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Irish Property Market 2020 Part 2

Graham

Continued from here:

https://www.boards.ie/vbulletin/showthread.php?t=2058041687

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Wanderer78

Marius34 wrote: »

How come we passed the worst quarter (2020 Q2) in modern history, and property prices has not started to fall yet?
Last crisis it was falling from very begging of the crisis.
Oh yeah, this time is different. No?

You ll find its actually the availability, or lack of, of credit that ultimately causes price changes

PommieBast

Marius34 wrote: »

1990-92

This one was notorious for sparking off a lot of repossessions, far more than the credit crunch.

Pelezico

Marius34 wrote: »

How come we passed the worst quarter (2020 Q2) in modern history, and property prices has not started to fall yet?
Last crisis it was falling from very begging of the crisis.
Oh yeah, this time is different. No?

Property prices are falling. There are circa 100 falls per week on myhome alone and transaction levels have dried up.

Marius34

schmittel wrote: »

this sounds a bit misleading - what are the figures? i.e what constitutes a "small price decrease"?

From what is see from https://landregistry.data.gov.uk/

73-76 recession - prices didn't fall.
80-81 recession - prices didn't fall
90-92 recession - the decrease from begging of the crisis to the lowest point it was ~-8%. (From the highest pre-crisis point in 89 that was ~-12%)

Pelezico

Marius34 wrote: »

I'm not sure where you are looking, that you can't find.
Maybe there were no recessions in Ireland before Credit crisis, I checked neighboring UK. And it had in total 3 recessions in past 50 years (apart from 2008 Credit crisis):
1973-76
1980-81
1990-92
1 resulted in small property price increase, 1 resulted in price stagnating, 1 resulted in small price decrease. None of them resulted in major price fall.

I lived in UK during that time. In the late 80s early 90s. Prices collapsed.

That is when the phrase negative equity was born.

There was an area in Bristol called Bradley Stoke....which was called Sadly Broke.

hometruths

Marius34 wrote: »

I'm not sure where you are looking, that you can't find.
Maybe there were no recessions in Ireland before Credit crisis, I checked neighboring UK. And it had in total 3 recessions in past 50 years (apart from 2008 Credit crisis):
1973-76
1980-81
1990-92
1 resulted in small property price increase, 1 resulted in price stagnating, 1 resulted in small price decrease. None of them resulted in major price fall.

Marius34 wrote: »

From what is see from https://landregistry.data.gov.uk/

73-76 recession - prices didn't fall.
80-81 recession - prices didn't fall
90-92 recession - the decrease from begging of the crisis to the lowest point it was ~-8%. (From the highest pre-crisis point in 89 that was ~-12%)

This is totally misleading, and needs to be understood in the context of inflation and interest rates. In all three recessions house prices fell in real terms and mortgage holders got thumped by interest rates.

1973-1976 - Inflation at about 25%, interest rates around 15%.

1980-81 - Inflation and interest rates were running at about 18%

1990-92 - "In the housing crash of the early 1990s house prices fell 20 per cent between 1989 and 1993." - The Times

This happened against a backdrop of inflation and interest rates that rose as high as 15% - "average prices fell by an inflation-adjusted 35 percent from their peak in 1989, according to data from property services firm CB Richard Ellis" - Reuters

Not even in boom/bust Ireland, could a 20% nominal, 35% real drop in house prices be considered a "small price decrease".

No doubt there will be some on here who would be happy to see rampant inflation, because they could flatter themselves that their 3 bed semi is still worth half a million.

But to quote Bass Reeves, they should be careful what they wish for.

The Belly

Pelezico wrote: »

I lived in UK during that time. In the late 80s early 90s. Prices collapsed.

That is when the phrase negative equity was born.

There was an area in Bristol called Bradley Stoke....which was called Sadly Broke.

Jingle mail was a common term i remember from back then.

Pelezico

The Belly wrote: »

Jingle mail was a common term i remember from back then.

Haha..I remember that. The collapse came after the Lawson boom when a change in interest rate deduct ability was signalled early.

After the change, priced collapsed as the world went into recession.

Jingle mail was when a homeowner sent the keys back to the bank...and walked away.

