Irish Property Market 2020 Part 2

dor843088 · 26-10-2020 1:58pm

bdmc5 wrote: »

I see plenty of posters using soundbyes like "biggest shock in history" but we not heading into any recession as we are already in the middle of it now and house prices have stayed incredibly resilient as not all people are equally impacted.

When you have very large proportion of people continuing to work as normal through the pandemic arguably saving more now than before recession working from home. Demand appears to have stayed strong as saving capacity has not been negatively impacted.

With the government increasing the HTB scheme to 30k and developers slowing construction or stopping completely until uncertainty clears then supply remains considerably constrained. Plenty of rational reasons why some people feel prices wont drop anywhere near as some hoped or feared.

It's a house of cards. Paying people to sit at home and shut their businesses . This cant go on and it wont. Entire sectors will never recover. Hospitality travel and entertainment employment has been wiped out. Anyone thinking property will remain at boom time prices is delusional. It simply cant happen.

Mad_maxx · 26-10-2020 2:03pm

PropQueries wrote: »

Don't be so sure. Interesting article on CNBC today: 'Banks may have to brace for heavy losses as commercial property prices plunge'

"Could the coronavirus crisis lead, via the commercial property sector, to long-term problems for the banking and financial systems? … we think it is a genuine concern,” Slater wrote."

Link to CNBC article here: https://www.cnbc.com/2020/10/26/commercial-property-prices-are-a-risk-for-banks-and-bond-investors.html

While all the experts believe that our banks are better caitalised this time, remember, they didn't spot the last recession either. Plus, there is a lot that they don't know e.g. the shadow banks/investment funds. But the regulated banking sector is most likely exposed to these shadow banks by the back door.

On example in Ireland is Colony Capital. They were the successful joint bidders for the development of the Glass Bottle site from NAMA but have pulled out as they have quietly put most of their investments in Ireland up for sale.

Examples of their investments are the the new Salesforce and Facebook developments. Colony’s most significant assets include a 75 per cent stake in the Burlington Plaza office complex on Burlington Road and a 72 per cent share in the headquarters of Three Ireland on Sir John Rogerson’s Quay. Colony’s Irish portfolio also includes shares in a number of Dublin office buildings with U+I. Located mainly in Dublin 4, these include Donnybrook House, 23 Shelbourne Road and Carrisbrook House.

That's just one investor. The Sorting Office in Dublin also has to now find a new tenant after Google pulled out last month. That building alone could accommodate 2,000 workers. And these are only the big sellers we know about. There are probably many many others quietly looking for a way out at the moment.

I'm more referring to central bank policy and approach this time round

enricoh · 26-10-2020 2:08pm

dor843088 wrote: »

It's a house of cards. Paying people to sit at home and shut their businesses . This cant go on and it wont. Entire sectors will never recover. Hospitality travel and entertainment employment has been wiped out. Anyone thinking property will remain at boom time prices is delusional. It simply cant happen.

I reckon you're right, the government is buying over 40% of all the new builds, through various charities, housing associations etc etc.

Huge numbers of people are going to need the government to pay the rent for the foreseeable.
We're the 3rd most indebted developed country in the world iirc.
It won't be long before the lads lending us all the billions for this start charging us more interest imo. Surely that 40% figure will drop like a stone.

PropQueries · 26-10-2020 2:16pm

JJJackal wrote: »

You realise pension funds etc buy and sell property all the time. It is driven by a multitude of factors including but not limited to shareholders, current debt levels, and future opportunities in addition to the potential price drops. You realise shopping centres change hands.

Except that the investors and pension funds now selling in.dublin are forced sellers:

Colony capital: https://www.irishtimes.com/business/commercial-property/colony-capital-seeks-buyer-for-stakes-in-prime-dublin-offices-1.4257498?mode=amp

Pension funds: https://www.irishtimes.com/business/commercial-property/aviva-stops-investors-from-taking-money-out-of-irish-property-funds-1.4157574?mode=amp

Blackrock - Blanchardstown shopping centre: https://m.independent.ie/business/irish/blackstone-and-aib-in-standoff-over-blanchardstown-shopping-centre-debt-39463682.html

JJJackal · 26-10-2020 2:27pm

PropQueries wrote: »

Except that the investors and pension funds now selling in.dublin are forced sellers:

Colony capital: https://www.irishtimes.com/business/commercial-property/colony-capital-seeks-buyer-for-stakes-in-prime-dublin-offices-1.4257498?mode=amp

Pension funds: https://www.irishtimes.com/business/commercial-property/aviva-stops-investors-from-taking-money-out-of-irish-property-funds-1.4157574?mode=amp

Blackrock - Blanchardstown shopping centre: https://m.independent.ie/business/irish/blackstone-and-aib-in-standoff-over-blanchardstown-shopping-centre-debt-39463682.html

Colony - 3.7 billion debt default; it is forced to sell yes. It does not reflect the Irish market. The 3.7 billion of debt is not all in Irish assets - in fact I would say <20% is? Thus selling a nondistressed asset to pay for a distressed one

Pension funds - not selling assets - have a hold on people withdrawing money as is there right to prevent a fire sale of an asset to fund people withdrawing money. This does not reflect Aviva selling assets

Blackrock - looks like a bad investment alright - likely driven by Debenhams going to the wall - which it has been for many years; COVID tipping it over the edge. Businesses go bankrupt in good and bad times. Bad investments are made in good and bad times. Blackrock isnt selling - its defaulting and the banks are likely taking over. So not clear a sale is taking place? I could be wrong

I am unsure what point you are making here

Bluefoam · 26-10-2020 2:31pm

JJJackal wrote: »

I am unsure what point you are making here

They sky is falling down, there must be cheap houses etc...

