Irish Property Market 2020 Part 2

PropQueries

awec wrote: »

They were also saying it in 2012.

That's true. But what happened next. We got the Google's, Facebooks etc., interest rates were knocked down to near zero, the vulture funds came in and bought up all the distressed properties.

What's left to get us out of this crisis?

beauf

PropQueries wrote: »

I think that's why we need to be very careful. If something doesn't add up, there's generally something else going on and it's generally bad. Cairn Homes said recently their construction levels are back to 85% pre-covid levels so construction (from the big developers anyway) has held up remarkably well.

Its a bit early to call...

hometruths

awec wrote: »

Yes, they will. But as soon as people start buying again, they'll rise again. The point is that waiting is not a reduction in demand.

His question was what happens if everyone waits six months. Let's imagine that demand for houses grows at roughly 100 buyers per month, supply grows at 50 per month. Let's say the current demand is 500.

September: 500 buyers, 300 houses, Price Index 1
October: 0 buyers (everyone waiting), 350 houses, Price index 0.9
Fast forward
March: 0 buyers, 600 houses, Price index 0.4
April: 1100 buyers, 650 houses, Price Index = ?

In April, the 500 originals see all those lovely houses on daft for 40% of what they were a few months ago and they all go shopping. Add on all those who started looking in the meantime and you suddenly have a surge.

Whereas if the 500 are removed permanently, you are looking at 650 houses for 500 buyers. People waiting does not cut it, you need buyers out of the market completely.

We have literally seen a version of this play out the past few months. Even with total lockdown, unprecedented unemployment, banks reducing valuations and cutting exemptions etc, price drops were in insignificant figures. ~1%. One percent. They ROSE outside of Dublin by 0.2%.

We saw a version play out from 2008 - 2013. Prices tanked and then surged. Yes that was largely a consequence of access to credit, but it was also influenced by would be buyers waiting because economic confidence took a big hit.

I don’t think this is misunderstood.

What I think is misunderstood is that sure you can talk about pent up demand or paused demand or non traditional demand but in order for supply and demand to meet for market price discovery, a transaction has to take place.

And transactions will always take place. Far less for sure in a falling market, but they will be happening, and that mechanism will be setting prices.

This is what happened in 2008-2013

MacronvFrugals

PropQueries wrote: »

That's true. But what happened next. We got the Google's, Facebooks etc., interest rates were knocked down to near zero, the vulture funds came in and bought up all the distressed properties.

What's left to get us out of this crisis?

Remember the Noonan quote "an important part of the ecology” "by cleaning up dying carcasses."

beauf

schmittel wrote: »

....And transactions will always take place. Far less for sure in a falling market, but they will be happening, and that mechanism will be setting prices.

This is what happened in 2008-2013

The reason for transactions dropping in the crash is entirely different to why they fell in the lock down. They may yet fall due to low demand and recession. But thats not what what has happened ... yet. Everything is still propped by Covid payments and payment deferrals.

PropQueries

schmittel wrote: »

We saw a version play out from 2008 - 2013. Prices tanked and then surged. Yes that was largely a consequence of access to credit, but it was also influenced by would be buyers waiting because economic confidence took a big hit.

I don’t think this is misunderstood.

What I think is misunderstood is that sure you can talk about pent up demand or paused demand or non traditional demand but in order for supply and demand to meet for market price discovery, a transaction has to take place.

And transactions will always take place. Far less for sure in a falling market, but they will be happening, and that mechanism will be setting prices.

This is what happened in 2008-2013

That's true. But it appears the whole future demand for housing that the experts are counting on is from continued net migration of c. 30,000 per year.

This appears unlikely in the current environment i.e. tourism and business travel won't recover for years, only so many other Googles, Facebooks etc., with Phil Hogan out, we don't have an inside man defending our interests in trade talks etc. etc.

Below is the breakdown of the population increase in Ireland between 2011 and 2016.

Total increase in population 2011 – 2016 was 173,613 as per Census 2016:

0 - 34 Years: -72,493 (yes, minus)
35 - 64 Years: +143,932
65 - 85+ Years: +102,174

hometruths

awec wrote: »

It does.

But there is some bizarre notion on here that Ireland is absolutely fcuked. Every bad thing that could possibly happen is going to happen, if you think otherwise you're an estate agent. The Brits are coming for us, the EU is coming for us, we'll all be eating the goo out of each others heads.

But among all this unprecedented misery people will have no bother buying houses.Every sector of the economy, every corner of the country is absolutely screwed, except for buying houses.