The Belly

Pelezico wrote: »

Haha..I remember that. The collapse came after the Lawson boom when a change in interest rate deduct ability was signalled early.

After the change, priced collapsed as the world went into recession.

Jingle mail was when a homeowner sent the keys back to the bank...and walked away.

If i remember correctly when keys were posted back that was that house was repossessed i dont think the owner were chased for the balance of the mortgage. Long time ago so could be wrong:)

Pelezico

The Belly wrote: »

If i remember correctly when keys were posted back that was that house was repossessed i dont think the owner were chased for the balance of the mortgage. Long time ago so could be wrong:)

I remember friends trying to sell in London and looking for a personal loan to.pay mortgage.

It took until a out 1996 to recover from the downturn.

At the time, people were scarred by the severe economic conditions ...just like 2008 - 2010.

Marius34

schmittel wrote: »

This is totally misleading, and needs to be understood in the context of inflation and interest rates. In all three recessions house prices fell in real terms and mortgage holders got thumped by interest rates.

1973-1976 - Inflation at about 25%, interest rates around 15%.

1980-81 - Inflation and interest rates were running at about 18%

1990-92 - "In the housing crash of the early 1990s house prices fell 20 per cent between 1989 and 1993." - The Times

This happened against a backdrop of inflation and interest rates that rose as high as 15% - "average prices fell by an inflation-adjusted 35 percent from their peak in 1989, according to data from property services firm CB Richard Ellis" - Reuters

Not even in boom/bust Ireland, could a 20% nominal, 35% real drop in house prices be considered a "small price decrease".

No doubt there will be some on here who would be happy to see rampant inflation, because they could flatter themselves that their 3 bed semi is still worth half a million.

But to quote Bass Reeves, they should be careful what they wish for.

When we buying house you think about nominal value, and compare in nominal value, if its good time to buy or not, and what todo with your cash.
If you have cash and inflation running at 5%, where property price increase 3% in nominal value (which is -2% in real value), you won't say that prices are falling, and you made a good decision by keeping your cash in your saving

The question, I was answering, was if there were any recession if house prices didn't fall, for the start I took Ireland and UK as an example, and there were 2 out of 3 cases for UK between Great Depression and Credit crisis.

Now you trying to find what's different from current crisis. Well many things are different, which i mentioned many times, thus you may not find even any options to compare current crisis with any other in first place.

fliball123

Pelezico wrote: »

Property prices are falling. There are circa 100 falls per week on myhome alone and transaction levels have dried up.

There are also increases about 1/4 to 1/5 of all price changes are going up and there is also a real drop in terms of property available. IN the last 3 months 10% less properties available.

I cant see some of the reasons for a huge drop happening coming to light mainly due to

Feck all supply
Interest rates and inflation will not be going up for at least a decade
Banks will be funded to lend by cheap loans from the ECB

The last 2 mean that access to credit will remain for people in a good position to buy

Marius34

Pelezico wrote: »

Property prices are falling. There are circa 100 falls per week on myhome alone and transaction levels have dried up.

I believe it was the same for the past few years. While in fact actual price stayed stable.
Wasn't like this before?

hometruths

Marius34 wrote: »

When we buying house you think about nominal value, and compare in nominal value, if its good time to buy or not, and what todo with your cash.
If you have cash and inflation running at 5%, where property price increase 3% in nominal value (which is -2% in real value), you won't say that prices are falling, and you made a good decision by keeping your cash in your saving

The question, I was answering, was if there were any recession if house prices didn't fall, ant there was in 2 out of 3 cases for UK between Great Depression and Credit crisis.

Now you trying to find what's different from current crisis. Well many things are different, which i mentioned many times, thus you may not find even any options to compare current crisis with any other in first place.

Fair enough, I realise the question you were answering, and your literal answer was entirely correct.

I was simply adding the context of rising inflation/interest rates as I think others who might not have thought about it, would benefit from considering whether or not 5% rise in property price with a 15% rise in inflation is actually a good thing.

fliball123

schmittel wrote: »

Fair enough, I realise the question you were answering, and your literal answer was entirely correct.

