Property Market 2019

Pussyhands wrote:

I can guarantee you no one owning a house now wants prices to drop. Are they thoughtful?

I know many people that own houses and want prices to drop. Why?

Because they have grown up children who need a home and many people believe current prices are crazy for what you are getting for your money

Pussyhands wrote: »

There is **** all people of the hundreds of thousands who have bought in the last 12/13 years that want prices to drop.

Even assuming everyone is selfish and short sighted, you can be sure some people would like it.

As others have said an obvious exemple is someone who would like to upgrade to something better. At 10% drop accross the board means that their upgrade cost is cut by 10%. What’s not to like for them?

To be honest while I’m fine with my current situation and don’t wish for anything, I wouldn’t have any issue with prices dropping as I definitely see how I could use it to my advantage.

beaz2018 wrote: »

But would your own house not fall in value by 10% also? Thus leaving less equity to purchase the new one?

If you’re upgrading and prices are falling accross the board, the more expensive house you want to buy at is dropping more in absolute value than the the one you want to sell, reducing you upgrade cost.

Simple exemple:
- You own a 200k house and want to upgrade to a 300k one. Cost of upgrade is 100k.
- Price drop by 10% accross the board
- You now own a 180k house and want to upgrade to a 270k one. Cost of upgrade has became 90k, 10% less than before.

So 10% drop in prices is saving you 10% on your upgrade cost.

Moonjet wrote: »

All this is assuming there will be any reduction in prices at all, which is certainly not a done deal given the economic/political instability in the EU and US at the moment.

To be fair the past few posts were in response to someone saying that no current homeowner would possibly wish for price drops.

None of the posts are saying that price drops are coming, they are arguing that there is a category of home owners for which they could be desirable, even from a selfish perspective.

But yeah it’s obviously not a given. And to be fair as I’ve said before there are so many uncertain and exogenous factors at play that while someone can make forecasts *assuming* the Irish environment remains the same, the certainty level of those forecasts is pretty low.

ELM327 wrote: »

Without additional external factors (eg hard brexit/no deal brexit) influencing things, I cannot see a recession in 2019.
The only similarity to the beginning of a downturn/recession is the migration of investors from stocks to real estate. However Trumps actions are influencing this more than any actual financial reasons.

It would be unwise not to keep an eye on US-China trade wars (growing protectionism), our reliance on corporation tax increases (similar to stamp duty back in previous bubble), Deutsche Bank trouble (could pull a Lehman Brothers on us), Italian/Greek debt crisis, era of low interest rates, oil prices + tensions etc etc

Our public debt levels are still growing despite economic growth. Ten firms pay nearly 40% of corporation tax, Revenue says.

House prices in Dublin are 25 per cent overvalued against income, according to the Economist, which also finds in a new survey that property price growth in the city has outpaced growth in 22 other global cities over the past five years. 75 per cent of exports are accounted for by just 50 companies, a much higher concentration than most other economies. Workers at multinational firms account for over a fifth of all income tax paid in the State and the large number of high earners at these firms poses a real risk to the tax base, an Oireachtas report found.

Budget watchdog the Irish Fiscal Advisory Council (IFAC) said recently that the departure of just one large multinational could leave the State nursing a €276m hole in the public finances. Ireland is vulnerable to “firm-specific shocks”, the NCC warns, meaning changes in the fortunes of a few big US firms could hit our economy significantly.

These are real threats to our economy and should be noted especially considering we are closer to a new recession than we were to the old one. Since 2012, Irish rents are up 60 per cent. House prices are up 40 per cent. And disposable income is up 8 per cent. In 1970s you only needed one wage to get a house and retire in your 60s on a decent pension. We have eroded that economy away and the reality is sadly we are becoming a nation of debt slaves all trying to aspire to the same when it's really out of our reach now.

Fine Gael told us that the previous property bubble prices in the 2007 era were unsustainable. What are they now so close to the peak?

ELM327 wrote: »

You can't compare now with 2012 and say house prices and rents are up. In 2012 the economy was emerging from the worst economic crash in global terms in at least a generation - and arguably the worst since the depression of the late 20's. To use that as a floor to base increase percentages off is a little misleading.

Just to say, rents are very significantly higher than their pre-crisis peek in 2006-2007 - which then was their highest point ever.

