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2021 Irish Property Market chat - mod warnings post 1

hometruths

Happy new year to all.

2020 was the year of pent up demand. I think 2021 will be the year the pent up supply comes to market.

I think the pent up supply will exceed the pent up demand and prices will fall. By how much I have no idea!

edit: Mod Warnings

This thread is about the Irish Property Market, it is not about:
* Immigration
* Refugees
* Welfare recipients
* Welfare rates
* General Irish politics beyond its impact on property
* General Irish economy beyond its impact on property
* How wonderful Country X is to buy in

Additionally, the specific issue of Geodirectory vacancy figures has been done to death and is not to be discussed again.

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Cyrus

Villa05 wrote: »

Most new developments are purchased by the state for social and affordable using taxpayers money to bid against them
Or
By investment funds with significant tax advantages over local purchasers

any evidence to support this very bold claim?

ongarite

Good data there.
The vast majority of sales are FTB or buyers trading up to bigger property

Timing belt

Ozark707 wrote: »

If there is a sizeable % of a new development that is purchased by Council and/or some fund then it puts a certain slant on the 'places flying off the market' narrative that seems to be out there.

Ozark707

Villa05 wrote: »

Most new developments are purchased by the state for social and affordable using taxpayers money to bid against them
Or
By investment funds with significant tax advantages over local purchasers

The general public are left to fight for the scraps after they have had there fill so of course its going to be competitive when the system is set to completely disadvantage people who merely wish to provide their own housing need

I don't think this is a situation that should be celebrated or viewed as a positive, quiet the contrary in fact.

If there is a sizeable % of a new development that is purchased by Council and/or some fund then it puts a certain slant on the 'places flying off the market' narrative that seems to be out there.

Villa05

Graham wrote:

Yet there appears to be no struggle selling new developments off plan and posters who are actually buying (rather than market guessing) consistently post about how competitive the market is.

Most new developments are purchased by the state for social and affordable using taxpayers money to bid against them
Or
By investment funds with significant tax advantages over local purchasers

The general public are left to fight for the scraps after they have had there fill so of course its going to be competitive when the system is set to completely disadvantage people who merely wish to provide their own housing need

I don't think this is a situation that should be celebrated or viewed as a positive, quiet the contrary in fact.

Thargor

How do people generally go about researching a property besides just Googling the address? Is there a way of looking up when it was built, previous owners etc?

rachaelf750

John Hutton wrote: »

Thank you.

Unfortunately (as I don't drive) they are too far north. In between Dundalk and Drogheda, commute wise, is actually much worse than living in Dundalk proper, and of course Drogheda.

This is an area I've scouted well and I've settled on Drogheda as the best spot north of Dublin. I was wondering if I have overlooked anything south or west of Dublin in my price/public transport bracket.

Ahh not driving will certainly limit your options.
Public transport from these two areas isn't too bad to Dublin, howandever best of luck with the house hunting.

Timing belt

As of 30.06.2020 the only countries that saw a fall in real house prices year on year as published by BIS

United Arab Emirates.............-4.8947%
China...................................-0.5741%
Colombia..............................-5.1304%
Hong Kong SAR.....................-4.0706%
Hungary...............................-4.8328%
Indonesia............................-0.6121%
India....................................-3.5159%
Japan...................................-0.6199%
Morocco................................-3.3015%
Peru.....................................-1.8072%
South Africa..........................-1.5634%

Ireland posted the 3rd smallest increase in property prices from the countries listed with a 0.7% increase.

The Philippines saw the largest increase of 24.3% followed by Luxembourg with 12.8%

The real y/y % increase for advanced economies was 3.7% and the average for the Euro Area was 4.9%

tigger123

mel123 wrote: »

Who predicted correctly in the last few threads to where we are now? Thats a genuine question. Me personally i would have been totally wrong, i thought house prices were going to drop and drop significantly. The hammer fell for me (literally, bought at bidex) about 2 weeks before all this covid stuff and I got really really lucky. My prediction at the minute for the current market is its still not going to drop, covid is here for 2021 too, albeit not as bad as 2020 hopefully.

