Property Market 2020

Cyrus

errlloyd wrote: »

I think this is also an admission by AIB they're expecting a widespread price drop. No point on allowing someone to borrow against a home you think will crash in price.

i wouldnt read that into it,

they are being prudent in their lending, someone in an unstable work situation doesnt get a new mortgage,

good sense for once and hopefully it continues, its banking like this that will keep a lid on house prices.

guyfawkes5

If banks do tighten lending criteria significantly (I don't consider checks for the Covid-19 subsidy to be overly tight criteria), then this would push houses prices down very sharply. You'd then have a similar rebound in a year or two once the rules are loosened back up, as there would be a glut of people restrained from buying entering the market at the same time.

I would hope if it looks like this is going to happen, the government intervenes to prevent another boom and bust housing cycle as it really is unique to Ireland and would exacerbate a lot of social problems we have if we create another 'lost generation' looking for their first house.

Billythekid19

Billythekid19 wrote: »

My point is that Joe Bloggs applying for a modest 200k mortgage this year has the same chance of losing his job as Billy Big Bollocks that drew down a 500k mortgage last year.

Yeah, but if Joe Bloggs is currently on Covid payment and his employer is struggling why the fook would any sane back lend him 200k?

Billy Big Bollocks wasn't on €350/week social welfare when he drew down his 500k mortgage last year.

What about this mortgage insurance you are talking about? What was your point there?

LJ12345

Imagine if there was a sniff of the govt raiding bank accounts - there’s so much cash in savings in Ireland where would people put it.
I also think the bank of mum and dad might come into play for a lot of folk locked out. I don’t see the housing market plummeting then shooting back up again. But you’re right, if it does happen it’ll probably surge, we’ve already a brexit backlog of buyers who were waiting for a drop.

guyfawkes5 wrote: »

If banks do tighten lending criteria significantly (I don't consider checks for the Covid-19 subsidy to be overly tight criteria), then this would push houses prices down very sharply. You'd then have a similar rebound in a year or two once the rules are loosened back up, as there would be a glut of people restrained from buying entering the market at the same time.

I would hope if it looks like this is going to happen, the government intervenes to prevent another boom and bust housing cycle as it really is unique to Ireland and would exacerbate a lot of social problems we have if we create another 'lost generation' looking for their first house.

Claw Hammer

awec wrote: »

It's an admission that they think there'll be people who can't afford to pay mortgages. Borrowing against a property that falls in value by itself is not much of an issue once the mortgage is still serviced.

.

Therein lies the problem. people are in positive equity have a much greater incentive to hold on to the property. People in negative equity tend to take the view that it is better to keep their money rather than pouring it into a loss. If they are repossessed they will get nothing other than a lower debt. People in positive equity will get the equity back if they have to sell and won't want to lose any of it in legal costs if there is a forced sale.

awec

Claw Hammer wrote: »

Therein lies the problem. people are in positive equity have a much greater incentive to hold on to the property. People in negative equity tend to take the view that it is better to keep their money rather than pouring it into a loss. If they are repossessed they will get nothing other than a lower debt. People in positive equity will get the equity back if they have to sell and won't want to lose any of it in legal costs if there is a forced sale.

I don't think this is true. I would imagine that after the last crash the overwhelming majority of people in NE continued to service the mortgage to some degree.

You always hear about the chancers on the news who haven't paid a penny in a decade finally getting taken to court, but I think they are the exception rather than the rule.

Open to correction if anyone can provide figures.

random_banter

guyfawkes5 wrote: »

If banks do tighten lending criteria significantly (I don't consider checks for the Covid-19 subsidy to be overly tight criteria), then this would push houses prices down very sharply. You'd then have a similar rebound in a year or two once the rules are loosened back up, as there would be a glut of people restrained from buying entering the market at the same time.

I would hope if it looks like this is going to happen, the government intervenes to prevent another boom and bust housing cycle as it really is unique to Ireland and would exacerbate a lot of social problems we have if we create another 'lost generation' looking for their first house.

