Property Market 2018

Lumen · 16-06-2018 8:17pm

EvolvedApe wrote: »

The wealthy are always a step ahead, they will see a collapse coming and will have already taken action before we even get a real sight of it.

That's not usually true. Rich people don't have access to better advice, they have access to more expensive advice which is no better then cheap advice. They lost a massive amount of wealth in the GFC. What helped them was that they had even more to start with.

It's the same with wars. Wars destroy capital, capitalists own capital so they lose wealth and inequality decreases. Unfortunately it's the poor that pay with their lives while the rich just see smaller numbers on bits of paper.

EvolvedApe · 16-06-2018 8:18pm

Lumen wrote: »

That's not usually true. Rich people don't have access to better advice, they have access to more expensive advice which is no better then cheap advice. They lost a massive amount of wealth in the GFC. What helped them was that they had even more to start with.

It's the same with wars. Wars destroy capital, capitalists own capital so they lose wealth and inequality decreases. Unfortunately it's the poor that pay with their lives while the rich just see smaller numbers on bits of paper.

No but rich people control prices, not just in property.

Lumen · 16-06-2018 8:20pm

EvolvedApe wrote: »

No but rich people control prices, not just in property.

They don't individually control prices, so they don't have control in the normal sense. Well, with a very few exceptions like DeBeers.

The greatest influencer of prices is the State, via policy decisions (or lack of).

The_Conductor · 16-06-2018 8:26pm

Lumen wrote: »

The greatest influencer of prices is the State, via policy decisions (or lack of).

It doesn't really matter in the grand scale of things- because we never seem to learn- we keep making the same mistakes- and the people who destroy the place- are quickly forgotten (as opposed to forgiven).

Toss- some populist sentiment into the mix, an external environment where the media are held in a healthy disregard- and any naysayers who dare to speak up are used as scapegoats- and its hard not to be cynical..........

We keep making the same mistakes- again and again and again.........

16-06-2018 8:49pm

The_Conductor wrote: »

....

A lot of Irish borrowers are going to be hurting- very soon- lob another batch of negative equity into the mix- and it might actually turn incendiary this time round.............

....
If I had any intention of getting out of here in the next 10 years- I'd be planning on doing it in the next 18 months.............

If it actually turned incendiary what would that entail exactly? I've no idea what you could possibly mean TBH

There's been little enough property changing hands so I don't think things could be anywhere near as bad as 2008 property crash wise.

sunnyday1234 · 17-06-2018 6:34am

The_Conductor wrote: »

Its a bit of a double edged sword- do we really want prices to fall substantially- when Irish borrowers are so exposed to ECB base rates (with the exception of those who manage to access the government scheme). We have tapered ECB QE and now have a firm date for the end of ECB QE (December 2018) and a suggested date to begin 'normalisation' of interest rates (subject to external factors) of September 2019.

A lot of Irish borrowers are going to be hurting- very soon- lob another batch of negative equity into the mix- and it might actually turn incendiary this time round.............

We already have the Dublin market showing that gravity is beginning to prevail- this is not evident nationally, yet, but the rates of increase in some regional areas- are simply staggering.

If I had any intention of getting out of here in the next 10 years- I'd be planning on doing it in the next 18 months.............

Why so negative ? Why do you think borrowers will be hurting soon

arctictree · 17-06-2018 7:59am

Opinions on this:

http://www.daftdrop.com/ireland/wicklow/houses/clara-lodge-laragh-co-wicklow-469231

Price drop of 25% since put for sale a year ago. In a 'sellers market'?

The_Conductor · 17-06-2018 8:22am

sunnyday1234 wrote: »

Why so negative ? Why do you think borrowers will be hurting soon

Irish borrowers are almost unique in Europe- the borrowers in no other EU countries borrow at variable rates in the manner in which we do. If you go to The Netherlands, Belgium, Germany- or any of a long and interesting list of other countries- you'll find the predominant mortgage products on the market are fixed rate products- fixed for the entire term of the mortgage- and most people would find it bizzare that a borrower was willing to accept the risk of a floating rate- its just an alien concept to them.

