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

gurramok

D3PO wrote: »

Love how you decimated a large part of your argument in one sentence. 40% of people leaving the country are immigrants. So for your argument they were never likely to buy and thefore their emigration from the county has no impact at all on the buying pool. :cool:

What? You're saying then 60% are Irish nationals, that reinforcing my argument. Thats a large pool of buyers who are likely to be young out of that buying pool.

Your 2nd sentence makes no sense. Immigrants in general tend not to buy, they rent.

StillWaters wrote: »

If you are one of them you surely know many others in your peer group in this situation.
If you want hard data CSO is your friend.

No I do not know many others in my peer situation, they had already bought in the "boom" and are in negative equity.

Show us that definitive source that there is a large pool of buyers in their 20s\30s waiting to buy, if you can't, its just conjecture.

D3PO

gurramok wrote: »

What? You're saying then 60% are Irish nationals, that reinforcing my argument. Thats a large pool of buyers who are likely to be young out of that buying pool.

Your 2nd sentence makes no sense. Immigrants in general tend not to buy, they rent.



No I do not know many others in my peer situation, they had already bought in the "boom" and are in negative equity.

Show us that definitive source that there is a large pool of buyers in their 20s\30s waiting to buy, if you can't, its just conjecture.

Everything is conjecture. Nobody has a crystal ball FFS why bother discussing this if your going to be so obtuse ? :rolleyes:

Ive outlined very rational reasoning behind what I think will happen, you on the otherhand are just trying to pick holes in other peoples argumes rather than making pertinent points yourself.

Yes there are a portion of twenty and thirty somethings leaving Ireland, these people do not decimate that pool of twenty and thirty somethings needing and wanting accomadation.

I dont need facts and figures to prove that rising rents supports that statement. Irish people rightly or wrongly have a tendancy to want to buy property so its fair to say that this pool that are renting like you and Lima and many others, for the most part would like to buy.

Im applying a logicial thought process, nobody can put facts and figures in black and white and say here theres proof X will happen.

You clearly believe Im wrong so perhaps you would outline exactly why and what you see happening then rather than try poorly to pick holes in others points.

gurramok

D3PO wrote: »

Everything is conjecture. Nobody has a crystal ball FFS why bother discussing this if your going to be so obtuse ? :rolleyes:

Ive outlined very rational reasoning behind what I think will happen, you on the otherhand are just trying to pick holes in other peoples argumes rather than making pertinent points yourself.

Yes there are a portion of twenty and thirty somethings leaving Ireland, these people do not decimate that pool of twenty and thirty somethings needing and wanting accomadation.

I dont need facts and figures to prove that rising rents supports that statement. Irish people rightly or wrongly have a tendancy to want to buy property so its fair to say that this pool that are renting like you and Lima and many others, for the most part would like to buy.

Im applying a logicial thought process, nobody can put facts and figures in black and white and say here theres proof X will happen.

You clearly believe Im wrong so perhaps you would outline exactly why and what you see happening then rather than try poorly to pick holes in others points.

Demographics were quoted when in fact demographics are against the adult buying numbers involved. Irish nationals leaving the country for work to be replaced(if numbers allow) by immigrants who rent.

We're talking about the buyers pool in their 20's\30s, not renters. Renters can continue to rent for decades if they want.

The poster cannot supply data to support that there is a large pool of these buyers existing, the poster cannot even supply the numbers involved. Hence we consult the CSO who have the numbers of emigrants and immigrants but not the intentions of those adults if they want to buy or not.

To sum up, the poster is basing his/her opinion that there is a large amount of buyers in their 20s\30s on conjecture rather than hard evidence.

D3PO

gurramok wrote: »

Demographics were quoted when in fact demographics are against the adult buying numbers involved. Irish nationals leaving the country for work to be replaced(if numbers allow) by immigrants who rent.

We're talking about the buyers pool in their 20's\30s, not renters. Renters can continue to rent for decades if they want.

The poster cannot supply data to support that there is a large pool of these buyers existing, the poster cannot even supply the numbers involved. Hence we consult the CSO who have the numbers of emigrants and immigrants but not the intentions of those adults if they want to buy or not.

