Irish Property Market 2020 Part 2

Springy Turf · 19-10-2020 11:27pm

thefridge2006 wrote: »

So why didnt everyone buy cheap houses in 2008 then........I'll tell you why, because they didnt have access to credit and had no job.

This is looking a LOT worse than 2008 crash.

The price drop was gradual rather than a short sharp drop. This is no doubt entirely different to the 2008 crash - but the difference is undersupply and lots of (so far) unaffected middle class jobs.

Get Real · 19-10-2020 11:33pm

thefridge2006 wrote: »

So why didnt everyone buy cheap houses in 2008 then........I'll tell you why, because they didnt have access to credit and had no job.

This is looking a LOT worse than 2008 crash.

People didn't buy cheap houses during the last crash because 1)banks weren't lending and 2)they were saddled with huge personal debts, and the job went on top.

It was literally going in for a 5k car loan, and being convinced to take out a mortgage for an investment property. You might have only been on 30k a year. The view of the bank was 1)profit now and 2)house prices will only go up, so it can't fail.

Now, people who were already searching for homes
1)aren't saddled with unsustainable debt
2)the majority are working, and earning their normal salary (those not in retail/bar/services who, due to their low income, wouldn't have been eligible for mortgages anyway)
3)they're putting away even more savings per month due to not spending on socialising/holidays/commuting.

The banks are still lending, supply hasn't increased, and those waiting are simply building bigger warchests to bid with.

CorkRed93 · 19-10-2020 11:45pm

CardMagic wrote: »

2)the majority are working, and earning their normal salary (those not in retail/bar/services who, due to their low income, wouldn't have been eligible for mortgages anyway)

The banks are still lending, supply hasn't increased, and those waiting are simply building bigger warchests to bid with.

this isnt true no matter how many time you type it out

Leozord · 19-10-2020 11:48pm

Get Real wrote: »

The banks are still lending, supply hasn't increased, and those waiting are simply building bigger warchests to bid with.

besides, ECB is printing money non-stop

Idbatterim · 19-10-2020 11:51pm

CorkRed93 wrote: »

this isnt true no matter how many time you type it out

they would probably been eligible, but for what? 105k? as a single earner... this lockdown announced now, could go on for ages, just open , lockdown,open, lockdown... I can see absolute carnage down the line, but are people going to wait 18-24 months or more on that MAYBE? maybe...

Springy Turf · 20-10-2020 12:03am

CorkRed93 wrote: »

this isnt true no matter how many time you type it out

I think the posters assertion is fair enough? Affordability just isn't there for low income families. With an LTI exemption for 4x, a couple on 50k can only borrow 200k. To buy something in decent nick in Dublin costs 100k+ more than that for the most part. Most of the houses linked in this thread would have been well out of reach before the pandemic.

https://www.irishtimes.com/life-and-style/homes-and-property/the-biggest-reason-why-first-time-buyers-can-t-afford-a-home-1.3815107

jill_valentine · 20-10-2020 12:24am

- landlords may want to sell second or third properties, but if you bought them as investment, would it be wise to sell now? Everything is cyclical and property is a long term game (I don’t think many of them will be doing this, so supply won’t grow too much)

What if they fear a bigger drop in future? What if they need the liquidity now? What if the rent on that apartment is no longer paying its mortgage and some of your own anymore?

cubatahavana · 20-10-2020 12:28am

jill_valentine wrote: »

What if they fear a bigger drop in future? What if they need the liquidity now? What if the rent on that apartment is no longer paying its mortgage and some of your own anymore?

Sure some will have to, but I don’t think as many as to make prices collapse. If a 10-20 per cent reduction in your rent as a landlord makes the whole thing unsustainable, it wasn’t a great investment anyway

jill_valentine · 20-10-2020 12:56am

cubatahavana wrote: »

Sure some will have to, but I don’t think as many as to make prices collapse. If a 10-20 per cent reduction in your rent as a landlord makes the whole thing unsustainable, it wasn’t a great investment anyway

It made sense in an Ireland where you could name your price to fill that unit all year round. Your apartment definitely wasn't going to go down, and would probably go up, and in the mean time would pay its way for you and some besides. If you already had your own primary residence sorted, getting a deposit together was quite a bit easier than doing so from scratch - so why wouldn't you buy a guaranteed money dispenser if you were in a position to?

All investments are bets in the end. These people would just be cashing out a bet now it looks chancy so they can put their chips in something else.

