Property Market 2020

OwlsZat

Quick analysis on myhome.ie shows a 4.5% drop in asking prices since Friday. Some people will hold through any price downturn, clearly others will not.

Reversal

OwlsZat wrote: »

Quick analysis on myhome.ie shows a 4.5% drop in asking prices since Friday. Some people will hold through any price downturn, clearly others will not.

That would make it a ~10% drop since January 2019 then in Dublin.

So prices can drop despite the supposed endless demand. And people will still sell. The sand is surely disappearing from around people's heads...

Mic 1972

OwlsZat wrote: »

Quick analysis on myhome.ie shows a 4.5% drop in asking prices since Friday. Some people will hold through any price downturn, clearly others will not.

is the analysis published somewhere on MyHome?

garhjw

Assetbacked wrote: »

https://www.irishtimes.com/business/media-and-marketing/ad-giant-wpp-pulls-dividend-buyback-and-outlook-1.4216684?mode=amp

To put this in context for the Irish rental market, there are thousands of employees employed in Dublin carrying out online sales for multinationals who are in an extremely vulnerable position right now. Online marketing revenue will be obliterated in the near term at least, with many of the employees not having any work to do consequently. The vast majority of the younger people employed by the multinationals are renters who, should they lose their job, will have to return home as they could be renting at 800+ their room in an apartment in Dublin and social welfare won't cover that. It is likely that no movement will happen on the jobs front until these stringent stay-at-home measures are eased as everything is essentially on hold right now, but once people start returning to work, there are likely to be job losses in the tech multinationals. This will be a hit to the demand for rentals which is going to put even more pressure on the rental return bubble to deflate.

However, it is important to say again that the rental market is different to the home purchasing market, where there is chronic undersupply due to the lack of new builds the past decade, meaning there is pent up demand from FTBs in particular who are not the non-national employees of the big multinationals (for the lost part at least). Looking at the share price of Cairn and Glenveagh, the homebuilding entities, they are maybe 40% lower than what they were three months ago. This probably means that the return on shares is expected to be 40% less (although, it is possible that this drop is more significant due to the initial panic and uncertainty that followed Covid19 measures being brought in), which translates to a drop in profit on new builds of up to 40% from a few months ago. Importantly, that does not mean house prices dropping by 40%; for example, cost to build of 400k and selling for 450k 3 months ago would be a drop in house price amounting to 4.4%. This is the market view in respect of homebuilders such as Glenveagh and Cairn.

some interesting points here on both rentals and sales. Is the projected 4.4% decrease in prices medium term as in there will be an initial more significant drop before things stabilise? Sounds optimistic...

Browney7

awec wrote: »

I have no evidence to support this but I would be surprised if the majority of new mortgages in the past few years weren't fixed.

Correct, CBI publishes stats.

Of the 67 billion in mortgage credit outstanding for PPRs at September 2019, 10 billion was fixed over 1 and up to 3 years, 12 billion between 3 and 5 with 2 billion over 5 years. There was 20 billion on SVR and 21.6 billion on tracker. Remainder was fixed up to one year.

For comparison, on september 16, 26 billion SVR, 24 billion tracker, 5 billion fixed over 1 year and under 3, 2 billion between 3 and 5 and 1.5 billion over 5 years.

Obviously some people who had SVRs from years ago may have switched to fixed rates but a reasonable inference is most new lending is fixed rate.

Banking and payments federation may have more data on new lending

Assetbacked

garhjw wrote: »

some interesting points here on both rentals and sales. Is the projected 4.4% decrease in prices medium term as in there will be an initial more significant drop before things stabilise? Sounds optimistic...

I would've thought the 40% share price drop was a significant drop in share price but that the price should recover more meaning that we may not even see a drop in price for new builds.

