2021 Irish Property Market chat - *mod warnings post 1*

Gradius wrote: »

Of course! The point is that the property market (and more) is almost diametrically opposed to reality: the worse shape the economy becomes, the better outlook people have!

But as you say, it's essentially make-believe. A bad company is about to go bust, a central bank buys the debt, and suddenly individuals are buying up stock like it's magically a "good" company. The reality is that nothing has changed, except you've been convinced into buying shares in a bad company.

But that kind of show can only last so long.

What evidence have you got that Ireland inc is about to go bust? We will have borrowed 30Billion extra on top of 210 Billion at 0% interest. This will be seen as a near zero sum with the the existing 210 Billion being refinanced at a lower rate than what it was borrowed at.

Just on the economy A lot of companies have been forced to close due to government policy and not due to liquidity or cash flow problems. We will get a snapshot later this year when the vaccine is administered and COVID is assigned to the past and we open back up for the last time without threat of lockdown. We also have record numbers of savings ever seen in Irish bank accounts so people have the cash and currently they cannot spend their money. Add in people can WFH meaning they can buy further out from the big cities and work and pay less for a property.

The reality is people need somewhere to live, the reality is in a lot of cases with interest rates so low its cheaper to pay a mortgage than rent not to mention some security knowing your not at the will of a landlord and in this country banks in a lot of cases are put off taking back the "family home" you only have to look at pips and other left leaning orgs that are fighting the "good fight" for this. Irish property is a cultural thing here in this country people from a young age are encouraged to "get on the ladder" this mentality has not changed.

fliball123 wrote: »

What evidence have you got that Ireland inc is about to go bust? We will have borrowed 30Billion extra on top of 210 Billion at 0% interest. This will be seen as a near zero sum with the the existing 210 Billion being refinanced at a lower rate than what it was borrowed at.

Just on the economy A lot of companies have been forced to close due to government policy and not due to liquidity or cash flow problems. We will get a snapshot later this year when the vaccine is administered and COVID is assigned to the past and we open back up for the last time without threat of lockdown. We also have record numbers of savings ever seen in Irish bank accounts so people have the cash and currently they cannot spend their money. Add in people can WFH meaning they can buy further out from the big cities and work and pay less for a property.

The reality is people need somewhere to live, the reality is in a lot of cases with interest rates so low its cheaper to pay a mortgage than rent not to mention some security knowing your not at the will of a landlord and in this country banks in a lot of cases are put off taking back the "family home" you only have to look at pips and other left leaning orgs that are fighting the "good fight" for this. Irish property is a cultural thing here in this country people from a young age are encouraged to "get on the ladder" this mentality has not changed.

Far too many ifs and maybes in your reasoning.

When is public spending going to end on this? Who says it's only going to be 30 billion?

Later this year we'll have a cure-all vaccine? When's that?

The next lockdown will be the last one?

The option to work from home is simply going to remain?

Record savings perhaps, but people piling it into ifs and maybes at very high prices. Bit of a moot point to say you saved a million quid and then spend it immediately.

"The reality is people need a place to live..." Yeah, like 2007?

You might be right that this will all work out happily, but I'm not betting on it, not going by what's happening here and now.

Gradius wrote: »

Far too many ifs and maybes in your reasoning.

When is public spending going to end on this? Who says it's only going to be 30 billion?

Later this year we'll have a cure-all vaccine? When's that?

The next lockdown will be the last one?

The option to work from home is simply going to remain?

Record savings perhaps, but people piling it into ifs and maybes at very high prices. Bit of a moot point to say you saved a million quid and then spend it immediately.

"The reality is people need a place to live..." Yeah, like 2007?

You might be right that this will all work out happily, but I'm not betting on it, not going by what's happening here and now.

