Property Market 2020

awec

awec wrote: »

Good post, this is the risk I am talking about. It is absolutely not as clear cut as "just wait, buy a bargain".

People are going to have to choose between potentially overpaying for a house now, or potentially not having the security of home ownership for a long time, possibly never. Yes, there will be some lucky people who do pick things up on the cheap, but the majority don't get lucky.

How many people who bought in 2007 and 2008 regretted it?
Most I'd imagine.

I can't see many going ahead with "potentially overpaying for a house now", you'd want to be insane IMO to do so.

Rock77

awec wrote: »

Depends on the house, the area etc.

"X price for Y house is insane" is too simplistic.

Average price of a 3 bed semi in the town I’m from in 2019 was 282,000.

FutureGuy

Augeo wrote: »

How many people who bought in 2007 and 2008 regretted it?
Most I'd imagine.

I can't see many going ahead with "potentially overpaying for a house now", you'd want to be insane IMO to do so.

With 100% mortagages, I'm sure they did. Different times now.

Interested Observer

randoplh134 wrote: »

3 bed semi for 300k is insane imo. You will get a 3 bed in a decent area for much lower than that this time next year.

Would you ever go away with this sort of rubbish. You have no knowledge about the house or it's location and you have even less knowledge about what things will look like next year.

FutureGuy

FutureGuy wrote: »

With 100% mortagages, I'm sure they did. Different times now.

Possibly worse times now tbh.
There will likely be longterm impacts of the short term shock.

Assetbacked

Augeo wrote: »

Possibly worse times now tbh.
There will likely be longterm impacts of the short term shock.

The good thing about this time is that the numbers renting are a lot higher now which means that the debt levels are far lower. Debt compounds economic fallout and a lot renters, while there is job and general uncertainty aren't saddled with hundreds of thousands of debt.

Mic 1972

randoplh134 wrote: »

3 bed semi for 300k is insane imo. You will get a 3 bed in a decent area for much lower than that this time next year.

i think you are simplifying things a little too much. A lot of people may not have access to credit during recession, so even if house prices drop they still wont be able to buy. For some people it's still "convenient" to buy an overprices property now once mortgage is approved rather then being stuck for years before they ca get a loan

Mic 1972

FutureGuy wrote: »

With 100% mortagages, I'm sure they did. Different times now.

The 3.5 salary rule still leaves people with a big exposure in case jobs are lost
Unfortunately people who need a loan are always going to buy when prices are high, because during recession banks don't lend money

2011

Mic 1972 wrote: »

Unfortunately people who need a loan are always going to buy when prices are high, because during recession banks don't lend money

I don't agree. It is just harder to borrow during a recession.
I bought my first home before the Celtic Tiger madness.

Mic 1972

Rock77 wrote: »

We want to buy in the town where we both grew up. We could possibly get something for 260,000ish

Any idea what measures the banks will be more strict about when the crap really hits the fan? Do you think house prices will go down by Sept/Oct this year?

If prices go down due to recession you may not be able to borrow from the bank anymore. Personally I wouldn't buy now, there is too much uncertainly. But if your ability to buy depends on a bank mortgage you need to consider taht too

2011

2011 wrote: »

I don't agree. It is just harder to borrow during a recession.
I bought my first home before the Celtic Tiger madness.

And even in mad times one can still be prudent, I borrowed 4 times my income at 24 to buy my first property in 2005.

2011

Mic 1972 wrote: »

But if your ability to buy depends on a bank mortgage you need to consider taht too

Of course, but if you are in a safe job (such as a civil servant) and property prices go down (more likely now) then you are actually less of a risk to the bank than before.

Mic 1972

2011 wrote: »

I don't agree. It is just harder to borrow during a recession.
I bought my first home before the Celtic Tiger madness.

Harder to borrow means a lot of people will have no access to a mortgage, only some will. That's when prices are low

2011

Augeo wrote: »

And even in mad times one can still be prudent, I borrowed 4 times my income at 24 to buy my first property in 2005.

Agreed, but I don't see your point.

Mic 1972

2011 wrote: »

Of course, but if you are in a safe job (such as a civil servant) and property prices go down (more likely now) then you are actually less of a risk to the bank than before.

if you can borrow money during recession than yes you are a lucky one who will buy cheap, most people won't have the same luxury

2011

Mic 1972 wrote: »

Harder to borrow means a lot of people will have no access to a mortgage, only some will. That's when prices are low

Yes, but that is a world away from "during recession banks don't lend money".

Anyone reckoning they won't get a mortgage in a few months but can now, and is reckoning buying now is therefore a good idea is mad IMO.

The Belly

2011 wrote: »

Yes, but that is a world away from "during recession banks don't lend money".

