme which will have a number of benefits, our carbon emissions will reduce and so will our fines, out builders will have employment which will stimulate the economy somewhat and therefore generate the payment of various taxes etc. Finally it will allow for the creation of a functioning Govt which will give the Greens what they want and also show FF and FG's credentials for the Green agenda which was an important topic in the last election.

Villa05

Google and Facebook allowing workers to work from home for the remainder of the year and will be increasingly flexible to the practice into the future

The_Conductor

Villa05 wrote: »

Google and Facebook allowing workers to work from home for the remainder of the year and will be increasingly flexible to the practice into the future

Sounds very positive.
Just wondering is there any inducement to work at home (e.g. an allowance for your own laptop/internet/electricity-heating etc)? There is also the fact that you're not taking up space in HQ buildings- must be a positive.
We'll hit the government's 20% home working target in no time flat at this rate!

Billythekid19

The_Conductor wrote: »

Sounds very positive.
Just wondering is there any inducement to work at home (e.g. an allowance for your own laptop/internet/electricity-heating etc)? There is also the fact that you're not taking up space in HQ buildings- must be a positive.
We'll hit the government's 20% home working target in no time flat at this rate!

You can claim around 3 euro a day from revenue for heat and electricity when wfh, it can be claimed at the end of the tax year. Also people will save thousands of euro in the year not having to commute to work.