That's the predicted figure

https://www.thejournal.ie/paschal-donohoe-covid-19-5099473-May2020/

https://www.rte.ie/news/business/2021/0128/1193593-annual-report-on-public-debt-in-ireland-2020/

Have you not been watching we have already over 230k doses of vaccine administered in the country. I seen a timeline of August/September when we will have enough to do the entire population.

https://www.breakingnews.ie/ireland/covid-vaccine-tracker-over-230000-doses-administered-in-ireland-1077794.html

Not sure when or if there will be another lockdown (lets get out of this one first)

A lot of companies will embrace WFH or some kind of hybrid model where you will work in the office 2/3 days a week. Personally my company started a WFH 3 years ago I have not been in an office in 3 years. So there will definitely be more take up especially with the big tech companies the likes of Google, Apple, Twitter etc have said WFH will be an option going forward. But it wont be there for everyone.

The point about the savings is that its not exactly the doom and gloom that your trying to make out not everyone has been financially effected. Everyone is entitled to spend their hard earned savings on what they want and a % will do so on property. What that % will be is who knows.

As for a place to live as a little exercise for yourself even during the last downturn post 2008 check out how many repossession of the "family home" were enforced and get back to me..Like I say everyone has to live somewhere.

Cool you should have a look at the 2020 Irish property market chat - people like yourself were a dime a dozen and were all proven wrong. Good luck in your future endeavors but like I say I hope your not left waiting

Gradius wrote: »

On the contrary, I find it not only surprising but bewildering.

Millions dead, employment numbers going through the floor, businesses closing left and right, no clear end in sight, debt spiralling out of control and so on and so on.

Just robbing a few graphs taken willy nilly to illustrate my overall point point...





I would confidently argue a lot of statistics floating around are supremely "optimistic" (if you don't like the word "cooked"). Yet, despite these hard realities, the likes of the below is happening in real time...





There is something seriously wrong with the overall picture here, seriously wrong.

There are rational reasons for everything that is happening it's not something out of the twilights zones.
1) its not surprising that there is no GDP growth when most of the world is in lock down for weeks on end with covid....what is surprising is that it is that the drop is not larger than we are seeing and this is down to government intervention whether it is the pup or stimulus cheques.

2) We have massive unemployment due to covid yet again this is not a surprise with business shut. What is a surprise is that we are not seeing 25%+ figures and that is mainly down to governments not counting people on PUP as unemployed. This also makes sense as a large % of these people will go back to jobs after covid. What we also know is that there are % of people that will not have a jobs to go back to as the businesses will have failed.

3) Increase in house prices is not down to the fact that their is a chronic shortage of supply in Ireland because if this was the only driver then it would not explain why property prices all over the world have increased since the start of the pandemic. Instead you need to look at the impact that rate cuts have always had on house prices and remember that QE is the equivalent of a historical Rate cut. Add on top of this the fact that banks have excess liquidity and will gladly lend. Irish house prices would be way higher only for the CBI rules as the banks would be lending more to lower thier liquidity like we see in other countries. The the final nail in the coffin is that low interest rate environment is driving investment in property as people look for a return in an environment where it is near impossible to get one without accepting large risks.


4) The stock markets are valued higher than they were before covid not because they think the underlying companies are now in a better financial position than before. There price valuations are due to the low interest rate environment. If you look at bond's valuations the price has gone through the roof with 1000%+ returns as central banks undertake QE and drive bond yields lower. This has encouraged most investors that do not need to hold bonds for regulatory purposes to cash out their gains. Now where are they going to put their cash... in a bank at negative rates or in other asset classes such as the stock market, property, Crypto, gold. Even if the stock market has a 10% correction they are still 990% better off than before all this started. Add on top then that you have retail investors who likewise are getting low to zero returns from a bank who see the stock market rising and think hey I want a piece of this action to make a quick buck.

