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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

The soundbites from sherry Fitz etc are very obviously trying to onvince would be sellers that now IS a good time to put their property on sale with them.

That's fair enough, but in reality it is counter productive to the lack of supply keeping prices up argument.

Iceman29

Taylor365 wrote: »

"We're delighted to present to you this delightful 1 word report, depression! "

World wide one at that...

Assetbacked

Expect significant falls in rents due to the extraordinary shock to demand was the accompanying commentary with the March Daft report. That's not sugarcoating anything!

Empty_Space

Hubertj wrote: »

you previously said prices will fall 40%-50%. Do you still think the decline will be that much? All of the analysis has had a spread of 5% to 25% between now and end of 2021. 5% sounds very optimistic to me but 40%-50% sounds extreme.

It depends on how things play out and how long depression lasts.
But yes easily 50 percent in terms of purchasing power of current currency.

awec

Empty_Space wrote: »

It takes time. Of course prices haven't fell yet.
But they will, the only question is how much.

It's hard to predict until we see how badly the "world" economies are effected. But I think it will be very bad.
Those talking about trivial local things like supply are entirely missing the point.

So have you done a u-turn on your earlier position that prices would be "massively lower" come October?

Empty_Space

awec wrote: »

So have you done a u-turn on your earlier position that prices would be "massively lower" come October?

Time-frames are difficult but when things start to unravel, it will be quick. Nothing like 08.

JJJackal

House owners want prices to stay the same or rise

Those looking to buy want prices to fall

Around and around it goes. Where prices will stop nobody knows!

Empty_Space

JJJackal wrote: »

House owners want prices to stay the same or rise

Those looking to buy want prices to fall

Around and around it goes. Where prices will stop nobody knows!

Buyers arent considering that everything will crash with property.
Including currency. Timing is everything.

JJJackal

Empty_Space wrote: »

Time-frames are difficult but when things start to unravel, it will be quick. Nothing like 08.

Prices wont fall quickly. Prices may fall stay the same or rise - I dont know.

However, there are several factors against a rapid fall in prices:

1) The bank cant evict you from your house - it takes years and as we have seen in the news lately even a decade!

2) There was a mortgage break - so no one who wasnt behind in their mortgage in March already is behind in their mortgage now.

3) Most people are spending less and have their wages subsidized heavily if no longer fully empolyed.

4) Some of the Air BNBs put up for let will likely go back to Air BNBs now that lockdown is over and there will be an unprecedented demand among Irish residents for stay cations. Hotels will be restricted re number of guests due to COVID19.

5) There is still an overall shortage of property. Construction halted for 2 months. New projects were likely put on ice or slowed down. New planning applications etc were slowed. Probably cost >10,000 new homes in the next 2 years.

For prices to fall rapidly the sellers (and a significant proportion of them to create a lot of supply) need to be distressed. Where are these distressed sellers going to come from?

JJJackal

Empty_Space wrote: »

Buyers arent considering that everything will crash with property.
Including currency. Timing is everything.

I suspect buyers are worried that everything will crash. If buyers are worried that everything will crash prices wont fall

Iceman29

JJJackal wrote: »

Prices wont fall quickly. Prices may fall stay the same or rise - I dont know.

However, there are several factors against a rapid fall in prices:

1) The bank cant evict you from your house - it takes years and as we have seen in the news lately even a decade!

2) There was a mortgage break - so no one who wasnt behind in their mortgage in March already is behind in their mortgage now.

3) Most people are spending less and have their wages subsidized heavily if no longer fully empolyed.

4) Some of the Air BNBs put up for let will likely go back to Air BNBs now that lockdown is over and there will be an unprecedented demand among Irish residents for stay cations. Hotels will be restricted re number of guests due to COVID19.

5) There is still an overall shortage of property. Construction halted for 2 months. New projects were likely put on ice or slowed down. New planning applications etc were slowed. Probably cost >10,000 new homes in the next 2 years.

For prices to fall rapidly the sellers (and a significant proportion of them to create a lot of supply) need to be distressed. Where are these distressed sellers going to come from?

this will be gone in a few months........

Iceman29

JJJackal wrote: »

I suspect buyers are worried that everything will crash. If buyers are worried that everything will crash prices wont fall

If I had planned to sell my car tomorrow and knew I'd get a fraction of the price of it in two months....... i know id be flogging it ASAP

awec

Iceman29 wrote: »

If I had planned to sell my car tomorrow and knew I'd get a fraction of the price of it in two months....... i know id be flogging it ASAP

This is a terrible analogy that makes no sense.

