Property Market 2019

Eric Cartman · 16-01-2019 9:38pm

I think this just says that we hit the credit wall. This is clearly the maximum pricing that society can take with credit controls involved. All the exemptions and other craic and this is how far we go.

Makes me think the credit cap should have been lower, but seems they set it exactly high enough for all the idiots from last time to get out of negative equity.

Graham · 16-01-2019 9:59pm

Eric Cartman wrote: »

Makes me think the credit cap should have been lower, but seems they set it exactly high enough for all the idiots from last time to get out of negative equity.

Don't mock, there's every chance they are on a tracker paying less than half the amount their neighbours are spending to rent an identical property.

Eric Cartman · 16-01-2019 11:27pm

Graham wrote: »

Don't mock, there's every chance they are on a tracker paying less than half the amount their neighbours are spending to rent an identical property.

very true, but the strategic defaulting, the upside down loans, the vacant properties etc... are causing problems for the rest of us from banks being allowed to lend to supply constraints. the same people who in late 07 / early 08 took out 102% mortgages at 5-8x sallary are the exact ones who have lobbied the banks and government to prevent reposessions and are clutching to their BTL's because they think property investment shouldnt go bad and wouldnt do the decent thing and walk away taking a 50-75k hit on a bad investment

Graham · 16-01-2019 11:44pm

Eric Cartman wrote: »

very true, but the strategic defaulting, the upside down loans, the vacant properties etc... are causing problems for the rest of us from banks being allowed to lend to supply constraints. the same people who in late 07 / early 08 took out 102% mortgages at 5-8x sallary are the exact ones who have lobbied the banks and government to prevent reposessions and are clutching to their BTL's because they think property investment shouldnt go bad and wouldnt do the decent thing and walk away taking a 50-75k hit on a bad investment

You are of course making the huge and undoubtedly incorrect assumption that everyone in negative equity over-borrowed, isn't paying their mortgage and spends their spare time on protest marches lobbying the central bank/ government.

dor843088 · 16-01-2019 11:59pm

A surprising but true little nugget of info is the difference between a 300k mortgage on 1% (tracker) bought lets say 2007 and a 150k 3.5% mortgage bought right at the bottom in 2013 or so is around 40k over the 30 years all said and done. Factor in the 5 years of rent and it's pretty much negligible difference.

mkdon · 17-01-2019 12:09am

dor843088 wrote: »

A surprising but true little nugget of info is the difference between a 300k mortgage on 1% (tracker) bought lets say 2007 and a 150k 3.5% mortgage bought right at the bottom in 2013 or so is around 40k over the 30 years all said and done. Factor in the 5 years of rent and it's pretty much negligible difference.

the last few messages are miles off the actual threat topic of property in 2019. Can we stick to the programme here? There is little mention of brexit impact on 2019 property market or the global slowdown

interesting piece below:

https://dailyreckoning.com/revealed-when-recession-starts/

dor843088 · 17-01-2019 12:28am

mkdon wrote: »

the last few messages are miles off the actual threat topic of property in 2019. Can we stick to the programme here? There is little mention of brexit impact on 2019 property market or the global slowdown

interesting piece below:

https://dailyreckoning.com/revealed-when-recession-starts/

Not a problem boss. Here is a summary of the last 16 pages of predicting the 2019 property market and the effects of brexit on said market. NOBODY KNOWS. And whilst we're sticking to the programme how bout you leave the modding to the mods eh ?

Pussyhands · 17-01-2019 1:00am

I've had an eye on daft for about a year now.

I see the same overpriced houses still on there. The good houses that are good quality are going but the ones which are expensive but not maybe the neatest or in the best areas are staying put.

You just need to go back 12 years to see it's all repeating itself. I'm looking at an rte archive from 2007 and it's talking about a show "I'm an adult, get me out of here" - a show about young people living at home with parents help and them trying to find people a home to move into. Very similar to Brendan Courtneys show about finding a place to rent for people living with their folks.

https://web.archive.org/web/20070513042226/http://www.rte.ie:80/business/2007/0509/FED.html

Just look at what the fed were saying 12 years ago:

The FOMC repeated its concern about inflation, saying that 'core' price pressures excluding food and energy were 'somewhat elevated' but "seem likely to moderate over time."

