Irish Property Market 2020 Part 2

Timing belt

Geuze wrote: »

IMF forecasts:

Do these forecasts including what they are classifying as a severe stress with more lockdowns or is it based on the assumption that a vaccine is found and we all go back to normal.

Geuze

Meandyou999 wrote: »

Is a price drop of say 100k expected.?

No.

Geuze

Timing belt wrote: »

Do these forecasts including what they are classifying as a severe stress with more lockdowns or is it based on the assumption that a vaccine is found and we all go back to normal.

https://www.imf.org/en/Publications/WEO/Issues/2020/09/30/world-economic-outlook-october-2020

The baseline projection assumes that social distancing will continue into 2021 but will subsequently fade over time as vaccine coverage expands and therapies improve.

Local transmission is assumed to be brought to low levels everywhere by the end of 2022. The medium-term projections also assume that economies will experience scarring from the depth of the recession and the need for structural change, entailing persistent effects on potential output. These effects include adjustment costs and productivity impacts for surviving firms as
they upgrade workplace safety, the amplification of the shock via firm bankruptcies, costly resource reallocation across sectors, and discouraged workers’ exit from the workforce. The scarring is expected to compound forces
that dragged productivity growth lower across many economies in the years leading up to the pandemic—relatively slow investment growth weighing on physical capital accumulation, more modest improvements in
human capital, and slower efficiency gains in combining
technology with factors of production.

Vestiapx

Timing belt wrote: »

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.

What if they print money ?

Timing belt

Vestiapx wrote: »

What if they print money ?

There is a limit to the amount of money they print and history has thought us that lessons in relation to this.

Springy Turf

Geuze wrote: »

https://www.imf.org/en/Publications/WEO/Issues/2020/09/30/world-economic-outlook-october-2020

The baseline projection assumes that social distancing will continue into 2021 but will subsequently fade over time as vaccine coverage expands and therapies improve.

Local transmission is assumed to be brought to low levels everywhere by the end of 2022. The medium-term projections also assume that economies will experience scarring from the depth of the recession and the need for structural change, entailing persistent effects on potential output. These effects include adjustment costs and productivity impacts for surviving firms as
they upgrade workplace safety, the amplification of the shock via firm bankruptcies, costly resource reallocation across sectors, and discouraged workers’ exit from the workforce. The scarring is expected to compound forces
that dragged productivity growth lower across many economies in the years leading up to the pandemic—relatively slow investment growth weighing on physical capital accumulation, more modest improvements in
human capital, and slower efficiency gains in combining
technology with factors of production.

I think for Ireland's case (not listed there) there is the shock of Brexit to consider as well. Odds are 50/50 on no deal right now.

Geuze

Vestiapx wrote: »

What if they print money ?

If?

QE started years ago.

The ECB started QE in 2014.

They have created billions of euro to buy financial assets.

Geuze

Vestiapx wrote: »

What if they print money ?

https://www.ecb.europa.eu/mopo/implement/omt/html/index.en.html


The ECB’s Asset Purchase Programme (APP) is part of a package of non-standard monetary policy measures that also includes targeted longer-term refinancing operations, and which was initiated in mid-2014 to support the monetary policy transmission mechanism and provide the amount of policy accommodation needed to ensure price stability.
It consists of the

• corporate sector purchase programme (CSPP)
• public sector purchase programme (PSPP)
• asset-backed securities purchase programme (ABSPP)
• third covered bond purchase programme (CBPP3)

APP net purchases, by programme

Between October 2014 and December 2018 the Eurosystem conducted net purchases of securities under one or more of the asset purchase programmes. During the net asset purchase phase, monthly purchase pace averaged:

€60 billion from March 2015 to March 2016
€80 billion from April 2016 to March 2017
€60 billion from April 2017 to December 2017
€30 billion from January 2018 to September 2018
€15 billion from October 2018 to December 2018

Between January 2019 and October 2019, the Eurosystem fully reinvested the principal payments from maturing securities held in the APP portfolios. The Governing Council aimed to maintain the size of its cumulative net purchases under each constituent programme of the APP at their respective levels as at the end of December 2018.

On 12 September 2019 the ECB Governing Council decided that “net purchases will be restarted under the Governing Council’s asset purchase programme (APP) at a monthly pace of €20 billion as from 1 November 2019. The Governing Council expects them to run for as long as necessary to reinforce the accommodative impact of its policy rates, and to end shortly before it starts raising the key ECB interest rates.” On 12 March 2020 the ECB Governing Council decided to add “a temporary envelope of additional net asset purchases of €120 billion” until the end of 2020.

Geuze

Vestiapx wrote: »

What if they print money ?

Here is the amount of money created each month by the ECB, used to buy financial assets:

Meandyou999

Bass Reeves wrote: »

Houses in rural have continued to rise over the last 3-5 years. They were slower to recover than Dublin prices so there prices reflect that compared to 4years ago.

Repayments would be about 1220/month over 25years on a 5year fixed rate. That is 38 percent of take home pay. It a bit above what is recommended however on low wage this will always e an issue.

Will houses prices crash Who knows. But those that are most bearish on this consider that WFH will attract people to houses outside larger urban areas. How this will effect rural houses prices is the question

Thanks.
Would it be safee over 30 years.
Also more interest paid.

