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Recession: Which falls first - rent or house prices?

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    #2
    cgcsb
    Registered Users Posts: 9,275 ✭✭✭cgcsb


    Deleted User wrote: »
    We're heading for a deep recession.

    We're really not.
    Deleted User wrote: »
    What is known about how this affects property prices and rents? Both will fall, but which falls first and fastest?

    rent seems to have fallen somewhat, you can now rent a bedsit (albeit substandard) on DAFT for about €800 a month. The average full time net salary is about €2,900 a month, so the average person can now snap up a dingy bedsit for just under 30% of their income. It's better than pre corona, but still we have a poor standard of living due to high housing cost.

    As for purchasing, I've not noticed significant movement in prices, kip apartments with newspaper walls in kip suburbs still cost 200k. The average worker can afford a €185,000 home as a single person or €370,000 as a couple.


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    #3
    [Deleted User]
    Posts: 0 ✭ [Deleted User]


    I hope you're right about the (lack of a deep) recession but the Central Bank says it will be the 'worst in history'. Hopefully it will be short.

    Thanks for the observation on rents/prices. So, rents are softening but house prices stable enough.

    Was there anything about the previous recession that could help predict the next 12 months? Access to credit/mortgages might be a factor.


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    #4
    BrokenArrows
    Registered Users Posts: 7,500 ✭✭✭BrokenArrows


    [Deleted User] wrote: »
    I hope you're right about the (lack of a deep) recession but the Central Bank says it will be the 'worst in history'. Hopefully it will be short.

    Thanks for the observation on rents/prices. So, rents are softening but house prices stable enough.

    Was there anything about the previous recession that could help predict the next 12 months? Access to credit/mortgages might be a factor.

    It seems to be the "worst recession" is more a technicality due to businesses being prevented from trading which recover immediately once restrictions are lifted.

    Past recessions were because of other longer lasting factors.


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    #5
    cgcsb
    Registered Users Posts: 9,275 ✭✭✭cgcsb


    https://www.thejournal.ie/central-bank-forecast-2-5139456-Jul2020/

    By 2022 we'll be back to normal in a pessimistic view. The job loses that have occurred are almost all in retail/hospitality. The higher earning workers were able to work from home with very low job losses. Once everything is open again and that higher earning group can spend again, the lower paid jobs will reappear very quickly.

    Governments are looking to stimulus based policies, we'll gain more debt of course but the economy will be fine. Institutional investors are still building BTR apartments here so they see a market for renters that is still massively profitable.


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    #6
    Ray Palmer
    Registered Users Posts: 8,353 ✭✭✭Ray Palmer


    BrokenArrows wrote: »
    It seems to be the "worst recession" is more a technicality due to businesses being prevented from trading which recover immediately once restrictions are lifted.

    Past recessions were because of other longer lasting factors.

    Once restrictions are lifted it will be a struggle to get customers to go. I won't go to a pub or restaurant for the rest of the year.

    Coffee shops frequented by office workers will close permanently as they aren't coming back for a while and not all of them will go even if open.

    There is going to be a very uneven distribution of effects with the low paid in much more danger. People who could buy houses before can still afford them so house prices may not be effected but rent could drop but it may not be much.

    People wishing an outcome they want is where things are being discussed rather than what is actually happening and who it effects.


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    #7
    awec
    Administrators Posts: 53,365 Admin ✭✭✭✭✭awec


    Ray Palmer wrote: »
    Once restrictions are lifted it will be a struggle to get customers to go. I won't go to a pub or restaurant for the rest of the year.

    Coffee shops frequented by office workers will close permanently as they aren't coming back for a while and not all of them will go even if open.

    There is going to be a very uneven distribution of effects with the low paid in much more danger. People who could buy houses before can still afford them so house prices may not be effected but rent could drop but it may not be much.

    People wishing an outcome they want is where things are being discussed rather than what is actually happening and who it effects.

    Will it?

    I think recent events have shown us that there is plenty of people happy enough to go back to pubs.


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    #8
    SozBbz
    Registered Users Posts: 1,889 ✭✭✭SozBbz


    Ray Palmer wrote: »
    Once restrictions are lifted it will be a struggle to get customers to go. I won't go to a pub or restaurant for the rest of the year.

