Irish Property Market 2020 Part 2

PropQueries

Blackstone has predicted that interest rates may rise to more normal levels in the next few years.

“I think this could be a lost decade in terms of equity appreciation, he said, referring to a term commonly used to describe a period in the 1990s when Japan experienced economic stagnation."

“He explained that current low interest rates may not dip further and may instead rise to more normal levels in the coming years. Higher interest rates, in many instances, tend to negatively affect corporate earnings and stock prices. High borrowing costs will eat into company profits and hurt share prices.”

You can read the article on CNBC here: https://www.cnbc.com/2020/09/16/blackstone-warns-of-lost-decade-with-anemic-stock-market-returns.html

Hubertj

Hubertj wrote: »

So if the banks are foooked again where do we put our savings? Property is doomed, pensions are doomed, stocks are doomed?

Who said pensions and stocks are doomed?

PropQueries

Augeo wrote: »

Who said pensions and stocks are doomed?

In relation to Irish pensions:

"Irish pension schemes had liabilities to €436.3 billion at the end of 2015, according to new figures published by the Central Statistics Office.

State pension commitments accounted for the majority of the future liabilities at that time. Existing and future pensioners had built up an entitlement to €231 billion, according to the figures – 53 per cent of the total liability.

Public service pensions made up 26 per cent of the bill, or €114.5 billion. These are defined-benefit, or final salary, schemes where workers a guaranteed a certain level of pension based on their salary and length of service.

Together, this €345.5 billion of liabilities is unfunded and will be met on a pay-as-you-go basis from Government tax revenue and the Social Insurance Fund."

Link to Irish Times article here: https://www.irishtimes.com/business/personal-finance/irish-pension-liabilities-top-430bn-1.3468225#:~:text=Irish%20pension%20schemes%20had%20liabilities,by%20the%20Central%20Statistics%20Office.&text=Together%2C%20this%20%E2%82%AC345.5%20billion,and%20the%20Social%20Insurance%20Fund

I can't imagine the situation has improved much in the last 5 years.

plibige

brisan wrote: »

You only asked for a 190k house
You never specified where

I was responding to someone who claimed "house price in 2004 was 190,000, house price today was 190,000". Which you conveniently left out.

Clear that isn't true unless you take massive distances in geography into account.

You would have got something in the greater Dublin area for 190,000 in 2004. You won't get that now.

PropQueries

PropQueries wrote: »

In relation to Irish pensions:...........

"...State pension commitments................

Public service pensions .............Together, this €345.5 billion of liabilities is unfunded and will be met on a pay-as-you-go basis from Government tax revenue and the Social Insurance Fund."

But from a point of view of where to put your money a PRSA etc is not doomed.

PropQueries

Augeo wrote: »

"...State pension commitments................

Public service pensions .............Together, this €345.5 billion of liabilities is unfunded and will be met on a pay-as-you-go basis from Government tax revenue and the Social Insurance Fund."

But from a point of view of where to put your money a PRSA etc is not doomed.

Depends where your PRSA is invested. Most private pensions are PAYG and are technically insolvent or if not it's all invested in either cash, bonds, stocks or property. Stocks and property are most likely to fall drastically in value over the coming decades, depending on which viewpoint you take.

All pension schemes are technically Ponzi schemes where the older ones get paid from your contributions and so forth all the way down and if you're at the end of the queue...

rks

https://www.msn.com/en-ie/money/other/first-annual-fall-in-house-prices-for-seven-years-recorded-in-july/ar-BB196tjf?li=BBr5KbJ

mariaalice

If you looked at boards after the downturn say circa 2010, its the exact same thing, Ireland is doomed, the tec and multinational are going to leave, interest rates are going to go up, invest in gold, eventually, you will be able to buy a red brick in Ranelagh or Blackrock for less than 100k, the banks are going to fail.

Then there were the epic ones, the EU is going to collapse, the western world is so indebted countries are going to fail, the west is owned by china anyway.

Have I forgotten anything?

