Property Market 2020

addaword

Hubertj wrote: »

Are the majority of workers on reduced income?

Most people except those in the public service, those who work in supermarkets or multinationals etc.

awec

addaword wrote: »

Most people except those in the public service, those who work in supermarkets or multinationals etc.

Source?

Hubertj

addaword wrote: »

Most people except those in the public service, those who work in supermarkets or multinationals etc.

Riiiiighttt

addaword

awec wrote: »

Source?

Last week the Department of Employment Affairs and Social Protection has recently confirmed that the number of people in Ireland that are now reliant on welfare support is has reached 700,000. "This means that an extra 507,000 people are now availing from the government’s COVID-19 Pandemic Unemployment Support Payment, which offers €350 a week.

It was also revealed that these payments are in addition to the 205,000 people currently on the Live Register that are receiving ‘standard’ Jobseeker’s Benefit for €203."

Add to that the people working on reduced incomes in businesses, many self employed, farmers etc

Snow Garden

Many companies will be asking employees for pay cuts and unpaid leave as cash flow becomes a serious problem. Q3 will be particularly savage I think.

awec

addaword wrote: »

Last week the Department of Employment Affairs and Social Protection has recently confirmed that the number of people in Ireland that are now reliant on welfare support is has reached 700,000. "This means that an extra 507,000 people are now availing from the government’s COVID-19 Pandemic Unemployment Support Payment, which offers €350 a week.

It was also revealed that these payments are in addition to the 205,000 people currently on the Live Register that are receiving ‘standard’ Jobseeker’s Benefit for €203."

Add to that the people working on reduced incomes in businesses, many self employed, farmers etc

But that isn't what you said.

You said the majority of workers are on reduced income, I am wondering what your source for that particular piece of information is.

pearcider

awec wrote: »

But that isn't what you said.

You said the majority of workers are on reduced income, I am wondering what your source for that particular piece of information is.

April 2020 Live Register

The seasonally adjusted Live Register figure in April 2020 was 216,900, up 7,500 monthly.

https://www.cso.ie/en/releasesandpublications/er/lr/liveregisterapril2020/ 4

A further 602,107 were in receipt of the Pandemic Unemployment Payment and 425,204 were in receipt of the Temporary COVID-19 Wage Subsidy Scheme.

This brought the total to 1,244,211.

There were 36,297 casual and part-time workers on the Live Register in April 2020 (was 39,683 in April 2019)

Live Register Activation Programmes:

March 2020 was 51,433. March 2019 was 51,349

Persons on activation programmes are not counted as part of the monthly Live Register.

Figures available go back to Jan 2007. Lowest ever was 37,875 in August 2019; highest was 89,704 in Mar 2015.

Broad Jobless Rate:

If we add the total Live Register rate + Live Register Activation Programmes, the broad jobless rate stands at 52.8%

[1,244,211 (April 2020) + 51,433 (March 2020)/ 2,454,900 per Labour Force Survey Q3 2019]

Credit to the Jackal over on the property pin

https://thepropertypin.com/t/ireland-real-unemployment-rate-at-53/88050/14

Dav010

amyed198 wrote: »

Thanks for giving me a laugh, needed that.

You don’t think cutting off easy access to credit and putting limits on how much you could borrow was good change in policy by the central bank?

Cyrus

pearcider wrote: »

April 2020 Live Register

The seasonally adjusted Live Register figure in April 2020 was 216,900, up 7,500 monthly.

https://www.cso.ie/en/releasesandpublications/er/lr/liveregisterapril2020/ 4

A further 602,107 were in receipt of the Pandemic Unemployment Payment and 425,204 were in receipt of the Temporary COVID-19 Wage Subsidy Scheme.

This brought the total to 1,244,211.

There were 36,297 casual and part-time workers on the Live Register in April 2020 (was 39,683 in April 2019)

Live Register Activation Programmes:

March 2020 was 51,433. March 2019 was 51,349

Persons on activation programmes are not counted as part of the monthly Live Register.

Figures available go back to Jan 2007. Lowest ever was 37,875 in August 2019; highest was 89,704 in Mar 2015.