I was simply adding the context of rising inflation/interest rates as I think others who might not have thought about it, would benefit from considering whether or not 5% rise in property price with a 15% rise in inflation is actually a good thing.

This is the real argument as I see it, I think everyone in Europe know even de Germans that if they increase either that the place will go wallop so they wont be looking to increase this for a long time

Pelezico

Marius34 wrote: »

I believe it was the same for the past few years. While in fact actual price stayed stable.
Wasn't like this before?

This is not correct. The number of falls has accelerated in the last few months.

I now expect 100 falls per week. A few years ago, it was circa 20.

As for falling supply, this always falls in Summer months. Come September, supply will start to increase.

fliball123

Pelezico wrote: »

This is not correct. The number of falls has accelerated in the last few months.

I now expect 100 falls per week. A few years ago, it was circa 20.

As for falling supply, this always falls in Summer months. Come September, supply will start to increase.

Sorry look again 1/4th to 1/5th are prices rises on myhome how do you square that anomaly without blowing your theory out of the water? If it was one or two I would think ok we have one or two people who are taking the pi$$ but 20% to 25% of people putting up their price?

Pivot Eoin

Pelezico wrote: »

This is not correct. The number of falls has accelerated in the last few months.

I now expect 100 falls per week. A few years ago, it was circa 20.

As for falling supply, this always falls in Summer months. Come September, supply will start to increase.

To be honest its not as if there's been great supply the last 2 months since in person viewings resumed again.

There is still very little amount of GOOD properties coming onto the market.

Absolutely loads of doer-uppers (Which some Lenders wont give you a mortgager for in this climate), a fair amount of okayish/decent properties that still need 40-50k of work done to get anywhere near long term livable.

The amount of turn key properties done up to any kind of modern standard (Post 2010) is still very few.

hometruths

fliball123 wrote: »

This is the real argument as I see it, I think everyone in Europe know even de Germans that if they increase either that the place will go wallop so they wont be looking to increase this for a long time

For sure, there is no (western) central bank or government who wants to increase interest rates, and they will resist it as long as possible.

But..

fliball123 wrote: »

Interest rates and inflation will not be going up for at least a decade
Banks will be funded to lend by cheap loans from the ECB

Do you really think there will be absolutely no effect, either deflationary or inflationary, from all this money printing and QE?

awec

Pivot Eoin wrote: »

To be honest its not as if there's been great supply the last 2 months since in person viewings resumed again.

There is still very little amount of GOOD properties coming onto the market.

Absolutely loads of doer-uppers (Which some Lenders wont give you a mortgager for in this climate), a fair amount of okayish/decent properties that still need 40-50k of work done to get anywhere near long term livable.

The amount of turn key properties done up to any kind of modern standard (Post 2010) is still very few.

I think there has been a change in mindset as a result of the last crash, with people now buying houses that they want to live in long term rather than speculating on "starter homes".

Combine this with the stricter lending criteria and higher deposit requirements and I think there will be a reduction in the number of modern houses that come up for sale as more people are in a position to wait it out, both financially and in terms of quality-of-life (i.e. there aren't going to be too many families of 4 stuck in 2 bed apartments).

There will be people who end up in negative equity, but many of them will be in NE in properties they have no intention of selling anyway.

fliball123

Pivot Eoin wrote: »

To be honest its not as if there's been great supply the last 2 months since in person viewings resumed again.

There is still very little amount of GOOD properties coming onto the market.

Absolutely loads of doer-uppers (Which some Lenders wont give you a mortgager for in this climate), a fair amount of okayish/decent properties that still need 40-50k of work done to get anywhere near long term livable.

The amount of turn key properties done up to any kind of modern standard (Post 2010) is still very few.

Personal viewings are back at least a month to 6 weeks and yet there are less properties available today than there was last month. Also the weeks where there were no viewings due to covid properties still went sale agreed so your theory does not add up.

There is very little decent stock available you can look through 2 or 3 of the threads on here and a lot of people are having the same experience and anything decent is being snapped up and going above or for asking. There is also the option of moving in and doing the place up over time an idea that seems lost on the newer generation who want it and want it now.

