Irish Property Market 2020 Part 2

Augeo wrote: »

Bank deposits would also include the cash portion of pension funds etc IMO ..........

Dear Client,
As you may be aware, the ECB is now charging EU banks/credit institutions to holdmoney on deposit with them rather than paying interest which has traditionally been thecase. When you hold cash in your account, Davy holds these cash balances with Bank of Ireland on your behalf. Bank of Ireland has given Davy notice of its intention tocommence charging a negative interest rate of -0.65% variable per annum on certain euro cash balances from 1st October 2020. This applies to your account as referenced in the subject line.

Thanks for that.

So it appears that even the relatively minor increase in household savings since the lockdown will have limited bearing on the cash deposits that first time buyers may have over the next twelve months to purchase homes? Or at the very least, it's not going to have the major impact that some commentators have been putting out there?

awec

edjkdkjdhjkd wrote: »

https://www.wsj.com/articles/cisco-to-pursue-deep-cost-cuts-in-corporate-tech-spending-slowdown-11597268494

Cisco most likely the bellwether.

Don't know the specifics of the industry but i know it's been talked about in Facebook, Twitter and few other Multi nationals.

Tech leadership do not go around telling their employees to expect pay cuts, pay freezes or worse.

You have invented this story.

[Deleted User]

PropQueries wrote: »

Bank deposits are only one type of savings I would assume by bank deposits they mean money someone can take out with their ATM card...........

Bank deposits would also include the cash portion of pension funds etc IMO ..........

Dear Client,
As you may be aware, the ECB is now charging EU banks/credit institutions to holdmoney on deposit with them rather than paying interest which has traditionally been thecase. When you hold cash in your account, Davy holds these cash balances with Bank of Ireland on your behalf. Bank of Ireland has given Davy notice of its intention tocommence charging a negative interest rate of -0.65% variable per annum on certain euro cash balances from 1st October 2020. This applies to your account as referenced in the subject line.

awec wrote: »

You have literally invented this. Total spoofing.

https://www.wsj.com/articles/cisco-to-pursue-deep-cost-cuts-in-corporate-tech-spending-slowdown-11597268494

Cisco most likely the bellwether.

Don't know the specifics of the industry but i know it's been talked about in Facebook, Twitter and few other Multi nationals.

edjkdkjdhjkd wrote: »

By what amount?

I didn't mention any amount besides what i guess would be the high end of what the average couple could have saved during lockdown.

Highly unlikely that the increase in savings is due to FTB getting ready to run wild in the property market.

I know. I was just referencing the article that contradicted the €10 billion in extra savings that a previous poster stated were made over the last few months. It's been nowhere that level.

PropQueries wrote: »

Bank deposits are only one type of savings. I would assume by bank deposits they mean money someone can take out with their ATM card. This would make sense since many people couldn't spend their monthly paycheck.

If the PUP payments fall back to €203 for many people, this will most likely be reversed over the next six months as people dip into these "savings" to make up the shortfall.

I’m just reading the article. If you want to interpret the numbers a certain way then go ahead.

awec

edjkdkjdhjkd wrote: »

A lot of people my partner knows in the tech industry seem to have been told to expect pay cuts or freezes at best.

No concrete confirmation but Leadership seems to have made it clear, curious if anyone has heard the same?

You have literally invented this. Total spoofing.

PropQueries wrote: »

They didn't increase by that amount. Here's the article from the Irish Times 2 weeks ago stating "Savings by Irish households double to €14bn between 2014 and 2019": https://www.irishtimes.com/business/...2019-1.4337433

By what amount?

I didn't mention any amount besides what i guess would be the high end of what the average couple could have saved during lockdown.

Highly unlikely that the increase in savings is due to FTB getting ready to run wild in the property market.

Hubertj wrote: »

I read that as deposits increased by €5.3bn in q2 2020 compared to €2bn for q2 in 2019.
Other wise deposits reduced from €14.4bn to €5.3bn?

Bank deposits are only one type of savings. I would assume by bank deposits they mean money someone can take out with their ATM card. This would make sense since many people couldn't spend their monthly paycheck.

If the PUP payments fall back to €203 for many people, this will most likely be reversed over the next six months as people dip into these "savings" to make up the shortfall.

edjkdkjdhjkd wrote: »

People are interpreting these statistics completely wrong.

What truth behind these figures is most likely that already wealthy individuals have been selling certain asset class vehicles i.e cashing out and placing the funds into savings deposits, for what i do not know but if was to hazard a guess it is to pick up property cheap when it crashes soon or maybe it is people getting out of risky vehicles and are keeping cash ready until the economic picture becomes clearer

These figures DO NOT represent the average Joe, the lockdown has made it easier to save for sure, but you will find the most the average couple may have saved was around 10-12k MAX. Most couples still need to pay rent/mortgages and all the other bills that come with it, cutting down on nights out, restaurants, hobbies etc will only save so much.