Broad Jobless Rate:

If we add the total Live Register rate + Live Register Activation Programmes, the broad jobless rate stands at 52.8%

[1,244,211 (April 2020) + 51,433 (March 2020)/ 2,454,900 per Labour Force Survey Q3 2019]

Credit to the Jackal over on the property pin

https://thepropertypin.com/t/ireland-real-unemployment-rate-at-53/88050/14

You are making the assumption that 350 is reduced income for everyone in that cohort, also that those getting the subsidy are on reduced income.

addaword

Cyrus wrote: »

You are making the assumption that 350 is reduced income for everyone in that cohort, also that those getting the subsidy are on reduced income.

Easily cancelled out by the number of self employed / professions / business people on reduced incomes this past month or 2.

coolshannagh28

Donald Trump wrote: »

Land will give you a gross return of about ~1.0-1.5% based on it's value in agricultural use.


You'll be 5 years before you pay off the stamp duty. You might get some capital upside of course, but you might also have downside and you could suffer from liquidity issues if you might be in a position where you need the cash in the future.


Buy it if you want it and have a use for it. If you are buying as an investment, I'd say that it would have a part in a diversified portfolio of course. But I wouldn't invest all my money in it if I was a pure "investor".

I have a romantic interest in a certain type of land which can act as a carbon sink and has green credentials going forward.

Bass Reeves

schmittel wrote: »

Yes, but investors impact property prices too! And they are less likely to have an emotional notional value on the property.

Yes investors impach property prices but they do not buy all property and did not buy all property in the 2010-2014 period they was also owners occupiers that will not be effected by CGT.

schmittel wrote: »

Obviously if they need cash they will have to sell, but it doesn't follow that if an investor did not need the cash they would not sell. A rational investor will weigh up the risk/reward to holding the property vs selling, and if they decide the potential risks outweigh the potential rewards they will sell regardless of whether they need the cash.

Most taht invested from 2010-2014 were those that had property already. Most Landlords/investors now have multiple properties. Many are in the game longterm and unless there is investment elsewhere they will seldom sell just to turn a profit.

schmittel wrote: »

I actually think the complete opposite is more likely. Consider the following scenario:

2013 - Investor buys 1 bed BTL apartment in SCD for €160k
Lets it on long term market for a few years, decent yield and capital gain. Happy days.
2016 - Assesses investment performance. Very happy with capital gains, whilst yield is good, anti-LL regulations increasing, and there is chance of increasing the yield with the red tap on the booming short term let market. Moves to short term lets.
2019 - Assesses investment performance. Strong further capital gains but looks like might be flattening. Increased legislation re STLs but enforcement is non existent, everybody flouting it. Keep at the STLs whilst we can, keep an eye on the way the wind is blowing.

Feb 2020 - Not just wind, but a bit of storm now. SF surged in election due in large part to broken rental market, new government likely to crackdown on STLs, will reassess options when/if they announce crackdown.

Apr 2020 - Entire country on lockdown. 30% unemployment. Ar$e fallen out of the STL market. What now? Do I sell or hold.


Property is currently worth €280k - sell now bank 120k/75% capital gain tax free - his risk reward in this scenario is whether or not he is giving up future returns by holding onto it.

Chances are he won't see the same levels of STL income so has to decide whether to become regular LL. With regulations and problem tenants, only really worth it if rents and purchase prices are likely to stay at same level or rise.

Are they? Nobody knows. But will he sit out this downturn because the allowance would be beneficial in next upturn?

Lets say that next upturn is 5 years away - i.e property prices are 5% up from 2020 levels in 2025.

His property now worth 294k - if he sells in 5 years his gain is 134k but now 7/12 of that is taxable - i.e €78,162 x 0.33 = €25,793

His net proceeds in 5 years time are 268k i.e 12k less than he would get now if he could sell for 280.

Not sure how beneficial this will be in the next upturn given the uncertainty of waiting.

Who knows what austerity measures/new flavour of government/scrapping CGT exemptions/increasing rates/targeting landlords might be introduced over the next 5 years.

And yes I know that nobody knows what is going to happen, and we could have a vaccine tomorrow, a capitalist government who cut CGT to 10% etc etc.

But the point is what does a rational investor assessing the future risks/rewards on an investment that has a 75% CGT free gain currently think is most likely to happen?