JJJackal

Springy Turf wrote: »

I think for Ireland's case (not listed there) there is the shock of Brexit to consider as well. Odds are 50/50 on no deal right now.

I wonder if COVID has mediated the shock of no deal.

By this I mean, has alot of the negative already been done eg decreased tourists, decreased consumption of Irish products in UK

Anyone know?

OwlsZat

JJJackal wrote: »

I wonder if COVID has mediated the shock of no deal.

By this I mean, has alot of the negative already been done eg decreased tourists, decreased consumption of Irish products in UK

Anyone know?

I thought it was just about our beef/dairy exports. 85% go to the UK. We will need to reduce the prices in a currently loss making sector.

Danzy

OwlsZat wrote: »

I thought it was just about our beef/dairy exports. 85% go to the UK. We will need to reduce the prices in a currently loss making sector.

Loss making?

There is billions being made.

Agri will be hit hard by a no deal Brexit but the real money will be lost in services.

Springy Turf

Danzy wrote: »

Loss making?

There is billions being made.

Agri will be hit hard by a no deal Brexit but the real money will be lost in services.

By who? Not the farmers - they are on subsidies to make ends meet.

CardMagic

Anyone know when we are likely the see more new developments finished in dublin? I see a lot of signs for new builds as I travel around Dublin but progress seems slow. The HTB scheme appears quite lucrative but I feel I could be waiting a long time and information is hard to come by for these new developments.

jgt3

Springy Turf wrote: »

By who? Not the farmers - they are on subsidies to make ends meet

True, but the industry as a whole is making cash hand over fist. Really a rigged system we built.

cnocbui

jgt3 wrote: »

True, but the industry as a whole is making cash hand over fist. Really a rigged system we built.

Do you work for free then?

jgt3

cnocbui wrote: »

Do you work for free then?

Certainly not working for free. Don't know where anyone asked for that.

cnocbui

jgt3 wrote: »

Certainly not working for free. Don't know where anyone asked for that.

I took it you were talking about house building. were you talking about something else?

jgt3

cnocbui wrote: »

I took it you were talking about house building. were you talking about something else?

No I forgot to quote but I was working on the tangent about beef industry / brexit.

Bass Reeves

Meandyou999 wrote: »

Thanks.
Would it be safee over 30 years.
Also more interest paid.

Over 30 years repayments should be about 150/ month less at about 11070/ month on a five year fixed. It we would cost about 18-20kin extra interest. However I would not get caught up on extra interest if it reduced financial stress on you it would be worth it.

My own theory on mortgages is usually financial stress occurs more because of ancillary loans or borrowings that are short-term such as credit cards or car loans. If a longer term mortgage allows you to avoid prepaying electricity, or stage paying insurance or car tax it will allow you to control savings better.

salamiii

Dublin September house prices sold down

https://www.propertypriceregister.ie/website/npsra/PPR/npsra-ppr.nsf/PPR-By-Date&Start=1&Query=%5Bdt_execution_date%5D%3E=01/09/2020%20AND%20%5Bdt_execution_date%5D%3C01/10/2020%20AND%20%5Bdc_county%5D=Dublin&County=Dublin&Year=2020&StartMonth=09&EndMonth=09&Address=

Sarn

salamiii wrote: »

Dublin September house prices sold down

https://www.propertypriceregister.ie/website/npsra/PPR/npsra-ppr.nsf/PPR-By-Date&Start=1&Query=%5Bdt_execution_date%5D%3E=01/09/2020%20AND%20%5Bdt_execution_date%5D%3C01/10/2020%20AND%20%5Bdc_county%5D=Dublin&County=Dublin&Year=2020&StartMonth=09&EndMonth=09&Address=

Did you post the wrong link? That doesn’t provide any information on trends up or down.

Timing belt

Included within AIB's half yearly report are there assumptions for the economy to work out the level of bad debt provision booked.

Apologise if this has already been shared but I thought people may be interested in there assumptions on house prices



Source: https://aib.ie/investorrelations/financial-information/results-centre/2020-annual-financial-results

Timing belt

Here is BOI Assumptions included in there Half yearly report





source: https://investorrelations.bankofireland.com/app/uploads/BOI-Interim-Report-2020.pdf

Timing belt

It will be interesting to see if there is a change in assumptions when they publish there Q3 results at the end of the month

hometruths

Timing belt wrote: »

It will be interesting to see if there is a change in assumptions when they publish there Q3 results at the end of the month

Yes, presumably the probability of "Upside Scenario' is looking much closer to zero now.

Actually probability of BOI's 'Central Scenario' also looking a lot more like zero now too.

Timing belt

schmittel wrote: »

Yes, presumably the probability of "Upside Scenario' is looking much closer to zero now.

Actually probability of BOI's 'Central Scenario' also looking a lot more like zero now too.

Bank of Ireland do make reference to house price lagging behind the economy.

hometruths

Timing belt wrote: »

Bank of Ireland do make reference house price lagging behind the economy.

Yes but presumably the 10% fall prediction was by year end. I guess they will update that too.

Timing belt

schmittel wrote: »

Yes but presumably the 10% fall prediction was by year end. I guess they will update that too.

I see what you mean... will be interesting to see if they push it out to 2021