Property Market 2020

Rainmann

The Belly wrote: »

It took 3 years in the last financial crisis to reach the height of unemployment we are already past that in 3 weeks. It's hard to see a v curve recovery.

Unlikely to be the V recovery but I think something on our side is that the banks will be in a position to lend through this crisis. The banks were insolvent in 2008 and are well-capitalized now. Naturally, there will be fewer people in a position to buy due to unemployment, wage cuts and so on, but the demand side will not be completely wiped out like 2008. I think in Dublin, the reduction in prices will be less significant and the recovery will be quicker. Ultimately, it is quite early in the pandemic and a lot of it will come down to how long it goes on for.

pearcider

cnocbui wrote: »

I'm in no doubt there will be a drop. I'm hopeful it wont last a decade like last time. We barely got back to a functioning market before this bolt from the blue happened.

Functioning market you mean grossly over inflated market surely.

BeansBeans

cnocbui wrote: »

Almost none of those commodities have much bearing on construction material costs.

There is very little steel used in the construction of most domestic houses. There is some in the form of rebar used in the concrete foundations. The rest is stuff like nails, timber straps and switch boxes and the boiler. Lets say the weight of copper in house wiring is 2 Kg at current prices that's €8.75 worth. In a house with a 350K build cost, I don't care if copper falls 99% in price as it's going to make no difference I would notice. Same for steel.

Now if the cost of sand, cement, timber and windows fell 25%, that might make a noticeable dent.

There's a hell of a lot of copper piping in a house as well as hot water cylinders

The Belly

Rainmann wrote: »

Unlikely to be the V recovery but I think something on our side is that the banks will be in a position to lend through this crisis. The banks were insolvent in 2008 and are well-capitalized now. Naturally, there will be fewer people in a position to buy due to unemployment, wage cuts and so on, but the demand side will not be completely wiped out like 2008. I think in Dublin, the reduction in prices will be less significant and the recovery will be quicker. Ultimately, it is quite early in the pandemic and a lot of it will come down to how long it goes on for.

Given the severity of the crisis i think the liquidity coming on stream wont be earmarked for inflating the markets again.

For there to be a real recovery and a fast one it needs to find its way into the real economy.

pearcider

BeansBeans wrote: »

There's a hell of a lot of copper piping in a house as well as hot water cylinders

Plus pretty much every commodity has oil as a major input.

pearcider

The Belly wrote: »

Given the severity of the crisis i think the liquidity coming on stream wont be earmarked for inflating the markets again.

For there to be a real recovery and a fast one it needs to find its way into the real economy.

If it does find it’s way into the real economy you’ll be paying 10 euro for a loaf of bread. Careful what you wish for.

cnocbui

pearcider wrote: »

Functioning market you mean grossly over inflated market surely.

No, I mean a market where you can sell a house for what it cost to build.

pearcider

cnocbui wrote: »

No, I mean a market where you can sell a house for what it cost to build.

Doesn’t have much to do with it. It’s all about the availability and cost of credit.

cnocbui

BeansBeans wrote: »

There's a hell of a lot of copper piping in a house as well as hot water cylinders

Yes, you are right, I had forgotten plumbing. if there is 50 Kg of copper plumbing in a house, that's still just €230 odd at raw copper metal commodity prices.

cnocbui

pearcider wrote: »

Doesn’t have much to do with it. It’s all about the availability and cost of credit.

Well it does because it's fundamental to availability. If you are aren't in a position to pay for a house to be built, it won't be built, will it? Availability = none.

The Belly

pearcider wrote: »

If it does find it’s way into the real economy you’ll be paying 10 euro for a loaf of bread. Careful what you wish for.

Starting from a very low base i just dont see that happening. How many loaves of bread can you eat?

cd76

Pheonix10 wrote: »

No I'm not an EA. But property prices will not fall even close to 50pc this time. 20pc at a maximum. You may have a different opinion on it.

Correct, i have. We'll see in March 2021.

cd76

cal naughton wrote: »

Facebook are building a huge HQ in ballsbridge pure fantasy to think that they are not going to fill that building to the rafters with staff once it is built.

Let's see. Facebook do zero Technical development in Ireland. All they do is marketing, sales and support work. As soon as that starts to drop then they will shelve plans.

awec

cd76 wrote: »

Let's see. Facebook do zero Technical development in Ireland. All they do is marketing, sales and support work. As soon as that starts to drop then they will shelve plans.