That’s exactly the message I am hearing on here too: “sure we’re in a recession and unemployment will increase significantly but house prices won’t drop significantly because we’ll all still be buying houses.”

Bizarre notion indeed.

hometruths

beauf wrote: »

The reason for transactions dropping in the crash is entirely different to why they fell in the lock down. They may yet fall due to low demand and recession. But thats not what what has happened ... yet. Everything is still propped by Covid payments and payment deferrals.

Agreed

awec

schmittel wrote: »

That’s exactly the message I am hearing on here too: “sure we’re in a recession and unemployment will increase significantly but house prices won’t drop significantly because we’ll all still be buying houses.”

Bizarre notion indeed.

Please don't confuse me with someone who thinks prices don't drop.

My issue is with people who think prices will drop, and it's going to affect everyone except the people waiting to buy houses.

hometruths

awec wrote: »

Please don't confuse me with someone who thinks prices don't drop.

My issue is with people who think prices will drop, and it's going to affect everyone except the people waiting to buy houses.

I’m pretty sure I know you are expecting falls.

Prices are going to drop precisely because a recession is going to affect a lot of the people who are waiting to buy houses.

I think most people get this, except those who are saying pent up demand and tight supply will prop up prices.

Hubertj

so will i get the new gaff in rathgar with a lift for €500k in 6 months?

beauf

Hubertj wrote: »

so will i get the new gaff in rathgar with a lift for €500k in 6 months?

We are what, 6 months post Covid.
I would have expected they'd be handing you the keys for free by now.

TheSheriff

schmittel wrote: »

I’m pretty sure I know you are expecting falls.

Prices are going to drop precisely because a recession is going to affect a lot of the people who are waiting to buy houses.

I think most people get this, except those who are saying pent up demand and tight supply will prop up prices.

Reading your posts it comes across that you seem to be having this cyclical argument with yourself, moreso than other posters. And looking at your posting history you seem to be having it for years.....

There are actually very few people on here who don't think prices will drop. Very few if any to be honest. The push back is against those posters comparing the prices of houses to their chicken fillet rolls, or that Joe average in his average job will scoop up a premium house in Ranleagh with free access to credit during a huge downturn.

Very few are predicting anything other than drops, albeit most modest.

beauf

TheSheriff wrote: »

...

Very few are predicting anything other than drops, albeit most modest.

I think theres a lot of varying opinions.

brisan

schmittel wrote: »

That’s exactly the message I am hearing on here too: “sure we’re in a recession and unemployment will increase significantly but house prices won’t drop significantly because we’ll all still be buying houses.”

Bizarre notion indeed.

Best I heard was that the people who lose their jobs would not have been interested or able to buy property

brisan

Hubertj wrote: »

so will i get the new gaff in rathgar with a lift for €500k in 6 months?

Only if you get in before Neutral Guy
He will be a cash buyer so will have the upper hand

hometruths

TheSheriff wrote: »

Reading your posts it comes across that you seem to be having this cyclical argument with yourself, moreso than other posters. And looking at your posting history you seem to be having it for years.....

For years? Really? What year did I start?

TheSheriff wrote: »

There are actually very few people on here who don't think prices will drop. Very few if any to be honest. The push back is against those posters comparing the prices of houses to their chicken fillet rolls, or that Joe average in his average job will scoop up a premium house in Ranleagh with free access to credit during a huge downturn.

Nobody is comparing houses to chicken fillet rolls etc or thinking Joe Average will lording up in Ranelagh, or certainly nobody I have noticed. The only time I have seen this sort of comment is as a dig at posters who have the temerity to say the market will drop more than modestly.

These people tend to have bought relatively recently. Like yourself.

TheSheriff wrote: »

Very few are predicting anything other than drops, albeit most modest.

That's where we differ. I think the drops will be more than modest. Though I will admit I am not as sure they will be as sharp as thought they would be 6 months ago.

The issue I have is the fearmongering of people saying don't wait, because if you wait and prices do drop significantly there will be blood on the streets, and we'll all be going back to subsistence farming, and sure there won't be any houses worth buying anyway when that happens.

awec

schmittel wrote: »

I’m pretty sure I know you are expecting falls.

Prices are going to drop precisely because a recession is going to affect a lot of the people who are waiting to buy houses.

I think most people get this, except those who are saying pent up demand and tight supply will prop up prices.

Well I think tight supply will prop up prices to an extent, as in drops will not be as drastic as they otherwise would be due to the housing crisis that exists.