Congrats on getting your own purchase across the line

We bought approx 18 months ago after looking, having places fall through on us, and being outbid on properties for almost two years. As a result I kind of became obsessed with watching the market, and still am.

To answer your question (and its rare I get to say such a thing), but I never expected a dip in house prices due to Covid, and kind of predicted where we are right now.

I could see in myself, my colleagues, and my friends that those people who could wfh, and who are in the income bracket to buy in Dublin, would not be impacted by Covid the same way lower income earners were going to be.

Also, after the new Government formed it was fairly apparent that there was going to be no real change in housing policy from FFG.

So, in short, demand reamins strong, and supply is as constrained as ever.

However, what I didn't realise was how much money people would be saving during Covid. And that has helped more people get their deposit together.

John Hutton

rachaelf750 wrote: »

Here is a few options that may suit.

https://www.daft.ie/for-sale/end-of-terrace-house-6-malthouse-gardens-castlebellingham-co-louth/2596401

https://www.daft.ie/for-sale/apartment-12-thorne-court-drogheda-road-ardee-co-louth/2569150

https://www.daft.ie/for-sale/detached-house-12-cherrybrook-ardee-co-louth/2839739

https://www.daft.ie/new-home-for-sale/bridgegate-ardee-co-louth/2583486

Thank you.

Unfortunately (as I don't drive) they are too far north. In between Dundalk and Drogheda, commute wise, is actually much worse than living in Dundalk proper, and of course Drogheda.

This is an area I've scouted well and I've settled on Drogheda as the best spot north of Dublin. I was wondering if I have overlooked anything south or west of Dublin in my price/public transport bracket.

rachaelf750

John Hutton wrote: »

2021 is the year for me (hopefully) Hope to buy (FTB) in late summer/autumn in a town where I can commute to Dublin. Have a budget of around 200k, have my deposit saved already. Looking to buy a 2/3 bedroom house or Duplex if can't get a house. No apartments.

Currently l'm thinking it will probably be Drogheda, does anyone have any recommendation for any other towns within an hours (public transport) commute of Dublin in my budget? (I've already ruled out Balbriggan).

Here is a few options that may suit.

https://www.daft.ie/for-sale/end-of-terrace-house-6-malthouse-gardens-castlebellingham-co-louth/2596401

https://www.daft.ie/for-sale/apartment-12-thorne-court-drogheda-road-ardee-co-louth/2569150

https://www.daft.ie/for-sale/detached-house-12-cherrybrook-ardee-co-louth/2839739

https://www.daft.ie/new-home-for-sale/bridgegate-ardee-co-louth/2583486

Villa05

mariaalice wrote:

Those who look purely at the financial markets and the economy as evidence for house prices are forgetting one thing, the government has come up with endless ways of supporting the housing market and shows no sign of stopping.

Should a government be using taxpayers money to keep prices high given that the state in itself is the largest customer through social and affordable housing.

Taxpayers money should be used in addressing supply issues not creating more demand.

This in itself is the greatest risk to the property market and the state finances.
Prices are at unsustainable levels especially rents. Spending taxpayers money to keep them there or rise further is economic suicide

Timing belt

blindside88 wrote: »

Watching the property market closely this year. I’m in 2 minds as to whether or not to buy a second property as an investment. I’d be borrowing about 50% of the value but would like to see a bit of a drop before jumping in. Will wait 6-8 months before doing anything anyway.

In relation to negative interest on deposits. It’s expected within the industry that this will be brought in on very large personal deposits only, possible starting at €500k, may eventually come down as far as €100k, I can’t see it impacting on property prices by and large.

Once negative interest rates are brought in on retail Deposits at whatever level it will have people questioning what to do with their deposits. Yes it will be implemented on very large deposits first to test the water and then the net will widen and catch more depositors.

Remember that Banks are still getting the high yield on government Bonds from the Sovereign Crisis and that this will be rolling off the books this year/next year and replaced with Government bonds with a negative yield which will have a big impact on their bottom line so any chance to pass this cost on (without breaching any of the CRD IV reg limits) will be taken by the banks.

