Irish Property Market 2020 Part 2

jill_valentine

dor843088 wrote: »

https://www.irishexaminer.com/news/arid-40071143.html

Rebuilding Ireland loans drop 50% . Demand has fallen off a cliff

RI want you to confirm you're not on the Covid subsidy (something I had a nightmare with recently) so even if you have managed to stay in employment, you may have found yourself suddenly snookered. It's a LOT of work to apply for, and they want 12 months of statements so any blips will show up for the next year.

fliball123

dor843088 wrote: »

https://www.irishexaminer.com/news/arid-40071143.html



Rebuilding Ireland loans drop 50% . Demand has fallen off a cliff

Available to those earning 75k (joint) or less sure a lot of these people have lost their jobs or are on PUP so they could not get a mortgage even with the grant due to banks not touching anyone who is not working or on PUP

fliball123

fliball123 wrote: »

We may not have had the fallout yet but the event is definitely here just try and go to for a pint and you will see .. You could be right but I still think it is 12 months away due to the budget keeping money in peoples pockets

And how many people have stopped paying their mortgages. As we know non payers dont get evicted very easily in this country. But surely this problem cant be swept under the carpet over the long term.

fliball123

Deleted User wrote: »

And how many people have stopped paying their mortgages. As we know non payers dont get evicted very easily in this country. But surely this problem cant be swept under the carpet over the long term.

I have seen some people still getting away with it after the last crash not paying their mortgage and there is not one political party who will stand by during a pandemic and let banks repossess family homes in any great velocity the blow back would be huge from the lefties. I agree it is a problem but like the high rates of welfare and Public sector pay and pensions what is given is very hard to take away

Timing belt

https://investorrelations.bankofireland.com/app/uploads/Q3_IMS_27.10.2020-FV-1.pdf

Bank of Ireland Q3 reporting not showing a deterioration in rates of default. 6k mortgages on payment breaks and banks capital position looks strong.

Timing belt

Timing belt wrote: »

https://investorrelations.bankofireland.com/app/uploads/Q3_IMS_27.10.2020-FV-1.pdf

Bank of Ireland Q3 reporting not showing a deterioration in rates of default. 6k mortgages on payment breaks and banks capital position looks strong.

6000 mortgages on payment breaks may be OK but also may a problem. Will everyone get their jobs back or back to full hours or pay.

Ursabear

Prime Dublin residential rents down 12% https://www.businessworld.ie/property-news/Prime-Dublin-residential-rents-down-12-since-March-574715.html

PropQueries

The latest MSCI/SCSI Property Index shows that the value of retail properties on Grafton Street have fallen 18% since March while those on Henry Street have dropped 19%.

Link to Irish Independent article here: https://www.independent.ie/business/commercial-property/property-values-on-irelands-top-retail-streets-slump-by-a-fifth-39675329.html

PropQueries

Q3 2020 DUBLIN RESIDENTIAL MARKET REVIEW from Owen Reilly:

Owen Reilly have released their Q3 transactional analysis on the Dublin residential market in Q3 2020:

Key findings:

- Selling prices 1.2% below asking prices

- Sales transactions up 21% compared to Q2

- 65% of our buyers are owner occupiers

- 42% of our sellers are landlords exiting the market

- Rents have fallen 11.7% since March

Link to report here: https://www.owenreilly.ie/marketintelligence/q3-2020-dublin-residential-market-review/

Marius34

dor843088 wrote: »

https://www.irishexaminer.com/news/arid-40071143.html



Rebuilding Ireland loans drop 50% . Demand has fallen off a cliff

Mortgage approvals for the month of September, is well above average pre-crisis levels.

JimmyVik

PropQueries wrote: »

Q3 2020 DUBLIN RESIDENTIAL MARKET REVIEW from Owen Reilly:

Owen Reilly have released their Q3 transactional analysis on the Dublin residential market in Q3 2020:

Key findings:

- Selling prices 1.2% below asking prices

- Sales transactions up 21% compared to Q2

- 65% of our buyers are owner occupiers

- 42% of our sellers are landlords exiting the market

- Rents have fallen 11.7% since March

Link to report here: https://www.owenreilly.ie/marketintelligence/q3-2020-dublin-residential-market-review/

The landlord exodus gathers pace.
I think any that missed that window to sell are stuck now until after Christmas.
If they miss that window they might be stuck forever

fliball123

JimmyVik wrote: »

The landlord exodus gathers pace.
I think any that missed that window to sell are stuck now until after Christmas.
If they miss that window they might be stuck forever

Why are they stuck till after xmas?

