Property Market 2019

Mad_maxx

Assetbacked wrote: »

So much of the demand for rental properties in Dublin is from young workers in finance and tech companies. Tech companies valuations are astronomical and surely unrealistic to the point that the whole thing is just a big bubble which will pop. Their growth has been huge but surely it cannot continue - Twitter only recently started making a profit and, while not in Ireland, Uber may never make a profit yet has a hyper valuation indicative of a herd mentality pumping money into huge tech company stocks.

If something happens with the economy, we'll probably lose a lot of the tech and finance workers who will go back to their own/migrate to the next country, empty high spec offices and institutional owners of large apartment blogs flogging them off individually. Housing crisis will no longer be a crisis without the government actually doing anything.

Facebook and Google valuations are not high

snotboogie

Assetbacked wrote: »

So much of the demand for rental properties in Dublin is from young workers in finance and tech companies. Tech companies valuations are astronomical and surely unrealistic to the point that the whole thing is just a big bubble which will pop. Their growth has been huge but surely it cannot continue - Twitter only recently started making a profit and, while not in Ireland, Uber may never make a profit yet has a hyper valuation indicative of a herd mentality pumping money into huge tech company stocks.

If something happens with the economy, we'll probably lose a lot of the tech and finance workers who will go back to their own/migrate to the next country, empty high spec offices and institutional owners of large apartment blogs flogging them off individually. Housing crisis will no longer be a crisis without the government actually doing anything.

Facebook and Google make astronomical profits. They are essentially printing money

JJJackal

snotboogie wrote: »

Facebook and Google make astronomical profits. They are essentially printing money

Facebook will be printing money #cryptocurrency

Assetbacked

snotboogie wrote: »

Facebook and Google make astronomical profits. They are essentially printing money

My point is that the share prices of big tech companies is motivated by a level of hype and herd mentality, when the man on the street talks of having shares in S&P500 companies, then you can guarantee this is not based on considerations of the profitability but an expectation that the only way is up. These are the people that will pull their money as soon as there is a hint of making losses.

beauf

Bob24 wrote: »

It is probably a futile discussion which is not overly relevant to the thread, but just to add my 2 cents: no camera will burn the date onto actual pictures by default, this has to be enabled - and someone who goes into menus to enable this obviously cares about the date and will likely make sure the camera time is correct.

So the date could be wrong but in this case I’d just follow this rule of thumb and say it has a higher probability of being correct: https://simple.wikipedia.org/wiki/Occam%27s_razor

Probably the place hasn't changed since 2010 anyway....:D

Danzy

KindOfIrish wrote: »

In my opinion there are two options beyond 2020:
1. significant economic recession
2. Hyperinflation
Western governments will not allow hyperinflation, so recession it is.
House prices will fall as soon soon as unemployment rate goes up.

A recession is likely in next year or two, there has been a global boom for near 10 years.

Deflation is more likely that normal inflation which is more likely than hyperinflation.

Keeping Inflation above 1% has taken a Herculean effor, especially in the EU.

Colonel Claptrap

Assetbacked wrote: »

My point is that the share prices of big tech companies is motivated by a level of hype and herd mentality, when the man on the street talks of having shares in S&P500 companies, then you can guarantee this is not based on considerations of the profitability but an expectation that the only way is up. These are the people that will pull their money as soon as there is a hint of making losses.

Most people's pension holds the S&P500. Its rarely a conscious decision to choose it as their investment of choice.

It's cumbersome and difficult to pull your money from an investment within your pension. Most people wouldn't know where to start.

You certainly couldn't dump your shares in an afternoon of plummeting prices.

Bob24

beauf wrote: »

Probably the place hasn't changed since 2010 anyway....:D

If it hasn’t gotten worse, that’s already a good thing :-)

Compak

Assetbacked wrote: »

My point is that the share prices of big tech companies is motivated by a level of hype and herd mentality, when the man on the street talks of having shares in S&P500 companies, then you can guarantee this is not based on considerations of the profitability but an expectation that the only way is up. These are the people that will pull their money as soon as there is a hint of making losses.