I do not buy into the doomsday scenarios. Yet.

hometruths

TheSheriff wrote: »

Reading your posts it comes across that you seem to be having this cyclical argument with yourself, moreso than other posters. And looking at your posting history you seem to be having it for years.....

Really not sure where you got that idea. I just had a look at my posting history and prior to 6 months ago I had made only 22 posts in this forum, and in not one of them did I say I thought property prices would fall.

You may however be right that I have been going around in circles for six months.

beauf

awec wrote: »

...
I do not buy into the doomsday scenarios. Yet.

If you are buying a zombie proof bunker, get one with a money back guarantee.

PropQueries

Dublin Level 3 - Impact on House Sales in Dublin

With Dublin probably moving to Level 3 of Covid-19 restrictions this Saturday, how will this potentially impact the housing market in Dublin as September/ October are among the peak selling months?

thefridge2006

https://www.irishtimes.com/business/health-pharma/examiner-appointed-to-cara-group-of-pharmacies-1.4357698

Examiner appointed to Cara group of pharmacies

But i thought it was only low level workers that were affected by this Covid job losses?

awec

thefridge2006 wrote: »

https://www.irishtimes.com/business/health-pharma/examiner-appointed-to-cara-group-of-pharmacies-1.4357698

Examiner appointed to Cara group of pharmacies

But i thought it was only low level workers that were affected by this Covid job losses?

Genuine question, did you read the article?

Loss making since 2016. 14 million euro debt for a company that hasn't made a bean in 4 years is a bit whacky. This was not a healthy business killed by covid.

I would actually be curious how a pharmacy runs up that sort of debt.

Mic 1972

People have cash, don't forget that
A lot of buyers are going to come out of the woods if prices start to decline

thefridge2006

awec wrote: »

Genuine question, did you read the article?

Loss making since 2016. 14 million euro debt for a company that hasn't made a bean in 4 years is a bit whacky. This was not a healthy business killed by covid.

I would actually be curious how a pharmacy runs up that sort of debt.

Yeah i read it but my point is that they were still operating and providing jobs....How many other companies are in the same position.

Even before covid arrived i had wondered how many companies (mainly cafes ) were just holding on.

Basically any company that was getting by is a goner i'd imagine

JimmyVik

Mic 1972 wrote: »

People have cash, don't forget that
A lot of buyers are going to come out of the woods if prices start to decline

10%. Come on 10% drop. Thats my magic number

neutral guy

JimmyVik wrote: »

10%. Come on 10% drop. Thats my magic number

I will not even look on house market without 50 per cent price drop.
Its like a sport once you see 10 per cent drop you will wait until 20 and then until 30
Only if price will rise from bottom end 3-5 per cents then many will start to buy.

neutral guy

When rents will 3-5 times cheaper then pay mortgage nobody will take a mortgage
Dublin are flooded with property for rent and supply are/will continue rising
This just a start
The many land lords will avoid bring prices down because they are trapped with maximum of 4 per cent per year price increase
But when mortgage holiday will be ends for them they will have choice or reduce rent and get rent to pay mortgage or pay mortgage for house with empty rooms
There will be total mess in shared property were half rooms will be empty and land lord will have pay mortgage for full house
That is one from example how low paid workers which lost jobs in retail and hospitality will massively affect the property market

neutral guy

Yara Rich Camouflage wrote: »

Yeah, good luck with that.

Good luck selling property in 2021 for 2019 price !

PropQueries

neutral guy wrote: »

Good luck selling property in 2021 for 2019 price !

You're right. Census 2016: c. 180,000 vacant homes. GeoDirectory Q2 2020: c. 90,000 vacant homes. I really don't believe all those c. 90,000 vacant homes are in Co. Leitrim. The whole demand for housing in Ireland is based upon net migration remaining at c. 30,000 per annum indefinitely as per a recent Central Bank report.

With the hospitality industry on its knees etc. for the next 4 years and Cairn Homes stating recently they're back at 85% pre-covid building levels, it is most likely supply with significantly exceed demand for the next 5 years at a minimum.

I would predict 2011 prices come 2022/2023. Yes, I did say 2011. Everyone can attack at will, but the demand isn't there and the excess supply is.

And if anyone truly believes our population is growing naturally at such a rate to meet this excess supply, here is the breakdown of the 173,613 increase in the population in Ireland between 2011 and 2016 as per Census 2016:

0 - 34 Years: -72,493 (yes, minus)
35 - 64 Years: +143,932
65 - 85+ Years: +102,174