Irish Property Market 2020 Part 2

coolshannagh28

Assetbacked wrote: »

The S&P 500 is down a few percent today with the big tech stocks . The thing is that it is likely to continue to correct; Apple phones, Tesla cars, Netflix new shows etc. aren't subject to increased demand the past few weeks but the stocks have been climbing like crazy. It appears to have been a bit of a dead cat bounce of a recovery aided by QE and this hysteria has run its course. The problem is that a 20% correction in the stock market isn't anything scary considering how high it has climbed but it will lead to panic selling and could start a chain reaction in the system. The "W" shaped recovery is likely to be the outcome with covid and we are going to start moving into that 2nd dip. Perhaps this recession talk might start to be seen in more job losses outside of the airline, tourism and retail sectors as well as asset price declines. It's going to be a bumpy few months as we are at the tail end of the covid crisis and returning to normal - buckle up!

Agree with everything you say , the wildcard is Trump , he needs the markets to remain high if he is to have any chance of re election ;he is putting extreme pressure on Jerome Powell the FED Chairman to pump QE in order to achieve this . Somehow he may achieve his aim but things could get very rocky post election.

Springy Turf

schmittel wrote: »

Surely it will suit those people who are in secure employment and can comfortably afford to take on a mortgage?

i.e the banks will lend less, because there are less people in employment, but they will continue to lend affordable mortgages to people with secure incomes.

Sure, if you are still in secure employment when everything else burns around you, you'll be in a good position. But if it gets to that stage, there will have to be tax hikes, public sector pay cuts and freezes, layoffs in industries that right now seem secure and so on. Pick most jobs, and you will be able to see how a couple of vulnerable industries crashing will hurt them. (for example most big tech is dependant on advertising. if the advertisers are hit, big tech is hit. If companies are getting squeezed, advertising spend gets squeezed).

The_Conductor

Springy Turf wrote: »

Sure, if you are still in secure employment when everything else burns around you, you'll be in a good position. But if it gets to that stage, there will have to be tax hikes, public sector pay cuts and freezes, layoffs in industries that right now seem secure and so on. Pick most jobs, and you will be able to see how a couple of vulnerable industries crashing will hurt them. (for example most big tech is dependant on advertising. if the advertisers are hit, big tech is hit).

They've already cancelled the tax cuts for the 'squeezed middle' that were highlighted in the general election. The public sector have been informed they are having a complete freeze on recruitment (but no job cuts) and the use of contract staff is to be wound down as expeditiously as possible. There is a 2% pay restoration for the public sector under the last pay agreement, due to be paid on the 1st of October- which hasn't been cancelled/postponed (yet) but it has been highlighted that any futher pay restoration will be put off for at least a number of years. The big spending Departments (esp. DSEAP) are being told to identify savings- and for the purpose of this exercise- identifying fraud is not to be considered a saving- but active steps should be taken to manage disbursements under the various subheads. The HSE and health in general- are going to have to adjust to living within their means- and we still have a deficit of 28-30 billion for 2020 and at least 20 billion for 2021 (and thats making a working assumption that we don't get slaughtered over Brexit from the 1st Jan.

There are torrid times ahead of us.

Pelezico

27 falls today
11 rises.

Springy Turf

Pelezico wrote: »

27 falls today
11 rises.

There seems to be more price drops then rises in general - but I don't see any correlation between this and prices. The average asking and selling price seems pretty much unchanged (within 3-4%) over the last few months.

cubatahavana

Pelezico wrote: »

27 falls today
11 rises.

How many with no change?

Dwarf.Shortage

Hubertj wrote: »

12.95 Fine Gael TDs are landlords? Who is the 0.95?

13/47 = .3714, spurious accuracy to not round to 37%.

Very little value in being difficult for the sake of it.

Hubertj

Dwarf.Shortage wrote: »

13/47 = .3714, spurious accuracy to not round to 37%.

Very little value in being difficult for the sake of it.

what? wheres 47 coming from? TDs? I thought they had 35?

i was taking the p*ss anyway.

Mic 1972

brisan wrote: »

I think someone stated we are heading for deflation ?????

The consensus view among economists is that sustained inflation occurs when a nation's money supply growth outpaces economic growth.

If we are all printing a lot of money while the economy is shrinking we are going to face high inflation.

That's what we are going to see

PropQueries

Mic 1972 wrote: »

The consensus view among economists is that sustained inflation occurs when a nation's money supply growth outpaces economic growth.