The statement added that a key risk is that 'the high level of resource utilisation has the potential to sustain those pressures,' a reference to tight labor market conditions.

This is exactly what's happening now, we're at full employment, salaries are going up. This means more money, meaning higher prices of housing. Salaries can't go to infinity...but they can be driven far above what they should be. Then something will happen like Apple will fail to meet targets and they cut back 10,000 jobs, which has a knock on effect to subbies etc.

There will be something big this year or next regarding the economy. We don't know yet but there's lots to be concerned about.

Pussyhands · 17-01-2019 1:10am

Foreign direct investment from China into the United States plummeted by 83% in 2018. Not only are Chinese firms drastically scaling back investments, but they've embarked on a record-setting wave of sales of real estate, hospitality and entertainment businesses.

Another $12 billion of Chinese assets around the world are expected to be sold this year, the report said.

No doubt the chinese have their finger in the pie here too.

https://edition.cnn.com/2019/01/14/investing/china-foreign-direct-investment/index.html

awec · 17-01-2019 9:45am

It's not all repeating itself. The situation now is entirely different to 2007. The reasons for Ireland property boom back then were entirely different.

If anything like 2007 happens again any time soon Ireland and the EU is finished. Someone's mortgage will be the least of their worries.

Property prices will come down eventually. It is inevitable. I doubt there is anyone in denial about this.

Pussyhands · 17-01-2019 9:46am

awec wrote: »

It's not all repeating itself. The situation now is entirely different to 2007. The reasons for Ireland property boom back then were entirely different.

If anything like 2007 happens again any time soon Ireland and the EU is finished. Someone's mortgage will be the least of their worries.

Property prices will come down eventually. It is inevitable. I doubt there is anyone in denial about this.

History doesn't repeat itself but it rhymes.

Case in point, my above post about a TV programme about helping young people find a place to live in 2007 and last year. They weren't the exact same reasons, one was about getting someone onto the property ladder, the other finding a place to rent, both situations caused by availability of property - either to buy or rent.

awec · 17-01-2019 9:46am

Pussyhands wrote: »

History doesn't repeat itself but it rhymes.

What does this even mean?

zl1whqvjs75cdy · 17-01-2019 9:46am

Pussyhands wrote: »

No doubt the chinese have their finger in the pie here too.

https://edition.cnn.com/2019/01/14/investing/china-foreign-direct-investment/index.html

What has this got to do with the Irish property market?

q85dw7osi4lebg · 17-01-2019 9:48am

Pussyhands wrote: »

I've had an eye on daft for about a year now.

I see the same overpriced houses still on there. The good houses that are good quality are going but the ones which are expensive but not maybe the neatest or in the best areas are staying put.

You just need to go back 12 years to see it's all repeating itself. I'm looking at an rte archive from 2007 and it's talking about a show "I'm an adult, get me out of here" - a show about young people living at home with parents help and them trying to find people a home to move into. Very similar to Brendan Courtneys show about finding a place to rent for people living with their folks.

https://web.archive.org/web/20070513042226/http://www.rte.ie:80/business/2007/0509/FED.html

Just look at what the fed were saying 12 years ago:

This is exactly what's happening now, we're at full employment, salaries are going up. This means more money, meaning higher prices of housing. Salaries can't go to infinity...but they can be driven far above what they should be. Then something will happen like Apple will fail to meet targets and they cut back 10,000 jobs, which has a knock on effect to subbies etc.

There will be something big this year or next regarding the economy. We don't know yet but there's lots to be concerned about.

I agree with some of your points pussyhands but regards property here, it's a good thing when terrible or untidy properties aren't selling, it's a sign that there is a lack of desperation among property buyers right now.

Second have values have stagnated for the best part of two years in my area but new homes are up over 25% since 2015 (help to buy).

I reckon we will see signs of a recession but at present I don't think we have any. USA and maybe Italy / Germany will potentially be within one within 18 months.

Pussyhands · 17-01-2019 9:52am

Rex Disgusting Tariff wrote: »

I agree with some of your points pussyhands but regards property here, it's a good thing when terrible or untidy properties aren't selling, it's a sign that there is a lack of desperation among property buyers right now.

Exactly, but we're also building heavily now and there's going to be a raft of new properties on the market in the next few years.

Pussyhands · 17-01-2019 9:57am

donkeyoaty0099 wrote: »

What has this got to do with the Irish property market?