    I think you're conflating what you think with what other people think.


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    #9
    Ray Palmer
    Registered Users Posts: 8,353 ✭✭✭Ray Palmer


    awec wrote: »
    Will it?

    I think recent events have shown us that there is plenty of people happy enough to go back to pubs.

    There will always be idiots. You can fill the Point with people to watch West Life they don't feed the economy long term. It really wasn't that many people in the pubs. If it happens again they will close them.

    The absence of office workers has a huge economic effect on local shops and businesses. They are going to close.


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    #10
    JimmyVik
    Registered Users Posts: 5,368 ✭✭✭JimmyVik


    Even if you keep your job, if you get hit with higher taxes then your rent/mortgage will be a bigger chunk of your take home.


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    #11
    SozBbz
    Registered Users Posts: 1,889 ✭✭✭SozBbz


    Ray Palmer wrote: »
    There will always be idiots. You can fill the Point with people to watch West Life they don't feed the economy long term. It really wasn't that many people in the pubs. If it happens again they will close them.

    The absence of office workers has a huge economic effect on local shops and businesses. They are going to close.

    I've no intentions of going to a busy pub but would go to a pub if it was being managed well. I plan to head west for a staycation at some point this month or next, will probably eat in pubs along the way.

    I've also been out to a restaurant and plan on going to more.

    Am I an idiot?


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    #12
    Ray Palmer
    Registered Users Posts: 8,353 ✭✭✭Ray Palmer


    SozBbz wrote: »
    I've no intentions of going to a busy pub but would go to a pub if it was being managed well. I plan to head west for a staycation at some point this month or next, will probably eat in pubs along the way.

    I've also been out to a restaurant and plan on going to more.

    Am I an idiot?

    As far as I am concerned yes you are.


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    #13
    [Deleted User]
    Posts: 0 ✭ [Deleted User]


    Isn't the gist of the next government's budgetary plan to pump money in for a year or two, and then rein things back in for a few years after that?

    Talking to people in pubs and cafes this week, they are glad to be open but a bit pessimistic about making it work over the next 12 months unless there are handouts/tax cuts etc.

    Feels like we should expect higher taxes when the 'worst' is over. But maybe there will be a kind of post-war feeling once COVID is tamed by a vaccine or effective treatment, and we can safely go back to full speed.


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    #14
    awec
    Administrators Posts: 53,365 Admin ✭✭✭✭✭awec


    Ray Palmer wrote: »
    As far as I am concerned yes you are.

    It's pretty stupid to think people should just not go to pubs or restaurants from now on. They are open, once you observe social distancing and the appropriate hygiene measures then go for it.


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    #15
    JimmyVik
    Registered Users Posts: 5,368 ✭✭✭JimmyVik


    SozBbz wrote: »
    I've no intentions of going to a busy pub but would go to a pub if it was being managed well. I plan to head west for a staycation at some point this month or next, will probably eat in pubs along the way.

    I've also been out to a restaurant and plan on going to more.

    Am I an idiot?




    I had planned not to go to a pub until next year.
    I was walking past one the other day and there was 1 person in it. So I went in for a sneaky pint. Now that ive gone once, im going back again tonight.


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    #16
    [Deleted User]
    Posts: 0 ✭ [Deleted User]


    Every recession is different, but is there no standard pattern to whether rents fall and this drags down prices - or vice versa?

    For example, it was obvious from the last crash that Dublin sales prices dipped first and bounced back first; apartments sank fast but recovered (if memory serves).


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    #17
    Ray Palmer
    Registered Users Posts: 8,353 ✭✭✭Ray Palmer


    awec wrote: »
    It's pretty stupid to think people should just not go to pubs or restaurants from now on. They are open, once you observe social distancing and the appropriate hygiene measures then go for it.

    You can do what you like but no control over others. Given the scenes shown you would be stupid to think you could maintain social distancing. Seeing as you can't then it us stupid to go there. Until there is proper actions being taken I and many others will avoid such places. Just because they are open doesn't make them safe


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    #18
    JimmyVik
    Registered Users Posts: 5,368 ✭✭✭JimmyVik


    Deleted User wrote: »
    Every recession is different, but is there no standard pattern to whether rents fall and this drags down prices - or vice versa?