PropQueries · 26-10-2020 3:12pm

JJJackal wrote: »

Colony - 3.7 billion debt default; it is forced to sell yes. It does not reflect the Irish market. The 3.7 billion of debt is not all in Irish assets - in fact I would say <20% is? Thus selling a nondistressed asset to pay for a distressed one

Pension funds - not selling assets - have a hold on people withdrawing money as is there right to prevent a fire sale of an asset to fund people withdrawing money. This does not reflect Aviva selling assets

Blackrock - looks like a bad investment alright - likely driven by Debenhams going to the wall - which it has been for many years; COVID tipping it over the edge. Businesses go bankrupt in good and bad times. Bad investments are made in good and bad times. Blackrock isnt selling - its defaulting and the banks are likely taking over. So not clear a sale is taking place? I could be wrong

I am unsure what point you are making here

Maybe colony capital and blackrock are the only investment funds selling/getting out due to bad investments, possible but not probable.

Here’s some advertised real estate in Dublin that Aviva is selling to meet redemption requests:

Hibernian way: https://www.irishtimes.com/business/commercial-property/aviva-tests-strength-of-market-with-80m-sale-of-royal-hibernian-way-1.4343825?mode=amp

Elm Park : https://www.irishtimes.com/business/commercial-property/aviva-set-to-market-prime-headquarter-office-at-elmpark-green-for-28m-1.4205105?mode=amp

And it’s not just commercial real estate that’s being forced to sell. Many residential developers are also being ‘forced to rent‘ as nobody was buying their properties pre-Covid. Forced to rent is very similar to forced selling and is a temporary measure until they are indeed forced to sell.

Here’s one example pre-Covid: https://www.irishtimes.com/life-and-style/homes-and-property/plan-b-for-d4-boutique-apartments-as-buyers-become-renters-instead-1.4161644?mode=amp

Many other apartments in Dublin that were for sale are now being offered on the rental market and it’s not because renting offers a better return. They’re being forced to rent as there’s very few buyers.

This temporary backstop won’t last long as they’re still empty due to little rental demand. These will be the forced residential market sellers in the next few months.

Hubertj · 26-10-2020 3:20pm

PropQueries wrote: »

Maybe colony capital and blackrock are the only investment funds selling/getting out due to bad investments, possible but not probable.

Here’s some advertised real estate in Dublin that Aviva is selling to meet redemption requests:

Hibernian way: https://www.irishtimes.com/business/commercial-property/aviva-tests-strength-of-market-with-80m-sale-of-royal-hibernian-way-1.4343825?mode=amp

Elm Park : https://www.irishtimes.com/business/commercial-property/aviva-set-to-market-prime-headquarter-office-at-elmpark-green-for-28m-1.4205105?mode=amp

And it’s not just commercial real estate that’s being forced to sell. Many residential developers are also being ‘forced to rent‘ as nobody was buying their properties pre-Covid. Forced to rent is very similar to forced selling and is a temporary measure until they are indeed forced to sell.

Here’s one example pre-Covid: https://www.irishtimes.com/life-and-style/homes-and-property/plan-b-for-d4-boutique-apartments-as-buyers-become-renters-instead-1.4161644?mode=amp

Many other apartments in Dublin that were for sale are now being offered on the rental market and it’s not because renting offers a better return. They’re being forced to rent as there’s very few buyers.

This temporary backstop won’t last long as they’re still empty due to little rental demand. These will be the forced residential market sellers in the next few months.

Everyone has left Dublin for the mystical vacant properties. The population of Leitrim has increased 243% since lockdown. Property boom in Leitrim. MNCs will relocate to their as well.

Marius34 · 26-10-2020 3:23pm

enricoh wrote: »

I reckon you're right, the government is buying over 40% of all the new builds, through various charities, housing associations etc etc.

Huge numbers of people are going to need the government to pay the rent for the foreseeable.
We're the 3rd most indebted developed country in the world iirc.
It won't be long before the lads lending us all the billions for this start charging us more interest imo. Surely that 40% figure will drop like a stone.

I saw few time already those figures. Where are you getting this from?
I don't think it's a factual numbers.

House Hunt · 26-10-2020 4:15pm

PropQueries wrote: »

Except that the investors and pension funds now selling in.dublin are forced sellers:

Colony capital: https://www.irishtimes.com/business/commercial-property/colony-capital-seeks-buyer-for-stakes-in-prime-dublin-offices-1.4257498?mode=amp

Pension funds: https://www.irishtimes.com/business/commercial-property/aviva-stops-investors-from-taking-money-out-of-irish-property-funds-1.4157574?mode=amp

Blackrock - Blanchardstown shopping centre: https://m.independent.ie/business/irish/blackstone-and-aib-in-standoff-over-blanchardstown-shopping-centre-debt-39463682.html

Blackstone, not BlackRock

enricoh · 26-10-2020 4:29pm

Marius34 wrote: »

I saw few time already those figures. Where are you getting this from?
I don't think it's a factual numbers.