JimmyVik

fliball123 wrote: »

Why are they stuck till after xmas?

Well I doubt sales are going to be business as usual during level 5.
Then you have Christmas.Notice periods are going to be all over the place too.

fliball123

JimmyVik wrote: »

Well I doubt sales are going to be business as usual during level 5.
Then you have Christmas.Notice periods are going to be all over the place too.

They didn't stop the last time there was a lockdown I know the number of properties that sold during the last lockdown was way down but there were still properties moving. There are still properties being put on the market and there is still viewings going on for example viewing today and I rang and they asked me what time I could make it over as they are staggering the viewings

https://www.myhome.ie/residential/brochure/9-rosemount-estate-dundrum-dublin-14/4459856

Solicitors and banks are still open and working so there will still be people doing business with regard to property but they will be down at the same level as the last lockdown.

brisan

Roberto_gas wrote: »

Until demand dies nothing is going to change ! Right now demand is what is keeping the market stable....Supply is never going to improve !

How can demand decrease ?

1) Job lossed and mass emigration like 2010 - Dont know where people will go as covid is a different ball game
2) Worldwide depression resulting in ppl losing jobs etc - We are possibly in one, but until gov keep giving out doles bailouts etc nothing is going to change

A big trigger can only change things in next one year ! Until then i dont see any major drops in prices !

We will have to wait for
A) A vaccine and things will go back to normal with some economic scarring
B )Government switches of life support (which it will have to do at some point ) and then the dung will hit the fan

JimmyVik

fliball123 wrote: »

They didn't stop the last time there was a lockdown I know the number of properties that sold during the last lockdown was way down but there were still properties moving. There are still properties being put on the market and there is still viewings going on for example viewing today and I rang and they asked me what time I could make it over as they are staggering the viewings

https://www.myhome.ie/residential/brochure/9-rosemount-estate-dundrum-dublin-14/4459856

Solicitors and banks are still open and working so there will still be people doing business with regard to property but they will be down at the same level as the last lockdown.

Actually, they did slow down a hell of a lot last time.
I think level 5 will effect viewings and preparations for sale.
Maybe it wont, but i know what i would put my money on.

Donald Trump

Timing belt wrote: »

https://investorrelations.bankofireland.com/app/uploads/Q3_IMS_27.10.2020-FV-1.pdf

Bank of Ireland Q3 reporting not showing a deterioration in rates of default. 6k mortgages on payment breaks and banks capital position looks strong.

Sure Anglo only had a temporary liquidity problem (said tongue-in-cheek)


1 in 25 mortgages were not being paid, but were not counted as being in default because they were on a break. The mortgaged amounts of those on the break would have been slightly higher on average than the average across the portfolio. Some of them could probably have been continued to be paid, but some might not.



The saving grace for the banks this time around, at least initially, compared to the last crash is that the borrower will absorb the first losses from any writedown in values. No 110% mortgages. That in itself might prevent the snowball effect that we saw last time around.

PropQueries

Donald Trump wrote: »

Sure Anglo only had a temporary liquidity problem (said tongue-in-cheek)


1 in 25 mortgages were not being paid, but were not counted as being in default because they were on a break. The mortgaged amounts of those on the break would have been slightly higher on average than the average across the portfolio. Some of them could probably have been continued to be paid, but some might not.



The saving grace for the banks this time around, at least initially, compared to the last crash is that the borrower will absorb the first losses from any writedown in values. No 110% mortgages. That in itself might prevent the snowball effect that we saw last time around.

Don't be so sure. Those boom time loans are still impacting on the banks and many still need to be resolved. Especially those interest only loans that are maturing shortly.

"PTSB signalled in February that it was assessing risks associated with thousands of buy-to-let mortgages, amounting to €2.5 billion, that were handed out before the crash and were issued on interest-only terms until the loans matured.

After the transaction, PTSB will continue to have €900 million of interest-only buy-to-let loans on its balance sheet. Mr Crowley said that, unlike the loans being sold, the loans being kept were typically to customers who had other business with the bank."

The question is how do they handle these loans once they mature as none of the capital has been paid off? Probably another sale to some fund but what they get for them (even if performing) will depend on the direction of the property market over the next 12-24 months. They got very very lucky with this weeks sale IMO.

Link to article in Irish Times today: https://www.irishtimes.com/business/financial-services/ptsb-plays-down-ulster-bank-talk-as-it-sells-1-4bn-of-loans-1.4392203

Timing belt

PropQueries wrote: »

Don't be so sure. Those boom time loans are still impacting on the banks and many still need to be resolved. Especially those interest only loans that are maturing shortly.