To sum up, the poster is basing his/her opinion that there is a large amount of buyers in their 20s\30s on conjecture rather than hard evidence.

Like I said nobody has a crystal ball so yes everyting is conjecture in regards to what the impact of reposessions on the market will be. Do you not get that ??? Its a fairly simple premise to get hold of.

They are not basing their opinion purely on conjecture, they are appling a reasonable thought process behind it based on census data, and the historical trend in Ireland for Irish people to buy rather than rent.

Its not scientific but to dismiss its credibility without an actually argument except for that you cant prove it with numbers is ridiculous to be honest. If you are genuinely like Lima in the market for a house in an urban area and have been tracking things you would know that decent houses in decent areas are seeing large numbers view them.

Sure its anecdotal that this shows that demand is high for decent housing in decent areas but it adds to the weight of the argument.

gaius c

StillWaters wrote: »

Demographics would indicate that there is a large cohort of people in their late 20s/30s who have not bought and have continued to rent (hence the pressure on rental prices). Many of these are finance approved or could access mortgage finance.

There's been a 50% increase in the number of households renting and that is probably down to the late 20's/early 30's FTB's "locked" out of the market at present.

If repossessions centre on underwater BTL's, I don't know if those wannabe FTB's will be queuing up to purchase them because they'll want to avoid the mistakes of their peers during the septic tiger years and will probably turn their noses up at apartments.

What I would expect to happen is that actual investors will buy these properties and let them out as cheap, good value accommodation to the early 20's/singles who are currently housesharing in what should really be family homes and thus competing with families for limited housing stock.

cookie1977

gaius c wrote: »

There's been a 50% increase in the number of households renting and that is probably down to the late 20's/early 30's FTB's "locked" out of the market at present.

If repossessions centre on underwater BTL's, I don't know if those wannabe FTB's will be queuing up to purchase them because they'll want to avoid the mistakes of their peers during the septic tiger years and will probably turn their noses up at apartments.

What I would expect to happen is that actual investors will buy these properties and let them out as cheap, good value accommodation to the early 20's/singles who are currently housesharing in what should really be family homes and thus competing with families for limited housing stock.

Sorry but "locked out" or patiently waiting to see what happens? BTL's might be heavily made up fo Apts but they're not all only apts.

D3PO

cookie1977 wrote: »

Sorry but "locked out" or patiently waiting to see what happens? BTL's might be heavily made up fo Apts but they're not all only apts.

Doesnt matter if they are locked out or patiently waiting anyway IMO. They as a collective exist. Which has a determining factor on the future of the housing market in terms of pricing.

cookie1977

D3PO wrote: »

Doesnt matter if they are locked out or patiently waiting anyway IMO. They as a collective exist. Which has a determining factor on the future of the housing market in terms of pricing.

I think that the OP's point was that the market is stopping people making decisions when in reality it's primarily themselves deciding to make or not to make a buy.

gurramok

D3PO wrote: »

Like I said nobody has a crystal ball so yes everyting is conjecture in regards to what the impact of reposessions on the market will be. Do you not get that ??? Its a fairly simple premise to get hold of.

They are not basing their opinion purely on conjecture, they are appling a reasonable thought process behind it based on census data, and the historical trend in Ireland for Irish people to buy rather than rent.

Its not scientific but to dismiss its credibility without an actually argument except for that you cant prove it with numbers is ridiculous to be honest. If you are genuinely like Lima in the market for a house in an urban area and have been tracking things you would know that decent houses in decent areas are seeing large numbers view them.

Sure its anecdotal that this shows that demand is high for decent housing in decent areas but it adds to the weight of the argument.

Why are you moving the goalposts, the issue I have is with the opinion that there is a large pool of buyer sin their 20s\30s waiting to buy, not to do with the impact of repossessions on the market.

Census data is against your argument. The Irish adult pool available to buy has been reduced in this recession by actual numbers and by those at work in permanent employment, yes they may either emigrate or rent locally.

