Property Market 2020

Hubertj

Hubertj wrote: »

If you find a house you love and are confident of job security why not proceed? The house might not be available in 6 months? If it is a house you will stay in for life does the value of it matter?

People remarry after losing their spouse.
I'm sure the vast majority of folk aren't into house/home monogamy ........... of course the value matters financially ......... LTV .........mortgage rates ........ equity.

Hubertj

Empty_Space wrote: »

I won't guarantee, but 99 percent sure price will be massively lower in 6 months. In two years, they will have crashed completely.

Some of the advice boggles the mind. You would be mad to buy now.

We’re you not saying they would be massively lower by the end of the summer last week? What has changed?

lomb

Experts in the States are advising holding off for upto 2 years. Thing is the Irish property market never peaked during the latest boom as banks have been reluctant to lend. So in my opinion given build costs the recession is already priced in. That's my two cents anyway. I could be wrong. Will be very interesting to see if they really fall 20% or if they just remain static. I'm voting for a 5% fall. And I'm basing that on the limited length of this recession, the fact that half of all property purchases are in cash and there isalot of cash out there that's been built up over the last 10 years in some people's pockets.
They will be thinking of inflation risks with all the ECB printing going on, you can't print a house.

hometruths

Hubertj wrote: »

If you find a house you love and are confident of job security why not proceed? The house might not be available in 6 months? If it is a house you will stay in for life does the value of it matter?

This idea is all fine in theory.

The problem is in practice it often goes tits up, and you lose the job that looked so secure when you were buying the house.

Now you have a house with mortgage repayments that you cannot afford, and potentially owe more money on the mortgage than the house is worth.

If the people in this situation are prepared to take the responsibility for the situation, sell the house, and take the loss and move on then that's fine.

But what will happen is they will say, "Poor me, it's not my fault, the bank should not have lent me the money, everybody said it was good time to buy, somebody has to pay for this, I don't care who, anybody but me."

And anybody who dares to say "Well actually, perhaps you should have been a bit more prudent under the circumstances" will be demonised: "Oh I see, I'm all right Jack, it's fine for you, you don't know the stress involved in being stuck in negative equity and not being able to pay your mortgage, and worried about losing your home."

And none of the it's always a good time to buy gang will stop to think why the maybe now is not a good time to buy gang are not in negative equity, unable to pay the mortgage.

But if you stop to think about it, it's pretty bloody obvious.

The reason I think this will happen is because it has happened before. And this time it will be worse.

Cyrus

Empty_Space wrote: »

Forget all the noise you've been fed about building costs and supply/demand. This is all irrelevant and was used to prop prices.

Once the world goes into recession, prices will plummet. Investors will all sell for save haven's. Jobs will be lost. Earnings will be cut. Immigrats will go home. Companies will fail. House will be built at fractions of silly costs.

again if what you are suggesting comes to pass it means, building regs go away, cost of raw materials plummets, trades people will be on minimum wage.

guess what, houses wont be built. So your hypothesis fails.

like the last recession a few people will do really well, the majority wont benefit.

addaword

In a depression, with many people from pilots to publicans to hotel workers to retail workers out of work, prices of property can only fall.

Bass Reeves

Cyrus wrote: »

again if what you are suggesting comes to pass it means, building regs go away, cost of raw materials plummets, trades people will be on minimum wage.

guess what, houses wont be built. So your hypothesis fails.

like the last recession a few people will do really well, the majority wont benefit.

People who wish for a hard recession are usually the last to benefit. If we see a really hard recession government will print money, this in turn will cause inflation which will causes prices to rise in the medium to longer term. In a hard recession borrowing becomes impossible unless you have substantial deposit in the 50% area, as well cash purchasers are preferable.

Building costs are still an issue no matter what. The bigger fear by contractors is failure of payment. In the 2010-2014 period no construction took place unless all materials were paid for up front. There was no credit.

I think the biggest risk to house prices is the government may decide to build a substantial number of houses especially in Dublin. However that would have a 12-18 month lead in time

Hubertj

schmittel wrote: »

This idea is all fine in theory.

The problem is in practice it often goes tits up, and you lose the job that looked so secure when you were buying the house.

Now you have a house with mortgage repayments that you cannot afford, and potentially owe more money on the mortgage than the house is worth.