+1

And also, the criteria have already been tightened a bit, in that exemptions are now off the table according to all banks except for a few odd circumstances that I've seen mentioned here. We've been told by BOI that they're off the table for sure.

Wether the lack of exemptions has a knock on effect remains to be seen (but it would, right?), as do the effects of all of this. The rush for people to use their approval makes sense to me, as we're looking at the moment and all I can see is prices increasing or staying the same. These events have made people re-evaluate their living situations and they're looking to remedy them asap. It's also the same properties being refreshed each week, very little actual "new" ones.

The slow response of the property market to all of these global and national events makes sense to me, so I'm expecting a drop at some point, and wasn't expecting it to happen quickly.

Re: approvals for those on COVID payments, yes it feels unfair but this is underwriters and risk and mathematical calculations. There's no emotions in it. If someone is on a state payment then that's a red flag indicator that the business they work for could be at risk because of current events. They would be mad to still lend when that red flag is there and they would probably get a slap on the wrist for it. It's a really tough time for a lot of people unfortunately.

boma_12

Todays's independent => Lenders stop issuing mortgages to customers on pandemic unemployment payment...

GreeBo

awec wrote: »

If prices do fall significantly there will be a lot of people watching from the sidelines as the housing market remains out of reach for them as they do not fit the risk profile the banks are looking for.

Doesn't that just push those people towards cheaper houses, increasing demand for those houses and thus increasing the price?

GreeBo

GreeBo wrote: »

Doesn't that just push those people towards cheaper houses, increasing demand for those houses and thus increasing the price?

Significant fall in prices suggests a totally t0ssed economy ........ high unemployment............ all that increases in such times is housing lists, property prices not so much I would think.

awec

GreeBo wrote: »

Doesn't that just push those people towards cheaper houses, increasing demand for those houses and thus increasing the price?

No it pushes those people into the rental market and the social housing list.

fliball123

awec wrote: »

No it pushes those people into the rental market.

Would they not already be there anyway?

Assetbacked

https://www.irishtimes.com/business/economy/house-prices-fall-3-in-three-months-says-myhome-ie-1.4290878

Asking prices, not actual house prices, dropped 3% in Q2. I'm a bit surprised by that considering most people would have held off doing anything since they had bigger issues like being in lockdown and whether they have a job. As such, considering the trend has been for house prices to start falling prior to covid, maybe this was more of a continuation of the correction of the market from the rapid increase since 2012.

The report reckons that the full impact on house prices won't become apparent until the 3rd quarter data appears. For me, that 's very optimistic as we are still in a very precarious stage of the covid crisis and people don't even know if their jobs will be impacted or not and even whether kids will be in school in September so buying and selling houses is not going to be a priority until we are out of the crisis (end Q3/Q4), then we will see the true impact on house prices (data at the end of Q1/Q2 in 2021 I would say at the earliest).

Springy Turf

fliball123 wrote: »

Would they not already be there anyway?

Yes, but people who previously would have been leaving the rental market will have to stay.

Donald Trump

Springy Turf wrote: »

Yes, but people who previously would have been leaving the rental market will have to stay.

There will be people in house-shares who might have been planning to get their own place and who will just keep house sharing........maybe if rents go down, the owner of the 3-bed who rented one room under the rent-a-room might now decide to rent out the other spare one too.


Nothing is really linear.


Prices might actually stabilize. That is of course possible. It is also possible that some dominos will fall once the first one gets a push.

combat14

https://amp.independent.ie/business/personal-finance/lenders-stop-issuing-mortgages-to-customers-on-pandemic-unemployment-payment-39324345.html

sounds like all lenders are now taking the same line as AIB

MrMusician18

combat14 wrote: »

https://amp.independent.ie/business/personal-finance/lenders-stop-issuing-mortgages-to-customers-on-pandemic-unemployment-payment-39324345.html

sounds like all lenders are now taking the same line as AIB

Market is now effectively shut for at least half of potential purchasers.

richard D

MrMusician18 wrote: »

Market is now effectively shut for at least half of potential purchasers.

