Glut of repossessed houses could depress prices ‘by up to 25%’

ezra_pound

There are currently 2 3 bed semis in scd asking less than 200k on daft.

Are you expecting prices to drop another 50% plus in area with most demand in country? And most demand y type of house?

uberalles

ezra_pound wrote: »

You never mentioned Wicklow.

You said you were looking for a 3 bed semi d n scd for 100 k.

Now if you check daft.ie for 3 bed semis in Dublin under say 175k you'll be hard pressed to get one other than in certain areas of tallaght and vlondalkin on the south side and nowhere in scd.

3 bed semis in scd are exactly the type of home which has the most demand. You'd need a lot of btl repo pressure to halve the price.

Wicklow I don't know about and wasn't mentioned in your previous post.

"Im not looking for a 3 bed semi for 100K in SCD, but looking for more choice"

What I mean is, Im not looking for a bargin. Im looking for more choice.
Correct, I didnt say Wicklow.

So at market value, similar to private sale, do you think there is supply on the way?

ezra_pound

uberalles wrote: »

"Im not looking for a 3 bed semi for 100K in SCD, but looking for more choice"

What I mean is, Im not looking for a bargin. Im looking for more choice.
Correct, I didnt say Wicklow.

So at market value, similar to private sale, do you think there is supply on the way?

Undoubtedly there will be more choice/supply with proper action taken on btls but it's kinda irrelevant if none of it is near your price. Ie it's a greater choice of something you can't afford.

ezra_pound

uberalles wrote: »

Anyone know if there are any BTL repros being "fast tracked" to market in any qty? And any time soon.

Considering buying at the mo and also considering holding off due to lack off tos see what arrives.

Im not looking for a 3 bed semi for 100K in SCD, but looking for more choice.

Oh I see. You're NOT.

Sorry.

Cringe.

ezra_pound

uberalles wrote: »

"Im not looking for a 3 bed semi for 100K in SCD, but looking for more choice"

What I mean is, Im not looking for a bargin. Im looking for more choice.
Correct, I didnt say Wicklow.

So at market value, similar to private sale, do you think there is supply on the way?

There is certainly going to be supply on the way.

However. Most parts of the country are already flooded with supply so I don't think it will make a huge difference. It could have a light cooling down effect on Dublin but I don't think any thing too severe.

cookie1977

ezra_pound wrote: »

There is certainly going to be supply on the way.

However. Most parts of the country are already flooded with supply so I don't think it will make a huge difference. It could have a light cooling down effect on Dublin but I don't think any thing too severe.

In relation to Dublin, what are you basing your thoughts on?

ezra_pound

cookie1977 wrote: »

In relation to Dublin, what are you basing your thoughts on?

Vacancy rate

cookie1977

ezra_pound wrote: »

Vacancy rate

The Vacancy rate for dublin is low.

In a report Irish Property - Foundations of Recovery, published yesterday, Mr O’Leary points out that vacancy rates in the capital and the mid-east region, Dublin and its commuter-belt in surrounding counties, are low at 5 per cent and 7 per cent.

http://www.irishtimes.com/business/sectors/transport-and-tourism/nama-should-fund-building-in-capital-to-avoid-house-price-bubble-economist-1.1542942

Bob24

ezra_pound wrote: »

You said you were looking for a 3 bed semi d n scd for 100 k.

Actually he said he was not looking for that ...

ezra_pound

cookie1977 wrote: »

The Vacancy rate for dublin is low.



http://www.irishtimes.com/business/sectors/transport-and-tourism/nama-should-fund-building-in-capital-to-avoid-house-price-bubble-economist-1.1542942

Exactly

ezra_pound

Bob24 wrote: »

Actually he said he was not looking for that ...

Yeah. Mea culpa. I acknowledged this earlier with a cringe.

cookie1977

ezra_pound wrote: »

Exactly

Then why say "there could be a light cooling affect". I doubt, as things stand, there will be any cooling effect at all.

ezra_pound

cookie1977 wrote: »

Then why say "there could be a light cooling affect". I doubt, as things stand, there will be any cooling effect at all.

