Property Market 2020

greengrass88

Question - my partner and I have our deposit saved for a house (Dublin). We were hoping to get mortgage approval around now and then buy this summer, but we will be holding off for at least a few months because of the obvious reason! Partner works in civil service (job secure), whilst I may need to go unpaid for a month or 2 when sh*t really hits the fan. It's likely that if and when things start getting back to normal, myself and my colleagues would all return to stable jobs. But i'm not sure how a bank would look at my temporary period of unemployment in this respect. Any ideas? I know that when banks are lending they want to see months of steady payslips etc. Thanks

Greyian

Just a couple of things on this discussion around bank lending.

1) Comparing the depths of the recession to the 2007/2008 figure doesn't make much sense. That was the top of a massive credit bubble. Comparing to a normal period of lending would make more sense (so 2018/2019 figures would be more applicable).
2) Comparing the value of mortgages given out isn't really relevant. Comparing the number of mortgages given out is far more relevant. If banks reduce the value of mortgages by 50%, but houses have also dropped 50% in value, it means they are giving out the same number of mortgages.

If we look at number of houses as opposed to value, the drop from 2006/2007/2008 to the lows of 2011/2012/2013 isn't as extreme.
If we also factor in that 2006/2007/2008 were artificially high, the discrepancy is again reduced.

A more balanced outlook would probably be to say that across the years where housing "bargains" were available (2010-2014/2015), banks probably reduced their mortgage lending compared to more "normal" years (2017/2018/2019) by roughly 60% on average.
While it is certainly harder to buy at the very bottom, there would be a lot of people who could get mortgages again at a year equivalent to 2015 in the graph, which compared to current prices would certainly be considered a bargain.

greengrass88

greengrass88 wrote: »

Question - my partner and I have our deposit saved for a house (Dublin). We were hoping to get mortgage approval around now and then buy this summer, but we will be holding off for at least a few months because of the obvious reason! Partner works in civil service (job secure), whilst I may need to go unpaid for a month or 2 when sh*t really hits the fan. It's likely that if and when things start getting back to normal, myself and my colleagues would all return to stable jobs. But i'm not sure how a bank would look at my temporary period of unemployment in this respect. Any ideas? I know that when banks are lending they want to see months of steady payslips etc. Thanks

Some banking chap on Newstalk during the week said such a situation shall be no problem on a mortgage application.

greengrass88

Big relief, thanks

2011

2011 wrote: »

Agreed, but I don't see your point.

Folk were borrowing more than 4 times their income, this meant lots of the debt was highly risky.

tobsey

Over 80k houses were built in 2006. We had massive oversupply in terms of housing when the credit bubble burst in 2008. Therefore rents and house prices fell massively.

This is very different. We built 25k houses last year and have massive demand for housing. That isn't going to go away as a result of this crisis. Prices and rents mail fall some amount due to affordability, but demand isn't going to go away. If demand for house purchases down, rental demand will have to increase to balance that out.

Currently houses near me are worth aroung 300k, with rent at 2k per month. That's an 8% return. There's no way property values can fall much without rent falling considerably also. Otherwise property would be the goose laying the golden egg for investors with double digit yields each year.

A 25% drop in property prices would have double digit rental yields. That's not going to happen.

Without doubt there are going to be impacts from this, on all sectors of the economy. But anyone who says they know what's going to happen is talking nonsense.

tobsey

tobsey wrote: »

..............

This is very different. We built 25k houses last year and have massive demand for housing. That isn't going to go away as a result of this crisis. Prices and rents mail fall some amount due to affordability, but demand isn't going to go away. If demand for house purchases down, rental demand will have to increase to balance that out..........

AirB&Bs are now on daft, loads of them and more to come.
Rents will fall, apartments and flats will become available as actual housing instead of short stay holiday homes.

When the dust settles and folk can travel again hotels shall likely be very busy and very expensive as once a property is rented out properly it won't be going back to being an Air B&B anytime soon.