If the people in this situation are prepared to take the responsibility for the situation, sell the house, and take the loss and move on then that's fine.

But what will happen is they will say, "Poor me, it's not my fault, the bank should not have lent me the money, everybody said it was good time to buy, somebody has to pay for this, I don't care who, anybody but me."

And anybody who dares to say "Well actually, perhaps you should have been a bit more prudent under the circumstances" will be demonised: "Oh I see, I'm all right Jack, it's fine for you, you don't know the stress involved in being stuck in negative equity and not being able to pay your mortgage, and worried about losing your home."

And none of the it's always a good time to buy gang will stop to think why the maybe now is not a good time to buy gang are not in negative equity, unable to pay the mortgage.

But if you stop to think about it, it's pretty bloody obvious.

The reason I think this will happen is because it has happened before. And this time it will be worse.

Irish people in general have a big problem with personal responsibility. It’s always someone else’s fault.

Padre_Pio

addaword wrote: »

In a depression, with many people from pilots to publicans to hotel workers to retail workers out of work, prices of property can only fall.

It got me thinking about the whole "working from home" situation many are in.

People buy houses near to work. Your commute it's the biggest factor in picking a location and like many, I'm working from home for at least the next 3 - 5 months.

If I can remain productive, I believe that next year I can either swing a WFH three days a week, or WFH three weeks a month.
It's really pushing me towards looking at houses much further afield and much much cheaper. An hour each way two days a week is the same as 25 mins each way five days a week.

Bass Reeves wrote: »

I think the biggest risk to house prices is the government may decide to build a substantial number of houses especially in Dublin. However that would have a 12-18 month lead in time

That has been policy for the past 3 years at least.

addaword

Bass Reeves wrote: »

People who wish for a hard recession are usually the last to benefit. If we see a really hard recession government will print money, this in turn will cause inflation which ..

Nobody wishes for a hard recession.
The government will not print money, the germans are rightly wary of inflation.

Hubertj

addaword wrote: »

Nobody wishes for a hard recession.
The government will not print money, the germans are rightly wary of inflation.

Unfortunately some people do. 1 of the clowns in here stated the other day recessions are necessary and welcome. Yes job losses and economic hardship are welcome and necessary....

wassie

Bass Reeves wrote: »

...If we see a really hard recession government will print money, this in turn will cause inflation which will causes prices to rise in the medium to longer term.

No necessarily so. In hard recession in which you have a period of deflation, it is possible to increase the money supply without causing inflation.
Case in point - inflation in the US post GFC never rose above 4% despite huge several quantitative easing programmes.

Donald Trump

BOI with 235m Euro lost in first quarter. Blames corona.

https://www.independent.ie/business/irish/bank-of-ireland-falls-into-loss-of-235m-due-to-covid-19-impact-39195710.html


also

The group warned that Covid-19 would have a “material impact on 2020 results.”

It said new lending this year could be between 50pc – 70pc of 2019 volumes.

Villa05

GreeBo wrote:

I know more people who regret not buying than those who regret buying. We've had similar posts on this thread.

How many people would share with others that they regret buying their most expensive possession. The day you buy is the day your a seller as they say

GreeBo wrote:

You are delaying a decision based on a future you can't confirm. If the numbers work for you now, buy now.

stayback wrote:

Nobody can predict the future on the 31jan could you predict what was going to happen on the 15th March with country closing down. There is no guarantee prices are going to come down. Again if the house is right for you and you can afford it then buy it. If you have doubts of weather the house is right or concerns about your affordability then you have a decision to make. Waiting for a % drop in prices is a very risky game to play.

In a properly funtioning market your argument makes sense, but Irish property is far from that and has been dysfunctional for quarter of a century now.

A. We were in an affordability crisis before covid, I would imagine that the vast majority buying at that point were not buying a property that ticked all the boxes. Sacrifices were made in some aspect of the property

B Highly uncertain times in relation to job losses, extra taxes, potential pay cuts.