Assetbacked

rks wrote: »

https://www.msn.com/en-ie/money/other/first-annual-fall-in-house-prices-for-seven-years-recorded-in-july/ar-BB196tjf?li=BBr5KbJ

Important to note that the level of transactions for the lockdown/covid restrictions period (ie the last 6 months) is way down; 40.7% drop in July 2020 compared to July 2019 and June had 12.9% less registered than July.

PropQueries

mariaalice wrote: »

If you looked at boards after the downturn say circa 2010, its the exact same thing, Ireland is doomed, the tec and multinational are going to leave, interest rates are going to go up, invest in gold, eventually, you will be able to buy a red brick in Ranelagh or Blackrock for less than 100k, the banks are going to fail.

Then there were the epic ones, the EU is going to collapse, the western world is so indebted countries are going to fail, the west is owned by china anyway.

Have I forgotten anything?

You forgot "kicking the can down the road". We may very well be at the end of the road.

christin

The latest news reports say: First fall in property prices since May 2013 as market absorbed impact of the pandemic

https://www.independent.ie/business/personal-finance/first-fall-in-property-prices-since-may-2013-as-market-absorbed-impact-of-the-pandemic-39535762.html

Hopefully this trend continues downwards for Dublin house prices:
House Price Index per CSO
Nov-19: 125.6
Dec-19: 123.6
Jan-20: 124.5
Feb-20: 124.6
Mar-20: 124.7
Apr-20: 124.2
May-20: 124
Jun-20: 123.8
Jul-20: 123.7

Sierra Oscar

PropQueries wrote: »

Blackstone has predicted that interest rates may rise to more normal levels in the next few years.

“I think this could be a lost decade in terms of equity appreciation, he said, referring to a term commonly used to describe a period in the 1990s when Japan experienced economic stagnation."

“He explained that current low interest rates may not dip further and may instead rise to more normal levels in the coming years. Higher interest rates, in many instances, tend to negatively affect corporate earnings and stock prices. High borrowing costs will eat into company profits and hurt share prices.”

You can read the article on CNBC here: https://www.cnbc.com/2020/09/16/blackstone-warns-of-lost-decade-with-anemic-stock-market-returns.html

Certainly putting their neck out there considering the Federal Reserve have put it on record time and time again that they will be sticking with low interest rates for the medium term at least.

Lets see what comes out of today's meeting. Their decision and guidance is what matters.

CNBC - In last meeting before election, the Fed could placate markets with promise of low rates for years

The Federal Reserve is unlikely to take any new policy actions at its final meeting before the presidential election, but it is expected to indicate it will keep its dovish policy in place for years to come while the economy and labor market heal.

CNN - Take it from the Fed: Low interest rates aren't going anywhere

Having already slashed interest rates to near zero and added roughly $3 trillion to the central bank's balance sheet, Chair Jerome Powell is expected to lean more heavily on forward guidance, telling businesses and investors more clearly what they can expect in the quarters and years ahead.

beauf

Assetbacked wrote: »

Important to note that the level of transactions for the lockdown/covid restrictions period (ie the last 6 months) is way down; 40.7% drop in July 2020 compared to July 2019 and June had 12.9% less registered than July.

That's still a lot of transactions and registrations. What does it say about supply though...

thefridge2006

https://www.irishtimes.com/business/economy/not-in-our-interests-to-support-loss-making-businesses-central-bank-governor-1.4356469

Not in our interests to support loss-making businesses – Central Bank governor

Well if that's not loud and clear i don't know what is......