As for banks you dont know what a bank will give until you ask and you must realise that people have a shed load more savings for deposits (off setting what you need for a mortgage) for buying. So a doer upper where you might of had a 20% deposit may not have been seen as a good investment for a bank will now be a 30/35% deposit and a bank will look at it a lot more favorably.

I wouldn't tell anyone to buy or sell but the price drops people are looking for wont happen the supply/demand axis is still not tilted in favor of buyers.

Cantstandsya

fliball123 wrote: »

There are also increases about 1/4 to 1/5 of all price changes are going up and there is also a real drop in terms of property available. IN the last 3 months 10% less properties available.

I cant see some of the reasons for a huge drop happening coming to light mainly due to

Feck all supply
Interest rates and inflation will not be going up for at least a decade
Banks will be funded to lend by cheap loans from the ECB

The last 2 mean that access to credit will remain for people in a good position to buy

There isn't "feck all" supply though. There was lack of a supply a few months back when everyone had secure employment and access to credit. This is no longer the case. The economic chips are yet to fall. We will see what develops in terms of sellers in the next few months.

You mention people in a good position to buy, there are far fewer of those than there were previously. You might counter that the lack of supply balances this out but that's not what I am seeing in my area. Plenty of houses with zero bids.

Do you seriously think the banks are going to be providing easy access to credit to anyone not in rock solid jobs anytime soon?

Here is the latest from Bank of Ireland. Do they sound like an organisation about to give out risky mortgages?

https://www.irishtimes.com/business/financial-services/bank-of-ireland-to-cut-jobs-as-covid-19-drives-937m-loans-charge-1.4322469

An Ri rua

Nothing about the Irish economy matters. No fundamentals apply.
The world financial markets drive and direct the real world economies, not the other way around.
Should anything happen to the USD or to access to credit at the upper levels, the demand/supply arguments go out the window.

Same as 2008 except with bells on. Only a matter of time.

Brussels Sprout

tobsey wrote: »

In the 1980s in Ireland they did: http://www.moneyguideireland.com/house-price-changes-in-ireland-a-history.html

In the early 80's inflation was running > 15%. The cost of everything was shooting up. Those house price increases are almost entirely down to that.

In contrast, inflation in Ireland for the last few years has been less than 1%. Any gains now are real gains.

Marius34

Pelezico wrote: »

This is not correct. The number of falls has accelerated in the last few months.

I now expect 100 falls per week. A few years ago, it was circa 20.

As for falling supply, this always falls in Summer months. Come September, supply will start to increase.

That's a big change in myhome trends. I never checked price changes, the massive change in trends is abit suspicious.
Where do you get this information (especially what used to be in the past), may you have this stats to share?

fliball123

schmittel wrote: »

For sure, there is no (western) central bank or government who wants to increase interest rates, and they will resist it as long as possible.

But..

Do you really think there will be absolutely no effect, either deflationary or inflationary, from all this money printing and QE?

It will without a doubt but when it comes to mortgages the option that would impact on them most when leveraging inflation or deflation would be by using interest rates and I cannot see them touched for a long time and when they are going up it will be very very slowly. Its all to do with timing and with a pandemic ongoing right now it is not the time to be bringing up interest rates

BEdS_83

Marius34 wrote: »

That's a big change in myhome trends. I never checked price changes, the massive change in trends is abit suspicious.
Where do you get this information (especially what used to be in the past), may you have this stats to share?

not expert about this, but to me it looks like they are changing price for houses that are stuck there, and pressure about the new HTB against the second hand houses.
Apart from that I am not seeing too much changing.. I call an EA to ask about a new state, and he told me that the price went up 5% due the covid, and because of that the price for the 3 bed house was out of the 500k cap.. he didn't sound me worried about prices like I keep reading here.

few days ago I read that prices now are in 2017 range, but to be honest, 2017 you could find loads of good family houses below 500k.