Anyone worrying about their SP500 position as it hits another record high today, while the Irish banks hit another 5 year low today, need to get their financial concerns reorganised, imo.
Investing in the US is the only solace we have in the mire Europe is in, and the catastophe Ireland will face if Brexit is a hard exit.

Edit: to make relevant to thread, imo, residential property is the safe investment here as it's purposeful and you don't buy to check your value statement end of week but to actually live there, or rent our in a booming yield market.
And anyone on one one hand saying not to buy Irish or property but then on the other is happily paying into a pension that is focused on Irish or European investments that they basically can't touch or utilise. They are the ones in for the shock should a downturn hit.

voluntary

Danzy wrote: »

A recession is likely in next year or two, there has been a global boom for near 10 years.

Deflation is more likely that normal inflation which is more likely than hyperinflation.

Keeping Inflation above 1% has taken a Herculean effor, especially in the EU.

A downturn is possible, but is not given. It's possible the central banks and governments will maneuver the world's economy through various obstacles with very little damage. The slowdown, which world have been experiencing for the last ~12 months or so, may as well work as a catalyst for a further rally. A history would call these times 'a consolidation period'.

There are many reasons for the slow inflation. One of them is the rapid technological progress: automation and robotics. We can basically produce more and more at the same cost, because we remove the most expensive (human) factor from the process. Therefore the inflation can no longer be a representative of consumer demand.

voluntary

snotboogie wrote: »

Facebook and Google make astronomical profits. They are essentially printing money

I can tell you that until recently Google didn't have to worry about their bottom line at all, just because they were rapidly increasing profits. They were basically burning money. They have changed recently. They aren't growing that fast any more and aren't that easy on burning money too.

Facebook? Look what happened to their share price on a report of weakening new accounts creation numbers! There was a massive drop and not even a single mention on profits.
This company is valued purely on hopes, speculation and believes.

MNCs are already feeling a pressure on increasing wages. 3-5% year over year in developed parts of the world, multiply of this in undeveloped parts like China or India. The pain will be felt. Very few of them will keep increasing revenues in such a pace to cover for the increasing labor costs.

adriaaaan

JJJackal wrote: »

There is a risk to waiting. If you get a chance look at the cost of buying a 300,000 euro house in 2006 (lets say, probably not peak price) on a tracker versus buying the same house on 3 or 3.5% in 2012/2013. Lets say you had to pay rent between 2006 and 2013 and you got to buy the house for 180,000 (probably not the cheapest you could buy it for, but we didnt go for peak price either). You would think looking at this that there would be a huge difference eg 120,000.

However, first you have rent for 6-7 years, if your renting a 300,000 house for the 6-7 years mentioned it would probably cost on average 10,000 per year - thus 60,000 to 70,000. You would be lucky not to have had to move in that time too (additional cost). And all the problems in the house you cant fix as you are not the owner.

You could probably buy the 300,000 with limited deposit. Borrowing 300,000 over 30 years at 0.95% interest would currently cost you 958.04 euro per week. Total cost 344895.82 (this is very simplistic as it assumes interest rates stays the same, they wont)

Now when you buy the house for 180,000 you will already have spent 60,000 on rent plus 18,000 deposit. This means you need to borrow 162,000. Borrowing 162,000 over 30 years at 3.00% interest would currently cost 683 per month. Total cost is 245,879.47 (plus your still paying it off 6 years later). Total cost is 18,000 plus 60,000 plus 245,879.47= approx 323,000.

The advantage of the first situation is you own your own home for 6 years longer and have the mortgage paid down 6 years earlier. You could of course increase your payments in the second situation to match situation A and thus pay it down earlier.

But in 2012 how many people got mortgages and on what types of properties and what was job security like.

A complex situation - if one was to live in Dublin and wait for property prices to fall 10% eg 400,000 to 360,000 there is a reasonable chance you will have paid one year (24,000) or two year (48,000) rent in that time.

Best post on this thread ever. Well done

snotboogie

voluntary wrote: »

I can tell you that until recently Google didn't have to worry about their bottom line at all, just because they were rapidly increasing profits. They were basically burning money. They have changed recently. They aren't growing that fast any more and aren't that easy on burning money too.