They are in a major cost cutting phase brought about by the reduced Income thanks to the low rates and will stop at little to improve their Cost to income ratios and ROTE. I imagine we will hear all about it when the publish their annual results in Feb

fliball123

might be an idea to get one of the polls up and let people say what they think property will do this year.

yagan

We've been targeting a few areas around north Dublin over the year and the trend seems to be houses in the FTB bracket are rising whereas above that limit there does appear to be some good discounts if you've got the cash.

Plus Brexit isn't done, we just reached the end of the beginning and transition away from the British market may see more export industry favoring closeness to the southern ports. This may take more wind out of the Dublin bubble.

[Deleted User]

fliball123 wrote: »

What ever about the property market I think it is only right that the government stepped in and supported those who where told to stop working. When you measure the money given to banks in 08 to what they are giving now it is not even 20% of what they gave to the banks. So as much as I hate the fact that I and the other tax payers will be paying for it. I simply think it was the right thing to do. Remember if everyone lost their job who are on covid payments they would still be entitled to get social welfare as well as redundancy from the state so we would not of saved too much by leaving things as they were before Covid.

Of course, it is the correct thing to do.

amacca

mel123 wrote: »

Who predicted correctly in the last few threads to where we are now? Thats a genuine question. Me personally i would have been totally wrong, i thought house prices were going to drop and drop significantly. The hammer fell for me (literally, bought at bidex) about 2 weeks before all this covid stuff and I got really really lucky. My prediction at the minute for the current market is its still not going to drop, covid is here for 2021 too, albeit not as bad as 2020 hopefully.

I didn't predict but I'll admit I thought it woukd drop too

However I bought a property last summer even though I thought it woukd drop as it made sense to do so. I was thinking even though it would drop it wouldn't affect me.

I was also thinking there were f all properties of the type I wanted to buy coming to market anyway (not particularly interested in a shiny overpriced imo) new build in an estate.

Come to think of it there were f all whst I would call quality properties on the market anyway........but no shortage of demand

If that remains the same and the demand side has the funds or access to them I doubt property values will fall much......barring mass emigration- but then where woukd they go in the current climate?

If banks tighten money supplies and govt attempt to increase taxes to recoup losses then you could see a drop but I'd say there will be very few properties put on the market if the owners can hold on to them...you are down to the odd executor or forced sales then...The developor wont develop and the builder wont build if they can't make anything out of it.....and they wont if prices drop much...given cost of land,Labour etc......and not many receiving negative interests on cash and wary of stock market will be that anxious to offload land........+ isn't there still a heavy windfall tax on development land?

Barring demand drying up or the state building houses below cost (which isn't without its problems either imo).... we are looking at status quo for a while methinks..........

fliball123

mariaalice wrote: »

Those who look purely at the financial markets and the economy as evidence for house prices are forgetting one thing, the government has come up with endless ways of supporting the housing market and shows no sign of stopping the same with supporting those who are unemployed because of COVID 19.

What ever about the property market I think it is only right that the government stepped in and supported those who where told to stop working. When you measure the money given to banks in 08 to what they are giving now it is not even 20% of what they gave to the banks. So as much as I hate the fact that I and the other tax payers will be paying for it. I simply think it was the right thing to do. Remember if everyone lost their job who are on covid payments they would still be entitled to get social welfare as well as redundancy from the state so we would not of saved too much by leaving things as they were before Covid.

blindside88

Watching the property market closely this year. I’m in 2 minds as to whether or not to buy a second property as an investment. I’d be borrowing about 50% of the value but would like to see a bit of a drop before jumping in. Will wait 6-8 months before doing anything anyway.

In relation to negative interest on deposits. It’s expected within the industry that this will be brought in on very large personal deposits only, possible starting at €500k, may eventually come down as far as €100k, I can’t see it impacting on property prices by and large.

