Irish Property Market 2020 Part 2

PropQueries

Timing belt wrote: »

When it comes to your conspiracy theory on investment funds it is like trying to talk to Gemma O'Doherty about Covid.

Your are entitled to your opinion as Gemma O'Doherty is entitled to her opinion on Covid. It doesn't mean that everyone needs to agree with you.

The investment funds did purchase c. €200 billion in property and business loans between 2012 and 2016.

Our difference of opinion in on what they bought. I think most of that spend was on property given that the banks weren't eager to sell their performing non-property related loan books. You obviously disagree but I don't see what else they could have bought for €200 billion between 2012 and 2016.

But back to how you believe today's property market is completely different to the situation that existed back in Celtic Tiger years.

Would you disagree that the property market during the Celtic Tiger years was primarily funded through foreign money?

Would you also disagree that the property market in Ireland over the past several years was also primarily funded through foreign money?

If you disagree, that's fine. If not, you would have to agree the situation today and back then are not entirely different. The foreign banks back then pulled their money. The investment funds can perform a very similar trick today. Both have the same impact on the property market.

Timing belt

PropQueries wrote: »

The foreign banks back then pulled their money. The investment funds can perform a very similar trick today. Both have the same impact on the property market.

The foreign banks pulling out of the Irish market only reduced competition on the mortgage market and did not have an impact on house prices. If Ulster bank sell there mortgage book (21bn) and exit the Irish market that does not mean that whoever buys the loan book buys 21bn of property. Sorry for being blunt but you do not know what you are talking about.

KennisWhale

Timing belt wrote: »

Every man and there dog can see that the global economy is on its knees thanks to covid and the stress to the system is 100 times that of 2008. The big difference is that Governments/Central Banks have taken action early to prevent a repeat of 2008.

Whilst nearly everyone agrees that the action taken will be sufficient for a short sharp contraction not everyone is convinced that it will be sufficient for a longer term contraction.

People that keep talking about banks being bailed out again but need to see that central banks and governments are bailing out the economy before it get's a chance to hit the banks.

The Central banks and governments have gone all in as they know that if it blows the fall out will be worse than 2008 so have noting to loose. Only time will tell if the action taken is sufficient.

Obviously people will have different views on whether it will work or not and for that reason will have different views on where they see the housing market going. Comparing the current housing market to 2008 is misleading as it is a very different dynamic this time around.

Very true but we are in a pretty severe housing crisis, which isn't going anywhere. Prices will gradually correct as supply comes on stream, not necessarily because of covid (IMO). It is clear that governments are doing everything to make sure the economy doesn't crash. As such, whilst unclear, it is not a certainty the economy is going to crash because of covid.

Over the last few months, look some of the announcements of residential developments being granted planning permission or in the process of being completed, in Dublin anyway. I have taken these from LinkedIn property business pages in the last 2 months, but it is clear the residential pipeline is extremely strong;

15/10/20 "Woodward Square project in Leopardstown, Dublin 18 progress. Will be 160 apartments when complete"
https://lnkd.in/eHa44KC

11/10/20 "Hines seeks to build up to 1,000 apartments at Liffey Valley"
https://www.businesspost.ie/residential/hines-seeks-to-build-up-to-1000-apartments-at-liffey-valley-20cfc192

9/10/20 "Carnlough Road, Dublin 7 progress update. The completed development will consist of 484 apartment units."
https://www.linkedin.com/feed/update/urn:li:activity:6719618069850927104/

8/10/20 "Masterplan unveiled for Cherrywood Village promising 1,300 homes".
https://www.dublinlive.ie/news/dublin-news/masterplan-launched-cherrywood-village-promising-19068727

2/10/20 "Planning Permission for the construction of 94 Apartments along with residential amenity space situated in the idyllic coastal town of Dalkey"
https://www.linkedin.com/posts/conor-rhatigan-915095131_winterbrookhomes-construction-activity-6716631367272189952-KDtl/

2/10/20 "324 apartments in Santry"
https://www.linkedin.com/posts/3d-design-bureau_santry-revit-3dsmax-activity-6716313014217273344-bJo7/