Can't find the link, but pretty sure my numbers are right, it may be behind the paywall on this Irish times page-
Groups other than households bought almost half new homes in capital in last year
https://www.irishtimes.com/business/commercial-property/state-bodies-playing-role-in-squeezing-dublin-housing-market-1.4356642?mode=amp

Marius34 · 26-10-2020 5:05pm

enricoh wrote: »

Can't find the link, but pretty sure my numbers are right, it may be behind the paywall on this Irish times page-
Groups other than households bought almost half new homes in capital in last year
https://www.irishtimes.com/business/commercial-property/state-bodies-playing-role-in-squeezing-dublin-housing-market-1.4356642?mode=amp

Even your link says differently:
"As noted by Goodbody chief economist Dermot O’Leary, the non-household sector (private companies, charitable organisations, and State institutions) accounted for 41 per cent of new home purchases in July and for 39 per cent over the past 12 months."

So you think all those non-household purchase falls under government? It's a bit of mad to think, that REITs and other investors do not play role on new build sales.

PropQueries · 26-10-2020 6:11pm

Marius34 wrote: »

Even your link says differently:
"As noted by Goodbody chief economist Dermot O’Leary, the non-household sector (private companies, charitable organisations, and State institutions) accounted for 41 per cent of new home purchases in July and for 39 per cent over the past 12 months."

So you think all those non-household purchase falls under government? It's a bit of mad to think, that REITs and other investors do not play role on new build sales.

Well to be fair, if the government isn’t buying them directly, they’re most likely funding their purchase through the back door through long term lease agreements or HAP.

One example is Herbert Hill in Dundrum here: https://www.dublinlive.ie/news/property/dundrum-housing-lease-deal-cost-17369248

Bluefoam · 26-10-2020 6:26pm

PropQueries wrote: »

Well to be fair, if the government isn’t buying them directly, they’re most likely funding their purchase through the back door through long term lease agreements or HAP.

One example is Herbert Hill in Dundrum here: https://www.dublinlive.ie/news/property/dundrum-housing-lease-deal-cost-17369248

But the government clearly isn't purchasing 40% of residential property, nor have they been... Nothing close & there's nothing to back up that arguement.... It's just not true nor nearly true. Nor can you just say that they are probably buying 40% of property through other means... No they're not.

PropQueries · 26-10-2020 6:42pm

Bluefoam wrote: »

But the government clearly isn't purchasing 40% of residential property, nor have they been... Nothing close & there's nothing to back up that arguement.... It's just not true nor nearly true. Nor can you just say that they are probably buying 40% of property through other means... No they're not.

Well the housing minister said in July: “You’ll know that for 2020, the target was to deliver 11,167 social homes through the Build, Acquisitions and Leasing programmes combined,” O’Brien said.“

That’s a lot of government purchases/leases in the private market, directly competing with first time buyers, especially given how little dedicated social housing they’re building.

Basically, the government is the housing market now and they’re taxing/ will be taxing younger workers more and more to continue outbidding them for housing in the marketplace. Basically younger workers are funding their main competitor in the marketplace i.e. the government. Hard to win a bidding war against them IMO.

Link here: https://www.thejournal.ie/housing-minister-local-authorities-buy-up-new-properties-5155602-Jul2020/

Wanderer78 · 26-10-2020 7:47pm

PropQueries wrote:

This will stop sooner than many people realise and thatâ€™s probably when the real major crash will happen. The governments removal from the market through either not being able to borrow any more or not needing social housing anymore (thatâ€™s very possible in my opinion and may happen sooner than many people realise) will be equivalent (probably worse) to the banking bust over 10 years ago.

Central banks can never run out of money, but our government can run into limitations in borrowing, but I wouldn't be worrying about that, as always, private debt is the far more dangerous debt, as the previous crash showed us. For the forseeable future, increasing public debt is more than likely the only way to get out of this one, and should be far safer to, as history shows us, there's been far less and far less serious crashes from public debt

PropQueries · 26-10-2020 8:19pm

Wanderer78 wrote: »

Central banks can never run out of money, but our government can run into limitations in borrowing, but I wouldn't be worrying about that, as always, private debt is the far more dangerous debt, as the previous crash showed us. For the forseeable future, increasing public debt is more than likely the only way to get out of this one, and should be far safer to, as history shows us, there's been far less and far less serious crashes from public debt

Well just in my short lifetime the UK needed an IMF bailout in the 1970s and Ireland was in deep trouble in the 1980s. The ECB will not keep printing money to continue lending to Ireland to allow the government to continue paying landlords €2,000 a month to rent apartments or to pay €350 a week in PUP payments which is more than many workers received per working week in many other countries in the EU pre-Covid.

jgt3 · 26-10-2020 8:30pm

PropQueries wrote: »

€350 a week in PUP payments

I think it's a siding scale now, so you don't just get the fixed amount, unless it was similar to your previous income.

Wanderer78 · 26-10-2020 8:43pm

PropQueries wrote:

Well just in my short lifetime the UK needed an IMF bailout in the 1970s and Ireland was in deep trouble in the 1980s. The ECB will not keep printing money to continue lending to Ireland to allow the government to continue paying landlords â‚¬2,000 a month to rent apartments or to pay â‚¬350 a week in PUP payments which is more than many workers received per working week in many other countries in the EU pre-Covid.

Yup true, but again, history shows, globally, there has been far more, and far more serious crashes related to private debt, as 08 showed us. The ECB will probably continue to keep supplying the markets with money, making it available to countries such as ours, as long as we can continue to service these debts, because failing to, would probably prolong the downturn for major proportions of the Euro zone, including ourselves.

