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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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Villa05

Hubertj wrote:

"APPEARS" says a lot about SF policy. It looks and sounds great on paper. What will it look like in practice.

It would benefit the debate if you discussed the points raised rather than knocking the parties that are supportive of those points

Can you think of a reason why the current government could not pursue a similar policy?

Hubertj

Villa05 wrote: »

It would benefit the debate if you discussed the points raised rather than knocking the parties that are supportive of those points

Can you think of a reason why the current government could not pursue a similar policy?

I’ll repeat myself again. I would like to see the business case for both, especially the 750k.

I would also like to see evidence of where the Irish state has delivered large scale construction projections within budget, or at least within contingency (whatever that % is).

It’s very easy to write a few numbers on a piece of paper.

I’m not disagreeing with the policy, whoever tries to implement it, but I have no confidence in the cost projections.

The Belly

c.p.w.g.w wrote: »

My buddy works for a bank, specifically dealing with defaulting mortgages...his experience is that a judge would take a house off a family with children, some of those houses will take 10-15 years to reclaim...thats why there is such a difference

Well the 42 months are the stats so id go with them.

The Belly

Hubertj wrote: »

I’ll repeat myself again. I would like to see the business case for both, especially the 750k.

I would also like to see evidence of where the Irish state has delivered large scale construction projections within budget, or at least within contingency (whatever that % is).

It’s very easy to write a few numbers on a piece of paper.

I’m not disagreeing with the policy, whoever tries to implement it, but I have no confidence in the cost projections.

The state are well able to deliver the large scale devlopments needed.

Provide the land and planning.

Tender each development out from small to very large to include penalty clauses in order to avoid missed targets or over runs.

Exclude any tenders that do not have a strong track record of delivering in time and on budget.

The reason we have nothing to compare it with is its policy not to provide social housing rather farm it out to small housing assocations like cluid etc so it looks like something is being done.

ELM327

The Belly wrote: »

It takes 42 months to repossess a property here and 24 in Finland our average mortgage interest rate is 2.99% theirs is .98%.

I cant see the justification in a 2% difference due to an 18month differnce in the time to reposses a house

The Belly wrote: »

Well the 42 months are the stats so id go with them.

We don't have the same volume, so you can't compare stats. It's not apples with apples.

19233974

The Belly wrote: »

The state are well able to deliver the large scale devlopments needed.

Provide the land and planning.

Tender each development out from small to very large to include penalty clauses in order to avoid missed targets or over runs.

Exclude any tenders that do not have a strong track record of delivering in time and on budget.

The reason we have nothing to compare it with is its policy not to provide social housing rather farm it out to small housing assocations like cluid etc so it looks like something is being done.

Exactly this, once planning and land is provided for its about as straight forward as possible. The problem is with all previous projects they have been rushed through and awarded to lowest bidder, and utilising the wrong form of contract.

hometruths

The Belly wrote: »

Well the 42 months are the stats so id go with them.

Where are you getting the 42 month figure from?

Plenty of people in Ireland living in their houses who haven’t paid their mortgage in 10 years never mind 42 months.

Just wouldn’t happen in any other country.

neutral guy

The difference between 2008 recession and today is that today every single person are more or less hit ! In 2008 the planes was flying,the taxi drivers was driving,the hotels was working,the shops was selling,the some companies was making business.Today planes not flying,the taxi drivers are seating at home,the hotels are closed,the shops are closing and every single company has problems with business.

The Belly

schmittel wrote: »

Where are you getting the 42 month figure from?

Plenty of people in Ireland living in their houses who haven’t paid their mortgage in 10 years never mind 42 months.

Just wouldn’t happen in any other country.

Maybe but thats the average.

Banking & Payments Federation Ireland (BPFI)

0gac3yjefb5sv7

No sign of any recession in the property market. Things have stayed as is before pre CoVid.

hometruths

The Belly wrote: »

Maybe but thats the average.

Banking & Payments Federation Ireland (BPFI)

The average perhaps, but it is only the average of the houses actually repossessed which is miniscule, and the majority are voluntarily surrendered which presumably speeds up the process.

At the end of Q1 2020 there were 63437 PDHs in arrears and 16773 BTLs. Of those in Q1 2020 only 64 PDH properties were repossessed and 15 BTLs.

The average you're quoting is meaningless because the level of repos is so small it is statistically insignificant.

Which is exactly the point the BFPI makes regularly.

You cannot compare the repossession statistics of Ireland vs any other country because essentially we don't have any repossessions.