This can only mean one thing a lack of lending, which will result in lower competition for houses, and ultimately lower prices.

I'm flabbergasted at how people can argue on this thread that house price are going up because of pent up demand from Covid 19 savings, house prices go up due to lack of supply. Its utter nonsense.

We know that we are in a recession all the forecasters, IMF, Central Bank, Irish Government etc are all forecasting a contraction in the economy by up to 12% and maybe some recovery in 2021. All have forecasted a downward projection on house prices. All the models used have factored in all the variables such as a) Shortage of supply due to construction ceasing,b) additional savings accumulated during the lock-down etc.
Do you think its wise to trust someone opinion Mr Joe Bloggs on this site who has ulterior motives to begin with (a) either bought a hose recently b) looking to buy before there exemption is pulled) who wants to convince themselves that house prices will go up due to xxxx, so they feel,like they have made/will make the right decision.

Can people accept that fact that house prices will fall. Instead of trying to make themselves feel better if they have bought recently or are looking to buy.

The only questions is how much will prices fall, 5%? 10%? 15%? or 20%+, that should be the focus of this discussion.

Underground

I found it interesting how the media was framing the AIB story today i.e. a "frightening tightening" of measures. I would have thought introducing an outright ban on mortgage lending to people in receipt of the covid payment or even on the WSS was an act of prudence, and don't we want our state owned bank to be prudent?

nerrad01

who in their right mind could expect to get a mortgage if they have been in receipt of a covid payment. Sounds like sensible tightening to me.

Deub

Underground wrote: »

I found it interesting how the media was framing the AIB story today i.e. a "frightening tightening" of measures. I would have thought introducing an outright ban on mortgage lending to people in receipt of the covid payment or even on the WSS was an act of prudence, and don't we want our state owned bank to be prudent?

Yes but it doesn’t sell if you write this.

“How do the banks dare refusing mortgages and therefore deny the right to own a house?“ is a better headline.

cnocbui

richard D wrote: »

This can only mean one thing a lack of lending, which will result in lower competition for houses, and ultimately lower prices.

I'm flabbergasted at how people can argue on this thread that house price are going up because of pent up demand from Covid 19 savings, house prices go up due to lack of supply. Its utter nonsense.

We know that we are in a recession all the forecasters, IMF, Central Bank, Irish Government etc are all forecasting a contraction in the economy by up to 12% and maybe some recovery in 2021. All have forecasted a downward projection on house prices. All the models used have factored in all the variables such as a) Shortage of supply due to construction ceasing,b) additional savings accumulated during the lock-down etc.
Do you think its wise to trust someone opinion Mr Joe Bloggs on this site who has ulterior motives to begin with (a) either bought a hose recently b) looking to buy before there exemption is pulled) who wants to convince themselves that house prices will go up due to xxxx, so they feel,like they have made/will make the right decision.

Can people accept that fact that house prices will fall. Instead of trying to make themselves feel better if they have bought recently or are looking to buy.

The only questions is how much will prices fall, 5%? 10%? 15%? or 20%+, that should be the focus of this discussion.

If four people are interested in a house, and one of them gets bumped from contention because of loan requirements, that still leaves 3 in competition to buy so in all likelihood, the price won't drop.

As we have already seen anecdotally, if prices do drop, or if there is even just a suspicion they might, many sellers will just withdraw from the market or not enter it to begin with, further restricting supply.

hometruths

Underground wrote: »

I found it interesting how the media was framing the AIB story today i.e. a "frightening tightening" of measures. I would have thought introducing an outright ban on mortgage lending to people in receipt of the covid payment or even on the WSS was an act of prudence, and don't we want our state owned bank to be prudent?

Interesting about turn from the Irish Times if this new stick to beat the nasty banks with becomes their editorial stance.