JJJackal

Iceman29 wrote: »

this will be gone in a few months........

2 out of 5 may be gone.

However, some of the people on mortgage breaks and getting subsidized wages will be back to work at this point. Some even if not all going back will allow some if not all mortgage holders to pay their mortgage

0gac3yjefb5sv7

There won't be an 08 level drop at all. Much much less but still a dip.

JJJackal

Iceman29 wrote: »

If I had planned to sell my car tomorrow and knew I'd get a fraction of the price of it in two months....... i know id be flogging it ASAP

I thought about how to respond to this. I have no words.

Iceman29

awec wrote: »

This is a terrible analogy that makes no sense.

Do you not understand? if i knew that prices would fall and wanted to sell, I'd sell as fast as i can.

Pretty simple like

JJJackal

Iceman29 wrote: »

Do you not understand? if i knew that prices would fall and wanted to sell, I'd sell as fast as i can.

Pretty simple like

I could sell a car in <12 hours... Pretty simple. There is a book price. If you put it at a few hundred under lads are keen. But would you sell the car now and wait for the same car to be cheaper in a few months? What would you do for a car in the interim?

You have never bought or sold a house I suspect - hence the blase attitude. Your average punter sells a house to move to another house... So you sell your first house, you then have to either rent or buy or be homeless typically... You cant just decide today I will buy a house and move in tomorrow.

Plus most people have a mortgage etc etc. There is significant costs in selling a house. Selling a car is essentially free ( or a few quid for an add in done deal).

guyfawkes5

Houses also don't depreciate rapidly over time like cars do.

awec

Iceman29 wrote: »

Do you not understand? if i knew that prices would fall and wanted to sell, I'd sell as fast as i can.

Pretty simple like

I understand. What you are saying makes little sense. Ignoring the fact that cars are hugely depreciating items, if you sell your car you need to get another car.

If you sell your house tomorrow, you're going to need another house.

"Oh but sure I'd just rent one" you say. Sure, you could do that, and it may work in your favour, but it also may not. You may not get a mortgage in future. You may not find a house you want to buy any time soon. There may not be any suitable rental properties for your family in the area you live.

Alternatively, you could keep your house, and it could fall in value, but the house you want to buy also falls in value by a greater amount, so your trade-up cost is lower.

It's not as simple as you think it is.

JJJackal

awec wrote: »

I understand. What you are saying makes little sense. Ignoring the fact that cars are hugely depreciating items, if you sell your car you need to get another car.

If you sell your house tomorrow, you're going to need another house.

"Oh but sure I'd just rent one" you say. Sure, you could do that, and it may work in your favour, but it also may not. You may not get a mortgage in future. You may not find a house you want to buy any time soon. There may not be any suitable rental properties for your family in the area you live.

Alternatively, you could keep your house, and it could fall in value, but the house you want to buy also falls in value by a greater amount, so your trade-up cost is lower.

It's not as simple as you think it is.

If your already own a house, it needs to depreciate by a significant amount (probably more than 5% per year) to make it worth your while selling and renting.

alias no.9

Top Dog wrote: »

Had to go have a look. Personally I thought it was a orient move on their part, but hey ho.

Can anyone comment on the accuracy of this paragraph please?

The mortgage process – from application to drawdown – typically takes an average of six to nine months to complete, and occurs in four phases – application, approval in principle, letter of offer, to drawdown.

I know it can be a slow process - but THAT slow?

It can take 6 to 9 months to get from sale agreed to getting the keys. If we enter the realms of distressed sales again, just wait and how slow they work, takes months for banks to get all the paperwork in order.

alias no.9

Iceman29 wrote: »

If I had planned to sell my car tomorrow and knew I'd get a fraction of the price of it in two months....... i know id be flogging it ASAP

What if you need a car on a daily basis and the car you had was running just fine, how would get by?

ebayissues

Two friends of mine have been viewing properties arround D3/D5/D8 and prices are pre-covid. One property which was 275k has gone to 300k.

Definitly market is still competitive.

Empty_Space

ebayissues wrote: »

Two friends of mine have been viewing properties arround D3/D5/D8 and prices are pre-covid. One property which was 275k has gone to 300k.

Definitly market is still competitive.

Lemmings will be lemmings.
Once one lemming cops on they will begin to turn.