Springy Turf · 20-10-2020 1:11am

jill_valentine wrote: »

It made sense in an Ireland where you could name your price to fill that unit all year round. Your apartment definitely wasn't going to go down, and would probably go up, and in the mean time would pay its way for you and some besides. If you already had your own primary residence sorted, getting a deposit together was quite a bit easier than doing so from scratch - so why wouldn't you buy a guaranteed money dispenser if you were in a position to?

All investments are bets in the end. These people would just be cashing out a bet now it looks chancy so they can put their chips in something else.

Have a go Landlords have been leaving the business for a good while now. I’m sure that trend will continue but I wouldn’t bet the house on it accelerating. As for the institutional investors - they are mostly in it for the long haul.

combat14 · 20-10-2020 7:17am

150,000 job losses tomorrow with prospect of more lockdowns starting in jan/feb next year

country borrowing relentless billions

it is too early to see how this is all going to pan out on economy and always up properly market

handlemaster · 20-10-2020 8:20am

combat14 wrote: »

150,000 job losses tomorrow with prospect of more lockdowns starting in jan/feb next year

country borrowing relentless billions

it is too early to see how this is all going to pan out on economy and always up properly market

The covid issue will still be here this time next year. Now think will people want to or be able to buy this time next year. The debt from this will have to be paid back also. There is no free money here.

stefanovich · 20-10-2020 8:31am

Leozord wrote: »

besides, ECB is printing money non-stop

ECB printing money, increasing the money supply, devaluing your savings. It's another form of stealth taxation.

handlemaster · 20-10-2020 9:30am

jill_valentine wrote: »

What if they fear a bigger drop in future? What if they need the liquidity now? What if the rent on that apartment is no longer paying its mortgage and some of your own anymore?

not forgetting Landlords are generally not emotionally attached to property its just an investment.

thefridge2006 · 20-10-2020 9:33am

fliball123 wrote: »

Why was there no credit because the banks where all banjaxed the banks are in a much better position in 2020 than they were in 2008

No, banks were all still lending back then. it was the people without the jobs that were banjaxed back then, that's the reason

Balluba · 20-10-2020 9:33am

handlemaster wrote: »

The covid issue will still be here this time next year. Now think will people want to or be able to buy this time next year. The debt from this will have to be paid back also. There is no free money here.

Well a couple did get free money yesterday when they left the High Court with there 10 year old debt reduced from €3.1 million down to only €16,000.........
INCREDIBLE!

Timing belt · 20-10-2020 9:50am

stefanovich wrote: »

ECB printing money, increasing the money supply, devaluing your savings. It's another form of stealth taxation.

When the ECB printed money previously it just went into the finance sector and only a small bit of it made its way to into the property market. This time the governments in Europe are spending up to 1 trillion on stimulus so it will reach the wider economy.

The big question is whether the 1 trillion is just compensating for the loss in economic output. If the economic loss is less than 1 trillion then we will have that excess money chasing the same goods/property which will mean inflation.

PropQueries · 20-10-2020 10:02am

Looks like the City of London has accepted the inevitable in relation to the impact of WFH on the commercial real estate market with a new 5-year plan for the Square Mile:

"The City of London wants to encourage small businesses and those in the arts sector to re-enter the city centre to help the UK’s financial capital recover from the economic damage of the coronavirus pandemic.

The City of London Corporation, which governs the Square Mile, has drawn up a plan to create start-up hubs and more affordable workplaces in London for smaller businesses, many of which have been hard hit by the Covid-19 lockdown.

The City wants a fifth of office tenants to be new to the Square Mile by 2025, half of journeys between rail and workplaces to be walked or cycled with the development of pedestrianised and bike routes, and a 50 per cent increase in weekend and evening visitors."

Link to article in today's FT here: https://www.ft.com/content/3885ab8d-bc0d-4781-b322-05cb9006634b

Timing belt · 20-10-2020 10:06am

thefridge2006 wrote: »

No, banks were all still lending back then. it was the people without the jobs that were banjaxed back then, that's the reason

Banks were lending but they slowed down and were more selective with who they lent to.

The following is bank lending for houses data from the Central Bank which shows the decreased lending.