PropQueries · 26-10-2020 8:47pm

Yara Rich Camouflage wrote: »

why would they "not need" it anymore? and why do you feel its possible? genuine q as seen with 2020 election housing a major issue and one would assume less/no social housing = annihilated in election?

It’s based on an article I read last year about a planning application to the council to build student accommodation units in Dublin 7. It was under 200 beds so the SHD didn’t apply.

The council asked them to come back with a report on how much student accommodation had been or is planned to be built in the area before making their decision.

Then it hit me. The state has no idea what’s being or has been built anywhere. They have an idea of new builds but they have very little idea on how many homes have re-entered supply through probate sales or refurbished properties.

I believe it’s a lot more than many people (or the state) realise. It’s just a thought. No proof. But either does the government.

And that could be a problem if the state is making decisions on the basis of a housing undersupply that may not really exist. Maybe it does but I’m doubtful.

Hubertj · 26-10-2020 9:43pm

PropQueries wrote: »

It’s based on an article I read last year about a planning application to the council to build student accommodation units in Dublin 7. It was under 200 beds so the SHD didn’t apply.

The council asked them to come back with a report on how much student accommodation had been or is planned to be built in the area before making their decision.

Then it hit me. The state has no idea what’s being or has been built anywhere. They have an idea of new builds but they have very little idea on how many homes have re-entered supply through probate sales or refurbished properties.

I believe it’s a lot more than many people (or the state) realise. It’s just a thought. No proof. But either does the government.

And that could be a problem if the state is making decisions on the basis of a housing undersupply that may not really exist. Maybe it does but I’m doubtful.

This is 1 of your more stupid comments. It’s up there with linking government policy to maintain high property prices with direct provision. Truly mad stuff altogether.

PHG · 26-10-2020 11:10pm

PropQueries wrote: »

Well just in my short lifetime the UK needed an IMF bailout in the 1970s and Ireland was in deep trouble in the 1980s. The ECB will not keep printing money to continue lending to Ireland to allow the government to continue paying landlords €2,000 a month to rent apartments or to pay €350 a week in PUP payments which is more than many workers received per working week in many other countries in the EU pre-Covid.

You need to look up how the Money Supply works and eradicating debt using inflation. The UK only paid off the last of its WWII debt the other week I think.

The EU does not go, "oh well cannot give Ireland any more money because of those pesky landlords". More landlords are leaving the market than ever.

Finally, the cost of living is a lot higher in Ireland than in say Eastern Europe, it is not a correct comparison. But don't let facts and a bit of research get in your way.

KennisWhale · 27-10-2020 9:03am

https://www-irishtimes-com.cdn.ampproject.org/c/s/www.irishtimes.com/business/economy/mortgage-drawdowns-fall-by-almost-a-third-1.4391707?mode=amp

Fewer than 6,400 people took out mortgages to buy homes in the three months to the end of September as Covid-19 took its toll on the property market.

Banking and Payments Federation of Ireland statistics show the total number of home loans drawn down during the three-month period was 8,220, a fall of 30.3 per cent on the 11,794 mortgages taken out through the third quarter of last year.

Not great when we are again in lockdown for half of Q4 so presumably it won't be much better. Q3 was an improvement on Q2 apparently.

https://amp.rte.ie/amp/1172420/

Supply of houses was down 1/3 on Daft during the same period so there is a correlation between the lower supply and the lower demand for mortgages. Meaning, covid may have stunted supply but may not have muted demand, even at the current market levels. Not to sound like an agent or an IT article but signs of robustness in the housing market perhaps.

Considering the lockdowns and restrictions when not in lockdown, it looks like the economy won't be free of most restrictions until next spring or even summer, which means the fallout from covid with jobs that aren't directly in the firing line, like law, finance and tech, won't be seen until people are getting back to normal. This time next year we will know if the Central Bank interventions are enough to restore some sort of pre-Covid status quo to the economy. The pre-Covid issue of what to do about the mind boggling mountain of debt in the global economy will hopefully be a fight for a few years down the line.

handlemaster · 27-10-2020 9:23am

https://m.independent.ie/business/commercial-property/aviva-initiates-legal-action-against-carpetright-over-rent-dispute-39648718.html

There will l be alot more to come case like this. Covid hasn't gone away.

KennisWhale · 27-10-2020 9:30am

handlemaster wrote: »

https://m.independent.ie/business/commercial-property/aviva-initiates-legal-action-against-carpetright-over-rent-dispute-39648718.html

There will l be alot more to come case like this. Covid hasn't gone away.

Irish Life owns half of Grafton St on behalf of their pension funds. If you ticked the box for more risky investments in your portfolio, it could be a bumpy ride.

PropQueries · 27-10-2020 10:19am

According to the Irish Times today: 'Tourists and renters to be permitted in student accommodation'

"The decision by Dublin City Council to allow five purpose-built student facilities to be used for holiday or general rental was described by Labour Senator Maire Sherlock as setting a dangerous precedent for co-living by the back door. The council approved the use up to May 31st with a condition that short-term lets would be restricted to two months.”

Link here: https://www.irishtimes.com/news/ireland/irish-news/tourists-and-renters-to-be-permitted-in-student-accommodation-1.4391807

PommieBast · 27-10-2020 11:33am

KennisWhale wrote: »

Irish Life owns half of Grafton St on behalf of their pension funds. If you ticked the box for more risky investments in your portfolio, it could be a bumpy ride.