Put it this way, the savings the average couple would have accumulated during the past 6 months would be nowhere near enough dry powder make an impact on the property game and would not be the type of money that would influence a persons decision to go from not buying a property to suddenly being able to jump into the market.

These figures do not represent the average joe FTB can we please stop these posts claiming that suddenly all these people across Ireland will have money ready to go and are just waiting to unleash on the property market.

They didn't increase by that amount. Here's the article from the Irish Times 2 weeks ago stating "Savings by Irish households double to €14bn between 2014 and 2019": https://www.irishtimes.com/business/...2019-1.4337433

PropQueries wrote: »

It says "Recent Central Bank figures show bank deposits here jumped to €5.3 billion in the second quarter of 2020 which coincided with the coronavirus lockdown."

"Jumped to" not "increased"

I read that as deposits increased by €5.3bn in q2 2020 compared to €2bn for q2 in 2019.
Other wise deposits reduced from €14.4bn to €5.3bn?

Bass Reeves wrote: »

In the last 6 months savings in Ireland have grown by 10billion. Just to put it in context that is 33k houses at 300k a pop. Now I am not saying everybody with savings will go out and buy a house.

However this is a vast amount to add to savings. It will mean there is more deposit money out there. As well people will be upgrading there own houses, extensions, sunrooms, revamping kitchens, bedrooms , bathrooms and living rooms. A good few paddies when they have a few point will spend a bit of it on there homes.

It likely over the next 6-12 months that another 10billion will be added to that savings. If even 10% of it goes on home improvements labour costs in building will stay stable or increase, if 10% of it is used on deposits it will see a demand for 40k houses in the short to medium terms.

Economics is fairly simple but that 10-20 billions in savings will effect the property market in different ways

People are interpreting these statistics completely wrong.

The truth behind these figures is most likely that already wealthy individuals have been selling certain asset class vehicles i.e cashing out and placing the funds into savings deposits, for what i do not know but if was to hazard a guess it is to pick up property cheap when it crashes soon or maybe it is people getting out of risky vehicles and are keeping cash ready until the economic picture becomes clearer

These figures DO NOT represent the average Joe, the lockdown has made it easier to save for sure, but you will find the most the average couple may have saved was around 10-12k MAX. Most couples still need to pay rent/mortgages and all the other bills that come with it, cutting down on nights out, restaurants, hobbies etc will only save so much.

Put it this way, the savings the average couple would have accumulated during the past 6 months would be nowhere near enough dry powder make an impact on the property game and would not be the type of money that would influence a persons decision to go from not buying a property to suddenly being able to jump into the market.

These figures do not represent the average joe FTB can we please stop these posts claiming that suddenly all these people across Ireland will have money ready to go and are just waiting to unleash on the property market.

Hubertj wrote: »

Article says €5.3bn increase in q2 2020 alone?

It says "Recent Central Bank figures show bank deposits here jumped to €5.3 billion in the second quarter of 2020 which coincided with the coronavirus lockdown."

"Jumped to" not "increased"

[Deleted User]

Bass Reeves wrote: »

In the last 6 months savings in Ireland have grown by 10billion......................
It likely over the next 6-12 months that another 10billion will be added to that savings.................
Economics is fairly simple but that 10-20 billions in savings will effect the property market in different ways

On the other hand the initial 12-week special Covid-19 welfare measures are expected to cost between €4 billion and €4.5 billion............ and the Pandemic Unemployment Payment is to be extended until next April ........... I'm fairly sure all those billions will effect the property market also, likely not in the same way as the billions you refer to

PropQueries wrote: »

Where did you get that figure?

The Irish Times published an article on the 24th August 2020 titled: "Savings by Irish households double to €14bn between 2014 and 2019"

Link to Irish Time article here: https://www.irishtimes.com/business/economy/savings-by-irish-households-double-to-14bn-between-2014-and-2019-1.4337433

One major source for the increase may be public sector pensioners who weren't hit in the last ten years, so they may have being doing most of the savings instead of potential first time buyers.

Article says €5.3bn increase in q2 2020 alone?

Bass Reeves wrote: »

In the last 6 months savings in Ireland have grown by 10billion. Just to put it in context that is 33k houses at 300k a pop. Now I am not saying everybody with savings will go out and buy a house.

However this is a vast amount to add to savings. It will mean there is more deposit money out there. As well people will be upgrading there own houses, extensions, sunrooms, revamping kitchens, bedrooms , bathrooms and living rooms. A good few paddies when they have a few point will spend a bit of it on there homes.

It likely over the next 6-12 months that another 10billion will be added to that savings. If even 10% of it goes on home improvements labour costs in building will stay stable or increase, if 10% of it is used on deposits it will see a demand for 40k houses in the short to medium terms.

Economics is fairly simple but that 10-20 billions in savings will effect the property market in different ways

Where did you get that figure?