Because there is currently an imbalance between supply and demand in favour of demand.

There will be repossessions in Dublin. Vacancy rate is a basic indicator but many btls were on interest only and weren't affordable for the mortgagor at the best if times. Add to that unemployment and you have some bad btl deals where the owner was never going to be able to move off interest only.

My point was that Dublin won't have as much percentage repos as other parts BUT
there is already too much supply in those areas whereas Dublin currently has too little. So Dublin's current upward pressure may cool slightly whereas the effect will be less noticeable elsewhere where there is already excess supply and downward prices.

cookie1977

ezra_pound wrote: »

Because there is currently an imbalance between supply and demand in favour of demand.

There will be repossessions in Dublin. Vacancy rate is a basic indicator but many btls were on interest only and weren't affordable for the mortgagor at tree best if times. Add to that unemployment and you have some bad btl deals where the owner was never going to be able to move off interest only.

My point was that Dublin won't have as much percentage repos as other parts BUT
there is already too much supply in those areas whereas Dublin currently has too little. So Dublin's current upward pressure may cool slightly whereas the effect will be less noticeable elsewhere where there is already excess supply and downward prices.

Yes I understand but I still dont see why you think Dublin will cool. There's currently requests for building to begin in Dublin (see previous linked article) and it's environs due to demand. Even Threshold in their recent budget submission asked for construction stimulus packages for Dublin.

The most recent
DAFT.ie property report shows that the total stock of property for sale nationally has fallen
by one-third from an average of 60,000 in 2008-2011 to just over 40,000 currently, with just
seven months of supply available in Dublin.

Introduce a stimulus for private housing construction in Budget 2014 that is directly
based on the current needs of households in Ireland.

http://www.threshold.ie/download/pdf/threshold_prebudget_submission_to_dept_of_finance_august_2013.pdf

ezra_pound

cookie1977 wrote: »

Yes I understand but I still dont see why you think Dublin will cool. There's currently requests for building to begin in Dublin (see previous linked article) and it's environs due to demand. Even Threshold in their recent budget submission asked for construction stimulus packages for Dublin.




http://www.threshold.ie/download/pdf/threshold_prebudget_submission_to_dept_of_finance_august_2013.pdf

It's reasonable to think that Dublin prices will cool to <10% annualised growth with btls coming onboard. This is a cooling. Are you expecting next 12 months to be 10%+ growth?

cookie1977

That's a lot more specific then your comment earlier

ezra_pound

No it's not. Do you under stand + - more less? Last 12 months price inflation is 10% therefore cooling down is anyhing less than current ie 10%. Not cooling down is + increase on 10% growth.


The only f difference is I have mentioned a figure, one figure, current growth I.e. 10%

cookie1977 wrote: »

That's a lot more specific then your comment earlier

It's the same substantive point.

ezra_pound

ezra_pound wrote: »

There is certainly going to be supply on the way.

However. Most parts of the country are already flooded with supply so I don't think it will make a huge difference. It could have a light cooling down effect on Dublin but I don't think any thing too severe.

How does this differ?

do you see price inflation increasing above 10% next year or do you see a light cooling down effect-nothing too severe?

cookie1977

ezra_pound wrote: »

How does this differ?

do you see price inflation increasing above 10% next year or do you see a light cooling down effect-nothing too severe?

It depends on what NAMA can do and how many repossessions in the city and its environs actually occur. As is right now if the status quo stays the same I see an upward pressure on Dublin property prices (houses) and a corresponding upward pressure on rents with no foreseeable cooling of any sort. IF things stay as is. Percentage wise? I couldn't even hazard a guess on that to be honest.