We started tapering ECB quantitative easing policies 18 months ago- we now have an agreed roadmap to completely finish ECB QE by December of this year. We also had a fairly dovish statement from the ECB about interest rate 'normalisation' (with an inference that its not going to commence until September 2019- and is going to be subject to conditions- not leastly the prevailing EU inflation rate- which is actually right where they want it to be).

We also have a complete joker in the pack- with the new Italian government- Brexit, a US trade war, ongoing Russian sanctions on EU products etc etc etc

Its one hell of a volatile situation- and into this mayhem- we are stopping QE and have a roadmap for interest rate rises..........

This is why I'm 'so negative'. I think I'm being a realist- though- rather than 'negative' per se.

Ireland is also going to have to refinance over 40 billion of debt by 2022- and we're not going to get the super-duper ultra low rate sovereign interest rates that we've become addicted to. A lot of the debt we've refinanced lately- is low rate debt- rather than higher rate debt (with the exception of the ECB/Troika bailout early repayment- which we were able to slash interest rates on).

We have a lot of nastiness coming down the road- and thats presuming things don't go pear shaped- if things do go pear shaped- 2008 could seem like a party in comparison- and the post 2008 economic downturn in Ireland could be a poor preparator for what we may have to inflict on our people in future..............

The_Conductor · 17-06-2018 8:31am

arctictree wrote: »

Opinions on this:

http://www.daftdrop.com/ireland/wicklow/houses/clara-lodge-laragh-co-wicklow-469231

Price drop of 25% since put for sale a year ago. In a 'sellers market'?

Stayed in the house as a kid- its damn remote- very beautiful part of the country- lovely for a weekend away- but to try and sell this to a prospective buyer as a property for commuting to Dublin from- is well beyond a stretch of the imagination.

It was priced as a property you could commute to Dublin from. This pretense isn't cutting ice with prospective buyers. If absolutely everything goes according to plan- you've a 2 hour commute to Dublin (both ways). If you have bad weather, a traffic accident or any of a myriad of other factors that you haven't prepped for- you're screwed.

I'd be kind and suggest its a beautiful cottage, very well proportioned and sized, well insulated- and in an amazing part of the country. It would suit someone who is looking for an amazing place to retire to- providing you accepted that your gardening skills etc were going to have to be honed (there would be a lot of care in a property with a garden like that).

In its defense- it does have a satellite internet connection- so if someone was able to work from home on a regular basis- it might mitigate 4 hours commuting to Dublin on the days they'd have to go to town.

The reason its price has fallen so much- is because its so remote- which you'll appreciate if you actually go to view it. This remoteness- is something that some people may love- but trying to turn this on its head and suggest its a hidden getaway for people who have to work in Dublin- as a sales concept is so flawed as to be funny.

If you have to work in Dublin- you're probably better off buying in Wexford- or somewhere actually on the train line- than somewhere like this that *does* get cut off a few times every year (every year- not just bad years). However- it is a beautiful cottage- very well modernised- and an abnormal size for a property of its vintage.

My thoughts.

sunnyday1234 · 17-06-2018 9:06am

The_Conductor wrote: »

Irish borrowers are almost unique in Europe- the borrowers in no other EU countries borrow at variable rates in the manner in which we do. If you go to The Netherlands, Belgium, Germany- or any of a long and interesting list of other countries- you'll find the predominant mortgage products on the market are fixed rate products- fixed for the entire term of the mortgage- and most people would find it bizzare that a borrower was willing to accept the risk of a floating rate- its just an alien concept to them.

We started tapering ECB quantitative easing policies 18 months ago- we now have an agreed roadmap to completely finish ECB QE by December of this year. We also had a fairly dovish statement from the ECB about interest rate 'normalisation' (with an inference that its not going to commence until September 2019- and is going to be subject to conditions- not leastly the prevailing EU inflation rate- which is actually right where they want it to be).

We also have a complete joker in the pack- with the new Italian government- Brexit, a US trade war, ongoing Russian sanctions on EU products etc etc etc

Its one hell of a volatile situation- and into this mayhem- we are stopping QE and have a roadmap for interest rate rises..........

This is why I'm 'so negative'. I think I'm being a realist- though- rather than 'negative' per se.