Idbatterim

greengrass88 wrote: »

Big relief, thanks

DO NOT take that for gospel, they will do whatever suits their own agenda, both scenarios are perfectly plausible... I think the government will do everything it can to stop a drop in prices, at current building standards and the amount the government cream off on taxes, it wont be viable to build much or anything, if prices drop probably 10-15%...

The Belly

lending central Bank report from 2016

Around 30,000 loans in 2017

A total of 39,495 loans were originated by these institutions in 2018,

A total of 18,260 loans were originated by these institutions in first 6 months of 2019,

coolshannagh28

Anyone in the market to buy right now who remains mortgage approved should be looking for value ie a large discount , go sale agreed and at the funereal pace closing takes in this country should have a couple of months to guage whether to sign contracts and close or withdraw .

coolshannagh28

coolshannagh28 wrote: »

Anyone in the market to buy right now who remains mortgage approved should be looking for value ie a large discount , ........ .

Indeed, to not do so is madness IMO.

Deco99

Padre_Pio wrote: »

Saved you 5 or 6 years of mortgage payments there :eek::eek:

I think it shows we were way over the top initially, just made a bidder who was as keen as us

theballz

coolshannagh28 wrote: »

Anyone in the market to buy right now who remains mortgage approved should be looking for value ie a large discount , go sale agreed and at the funereal pace closing takes in this country should have a couple of months to guage whether to sign contracts and close or withdraw .

Funny you say that.

I was bidding on a property; it was high overly valued 1.5 months ago when it first went up. Long story short, I was the highest bidder (20k under asking price,) 2 weeks ago the owner said he would hold out to something closer to the number but suggested an additional 15k would get it done.

After two weeks (today) I went back to the EA and told them I was withdrawing my offer based on the downturn and evidential recession we could find ourselves in come 2/3 months. The EA responds with the "The homeowner said they would take an additional 10k."

Not all of us can see this downturn, daft.ie is still posting new homes daily (no more or less than ever before.) So I do agree, in theory, this could be seen as an excellent time for value buying, but ultimately, it hasn't struck the market hard enough yet to avail of such.

Mic 1972

tobsey wrote: »

We built 25k houses last year and have massive demand for housing. That isn't going to go away as a result of this crisis

It has gone away already. There are plenty of new houses and apartments available now there were used as BnB

Mic 1972

JohnnyChimpo wrote: »

- 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)

Correct. That's why most people can't afford to buy during a recession when prices are low, simply because they can't get a mortage

Graham

Mic 1972 wrote: »

It has gone away already. There are plenty of new houses and apartments available now there were used as BnB

While those properties returning to the residential market will certainly help, I'm not sure they will make up for the lost construction/production that we're likely to see over the next few weeks.

voluntary

Mic 1972 wrote: »

Correct. That's why most people can't afford to buy during a recession when prices are low, simply because they can't get a mortage

Well, the 150.000 or so who have already been layed off will certainly not be buying anytime soon.

nerrad01

voluntary wrote: »

Well, the 150.000 or so who have already been layed off will certainly not be buying anytime soon.

its likely going to be 340,000 laid off by the end of this week, and this thing hasn't even begun yet.

Mic 1972

Graham wrote: »

While those properties returning to the residential market will certainly help, I'm not sure they will make up for the lost construction/production that we're likely to see over the next few weeks.

The housing issue will correct itself. No more foreign workers coming to Ireland, lots going back home. No tourists
There will be no need to add new houses in this climate

voluntary

Just a note on rent to purchase cost ratios. The rents in Ireland are and were enormous. If rents would to drop by 30-40% and house prices remain at the current level, this would still make an investment in BTL attractive.

If you could recently purchase an apartment for 240.000 and rent it for 2000 per month (24k annually) the puts a purchase price of 10 annual rents which is normally considered as very low. A ratio of 15 would be an average and a ratio of 20 would indicate properties too expensive in comparison to rents.