23/9/20 "One Springfield Park in Foxrock - a development of 20 apartments is still continuing despite the builder going bust."
https://www.dublininquirer.com/2020/09/23/in-foxrock-work-continues-on-apartments-after-the-developer-and-property-finance-company-close-down

9/20 "1000 homes grated planning permission in Ballyboden"
https://www.linkedin.com/feed/update/urn:li:activity:6711625873092595712/

9/20 "An application has been lodged to An Bord Pleneala for a 628 unit Strategic Housing Development in Dundrum"
https://www.linkedin.com/feed/update/urn:li:activity:6712368245925576704/

9/20 "In progress, apartments on Mount Anville Road"
https://www.linkedin.com/feed/update/urn:li:activity:6712080508777496576/

11/9/20 "Michael O'Flynn's O'Flynn Group has lodged plans to construct 1,137 residential units and a 15-storey hotel set to cost €625m at Walkinstown Avenue" https://www.independent.ie/business/commercial-property/group-lodges-625m-hotel-and-housing-plan-for-capital-39521826.html

09/20 "Richmond Homes is delighted to announce that its planning permission application for 148 apartments on Eglinton Road, Dublin 4" https://www.linkedin.com/posts/richmond-homes-ltd-ireland_richmond-homes-is-delighted-to-announce-that-activity-6709090514853003264--NuC/

9/20 "The Phase 3 refurb of Clancy Quay has been completed, which delivered 246 high quality residential units"
https://www.linkedin.com/feed/update/urn:li:activity:6711635078050578432/

9/20 "Planning permission granted for 52 homes in Malahide"
https://www.linkedin.com/feed/update/urn:li:activity:6710098070018826240/

9/20 "In progress, 142 dwellings in Dundrum"
https://marlet.ie/project/walled-garden/

9/20 "In progress, 216 apartments on Lime St, Dublin 2".
https://www.linkedin.com/feed/update/urn:li:activity:6707613227880103936/

9/20 "Planning permission granted for 413 apartments in the Liberties"
https://www.independent.ie/business/irish/bain-backed-vehicle-secures-planning-for-413-apartments-39521413.html

9/20 "A developer has been selected to build more than 600 homes on the Oscar Traynor Road site in north Dublin."
https://www.98fm.com/news/developer-selected-build-homes-oscar-traynor-road-site-1073331

1/9/20 "Hotel builds to be cancelled to make way for new homes
Developers to change plans as they seek to capitalise on demand for housing amid dramatic drop in hotel occupancy, according to report"
https://www.businesspost.ie/property-insight/hotel-builds-to-be-cancelled-to-make-way-for-new-homes-7dd05a3e?utm_campaign=article&utm_source=twitter&utm_medium=web

However, I think it is a bit different with commercial property, where the same optimism cannot be given. These articles do seem a bit like the Brendan O'Connor 2007 article, captains going down with their sinking ships;

https://www-irishtimes-com.cdn.ampproject.org/c/s/www.irishtimes.com/business/commercial-property/dublin-office-lets-up-125-in-last-quarter-says-cbre-1.4373567?mode=amp

https://www.irishtimes.com/business/commercial-property/commercial-real-estate-security-and-yield-remain-attractive-in-face-of-covid-19-1.4372576

Vieira82

don't know if this was shared before but would like to know but it's related to this topic:

https://www.irishexaminer.com/business/economy/arid-40063946.html

Marius34

HotDudeLife wrote: »

Exactly this, i made a remark that i predict a drop of around 10-15% in property by this time next year and a huge economic crash (which there already is) and was labelled the same and laughed at on here, one such smug mod posted a reply similar to "sure you might be right eventually" (despite that being my first timeline prediction).


People have very short memories and ignorance is well and truly bliss in 2020, i suspect those shooting down and defending claims are just desperate property owners or investors who made bad decisions and purchased at the wrong time.

I wouldn't call 10% in property price fall, a huge crash.

PropQueries

Timing belt wrote: »

The foreign banks pulling out of the Irish market only reduced competition on the mortgage market and did not have an impact on house prices. If Ulster bank sell there mortgage book (21bn) and exit the Irish market that does not mean that whoever buys the loan book buys 21bn of property. Sorry for being blunt but you do not know what you are talking about.