Ireland is also going to have to refinance over 40 billion of debt by 2022- and we're not going to get the super-duper ultra low rate sovereign interest rates that we've become addicted to. A lot of the debt we've refinanced lately- is low rate debt- rather than higher rate debt (with the exception of the ECB/Troika bailout early repayment- which we were able to slash interest rates on).

We have a lot of nastiness coming down the road- and thats presuming things don't go pear shaped- if things do go pear shaped- 2008 could seem like a party in comparison- and the post 2008 economic downturn in Ireland could be a poor preparator for what we may have to inflict on our people in future..............

A dovish statement from the ECB signifies that they are in no rush to raise interest rates so even if they do start raising them next september then it will a very very slow process so i dont think interest rates are an issue for a while yet. We dont even know if the banks will pass on the first rate increase or absorb it

However i do see a recession coming, i work in IT and there is a slowdown happening already . The US is 1 year away from matching the longest expansion on record so its very plausible and probably a near certainty that we will have a recession in the next 24 months

I am an accidental landlord and my plan was to give my tenants 3 months notice this october and put the house on the market next spring - i still think that is the best thing to do.

I was a first time buyer myself once upon a time and i didnt give interest rates a second thought so its likely now that any first time buyers are and will be caught up in the magic of buying your first home and wont be put off or even aware of any interest rate rises for some time yet...

Wanderer78 · 17-06-2018 9:10am

sunnyday1234 wrote:

A dovish statement from the ECB signifies that they are in no rush to raise interest rates so even if they do start raising them next september then it will a very very slow process so i dont think interest rates are an issue for a while yet. We dont even know if the banks will pass on the first rate increase or absorb it

Could these oncoming rate hikes actually cause the next downturn?

sunnyday1234 · 17-06-2018 9:46am

Wanderer78 wrote: »

Could these oncoming rate hikes actually cause the next downturn?

Yes of course . Historically this has happened. Rates could rise a lot before having any impact though

adriaaaan · 17-06-2018 9:47am

The_Conductor wrote: »

Irish borrowers are almost unique in Europe- the borrowers in no other EU countries borrow at variable rates in the manner in which we do. If you go to The Netherlands, Belgium, Germany- or any of a long and interesting list of other countries- you'll find the predominant mortgage products on the market are fixed rate products- fixed for the entire term of the mortgage- and most people would find it bizzare that a borrower was willing to accept the risk of a floating rate- its just an alien concept to them.

We started tapering ECB quantitative easing policies 18 months ago- we now have an agreed roadmap to completely finish ECB QE by December of this year. We also had a fairly dovish statement from the ECB about interest rate 'normalisation' (with an inference that its not going to commence until September 2019- and is going to be subject to conditions- not leastly the prevailing EU inflation rate- which is actually right where they want it to be).

We also have a complete joker in the pack- with the new Italian government- Brexit, a US trade war, ongoing Russian sanctions on EU products etc etc etc

Its one hell of a volatile situation- and into this mayhem- we are stopping QE and have a roadmap for interest rate rises..........

This is why I'm 'so negative'. I think I'm being a realist- though- rather than 'negative' per se.

Ireland is also going to have to refinance over 40 billion of debt by 2022- and we're not going to get the super-duper ultra low rate sovereign interest rates that we've become addicted to. A lot of the debt we've refinanced lately- is low rate debt- rather than higher rate debt (with the exception of the ECB/Troika bailout early repayment- which we were able to slash interest rates on).

We have a lot of nastiness coming down the road- and thats presuming things don't go pear shaped- if things do go pear shaped- 2008 could seem like a party in comparison- and the post 2008 economic downturn in Ireland could be a poor preparator for what we may have to inflict on our people in future..............

I would imagine Interest rates will be extremely slow to rise at 0.1 %per year initially. The ECB is extremely prudent, everything is forward guided and there will be no shocks. Think...they are only now ending QE 3 years after the recession ended. Draghi intervened to save the Euro at all costs during the PIIGS era and it worked extremely well. He would do the same in the unlikely event it happens again in Italy.
Sanctions on Russia are irrelevant, their economy is the size of Belgium and Netherlands combined. I think the one true shock potential is Trumps trade war, if this escalates further it has the potential to trigger a global slowdown, but so far tech and pharma have escaped.

youtube! · 17-06-2018 10:11am

https://www.independent.ie/business/irish/has-the-celtic-phoenix-already-passed-its-peak-37016097.html

?

adriaaaan · 17-06-2018 10:18am

youtube! wrote: »

https://www.independent.ie/business/irish/has-the-celtic-phoenix-already-passed-its-peak-37016097.html

?