"PTSB signalled in February that it was assessing risks associated with thousands of buy-to-let mortgages, amounting to €2.5 billion, that were handed out before the crash and were issued on interest-only terms until the loans matured.

After the transaction, PTSB will continue to have €900 million of interest-only buy-to-let loans on its balance sheet. Mr Crowley said that, unlike the loans being sold, the loans being kept were typically to customers who had other business with the bank."

The question is how do they handle these loans once they mature as none of the capital has been paid off? Probably another sale to some fund but what they get for them (even if performing) will depend on the direction of the property market over the next 12-24 months. They got very very lucky with this weeks sale IMO.

Link to article in Irish Times today: https://www.irishtimes.com/business/financial-services/ptsb-plays-down-ulster-bank-talk-as-it-sells-1-4bn-of-loans-1.4392203

When these interest only loans mature then the individuals will need to either take out another mortgage to pay off the loan, Use savings to repay, sell the house to repay or default and then go through the process of reposing the house and selling it. Why would a fund be interested in purchasing something like this? As I have explained to you time and time again the funds are interested in purchasing the debt not the property.

JJJackal

Timing belt wrote: »

When these interest only loans mature then the individuals will need to either take out another mortgage to pay off the loan, Use savings to repay, sell the house to repay or default and then go through the process of reposing the house and selling it. Why would a fund be interested in purchasing something like this? As I have explained to you time and time again the funds are interested in purchasing the debt not the property.

If these loans are not defaulting it is unlikely the bank is losing money on them (although its unlikely that they are highly profitable if tracker based)

These properties are likely worth close to what was paid for them - if the borrower has continued to repay all these years - it is improbable that they will suddenly default 12 plus years after the crash? Presumably a significant proportion will have a clear exit strategy.

These are not borrowers who have been distressed for years

Browney7

Timing belt wrote: »

https://investorrelations.bankofireland.com/app/uploads/Q3_IMS_27.10.2020-FV-1.pdf

Bank of Ireland Q3 reporting not showing a deterioration in rates of default. 6k mortgages on payment breaks and banks capital position looks strong.

It was realistically impossible for the default rate to increase in the period due to the availability of the payment break. Taking the payment break meant you couldn't default or be categorised as impaired. Once arrears go above 180 days then the loan becomes classified as default.

PropQueries

JJJackal wrote: »

If these loans are not defaulting it is unlikely the bank is losing money on them (although its unlikely that they are highly profitable if tracker based)

These properties are likely worth close to what was paid for them - if the borrower has continued to repay all these years - it is improbable that they will suddenly default 12 plus years after the crash? Presumably a significant proportion will have a clear exit strategy.

These are not borrowers who have been distressed for years

The problem is that they are interest-only until maturity. None of the capital has been repaid. They've only being meeting repayments to date as they only had to pay the interest and that was most likely a tracker loan with very low repayments. When they look to remortgage, they won't be able to (IMO) and the fund will take control of the properties. This loan sale is a property play by the buyers and won't work out IMO.

Graham

PropQueries wrote: »

When they look to remortgage, they won't be able to (IMO) and the fund will take control of the properties.

Would it be fair to say you're just guessing and you really have no idea how the banks will approach such cases?

PropQueries

Graham wrote: »

Would it be fair to say you're just guessing and you really have no idea how the banks will approach such cases?

Isn't that the point of a property forum board. Making educated guesses based on the data currently available to us. Just like there would be no need for court cases if everyone knew the outcome before it happened...

My 'educated guess' on how the banks will approach these interest-only buy-to-let loans when they mature is that the borrower may not be able to re-mortgage so they will have to sell them at a loss.

These are Celtic Tiger property plays and the rental payments (should rents fall by 50% over the next 2 years) won't cover the principal and interest repayments if the borrower has no other income to make up the shortfall.

Would you re-mortgage in such a scenario when such a borrower cannot meet the repayments going forward? You would have to take charge of the underlying asset in such a scenario as such a borrower would be defaulting on month one of any re-mortgage term.

Graham

PropQueries wrote: »

Isn't that the point of a property forum board. Making educated guesses based on the data currently available to us.

Educated guess would suggest there's something behind the guesses.

If that's the case, it's a good idea to share what the something is.

fliball123

PropQueries wrote: »

Isn't that the point of a property forum board. Making educated guesses based on the data currently available to us. Just like there would be no need for court cases if everyone knew the outcome before it happened...