Considering many many people claim that foreign investors are driving up prices here I think it's relevant.

zl1whqvjs75cdy · 17-01-2019 10:24am

Pussyhands wrote: »

Considering many many people claim that foreign investors are driving up prices here I think it's relevant.

The article is to do with Chinese money leaving the US. Which is undoubtedly being directed from the top as part of the ongoing trade war. Really don't see the relevance to the Irish market

Bob24 · 17-01-2019 10:45am

Pussyhands wrote: »

History doesn't repeat itself but it rhymes.

I have to summon Marx to answer this, who said that history always repeats itself, "the first as tragedy, then as farce”.

I actually think he had a point and we might be heading that way, but I have not idea what our property farce will be like and how many people will indeed find it funny.

The_Conductor · 17-01-2019 11:11am

I think its more a minor echo- thankfully, many people have been saved from themselves this time round- between CB income rules and the general exemptions. Also- while we may be building in atrocious locations- we don't have a runaway building sector- as we had the last time round. We are a silly silly people though.

coolshannagh28 · 17-01-2019 11:19am

The effect on our property market will be dictated by the severity of what happens in the US and Europe , the QE low interest bubble in both places could blow up spectacularly with unforeseen consequences.

Bob24 · 17-01-2019 11:43am

The_Conductor wrote: »

I think its more a minor echo- thankfully, many people have been saved from themselves this time round- between CB income rules and the general exemptions. Also- while we may be building in atrocious locations- we don't have a runaway building sector- as we had the last time round. We are a silly silly people though.

Agree as a country we have been less reckless than the last time around. Having said that I also think the consequences of the last crisis still haven’t been fully resolved. So in spite of being more (but probably still not enough) carefull this time around, I am not completely sure a new crisis would be milder ... some people from the last crisis who thought they had finally managed to put their head above water or were about to do so might be pushed down again and joined by a new cohort.

And that’s not to mention the global economic and political context which is probably more worrying than it was before the previous crisis.

beaz2018 · 17-01-2019 12:11pm

Bob24 wrote: »

Agree as a country we have been less reckless than the last time around. Having said that I also think the consequences of the last crisis still haven’t been fully resolved. So in spite of being more (but probably still not enough) carefull this time around, I am not completely sure a new crisis would be milder ... some people from the last crisis who thought they had finally managed to put their head above water or were about to do so might be pushed down again and joined by a new cohort.

And that’s not too mention the global economic and political context which is probably more worrying than it was before the previous crisis.

So what are people supposed to do? keep renting on the premise that there will be cheap and plentiful houses in a few years because of a recession? What about if they lose their job/take a cut in pay as part of that recession?

Pussyhands · 17-01-2019 1:10pm

donkeyoaty0099 wrote: »

The article is to do with Chinese money leaving the US. Which is undoubtedly being directed from the top as part of the ongoing trade war. Really don't see the relevance to the Irish market

Did you even read the article?

5.5 billion taken from the US last year, with 12 billion of WORLDWIDE assets taken out this year.

Pussyhands · 17-01-2019 1:16pm

beaz2018 wrote: »

So what are people supposed to do? keep renting on the premise that there will be cheap and plentiful houses in a few years because of a recession? What about if they lose their job/take a cut in pay as part of that recession?

It's more likely to end up better than getting an inflated mortgage for 35 years, then potentially losing your job and then house...yeah.

If people are able to buy now, that means they need a deposit. That deposit is still there in a recession/job loss. In a once in a lifetime recession there were still 86/100 people in work.

Your deposit increases in buying power, your repayments are lower because you have a smaller loan.

Bob24 · 17-01-2019 1:22pm

beaz2018 wrote: »

So what are people supposed to do? keep renting on the premise that there will be cheap and plentiful houses in a few years because of a recession? What about if they lose their job/take a cut in pay as part of that recession?

My point was more about describing the situation than telling people what they should do or not.

Having said if someone was asking for advice i would say that while buying isn’t necessarily a bad idea, one should only do it with a good deposit (minimum 20% of the house prices, ideally 30% or more) and make sure they could still manage their budget with let’s say a 3% interest rise combined to the loss of one income in the household.

IMO buying with an exception or even at the bottom of the current rules (especially the 10% LTV for part of an FTB’s mortgage) is too risky.

zl1whqvjs75cdy · 17-01-2019 1:42pm

Pussyhands wrote: »

Did you even read the article?