If NAMA acts to complete some of its property in the capital and we have a modest repossession rate (I still see no chance of this government allowing a high rate or "glut" of repossessions) then I think we'll see what you've alluded to. A slow down in the rate of increase in prices/rents but certainly not a reversal into more price drops as some would hope for. I think the bottom of the market, at least in Dublin, has been reached a short while back.

ezra_pound

cookie1977 wrote: »

It depends on what NAMA can do and how many repossessions in the city and its environs actually occur. As is right now if the status quo stays the same I see an upward pressure on Dublin property prices (houses) and a corresponding upward pressure on rents with no foreseeable cooling of any sort. IF things stay as is. Percentage wise? I couldn't even hazard a guess on that to be honest.

If NAMA acts to complete some of its property in the capital and we have a modest repossession rate (I still see no chance of this government allowing a high rate or "glut" of repossessions) then I think we'll see what you've alluded to. A slow down in the rate of increase in prices/rents but certainly not a reversal into more price drops as some would hope for. I think the bottom of the market, at least in Dublin, has been reached a short while back.

I agree with you.

Presuming that banks will slowly increase lending volume over next year or two I can see a slow recovery in the market and steady but slow price increases in Dublin.

cookie1977

ezra_pound wrote: »

I agree with you.

Presuming that banks will slowly increase lending volume over next year or two I can see a slow recovery in the market and steady but slow price increases in Dublin.

According to the IBF mortgage approvals for house purchases are up 15% on this time last year but down 5% on last month (I'm guessing seasonal):

http://www.ibf.ie/Libraries/Research_Statistics/IBF_Mortgage_Approvals_publication_Aug_2013.sflb.ashx

Villa05

ezra_pound wrote: »

There is certainly going to be supply on the way.

However. Most parts of the country are already flooded with supply so I don't think it will make a huge difference. It could have a light cooling down effect on Dublin but I don't think any thing too severe.

Yes there is a huge supply in most of the rest of the country, but voluntary sales/repossessions will have a big impact there.

The reason there is huge supply is because property is not at market clearing price. Repossessions and voluntary sales by there nature will have to be priced to market. Each sale picks off a buyer from a limited pool of buyers, causing significant and prolonged downward pressure on prices.

As prices continue to fall Dubs will be tempted to move out to the commuter belt as they were in the bubble as they can get a larger houses at cheaper prices.

Would agree with the cooling theory for Dublin, however most of the rest of the country have significant falls to come.

ezra_pound

Villa05 wrote: »

Yes there is a huge supply in most of the rest of the country, but voluntary sales/repossessions will have a big impact there.

The reason there is huge supply is because property is not at market clearing price. Repossessions and voluntary sales by there nature will have to be priced to market. Each sale picks off a buyer from a limited pool of buyers, causing significant and prolonged downward pressure on prices.

As prices continue to fall Dubs will be tempted to move out to the commuter belt as they were in the bubble as they can get a larger houses at cheaper prices.

Would agree with the cooling theory for Dublin, however most of the rest of the country have significant falls to come.

Yes. The rest of the country has further to fall. But how much of an impact will repos have?

The markets there are so oversupplied relative to demand that any incremental increase in supply is going to have a questionable effect on prices. It will however increase the duration of the downturn in rural areas.

I think you're overestimating significance of clearing prices. The biggest issue is lack of demand rather than an unwillingness to sell at the right price.

Villa05

I' m originally from a small village in rural ireland commutable to 2 cities in ireland (45 and 35 minutes). An executor sale of a fine house resulted in a sale price of 25k. 200k would not have bought it in 2006.

There is demand at every price point, the market just needs to find it

ezra_pound

Villa05 wrote: »

I' m originally from a small village in rural ireland commutable to 2 cities in ireland (45 and 35 minutes). An executor sale of a fine house resulted in a sale price of 25k. 200k would not have bought it in 2006.

There is demand at every price point, the market just needs to find it

Of course.

BUT

how much difference would increase of say 30% stock be on that market. There is clearly a total lack of demand. Presumably supply is also relatively massive compared to demand. 25k assumes a rent of about 120e monthly which I'm sure is well below what the property would earn if rented. It's clearly an amazing deal but more importantly it shows that demand is next to non existent.

If there was a 30% increase in stock in that area do you think that the clearing price would have lowered to say 20k?