So when it comes to rents you don’t need to take the bottom of the crash as a reference point to see a massive increase, even compared to the top of the boom we had before that crash are today’s rents massively higher (way more than either inflation or pay progression during the same period).

Granted, selling prices are a different story.

AlmightyCushion wrote: »

You have less equity in your current house but the new house has dropped by more actual value than your current house so you're still technically better off.

Current house 300k
New house 400k

A 10% drop will mean your current house has lost 30k value whilst your new house will cost 40k less so it still saves you money. Obviously, it's not always that simple. Trading down works out more expensive. Reduction in equity could complicate things. Also different area might drop at different rates as it's rarely a straight XX% drop across the board.

That’s true but for most people trading up the equity in their current home is the deposit for the next. If you have a house worth 300k and a mortgage of 200k and want to trade up to a 400k house, you have 100k deposit which is 25% LTV against the new house. If the value drops to 270k you now have 70k equity. The new house has dropped to 360k but you’re limited to a 350k house because your 70k has to be at least 20% of the new purchase price due to the CBI limits on second time buyers.

I know the figures will be different for everyone but the scenario above is basically my situation. I would prefer prices to rise slightly to give me more equity because I’m currently limited by the LTV restriction rather than the LTI.

Graham wrote: »

Interesting.

What influence do you expect that to have on the Irish property market in the coming year?

What parallels can you draw between the two property markets?

I wonder is there much commonality between investor bases in both markets? IE is there likely to be a capital flight from Irish property to chinese property? I wouldn't have thought so to be honest.

Zenify wrote: »

Donegal is an extreme. Most parts of country is commutable to Dublin or even another another big city, Limerick, Cork etc. Not an example that would represent most cases IMO.

There are some places that can just about commute to two job markets (but only just) Athlone to Dublin or Galway, for instance, or Carlow to Dublin or Waterford. I don't see anywhere practical for Dublin and Cork though, which would probably give you the most options.



I think of an hour on a train one way as my max reasonable commute. Shorter is better, of course. I know others who have tolerated longer commutes out of necessity (Belfast to Dublin comes to mine) but dammit life is too short.



Obviously it depends on a few things - annoyingly it's easiest to get to Heuston but the jobs are near Connolly, and Waterford probably has 1/20th as many jobs as Dublin, but it gives some resilience. I nearly moved to Waterford, actually - seems like a nice place and the Greenway is heavenly.

smurgen wrote: »

German industrial figures down since the first time since 2008. 4,600 laid off at Jaguar/Rover in the U.K and new car demands in China down for the first time in 20 years. I think the signs of recession have arrived.

The JLR layoffs were attributable to Brexit.
Not familiar enough to make a comment on China but if it's including imported new cars it may be reflecting tariff impacts

This is not a recession.

On cars and China, it is worth mentioning that increasing car ownership has been a plague for many large cities there (traffic jams and air pollution) and many local governments have gradually been introducing restrictive policies on car ownership/usage in their cities to tackle the issue. This can be as simple and drastic as introducing hard quotas for new cars sale/registration each year within the city, combined to fairly low limits on how many days per year cars registered elsewhere can be used within the city (and being China they have no problem monitoring cars usage and enforcing these rules with a dense network of video cameras on the streets plugged onto automated picture analysis technology to make full use of the footage).

So specifically on cars demand in China, I wouldn’t read to much more into it than governement policies having their intended effect.

(it probably wouldn’t make sense here, but to be clear on what it means: if Dublin, Cork and Galway were to introduce quotas for car sales/reg within their county equal to 80% of last year’s sales, and at the same time to enforce a policy saying that cars registered outside the county can’t be used within that county more that 50 days per year, car sales in Ireland would probably drop as well and not because of economic reasons)

Zenify wrote: »

New car sales are down in Ireland too due to brexit.

I remember I was working for a company in 2010 and all our deliveries got delayed due to the "big freeze". It really did have a negative effect on the business but we sure got a lot of mileage from blaming that snow. Went on for months afterwards.

new car sales down in ireland?

They are down due to imports of 6-18 month old cars from the UK!

smurgen wrote: »

German industrial figures down since the first time since 2008. 4,600 laid off at Jaguar/Rover in the U.K and new car demands in China down for the first time in 20 years. I think the signs of recession have arrived.

The yield curve is suggesting a recession is coming to the US in late 2019 or 2020.

http://econbrowser.com/archives/2018/12/yield-curve-inversions