My 'educated guess' on how the banks will approach these interest-only buy-to-let loans when they mature is that the borrower may not be able to re-mortgage so they will have to sell them at a loss.

These are Celtic Tiger property plays and the rental payments (should rents fall by 50% over the next 2 years) won't cover the principal and interest repayments if the borrower has no other income to make up the shortfall.

Would you re-mortgage in such a scenario when such a borrower cannot meet the repayments going forward? You would have to take charge of the underlying asset in such a scenario as such a borrower would be defaulting on month one of any re-mortgage term.

Not very educated why would the bank force someone to sell at a loss when the mortgage has been interest only meaning the bank are still owed the full amount, what you suggest would mean the banks would also have to take a loss. where are you getting a 50% loss in rent over 2 years. They are going down now currently as we have no tourists , no students, no immigration inwards, in 2 years time I would hazard a guess that all three of these will be back along with the influx of foreigners coming to live in the only English speaking country in the EU. So there is only a snowball's chance in hell that rents will be down 50% in 2 years time. Corona will not be impacting us as severely in 2 years time as it is now.

Your guessing at how the borrower is fixed, you don't know if they can or cannot repay the interest + principal. Interest can be written off in tax so if they are getting current or even the current rent minus say 3/4% to allow for further rent reductions they may well be able to pay .. See everyone can make a scenario that suits their point of view. Your scenarios here always seem to have outrageous and unfounded figures for things like 50% drops in rent. Try being a bit more rational

PropQueries

Graham wrote: »

Educated guess would suggest there's something behind the guesses.

If that's the case, it's a good idea to share what the something is.

From Irish Independent in 2017 when everyone thought house prices and rents were going to keep increasing for the next 20 years. Times have changed since then?: "Day of reckoning looms for those who took out interest-only mortgages in boom era".

Worth a read as you appear to believe all those Celtic Tiger interest-only buy-to-let mortgages are all fine. The situation in the UK is in the first half of the article and then Ireland in the second half.

Link to Irish Independent article here: https://www.independent.ie/business/personal-finance/property-mortgages/day-of-reckoning-looms-for-those-who-took-out-interest-only-mortgages-in-boom-era-35970364.html

Timing belt

PropQueries wrote: »

From Irish Independent in 2017 when everyone thought house prices and rents were going to keep increasing for the next 20 years. Times have changed since then?: "Day of reckoning looms for those who took out interest-only mortgages in boom era".

Worth a read as you appear to believe all those Celtic Tiger interest-only buy-to-let mortgages are all fine. The situation in the UK is in the first half of the article and then Ireland in the second half.

Link to Irish Independent article here: https://www.independent.ie/business/personal-finance/property-mortgages/day-of-reckoning-looms-for-those-who-took-out-interest-only-mortgages-in-boom-era-35970364.html

Banks would have proactively been managing this for a while explaining to customers the consequences and trying to move them over to a principal and interest mortgage. Any of the BTL should have sufficient money from there rental income to repay.

Yes some will be in difficulty but it is not a total collapse as you predict.

PropQueries

Timing belt wrote: »

Banks would have proactively been managing this for a while explaining to customers the consequences and trying to move them over to a principal and interest mortgage. Any of the BTL should have sufficient money from there rental income to repay.

Yes some will be in difficulty but it is not a total collapse as you predict.

Rents have only being rising significantly each year for each of the past 6 years. They also paid tax on that rental income. Many are small business owners who were hoping to rely on these investment properties for their pension. Even if most did save all the rental income (as you appear to believe), they will have to re-mortgage over the next 20 years on a principal and interest basis at probably in excess of 5% and on the property price they paid back in 2006/2007.

You're also expecting rents to keep at todays level for the duration of the new mortgage term. That's very doubtful in my opinion.

Timing belt

PropQueries wrote: »

Rents have only being rising significantly each year for each of the past 6 years. They also paid tax on that rental income. Many are small business owners who were hoping to rely on these investment properties for their pension. Even if most did save all the rental income (as you appear to believe), they will have to re-mortgage over the next 20 years on a principal and interest basis at probably in excess of 5% and on the property price they paid back in 2006/2007.

You're also expecting rents to keep at todays level for the duration of the new mortgage term. That's very doubtful in my opinion.

If they have been on interest only they have made money on renting the properties. If they were relying on it as a pension then unfortunately it didn’t work out the same as a lot of people that put money into a pension only to find that the March crash wiped 50% of its value.

I am not surprised that you expected rent to drop that would be inline with your thinking that house prices are going to crash and everyone will move to Leitrim to WFH. The glass is never half full