5.5 billion taken from the US last year, with 12 billion of WORLDWIDE assets taken out this year.

It actually says they expect 12 billion in assets to be taken this year. It also doesn't mention whether or not the assets are commercial or residential. So I stand by question. What exactly does this have to do with the Irish property market

zl1whqvjs75cdy · 17-01-2019 1:55pm

Bob24 wrote: »

My point was more about describing the situation than telling people what they should do or not.

Having said if someone was asking for advice i would say that while buying isn’t necessarily a bad idea, one should only do it with a good deposit (minimum 20% of the house prices, ideally 30% or more) and make sure they could still manage their budget with let’s say a 3% interest rise combined to the loss of one income in the household.

IMO buying with an exception or even at the bottom of the current rules (especially the 10% LTV for part of an FTB’s mortgage) is too risky.

I wouldn't say there's many that could afford a 3 % increase coupled with the loss of a salary. You have to assume (depending on your line of work) that your salary is going to generally increase as your career progresses. So a mortgage that is a stretch this year may not be in 5 years time. That's what happened to us in any case. I do take your point that it's a gamble though

Moonjet · 17-01-2019 2:32pm

Pussyhands wrote: »

It's more likely to end up better than getting an inflated mortgage for 35 years, then potentially losing your job and then house...yeah.

If people are able to buy now, that means they need a deposit. That deposit is still there in a recession/job loss. In a once in a lifetime recession there were still 86/100 people in work.

Your deposit increases in buying power, your repayments are lower because you have a smaller loan.

What you're suggesting is getting involved in price speculation, which is a dangerous game especially when it comes to your primary residence. You're assuming another crash in property prices here is a certainty - it' s not.

Nobody knows if property prices will crash or boom or remain stagnant or if there will be a recession this year or in 10 years or if Brexit will go ahead or if there will be mass unemployment or continued full employment.

People have to live somewhere and the only alternative to buying is renting.

Over the long-term, throughout history both here and abroad, buying property has always worked out more favorably than renting.

As the usual mantra goes, if you find a property you like in the area you're happy to live in long term, can afford the deposit and monthly repayments (stress tested +2%) then it's a good time to buy. Renting and waiting for the next crash could backfire.

Villa05 · 17-01-2019 3:00pm

awec wrote:

It's not all repeating itself. The situation now is entirely different to 2007. The reasons for Ireland property boom back then were entirely different.

Many of the symptoms of the last boom/bust exist today, some of those symptom are considerably worse than in the early noughties

A big contributer last time was the low interest rates in a booming economy. This time round they are even lower

Bob24 · 17-01-2019 3:31pm

donkeyoaty0099 wrote: »

I wouldn't say there's many that could afford a 3 % increase coupled with the loss of a salary. You have to assume (depending on your line of work) that your salary is going to generally increase as your career progresses. So a mortgage that is a stretch this year may not be in 5 years time. That's what happened to us in any case. I do take your point that it's a gamble though

Yeah the OP was asking for what people should do and as I said this is just the advice I would give if someone was asking me, to be able to in good concscience say I’m not giving advice to someone I know which I think might put them in a bad situation. Then the general public do what they like and many people might give a lot less restrictive advice to their friends (in any case I think it is interesting to look at it from the perspective of: would I tell that to a friend in good conscience?)

Just to give the rational behind it though: I am taking into account that the likelihood of an economic recession and a property price drop is a lot higher in the coming years than it was let’s say 3-5 years ago. The high deposit is to limit chances of negative equity in case of a price drop so the people don’t get stuck, as well as reducing the share of monthly repayments which is interests (and thus to limit the impact of a potential interest rate hike, which helps a lot to satisfy my second condition). And the the budget safety limit is to make sure it is very unlikely for people to be stuck and unable to pay as during a recession and when property prices are falling it would be much more problematic then during a phase of economic growth and property prices inflation.

I do hear your argument about salary increases though and it is valid, but I would have seen it as more relevant a couple of years ago at the beginning of the upwards economic cycle we are currently in, as I think everyone agrees it is very likely to end in the next year or two and the question is more when will it end and how bad/long the subsequent downwards cycle will be. So I would have given people slightly different advice 5 years ago.

Property Market 2019

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