As nearly 50% of all buyers last year were cash buyers, the core criteria for buyers who have not hundreds of thousands of euro already in the bank to obtain mortgage finance is:
-In Permanent employment
-Debt free
-Proven savings record

They are basing their assumption that there is a large pool of buyers in their 20s\30s who pass the above criteria and want to buy.

D3PO

gurramok wrote: »

Why are you moving the goalposts, the issue I have is with the opinion that there is a large pool of buyer sin their 20s\30s waiting to buy, not to do with the impact of repossessions on the market.

Census data is against your argument. The Irish adult pool available to buy has been reduced in this recession by actual numbers and by those at work in permanent employment, yes they may either emigrate or rent locally.

As nearly 50% of all buyers last year were cash buyers, the core criteria for buyers who have not hundreds of thousands of euro already in the bank to obtain mortgage finance is:
-In Permanent employment
-Debt free
-Proven savings record

They are basing their assumption that there is a large pool of buyers in their 20s\30s who pass the above criteria and want to buy.

Census data is not against my argument. Go check the latest census data for those between 24 - 35 that are Irish and renting.

Apply a level of logical thinking based on historical trends in Irish house ownership rates. Then look at potential reposession numbers based on arrears.

Consider current and projected housing stock changes in terms of new builds.

Im not here to spoon feed you im outlining relevent details that are going to have an ability to impact housing demand and as a result house pricing even in a scenario of large scale reposessions coming to the market.

I take your point about meeting bank criteria to get mortgages, but it actually will have a smaller impact on house prices then you think. Astute investors will pick up properties at the right price if the yield is right.

If that prevents some portion of that 20 - 30 something cohort from buying they will still have to live somewhere, so they will continue to rent. Unless housing stock levels change that will drive upward pressure on rents (as we have now) which allows house prices to rise or at lest certainly stop them from dropping another 25% as is suggested repos will do by the title of this thread.

Of course this will be temperd by changes in renting in terms of property tax, PRSI liabilities etc. I think these things will certainly work to dampen investors enthuiasm to outbid each other over and over to get property but it wont have a completely detrimental impact on house prices.

Nobody knows for sure but the indicators are that reposessions wont push prices to a significantly lower floor. Cleary thats location dependent but Im taking in the main urban centres.

gurramok

D3PO wrote: »

Census data is not against my argument. Go check the latest census data for those between 24 - 35 that are Irish and renting.

Show us, I cannot find it for that age group. And show us that this "large portion" in this particular age group intend to buy.

D3PO wrote: »

Apply a level of logical thinking based on historical trends in Irish house ownership rates. Then look at potential reposession numbers based on arrears.

Consider current and projected housing stock changes in terms of new builds.

Im not here to spoon feed you im outlining relevent details that are going to have an ability to impact housing demand and as a result house pricing even in a scenario of large scale reposessions coming to the market.

I take your point about meeting bank criteria to get mortgages, but it actually will have a smaller impact on house prices then you think. Astute investors will pick up properties at the right price if the yield is right.

If that prevents some portion of that 20 - 30 something cohort from buying they will still have to live somewhere, so they will continue to rent. Unless housing stock levels change that will drive upward pressure on rents (as we have now) which allows house prices to rise or at lest certainly stop them from dropping another 25% as is suggested repos will do by the title of this thread.

How does upward pressure on rents result in upward pressure on house prices?

You're forgetting that the demand has to afford the prices in the first place. That has to be a level balance between affordability and price. Negative factors outlined below and in the previous post are not in your favour.

D3PO wrote: »

Of course this will be temperd by changes in renting in terms of property tax, PRSI liabilities etc. I think these things will certainly work to dampen investors enthuiasm to outbid each other over and over to get property but it wont have a completely detrimental impact on house prices.

Nobody knows for sure but the indicators are that reposessions wont push prices to a significantly lower floor. Cleary thats location dependent but Im taking in the main urban centres.

D3PO

gurramok wrote: »

Show us, I cannot find it for that age group. And show us that this "large portion" in this particular age group intend to buy.