By foreign banks you know I meant the money foreign banks lent to the Irish banks to lend into the Irish market.

The foreign banks back then pulled their money. The investment funds can perform a very similar trick today. Both have the same impact on the property market.

Hubertj

Vieira82 wrote: »

don't know if this was shared before but would like to know but it's related to this topic:

https://www.irishexaminer.com/business/economy/arid-40063946.html

i did read it and read a similar article elsewhere.... I also heard Eddie Hobbs new ad on radio where he mentions the same issue.

Hubertj

Marius34 wrote: »

I wouldn't call 10% in property price fall, a huge crash.

i think a 10%-15% drop in prices over a 12 month period would be a significant correction?

hometruths

Hubertj wrote: »

i think a 10%-15% drop in prices over a 12 month period would be a significant correction?

Indeed it would. And if that occurred no doubt you'd have a number of posters on here like Marius saying "I told you it would not be significant, 10% falls totally expected, exactly as I said all along, I am right as usual"

Marius34

Hubertj wrote: »

i think a 10%-15% drop in prices over a 12 month period would be a significant correction?

It definitely would mean a significant correction/fall, but this would not be enough to destroy a whole Property market. I believe most residential construction companies and banks would handle 10-15% fall. Which I wouldn't call a huge crash.

I was referring to comment:

HotDudeLife wrote: »

Patience my friend, play the long game. This house of cards won't be standing much longer, huge crash coming in 2021-2022.

fliball123

schmittel wrote: »

Indeed it would. And if that occurred no doubt you'd have a number of posters on here like Marius saying "I told you it would not be significant, 10% falls totally expected, exactly as I said all along, I am right as usual"

Has the market dropped by 10% yet? Did I miss something?

hometruths

fliball123 wrote: »

well we will have to wait and see but people saying a crash is imminent in the most have been saying it for 9 months and it has not come to pass and the budget will keep things ticking along for the next 12 months or so..Hopefully there will be a cure found in that time and students and tourists will come back

Prices were dropping when the students and tourists were in town, before anybody had ever heard of COViD 19.

Seems like Covid is the only thing propping the prices up right now.

hometruths

fliball123 wrote: »

Has the market dropped by 10% yet? Did I miss something?

Just the point of my post.

EDIT: I take it back. I see Marius has now said 10% is significant.

PropQueries

Hubertj wrote: »

i think a 10%-15% drop in prices over a 12 month period would be a significant correction?

You're right. I think there's a big difference between the younger generation and the older generation on this issue. The younger generation have grown up with prices fluctuating very heavily and very frequently over the past ten years and have become accustomed to it e.g. shares going up one day by 10% and dropping a week later by 10% and so on.

This is not normal behaviour in any properly functioning market. It just signals that noone can value anything and that's a very dangerous situation.

Timing belt

PropQueries wrote: »

By foreign banks you know I meant the money foreign banks lent to the Irish banks to lend into the Irish market.

The foreign banks back then pulled their money. The investment funds can perform a very similar trick today. Both have the same impact on the property market.

The reason I gave ulster bank as an example is to show how crazy your theory on investment funds is as by your reckoning they buy property and not loans. You have avoided this as you know that you are unable to back it up.

The issue in 2008 was that there was cheap credit and plenty of it and this found its way into the mortgages.

This time around there is cheap credit and plenty of it (Backed by the ECB) but it has not found its way into the mortgage market. (See the data from the central bank in the graph)

Balluba

Marius34 wrote: »

I wouldn't call 10% in property price fall, a huge crash.

Hot Dude predicted a fall of between 10% - 15%
I would consider a 15% drop to be quite substantial. On a €600,000 house the price drop would be €90,000

Marius34

schmittel wrote: »

Indeed it would. And if that occurred no doubt you'd have a number of posters on here like Marius saying "I told you it would not be significant, 10% falls totally expected, exactly as I said all along, I am right as usual"

I told at the beginning of crisis that I expect around -5% property prices lower, which is not that far from 0% or -10%, but it is very far from -30% crash, that many was forecasting back than.