    For example, it was obvious from the last crash that Dublin sales prices dipped first and bounced back first; apartments sank fast but recovered (if memory serves).


    Only way house prices will fall are


    if the market gets flooded with houses for sale. If it does they will come from the rental market. Landlords selling up. Because there is no oversupply at the moment.


    or b)
    If the supply of buyers dries up. That would require major job losses.
    So maybe rents would fall then. But the country and all of us would be in some state.


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    #19
    SozBbz
    Registered Users Posts: 1,889 ✭✭✭SozBbz


    Ray Palmer wrote: »
    As far as I am concerned yes you are.

    Well, with that perspective and your exceptional interpersonal skills on display here, the feeling is mutual.


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    #20
    awec
    Administrators Posts: 53,365 Admin ✭✭✭✭✭awec


    Ray Palmer wrote: »
    You can do what you like but no control over others. Given the scenes shown you would be stupid to think you could maintain social distancing. Seeing as you can't then it us stupid to go there. Until there is proper actions being taken I and many others will avoid such places. Just because they are open doesn't make them safe

    The scenes shown in a handful of pubs.

    There will be pubs and restaurants open up and down the country without issue, and they'll have more than enough custom to sustain opening.


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    #21
    SozBbz
    Registered Users Posts: 1,889 ✭✭✭SozBbz


    awec wrote: »
    The scenes shown in a handful of pubs.

    There will be pubs and restaurants open up and down the country without issue, and they'll have more than enough custom to sustain opening.

    Exactly.

    People are capable of exercising good judgement and cop on.

    Personally I'll be very much taking things as I find them. If I'm not happy that good practices are being observed, then I won't go in.


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    #22
    Ray Palmer
    Registered Users Posts: 8,353 ✭✭✭Ray Palmer


    SozBbz wrote: »
    Well, with that perspective and your exceptional interpersonal skills on display here, the feeling is mutual.

    You asked and I answered what interpersonal skills would you like applied to that? Do something I consider stupid and ask if it makes you stupid that is the answer you get.

    Why am I stupid? Not wanting to catch or spread a virus, is stupid?


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    #23
    Ray Palmer
    Registered Users Posts: 8,353 ✭✭✭Ray Palmer


    SozBbz wrote: »
    Exactly.

    People are capable of exercising good judgement and cop on.

    Personally I'll be very much taking things as I find them. If I'm not happy that good practices are being observed, then I won't go in.

    Except we have seen people can't exercise good judgement and cop on. Are the staff some of these people who went out and didn't socially distance? You don't know and can't possibly know to make a judgement call.

    At the start of this a shop worker though him wearing gloves kept me safe even though he had just rubbed his face while wearing them.


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    #24
    cgcsb
    Registered Users Posts: 9,275 ✭✭✭cgcsb


    Ray Palmer wrote: »
    Once restrictions are lifted it will be a struggle to get customers to go. I won't go to a pub or restaurant for the rest of the year.

    Coffee shops frequented by office workers will close permanently as they aren't coming back for a while and not all of them will go even if open.

    There is going to be a very uneven distribution of effects with the low paid in much more danger. People who could buy houses before can still afford them so house prices may not be effected but rent could drop but it may not be much.

    People wishing an outcome they want is where things are being discussed rather than what is actually happening and who it effects.

    You'd be an extreme outlier there. restaurants/bars around me are booked solid, can't get a table.


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    #25
    cgcsb
    Registered Users Posts: 9,275 ✭✭✭cgcsb


    Ray Palmer wrote: »
    As far as I am concerned yes you are.

    At this point in Ireland you're as likely to die in a road traffic accident than you are to contract corona virus, you're the idiot I'd say.


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    #26
    SozBbz
    Registered Users Posts: 1,889 ✭✭✭SozBbz


    Ray Palmer wrote: »
    You asked and I answered what interpersonal skills would you like applied to that? Do something I consider stupid and ask if it makes you stupid that is the answer you get.

    Why am I stupid? Not wanting to catch or spread a virus, is stupid?

    So you can call me and idiot, but it doesnt work the other way around - gotcha.