Facebook? Look what happened to their share price on a report of weakening new accounts creation numbers! There was a massive drop and not even a single mention on profits.
This company is valued purely on hopes, speculation and believes.

MNCs are already feeling a pressure on increasing wages. 3-5% year over year in developed parts of the world, multiply of this in undeveloped parts like China or India. The pain will be felt. Very few of them will keep increasing revenues in such a pace to cover for the increasing labor costs.

Both companies are, like I said, printing money with advertising. Facebook suffered one of the biggest scandals in corporate history and they barely flinched. Neither company has any meaningful presence in China and neither company employs a meaningful number of staff in India.

Wildly Boaring

adriaaaan wrote: »

Best post on this thread ever. Well done

Except "958 euro a week"
But I'm really nitpicking

4ensic15

JJJackal wrote: »

There is a risk to waiting.

A complex situation - if one was to live in Dublin and wait for property prices to fall 10% eg 400,000 to 360,000 there is a reasonable chance you will have paid one year (24,000) or two year (48,000) rent in that time.

The old "rent is dead money" line. It is not 2006.

duffman13

4ensic15 wrote: »

The old "rent is dead money" line. It is not 2006.

A detailed post, well written with good points raised. Hardly saying rent is dead money either

4ensic15

duffman13 wrote: »

A detailed post, well written with good points raised. Hardly saying rent is dead money either

That is exactly what it is saying.

Wexforllion

4ensic15 wrote: »

That is exactly what it is saying.

At least it's saying something. Yours on the other hand ..

Twenty Grand

Rent is not dead money.

I pay 500 a month for a room.

I can walk away at any time.
All the furniture was here when I arrived and I don't care if it gets worn and wrecked.
I do no upkeep, just keep the place clean.
The landlord fixes anything goes wrong. Got a new boiler, the underfloor heating sorted, the gutters cleaned a new tumble dryer and a new mattress last year.
I don't pay property tax, mortgage protection, life assurance or any other requirements.
I don't have to maintain good relations with my neighbours.

Sheeps

Twenty Grand wrote: »

Rent is not dead money.

I pay 500 a month for a room.

I can walk away at any time.
All the furniture was here when I arrived and I don't care if it gets worn and wrecked.
I do no upkeep, just keep the place clean.
The landlord fixes anything goes wrong. Got a new boiler, the underfloor heating sorted, the gutters cleaned a new tumble dryer and a new mattress last year.
I don't pay property tax, mortgage protection, life assurance or any other requirements.
I don't have to maintain good relations with my neighbours.

You can't walk away at any time with out paying significantly more than what you pay now. If you want to start a family, you can't with out living a severly risk adverse life. I'm guessing you're young, and that's who renting suits, but it wont suit once your circumstances change even slightly.

Twenty Grand

Sheeps wrote: »

You can't walk away at any time with out paying significantly more than what you pay now. If you want to start a family, you can't with out living a severly risk adverse life. I'm guessing you're young, and that's who renting suits, but it wont suit once your circumstances change even slightly.

I can walk away whenever to wherever. No ties.
I can travel, I can work abroad, worry free.
I'm in my 30s with no plans to start a family.

Your points don't support the argument that renting is dead money.

Sheeps

Twenty Grand wrote: »

I can walk away whenever to wherever. No ties.
I can travel, I can work abroad, worry free.
I'm in my 30s with no plans to start a family.

Your points don't support the argument that renting is dead money.

I was a renter for 10 years, now I live at home with the aul pair following an eviction. The potential to walk away is just that. It's merely potential, and realistically in this market you wont walk away because it makes zero financial sense to walk away from what you're paying. You know what it's like out there. Playinig this card is insincere.

As someone who's other half is a non EEA citizen, emmigration is a very real part of our future plans, and we've found the best way of doing this is with the financial security of owning a home that we can lease long term. This will benefit us because the earning from leasing that home will support the lease where we plan to live (with a bit of spending money on the side). So, as a homeower you can certainly emmigrate.