Probably still a better bet than the "non risky" option of government bonds. For someone of my age pension contributions is basically just another tax.

</off-topic>

fliball123 · 27-10-2020 12:44pm

dor843088 wrote: »

People in here dont seem very rational. If we are heading into the biggest economic shock in modern history what makes people think that property will be the only unaffected market ? All markets are bubbles right now. Nothing makes sense including the property market.

the thing is we have been in this shock for the last 8/9 months and prices have not dropped.

WhenPigsCry · 27-10-2020 12:50pm

fliball123 wrote: »

the thing is we have been in this shock for the last 8/9 months and prices have not dropped.

The Great Property Crash, originally scheduled for 2019 due to Brexit, is currently expected in 2021 due to Covid, or 2022 at the latest. Please defer any property purchases until after this date in order to avail of great bargains.

PropQueries · 27-10-2020 1:04pm

WhenPigsCry wrote: »

The Great Property Crash, originally scheduled for 2019 due to Brexit, is currently expected in 2021 due to Covid, or 2022 at the latest. Please defer any property purchases until after this date in order to avail of great bargains.

Technically it did

The developers couldn't sell their properties pre-covid so were forced into the renting their new build properties. These probably aren't renting either as the increases in Daft.ie listings has shown. The original financiers of these developments didn't sign up to fund long-term rental properties so will want their investment/loans back over the next few months. This is when we will begin see the 'forced rentals' converting into 'forced sales' IMO. They tried a similar tactic after the last crash.

This is just one example from February 2020 (pre-covid):

"But sales failed to materialise in line with expectations and developer Agricula has withdrawn the properties from the market and returned booking deposits to intending buyers. As of mid-January they have been advertised for rent through agent Bergins. Half the units have since been rented. Originally the apartments at 19 Pembroke Road were priced from €650,000 for a one-bedroom unit up to €1.1 million for a two-bed penthouse, but renters can now expect to pay from €3,000 per month for a 54sq m one-bed up to €3,400 for a 71.5sq m one-bed."

Link to article here: https://www.irishtimes.com/life-and-style/homes-and-property/plan-b-for-d4-boutique-apartments-as-buyers-become-renters-instead-1.4161644

fliball123 · 27-10-2020 1:09pm

PropQueries wrote: »

Technically it did The developers couldn't sell their properties pre-covid so were forced into the renting their new build properties. These probably aren't renting either as the increases in Daft.ie listings has shown. The original financiers of these developments didn't sign up to fund long-term rental properties so will want their investment/loans back over the next few months. This is when we will begin see the 'forced rentals' converting into 'forced sales' IMO. They tried a similar tactic after the last crash.

This is just one example from February 2020 (pre-covid):

"But sales failed to materialise in line with expectations and developer Agricula has withdrawn the properties from the market and returned booking deposits to intending buyers. As of mid-January they have been advertised for rent through agent Bergins. Half the units have since been rented. Originally the apartments at 19 Pembroke Road were priced from €650,000 for a one-bedroom unit up to €1.1 million for a two-bed penthouse, but renters can now expect to pay from €3,000 per month for a 54sq m one-bed up to €3,400 for a 71.5sq m one-bed."

Link to article here: https://www.irishtimes.com/life-and-style/homes-and-property/plan-b-for-d4-boutique-apartments-as-buyers-become-renters-instead-1.4161644

and prices still have not dropped

PropQueries · 27-10-2020 1:13pm

fliball123 wrote: »

and prices still have not dropped

Of course not. Property is highly illiquid. But transactions are well down which doesn't bode well for the future direction of the property market.

As many have said here before, the only ones able to purchase are multinational employees and similar workers etc. who haven't been impacted by Covid-19.

Where are all these buyers if transactions are down. Plus there's only so many workers who aren't impacted that actually do require to purchase a home. The supply of these non-impacted covid-19 workers seeking to purchase a home is not unlimited.

JimmyVik · 27-10-2020 1:26pm

WhenPigsCry wrote: »

The Great Property Crash, originally scheduled for 2019 due to Brexit, is currently expected in 2021 due to Covid, or 2022 at the latest. Please defer any property purchases until after this date in order to avail of great bargains.

Ive moved my prediction date twice now.
Do I have to move it out another year until im right.
I will be right eventually, even if I have to move it for the next 10 years

KennisWhale · 27-10-2020 1:34pm

PropQueries wrote: »

Technically it did The developers couldn't sell their properties pre-covid so were forced into the renting their new build properties. These probably aren't renting either as the increases in Daft.ie listings has shown. The original financiers of these developments didn't sign up to fund long-term rental properties so will want their investment/loans back over the next few months. This is when we will begin see the 'forced rentals' converting into 'forced sales' IMO. They tried a similar tactic after the last crash.

This is just one example from February 2020 (pre-covid):

"But sales failed to materialise in line with expectations and developer Agricula has withdrawn the properties from the market and returned booking deposits to intending buyers. As of mid-January they have been advertised for rent through agent Bergins. Half the units have since been rented. Originally the apartments at 19 Pembroke Road were priced from €650,000 for a one-bedroom unit up to €1.1 million for a two-bed penthouse, but renters can now expect to pay from €3,000 per month for a 54sq m one-bed up to €3,400 for a 71.5sq m one-bed."