If we are all printing a lot of money while the economy is shrinking we are going to face high inflation.

That's what we are going to see

Maybe. But, if that is true, interest rates rise and the impact on Irish property values will be significant (on the downside).

*** Disclaimer - I have made the below point numerous times and I fully understand this. If you're a regular poster, you don't need to read the below. I'm adding it in for the benefit of new posters and the younger generation. ***

I put some numbers into a mortgage repayment calculator. As you can see below, if a couple that is approved for a maximum €300,000 mortgage and buys today, a similar couple with a similar repayment capacity would only be approved for a mortgage of €200,000 in 5 years time if mortgage interest rates did increase by 3%. This doesn't impact the buyer today but it does impact them if they wish to sell in 5 years times as most similar potential buyers with a similar repayment capacity would be approved for a significantly lower value mortgage. If interest rates rise, it will have a a very very negative impact on Irish residential house prices.

Monthly repayments on a typical 30-year mortgage of €300,000 at 3% = €1,264.81

Monthly repayments on a typical 30-year mortgage of €200,000 at 6% = €1,199.10

PropQueries

The_Conductor wrote: »

They've already cancelled the tax cuts for the 'squeezed middle' that were highlighted in the general election. The public sector have been informed they are having a complete freeze on recruitment (but no job cuts) and the use of contract staff is to be wound down as expeditiously as possible. There is a 2% pay restoration for the public sector under the last pay agreement, due to be paid on the 1st of October- which hasn't been cancelled/postponed (yet) but it has been highlighted that any futher pay restoration will be put off for at least a number of years. The big spending Departments (esp. DSEAP) are being told to identify savings- and for the purpose of this exercise- identifying fraud is not to be considered a saving- but active steps should be taken to manage disbursements under the various subheads. The HSE and health in general- are going to have to adjust to living within their means- and we still have a deficit of 28-30 billion for 2020 and at least 20 billion for 2021 (and thats making a working assumption that we don't get slaughtered over Brexit from the 1st Jan.

There are torrid times ahead of us.

Torrid indeed. Thanks for the information. I don't think many know the above. I didn't anyway.

If the government thinks they're going to make savings on the social welfare spend, that means they're cutting pensions. As per below, there's very little else to cut to make meaningful savings.

This is a breakdown of the €21 billion "Social Welfare" expenditure for 2019. As you can see, very little of the "welfare" spend is actually "social welfare" as the layman understands it.

Pensions = €8.21 Billion
Administration = €0.8 Billion
Illness, Disability and Carers = €4.51 Billion
Children = €2.65 Billion
Working Age - Income Supports = €3.26 Billion
Working Age - Employment Supports = €0.7 Billion
Supplementary Benefits = €0.8 Billion

The link to the information is here: https://whereyourmoneygoes.gov.ie/en/socialprotection/2019/

hometruths

Springy Turf wrote: »

Sure, if you are still in secure employment when everything else burns around you, you'll be in a good position. But if it gets to that stage, there will have to be tax hikes, public sector pay cuts and freezes, layoffs in industries that right now seem secure and so on. Pick most jobs, and you will be able to see how a couple of vulnerable industries crashing will hurt them. (for example most big tech is dependant on advertising. if the advertisers are hit, big tech is hit. If companies are getting squeezed, advertising spend gets squeezed).

Agree with you on the above.

The reason I asked is we're told in this thread that if you have a secure income and can afford the mortgage at current prices, and it is a property that will suit for 10 years+ people should go ahead and buy now, negative equity is only a problem if you want to sell etc etc.

These posters also say they don't expect prices to rise - they'll either remain pretty much the same or drop slightly. Nothing to be overly concerned about.

But some of the same posters also say that if prices do drop substantially, everything will go to hell in a handcart, you'll lose your job, we're heading back to the 1980s, be careful what you wish for etc etc.

These points of view seem a bit contradictory.

Considering all of the above the rational thing to do is wait and see.

If your job is secure as you think as it is you'll have no problem buying a property at the same or less than today's prices.

If your job is not as secure as you think it is, then you should probably not be considering taking out a 30 year mortgage at the minute.

Mic 1972

PropQueries wrote: »

Maybe. But, if that is true, interest rates rise and the impact on Irish property values will be significant (on the downside).

Inflation means all prices will increase and they will increase a lot when the economy starts functioning again and all that money start circulating for real

L1011

Hubertj wrote: »

what? wheres 47 coming from? TDs? I thought they had 35?

i was taking the p*ss anyway.