Timing belt · 20-10-2020 10:10am

PropQueries wrote: »

Looks like the City of London has accepted the inevitable in relation to the impact of WFH on the commercial real estate market with a new 5-year plan for the Square Mile:

"The City of London wants to encourage small businesses and those in the arts sector to re-enter the city centre to help the UK’s financial capital recover from the economic damage of the coronavirus pandemic.

The City of London Corporation, which governs the Square Mile, has drawn up a plan to create start-up hubs and more affordable workplaces in London for smaller businesses, many of which have been hard hit by the Covid-19 lockdown.

The City wants a fifth of office tenants to be new to the Square Mile by 2025, half of journeys between rail and workplaces to be walked or cycled with the development of pedestrianised and bike routes, and a 50 per cent increase in weekend and evening visitors."

Link to article in today's FT here: https://www.ft.com/content/3885ab8d-bc0d-4781-b322-05cb9006634b

I think that may have more to do with Brexit than the WFH policies.

PropQueries · 20-10-2020 11:22am

Timing belt wrote: »

I think that may have more to do with Brexit than the WFH policies.

I don't think Brexit (pre-covid) would have had the potential impact on the City of London that many were assuming. Even the Irish Central Bank wrote a report last year that questioned that belief:

"Interestingly, even though London is Europe’s primary GFC, the direct contribution of EU-based clients to UK financial services firms’ revenues is in fact quite moderate. Estimates show that in 2015, the portion directly attributable to EU clients was only around one fifth."

In other words, in a worst case hard Brexit scenario, the City of London would lose some business but it wouldn't have been as catastrophic as many commentators appeared to suggest.

Then you have to factor in that the UK fund managers run their back-office functions in Luxembourg or Dublin and it could work both ways if the EU ever did play hardball i.e. the UK could force their back-office functions back from Dublin. I can't find the statistics at the moment (maybe you can), but I would assume that Dublin is ahead of Luxembourg for back-office functions for UK based asset managers (due to our close relationship and history) and Luxembourg would be ahead of Dublin for back-office functions for EU based asset managers i.e. we potentially have more to lose than Luxembourg in such a scenario.

Link to Central Bank report here: https://www.centralbank.ie/docs/default-source/publications/financial-stability-notes/no-9-the-future-of-global-financial-centres-after-brexit---an-eu-perspective-(calo-and-herzberg).pdf?sfvrsn=4

Timing belt · 20-10-2020 11:45am

PropQueries wrote: »

I don't think Brexit (pre-covid) would have had the potential impact on the City of London that many were assuming. Even the Irish Central Bank wrote a report last year that questioned that belief:

"Interestingly, even though London is Europe’s primary GFC, the direct contribution of EU-based clients to UK financial services firms’ revenues is in fact quite moderate. Estimates show that in 2015, the portion directly attributable to EU clients was only around one fifth."

In other words, in a worst case hard Brexit scenario, the City of London would lose some business but it wouldn't have been as catastrophic as many commentators appeared to suggest.

Then you have to factor in that the UK fund managers run their back-office functions in Luxembourg or Dublin and it could work both ways if the EU ever did play hardball i.e. the UK could force their back-office functions back from Dublin. I can't find the statistics at the moment (maybe you can), but I would assume that Dublin is ahead of Luxembourg for back-office functions for UK based asset managers (due to our close relationship and history) and Luxembourg would be ahead of Dublin for back-office functions for EU based asset managers i.e. we potentially have more to lose than Luxembourg in such a scenario.

Link to Central Bank report here: https://www.centralbank.ie/docs/default-source/publications/financial-stability-notes/no-9-the-future-of-global-financial-centres-after-brexit---an-eu-perspective-(calo-and-herzberg).pdf?sfvrsn=4

It is not just the back office function. Ireland and Luxembourg are the two main centres for funds within the EU due to legislation and tax rules in place. The other countries would be Jersey and Guernsey. The company structures in all 4 jurisdictions are designed for different investors for tax purposes.

If you look at the Irish stock exchange you will see that the UK Fund managers register the fund in Ireland.

The split between Ireland and Lux is more to do with the type of fund. I think Lux specialises in property funds where as Ireland is more Money market & Equity Funds.

If trading continues in the Square mile post Brexit they will still need offices as any of the Trading activity will need to be undertaken in the office with recorded telephone lines, chat monitoring etc as they will need to demonstrate/Prove that there is no insider trading going on.