For him not to sell now, he needs to be pretty confident that

a) prices will be materially higher in 5 years time than they are now
b) the regulatory/tax position will be at least the same as it is now, i.e not any less friendly to property investment

Is he likely to be confident of this?

I am not suggesting that everybody who has a CGT exemption in their back pocket will suddenly panic sell, just that I think on the balance of probabilities, it is quite likely that a reasonable proportion will try to sell this year.

Whats you have put down looks good on paper however most LL/Investors are longterm investors. yes if they needed to sell then the property that they could pocket the most money off would be sold first.

The eager seller remark was made in regard to eager seller causing a property price crash. An investor might consider selling if he was going to pocket a substantial profit. However you also have to factor in selling and buying costs. It is unlikely he will sell for the sake of selling. In your senario above if the investor sold. If prices drop 10-20%+ as many allude here his gain is now reduced in half maybe.

You also have to factor in buying and selling costs. if he decides to sell and is going to reinvest in property again the turnover cost is in in the region of 8-10K in auctioneer, legal and bank charges. As well he may to reborrow next time.

You took a 5 extra year senario. You failed to allow a rental return for those 5 years. He may have sitting tenants that are contract tied, he may have longterm tenants that were not paying inflated rent. His may be in a sought after area. If he holds and achieves an average yield of 6-8% of original investment that is 45-60K admittly in taxable income in 5 years, but some larger LL's have formed mini REIT's to manage there portfolio within.

However most property investors look at these as longterm 20-30 year terms. That apartment achieving an average yield of 10% over 25 years would give a rental return 375K, if sold at that stage for 500K he still net 100K tax free. before paying capital gains on the remaining 250K. After CGT his total gain would be 250K after fees and tax

Donald Trump

coolshannagh28 wrote: »

I have a romantic interest in a certain type of land which can act as a carbon sink and has green credentials going forward.

That's fine. That comes under the "if you want it and have a use for it" part of my statement. You're initial statement gave the impression that you were investing in land for capital appreciation (or at least capital preservation) reasons.







(all land can act as a carbon sink depending on what you grow on it. In fact grassland acts as a carbon sink too)

hometruths

Bass Reeves wrote: »

Yes investors impach property prices but they do not buy all property and did not buy all property in the 2010-2014 period they was also owners occupiers that will not be effected by CGT.




Most taht invested from 2010-2014 were those that had property already. Most Landlords/investors now have multiple properties. Many are in the game longterm and unless there is investment elsewhere they will seldom sell just to turn a profit.





Whats you have put down looks good on paper however most LL/Investors are longterm investors. yes if they needed to sell then the property that they could pocket the most money off would be sold first.

The eager seller remark was made in regard to eager seller causing a property price crash. An investor might consider selling if he was going to pocket a substantial profit. However you also have to factor in selling and buying costs. It is unlikely he will sell for the sake of selling. In your senario above if the investor sold. If prices drop 10-20%+ as many allude here his gain is now reduced in half maybe.

You also have to factor in buying and selling costs. if he decides to sell and is going to reinvest in property again the turnover cost is in in the region of 8-10K in auctioneer, legal and bank charges. As well he may to reborrow next time.

You took a 5 extra year senario. You failed to allow a rental return for those 5 years. He may have sitting tenants that are contract tied, he may have longterm tenants that were not paying inflated rent. His may be in a sought after area. If he holds and achieves an average yield of 6-8% of original investment that is 45-60K admittly in taxable income in 5 years, but some larger LL's have formed mini REIT's to manage there portfolio within.

However most property investors look at these as longterm 20-30 year terms. That apartment achieving an average yield of 10% over 25 years would give a rental return 375K, if sold at that stage for 500K he still net 100K tax free. before paying capital gains on the remaining 250K. After CGT his total gain would be 250K after fees and tax

What you said looks good on paper etc etc etc I am not disputing there will be some who take a 30 year view. Unlikely to be the STL cohort though.

All I am saying is it won't take many of these sort of eager sellers to put pressure on prices.

Here's one I found in about 5 minutes. And this guy is willing to take a haircut, presumably for a quick sale.