To be honest, it could be low hanging fruit for the government to stimulate the economy by getting the homebuilding market going again with certain measures in the short to medium term once the fallout becomes clear after the covid19 crisis. This could be done by putting the builders of the office blocks back to work and encouraging FTBs to get on the laddder. Based on salaries, new homes under 500k are generally affordable so it should continue to be possible to build and make a profit within this price range. Potentially it could come at a cost to STBs looking to upgrade and offload their SHH to a FTB, particularly if the home needs renovations.

GreeBo

OwlsZat wrote: »

There will be plenty of recent buyers willing to sell out of a new investment if it's going to save them financially. Do you really think everyone is firming going to hold through a downturn? Seriously delusional.

Where will all these "plenty" of people live after selling their houses?

pearcider

GreeBo wrote: »

Where will all these "plenty" of people live after selling their houses?

Key word “investment”.

Graham

Recent buyers for "investment" purposes?

Outside of the REITs my guess is that number is about as close to zero as you can get.

Claw Hammer

Graham wrote: »

Recent buyers for "investment" purposes?

Outside of the REITs my guess is that number is about as close to zero as you can get.

Quite a number of bidx1 purchasers were buying investment properties. Some have bought in the last week. The Reits were buying whole blocks. Individual investors were buying second units as the rental yield was much greater than deposit interest.

OwlsZat

Mic 1972 wrote: »

is the analysis published somewhere on MyHome?

https://www.myhome.ie/pricechanges

OwlsZat

GreeBo wrote: »

Where will all these "plenty" of people live after selling their houses?

Downsize. Family homes. Return to other countries. Rent. Care to explain how you failed to believe any of these were possible?

garhjw

OwlsZat wrote: »

Downsize. Family homes. Return to other countries. Rent. Care to explain how you failed to believe any of these were possible?

is the point not that there is still a significant supply shortage of units in Dublin and other cities so even if demand reduces short to medium term it is still ahead of supply?

Edgware

Graham wrote: »

Recent buyers for "investment" purposes?

Outside of the REITs my guess is that number is about as close to zero as you can get.

I agree with you. The day of the one or two apartment owned by an individual as an investment is finished. The small landlords are pulling out. Too much red tape, useless response by
P.R.T.B. when you have problem tenants etc. There is no financial incentive anymore. Unpaid tax collectors is all the landlords are

fliball123

cd76 wrote: »

.. with 25% unemployment and a global recession this is not a 6 to 12 month impact. We're looking at a 3 year recession and in such a case the property low is still 12 to 18 months away. People try and make ends meet and their house is the last thing they will abandon. UK and US is likely to pickup first. Ireland will see massive youth emigration to the UK like in the 50s and the 80s.
It is so tragic. But that means there will be economic opportunities for those who have access to cash. Property is always a good long term investment if you buy during a recession when there is hyper deflation in house prices.

Why would our youth go to the UK ?

smurgen

fliball123 wrote: »

Why would our youth go to the UK ?

Because a crap job is better than no job.

fliball123

OwlsZat wrote: »

https://www.myhome.ie/pricechanges

has your % only factored in the 20/30 properties that changed what about the tens of thousand that have not changed for a simple example 2 out of 10 houses that are 100k reduce by 4.5% that means that there is a drop in 9k (2 * 4.5k) over 1000k (total price of 10 houses) not over 200k (total price of 2 houses). So it will bring your % right down. So the drops are more like about .9% of a drop

Reversal

garhjw wrote: »

is the point not that there is still a significant supply shortage of units in Dublin and other cities so even if demand reduces short to medium term it is still ahead of supply?

Theoretical demand of 35K a year, but how many of those want to or are in a position to buy, not all.

Even the completion rate of ~20K units a year was leading to a significant buildup of unsold stock. And yes this includes the 3&4 bed semi market l, and yes in Dublin. This was widely reported on and discussed in this very thread.

There may be a housing crisis but it's an affordability crisis. This demand that people keep banging on about is fictitious, and would only be realised if everyone in need of accommodation in Dublin magically got high income jobs. It certainly won't be there after this crisis.