The Register of Members Interests is to December 2019 and hence in the last Dáil before they lost seats.

hometruths

Mic 1972 wrote: »

The consensus view among economists is that sustained inflation occurs when a nation's money supply growth outpaces economic growth.

If we are all printing a lot of money while the economy is shrinking we are going to face high inflation.

That's what we are going to see

Whilst I personally agree with that view, it no longer seems to be the consensus. Certainly does not seem to be amongst the economists at various central banks!

brisan

schmittel wrote: »

Agree with you on the above.

The reason I asked is we're told in this thread that if you have a secure income and can afford the mortgage at current prices, and it is a property that will suit for 10 years+ people should go ahead and buy now, negative equity is only a problem if you want to sell etc etc.

These posters also say they don't expect prices to rise - they'll either remain pretty much the same or drop slightly. Nothing to be overly concerned about.

But some of the same posters also say that if prices do drop substantially, everything will go to hell in a handcart, you'll lose your job, we're heading back to the 1980s, be careful what you wish for etc etc.

These points of view seem a bit contradictory.

Considering all of the above the rational thing to do is wait and see.

If your job is secure as you think as it is you'll have no problem buying a property at the same or less than today's prices.

If your job is not as secure as you think it is, then you should probably not be considering taking out a 30 year mortgage at the minute.

There are quite a few on here who disagree with the bit in bold and fully intend to do the exact opposite

hometruths

brisan wrote: »

There are quite a few on here who disagree with the bit in bold and fully intend to do the exact opposite

For sure, but at least they're beginning to acknowledge they think that.

i.e the only good reason to buy a property now is if you think you will lose your job.

Insane really, and unlikely to end well.

neutral guy

I know people who saving for property since last recession
They does not care about they will lose job because they are cash buyers
Some of them could go to credit union now to increase them funds preparing for recession property sale and simply pay the loan back as fast they can before they will lose jobs.
There is plenty situations and plenty options but fact is The Property prices will Fall !
The stories about demand will adjust prices is wishful thinking
When people will not have jobs They will not get mortgage When they will not get mortgage Nobody will have money for property !
Some of them already use savings for buying food and pay mortgages !
The demand is nothing against people with empty pockets !

SummerSun20

The_Conductor wrote: »

They've already cancelled the tax cuts for the 'squeezed middle' that were highlighted in the general election. The public sector have been informed they are having a complete freeze on recruitment (but no job cuts) and the use of contract staff is to be wound down as expeditiously as possible. There is a 2% pay restoration for the public sector under the last pay agreement, due to be paid on the 1st of October- which hasn't been cancelled/postponed (yet) but it has been highlighted that any futher pay restoration will be put off for at least a number of years. The big spending Departments (esp. DSEAP) are being told to identify savings- and for the purpose of this exercise- identifying fraud is not to be considered a saving- but active steps should be taken to manage disbursements under the various subheads. The HSE and health in general- are going to have to adjust to living within their means- and we still have a deficit of 28-30 billion for 2020 and at least 20 billion for 2021 (and thats making a working assumption that we don't get slaughtered over Brexit from the 1st Jan.

There are torrid times ahead of us.

Hi, is it word of mouth or is there a source for the budget/ public sector info above? Thanks

Hubertj

schmittel wrote: »

Agree with you on the above.

The reason I asked is we're told in this thread that if you have a secure income and can afford the mortgage at current prices, and it is a property that will suit for 10 years+ people should go ahead and buy now, negative equity is only a problem if you want to sell etc etc.

These posters also say they don't expect prices to rise - they'll either remain pretty much the same or drop slightly. Nothing to be overly concerned about.

But some of the same posters also say that if prices do drop substantially, everything will go to hell in a handcart, you'll lose your job, we're heading back to the 1980s, be careful what you wish for etc etc.

These points of view seem a bit contradictory.

Considering all of the above the rational thing to do is wait and see.

If your job is secure as you think as it is you'll have no problem buying a property at the same or less than today's prices.

If your job is not as secure as you think it is, then you should probably not be considering taking out a 30 year mortgage at the minute.

If you look at the varying opinions provided on this thread it’s quite clear that many people don’t think rationally when it comes to property. Doom merchants, socialists, head in the sanders, know it alls, know nothings, spoofers. Very diverse.

neutral guy

Hubertj wrote: »

If you look at the varying opinions provided on this thread it’s quite clear that many people don’t think rationally when it comes to property. Doom merchants, socialists, head in the sanders, know it alls, know nothings, spoofers. Very diverse.