Apartment 1, 43 East Essex Street, Temple Bar, Dublin 2, D02 F409
https://bidx1.com/en/en-ie/auction/property/41628
Guide Price 385,000

Sold 25/11/2016 for €410,000.00

Bass Reeves

schmittel wrote: »

What you said looks good on paper etc etc etc I am not disputing there will be some who take a 30 year view. Unlikely to be the STL cohort though.

All I am saying is it won't take many of these sort of eager sellers to put pressure on prices.

Here's one I found in about 5 minutes. And this guy is willing to take a haircut, presumably for a quick sale.

Apartment 1, 43 East Essex Street, Temple Bar, Dublin 2, D02 F409
https://bidx1.com/en/en-ie/auction/property/41628
Guide Price 385,000

Sold 25/11/2016 for €410,000.00

BidX1 an auction, Expectation is that it will achieve 10-15% above guide price. In general a lot of properties sold in this senario and by this outfit are forced sales. Not a good example try harder next time

coolshannagh28

Donald Trump wrote: »

(all land can act as a carbon sink depending on what you grow on it. In fact grassland acts as a carbon sink too)

Lets hope the next Government recognise that fact .

hometruths

Bass Reeves wrote: »

BidX1 an auction, Expectation is that it will achieve 10-15% above guide price. In general a lot of properties sold in this senario and by this outfit are forced sales. Not a good example try harder next time

It was bought for €410k in 2016

Photos clearly indicate a short term let.

Put up for auction in mid March advertised with a reserve of €385k

It failed to sell at auction.

It's now in the "Unsold Properties, Make us an Offer," section with a guide price of €385k.

It's an absolutely perfect example of the point I am trying to make.

Donald Trump

schmittel wrote: »

It was bought for €410k in 2016

Photos clearly indicate a short term let.

Put up for auction in mid March advertised with a reserve of €385k

It failed to sell at auction.

It's now in the "Unsold Properties, Make us an Offer," section with a guide price of €385k.

It's an absolutely perfect example of the point I am trying to make.

Previously owned by Mick Wallace.


Asking for 195k back in 2013!


https://www.independent.ie/irish-news/four-apartments-linked-to-mick-wallace-up-for-sale-29655382.html

pearcider

Cyrus wrote: »

You are making the assumption that 350 is reduced income for everyone in that cohort, also that those getting the subsidy are on reduced income.

Hubertj

pearcider wrote: »

??

https://www.irishtimes.com/business/economy/up-to-400-000-households-better-off-due-to-supports-esri-says-1.4236931

pearcider

Hubertj wrote: »

??

https://www.irishtimes.com/business/economy/up-to-400-000-households-better-off-due-to-supports-esri-says-1.4236931

May as well just leave the supports in place forever then. Actually why not double them? Not like anybody will be picking up the tab anyway.

Cyrus

pearcider wrote: »

May as well just leave the supports in place forever then. Actually why not double them? Not like anybody will be picking up the tab anyway.

not sure what you are on about

But it does rubbish the point that the majority of workers are worse off now doesn't it

GreeBo

listermint wrote: »

We are and should be moving to specialised health care units. There are many dotted all over the country.

I'm a dub left 3 years ago. There is two such clinics one 5 minutes away the other 20 mins away.

Left Dublin to get away from living on top of people. I had no appetite to stare into someone else's back window from my own.


You shouldn't take offence to people's choices, I've a better quality of life where I am.

Well I didn't even ask you the question... But anyway.
I'm not offended in the slightest, dunno where you got that from?

GreeBo

Graham wrote: »

Nobody is suggesting the entire country is about to start working from home on a permanent basis.

However, there is a likelihood that it will be a serious consideration for SOME companies for at least SOME of their staff.

That's not the same as saying it will suit everyone/every company. That's not the same as saying rural living is 'better' than living in Dublin.

I didn't say anything to compare rural living to Dublin living?!

I'm saying the number of people who both can and actually will up sticks and move out of Dublin is tiny and not going to do anything to the market.

pearcider

Cyrus wrote: »

not sure what you are on about

But it does rubbish the point that the majority of workers are worse off now doesn't it

Sure thing. I wonder if a meteor hit Ireland and wiped it out, would this board still have people on it saying now is a good time to buy. Probably.

Hubertj

pearcider wrote: »

Sure thing. I wonder if a meteor hit Ireland and wiped it out, would this board still have people on it saying now is a good time to buy. Probably.