The reality is that prices did drop by 5% in Dublin throughout 2019. This mythical demand that some on here are convinced will stop prices from ever dropping does not exist in reality. And the demand that does exist is about to shrink further.

fliball123

smurgen wrote: »

Because a crap job is better than no job.

Last I checked the UK were running the same race and jumping the same hurdles we were, they are more in debt than we are and will have the same if not more levels of unemployement than we will and now no longer have the EU to help them if they run into serious trouble..So once again this virus did not just skip the UK so where would you get more money on social welfare, where would you keep your house no matter how bad you were in debt after losing your job. I cant see the youth going to the UK at all.

garhjw

Reversal wrote: »

Theoretical demand of 35K a year, but how many of those want to or are in a position to buy, not all.

Even the completion rate of ~20K units a year was leading to a significant buildup of unsold stock. And yes this includes the 3&4 bed semi market l, and yes in Dublin. This was widely reported on and discussed in this very thread.

There may be a housing crisis but it's an affordability crisis. This demand that people keep banging on about is fictitious, and would only be realised if everyone in need of accommodation in Dublin magically got high income jobs. It certainly won't be there after this crisis.

The reality is that prices did drop by 5% in Dublin throughout 2019. This mythical demand that some on here are convinced will stop prices from ever dropping does not exist in reality. And the demand that exist bis about to shrink further.

I'm pretty sure Dublin saw prices increases overall in 2019 YoY by about 0.5%. Some areas of Dublin, such as D4, saw prices decrease by around the 5% you refer to.

So everyone is wrong and you are right that there is an under supply of units in Ireland? and it is an affordability issue? Affordability will be addressed when supply increases and / or demand decreases?

Reversal

garhjw wrote: »

I'm pretty sure Dublin saw prices increases overall in 2019 YoY by about 0.5%. Some areas of Dublin, such as D4, saw prices decrease by around the 5% you refer to.

So everyone is wrong and you are right that there is an under supply of units in Ireland? and it is an affordability issue? Affordability will be addressed when supply increases and / or demand decreases?

Nope, YoY decreases in Dublin throughout 2019, and in many areas of South Dublin it was around 5%, not just D4, again well reported.

On the demand point. Read it yourself:

https://www.google.com/amp/s/www.irishtimes.com/business/construction/despite-shortage-houses-being-left-unsold-1.3928592

No, I'm not saying everyone is wrong. It is entirely correct to say we need 35K units per year to house our citizens. My point is that those in denial here are wrong to spin this figure as 35K people a year with mortgage approval rushing out the door to buy.

The article linked above shows 25% of new units in Dublin being left on the shelf, in Dublin, in 2019, before this crisis. But hey don't let hard figures stop you keeping your head in the sand.

Graham

Reversal wrote: »

On the demand point. Read it yourself:

https://www.google.com/amp/s/www.irishtimes.com/business/construction/despite-shortage-houses-being-left-unsold-1.3928592

4 quarters to March '19 ??

Would be interested in seeing the figures behind the Goodbody report referenced because something doesn't add up.

I wouldn't be at all surprised to discover the 'missing' 2500 units had since been sold as complete blocks/developments.

garhjw

Reversal wrote: »

Nope, YoY decreases in Dublin throughout 2019, and in many areas of South Dublin it was around 5%, not just D4, again well reported.

On the demand point. Read it yourself:

https://www.google.com/amp/s/www.irishtimes.com/business/construction/despite-shortage-houses-being-left-unsold-1.3928592

No, I'm not saying everyone is wrong. It is entirely correct to say we need 35K units per year to house our citizens. My point is that those in denial here are wrong to spin this figure as 35K people a year with mortgage approval rushing out the door to buy.

The article linked above shows 25% of new units in Dublin being left on the shelf, in Dublin, in 2019, before this crisis. But hey don't let hard figures stop you keeping your head in the sand.

apologies it was a decrease in Dublin for 2019 of 0.9% -

https://www.cso.ie/en/releasesandpublications/ep/p-rppi/residentialpropertypriceindexdecember2019/priceindices/

Or is the a different index that shows your 5% decrease? Are you saying the CSO is incorrect? The IT article you reference is from June 2019.