How does upward pressure on rents result in upward pressure on house prices?

You're forgetting that the demand has to afford the prices in the first place. That has to be a level balance between affordability and price. Negative factors outlined below and in the previous post are not in your favour.

Are you incapable of understanding somebody elses point or do you just not bother reading. I could be as equally obtuse and say show me that this "large portion" dont intent to buy.

You cant nor can I, however like ive said THREE times already. Historical trends within Ireland lend themself to my train of thought that these people would prefer to buy as opposed to your thought process that they do not intend to.

Dont make it out like Im saying house prices will rise. My point is that I do not believe Reposessions will make house prices fall significantly. That is the topic of this thread.

You have yet to actually make any points on here. Again I ask you to outline why you believe reposessions will make property prices fall significantly. Im happy to debate differing thought processes but its pointless going back and forth with you if you have nothing constructive to contribute.

StillWaters

gurramok wrote: »

Show us, I cannot find it for that age group. And show us that this "large portion" in this particular age group intend to buy.

The census data will only show you the bubble in that age group, and the fact they are renting. If you believe the Irish psyche has morphed, and people particularly in family formation stage are happy to rent forever, I'm not going to argue with you.
It is not disputed that a sustainable replacement rate for housing of between 18-25K is needed, and we do not have near that, less than 10k in fact.

http://www.cso.ie/en/census/census2011reports/census2011profile4theroofoverourheads-housinginireland/
http://www.cso.ie/en/statistics/housingandhouseholds/
http://www.cso.ie/en/releasesandpublications/population/

gurramok

StillWaters wrote: »

The census data will only show you the bubble in that age group, and the fact they are renting. If you believe the Irish psyche has morphed, and people particularly in family formation stage are happy to rent forever, I'm not going to argue with you.
It is not disputed that a sustainable replacement rate for housing of between 18-25K is needed, and we do not have near that, less than 10k in fact.

http://www.cso.ie/en/census/census2011reports/census2011profile4theroofoverourheads-housinginireland/
http://www.cso.ie/en/statistics/housingandhouseholds/
http://www.cso.ie/en/releasesandpublications/population/

You're first two links show nothing about age and renting. The 3rd link just gives a figure of 280,000 persons renting from a private landlord(which probably includes a few students), nothing about their intentions or preference to buy.

To add, I do not recall an entry on the CSO form about my intentions to either to rent or buy. Also, about 90,000 of that figure are on Rent Supplement from the govt in the form of OPFP so that brings down the figure to 190,000. subtract those who are on other forms of welfare(like dole) while renting from a private landlord, the number shrinks further. And you can subtract the large amount of immigrants who do not buy so yes that buyers pool is dwindling.

noodler

Buy-to-Lets have to be acted on fast.

If there is no reasonable rent coming in and/if the landlord is no longer cooperating then just take it.


PPDs are obviously more difficult.

The extreme example of someone living in Balls bridge in a 600,000 house is used alot for illustration and for a very blunt example on a situation where the mortgageholder can't really expect to stay in the house if they can't afford the mortgage. There is value in the property and that has to be realised.



House only worth 150,000 but mortgage worth 200,000+. You could throw them out and then chase them for the 50,000 loss but there'd likely be a write down on this once the borrower goes through the new insolvency service. The person then needs to be rehoused. This example would seem to encourage as much forbearance by the bank as possible.



The situation becomes far more murky when dealing with margin cases.

gurramok

D3PO wrote: »

Are you incapable of understanding somebody elses point or do you just not bother reading. I could be as equally obtuse and say show me that this "large portion" dont intent to buy.

You cant nor can I, however like ive said THREE times already. Historical trends within Ireland lend themself to my train of thought that these people would prefer to buy as opposed to your thought process that they do not intend to.

Dont make it out like Im saying house prices will rise. My point is that I do not believe Reposessions will make house prices fall significantly. That is the topic of this thread.

You have yet to actually make any points on here. Again I ask you to outline why you believe reposessions will make property prices fall significantly. Im happy to debate differing thought processes but its pointless going back and forth with you if you have nothing constructive to contribute.