C Post Covid could be a very different world, Clusters of infection are highly concentrated amongst working poor living in cramped accommodation. This could lead to change in market driven house prices to the state intervening to provide housing to balance the supply demand issue. I have posted here on numerous occasions on how this can be done at a profit for the state. Housing a major issue in the last election. Those that ignore it will risk loosing power.
Affordable housing close to places of employment would go a long way to help the green agenda, who may hold the balance of power

D. I think it is generally accepted that both price and rents will fall in the near term

E people here keep posting that this is different to 08, it is but the elephant in the room is that we haven't started paying back for the cost of 08 yet

F commercial property was in a boom over the last 5 years, concerns eminating from the US and here about its sustainability. A downturn will affect lending

Hulk Hands

Hubertj wrote: »

If you find a house you love and are confident of job security why not proceed? The house might not be available in 6 months? If it is a house you will stay in for life does the value of it matter?

I'll never understand this line of thinking. If you have a total of 100k, that you put all into a house, and the house devalues by 50k in a year, that's your net worth basically halved.

The 50k you couldve saved by waiting would mean €250 less p/m on a typical mortgage repayment. The lack of equity you now have will massively affect your ability to refinance, whether to upsize if things go well, efficiently downsize in bad times or go after an investment opportunity.

Someone's net worth will always be calculated by the sum total of their assets. Hard to fathom how people could discard that with the "home for life" line, while their life's work up to that point gets eroded by a poor decision.

That's not to say property prices will rise or fall or that anyone's wrong to buy now. Just that getting the decision right either way has huge consequences for the majority

SozBbz

Hulk Hands wrote: »

I'll never understand this line of thinking. If you have a total of 100k, that you put all into a house, and the house devalues by 50k in a year, that's your net worth basically halved.

The 50k you couldve saved by waiting would mean €250 less p/m on a typical mortgage repayment. The lack of equity you now have will massively affect your ability to refinance, whether to upsize if things go well, efficiently downsize in bad times or go after an investment opportunity.

Someone's net worth will always be calculated by the sum total of their assets. Hard to fathom how people could discard that with the "home for life" line, while their life's work up to that point gets eroded by a poor decision.

That's not to say property prices will rise or fall or that anyone's wrong to buy now. Just that getting the decision right either way has huge consequences for the majority

Because anyone who uses the term "net worth" to talk about an average joe and the roof over their head is flattering themselves massively.

Unless you're planning on dying and liquidating your "net worth" its completely pointless. We all need somewhere to live and funds that are necessary for a normal standard of living shouldnt be considered part of ones available assets. Fine, if you have multiple properties worth millions each, count those towards your net worth, but it doesnt work for most middle class homeowners.

You're also assuming that house prices drop in a vaccum, an arguement thats been debunked about 1000 times on this thread already so I'm not going to repeat it, other than to say if houses drop by 50% then you'd better be prepared for everthing else to have gone to sh1te also so good luck getting that mortgage you referenced.

Experience_day

Hulk Hands wrote: »

I'll never understand this line of thinking. If you have a total of 100k, that you put all into a house, and the house devalues by 50k in a year, that's your net worth basically halved.

The 50k you couldve saved by waiting would mean €250 less p/m on a typical mortgage repayment. The lack of equity you now have will massively affect your ability to refinance, whether to upsize if things go well, efficiently downsize in bad times or go after an investment opportunity.

Someone's net worth will always be calculated by the sum total of their assets. Hard to fathom how people could discard that with the "home for life" line, while their life's work up to that point gets eroded by a poor decision.

That's not to say property prices will rise or fall or that anyone's wrong to buy now. Just that getting the decision right either way has huge consequences for the majority

But losses/gains are only crystallised after disposal of an asset. I could have owned a sh1te ton of Enron for example. I might have been a paper millionaire at one point but having not sold it, my gains were not realised.


Extreme example but there is an element of truth for lots of people. Bearing in mind we're talking about the "average person" here. Most people do not have a good understanding of finance whether it's opportunity costs, time value of money etc.


For lot's of people the act of buying and holding the asset (namely the house) is a prudent suggestion as it gives them a tangible asset, non quantitative benefits and allows them to use their money in something other than bulgarian investment homes, stock trading etc.

Ozark707

Donald Trump wrote: »

BOI with 235m Euro lost in first quarter. Blames corona.

https://www.independent.ie/business/irish/bank-of-ireland-falls-into-loss-of-235m-due-to-covid-19-impact-39195710.html


also

Re their projected lending cuts of 30-50% compared to last year it will heavily depend on which sectors (residential/office/retail...) they specifically target. I can't imagine office demand will be looked on favourably with all this talk of WFH.

stayback

Hulk Hands wrote: »

I'll never understand this line of thinking. If you have a total of 100k, that you put all into a house, and the house devalues by 50k in a year, that's your net worth basically halved.