Will it all end it tears... yes most probably but we don't know when. Interest rates have been falling for 30+ years keeping the show on the road... now they have hit zero they have gone negative and we have QE. People say that inflation will be the pin that pops the bubble but we are not seeing inflation in the CPI at moment because the velocity of money falls with QE. To put this in English people are not spending money.... If you went back a number of years cash would have changed hands 8+ times during a year... it is now down to 1.5 or something like that... If people are not spending we will not see inflation as the extra money is not chasing a limited supply of goods. Will this change possibly if consumer confidence grows but that is unlikely in an environment with unemployment and companies failing but that is just IMO.

Level 5 lockdowns until April at least . Seems crazy to shut this down for half the year

schmittel wrote: »

Velocity has tanked because people are locked in their houses saving money, with limited spending options.

It is likely to rocket when covid is behind us.

Velocity of money has been slowing down for years well before Covid. That is not to say that it will continue like that...something like the banks charging negative interest rates to retail customers could change that quickly or a increase in global GDP. Both things are unlikely in the short term and instead we are likely to see the economy limp on with the aid of more stimulus disguised as a green wave or as universal credit.

Graham wrote: »

I think almost the exact opposite once COVID is under control. I reckon things will ramp up pretty quickly.

Stimulus money, savings from the significant number able to WFH, suppressed demand and a general feeling of wahaay let me the **** out of here.

But as someone posted recently, how many additional haircuts, pints, meals out etc. can people spend these savings on once the economy does reopen.

Plus, I think it would be interesting to see what percentage of these additional savings are due to the older groups e.g. pensioners being unable to spend any money.

And given this weeks plan to tax all PUP payments received this year in this current tax year if someone returns to work this year, I think the state is planning to grab a significant chunk of these additional savings in some form or other.

The state isn't going to get it back through some hoped for spending bounce once the economy does fully reopen, which will now be most likely next year at the earliest as they're not going to encourage everyone back to the office and onto public transport between September 2021 and February 2022, even if the vaccine programme rolls out as expected IMO

Gradius wrote: »

Of course! The point is that the property market (and more) is almost diametrically opposed to reality: the worse shape the economy becomes, the better outlook people have!

But as you say, it's essentially make-believe. A bad company is about to go bust, a central bank buys the debt, and suddenly individuals are buying up stock like it's magically a "good" company. The reality is that nothing has changed, except you've been convinced into buying shares in a bad company.

But that kind of show can only last so long.

Oh, you mean just like property
You can slot the government in for the central bank there.
And property for company.

schmittel wrote: »

Velocity has tanked because people are locked in their houses saving money, with limited spending options.

It is likely to rocket when covid is behind us.

It will only rocket if the government dont scare people by taxing them more.
If they keep their word and dont put their hand in peoples pocket in any way, shape or form, them i think people will have confindence to start spending.


But start messing with taxes, stealth taxes or any other sneaky way to extract money from people and they will just button up and not spend.

awec wrote: »

I don't think the point that AIPs are a pretty worthless indicator was unique to PropQueries on here. I think it's a point that has been made my numerous posters, myself included.

Me too.
I said this before, but I still have multiple ones active and only used one on closing with that lender. I actually am still AIP with others even though ive already closed.
And I think it was always thus for AIPs, even pre-covid.

AdamD wrote: »

Do you not think significant increases in saving, leading to more people having a deposit built up will lead to more demand? When the market actually opens

It's an interesting one. Deposits are up 10.2% since COVID kicked in, and deposits have been trending up for a while so not all of the 10.2% can be attributed to COVID.

Assuming most people have a 10% deposit, that's 1.2% of house value that people have saved on average. Of course it's possible some people who were not previously buyers into the buyer net, but also suspect most additional saving is being done by those with higher discretionary spend (ski trips, summer holidays etc.) for whom deposits were unlikely to be an issue.

Overall it will have some effect, but hard to say how much. And also, as it's a one off event any effect it has will not be a sustainable one.

Another poster also mentioned here which was a great point, everyone assumes more savings is because of an inability to spend, but it's also possible that people are saving more out of caution/worry (classic recession problem). Doubt the cohort of worriers are planning to get involved in bidding wars on houses post lockdown!