For the last ten years they have been putting the boot into to the banks for causing the 08 crash by their reckless lending.

a generation of homeowners was plunged into arrears by the financial crash and the reckless lending practices of institutions which had allowed borrowers to become overextended

https://www.irishtimes.com/business/personal-finance/holding-banks-to-account-on-charges-1.4067215

taxpayers were forced to pump €64 billion into the State’s banks to keep them afloat after years of reckless lending

https://www.irishtimes.com/business/financial-services/ban-on-bank-bonuses-works-against-hunt-for-brexodus-jobs-1.3933357

The main cause of the Irish crisis was clearly the wave of reckless bank lending which preceded it

https://www.irishtimes.com/opinion/patrick-honohan-the-troika-brought-austerity-and-other-myths-of-the-irish-crash-1.3909903

MrMusician18

cnocbui wrote: »

If four people are interested in a house, and one of them gets bumped from contention because of loan requirements, that still leaves 3 in competition to buy so in all likelihood, the price won't drop.

As we have already seen anecdotally, if prices do drop, or if there is even just a suspicion they might, many sellers will just withdraw from the market or not enter it to begin with, further restricting supply.

This would be true if maybe you were looking at 5/10% of purchasers being shut out but you are looking at more than half, minimum. Most people buy property as part of a couple and if just one of the couple has had a covid payment their income is discounted.

The only people that will qualify for full mortgages are couples in the public service and tech. How many people do you think that is?

So with your example, of the four competing for a house, a seller will be lucky to have one buyer standing.

The banks have, with one swoop, killed competition in the buyer side of the market.

Cyrus

MrMusician18 wrote: »

The only people that will qualify for full mortgages are couples in the public service and tech. How many people do you think that is?

Say what now ?

liam7831

This has been happening with the last month or 6 weeks, as I just got mortgage approval updated but it's only based on one of our wages as other person on C19 supplement. I suppose people not in system for the last few months didn't realize this

ebayissues

Banks are or should be using a risk based approach towards lending. If you're on the government scheme, or you received, bank should withdraw AIP and re-asses your situation in 6 months. You should not be given a mortgage.

The actions taking by AIB should have be done 1/2 months ago.

No denial, I've skin in the game. Exemption expired , still renting with a disgusting and frustrating housemate, however I still have the peace of mind now than to purchase and lose my job.

I see posters here saying better proceed as it's better to loose your job and live in your own house - really sums up why we pay huge rates for mortgage in Ireland.

Anyone whose job is at risk and yet still proceeds deserves what they get.

hometruths

liam7831 wrote: »

This has been happening with the last month or 6 weeks, as I just got mortgage approval updated but it's only based on one of our wages as other person on C19 supplement. I suppose people not in system for the last few months didn't realize this

The fact that banks restrict lending to people whose salaries are subsidised/replaced by government handouts should not really come as a big surprise to anybody.

liam7831

schmittel wrote: »

The fact that banks restrict lending to people whose salaries are subsidised/replaced by government handouts should not really come as a big surprise to anybody.

Ya I know was surprised it was a news story today

Iceman29

richard D wrote: »

This can only mean one thing a lack of lending, which will result in lower competition for houses, and ultimately lower prices.

I'm flabbergasted at how people can argue on this thread that house price are going up because of pent up demand from Covid 19 savings, house prices go up due to lack of supply. Its utter nonsense.

We know that we are in a recession all the forecasters, IMF, Central Bank, Irish Government etc are all forecasting a contraction in the economy by up to 12% and maybe some recovery in 2021. All have forecasted a downward projection on house prices. All the models used have factored in all the variables such as a) Shortage of supply due to construction ceasing,b) additional savings accumulated during the lock-down etc.
Do you think its wise to trust someone opinion Mr Joe Bloggs on this site who has ulterior motives to begin with (a) either bought a hose recently b) looking to buy before there exemption is pulled) who wants to convince themselves that house prices will go up due to xxxx, so they feel,like they have made/will make the right decision.

Can people accept that fact that house prices will fall. Instead of trying to make themselves feel better if they have bought recently or are looking to buy.

The only questions is how much will prices fall, 5%? 10%? 15%? or 20%+, that should be the focus of this discussion.

Well said. The real debate is by how much