Link to article here: https://www.irishtimes.com/life-and-style/homes-and-property/plan-b-for-d4-boutique-apartments-as-buyers-become-renters-instead-1.4161644

Brexit blamed for sluggish sales market

The delusion! Nothing to do with the prices being advertised.

KennisWhale · 27-10-2020 1:37pm

nerrad01 wrote: »

Its a simple supply and demand issue, not enough properties and still enough people in secure well paid employment to keep the prices sustained. I cant see this changing, and i had previously been convinced we would be in for a crash.

The rental market on the other hand is in for a major correction (or at least should be if the reits were made pay tax on all those vacant properties they are using to price fix the rental market with). What effect this will have, if any, on the purchasing market is anyones guess

On that; in Dublin, the average asking rents for 1 and 2 bed apartments has dropped 15-20% in 6 months of covid. Could end up being even worse the longer these restrictions go on.

Shoden · 27-10-2020 1:37pm

Here's an interesting video on the subject just posted by Shane Fleming: https://youtu.be/H_rSohgB6JU

fliball123 · 27-10-2020 1:49pm

PropQueries wrote: »

Of course not. Property is highly illiquid. But transactions are well down which doesn't bode well for the future direction of the property market.

As many have said here before, the only ones able to purchase are multinational employees and similar workers etc. who haven't been impacted by Covid-19.

Where are all these buyers if transactions are down. Plus there's only so many workers who aren't impacted that actually do require to purchase a home. The supply of these non-impacted covid-19 workers seeking to purchase a home is not unlimited.

Have a look at the income tax take it was not down throughout the virus meaning those who have been paying the majority of income tax, those on the average and above average salaries are still working. (not sure how many low wage employees who would be in a position to buy even without Covid) Transactions are down due to the amount of red tape and extra work the process takes to buy a house, (all the moving parts, from solicitors to surveyors, to EAs to bank employees) while living in a covid world. It would be great to get some data on the timeframes for a property selling between going sale agreed and sold. I also believe the translations completed are ramping back up over the last couple of weeks. It will be interesting to see how the next 4 months go but I thought we would of seen a drop by now and this is not the case. Covid started in Feb its now the end of October that's 9 months. The crash in 08 is generally accepted that the Lehman Brothers hitting the wall in September signaled the spiral downwards with in 9 months of that event Irish property prices had plummeted and there was panic and prices were only going one way. We are 9 months since the event of Covid impacting us and prices have stayed flat.

PropQueries · 27-10-2020 2:17pm

fliball123 wrote: »

Have a look at the income tax take it was not down throughout the virus meaning those who have been paying the majority of income tax, those on the average and above average salaries are still working. (not sure how many low wage employees who would be in a position to buy even without Covid) Transactions are down due to the amount of red tape and extra work the process takes to buy a house, (all the moving parts, from solicitors to surveyors, to EAs to bank employees) while living in a covid world. It would be great to get some data on the timeframes for a property selling between going sale agreed and sold. I also believe the translations completed are ramping back up over the last couple of weeks. It will be interesting to see how the next 4 months go but I thought we would of seen a drop by now and this is not the case. Covid started in Feb its now the end of October that's 9 months. The crash in 08 is generally accepted that the Lehman Brothers hitting the wall in September signaled the spiral downwards with in 9 months of that event Irish property prices had plummeted and there was panic and prices were only going one way. We are 9 months since the event of Covid impacting us and prices have stayed flat.

These are just some of the signals I would be looking at since January 2020:

Colony capital selling Irish real estate investments: https://www.irishtimes.com/business/commercial-property/colony-capital-appoints-eastdil-to-sell-stakes-in-prime-dublin-offices-1.4292785?mode=sample&auth-failed=1&pw-origin=https%3A%2F%2Fwww.irishtimes.com%2Fbusiness%2Fcommercial-property%2Fcolony-capital-appoints-eastdil-to-sell-stakes-in-prime-dublin-offices-1.4292785

Aviva stops investors from taking money out of Irish property funds: https://www.irishtimes.com/business/commercial-property/aviva-stops-investors-from-taking-money-out-of-irish-property-funds-1.4157574?mode=sample&auth-failed=1&pw-origin=https%3A%2F%2Fwww.irishtimes.com%2Fbusiness%2Fcommercial-property%2Faviva-stops-investors-from-taking-money-out-of-irish-property-funds-1.4157574#:~:text=Aviva%20Life%20%26%20Pensions%20Ireland%20moved,investor%20seeking%20their%20money%20back.

Blackstone tries to get out of Blanchardstown shopping centre: https://www.independent.ie/business/irish/blackstone-and-aib-in-standoff-over-blanchardstown-shopping-centre-debt-39463682.html

Pepper Money to cease new commercial lending: https://www.rte.ie/news/business/2020/0904/1163292-pepper-money-to-cease-new-commercial-lending/

Cullaun Capital with a loan book of €140M closed to new business: https://www.dublininquirer.com/2020/09/23/in-foxrock-work-continues-on-apartments-after-the-developer-and-property-finance-company-close-down

Ires Reit to sell off €50m in assets after buoyant first half: https://www.independent.ie/business/commercial-property/ires-reit-to-sell-off-50m-in-assets-after-buoyant-first-half-39432452.html

Properties available for rent in central Dublin up 71% on comparable period last year: https://www.rte.ie/news/ireland/2020/0417/1132149-rent-sale-property-ireland/

Glenveagh cuts prices on luxury properties in Dublin and Wicklow to accelerate sales: https://www.independent.ie/business/personal-finance/property-mortgages/glenveagh-cuts-prices-on-luxury-properties-in-dublin-and-wicklow-to-accelerate-sales-39513776.html

In other words, the big boys are looking to get out and as always, the small guys will be left holding the bag of proverbial.