[Deleted User]

Those who look purely at the financial markets and the economy as evidence for house prices are forgetting one thing, the government has come up with endless ways of supporting the housing market and shows no sign of stopping the same with supporting those who are unemployed because of COVID 19.

fliball123

If you look at 2020 and 2021 from a interim view point

2020
We had covid and a lot of uncertainty
We had Brexit looming large
We have had a stop on people coming into the country both immigration/study and tourists
People have lost jobs and businesses have gone to the wall
We have had building stymied by covid
We have had banking lending Stymied by covid

2021
We now have multiple vaccines being rolled out for Covid
Brexit has now passed
Once covid is gone Ireland will start receiving people again from foreign countries
The irish government as much as I dislike a lot of the horse-crap they go on with have a brilliant track record for encouraging and creating an environment for job creation. So jobs lost will hopefully open a space for someone to step in and create jobs.
Building and Lending will be back to normal this year too.

I think the budget the gov put in last year will keep property prices going up or at least steady.

My prediction is 3-5% increase in prices this year my prediction is based on the chronic supply side and the pent up demand that was built up during last year as well as a lot of issues such as brexit and covid that stopped people in their tracks for years buying finally buying. Add in the the amount of money people have saved extra in 2020 means people have more cash to play with and working from home may also mean that people now have more Take home pay to pay for a mortgage than they did before.

But I would not advise anyone to buy or sell as everyone will have their own individual set of circumstances which will trump any reason I outline above for buying or selling.

Timing belt

mel123 wrote: »

Who predicted correctly in the last few threads to where we are now? Thats a genuine question. Me personally i would have been totally wrong, i thought house prices were going to drop and drop significantly. The hammer fell for me (literally, bought at bidex) about 2 weeks before all this covid stuff and I got really really lucky. My prediction at the minute for the current market is its still not going to drop, covid is here for 2021 too, albeit not as bad as 2020 hopefully.

I think the majority of people expected property prices to fall by 5% - 10% in 2020. (including the banks that had build this into their models for providing for bad debt)

I don't think anyone predicted that house prices would be stable or even grow in 2020

mel123

Who predicted correctly in the last few threads to where we are now? Thats a genuine question. Me personally i would have been totally wrong, i thought house prices were going to drop and drop significantly. The hammer fell for me (literally, bought at bidex) about 2 weeks before all this covid stuff and I got really really lucky. My prediction at the minute for the current market is its still not going to drop, covid is here for 2021 too, albeit not as bad as 2020 hopefully.

Timing belt

Idbatterim wrote: »

https://www.irishtimes.com/business/economy/economists-predicted-a-covid-property-collapse-it-hasn-t-happened-1.4449261?mode=amp

Bery interesting, ome thing is for sure, the time lines involved for crash to build or recivery to cone about are way longer than people expect. Also everything seems fine until like a tree on a storm, what looked strong, just collapses. There is so little supply, even with another economic shock would prices drop, so many high paying and secure jobs, in government and private sector, so little supply...

Short of potentially another bailout situation or worse...

The issue is a chronic shortage of supply and there are only 2 things that will lead to lower house prices.

1 - A massive increase in supply

unlikely to happen in current environment but is flagged as risk for the Irish property Market by the European Systemic Risk Board

Biggest risk is that forecast immigration does not materialise and we end up with oversupply

2 - A reduction in disposable income

Most likely brought about by Unemployment but could be impacted by tax increases.

Its is possible that this could emerge of the back of a shock to the financial system but it is not probable as we have seen that the central banks are willing to do whatever to prevent the financial systems from falling over like in 08.

Yes it takes time from cause to effect but the majority of issues will have been flagged up by the year end. The prediction is NPL's expected to rise to 14% and a cost to the banks of circa 4bn which has already been provided for by the banks by way of a provision.

Personally I think that this provision includes everything including the kitchen sink and that we will see a claw back of circa 30% of these provision in 2022.

Villa05

Bubbaclaus wrote:

"Those who bore the brunt of the Covid hit, those who lost their jobs and livelihoods in such large numbers, were in relatively low-paying service jobs and were not part of the home-buying market in the first place."

Idbatterim wrote:

Very interesting, one thing is for sure, the time lines involved for crash to build or recovery to come about are way longer than people expect. Also everything seems fine until like a tree in a storm, what looked strong, just collapses. There is so little supply, even with another economic shock would prices drop, so many high paying and secure jobs, in government and private sector, so little supply...

