Irish Property Market 2020 Part 2

hometruths

Hubertj wrote: »

You haven’t included the “theory” about there being no shortage of accommodation.

Perhaps that's because the post I replied to and quoted didn't mention anything about a shortage of accommodation.

However since you brought the 'theory" up...

I have always acknowledged that there is a current shortage of accommodation.

Based on the relevant facts and data, it is my belief that is current situation is better immediately tackled by addressing the inefficiencies in the allocation of existing housing resources and then analysing the long term build requirements.

Clamouring to build 30,000 3/4 bed suburban semis per annum will lead to massive oversupply when the current misallocation washes through the market, as it inevitably will.

I get that this is a contrarian view, but to date nobody has put up a credible argument against it, least of all you.

The only argument you've managed is that you don't consider the CSO to be a credible data source.

Faced with analysis of that calibre, my "theory" stands.

Bass Reeves

smurgen wrote: »

The main thing i've taken from this thread is that you need to buy now. Beg borrow and steal to get a house because they'll always go up. If you're trying to buy make sure you go at least 50k over asking. It'll be cheaper that way because rent is definitely going to grow at a rate faster than wages. Oh and don't worry either,people will always be employed and your wages will always rise. Plus even if the economy collapses demand will stay the same because house prices in Ireland are only linked to housing supply.

50K over asking is not 50K over priced. Prices in Dublin have been virtually stable for 24-30 months. Houses are priced under asking price to encourage buyers that the reality. Nobody says they will stay the same rather is it worth sitting on the fence 2-3 trying to buy in a climbing market after a 8-12% fall in prices or watching for value now when you may have more choice

TheSheriff wrote: »

I think you've been reading a different thread to be honest.......

Ridiculous post, nobody is promoting the above.

You are a property bear now if you think prices will drop by less than 10% in the next 18-24 months. They could drop by 10% by early next year if prices started to rise again lads would be predicting about a double dip same as 2012

JJJackal wrote: »

Houses need to fall by X amount per year to make it worth waiting to buy and continuing to rent - if buying a house is a long term objective

X depends on the current price of rent, current interest repayments etc

If a 300,000 euro house falls by 1% per year indefinitely (i.e. 3,000 in year 1), you would have to think that buying instead of renting makes sense

If a 300,000 euro house falls by 5% per year (i.e. 15,000 in year 1) for a few years waiting makes sense

The problem which has always existed is no one knows the trajectory of house prices

Everything mentioned on this thread to date is speculation

You need house prices to fall 15% in 12 months to make it worth your while if renting especially as rental prices are higher than mortgages payments. Constant price falls seldom happen

Austria! wrote: »

Am I missing something?

We need more people per sq metre to solve housing.

No apartments are more expensive than houses to build. As well working from home may encourage more surbundan living and denesities may drop

smellyoldboot

12% would do me. I have the time. I think the fall will be closer to double that tbh. Can see government supports pulled at the end of year and then we'll really see where the market is. Soft landings are fairyland stuff. Going down faster than your ma is my opinion.

cubatahavana

smellyoldboot wrote: »

12% would do me. I have the time. I think the fall will be closer to double that tbh. Can see government supports pulled at the end of year and then we'll really see where the market is. Soft landings are fairyland stuff. Going down faster than your ma is my opinion.

Does anyone know the margin of builders? Would they just not stop building if prices drop?

Cyrus

cubatahavana wrote: »

Does anyone know the margin of builders? Would they just not stop building if prices drop?

Look at the cairn or glenveagh annual report

And yes they would slow down at the very least

smurgen

cubatahavana wrote: »

Does anyone know the margin of builders? Would they just not stop building if prices drop?

What are they going to do if they stop? Covid is global. Commercial property is finished. Their skills are not really transferrable. They could retrain and go into other industries maybe? Or go on the dole?

OwlsZat

cubatahavana wrote: »

Does anyone know the margin of builders? Would they just not stop building if prices drop?

And let all their staff go? Most small builders treat their crew like extended families. The last thing the want to do is let them go or worse have to hire a new squad in the event of a rebound. There is also the added concern that most builders will have a mortgage themselves. The last thing they really want to do is to stop building.

smurgen

PropQueries wrote: »

Interesting article if interested in the future of WFH where fund manager Schroders has stated it will allow thousands of its employees in London to continue working from home even after the pandemic.