Sure. give me sustainable 2% growth with sustainable property price growth for 50 years above boom-bust cycles every ten years

downtheroad · 17-06-2018 10:37am

Opinion: 'The housing bubble will burst and create another credit crunch' http://jrnl.ie/4065371

Pretty poor article imo

Lumen · 17-06-2018 10:58am

downtheroad wrote: »

Opinion: 'The housing bubble will burst and create another credit crunch' http://jrnl.ie/4065371

Pretty poor article imo

Yeah, a 2% rise in interest rate on 350k mortgage (100k household income) is only €600/mo.

That's 7.2% of gross income. It's not going to push any new owners into default.

Rising rates (if they happen, which is far from guaranteed given the banks' fat margins) will just put more pressure on people still screwed from the last crash, but the economy has ticked along just fine with tens of thousands in default so I can't see that causing a crash in itself.

Weepsie · 17-06-2018 11:02am

downtheroad wrote: »

Opinion: 'The housing bubble will burst and create another credit crunch' http://jrnl.ie/4065371

Pretty poor article imo

It's in the Journal. Of course it's poor

M.Cribben · 17-06-2018 11:05am

downtheroad wrote: »

Opinion: 'The housing bubble will burst and create another credit crunch' http://jrnl.ie/4065371

Pretty poor article imo

That was painful to read. It reminds me of something a 12-year old would submit for a school project. He just keeps repeating the same thing every paragraph without providing any citation or statistics to back it up.

downtheroad · 17-06-2018 11:05am

Lumen wrote: »

Yeah, a 2% rise in interest rate on 350k mortgage (100k household income) is only €600/mo.

That's 7.2% of gross income. It's not going to push any new owners into default.

Rising rates (if they happen, which is far from guaranteed given the banks' fat margins) will just put more pressure on people still screwed from the last crash, but the economy has ticked along just fine with tens of thousands in default so I can't see that causing a crash in itself.

He quotes "Housing stock is set to increase" and "Government plans to build a half million houses by 2040" and then says if you're buying now as a first time buyer it's the worst thing to do.

Most reports outline how the completions of new houses are so far behind demand that basic economics suggests prices cannot drop while demand far exceeds supply.

This man makes a living from providing financial advice, I would love to know who his clients are.

17-06-2018 11:19am

Wanderer78 wrote: »

Are we codding ourselves when we say things such as qe have worked? How do we define this 'worked'?

Well in Ireland unemployment is much reduced, emigration isn't happening except by choice and we have quite a few folk immigrating to work here again.

We don't have an economy dependent on construction....we are quite diversified compared to a decade ago.

The amount of small businesses in the service industry (coffee shops, restaurants etc) are visible indicators that QE has worked in Ireland. "Staff wanted" signs on call businesses are not uncommon.....a decade ago there was literally none about.

We do have quite a bit of stock market funded jobs in the country though which are being propped up by low interest rates essentially along with advertising yields from the net. Potentially grim if you're on 60k+/annum doing something that someone similarly qualified s year out of college could do....especially if perfect English isn't a must have.

The stock market is going mad recently imo too.... that won't continue

arctictree · 17-06-2018 4:10pm

The_Conductor wrote: »

Stayed in the house as a kid- its damn remote- very beautiful part of the country- lovely for a weekend away- but to try and sell this to a prospective buyer as a property for commuting to Dublin from- is well beyond a stretch of the imagination.

It was priced as a property you could commute to Dublin from. This pretense isn't cutting ice with prospective buyers. If absolutely everything goes according to plan- you've a 2 hour commute to Dublin (both ways). If you have bad weather, a traffic accident or any of a myriad of other factors that you haven't prepped for- you're screwed.

I'd be kind and suggest its a beautiful cottage, very well proportioned and sized, well insulated- and in an amazing part of the country. It would suit someone who is looking for an amazing place to retire to- providing you accepted that your gardening skills etc were going to have to be honed (there would be a lot of care in a property with a garden like that).