It's an interesting article, lots of danger signals in there dressed up as positives
People lost jobs not income, This income was replaced by state subsidies which need to be paid back. Is spending 15 billion + value for money with the result being maintaining unaffordability in the housing market.

yagan

Idbatterim wrote: »

https://www.irishtimes.com/business/economy/economists-predicted-a-covid-property-collapse-it-hasn-t-happened-1.4449261?mode=amp

Bery interesting, ome thing is for sure, the time lines involved for crash to build or recivery to cone about are way longer than people expect. Also everything seems fine until like a tree on a storm, what looked strong, just collapses. There is so little supply, even with another economic shock would prices drop, so many high paying and secure jobs, in government and private sector, so little supply...

Short of potentially another bailout situation or worse...

It's still very early to tell.

Prices can still climb even as sales decrease, which looking at the PPR for the last year seems to be what's happening.

National prices still rose for two years after volume peaked in 06.

Wanderer78

Idbatterim wrote: »

https://www.irishtimes.com/business/economy/economists-predicted-a-covid-property-collapse-it-hasn-t-happened-1.4449261?mode=amp

Bery interesting, ome thing is for sure, the time lines involved for crash to build or recivery to cone about are way longer than people expect. Also everything seems fine until like a tree on a storm, what looked strong, just collapses. There is so little supply, even with another economic shock would prices drop, so many high paying and secure jobs, in government and private sector, so little supply...

Short of potentially another bailout situation or worse...

or bail in!

Idbatterim

https://www.irishtimes.com/business/economy/economists-predicted-a-covid-property-collapse-it-hasn-t-happened-1.4449261?mode=amp

Very interesting, one thing is for sure, the time lines involved for crash to build or recovery to come about are way longer than people expect. Also everything seems fine until like a tree in a storm, what looked strong, just collapses. There is so little supply, even with another economic shock would prices drop, so many high paying and secure jobs, in government and private sector, so little supply...

Short of potentially another bailout situation or worse...

Timing belt

amacca wrote: »

only a fairly uninformed guess but

I think they might go with a cap first assuming they have enough on deposit to satisfy capital ratios....it would be less likely to cause the kind of headlines charging negative rates might.....then/or negative rates over a fairly hefty deposit amount (depending on the banks situation)

could be a different scenario but some CUs have gone with a cap as they are losing money on the deposits and cant get enough money lent out so people are already aware of that and it doesn't seem to have cause a stink

the difference between what the banks were at early to mid 2000s and now regarding deposit accounts is unreal - I remember regular savers with up to 8% interest
of course that situation and whats happening now were both worrying, both scenarios really make me question the value/stability of money.

you may be correct that the banks go with a CAP but if all banks implement this then you will have some depositors looking for a home for there excess deposits that they will need to invest elsewhere.

Back in the early to mid 2000s ECB rates were 2-3% but banks relied heavily on the the wholesale markets for funding so were willing to pay for deposits as it was a cheaper source of funds.

amacca

Timing belt wrote: »

They won’t apply to all retail deposits as 70-80% of loans are funded by customer deposits so they will not want to impact these deposits. It is just the higher level of deposits that they will want to target. The options the banks have are:
-negative rates over x
- put a cap on deposits only allowing a customer deposit up to x.
- increase the margin on lending to compensate
- increase bank charges
- accept the loss

The longer we are in a low interest rate environment the less likely that the bank will just accept the loss as bonds with a higher yield roll off the banking book and are replaced with bonds with a negative yield.

A negative rate, cap or a increase in margin on lending all have the ability to influence the property market.

only a fairly uninformed guess but

I think they might go with a cap first assuming they have enough on deposit to satisfy capital ratios....it would be less likely to cause the kind of headlines charging negative rates might.....then/or negative rates over a fairly hefty deposit amount (depending on the banks situation)

could be a different scenario but some CUs have gone with a cap as they are losing money on the deposits and cant get enough money lent out so people are already aware of that and it doesn't seem to have cause a stink

the difference between what the banks were at early to mid 2000s and now regarding deposit accounts is unreal - I remember regular savers with up to 8% interest

of course that situation and whats happening now were both worrying, both scenarios really make me question the value/stability of money.

Id be a fan of slow steady safe predictable type environments........money losing its value on deposit (and not just due to inflation) isnt good at all.