Again, once you plan on starting a family, stability becomes more important, but not everyone is in that position. I'll put it this way. In my 10 years renting I paid 144k to a landlord. I'd have the majority of that money back had I been paying a mortgage through those years. Renting isn't dead money but it's horribly shite value, and the benefits you gain from it are also available to you through homeownership.

Ultimately whether you feel spending money on something and whether or not you are obtaining value is completely subjective, so if you feel this way then fair play. Really my point is that I feel the same way about the points you've raised and how they apply to homeownership.

adriaaaan

4ensic15 wrote: »

The old "rent is dead money" line. It is not 2006.

Many on this thread don't understand what opportunity cost is. Or compound interest rates for that matter. It's posts like that one that can shed light for the simpletons

Interested Observer

snotboogie wrote: »

Both companies are, like I said, printing money with advertising. Facebook suffered one of the biggest scandals in corporate history and they barely flinched. Neither company has any meaningful presence in China and neither company employs a meaningful number of staff in India.

Microsoft are bigger the the pair of them at the moment (in terms of market cap) too and have a significant presence in Ireland between MS itself and LinkedIn.

coolshannagh28

JJJackal wrote: »

Facebook will be printing money #cryptocurrency

This is a smart move by facebook , the dollar is vulnerable and if there is any sort of financial calamity in the US a cryptocurrency backed by a megacompany could gain serious traction .

Blueshoe

coolshannagh28 wrote: »

This is a smart move by facebook , the dollar is vulnerable and if there is any sort of financial calamity in the US a cryptocurrency backed by a megacompany could gain serious traction .

BTC just hit 10k again

Graham

What impact do you expect bitcoin prices to have on the Irish property market this year?

Blueshoe

Graham wrote: »

What impact do you expect bitcoin prices to have on the Irish property market this year?

Could be the making or breaking. More than likely though it means nothing.
I can see where this is going

JJJackal

Twenty Grand wrote: »

I can walk away whenever to wherever. No ties.
I can travel, I can work abroad, worry free.
I'm in my 30s with no plans to start a family.

Your points don't support the argument that renting is dead money.

You cant walk away at anytime without a cost - namely your deposit and months rent in advance

If you are in late 30s you can no longer get a 30 year mortgage if u want to buy a house

Your lucky ur land lord bought u a new mattress, I bet he bought you a great mattress

Edit: realistically you do have to maintain civil relations with your neighbours or you will be evicted

Renting at 500 may not be dead money as its very low (depending on where you live) - renting certainly allows flexibility

However you cant move your family (when and if you have/want one) in, you cant improve your room, you cant really do anything with your rented house.

The dead money concept is not correct eg if you wanted to live in Cork for 1 year and move on and not come back it would not make sense to buy; however when the rent is paid its gone and its not coming back and you have nothing to show for it long term

JJJackal

Sheeps wrote: »

I was a renter for 10 years, now I live at home with the aul pair following an eviction. The potential to walk away is just that. It's merely potential, and realistically in this market you wont walk away because it makes zero financial sense to walk away from what you're paying. You know what it's like out there. Playinig this card is insincere.

As someone who's other half is a non EEA citizen, emmigration is a very real part of our future plans, and we've found the best way of doing this is with the financial security of owning a home that we can lease long term. This will benefit us because the earning from leasing that home will support the lease where we plan to live (with a bit of spending money on the side). So, as a homeower you can certainly emmigrate.

Again, once you plan on starting a family, stability becomes more important, but not everyone is in that position. I'll put it this way. In my 10 years renting I paid 144k to a landlord. I'd have the majority of that money back had I been paying a mortgage through those years. Renting isn't dead money but it's horribly shite value, and the benefits you gain from it are also available to you through homeownership.

Ultimately whether you feel spending money on something and whether or not you are obtaining value is completely subjective, so if you feel this way then fair play. Really my point is that I feel the same way about the points you've raised and how they apply to homeownership.

In todays market (interest rate 2.5 to 3%) 144k in rent over 10 years is about a 300k mortgage (10 years paid down