Article is here: https://www.cityam.com/schroders-becomes-first-major-city-firm-to-make-home-working-permanent/

It's going to happen big time and will impact massively on places with high rents. This article about San Fran and the tech cos is an interesting one. The line about Facebook hiring a director of remote working stood out to me.

https://www.wsj.com/articles/remote-work-is-reshaping-san-francisco-as-tech-workers-flee-and-rents-fall-11597413602

cubatahavana

Cyrus wrote: »

Look at the cairn or glenveagh annual report

And yes they would slow down at the very least

Cairn report is about a 15% operating profit. Not too much

oceanman

cubatahavana wrote: »

Cairn report is about a 15% operating profit. Not too much

but that 15% is on millions..

beauf

smurgen wrote: »

What are they going to do if they stop? Covid is global. Commercial property is finished. Their skills are not really transferrable. They could retrain and go into other industries maybe? Or go on the dole?

There are still big public jobs that roll on. Last time a load emigrated to wherever these were. Some will go into black market and small jobs like extensions and conversions.

Bass Reeves

cubatahavana wrote: »

Does anyone know the margin of builders? Would they just not stop building if prices drop?

Direct build costs is about 180K. however its without what they call soft costs
Professional fees 5.7K, I not sure but I think this is engineer and certification costs.
Levies are mostly Co.Co costs 14.7K
Sale, Marking, legal 8.4K
Finance costs 16.7k
Vat 44K
Site 61K
Margin 42K

That about 370K

Margin is about 15% or that is what the report says.

Cyrus wrote: »

Look at the cairn or glenveagh annual report

And yes they would slow down at the very least

More like dead stop like 2008-15

smurgen wrote: »

What are they going to do if they stop? Covid is global. Commercial property is finished. Their skills are not really transferrable. They could retrain and go into other industries maybe? Or go on the dole?

Ya stop slow down at best. Ya that the thing about build skill are transferrable. House extension become popular again with smaller builders. You shrink the number working for you. No point in being a busy monkey. General operatives opt for unemployment benefit or get jobs in factories or look for jobs as truckdrivers etc.

No point in driving two hours to and from a site for 6-800 euro/ week, working and slogging in wet conditions. It was amazing how many working in building in the noughties after the recession did not return to the industry.

Tilers and painters start doing renovations or smaller jobs. As well in a downturn most lads will look for materials supplied to be paid for before they arrive on site.

Most learned from the last time

OwlsZat wrote: »

And let all their staff go? Most small builders treat their crew like extended families. The last thing the want to do is let them go or worse have to hire a new squad in the event of a rebound. There is also the added concern that most builders will have a mortgage themselves. The last thing they really want to do is to stop building.

Lads that survived the last down turn learned the hard lession baout keeping crews togeather.......it left many of them sorting out 100-500K messes. Lads took there own lives over it.

cubatahavana wrote: »

Cairn report is about a 15% operating profit. Not too much

As I posted above nobody works for nothing

cubatahavana

oceanman wrote: »

but that 15% is on millions..

Still 15% though. Is operational profit not profit before taxes? Someone correct me if I’m wrong. (Not trying to defend developers at all)

smurgen

beauf wrote: »

There are still big public jobs that roll on. Last time a load emigrated to wherever these were. Some will go into black market and small jobs like extensions and conversions.

Where are these? UK going to enter the abyss after Brexit transition period ends at the end of this year. Oz falling big time before Covid. That leaves Canada and New Zealand,both that will also be hit hard by Covid.

Bass Reeves

cubatahavana wrote: »

Still 15% though. Is operational profit not profit before taxes? Someone correct me if I’m wrong. (Not trying to defend developers at all)

And its margin, some indirect costs may be still to be paid, company operating costs like accounts, auditors and solicitors doing company work(as opposed to work involved with housing), local soccer or GAA club looking for a few bob. After all that you pay 15% in company tax. You then need to extract the money out of the company where you pay income tax. Ya you can write off some of the Landcruiser or BMW costs but it not like you walk away with 40K out of every house and head to the pub with it

Bass Reeves

smurgen wrote: »

Where are these? UK going to enter the abyss after Brexit transition period ends at the end of this year. Oz falling big time before Covid. That leaves Canada and New Zealand,both that will also be hit hard by Covid.

And I be uneffected and buy my forever home on the cheap:cool::cool:

OwlsZat

Bass Reeves wrote: »

Margin is about 15%

Lads that survived the last down turn learned the hard lession baout keeping crews togeather.......it left many of them sorting out 100-500K messes. Lads took there own lives over it.