Assetbacked

The Central Bank's Financial Stability Review 1 has been published. At a high level it discusses the financial stability of the Irish economy, I would recommend reading the PDF at the link.

https://www.centralbank.ie/publication/financial-stability-review/financial-stability-review-2020-i

Of relevance to property, some things I noted were;

- The Central Bank is doing a deep dive into Irish property funds to assess the crystallisation of risks and the potential impact to Ireland and the EU. It notes that funds make up a third of the exposure to domestic commercial property and although the risk has been outsrouced to foreign capital invested in these funds, the Irish property funds have more leverage than their European peers. And we know that more leverage results in a worse crash impact.

- The LTV and LTI mortgage lending restrictions have increased resilience in the mortgage sector and they seem to be happy with them, but there is a review likely to occur next year at this stage rather than this year on these measures which will include a public engagement.

- The widespread nature of the shock means almost half of mortgage holders work in an affected sector. In addition, a significant share of households have limited liquid assets and income support payments may be insufficient to meet mortgage repayments in some cases. This highlights the importance of payment breaks to support households’ short-term liquidity needs, with almost 75,000 currently active agreements covering 11 per cent of the local mortgage market. In some cases, the income shock for mortgage borrowers will persist beyond the length of the payment break and will require additional forbearance, restructuring or resolution.

- The number of residential
property transactions recorded throughout March and April 2020 were at their lowest level since
2014 and down by almost 25 per cent on the same period in 2019. These transactions
would have begun in advance of the arrival of the pandemic, so the effect may be more
pronounced in future months. The impact of containment measures on a number of professional services necessary to support transactions (estate agents and valuers, surveyors, solicitors, etc.), could also serve to delay the practical operation of the market. Similarly, the closure of building
sites across the country from end-March to mid-May saw a cessation in the delivery of new
housing units, at a time when a significant supply shortfall already exists.

- Similarly, the closure of building
sites across the country from end-March to mid-May saw a cessation in the delivery of new
housing units, at a time when a significant supply shortfall already exists. Industry data suggests that as of late April, 90 per cent of construction activity had ceased in Ireland. As a result, housing output in 2020 is expected to be lower than 2019, and further below estimates of medium term demand.17 Another immediate effect of COVID-19 has been a rise in available properties for rent, in part due to a shift out of short-term lets arising from the fall in tourism and most notably in Dublin. While this is likely to have contributed to the reduction in asking rents in April, longer term this rental supply is itself sensitive to any changing accommodation preferences for short-term lets and the capacity of the industry to deliver new units to meet overall housing demand.

- Commercial property prices and rental growth were stabilising prior to Covid19. The use of the word stabilising indicates some form of erratic behaviour like hyper growth maybe.

Dub4747

Fuzzy_Dunlop wrote: »

Are you sure about this? I haven't seen any confirmation of it from the banks and heard anecdotally that they just needed one standard pay check after coming off the subsidy.

It is only one month's proof you need. I spoke to the bank today. But they will check on your payslips after that one as the process continues to ensure you don't go back on it.

Dub4747

awec wrote: »

I understand. What you are saying makes little sense. Ignoring the fact that cars are hugely depreciating items, if you sell your car you need to get another car.

If you sell your house tomorrow, you're going to need another house.

"Oh but sure I'd just rent one" you say. Sure, you could do that, and it may work in your favour, but it also may not. You may not get a mortgage in future. You may not find a house you want to buy any time soon. There may not be any suitable rental properties for your family in the area you live.

Alternatively, you could keep your house, and it could fall in value, but the house you want to buy also falls in value by a greater amount, so your trade-up cost is lower.

It's not as simple as you think it is.

True but I can say that as someone who needs to sell a house in order to buy a bigger one, we're being advised by almost everyone to sell now and if we can get a good price just take it and close the deal as prices will fall. So sell and then rent and be there ready to go, ready to buy and not in a chain.

jimmycrackcorm

guyfawkes5 wrote: »

Houses also don't depreciate rapidly over time like cars do.

My SiL who bought an apartment in 2007 that is still in negative equity might not agree with you.

kippy

jimmycrackcorm wrote: »

My SiL who bought an apartment in 2007 that is still in negative equity might not agree with you.

Let's say she bought a car in 2007 and still had it now......
Which would have depreciated more percentage wise? Is there any chance of the car rising in value at any point?
A car will depreciate all they way down to you having to pay someone to take it off your hands.

Comparing the selling of card with the selling of property or indeed the variables around each as one poster did above is daft on many levels.