As a bull, you are basing your assumptions on "historical trends" rather than hard statistics.
On repo's, it totally depends on whether the banks will repossess in large numbers. They have held back so far in an attempt to stabilise prices.

Galego

Repos will drive down prices and whoever do not understand this then do not understand simple economic theories. That banks and/or government are able to contain this in some way then that is a total different matter. Even if the stock is not in Dublin, even if they are s**t holes, they will still affect prices anywhere in the country. Ireland is a small country, travel distances are not that big.

There are "expects'" reports out there outlining the obvious. The uncertainty in the Irish economy is HUGE. I hear news from back home which say that TV news are talking about the Irish 12% corporate tax and complaining about it. Meanwhile Cypruss is likely to raise its corporate tax for bail out. I think all these economic uncertainties about the Irish economy could eventually take a massive hit to house prices more than a pool of potential buyers waiting in the darkness. I am one of them but if my job is not secured in this country then I am out!

Villa05

smccarrick wrote: »

In most cases 'a' payment could have been made. Perhaps not a full payment, but 'a' payment nonetheless. People see that there has been no reprecussions for other people- and in some cases are made feel fools for continuing to pay- and indeed, why would you pay- when your next door neighbour has a significantly higher standard of living than you do, on the back of not paying their mortgage.

Its debatable how many of the strategic defaulters could pay their mortgages in part, or full- and is something we may never know. One thing we do know is, regardless, a token payment could be made by most of these people- and if their circumstances are as bad as many will lead you to believe, they probably would qualify for Mortgage Interest Supplement- which would cover the interest component of the loan?.........

A payment less than the interest accruing is a waste of time, the debt is still increasing, even interest only is a waste of time, during the boom/con period many borrowed the maximum amount over the maximum term, leaving no room for future flexibility. Add in that many have had their incomes cut and increased taxes. They may also have families now and have increased expenditure.
I suspect Mortgage interest relief facility would be used up prior to falling into arrears of 1 year or more and would be open to unemployed persons only - I think.

Villa05

StillWaters wrote: »

That would only be a small proportion of those figures, nothing near 50,000

Can you provide me figures for the number of people in arrears for 1 or 2 years in the UK. I went looking but could not find any. Could it be that they do not measure this because it is an automatic repossession/unsustainable category

cookie1977

Villa05 wrote: »

A payment less than the interest accruing is a waste of time, the debt is still increasing, even interest only is a waste of time, during the boom/con period many borrowed the maximum amount over the maximum term, leaving no room for future flexibility. Add in that many have had their incomes cut and increased taxes. They may also have families now and have increased expenditure.
I suspect Mortgage interest relief facility would be used up prior to falling into arrears of 1 year or more and would be open to unemployed persons only - I think.

Hence why a debt for equity swap could work for these people though

Villa05

D3PO wrote: »

If you reread my reply and the quoted post I was replying to it was I specifically regarding BTL's. Nobody is ignoring this issue, they are taking a realistic look at whats likely to happen.

It is easier for banks to gain posession of a BTL than a PPR, as a result underwater BTL's will be repossesed first. Thats just logic, so in terms of looking at house price impact from repos that should be the first port of call as to how do people see that impacting the market.

Ive outlined my thought process as to why this will have very little to no impact in that regard.

That process alone will take a significant amount of time to do for those than dont surrender the property. We have a finite number of courts and court hours to hear any such reposession hearings meaning weather we like it or not PPR repos are very much likey to take a number of years to actually start to come on stream.

In the mean time you have a large pool of young professionals waiting and sitting on their hands to jump at these bargains they expect to crop up when these large firesales they believe will occur.

This pool of people waiting grows and grows, and unless the housing stock does too which I do not believe it will do certainly in sufficent numbers, then demand outstrips supply. Demand outstripping supply will absolutly postively mean that rather than downward pressure on house prices you will see upward pressure on them.

Im not saying we will see huge gains but these factors will negate house prices falling off a cliff. I dont think that thought process is delusional, I think its well thought out and rational.