A far better relative measure is the level of mortgages in default:

In terms of loan book risk profile, according to a 2016 report issued by Davy Stockbrokers Finland’s defaulted stock to total stock was 1.2% (in Ireland by comparison it was 18.1%)

Does the fact that we have about 15 times the rate of mortgage defaults help you understand why our rates our 2% more expensive?

To be honest we're lucky it is only 2%.

fliball123

The Belly wrote: »

Well the 42 months are the stats so id go with them.

Its no where near 42 months if its a family home and the family have kids. You might want to check the difference for buy to lets . but family homes are very hard to take away

guyfawkes5

This sort of "that doesn't sound right to me... you must be wrong!" pattern has happened in other threads.

I guess when you're presented with statistics contrary to your view formed from anecdotes or media reports, you either consider changing your mind or changing the statistics. Most people seem to plump for one over the other.

The Belly

schmittel wrote: »

The average perhaps, but it is only the average of the houses actually repossessed which is miniscule, and the majority are voluntarily surrendered which presumably speeds up the process.

At the end of Q1 2020 there were 63437 PDHs in arrears and 16773 BTLs. Of those in Q1 2020 only 64 PDH properties were repossessed and 15 BTLs.

The average you're quoting is meaningless because the level of repos is so small it is statistically insignificant.

Which is exactly the point the BFPI makes regularly.

You cannot compare the repossession statistics of Ireland vs any other country because essentially we don't have any repossessions.

A far better relative measure is the level of mortgages in default:

Does the fact that we have about 15 times the rate of mortgage defaults help you understand why our rates our 2% more expensive?

To be honest we're lucky it is only 2%.

I cant find 2019 or 2020 figures only individual banks Boi is under 5% as of 2019.

AIB Group plc (“AIB”) has agreed to sell a non-performing loan portfolio to Everyday Finance DAC ("Everyday")as part of a consortium arrangement with Everyday and affiliates ofCerberus Capital Management. This isanother important step in our non-performing exposure (NPE) deleveraging strategy and we remain on trackto reach c. 5% by end 2019.

Since 2016 as quoted the NPL have fallen and are not 15 times that of Finlands anymore.

2018 figures

Ireland Non Performing Loans Ratio. Ireland's Non Performing Loans Ratio stood at 5.7 % in Dec 2018, compared with the ratio of 11.5 % in the previous year.

Finlands 1.7% according to the EBF.

Italy figures are worse then ours and yet their mortgage rate is still far less then ours.

Italy's Non Performing Loans Ratio stood at 6.9 % in Mar 2020 a reduction from 7.2 % in the previous quarter. Italy'supdated quarterly, available from Jun its average mortgage rate is 1.75% as of March 2020.

The_Brood

Houses in Tallaght going for 40-50k above the asking price, have been outbid on several occasions now. Other areas too. Don't know what to do anymore. It seems demand is at a breaking point in Dublin regardless of any virus, while supply at an all time low.

combat14

The_Brood wrote: »

Houses in Tallaght going for 40-50k above the asking price, have been outbid on several occasions now. Other areas too. Don't know what to do anymore. It seems demand is at a breaking point in Dublin regardless of any virus, while supply at an all time low.

gonna be a world of pain so if ppl paying that much money for their houses - hope the bank are really stress testing these mortgages

Graham

The Belly wrote: »

I cant find 2019 or 2020 figures only individual banks Boi is under 5% as of 2019.

AIB Group plc (“AIB”) has agreed to sell a non-performing loan portfolio to Everyday Finance DAC ("Everyday")as part of a consortium arrangement with Everyday and affiliates ofCerberus Capital Management. This isanother important step in our non-performing exposure (NPE) deleveraging strategy and we remain on trackto reach c. 5% by end 2019.

It's as if the banks have to sell the NPLs to recoup the losses and reduce their exposure.

Something that would be facilitated by reposession in most markets.

hometruths

The Belly wrote: »

I cant find 2019 or 2020 figures only individual banks Boi is under 5% as of 2019.

AIB Group plc (“AIB”) has agreed to sell a non-performing loan portfolio to Everyday Finance DAC ("Everyday")as part of a consortium arrangement with Everyday and affiliates ofCerberus Capital Management. This isanother important step in our non-performing exposure (NPE) deleveraging strategy and we remain on trackto reach c. 5% by end 2019.

Since 2016 as quoted the NPL have fallen and are not 15 times that of Finlands anymore.