PropQueries

Timing belt wrote: »

The reason I gave ulster bank as an example is to show how crazy your theory on investment funds is as by your reckoning they buy property and not loans. You have avoided this as you know that you are unable to back it up.

The issue in 2008 was that there was cheap credit and plenty of it and this found its way into the mortgages.

This time around there is cheap credit and plenty of it (Backed by the ECB) but it has not found its way into the mortgage market. (See the data from the central bank in the graph)

It's impossible to back up what comprised of the €200 billion in property and business loans the investment funds purchased between 2012 and 2016 due to the secrecy of those deals. But, it's reasonable to assume that it mostly comprised of property investment and property related loans as the banks weren't exactly eager to sell their performing non-property related loans.

Once the investment funds owned the loans, they owned the assets that those same loans were secured on unless of course the developers and other property investors did indeed manage to repay those loans. Maybe all those property developers in rural Ireland did repay all those loans. Entirely possible but not very probable.

In relation to the ECB cash finding its way into the mortgage market. It may not have found its way into the mortgage market, but I would guess you would agree that it has found its way into the property market via the back-door?

Bubbaclaus

Marius34 wrote: »

I told at the beginning of crisis that I expect around -5% property prices lower, which is not that far from 0% or -10%, but it is very far from -30% crash, that many was forecasting back than.

There was somebody in this thread predicting 70% crash last week. Could buy a 500k home for 150 then!

plibige

Would it be fair to say we are still to close to the event to actually have a good idea where its going?

Like on the one hand there is tremendous demand due to lack of supply. Also due to covid people are saving far more so there will inevitably be a lot of ability to buy whenever things do get back to some sort of normality.

On the other hand the economy has been put into a semi self induced coma. Some sectors are still doing well, others are close to wiped out. When the government funding does stop these sectors either going to struggle at best, or some businesses will close all together. This will have a knock on affect to other parts of the economy, naturally. Which in turn could affect peoples ability to borrow in the short to medium term.

Like I can easily say "I think it could dip by 10% -15%" but it could easily not and just stagnate. Then again it could be far worse. And then there could be no dip at all.

Am I wrong in saying "until the government takes the economy off life support, we can't actually predict where this is going"

And just FYI I am hoping for a 10-15% dip for selfish reasons

PropQueries

Bubbaclaus wrote: »

There was somebody in this thread predicting 70% crash last week. Could buy a 500k home for 150 then!

I wouldn't entirely dismiss it. Depends over what timeframe they are looking at. It's well known here that I would be in a similar prediction camp, but over a 5 - 10 year timeframe. I've never denied that.

Timing belt

PropQueries wrote: »

It's impossible to back up what comprised of the €200 billion in property and business loans the investment funds purchased between 2012 and 2016 due to the secrecy of those deals. But, it's reasonable to assume that it mostly comprised of property investment and property related loans as the banks weren't exactly eager to sell their performing non-property related loans.

Once the investment funds owned the loans, they owned the assets that those same loans were secured on unless of course the developers and other property investors did indeed manage to repay those loans. Maybe all those property developers in rural Ireland did repay all those loans. Entirely possible but not very probable.

There is a separate thread for this and am happy to prove yet again that you are talking rubbish there.

PropQueries wrote: »

In relation to the ECB cash finding its way into the mortgage market. It may not have found its way into the mortgage market, but I would guess you would agree that it has found its way into the property market via the back-door?

No I don't agree that it has found its way into the residential property market via a back-door. Yes it has found its way into Commercial real estate, the stock exchange, the bond market but it has not found its way into the retail property market.

HotDudeLife

Marius34 wrote: »

It definitely would mean a significant correction/fall, but this would not be enough to destroy a whole Property market. I believe most residential construction companies and banks would handle 10-15% fall. Which I wouldn't call a huge crash.

I was referring to comment:

Sigh, I've stated before that i predict a huge economic crash, the crash of the property market will lag behind the general economy, hence why i think it'll drop around 10-15% next year and possibly more the year after.