Im not saying people should buy now, im not saying prices wont drop a little more, but I am saying that people who think prices are going to nose dive further specifically in many urban areas (which is where the majority of buyers are) are likely to be sorely dissapointed.

Many of those young professionals were sucked in by 100/110% mortgages from 2006. Those that escaped/too young have to build up savings, credit history, careers to qualify for a mortgage
25% youth unemployment a rate that excludes those in education, job bridge.
Mass emigration figures not seen since the famine.
Much lower wages as their parents have pulled up the ladder to protect themselves.
Mortgage interest rate rise are inevitable as the security for the loan is not certain
Writing off mortgage loans affects the banks’ balance sheet meaning they have less to lend.
Banks over exposed to property meaning lending needs to be diversified into other asset classes reducing the amount available for mortgage lending

Ilik Urgee

A friend of mine had his house sale agreed start of this week in a relatively sought after estate in Cork.
Bank released a semi-detached similar to his for sale midweek in the same estate , both original bidders have pulled out of his property. There was a difference of 25k in the asking. About 10% reduction on my buddy's asking

Villa05

lima wrote: »

You have to aslo consider the large amount of Irish in Australia earning serious $$$ and saving it who will eventually return.

Are you serious! Come back for what; to pay of the massive growing debt this country is accumulating, their children will be impressed

Villa05

The drop in employment has also been heavily concentrated in the under 35’s. Between the third quarters of 2010 and 2011, numbers at work in Ireland fell by 2.5%. Over the same period the number of under 35’s in jobs declined by 7.6% whereas the number of over 35’s in work actually increased, albeit marginally, by 0.8%. This reinforces the strongly divergent trend evident since the downturn began. While overall employment fell by 16% since late 2007, this has been almost entirely due to a 31.6% fall in employment among under 35’s. Over this period numbers at work aged over 35 fell by just 3%. Clearly, the very skewed age profile of jobs losses reinforces the weakness in activity in consumer spending and housing within the Irish economy as the under 35’s are the key spending age group. These trends also dovetail with the pick-up in outward migration.

Source KBC Unemployment report

In the years leading up to the bust, there were about 325,000 gainfully employed under-25s in the State. At the last count there were just 130,000, meaning that for every 10 jobs that existed at the beginning of 2008, six have disappeared. Put another way, in 2012 only a quarter of the 15-24 age group is working, down from half before the crash.

http://www.irishtimes.com/news/youth-unemployment-the-remedies-1.536292

lima

Villa05 wrote: »

Are you serious! Come back for what; to pay of the massive growing debt this country is accumulating, their children will be impressed

Yes I am serious. Come back to their families, the familiarities, whatever reason they want to come back. Who are you to question why someone should come back to their home country.

Galego

Ilik Urgee wrote: »

A friend of mine had his house sale agreed start of this week in a relatively sought after estate in Cork.
Bank released a semi-detached similar to his for sale midweek in the same estate , both original bidders have pulled out of his property. There was a difference of 25k in the asking. About 10% reduction on my buddy's asking

But how could that really happen? According to some people on this forum repossessions will not affect current prices.

username123

lima wrote: »

Yes I am serious. Come back to their families, the familiarities, whatever reason they want to come back. Who are you to question why someone should come back to their home country.

In my experience, anyone I knew who left for Australia and managed to get residency, is never coming back. Ditto Canada, the USA. Coming back is a dream they talk about until they meet someone, get settled etc... Why would they come back? This country is going further down the toilet everyday.

handlemaster

Ilik Urgee wrote: »

A friend of mine had his house sale agreed start of this week in a relatively sought after estate in Cork.
Bank released a semi-detached similar to his for sale midweek in the same estate , both original bidders have pulled out of his property. There was a difference of 25k in the asking. About 10% reduction on my buddy's asking

thats the free market.

Ilik Urgee

handlemaster wrote: »

thats the free market.

It's not the free market though in this case,it's been very heavily manipulated.

carpejugulum

cookie1977 wrote: »

You've got people even now (pensioners in particular) struggling to keep going

The elderly are the richest, most secure and least hit group.