Well from the table below there is a fair fall in lending during a recession if the last one was anything to go by.
Source Central Bank

Loan approvals - All Agencies - by year
Year New Houses Other Houses Totals
Number Value €m Number Value €m Number Value €m
2000 33,289 3726.2 47,567 5277.4 80,856 9003.7
2001 29,277 3695.9 39,785 5036.6 69,062 8732.6
2002 39,399 5985.9 53,737 8373.4 93,136 14359.3
2003 39,676 6968.2 58,212 10477.8 97,888 17446.1
2004 50,018 9750 54,287 11269.2 104,305 21019.2
2005 58,104 12971 61,933 14782.3 120,037 27753.3
2006 53,895 13994.7 60,698 17387.5 114,593 31382.2
2007 40,497 10560.4 48,250 13503.7 88,747 24064.1
2008 26,293 6625.2 29,586 8515 55,879 15140.3
2009 12,584 2719.7 15,340 3711.4 27,924 6431.1
2010 6,991 1,354.60 13,030 2,799.20 20,021 4,153.90
2011 2,960 541.2 9,874 1886.4 12,834 2427.7
2012 3,457 599.5 14,312 2625.5 17,769 3225
2013 2,974 530.6 16,284 3178.6 19,258 3709.3
2014 4,461 869.7 27,436 5317.4 31,897 6187.2
2015 4,685 996.5 27,551 5329.4 32,236 6326
2016 6,450 1517.1 28,587 5767.7 35,037 7284.8

Notes:
Source: From lending institutions and local authorities

The Belly

The Belly wrote: »

Well from the table below there is a fair fall in lending during a recession if the last one was anything to go by. .........

No one is disputing that.
An most who borrow immediately beforehand regret it.

lawred2

randoplh134 wrote: »

People should not use emotion when making one of the biggest financial decisions of their life. Logic and rationale is needed now more than ever, if someone is jumping into a mortgage now with only a 10% deposit, they are clearly desperate and are better off waiting for a bargain.

Of course everyone would be better off financially waiting for a "bargain"..

Life doesn't wait around for people to find bargains though. And if lenders are spooked, it doesn't matter how high a regard you hold yourself in, these bargains can easily pass on by as you're locked out.

Best of luck all the same.

2011

The Belly wrote: »

Well from the table below there is a fair fall in lending during a recession if the last one was anything to go by.

Yes, but the banks still lent so my pint still stands.

It is also worth noting that part of the reason for borrowing being down during a recession is because less people apply for loans.

2011

2011 wrote: »

......
It is also worth noting that part of the reason for borrowing being down during a recession is because less people apply for loans.

....... and they borrow less as houses are cheaper.

Graham

2011 wrote: »

Yes, but the banks still lent so my pint still stands.

Barely, according to the posted figures.

31 billion at the peak to 2 billion.

That's what, around a 94% drop in lending.

JohnnyChimpo

2011 wrote: »

Yes, but the banks still lent so my pint still stands.

It is also worth noting that part of the reason for borrowing being down during a recession is because less people apply for loans.

Sure, but if lending volume is down 90% from its peak in 2005, you're only correct in the most technical sense

lawred2

2011 wrote: »

Yes, but the banks still lent so my pint still stands.

It is also worth noting that part of the reason for borrowing being down during a recession is because less people apply for loans.

Your pint still stands..

Indeed.

2011

JohnnyChimpo wrote: »

Sure, but if lending volume is down 90% from its peak in 2005, you're only correct in the most technical sense

All in saying is that the banks still lend during a recession. I have already acknowledged that it is harder to get a mortgage during a recession but to make a blanket stthat they won’t lend during this time is very misleading.

Also applications for mortgages being down make up part of the 90% too

Graham

2011 wrote: »

It is also worth noting that part of the reason for borrowing being down during a recession is because less people apply for loans.

This is true. Job uncertainty, reduced wages etc etc etc.

It hasn't occurred to many of the "I'll wait for the drop" brigade that their well planned intentions are quite likely to be scuppered by events completely outside of their control.

JohnnyChimpo

2011 wrote: »

All in saying is that the banks still lend during a recession. I have already acknowledged that it is harder to get a mortgage during a recession but to make a blanket stthat they won’t lend during this time is very misleading.

Ok fine, lending volume may be reduced by 90% based on historical experience, this means that both statements are true:

- Banks still lend during recession/crashes.

- During a recession, most people who would like to get a house cannot. (Either because they are underemployed and thus untenable prospects for a mortgage, or because the banks will not take a risk on them, or are otherwise constrained by Central Bank rules)

The Belly

Population since 2005 has grown by 800k

We had a chronic supply issue since the crash yet population is still rising.

Tinkering around with HAP and housing bodies building a few houses here and there wont deal with it. Whatever happens in the short term with housing prices in the long term if we are on a recession course or worse the government will have no choice but to directly build houses on a large scale quickly.

This will go some way in relieving pressure on the private stock both rental and homes which will level out prices as people have more then one option regarding housing.

This will happening faster if we have a major downturn and be kicked down the road if we are back to normal over the summer.

I suspect the day of everyone having to go to the bank for a mortgage and into the private market only will be a coming to an end one way or the other and rightly so.

In the long term its would be a very good result as house price would grow at a steady rate and in times of recession fall slower too.

Graham

Graham wrote: »

This is true. Job uncertainty, reduced wages etc etc etc.

It hasn't occurred to many of the "I'll wait for the drop" brigade that their well planned intentions are quite likely to be scuppered by events completely outside of their control.

You can reckon now is a woeful time to buy without being part of a "I'll wait for the drop" brigade.

I'm not waiting for any drop but I can still see that there is going to be one over the coming months.