You see,there is 100 people on market who can pay 600K for property
Another 1000 who can pay 450K
Another 2000 who can pay 300K only
The problem of the market that more people has no money to buy than property coming on market.
What gonna happen with prices then ? They gonna continue rising ?
Exact same story what happened in 2008.
Go to the bank with 20 per cent deposit and they will tell you No because they accept 40 only now.
How many people will save another 20 when is no jobs ?
Or how long it gonna take ?

neutral guy

One of my mates has 2 apartments ( both in Lagos ) in Portugal
2 in Dublin
All bought trough mortgages and used for short term rent
Could you imagine what gonna happen with his property in next 3 months ?
I think they all will go for sale trying save some earned money.
Before prices will went down and apartments owner will lose them without getting any money back.
How many similar properties in Dublin ? About 7000 ? When country every year need only 36 000 and last year was built only 18 000 ?

neutral guy

brisan wrote: »

I think someone stated we are heading for deflation ?????

In couple words the more we spend for bread the less we have for property because our wages will not growing with same speed as inflation.For that reason property prices will fall because not many people will have money..For that reason we will have deflation.
If we look at inflation/deflation curves during the recessions we will see that the more billions was printed the bigger deflation we had ! With every last recession we had bigger deflation and bigger property prices fall .
The ECB printed billions in last 10 years did not moved inflation forward.
Why ? Because money was printed for banks not for people
In this recession we will have even bigger deflation but only if government will not give money for free as they did during Covid
As far we see now the government cut people access to free money what mean we will have deflation again
The wage subsidy cut,same as other options to get free money.
Every bussines which takes free loans has serious bancruptcy risk because money has to be returned !

fliball123

neutral guy wrote: »

In couple words the more we spend for bread the less we have for property because our wages will not growing with same speed as inflation.For that reason property prices will fall because not many people will have money..For that reason we will have deflation.
If we look at inflation/deflation curves during the recessions we will see that the more billions was printed the bigger deflation we had ! With every last recession we had bigger deflation and bigger property prices fall .
The ECB printed billions in last 10 years did not moved inflation forward.
Why ? Because money was printed for banks not for people
In this recession we will have even bigger deflation but only if government will not give money for free as they did during Covid
As far we see now the government cut people access to free money what mean we will have deflation again
The wage subsidy cut,same as other options to get free money.
Every bussines which takes free loans has serious bancruptcy risk because money has to be returned !

Well the good news for people going bankrupt is that the family home is always off the table

neutral guy

fliball123 wrote: »

Well the good news for people going bankrupt is that the family home is always off the table

Well,at the moment we have young bussines /startup family with good bit of money saved before Covid.
The guy tells his woman
Love,we have 2 choices
The first one save our bussiness and lose our savings for our house
Or lose the savings for the house and try save our bussiness
I am pretty sure today many busines families has this choice
What would you choose ?

Springy Turf

If your choice is between being stuck in mortgage arrears in your own home, and stuck with rental arrears where you can get evicted, which is the better option?

Springy Turf

neutral guy wrote: »

Well,at the moment we have young bussines /startup family with good bit of money saved before Covid.
The guy tells his woman
Love,we have 2 choices
The first one save our bussiness and lose our savings for our house
Or lose the savings for the house and try save our bussiness
I am pretty sure today many busines families has this choice
What would you choose ?

Seems like a lose lose situation there!

neutral guy

Springy Turf wrote: »

Seems like a lose lose situation there!

Well,but some people says that supply and demand run the property market ! The does not care were money come into the buyers pocket ! They think if 1 house will be for sale in Ireland then buyers with empty pockets will pay 1 million for it !

Bass Reeves

neutral guy wrote: »

Well,at the moment we have young bussines /startup family with good bit of money saved before Covid.
The guy tells his woman
Love,we have 2 choices
The first one save our bussiness and lose our savings for our house
Or lose the savings for the house and try save our bussiness
I am pretty sure today many busines families has this choice
What would you choose ?

Tell us the one about the three bears and the dumb blonde girl again it a better story.

fliball123

neutral guy wrote: »

Well,at the moment we have young bussines /startup family with good bit of money saved before Covid.
The guy tells his woman
Love,we have 2 choices
The first one save our bussiness and lose our savings for our house
Or lose the savings for the house and try save our bussiness
I am pretty sure today many busines families has this choice
What would you choose ?

I would go for the house if the business goes under they can stay rent free while on the dole in their own home. If they go and try save the business I dont think too many landlords will let them keep renting