2018 figures

Ireland Non Performing Loans Ratio. Ireland's Non Performing Loans Ratio stood at 5.7 % in Dec 2018, compared with the ratio of 11.5 % in the previous year.

Finlands 1.7% according to the EBF.

Italy figures are worse then ours and yet their mortgage rate is still far less then ours.

Italy's Non Performing Loans Ratio stood at 6.9 % in Mar 2020 a reduction from 7.2 % in the previous quarter. Italy'supdated quarterly, available from Jun its average mortgage rate is 1.75% as of March 2020.

The 2020 stats are hiding in plain sight - mortgage arrears figures from the Central Bank are linked in my post above.

Currently restructured loans are not included in the arrears figures. But they are clearly loans in default. Including them brings the total over 10%.

I'd make a similiar point re these loans as Graham does about selling the NPLs to vulture funds.

Banks are reclassifying loans as restructured performing loans after agreeing arrears capitalization/split mortgage/payment holiday or whatever so the % figures of a key indicator look healthier.

In any other market these loans would have been called in and properties repossessed long ago.

A consequence of our unique approach is higher interest rates than in those countries that have the stomach for repossessions.

Hubertj

schmittel wrote: »

The 2020 stats are hiding in plain sight - mortgage arrears figures from the Central Bank are linked in my post above.

Currently restructured loans are not included in the arrears figures. But they are clearly loans in default. Including them brings the total over 10%.

I'd make a similiar point re these loans as Graham does about selling the NPLs to vulture funds.

Banks are reclassifying loans as restructured performing loans after agreeing arrears capitalization/split mortgage/payment holiday or whatever so the % figures of a key indicator look healthier.

In any other market these loans would have been called in and properties repossessed long ago.

A consequence of our unique approach is higher interest rates than in those countries that have the stomach for repossessions.

Do other countries in the EU not enter into similar arrangements regarding loans in arrears? Or is it pay up or sell up?

neutral guy

<SNIP>

hometruths

Hubertj wrote: »

Do other countries in the EU not enter into similar arrangements regarding loans in arrears? Or is it pay up or sell up?

Only other market have knowledge of is UK, and that is pretty much pay up or sell up.

Of course they'd look at individual cases but I'd be very surprised if any other EU country has over 10% of outstanding mortgage stock "restructured".

I'm consistently amazed about how many people in Ireland think our approach to this is normal, and assume all countries engage in the sort of forbearance we do.

Graham

Mod Note

Neutral guy, you have already been asked to stop the off topic posts. For clarity that includes anecdotes about your use of public transport.

Do not reply to this post.

c.p.w.g.w

The Belly wrote: »

Well the 42 months are the stats so id go with them.

I'd imagine those Stats include buy to let mortgages...which are much easier to get a judgment in court

Bass Reeves

The Belly wrote: »

I cant find 2019 or 2020 figures only individual banks Boi is under 5% as of 2019.

AIB Group plc (“AIB”) has agreed to sell a non-performing loan portfolio to Everyday Finance DAC ("Everyday")as part of a consortium arrangement with Everyday and affiliates ofCerberus Capital Management. This isanother important step in our non-performing exposure (NPE) deleveraging strategy and we remain on trackto reach c. 5% by end 2019.

Since 2016 as quoted the NPL have fallen and are not 15 times that of Finlands anymore.

2018 figures

Ireland Non Performing Loans Ratio. Ireland's Non Performing Loans Ratio stood at 5.7 % in Dec 2018, compared with the ratio of 11.5 % in the previous year.

Finlands 1.7% according to the EBF.

Italy figures are worse then ours and yet their mortgage rate is still far less then ours.

Italy's Non Performing Loans Ratio stood at 6.9 % in Mar 2020 a reduction from 7.2 % in the previous quarter. Italy'supdated quarterly, available from Jun its average mortgage rate is 1.75% as of March 2020.

Lads are here posting that we will see as big or bigger crash comapared to 2008-14. They make the point about Irish interest rates being penal and 2%+ above EU average on the other hand when it point out that this is due to failure to repossess they start on about statistics. The amount of property that has been dumped even over the last 3-5 years is not taken into account. Banks have been selling off holiday home's ( friend bought one in Kerry for 55K last year 3 Bed 800 metres from the beach) houses in small towns( I bought one in 2016 for 50K ). Both properties were 200+ region at purchase in the 2004-2008 period.

In the last 5 years we have seen 3-4 banks exit from the Irish Market, Rabo, Bank of Scotland are the two I remember off habd as well as Irish Nationwaide and Anglo going bust.