In six months to a year, people will be saying "oh yea, I spotted all those signals too"...

fliball123 · 27-10-2020 2:36pm

PropQueries wrote: »

These are just some of the signals I would be looking at since January 2020:

Colony capital selling Irish real estate investments: https://www.irishtimes.com/business/...57498?mode=amp

Aviva stops investors from taking money out of Irish property funds: https://www.irishtimes.com/business/...57574?mode=amp

Blackstone tries to get out of Blanchardstown shopping centre: https://m.independent.ie/business/ir...-39463682.html

Pepper Money to cease new commercial lending: https://www.rte.ie/news/business/2020/0904/1163292-pepper-money-to-cease-new-commercial-lending/

Cullaun Capital with a loan book of €140M closed to new business: https://www.dublininquirer.com/2020/09/23/in-foxrock-work-continues-on-apartments-after-the-developer-and-property-finance-company-close-down

Ires Reit to sell off €50m in assets after buoyant first half: https://www.independent.ie/business/commercial-property/ires-reit-to-sell-off-50m-in-assets-after-buoyant-first-half-39432452.html

Properties available for rent in central Dublin up 71% on comparable period last year: https://www.rte.ie/news/ireland/2020/0417/1132149-rent-sale-property-ireland/

Glenveagh cuts prices on luxury properties in Dublin and Wicklow to accelerate sales: https://www.independent.ie/business/personal-finance/property-mortgages/glenveagh-cuts-prices-on-luxury-properties-in-dublin-and-wicklow-to-accelerate-sales-39513776.html

In other words, the big boys are looking to get out and as always, the small guys will be left holding the bag of proverbial.

In six months to a year, people will be saying "oh yea, I spotted all those signals too"...

Whatever the signals you have up here it has not happened yet. Like I say the above signals mean nothing. If the market had been following your so called signals we should of seen a drop of at least 10% 9 months into possibly the biggest global event of my life and yet it has not come to pass.

Reasons not signals for prices staying where they are as follows.

Supply dwindling on a daily/weekly basis add in new house builds have slowed down.

People who were paying the majority of the tax are still working are saving more due to working from home and will be able to buy.

We have a huge subset in society in the 25 - 50 who are most likely to buy (something you tried to mislead people with your out of date stats)

It now costs money to hold money in a bank and other investment opportunities such as shares are even more risky due to the current climate. As an investor the idea of being able to buy a house give it to the Irish government for 20+ years and make a safe ROI backed by the gov is a very attractive one in the current climate.

The government have just passed a budget that will keep money in peoples pockets for the next 12 months.

The Pfizer vaccine is nearly here and already countries/Continents like the US, and Europe have already subscribed to at least a billion orders of this vaccine. So we could be close to getting Corona under control it might take another 2 years to get it under control but like the flu jab it may be something someone can get once a year to keep Corona at bay.

So unless the Irish government go under and all the MNCs go away I cant see a drop in price for the next 12 months.

PropQueries · 27-10-2020 2:41pm

fliball123 wrote: »

Whatever the signals you have up here it has not happened yet. Like I say the above signals mean nothing. If the market had been following your so called signals we should of seen a drop of at least 10% 9 months into possibly the biggest global event of my life and yet it has not come to pass.

Reasons not signals for prices staying where they are as follows.

Supply dwindling on a daily/weekly basis add in new house builds have slowed down.

People who were paying the majority of the tax are still working are saving more due to working from home and will be able to buy.

We have a huge subset in society in the 25 - 50 who are most likely to buy (something you tried to mislead people with your out of date stats)

It now costs money to hold money in a bank and other investment opportunities such as shares are even more risky due to the current climate. As an investor the idea of being able to buy a house give it to the Irish government for 20+ years and make a safe ROI backed by the gov is a very attractive one in the current climate.

The government have just passed a budget that will keep money in peoples pockets for the next 12 months.

The Pfizer vaccine is nearly here and already countries/Continents like the US, and Europe have already subscribed to at least a billion orders of this vaccine. So we could be close to getting Corona under control it might take another 2 years to get it under control but like the flu jab it may be something someone can get once a year to keep Corona at bay.

So unless the Irish government go under and all the MNCs go away I cant see a drop in price for the next 12 months.

All good points. It's the last one, although in jest, that may end up being a very accurate prophecy (maybe not in the next 12 months though)

fliball123 · 27-10-2020 2:46pm

PropQueries wrote: »

All good points. It's the last one, although in jest, that may end up being a very accurate prophecy (maybe not in the next 12 months though)

Well we will have to wait and see. I honestly thought 6 months ago we would of seen a drop of 5 maybe 10% but it just hasnt happened and the points I made would make me believe that the drop will not happen for another 12 months..But god knows what will happen between now and then

PropQueries · 27-10-2020 2:52pm

fliball123 wrote: »

Well we will have to wait and see. I honestly thought 6 months ago we would of seen a drop of 5 maybe 10% but it just hasnt happened and the points I made would make me believe that the drop will not happen for another 12 months..But god knows what will happen between now and then

And that's why we're here. To look at the current data and we both take opposing views on what it's telling us about what's about to happen. Nothing wrong with that

Timing belt · 27-10-2020 2:54pm

PropQueries wrote: »

But isn't that the definition of a 'forced sale' that many here have being saying is different this time i.e. prices can't drop much as there will be little forced sales to force a drop in values?