    In the spirit of asking and answering questions - why are you stupid?

    Unless you are in a high risk category, there is no need to go beyond government guidelines that are based on public health advice.

    What I have done and what I intend to do are fully within what has been allowed. I wear a mask to the shops and carry hand sanitizer and follow and have followed all of the advice throughout the pandemic so far. I would love to go on holiday somewhere sunny, but I won't until the advice to do so is clear and unambiguous.

    I am continuing to follow the advice, by doing what is now permitted. Yet according to you, that makes me an idiot.

    To me, locking myself up over and above the public health advice is pretty stupid. Also, calling someone who is fully playing by the rules and idiot, is pretty idiotic in itself.

    Please provide evidence of your academic qualifications that are superior to those of Dr. Holohan, that I may disregard his advice in favour of yours.


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    #27
    Ray Palmer
    Registered Users Posts: 8,353 ✭✭✭Ray Palmer


    cgcsb wrote: »
    You'd be an extreme outlier there. restaurants/bars around me are booked solid, can't get a table.

    No I am not. They are working on a reduced capacity. There is no restaurant in Dublin that I am aware of that has toilets where social distancing can be achieved.
    There are loads of idiots refusing to wear masks on public transport too. Even if it is the majority of people being stupid they remain stupid.


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    #28
    cgcsb
    Registered Users Posts: 9,275 ✭✭✭cgcsb


    Honestly it's like the karens commenting on Dublin Live.

    On a separate note: it is estimated that the propulation of Dublin City will increase 60,000 between now and 2026. Say 10,000 per year between now and then. There were 1,800 housing completions in the city in 2019 (with no signs of that picking up), so unless all the new residents live 6 people to a dwelling, then the housing crisis will get worse.


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    #29
    Smouse156
    Registered Users Posts: 529 ✭✭✭Smouse156


    cgcsb wrote: »
    https://www.thejournal.ie/central-bank-forecast-2-5139456-Jul2020/

    By 2022 we'll be back to normal in a pessimistic view. The job loses that have occurred are almost all in retail/hospitality. The higher earning workers were able to work from home with very low job losses. Once everything is open again and that higher earning group can spend again, the lower paid jobs will reappear very quickly.

    Governments are looking to stimulus based policies, we'll gain more debt of course but the economy will be fine. Institutional investors are still building BTR apartments here so they see a market for renters that is still massively profitable.

    This false belief that only low paid workers lost or will lose their jobs is surprising naive! Even though hospitality/retail was undoubtedly the worst effected the knock on effects of loss of business for legal/IT/Finance etc has already lead to salary cuts, hiring freezes and a small number of job cuts in “higher paid” roles. If the downturn continues there will be lots of higher paid job cuts as those companies won’t have sufficient business to pay the high salaries!

    To answer the OP, rents should fall first as landlords less likely to wait 12 months plus (Except some REITs) to get a high price. Lower rents will drag on capital values, especially apartments. House price falls will be slower


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    #30
    SozBbz
    Registered Users Posts: 1,889 ✭✭✭SozBbz


    Ray Palmer wrote: »
    No I am not. They are working on a reduced capacity. There is no restaurant in Dublin that I am aware of that has toilets where social distancing can be achieved.
    There are loads of idiots refusing to wear masks on public transport too. Even if it is the majority of people being stupid they remain stupid.

    Well luckily for us all, you are not in charge.

    I ate at a local restaurant last week. No issue with social distancing. Masks worn by staff and no crowding in the toilets.

    Lock yourself up, by all means thats your prerogative, but being abusive to people who are following the rules just makes you sound like an angry loon who needs to get out more....


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    #31
    Ray Palmer
    Registered Users Posts: 8,353 ✭✭✭Ray Palmer


    SozBbz wrote: »
    So you can call me and idiot, but it doesnt work the other way around - gotcha.
    .

    No, you asked if you were stupid and I answered there is the difference.

    You have since explained that following the minimum advice and anybody going beyond that is stupid. Not sure why the minimum became best practice. If you interact with people at risk or live with them you certainly need to above and beyond the minimum.

    The cop on and exercised judgment you think you have is limited because you think minimum is the highest standard. It isn't.


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