Marius34

Graham wrote: »

4 quarters to March '19 ??

Would be interested in seeing the figures behind the Goodbody report referenced because something doesn't add up.

I wouldn't be at all surprised to discover the 'missing' 2500 units had since been sold as complete blocks/developments.

Correct, there have been already plenty of reports with made up math calculations, that makes no sense.

Around me in Clongriffin people already moving to their rental property. 376 in total, built for rent. It's registered as a built units, but will not reach PPR register with it sales data:
https://www.rte.ie/news/2020/0218/1116105-vesta-apartments-twinlite/

On the other side of the street, another 943 units, built to rent, will come from Gannon, that will add to Goodbody "unsold" properties list:
https://www.thejournal.ie/apartments-planning-permission-clongriffin-4942417-Dec2019/

TheSheriff

Again I can only offer a micro view of the D15/Meath areas in terms of new builds but I can attest to the above post re: not experiencing the demand for new builds often expressed here.

We viewed a few new build developments over last year and none had sold out on day one/off planss that I can think off. Most still available.

One small development in lexslip springs to mind (the view, st.marys) still had some units available months after launch and last checked had dropped ~30k off the prices.

The housing crisis is an affordability issue, not necessarily a supply issue.

There is an abundance of supply of rubbish houses, they are just not priced to sell.

Donald Trump

I haven't seen it mentioned on here, but one other possible development due to corona might be an increase in the people who can, and are allowed, work from home.


There are plenty of people who would probably be glad to work from home for an extended period of time rather than commute up to Dublin every Monday morning and spend the weeknights in their expensive house share before fecking off back home at the weekend, or every second weekend.

You might see more flexibility from employers in future if productivity is maintained over the current period.

Mic 1972

OwlsZat wrote: »

https://www.myhome.ie/pricechanges

While there is evidence of price drops in the last few days, you can't work out a % avg drop by looking only at those properties. There are a lot that haven't changed which should be counted in too.

I was looking at Dublin only and many properties have actually increased the asking price most likely to compensate the inevitable drop during negotiation

snoopboggybog

TheSheriff wrote: »

Again I can only offer a micro view of the D15/Meath areas in terms of new builds but I can attest to the above post re: not experiencing the demand for new builds often expressed here.

We viewed a few new build developments over last year and none had sold out on day one/off planss that I can think off. Most still available.

One small development in lexslip springs to mind (the view, st.marys) still had some units available months after launch and last checked had dropped ~30k off the prices.

The housing crisis is an affordability issue, not necessarily a supply issue.

There is an abundance of supply of rubbish houses, they are just not priced to sell.

Am 28 on 42K, two hours from Dublin, houses in my area are 200k. Can't get a mortgage and work in IT. Will have to wait another four or five years for my salary to hit 50K before i can get one or have about 60K saved to get one now.

But Meh, rent is more than the mortgage would be.

GreeBo

OwlsZat wrote: »

Downsize. Family homes. Return to other countries. Rent. Care to explain how you failed to believe any of these were possible?

So they will buy other houses or pay more in rent than they would have in their mortage?

GreeBo

Reversal wrote: »

Theoretical demand of 35K a year, but how many of those want to or are in a position to buy, not all.

Even the completion rate of ~20K units a year was leading to a significant buildup of unsold stock. And yes this includes the 3&4 bed semi market l, and yes in Dublin. This was widely reported on and discussed in this very thread.

There may be a housing crisis but it's an affordability crisis. This demand that people keep banging on about is fictitious, and would only be realised if everyone in need of accommodation in Dublin magically got high income jobs. It certainly won't be there after this crisis.

The reality is that prices did drop by 5% in Dublin throughout 2019. This mythical demand that some on here are convinced will stop prices from ever dropping does not exist in reality. And the demand that does exist is about to shrink further.

If affordability was the problem rather than demand, wouldn't there be tens of thousands for sale in Dublin? Right now there are 4207.