The 50k you couldve saved by waiting would mean €250 less p/m on a typical mortgage repayment. The lack of equity you now have will massively affect your ability to refinance, whether to upsize if things go well, efficiently downsize in bad times or go after an investment opportunity.

Someone's net worth will always be calculated by the sum total of their assets. Hard to fathom how people could discard that with the "home for life" line, while their life's work up to that point gets eroded by a poor decision.

That's not to say property prices will rise or fall or that anyone's wrong to buy now. Just that getting the decision right either way has huge consequences for the majority

This is the kind of a attitude that got us into a property bubble. A house is a home not a commodity that you check it’s value everyday.. if you don’t see a house as a home then DONT BUY A HOUSE. As said above we were in negative equity for a good few years after the crash but we could afford the repayments so we didn’t concern ourselves with it. We were happy in the house nice neighbourhood.. this attitude drives me mad do you drive around looking for the cheapest diesel while you have burnt the savings in diesel driving to the cheapest petrol station. A free market is what it is. Prices will go up and go down.. negative equity is only a concern if you have to realise that equity..

NIMAN

stayback wrote: »

This is the kind of a attitude that got us into a property bubble. A house is a home not a commodity that you check it’s value everyday.. if you don’t see a house as a home then DONT BUY A HOUSE. As said above we were in negative equity for a good few years after the crash but we could afford the repayments so we didn’t concern ourselves with it. We were happy in the house nice neighbourhood.. this attitude drives me mad do you drive around looking for the cheapest diesel while you have burnt the savings in diesel driving to the cheapest petrol station. A free market is what it is. Prices will go up and go down.. negative equity is only a concern if you have to realise that equity..

... exactly.

And by the same logic, many people back in the good times would consider themselves wealthy cos their house has gone up maybe 100k or 150k since they bought it.

But if they were to sell and move, the potential houses they would be buying would also have went up by same amount.

Hubertj

Hulk Hands wrote: »

I'll never understand this line of thinking. If you have a total of 100k, that you put all into a house, and the house devalues by 50k in a year, that's your net worth basically halved.

The 50k you couldve saved by waiting would mean €250 less p/m on a typical mortgage repayment. The lack of equity you now have will massively affect your ability to refinance, whether to upsize if things go well, efficiently downsize in bad times or go after an investment opportunity.

Someone's net worth will always be calculated by the sum total of their assets. Hard to fathom how people could discard that with the "home for life" line, while their life's work up to that point gets eroded by a poor decision.

That's not to say property prices will rise or fall or that anyone's wrong to buy now. Just that getting the decision right either way has huge consequences for the majority

thats a valid point but i never considered any of this when i bought my house about 5 years ago. It was in the area we wanted, within price range and plenty of room for the family. I have no idea what it was worth pre Covid or post Covid and i really don't care. My wife and i are in secure employment and that will not change.

Donald Trump

Bass Reeves wrote: »

People who wish for a hard recession are usually the last to benefit. If we see a really hard recession government will print money, this in turn will cause inflation which will causes prices to rise in the medium to longer term.

People might not have their cash in Euro. Most will, but some won't.

SozBbz

NIMAN wrote: »

... exactly.

And by the same logic, many people back in the good times would consider themselves wealthy cos their house has gone up maybe 100k or 150k since they bought it.

But if they were to sell and move, the potential houses they would be buying would also have went up by same amount.

Exactly, and then borrowed against said equity to buy off plan apartments in Bulgaria and we all know how that ended....

Whatever money you have tied up in your home should be ignored until such a point as you actually plan on selling it and then only evaluated against the cost of whatever you have to finance to live in once your home is sold.

Sure, I'm a millionaire on paper if we're talking property, but its not real, at least not to my next of kin until I die.

Hulk Hands

stayback wrote: »

This is the kind of a attitude that got us into a property bubble. A house is a home not a commodity that you check it’s value everyday.. if you don’t see a house as a home then DONT BUY A HOUSE. As said above we were in negative equity for a good few years after the crash but we could afford the repayments so we didn’t concern ourselves with it. We were happy in the house nice neighbourhood.. this attitude drives me mad do you drive around looking for the cheapest diesel while you have burnt the savings in diesel driving to the cheapest petrol station. A free market is what it is. Prices will go up and go down.. negative equity is only a concern if you have to realise that equity..