Before or after the meteor hits? What size is the meteor? Does household insurance cover meteor strikes?

addaword

Estate agents always tell buyers now is a good time to buy, and tell sellers now is a good time to sell.

Villa05

Dylan94 wrote:

I would think that if its really only people from outside of Dublin moving back home then it would only take a small amount of people moving to rural Ireland to increase the prices, but it would take a lot more moving from Dublin to reduce the prices.

Rural Ireland is a big place, they won't all be going to the same part of it and again a small change makes a big difference in a high demand areas where affordability issues pre existed

MrMusician18 wrote:

Actually we can look to the past to crystal ball the future regarding this. When the government tried decentralisation, the uptake was low because civil servants families were established in Dublin and/or it wouldn't suit for the partners job. Many of these reasons for people to remain sticky to Dublin will be still there this time around too. Iirc the majority of civil servants that moved were in the 30s bracket, priced out of Dublin with the flexibility to move. The younger didn't want to leave the bright city lights and the older were more established.

So it was Ftb that moved during decentralisation. It didn't work because people were pushed WFH will be voluntary in my opinion and as a result will be far more popular. Something that is popular spreads rapidly

Experience_day wrote:

Banks are well capitalised and things will drift back. As long as Ireland can weather the world storm domestic issues will be overcome.

Irish banks have significant arrears on their books are heavily invested in property with little diversification in their portfolio. They would not be able to recognise a good business idea if it was staring them in the face

Dav010 wrote:

This time it is different to anything that has gone before, every economist is saying that. Where recessions historically were due to fiscal mismanagement or conflict, this is due to neither, so we have to see if the sound principles economies were built on after the last recession will help to recover from this unprecedented shock.

Most economists were predicting a soft landing last time. As a country we have one of the highest debts in the world on a per capita basis, which will now increase sharply heading into a recession

The Student wrote:

Care to share why you believe the State and all political parties are wrong

Past performance is not reliable predictor of the future but in this case!

Cyrus wrote:

You are making the assumption that 350 is reduced income for everyone in that cohort, also that those getting the subsidy are on reduced income.

I think the actual numbers claiming it is the shocking part, that's a massive bill

GreeBo wrote:

I'm saying the number of people who both can and actually will up sticks and move out of Dublin is tiny and not going to do anything to the market.

Great to have someone on the forum that has there finger on the pulse of the thoughts of the population of Dublin

Snow Garden

Deleted User wrote: »

I made the point earlier, after the last recession kicked in in 2008 you would have been better selling you house in 2009 for 10% below peak than waiting about for prices to rise again. Prices didn't reach that level again until 2014 or 2015.

If people think they are going to wait this one out they may need to wait 5 years or more.

The property market is essentially stalled at the moment for obvious reasons. It's hard to know when we'll actually see significant new transactions, it will depend on a lot of factors. But when the market is somewhat operational again (Q420/Q121 maybe), I think we'll see 1 thing for sure - Banks will be spooked with all the permanent redundancies, unemployment, debt levels, defaults, bad debts, govt budget deficits etc and will become extremely risk averse and strict on new mortgages. As a result I think the fall in house prices will be a lot more pronounced than 2008-2012. I reckon it will take 1-2 years to bottom out from Q4. I would expect 20+% drops in both 2021 and 2022. Confidence will be eroded from every angle. The borrowing rates for both mortgages and govt debt will be interesting.

Hubertj

Snow Garden wrote: »

The property market is essentially stalled at the moment for obvious reasons. It's hard to know when we'll actually see significant new transactions, it will depend on a lot of factors. But when the market is somewhat operational again (Q420/Q121 maybe), I think we'll see 1 thing for sure - Banks will be spooked with all the permanent redundancies, unemployment, debt levels, defaults, bad debts, govt budget deficits etc and will become extremely risk averse and strict on new mortgages. As a result I think the fall in house prices will be a lot more pronounced than 2008-2012. I reckon it will take 1-2 years to bottom out from Q4. I would expect 20+% drops in both 2021 and 2022. Confidence will be eroded from every angle. The borrowing rates for both mortgages and govt debt will be interesting.

So you are predicting minimum 40% by end of 2021? Ouch if that happens.