Facebook do of course have engineering positions in Dublin.

cal naughton

cd76 wrote: »

Let's see. Facebook do zero Technical development in Ireland. All they do is marketing, sales and support work. As soon as that starts to drop then they will shelve plans.

Marketing, sales and support work to 2.5billion active users and growing. Wishful thinking on your part that they will need less staff to support all those users. They also have cash reserves of 52 Billion dollars so this blip won't change their plans one bit.

cd76

fliball123 wrote: »

The only problem with your argument is that you think there is somewhere in the world that our youth will go to. Last I checked Corona was a global event so unless the youth are jumping on a space shuttle and heading to Mars. Unlike the 80s there is as much opportunity here as anywhere else in the world Ireland is no longer a poor relation to England we have shown to be a leader in tech and pharma and in other areas of industry otherwise we would not of been importing people for the last decade into the country to work here

I don't agree, Yes Corona is global but hopefully will be over(bar a second coming - hopefully not).
The US tech companies here are largely for support functions; Google, Linkedin, Facebook doing marketing and support. They will "right size" their organisations.
The most marketable people will emigrate as they did previously.
Trump is going to insist the majority of the US multinationals repatriate businesses. If he wins in Nov then it will not be good for the MNCs in Ireland...especially the Pharmas.

cd76

cal naughton wrote: »

Marketing, sales and support work to 2.5billion active users and growing. Wishful thinking on your part that they will need less staff to support all those users. They also have cash reserves of 52 Billion dollars so this blip won't change their plans one bit.

I don't share your optimism. If we had the "brains" work here it would be different.

what_traffic

ittakestwo wrote: »

Under the Maastricht Treaty the ECB is obliged to keep inflation under 2%. If the ECB start to break this, it will inevitably lead to Germany leaving the Euro and the Euro falling apart. The recent printing of money by the ECB is to compensate to the fact they cant lower interest rates as they are already at zero. In the last recession in 2008 the ECB was able to cut the base rate from 4.25% to 0 to increase the money supply but that's not an option going into this recession as the base rate was already near zero. .

There is a good reason that a GER 30-YR Bond is at -0.029 % v ITA 30-YR Bond 2.433% right now.
Safer to stash your Euro's in Deutschland that you pay them for holding them for you.
If those Corona Bonds dont happen in Eurozone - then the EURO project is at risk.

cal naughton

cd76 wrote: »

I don't share your optimism. If we had the "brains" work here it would be different.

Dublin contributed 25billion to the company's overall revenues in 2019 and only paid corporation tax of 63 million here. The other companies you mentioned might be under pressure but Facebook is a totally different proposition.

fliball123

cd76 wrote: »

I don't agree, Yes Corona is global but hopefully will be over(bar a second coming - hopefully not).
The US tech companies here are largely for support functions; Google, Linkedin, Facebook doing marketing and support. They will "right size" their organisations.
The most marketable people will emigrate as they did previously.
Trump is going to insist the majority of the US multinationals repatriate businesses. If he wins in Nov then it will not be good for the MNCs in Ireland...especially the Pharmas.

But where will the emigrate too and Trump has had 4 years to make an impact on what you say and has not managed to repatriate anything

pearcider

cnocbui wrote: »

Well it does because it's fundamental to availability. If you are aren't in a position to pay for a house to be built, it won't be built, will it? Availability = none.

There’s plenty of availability I think there’s a quarter of a million empty dwellings in Ireland. When the credit bubble collapses the market will clear a lot of these.

pearcider

The Belly wrote: »

Starting from a very low base i just dont see that happening. How many loaves of bread can you eat?

How much money can they print?

cnocbui

pearcider wrote: »

There’s plenty of availability I think there’s a quarter of a million empty dwellings in Ireland. When the credit bubble collapses the market will clear a lot of these.

So why all the noise over the last several years of a housing crisis in Dublin and the call for 35,000 new dwellings a year just to meet demand?

fliball123

cnocbui wrote: »

So why all the noise over the last several years of a housing crisis in Dublin and the call for 35,000 new dwellings a year just to meet demand?