So you don't think the €250 p/m repayment i referenced, which is a tame example given the price drops back then, would've made a significant difference to the quality of life you had? For most that's a yearly family holiday, or could influence someones decision on a having a further child.

Obviously none of us have a crystal ball, and we can only speculate and go on advice we trust. But it's silly to think you should just plow on if your situation at the moment is ok and think it'll have no affect on your life thereafter. Someone who bought in 2010 over 2007 had a lot more disposable income thereafter, as did someone who bought in 2015 over 2018.

MrMusician18

stayback wrote: »

This is the kind of a attitude that got us into a property bubble. A house is a home not a commodity that you check it’s value everyday.. if you don’t see a house as a home then DONT BUY A HOUSE. As said above we were in negative equity for a good few years after the crash but we could afford the repayments so we didn’t concern ourselves with it. We were happy in the house nice neighbourhood.. this attitude drives me mad do you drive around looking for the cheapest diesel while you have burnt the savings in diesel driving to the cheapest petrol station. A free market is what it is. Prices will go up and go down.. negative equity is only a concern if you have to realise that equity..

Negative equity may only be of concern to those that crystalize their loss but waiting in a falling market will mean you will have a smaller mortgage repayment.

Bass Reeves

Padre_Pio wrote: »

That has been policy for the past 3 years at least.

There has not been substantial amounts build. If construction slows I could see the government consider using state owned land to provide housing. Allowing build and servicing costs of 200k/ house, 10k extra houses over and above present provision plans would cost 2billion per year. After claw back of taxes and economic activity the net cost would be very small. Factor in savings on rent allowance long term as well.

However lead in time would be 12-18 months for these extra house to be start bring build. This would put pressure on house and rental prices long term.

However if house prices government could decide to buy stock but this creates no new economic activity and upgrade costs could be similar to building costs

stayback

Hulk Hands wrote: »

So you don't think the €250 p/m repayment i referenced, which is a tame example given the price drops back then, would've made a significant difference to the quality of life you had? For most that's a yearly family holiday, or could influence someones decision on a having a further child.

Obviously none of us have a crystal ball, and we can only speculate and go on advice we trust. But it's silly to think you should just plow on if your situation at the moment is ok and think it'll have no affect on your life thereafter. Someone who bought in 2010 over 2007 had a lot more disposable income thereafter, as did someone who bought in 2015 over 2018.

But if we waited at the time we might not have got the property we wanted. It’s all relative . Yes If we waited we might have got a cheaper house but it might not have been the house we wanted. We bought what we wanted. If we waited then you have to ask yourself how long .. 12 months 18 months or never buy..

stayback

MrMusician18 wrote: »

Negative equity may only be of concern to those that crystalize their loss but waiting in a falling market will mean you will have a smaller mortgage repayment.

How long do you wait and also are you buying because it’s cheap and not because it’s what you want..

GreeBo

Snow Garden wrote: »

Yeah fair enough but if my auntie had balls she'd be my uncle.
It would want to be the house of your dreams because I believe you'll pick up a much better house for the same price in 1 year. Better again in 2 years.

Do you buy and sell your house every few years to take advantage of peaks and troughs in house prices?

JimmyVik

lomb wrote: »

Experts in the States are advising holding off for upto 2 years. Thing is the Irish property market never peaked during the latest boom as banks have been reluctant to lend. So in my opinion given build costs the recession is already priced in. That's my two cents anyway. I could be wrong. Will be very interesting to see if they really fall 20% or if they just remain static. I'm voting for a 5% fall. And I'm basing that on the limited length of this recession, the fact that half of all property purchases are in cash and there isalot of cash out there that's been built up over the last 10 years in some people's pockets.
They will be thinking of inflation risks with all the ECB printing going on, you can't print a house.

Yeah but if you have money burning a hole in your pocket and you want to invest in property, Ireland is not the place. I would invest in property in other contries, but not Ireland. If I was a REIT i might risk it, but Ireland is so stacked against the private residential investor you are just asking to get ridden.