I believe rents are going to fall much faster than house prices.

Umaro

Viewed a place in late January, I liked it a fair bit and thought the asking price was fair given the market at the time. Bidding eventually went to 30k over asking and I was outbid around 4 weeks ago.

Now the estate agent is contacting me asking if I want to put another bid on otherwise its going sale agreed. There is not a hope that this sale is completing at the current bid given what we're seeing now.

Mic 1972

voluntary wrote: »

Just a note on rent to purchase cost ratios. The rents in Ireland are and were enormous. If rents would to drop by 30-40% and house prices remain at the current level, this would still make an investment in BTL attractive.

If you could recently purchase an apartment for 240.000 and rent it for 2000 per month (24k annually) the puts a purchase price of 10 annual rents which is normally considered as very low. A ratio of 15 would be an average and a ratio of 20 would indicate properties too expensive in comparison to rents.

I believe rents are going to fall much faster than house prices.

Don't forget tax, service charges/fees, maintenance
out of 24K gross income you might pocket half if you are lucky

OwlsZat

Augeo wrote: »

AirB&Bs are now on daft, loads of them and more to come.

Shocking how a Government could be so bad at stoping profiteering. All the properties with the perfect set tables. Totally typical AirBnBs shots.

Mic 1972

OwlsZat wrote: »

Shocking how a Government could be so bad at stoping profiteering. All the properties with the perfect set tables. Totally typical AirBnBs shots.

Honestly, people have a right to do AirBnBs with their own houses if they want, any other country in Europe allows that no probs
Why should the gvmt stop that?

Idbatterim

nerrad01 wrote: »

its likely going to be 340,000 laid off by the end of this week, and this thing hasn't even begun yet.

I am not saying this wont have an effect on prices, due to the wider implications, but believe me. the vast majority who have or will be laid off if in dublin if its hospitality related, were not going to have or get mortgage approval!

nerrad01

OwlsZat wrote: »

Shocking how a Government could be so bad at stoping profiteering. All the properties with the perfect set tables. Totally typical AirBnBs shots.

christ just had a look, the amount of luxury apts up for rent now!

Mic 1972

Idbatterim wrote: »

I am not saying this wont have an effect on prices, due to the wider implications, but believe me. the vast majority who have or will be laid off if in dublin if its hospitality related, were not going to have or get mortgage approval!

I was talking to a recruitment agent yesterday about potential opportunities for me, he reckons that 90% of current open vacancies are on hold. I work in IT, data analysis and project management. The issue seems to affect most industries

Idbatterim

Mic 1972 wrote: »

Honestly, people have a right to do AirBnBs with their own houses if they want, any other country in Europe allows that no probs
Why should the gvmt stop that?

agreed. The government chose this route, i.e the crisis and rip off prices. I dont see why the rights of property owners should be impinged... within reason. Maybe have temporary price freezes or airbnb ban, for a period to address a situation. But doing it long term, because they actually support rip off prices, is impinging too much IMO...

nerrad01

Idbatterim wrote: »

I am not saying this wont have an effect on prices, due to the wider implications, but believe me. the vast majority who have or will be laid off if in dublin if its hospitality related, were not going to have or get mortgage approval!

this effects every part of the economy, friend of mine is an aer lingus pilot for the last 10 years, been reduced to flying cargo part time and likely job gone by the end of the month. So it will also effect people who had or were going to have mortgage approval.

Idbatterim

Mic 1972 wrote: »

I was talking to a recruitment agent yesterday about potential opportunities for me, he reckons that 90% of current open vacancies are on hold. I work in IT, data analysis and project management. The issue seems to affect most industries

yeah it makese sense, I am just saying, that if its just hospitality workers etc and most retail, they werent getting a mortgage. But my first line about the wider implications this will have, like people for yourself , is valid