"In his letter to the Minister for Finance Paschal Donohoe, Mr Makhlouf noted that Covid-19 may mean some sectors may never be able to return to previous financial health, even in the medium term, because of the requirement for social distancing."

neutral guy

schmittel wrote: »

Gold

Holders of gold will be taxed in future I think.
The best investment is kids education,own health and quality of life,own property.
The matter is not how much you pay for property the matter is when you sell.
I dont care sell 300 K property during the recession for half price if I will buy another property for same half price.
If you sell your property on top price for half price and buy another property for higher price then yes it is bad
But when you sell your property for half price and buy another for half price there is no difference.
Some says there will be no supply during the recession
I have no problem sell my parents house when they will pass away for half price during the recession because I will buy something different for half price also

hometruths

neutral guy wrote: »

Holders of gold will be taxed in future I think.
The best investment is kids education,own health and quality of life,own property.
The matter is not how much you pay for property the matter is when you sell.
I dont care sell 300 K property during the recession for half price if I will buy another property for same half price.
If you sell your property on top price for half price and buy another property for higher price then yes it is bad
But when you sell your property for half price and buy another for half price there is no difference.
Some says there will be no supply during the recession
I have no problem sell my parents house when they will pass away for half price during the recession because I will buy something different for half price also

Yes I think taxing gold is a possibility in the future, but the price will have risen substantially I suspect for taxes to be applied. Much of my gold exposure is in mining shares, who should benefit from that price rise.

Completely agree you on the relative values on any property you buy and sell, a point I often think is completely lost on a lot of the posters here and a lot of the active participants in the property market.

Hubertj

schmittel wrote: »

Yes I think taxing gold is a possibility in the future, but the price will have risen substantially I suspect for taxes to be applied. Much of my gold exposure is in mining shares, who should benefit from that price rise.

Completely agree you on the relative values on any property you buy and sell, a point I often think is completely lost on a lot of the posters here and a lot of the active participants in the property market.

What income does gold generate to be taxed ? I presume it is subject or cgt upon sale for profit etc but is unlike property that generates rent which is subject to income tax and cgt (if sold for profit).

neutral guy

schmittel wrote: »

Yes I think taxing gold is a possibility in the future, but the price will have risen substantially I suspect for taxes to be applied. Much of my gold exposure is in mining shares, who should benefit from that price rise.

Completely agree you on the relative values on any property you buy and sell, a point I often think is completely lost on a lot of the posters here and a lot of the active participants in the property market.

Not gold getting more expensive is the dollar getting cheaper.Dont look to gold price in dollars look to euro-dollar exchange rate and price for gold in euros.Also rising the inflation the central banks will rise interest rate once they will rise interest rate the gold price will go down.
If there will be mega inflation as many other dreaming about the mortgage holders who took the mortgages before inflation will pay them mortgages which been taken before recession from couple weeks wages.But when there will be inflation there will be higher central banks rates what will make mortgages more expensive and people will never pay them back during so short period of time.
There is many For,Against and But but as far I see from investors advertisment activity at the moment there is big cash shortage on market as usual and as was during the last recession.
So cash is a King as usual.

Cyrus

Property prices will fall that’s almost a certainty but what people are forgetting is that prices didn’t rise as much as they would have without the central bank rules and that our banks , as conductor noted above , are pretty well capitalised .

It won’t be nearly as bad as some think or hope it seems.

neutral guy

Hubertj wrote: »

What income does gold generate to be taxed ? I presume it is subject or cgt upon sale for profit etc but is unlike property that generates rent which is subject to income tax and cgt (if sold for profit).

Simply go and buy investment gold without the passport and lets see how much you will get ! When you buy gold the Revenue will know how much you have it ant then will calculate how much tax you have to pay ! You will be taxed by value of the gold at average price. Well,again,if gold holders will be taxed.

hometruths

Hubertj wrote: »

What income does gold generate to be taxed ? I presume it is subject or cgt upon sale for profit etc but is unlike property that generates rent which is subject to income tax and cgt (if sold for profit).

Physical gold does not generate any income obviously, mining shares pay dividends as income. Both subject to CGT. I think the biggest risk of a future tax impact is from the US govt taxing the value of physical gold holdings - that will hurt the gold price, but price will have risen a lot if that were to happen.

Bubbaclaus

neutral guy wrote: »

Simply go and buy investment gold without the passport and lets see how much you will get ! When you buy gold the Revenue will know how much you have it ant then will calculate how much tax you have to pay ! You will be taxed by value of the gold at average price. Well,again,if gold holders will be taxed.