The_Brood wrote: »

Houses in Tallaght going for 40-50k above the asking price, have been outbid on several occasions now. Other areas too. Don't know what to do anymore. It seems demand is at a breaking point in Dublin regardless of any virus, while supply at an all time low.

When people have confidence in buying in Tallaght

IAmTheReign

The Belly wrote: »

It takes 42 months to repossess a property here and 24 in Finland our average mortgage interest rate is 2.99% theirs is .98%.

I cant see the justification in a 2% difference due to an 18month differnce in the time to reposses a house

While it may take 42 months on average for a repossession order to be granted the reality is that for most defaulting mortgages it's so unlikely that one will be granted the banks don't even try. In the last decade there has only been 3 years (2014-2016) where repossession orders granted exceeded 1,000 homes. Where a lender does try to pursue a mortgage defaulter through the courts even then there is only about a 40% chance of success. See here

When you consider that as of this time last year nearly 63,000 family homes were in arrears, and 45% (approx. 28,000) of those in arrears were more than 2 years behind in their mortgage payments the number of repossessions is shockingly low. That is why mortgage rates are so much higher here.

IAmTheReign

According to the Examiner the Daft report for June has house prices nationally down 3.3% on last year, with Dublin down 3.8% The Munster area has the biggest drop, falling 4.9%

https://www.irishexaminer.com/breakingnews/ireland/munster-sees-biggest-fall-in-property-prices-in-past-year-1009876.html

Billythekid19

Rents edge up in June as house prices fall
Report shows bounce in supply as easing of restrictions reopens property markets

This looks like the start of the market correction

Springy Turf

https://www.daft.ie/report/2020-june-housingmarket-daftreport.pdf

Assetbacked

Springy Turf wrote: »

https://www.daft.ie/report/2020-june-housingmarket-daftreport.pdf

It's good to also re-post this handy data chart for asking rents in Dublin with the Daft report that is circulated in this forum. I'm just posting about rent here, I'm still not touching the housing market as I believe it won't be until next year we see the impact in data of the pandemic.

https://bl.ocks.org/pinsterdev/raw/234b4a5310a14a32e080/

Due to procrastination levels in work being high this morning, I was looking at the median asking rents from the chart this morning and taking some back-of-the-envelope calculations, from the November/December 2019 highs for rents in Dublin;

1 bedroom apartment - €1625 -> €1550 = 5% approx.
2 bedroom apartment - €2200 -> €2000 = 10% approx. (presumably housemates from big tech companies going home to WFH or else €1100 for a bedroom as median rent is totally unaffordable).
2 bedroom house - €2000 = no change.
3 bedroom house - €2750 -> €2500 = 9% approx.

Taking some observations on the Daft.ie housing report;

Rents down 0.1% month to month in Dublin (May to June).
Rents up 0.2% month to month nationally (May to June).
Rents up 0.5% year on year in Dublin.
Rents up 0.2% year on year nationally.
Supply of rentals is up 63% year on year in Dublin.
Supply of rentals is up 21% year on year nationally.

It looks like the rental market has stabilised in terms of year on year growth, but more promisingly, this year's trends are for drops from 0 - 10% in Dublin, which is quite significant and appears to have happened fairly swiftly, which maybe is unsurprising considering how high the median rents are.

One to watch is how the sheer volume of rental properties now available will play out. With WFH still seemingly a thing until the end of the summer for a lot of places and even to the end of the year for other companies, I think we could be seeing another 0-10% drop in rents before the end of the year across those properties.

c.p.w.g.w

Taking a look around i'd be very wary of closing a sale of a house right now...

Covid19 is still in full swing in the states & Central/Southern America, also seeing resurgence in Spain & UK

Many hospitality business' are going to be in real trouble with reduced numbers travelling into the country for myriad of reasons...Locals are less likely to staycation due to fears of covid19 & weather(and the sure we'll wait till next year and go to Spain for 3 weeks instead 2 etc)

Many medical device companies are struggling due to elective procedures being suspended in many parts of the states, and we don't know long that will last for, i know of at least 2 that have undergone major cost cutting as a result of CoVid19

The impending recession which is likely to lead to serious amounts of unemployment...

ANd the folks who say their jobs is secure, while being on the Wage Subsidy Scheme is scary...If your on the Scheme, your job isn't safe its precarious depending on which sector you operate in...

House prices will not likely reflect this for another 6 months, due to the CoVid19 payments which is injecting money into the economy, but when those supports stops...its not going to be fun