As I posted above nobody works for nothing

Builders will build until their 15% margin is gone. If the current Government allow the builders to exist the workforce at this point it would be political suicide. They will have to suck it up and start reducing the bonkers taxes. That is if we don't go deep into recession. If we go into a deep recession all bets are off.

Bass Reeves

OwlsZat wrote: »

Builders will build until their 15% margin is gone. If the current Government allow the builders to exist the workforce at this point it would be political suicide. They will have to suck it up and start reducing the bonkers taxes. That is if we don't go deep into recession. If we go into a deep recession all bets are off.

How many houses were build from 2008-2018. usually what happen's is everybody gets the jitters. A lot of small subbies were left with massive unpaid building work as were builders providers.

if you are 10 people working for you maybe a 500K wage bill every year, you be getting jittery if houses are not being build. In 2008/9 subbies continued keeping crews together because labour was scarce pre 2007. I know one lad that was left with a 250K personal debt he was not incoporated his business never recovered he had to go down the insolvency route.

Government has steadfastly refused to reduce building Vat and costs for the last 10 years they will not start now

smurgen

Bass Reeves wrote: »

And I be uneffected and buy my forever home on the cheap:cool::cool:

So just not answering the post?

0gac3yjefb5sv7

smellyoldboot wrote: »

12% would do me. I have the time. I think the fall will be closer to double that tbh. Can see government supports pulled at the end of year and then we'll really see where the market is. Soft landings are fairyland stuff. Going down faster than your ma is my opinion.

Cringe times 10000

beauf

smurgen wrote: »

Where are these? UK going to enter the abyss after Brexit transition period ends at the end of this year. Oz falling big time before Covid. That leaves Canada and New Zealand,both that will also be hit hard by Covid.

There's always someone building a dam or a bridge or schools or a military base, roads, pipeline somewhere.

Lots of extensions going on at the moment.

Eric Cartman

JJJackal wrote: »

Houses need to fall by X amount per year to make it worth waiting to buy and continuing to rent - if buying a house is a long term objective

X depends on the current price of rent, current interest repayments etc

If a 300,000 euro house falls by 1% per year indefinitely (i.e. 3,000 in year 1), you would have to think that buying instead of renting makes sense

If a 300,000 euro house falls by 5% per year (i.e. 15,000 in year 1) for a few years waiting makes sense

The problem which has always existed is no one knows the trajectory of house prices

Everything mentioned on this thread to date is speculation

if a 300k house fell by 5% in one year, the chances of anyone who could only afford to get a 300k mortgage being able to get a mortgage the next year would decrease by 50% .

we have to remember property prices are usually tied to mortgages, if the loan book ends up upside down (negative equity) the bank won't lend anymore.

fliball123

Eric Cartman wrote: »

if a 300k house fell by 5% in one year, the chances of anyone who could only afford to get a 300k mortgage being able to get a mortgage the next year would decrease by 50% .

we have to remember property prices are usually tied to mortgages, if the loan book ends up upside down (negative equity) the bank won't lend anymore.

Ah sure welcome to boards of economics and spin. Just an example of what is being spouted in here currently is.

Your a bull if you are saying there will be drops of 2 - 5%.
Your a bull for identifying that supply is coming down massively
Builders will continue building even at a personal loss
Builders will emigrate to else where even do they cant
Government will pull the subsidies holding up the market (does this include the housing list and the most recent one where they upped FTB by 10k)
Banks will continue lending even if property tanks and people waiting for the drop will not be impacted and will still get their mortgage.
REITS and vultures will stop buying in Ireland even do they can still secure 85% of current rental yields for anywhere up to 35 years.
Student accommodation will be never needed again due to Covid - NEVER
Rents are going to drop hugely - Still waiting
We have 90k houses that are vacant in the country so like Gaybo used to say one for everyone in the audience or on the housing waiting list (if only it was that easy)
We have very few homeless - Forget what all the political parties were saying at election time.
People should be forced to sell at a price lower than what they think their property is worth.
If the sh1t hits the fan the government will allow banks come in and take all the family homes off those who have lost their job and can no longer afford to pay the mortgage or in a more common term Political suicide.

Now I am no political/financial or property expert but I know the smell of bullsh1t when I smell it.

People on here need to stop giving opinion as fact and if you have an opinion great lets hear it but if you have no facts/stats behind it, its only an opinion.