I don't think that it would.

Perhaps I am wrong of course.

uberalles

Local supply and local demand determines rent prices and sale prices in those areas Ive found.

camphor

ezra_pound wrote: »

It's reasonable to think that Dublin prices will cool to <10% annualised growth with btls coming onboard. This is a cooling. Are you expecting next 12 months to be 10%+ growth?

The rising rents and prices are also going to lift a lot of BTls out of the danger zone. Rents are up and vacancy rates are down. That is going to remain the case and quite likely intensify. Trying to foreclose on BTls is quite often as difficult as on family homes. It is also the case in Dublin that most of the BTL post 2000 were apartments and this is where the the arrears problem lies. there will be no real surge in the numbers of houses coming on the Dublin market as a result of BTLs being repossessed.

ezra_pound

Villa05 wrote: »

Yes there is a huge supply in most of the rest of the country, but voluntary sales/repossessions will have a big impact there.

The reason there is huge supply is because property is not at market clearing price. Repossessions and voluntary sales by there nature will have to be priced to market. Each sale picks off a buyer from a limited pool of buyers, causing significant and prolonged downward pressure on prices.

As prices continue to fall Dubs will be tempted to move out to the commuter belt as they were in the bubble as they can get a larger houses at cheaper prices.

Would agree with the cooling theory for Dublin, however most of the rest of the country have significant falls to come.

Big difference between draw to commuter belt in boom and over next few years though.

A. In boom prices were rising everywhere. There was a property ladder that went up universally. So if you got in the ladder in the belt then you could retain relative purchasing power in the city if and when you moved there. However if com belt prices are clearly slower at increasing or negative then it's risky to move there if you really want a slice of the big smoke.

B. Much of the draw to the belt was an emotional fear of being locked out of a place on the ladder. In the current situation it's simply a rational price calculation.

C. In the boom it was assumed that jobs were omnipresent and that if you moved somewhere outside the city there'd be an option to work nearby if you decided. This has completely evaporated with jobs being increasingly centred in cities.

I would not overly emphasise an elasticity between demand for Dublin and com belt for foreseeable future.

camphor

ezra_pound wrote: »

Big difference between draw to commuter belt in boom and over next few years though.

A. In boom prices were rising everywhere. There was a property ladder that went up universally. So if you got in the ladder in the belt then you could retain relative purchasing power in the city if and when you moved there. However if com belt prices are clearly slower at increasing or negative then it's risky to move there if you really want a slice of the big smoke.

B. Much of the draw to the belt was an emotional fear of being locked out of a place on the ladder. In the current situation it's simply a rational price calculation.

C. In the boom it was assumed that jobs were omnipresent and that if you moved somewhere outside the city there'd be an option to work nearby if you decided. This has completely evaporated with jobs being increasingly centred in cities.

I would not overly emphasise an elasticity between demand for Dublin and com belt for foreseeable future.

The price of fuel has increased substantially since the boom years. Commuting is much more expensive than it was. Running two cars, each doing high mileage is a strain most people will not be able to afford.

ezra_pound

camphor wrote: »

The rising rents and prices are also going to lift a lot of BTls out of the danger zone. Rents are up and vacancy rates are down. That is going to remain the case and quite likely intensify. Trying to foreclose on BTls is quite often as difficult as on family homes. It is also the case in Dublin that most of the BTL post 2000 were apartments and this is where the the arrears problem lies. there will be no real surge in the numbers of houses coming on the Dublin market as a result of BTLs being repossessed.

Yes rents are up. Yes vacancies are down. However there will still be Dublin btl repos. I think only the banks and central bank have any idea how much. Btl repos will be function of ability to repay mortgage. Notwithstanding increase in rents there will still be many in trouble because people have lower pay or no pay. People got interest only mortgages and bought property at negative yields where rent would make a loss on mortgage etc. Etc.

Think you MAY be considerably overestimating btl concentration on apartments also.


Either way we are all in agreement that btl repos will not have a cataclysmic effect on Dublin prices.