Clay farm is a great example, they released the new phase a couple weeks ago, tiny 3-bed for 500k, I was reading the comments on the topic about it, that 3 bed was gone few minutes after the email, people just planning the 5k without even seen the house..
now there is only 4bed house there for nothing less than 580k =/

BEdS_83

one thing that I read here, and it does make sense for me now, is the fact that people are accepting to live in a NE home rather that wait and bet against the market, I started to save the deposit in 2018, in 2019 I started to look around for house, prices seemed me pretty much impossible for my AIP, 2020 is here, lockdown almost over, prices are still impossible the same and the REIT that I live just sent me this year increase..
I guess I would be one of those people that I find a house just lock that up, live there and didn't carry about market as long as I'm managing to pay the mortgage, it's sad to say that I know, but getting almost at 37 leaves me worried about if I'm waiting too much.. =/

sorry about the whining

fliball123

Cantstandsya wrote: »

There isn't "feck all" supply though. There was lack of a supply a few months back when everyone had secure employment and access to credit. This is no longer the case. The economic chips are yet to fall. We will see what develops in terms of sellers in the next few months.

You mention people in a good position to buy, there are far fewer of those than there were previously. You might counter that the lack of supply balances this out but that's not what I am seeing in my area. Plenty of houses with zero bids.

Do you seriously think the banks are going to be providing easy access to credit to anyone not in rock solid jobs anytime soon?

Here is the latest from Bank of Ireland. Do they sound like an organisation about to give out risky mortgages?

https://www.irishtimes.com/business/financial-services/bank-of-ireland-to-cut-jobs-as-covid-19-drives-937m-loans-charge-1.4322469

I said there is feck all decent supply you can buy a load of properties in the back a$$ of Leitrim if you want or a shed in Dublin for 250k. Supply is down 10% on myhome anyways within 3 months. Before covid there was a selection of over 21k properties today its about 18.5k.

As for banks I have just yesterday got the mortgage I want and proceeding with buying at asking and I am selling and I have got an over of 9k over the asking so it looks like banks are open for business. Remember they are getting money at nearly 0 interest rates off the ECB it would be a good move for them to be lending especially non first time buyers who have at least 20% deposit meaning a 20% drop in house prices and someone is forced to sell they are still breaking even on top of interest being paid.

All of the properties above the only 2 that matter are supply and demand if a person cant afford a house he or she must either rent or go homeless (where they can still get a hous) which means supply stays the same as in thats one less house for others so have.

I have said this before the left leaning nature of this country as in "everyone is entitled to a house" means a lot of property that should be for sale is set aside for those on the dole and then you have right right leaning nature of giving vulture funds the economic basis to come in and buy full apartment blocks that dont even hit the market.

Currently if you had the cash say 250k you could buy a 3 bed in Clondalkin which current has a ROI of 10% give it to the government for 20 years at a rate of 85% of the ROI you would after tax (on the higher tax rate) clear over 200k and still have a property that most likely after 20 years have gone up in value. That is why REITS and vulture funds are snapping things up they would not get the same return and backed by a government for 20 years + ..So if you had money and you were an invester would you chance the stock market or look at this and go ok good government backed returns

If this was a race and it was just people in Ireland buying and selling then prices would come down a lot more than they could but as you can see the race is rigged

hometruths

fliball123 wrote: »

It will without a doubt but when it comes to mortgages the option that would impact on them most when leveraging inflation or deflation would be by using interest rates and I cannot see them touched for a long time and when they are going up it will be very very slowly. Its all to do with timing and with a pandemic ongoing right now it is not the time to be bringing up interest rates

Again I am in agreement with you - the money printing and QE will have some effect for sure, whether that is deflationary or inflationary remains to be seen.

Consider both in theory in an Irish property context (so I don't fall foul of the no global macro discussion mod warning!).

If it is deflationary prices will fall, as will wages, unemployment will rise etc and it will spiral until CBs can get a handle on the deflation.

But how will they do that? They have no room to drop interest rates further without going negative?

And if it is inflationary, sure property prices will rise, as will the cost of living whilst wages will not keep pace in real terms. This will disproportionately affect the poorest and our housing crisis will get worse.

How will we fight inflation? Very difficult to do it without increasing interest rates. If CBs refuse to increase interest rates, or raise them too slowly, we'll end up with hyperinflation.

Which brings me back to Bass Reeves repeated point. Be careful what you wish for.