My post from earlier:
" i predict a drop of around 10-15% in property by this time next year and a huge economic crash (which there already is)"

HotDudeLife

schmittel wrote: »

Indeed it would. And if that occurred no doubt you'd have a number of posters on here like Marius saying "I told you it would not be significant, 10% falls totally expected, exactly as I said all along, I am right as usual"

Pretty sure that's the criteria required to become a mod

Timing belt

plibige wrote: »

Would it be fair to say we are still to close to the event to actually have a good idea where its going?

Like on the one hand there is tremendous demand due to lack of supply. Also due to covid people are saving far more so there will inevitably be a lot of ability to buy whenever things do get back to some sort of normality.

On the other hand the economy has been put into a semi self induced coma. Some sectors are still doing well, others are close to wiped out. When the government funding does stop these sectors either going to struggle at best, or some businesses will close all together. This will have a knock on affect to other parts of the economy, naturally. Which in turn could affect peoples ability to borrow in the short to medium term.

Like I can easily say "I think it could dip by 10% -15%" but it could easily not and just stagnate. Then again it could be far worse. And then there could be no dip at all.

Am I wrong in saying "until the government takes the economy off life support, we can't actually predict where this is going"

And just FYI I am hoping for a 10-15% dip for selfish reasons

Yes you are correct to say that we don't know the full fall out of the economic crash. If it is short and sharp then there will probably be no impact on the housing market.

If it is a slow then the probability of a implosion in the financial market increases.

HotDudeLife

PropQueries wrote: »

I wouldn't entirely dismiss it. Depends over what timeframe they are looking at. It's well known here that I would be in a similar prediction camp, but over a 5 - 10 year timeframe. I've never denied that.

If i had to put my money where my mouth is i think that most 3 bed semis in Dublin that are currently selling for 350k will be going for around 275k by 2023/24.


A serious correction is long overdue and anyone buying now (if they absolutely don't have to) is completely mad.

Timing belt

HotDudeLife wrote: »

If i had to put my money where my mouth is i think that most 3 bed semis in Dublin that are currently selling for 350k will be going for around 275k by 2023/24.


A serious correction is long overdue and anyone buying now (if they absolutely don't have to) is completely mad.

Unless you are a 100% cash buyer it will be as difficult to buy a 275k house in 2023/24 as it is to buy a 350k house today if your prediction is correct.

Marius34

plibige wrote: »

Would it be fair to say we are still to close to the event to actually have a good idea where its going?

Like on the one hand there is tremendous demand due to lack of supply. Also due to covid people are saving far more so there will inevitably be a lot of ability to buy whenever things do get back to some sort of normality.

On the other hand the economy has been put into a semi self induced coma. Some sectors are still doing well, others are close to wiped out. When the government funding does stop these sectors either going to struggle at best, or some businesses will close all together. This will have a knock on affect to other parts of the economy, naturally. Which in turn could affect peoples ability to borrow in the short to medium term.

Like I can easily say "I think it could dip by 10% -15%" but it could easily not and just stagnate. Then again it could be far worse. And then there could be no dip at all.

Am I wrong in saying "until the government takes the economy off life support, we can't actually predict where this is going"

And just FYI I am hoping for a 10-15% dip for selfish reasons

I think it will make not much difference on how and what we predict with government support or without. As the right forecast will be "Future will tell", there is never certainty in the world.

kravmaga

Ive noticed a lot of 2 bed apartments going up for sale in the last few weeks recently in North County Dublin.

Looks like a lot of Landlords/ Investors are getting out of the property game.

Most of the apartments had been previously rented out.

Appliances left but no furniture in a lot of the apartments I have looked at on Daft, My home and various other property websites

What's the mad rush in selling up now? 2 bed apartment prices have been falling since August.

Are investors/ landlords just deciding to get out because of market volatility due to Covid/ recession biting in.

hometruths

Timing belt wrote: »

Unless you are a 100% cash buyer it will be as difficult to buy a 275k house in 2023/24 as it is to buy a 350k house today if your prediction is correct.

Is this because nobody will be able to get a mortgage in 2023/24?

Of course the banks will lend less in a recession, but they won’t stop lending completely.

If you have good job security, good savings history and qualify within LTV and LTI limits you will no problem accessing a mortgage in 2023/4.

Thoroughly disingenuous to suggest otherwise, happens on here a lot.