Not to mention the supposed 100k on the housing waiting list

Logan Roy

Logan Roy wrote: »

I'm actually amazed how many economists there are on Boards. Is there somewhere I can go to read their work in depth or do they only post on here?

I hate these lazy posts. :rolleyes:


You don't need to be an economist to have an opinion on a discussion forum.

Assetbacked

Good news for renters, it's their market as a result of the covid19 crisis;

https://www.irishtimes.com/life-and-style/homes-and-property/for-the-first-time-in-years-it-is-a-renter-s-market-1.4216892?mode=amp&fbclid=IwAR2Er0Di3XmMyS7km7E341uu6U8LD2Fp0afOrQZavIiGoPvzy8oRqUdBtBM

This article demonstrates how short term lets have been ripping the character out of prime neighbourhoods in Dublin such as Grand Canal Dock. The article mentions that tenants are now haggling with landlords for rentals, a sign of how the balance of power has shifted, even though we are only three weeks into the crisis which could last more than three months.

TheSheriff

Assetbacked wrote: »

Good news for renters, it's their market as a result of the covid19 crisis;

https://www.irishtimes.com/life-and-style/homes-and-property/for-the-first-time-in-years-it-is-a-renter-s-market-1.4216892?mode=amp&fbclid=IwAR2Er0Di3XmMyS7km7E341uu6U8LD2Fp0afOrQZavIiGoPvzy8oRqUdBtBM

This article demonstrates how short term lets have been ripping the character out of prime neighbourhoods in Dublin such as Grand Canal Dock. The article mentions that tenants are now haggling with landlords for rentals, a sign of how the balance of power has shifted, even though we are only three weeks into the crisis which could last more than three months.

It's amazing to see.

Received 50 emails from daft today for properties <1500 per month. That alert has been active years, and was receiving the odd email every other week up until last month.

alwald

This recession is global and its length and impact will be determined by the speed and efficiency of getting rid of Covid-19 by all countries, or at least the major players.
Let's say that Ireland will succeed in managing the situation with Covid-19 in 2 months, but not the UK or USA, then the Irish economy won't bounce back and thus the impact on the housing market will last longer.
I expect a very bad years for sellers and investors as the price of properties either for sale or rent will decrease hugely IMO.

pearcider

cnocbui wrote: »

So why all the noise over the last several years of a housing crisis in Dublin and the call for 35,000 new dwellings a year just to meet demand?

Short answer is it’s a completely dysfunctional market artificially inflated by reckless monetary policy (although this is outside our control as we are subject to the ECB). Central bank policy (specifically zero interest rates and quantitive easing) have made the worlds financial system extremely fragile and it almost certainly won’t survive this depression.

35,000 houses might have been a good estimate of demand in a 350bn euro economy with 5% unemployment and 7% growth. In a 200bn economy with 30% unemployment and stagnant or negative growth however that estimate may prove somewhat wide of the mark.

This of course reflects the lack of resilience in the economy and in particular the property market. It all comes down to the banks really and the European banks are 300% of Eurozone GDP and they are insolvent mostly due to the crashed property bubble. They still hold billions of defaulted loans on their balance sheets. They are zombie banks lending to zombie companies and gradually poisoning the economy. You can see this in their share prices which have never recovered since 2008.

If interest rates had been operated correctly we wouldn’t have had the property market reflation of the last few years. It hasn’t been organic economic growth since the crash of 2008 and I think most people feel this in their bones. The only upside to a credit collapse is the free market will reassert itself once all the shouting is over just like it did in Soviet Russia and Zimbabwe and any other crash you care to study.

bdmc5

cd76 wrote: »

I don't share your optimism. If we had the "brains" work here it would be different.

Last few days of following this thread Ive these posts wildly speculating 30 percent drops in houses this year, that rental market is crashing and we will have mass emigration. I realised that these hysterical posts have all been left by you.

Like the rest of us you don’t have a clue what we happen at the end of the day. i would recommend if you are in the market for a home then dont buy as I dont think you will be able to tolerate the stress short to medium term drop in property prices.

You could argue The flip side When the time comes we come out of this there will be a huge bottle neck of buyers who had been holding off and developers will hold back stock to push up prices back up as mass employment slowly builds back up again. There’s still a large portion of people working from home earning full wages so it’s nowhere near as clear certain of a meltdown of The housing market as you make out.