PropQueries · 20-10-2020 11:57am

Timing belt wrote: »

It is not just the back office function. Ireland and Luxembourg are the two main centres for funds within the EU due to legislation and tax rules in place. The other countries would be Jersey and Guernsey. The company structures in all 4 jurisdictions are designed for different investors for tax purposes.

If you look at the Irish stock exchange you will see that the UK Fund managers register the fund in Ireland.

The split between Ireland and Lux is more to do with the type of fund. I think Lux specialises in property funds where as Ireland is more Money market & Equity Funds.

If trading continues in the Square mile post Brexit they will still need offices as any of the Trading activity will need to be undertaken in the office with recorded telephone lines, chat monitoring etc as they will need to demonstrate/Prove that there is no insider trading going on.

How do you think Dublin and Luxembourg would be able to defend themselves against potential EU action on the funds tax structures without the UK defending us? Could Jersey and Guernsey then take a significant bite out of both Dublin's and Luxembourg's fund business in the event of a worst case hard Brexit scenario?

Hubertj · 20-10-2020 12:19pm

PropQueries wrote: »

How do you think Dublin and Luxembourg would be able to defend themselves against potential EU action on the funds tax structures without the UK defending us? Could Jersey and Guernsey then take a significant bite out of both Dublin's and Luxembourg's fund business in the event of a worst case hard Brexit scenario?

Get your facts straight.

https://www.irishtimes.com/business/financial-services/city-firms-move-1-2tn-and-7-500-jobs-out-of-london-ey-1.4369451

PropQueries · 20-10-2020 12:27pm

Hubertj wrote: »

Get your facts straight.

https://www.irishtimes.com/business/financial-services/city-firms-move-1-2tn-and-7-500-jobs-out-of-london-ey-1.4369451

I already covered that above.

Hubertj · 20-10-2020 12:30pm

PropQueries wrote: »

I already covered that above.

You said Brexit wouldn’t have much impact on city of London. The is an incorrect statement.

PropQueries · 20-10-2020 12:46pm

Hubertj wrote: »

You said Brexit wouldn’t have much impact on city of London. The is an incorrect statement.

Then we have different definitions of the word impact

However, pre-covid, I was fully expecting the City of London to boom and be even bigger within 5 years if there was a worst case hard Brexit.

Without the UK backing up the likes of Dublin and Luxembourg, the EU will come down hard on the funds domiciled in these countries. Wealthy investors/funds etc. can transfer cash in a very short period of time these days (as shown by your Irish Times link) and if the EU starts interfering with or taxing them (and they will), they will move their money to more investor friendly jurisdictions very very quickly e.g. the UK.

Timing belt · 20-10-2020 12:59pm

PropQueries wrote: »

How do you think Dublin and Luxembourg would be able to defend themselves against potential EU action on the funds tax structures without the UK defending us? Could Jersey and Guernsey then take a significant bite out of both Dublin's and Luxembourg's fund business in the event of a worst case hard Brexit scenario?

No they are used for non Dom uk residents etc and for leveraging the fund. Ireland is the gateway for the US funds and lux specialises in property funds. Europe needs the structures who do you think is buying all the EU gov debt.

Timing belt · 20-10-2020 1:01pm

PropQueries wrote: »

Then we have different definitions of the word impact However, pre-covid, I was fully expecting the City of London to boom and be even bigger within 5 years if there was a worst case hard Brexit.

Without the UK backing up the likes of Dublin and Luxembourg, the EU will come down hard on the funds domiciled in these countries. Wealthy investors/funds etc. can transfer cash in a very short period of time these days (as shown by your Irish Times link) and if the EU starts interfering with or taxing them (and they will), they will move their money to more investor friendly jurisdictions very very quickly e.g. the UK.

No they won’t do a bit of research on the industry and as for UK growing after a no deal I don’t see it..us investment bankers are referring to gbp as an emerging market currency and the ftse is the only stock exchange to still be down post the crash earlier in the year which is a subtle message to the uk from investors. Listen to today’s FT podcast

PropQueries · 20-10-2020 1:09pm

Timing belt wrote: »

No they won’t do a bit of research on the industry and as for UK growing after a no deal I don’t see it..us investment bankers are referring to gbp as an emerging market currency and the ftse is the only stock exchange to still be down post the crash earlier in the year which is a subtle message to the uk from investors. Listen to today’s FT podcast

So the Tobin Tax etc. will still remain on the back burner once the UK leaves? Possibly but not probably IMO.

Irish Property Market 2020 Part 2

Comments