In its defense- it does have a satellite internet connection- so if someone was able to work from home on a regular basis- it might mitigate 4 hours commuting to Dublin on the days they'd have to go to town.

The reason its price has fallen so much- is because its so remote- which you'll appreciate if you actually go to view it. This remoteness- is something that some people may love- but trying to turn this on its head and suggest its a hidden getaway for people who have to work in Dublin- as a sales concept is so flawed as to be funny.

If you have to work in Dublin- you're probably better off buying in Wexford- or somewhere actually on the train line- than somewhere like this that *does* get cut off a few times every year (every year- not just bad years). However- it is a beautiful cottage- very well modernised- and an abnormal size for a property of its vintage.

My thoughts.

Good informed post. Funny how the EA can get the price so wrong though.

Bob24 · 18-06-2018 9:46am

Apparently Ireland has the 4rth fastest property price rises globally, only behind HK, Malta, and Iceland: https://www.irishtimes.com/business/economy/irish-property-prices-rising-at-fourth-fastest-pace-globally-1.3534534

Doesn’t mean it can’t keep going for a while (it probably will as IMO there is no internal solution in sight), but I really don’t see this ending well when the tide turns (which it eventually will) :-/

M.Cribben · 18-06-2018 10:16am

Bob24 wrote: »

Apparently Ireland has the 4rth fastest property price rises globally, only behind HK, Malta, and Iceland: https://www.irishtimes.com/business/economy/irish-property-prices-rising-at-fourth-fastest-pace-globally-1.3534534

Doesn’t mean it can’t keep going for a while (it probably will as IMO there is no internal solution in sight), but I really don’t see this ending well when the tide turns (which it eventually will) :-/

3 years time from now (2021) seems to be a shared consensus for supply to catch up with demand:

He forecasts that it will be 2021 or 2022 before supply rises to meet demand, and as such, expects prices to continue to rise

This leaves potential buyers in a difficult position, what are the options - pay upwards of €70k for 3 years rent until the market cools down?

Bob24 · 18-06-2018 11:00am

M.Cribben wrote: »

This leaves potential buyers in a difficult position, what are the options - pay upwards of €70k for 3 years rent until the market cools down?

Can be a very hard decision indeed. There is a potential risk buying now, but at the same time there is no guarantee that these predictions about supply catching-up will be correct and to know if/when there will be a crash.

If I was to give advice, I’d probably tell someone who is still in their 20s and needsa large mortgage to hold-off and save as much as they can, and someone who is older with a large enough deposit to still go ahead as they don’t have all the time in the world and can limit their exposure to interest rate rises. But I’m still not even sure myself it would be good advice and for someone who doesn’t fit in those categories I don’t know what I’d say ...

M.Cribben · 18-06-2018 2:04pm

More pressure on the Dublin housing market. Where are all these people supposed to live?

https://www.independent.ie/business/amazon-announce-1000-tech-jobs-for-ireland-37022204.html

Samuel T. Cogley · 18-06-2018 2:16pm

M.Cribben wrote: »

More pressure on the Dublin housing market. Where are all these people supposed to live?

https://www.independent.ie/business/amazon-announce-1000-tech-jobs-for-ireland-37022204.html

Plenty of places, I work for a very similar company, in a very similar location and commute in, in under 45 mins door to desk from Kilbarrack.

18-06-2018 3:10pm

M.Cribben wrote: »

More pressure on the Dublin housing market. Where are all these people supposed to live?..............

Well some will be living here anyway .......... change jobs to Amazon if it suits them. Domino effect ... folks stepping up from 1 / 2 years experience gigs to senior gigs etc etc.

they won't be all coming in on a ferry at once like

CWF · 18-06-2018 3:20pm

Samuel T. Cogley wrote: »

Plenty of places, I work for a very similar company, in a very similar location and commute in, in under 45 mins door to desk from Kilbarrack.

Yeah, but who wants to live in Kilbarack

M.Cribben · 18-06-2018 3:42pm

Samuel T. Cogley wrote: »

Plenty of places, I work for a very similar company, in a very similar location and commute in, in under 45 mins door to desk from Kilbarrack.

I went to check cost of renting there, and not a single house to rent in Kilbarrack on daft at the moment. Shows the scale of the crisis.

Property Market 2018

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