Another group selling are the pension funds e.g. Aviva and Zurich in Ireland blocked redemptions from their commercial property funds back in January (pre-covid) and are now selling several office buildings in Dublin in order to meet these redemption requests. These are only a few we know about.

So, the big investors are selling. The pension funds are selling. Who will buy them?

Yes you are right they blocked redemptions in January and most property funds in London were suspended till the end of January and during this time they built up liquidity to deal with any run on investor redemptions to prevent the funds from having to go into a fire sale of property to be able to pay investors redemptions.

Everyone knows that Commercial Real estate is impacted heavily and the assumptions the banks are working on is a 20% drop in value which they have already accounted for in half year provisions so to suggest that banks will go bust on the back of this is highly unlikely.

The other thing you need to considered is that pension funds need regular cash flow to pay pensions and with rates negative on government bonds they will invest in commercial real estate for the regular rent payments as this provides a strong yield compared to other investments at the moment. In short I don’t think Commercial real estate will totally collapse yes there will be loss on some investment which were undertaken at the peak but the majority are still providing a reasonable return.

Timing belt · 27-10-2020 2:59pm

PropQueries wrote: »

Of course not. Property is highly illiquid. But transactions are well down which doesn't bode well for the future direction of the property market.

As many have said here before, the only ones able to purchase are multinational employees and similar workers etc. who haven't been impacted by Covid-19.

Where are all these buyers if transactions are down. Plus there's only so many workers who aren't impacted that actually do require to purchase a home. The supply of these non-impacted covid-19 workers seeking to purchase a home is not unlimited.

If the majority thought there was a property crash coming they would be frantically trying to sell their property and exit. The fact transactions are down shows that this is not the case.

fliball123 · 27-10-2020 3:01pm

Timing belt wrote: »

If the majority thought there was a property crash coming they would be frantically trying to sell their property and exit. The fact transactions are down shows that this is not the case.

Not just transactions but the actual level of supply should of gone right up instead it continues to drop.

dor843088 · 27-10-2020 3:04pm

Huge amounts of homeowners already in negative equity especially in new build estates.

donnaille · 27-10-2020 3:07pm

dor843088 wrote: »

Huge amounts of homeowners already in negative equity especially in new build estates.

What definition of 'negative equity' are you using, with a deposit &/or HTB there's very little change any homeowner in a new build estate is in negative equity.

PropQueries · 27-10-2020 3:08pm

Timing belt wrote: »

If the majority thought there was a property crash coming they would be frantically trying to sell their property and exit. The fact transactions are down shows that this is not the case.

That's the thing. 'The majority' generally don't realise what's going on until it's too late. But if you look at the signals e.g. Glenveagh very publicly reduced their prices last month. Many developers who did intend to sell have now reverted to renting or have kept them empty. Seems to be following the same playbook that I saw just before the last crash.

I think the primary difference this time is that many will hope to either sell or rent to the state. However, I don't think the state has the resources to soak up all the property that may be hoping to find a home with them over the next 12 months.

KennisWhale · 27-10-2020 3:15pm

fliball123 wrote: »

Have a look at the income tax take it was not down throughout the virus meaning those who have been paying the majority of income tax, those on the average and above average salaries are still working. (not sure how many low wage employees who would be in a position to buy even without Covid) Transactions are down due to the amount of red tape and extra work the process takes to buy a house, (all the moving parts, from solicitors to surveyors, to EAs to bank employees) while living in a covid world. It would be great to get some data on the timeframes for a property selling between going sale agreed and sold. I also believe the translations completed are ramping back up over the last couple of weeks. It will be interesting to see how the next 4 months go but I thought we would of seen a drop by now and this is not the case. Covid started in Feb its now the end of October that's 9 months. The crash in 08 is generally accepted that the Lehman Brothers hitting the wall in September signaled the spiral downwards with in 9 months of that event Irish property prices had plummeted and there was panic and prices were only going one way. We are 9 months since the event of Covid impacting us and prices have stayed flat.

I do not think we can say that we have had the covid event as of yet considering the government and central banks are still supporting the economy and markets. Until restrictions are eased and accompanying economic supports are wound down, the covid shock will be delayed.

In the quarter that everything is unfrozen we will start to see the fallout in the economy, which will only then start to affect the housing market, then a couple quarters later we will see the property market data. At this stage, best guess is Q2 2021 (April, 2021, at the start of the new tourism season) when the economy is unfrozen which means people are getting back to their jobs and will find out if they can still be paid the same amount / given the same number of hours, if they are even still needed by their company. The covid impact on housing would start to show in the quarterly reports after this (so Q3 reports onwards).

dor843088 · 27-10-2020 3:18pm

donnaille wrote: »

What definition of 'negative equity' are you using, with a deposit &/or HTB there's very little change any homeowner in a new build estate is in negative equity.

Reselling these homes will not qualify for help to sell
The house is no longer brand new
The property market is significantly weaker than when most of these properties were bought.

Negative Equity

Irish Property Market 2020 Part 2

Comments