You probably wouldn't pay your tax anyway, given your love of defrauding the Irish taxpayer.

HotDudeLife

fliball123 wrote: »

I dont think prices have dropped yet the CSO and price property register stats have proven this

They haven't in the areas i mentioned though. Not saying it's across the board but the areas i've looked at online have seen prices dropping already.

neutral guy

schmittel wrote: »

Physical gold does not generate any income obviously, mining shares pay dividends as income. Both subject to CGT. I think the biggest risk of a future tax impact is from the US govt taxing the value of physical gold holdings - that will hurt the gold price, but price will have risen a lot if that were to happen.

If gold will be taxed then money will move to property which create profit.Because I for example would not like have investment which changing the price on market and does not create income.To move economy and building sites forward the taxation of the gold will be very useful for government.
At the moment government know about huge people savings in banks and I pretty sure government lifting taxes,bringing new and cutting expenses to social welfare will force people use them savings ! I am absolutely sure that this gona happen ! Taxation on deposits will coming shortly.

HotDudeLife

sheepskin1234 wrote: »

As long as interest rates are low, there's no downward pressure on prices.

What??


Oh never mind, just noticed this account has been banned, explains a lot.

HotDudeLife

Mic 1972 wrote: »

D7 isn't dropping, i check it daily
in the last 2-3 week some very expensive apartments have been added. Asking prices are through the roof in the area

Yes they are:


https://www.myhome.ie/pricechanges/dublin-7


If you search houses sold in PPR within the past 3 months and compare against similar properties sold from 2017-2020 you will see drops. I would link but the PPR is not the most user friendly

HotDudeLife

schmittel wrote: »

Don't forget about the lads clowns who say prices are technically not dropping, they were just overpriced to begin with.

FTFY

HotDudeLife

The_Conductor wrote: »

The banks aren't fooked' as you so eloquently put it.
If anything- they are awash in liquidity- and while they'd love to lend it at prime rates to anyone they'd like to- thankfully, for both their sake and the sake of the taxpayer- they are restrained by regulations this time round- whereas in 2008-2009 (and in the decade preceding the last crash)- Ireland was renowned internationally for being the wild wild west with 'light touch' regulation of the sector.

It is hard to find somewhere to put your money- and contrary to the suggestion to buy gold, I'd suggest that simply sitting on your money for at least the medium term- might be the better course of action- as when the dust settles, liquidity may be a valuable commodity.

Returns are pitiful no matter where you look- however, inflation is also constrained (despite unprecedented liquidity creation)- and in the presence of constrained demand, there is no particular reason that inflation should feature as an issue.

I'd suggest park your money somewhere where access to it has minimal constraints- and even if the return is pretty much nil, suck it up, and revisit what you'd like to do in 2-3 years time- but until then keep your assets as liquid as possible.

Any individual planning on taking advantage of the upcoming crash should take heed of the advice above, learned it the hard way years ago.

PHG

neutral guy wrote: »

Holders of gold will be taxed in future I think.
But when you sell your property for half price and buy another for half price there is no difference.
Some says there will be no supply during the recession
I have no problem sell my parents house when they will pass away for half price during the recession because I will buy something different for half price also

What about transaction costs of buying and selling?

Why would you bother moving to a house with the exact same value? It is either an upgrade or a downgrade financially ny most peoples accounts.

As for gold, I heard on a podcast today that less than 8% of Americans own any sort of gold. Would assume similar or less here, so what is the point in taxing it?

Agree with point that best investment is yourself

PHG

neutral guy wrote: »

.
At the moment government know about huge people savings in banks and I pretty sure government lifting taxes,bringing new and cutting expenses to social welfare will force people use them savings ! I am absolutely sure that this gona happen ! Taxation on deposits will coming shortly.

We have it already, its called D.I.R.T (deposit interest retention tax) and I think around 33%. That and the stamp duty on credit cards is appalling!