The Irish Times published an article on the 24th August 2020 titled: "Savings by Irish households double to €14bn between 2014 and 2019"

Link to Irish Time article here: https://www.irishtimes.com/business/economy/savings-by-irish-households-double-to-14bn-between-2014-and-2019-1.4337433

One major source for the increase may be public sector pensioners who weren't hit in the last ten years, so they may have being doing most of the savings instead of potential first time buyers.

Bass Reeves

In the last 6 months savings in Ireland have grown by 10billion. Just to put it in context that is 33k houses at 300k a pop. Now I am not saying everybody with savings will go out and buy a house.

However this is a vast amount to add to savings. It will mean there is more deposit money out there. As well people will be upgrading there own houses, extensions, sunrooms, revamping kitchens, bedrooms , bathrooms and living rooms. A good few paddies when they have a few point will spend a bit of it on there homes.

It likely over the next 6-12 months that another 10billion will be added to that savings. If even 10% of it goes on home improvements labour costs in building will stay stable or increase, if 10% of it is used on deposits it will see a demand for 40k houses in the short to medium terms.

Economics is fairly simple but that 10-20 billions in savings will effect the property market in different ways

edjkdkjdhjkd wrote: »

A lot of people my partner knows in the tech industry seem to have been told to expect pay cuts or freezes at best.

No concrete confirmation but Leadership seems to have made it clear, curious if anyone has heard the same?

Nothing like that where I work. Bonus will be affected for 2020 as a % of it is dependent on company performance. Likely to miss some targets due to q2 which will impact bonus payment. Company is still hiring, waiting on 100+ work visas to get people to Ireland.

mcbert

edjkdkjdhjkd wrote: »

A lot of people my partner knows in the tech industry seem to have been told to expect pay cuts or freezes at best.

No concrete confirmation but Leadership seems to have made it clear, curious if anyone has heard the same?

Not heard anything myself. 'tech industry' is quite broad, anything more specific?

hmmm

edjkdkjdhjkd wrote: »

Sheer desperation, most likely a couple who fear they will lose their jobs in the next year and don't want to keep renting. Which is insane in itself, make the biggest purchase of your life before losing your job but country is insane in fairness.

That or a cash buyer with more money than brains.

I can understand it - it's difficult to remove someone from their home, relatively easy to remove a renter. It's not ideal that we have a system where people can not pay their mortgage for years at a time, but it's what we have.

JimmyVik

edjkdkjdhjkd wrote: »

A lot of people my partner knows in the tech industry seem to have been told to expect pay cuts or freezes at best.

No concrete confirmation but Leadership seems to have made it clear, curious if anyone has heard the same?

Never waste a good recession would be the way they will go.
Even if they arent effected by the recession, they will use it to cut costs. Be that wages, rents, contracts etc

A lot of people my partner knows in the tech industry seem to have been told to expect pay cuts or freezes at best.

No concrete confirmation but Leadership seems to have made it clear, curious if anyone has heard the same?

The_Conductor wrote: »

I think that the entire manner of how income from residential property is taxed- urgently needs reform. My preference would be for a flatrate tax- on the gross rental income (of perhaps 25%) with no deductions for anything allowable- and this would be applied to all actors in the sector without exception- including the REITs.

The biggest issue I have with the taxation regime (and not just associated with the residential letting sector)- is that the cost of debt is an allowable expense. IMHO- debt should never, ever, be an allowable cost. It creates a perverse disincentive to ever pay down the debt associated with a property- sure why would you- when you'll be punished with higher tax if you do.

A possible manner of looking at this might include a rebate for any landlords who let property that has no debt secured on it- however, for numerous reasons- this would not fly.

Even publications such as 'The Economist' agree that in an international context- debt has to be removed from tax considerations- as aside from any other factor, it introduces system risk into economic systems- and is paid for out of general taxation by introducing additional burdens on those who are unable to avail of such mechanisms.

I think the primary advantage of purchasing an investment property from a small investors perspective is that they can leverage up to purchase the asset. The bank won't lend to a small investor to purchase other types of assets e.g. shares etc. If the value rises, they gain exponentially, if not, the opposite.

It's a gamble that may have paid off very handsomely over the past 40 years (depending on when they bought). I'm not too sure about the next 40 years.

In relation to incentives to encourage landlords to let out vacant properties. Everyone seems to mention "incentives". I think "carrots" would be a better idea. I understand it's a no-no at the moment, but I think a property vacancy tax, e.g. 50% of potential market rent would encourage all vacant properties (retail and residential) into the market.

As the ECB is now the backstop for the main Irish banks, the state shouldn't worry too much about all this extra supply bringing values down. The economy benefits and there's little to lose. I know the pension industry would also suffer but I think they're just zombie firms now and will go under sooner rather than later. Best break them now and get on with growing the economy.