Villa05

fliball123 wrote:

Your a bull if you are saying there will be drops of 2 - 5%. Your a bull for identifying that supply is coming down massively Builders will continue building even at a personal loss Builders will emigrate to else where even do they cant Government will pull the subsidies holding up the market (does this include the housing list and the most recent one where they upped FTB by 10k) Banks will continue lending even if property tanks and people waiting for the drop will not be impacted and will still get their mortgage. REITS and vultures will stop buying in Ireland even do they can still secure 85% of current rental yields for anywhere up to 35 years. Student accommodation will be never needed again due to Covid - NEVER Rents are going to drop hugely - Still waiting We have 90k houses that are vacant in the country so like Gaybo used to say one for everyone in the audience or on the housing waiting list (if only it was that easy) We have very few homeless - Forget what all the political parties were saying at election time. People should be forced to sell at a price lower than what they think their property is worth. If the sh1t hits the fan the government will allow banks come in and take all the family homes off those who have lost their job and can no longer afford to pay the mortgage or in a more common term Political suicide.

You have stated multiple times how a Government is propping up property prices.

Are you comfortable as a taxpayer with your government guaranteeing the profits of Reits and vulture funds who pay no tax of note with your tax that you pay at over 50%. How do you think tax paying renters feel about this and what implication that could have on how they vote in future.
Do you think this is sustainable
Will taxes be raised to assist in keeping rents of tax payers high.
If more and more people become unemployed. Will the government maintain current rent levels and how will this be achieved.

fliball123 wrote:

Now I am no political/financial or property expert but I know the smell of bullsh1t when I smell it.

They do say people have high degree of immunity from the smell of their own

awec

According to Sky News, July was the busiest month in the housing market in the UK for over a decade. Average prices down 0.2 percent, London down 2 percent but rural areas seeing record high prices.

People leaving the commuter belt bringing prices down there, but this in turn driving up prices in other areas that have traditionally seen lower demand.

https://news.sky.com/story/coronavirus-julys-37bn-house-buying-boom-is-busiest-month-of-sales-in-a-decade-12050810

fliball123

Villa05 wrote: »

You have stated multiple times how a Government is propping up property prices.

Are you comfortable as a taxpayer with your government guaranteeing the profits of Reits and vulture funds who pay no tax of note with your tax that you pay at over 50%. How do you think tax paying renters feel about this and what implication that could have on how they vote in future.
Do you think this is sustainable
Will taxes be raised to assist in keeping rents of tax payers high.
If more and more people become unemployed. Will the government maintain current rent levels and how will this be achieved.


They do say people have high degree of immunity from the smell of their own

No I am not comfortable about it all but it doesn't get around the fact that this is how it is and will continue to be for the foreseeable future. Any opinion I have put up, I have done so with fact or stats to back it I have also been on record as saying I would not advise anyone to buy or sell or to hold off on either as its a personal choice where everyone will almost always be in a unique situation with regarding financing, work, life, kids, rent, other commitments so how can any say hold off we are going to have a 20 to 50% reduction in prices is beyond me.

hometruths

awec wrote: »

According to Sky News, July was the busiest month in the housing market in the UK for over a decade. Average prices down 0.2 percent, London down 2 percent but rural areas seeing record high prices.

People leaving the commuter belt bringing prices down there, but this in turn driving up prices in other areas that have traditionally seen lower demand.

https://news.sky.com/story/coronavirus-julys-37bn-house-buying-boom-is-busiest-month-of-sales-in-a-decade-12050810

what a bolt from the blue, who would have thought it.

awec

schmittel wrote: »

what a bolt from the blue, who would have thought it.

Don’t think there were too many saying that prices would be driven up rurally! Half price houses everywhere was the message on here!

I did suggest this but of course there were those saying it couldn’t possibly happen.

Villa05

fliball123 wrote:

No I am not comfortable about it all but it doesn't get around the fact that this is how it is and will continue to be for the foreseeable future.

The reasons you state for price stability/appreciation are the very same reasons why the prices will collapse

State paying stupid money for social/affordable housing propping up prices and rents in the private sector. This is happening despite the state having the capacity to provide housing at a fraction of the cost and deliver housing while generating significant profit for the state

No repossessions meaning mortgage lending is no longer secured lending. This will mean banks will go bankrupt again in a downturn as they stiil have all there eggs in the property basket

PropQueries

I think it will come down to who moves first. While I'm not saying I have any knowledge of how well the new builds will sell over the coming 6 weeks, which is a very important selling period, if the developers listed on the stock market see little movement, they may initiate price cuts as they need to show sales and that their existing stock is moving. It will be all about first mover advantage. Then the rest generally follow up fairly fast.