Irish Property Market 2020 Part 2

brisan

OwlsZat wrote: »

Your post will either age really well or really badly. Coming back for an I told you so post before you know which is very premature. Congrats on buying your current idea of a dream house. Fingers crossed in a few years your not stuck there permanently drowning in a hopeless pool of negative equity.

As long as he is happy to live in his dream house and can comfortably afford the mortgage why would he have to worry about drowning in a pool of negative equity
it will only affect him if he decides to sell his dream house.
Without being vulgar he can now have noisy sex all over the house instead of silent sex in his parents boxroom

Cyrus

brisan wrote: »

As long as he is happy to live in his dream house and can comfortably afford the mortgage why would he have to worry about drowning in a pool of negative equity
it will only affect him if he decides to sell his dream house.
Without being vulgar he can now have noisy sex all over the house instead of silent sex in his parents boxroom

Negative equity is really only an issue if you need to sell , negative equity in and of itself is a moment in time and doesn’t necessarily impact you if the property suits your needs and you can afford the repayments.

Mortgage rates are low now anyway so switching isn’t as much of a concern and with most buyers getting 80 percent mortgages the drops would need to be very big .

brisan

Cyrus wrote: »

Negative equity is really only an issue if you need to sell , negative equity in and of itself is a moment in time and doesn’t necessarily impact you if the property suits your needs and you can afford the repayments.

Mortgage rates are low now anyway so switching isn’t as much of a concern and with most buyers getting 80 percent mortgages the drops would need to be very big .

As I said .negative equity only comes into play if he decides to sell his dream house
Who sells their dream home ????

Pelezico

brisan wrote: »

As I said .negative equity only comes into play if he decides to sell his dream house
Who sells their dream home ????

I have always wondered what a dream home looks like.

TheSheriff

OwlsZat wrote: »

Your post will either age really well or really badly. Coming back for an I told you so post before you know which is very premature. Congrats on buying your current idea of a dream house. Fingers crossed in a few years your not stuck there permanently drowning in a hopeless pool of negative equity.

This wins the most miserable post on this entire thread.

Pelezico

TheSheriff wrote: »

This wins the most miserable post on this entire thread.

You think? Only time will tell. All will be revealed in twelve months.

Reminds me of the Lawson boom. Some people are feverishly trying to buy a house before credit is stopped.

In 1988, a well flagged change in mortgage interest relief resulted in a massive temporary boom. Those who bought after that date did not qualify for the interest relief. Interest rates were very high so the relief mattered.

Unfortunately prices collapsed after the change in relief date so the buyers did not benefit.

That is when the phrase negative equity was born.

Cyrus

Pelezico wrote: »

I have always wondered what a dream home looks like.

You don’t have a dream home ?

cubatahavana

Pelezico wrote: »

You think? Only time will tell. All will be revealed in twelve months.

Reminds me of the Lawson boom. Some people are feverishly trying to buy a house before credit is stopped.

In 1988, a well flagged change in mortgage interest relief resulted in a massive temporary boom. Those who bought after that date did not qualify for the interest relief. Interest rates were very high so the relief mattered.

Unfortunately prices collapsed after the change in relief date so the buyers did not benefit.

That is when the phrase negative equity was born.

Probably the smart ones in 1988 are still waiting. Prices will drop even further now

Pelezico

Cyrus wrote: »

You don’t have a dream home ?

I have a place where we brought up our children. I would hate to refer to it as a dream home.

I own my house. My house does not own me.

Cyrus

Pelezico wrote: »

I have a place where we brought up our children. I would hate to refer to it as a dream home.

I own my house. My house does not own me.

You are still bringing them up there

What I meant if you current home isn’t your idea of a dream home is there something that is ?

Pelezico

cubatahavana wrote: »

Probably the smart ones in 1988 are still waiting. Prices will drop even further now

The smart ones bought in 1991/2 in the depths of the recession.

Just waiting a few years made all the difference.

Pelezico

Cyrus wrote: »

Negative equity is really only an issue if you need to sell , negative equity in and of itself is a moment in time and doesn’t necessarily impact you if the property suits your needs and you can afford the repayments.

Mortgage rates are low now anyway so switching isn’t as much of a concern and with most buyers getting 80 percent mortgages the drops would need to be very big .

Well at least you are acknowledging the possibility of negative equity.

I do believe this thread has been worthwhile.

It is not all laughs.

Smouse156

awec wrote: »

Bank of Ireland share prices have been garbage since the last crash. Even when property values were exploding their share price was rubbish and heading downward. AIB same story.

The BOI share price, and Irish bank shares in general, are a terrible barometer for the state of the economy.

They mightn’t be the best proxy for the state of the economy overall but they are a useful proxy for the property market (residential & commercial).

The reality is the market is usually right and has the best information and is a far better indicator than the vested interests on boards.ie. The best proxies for the residential market are the banks & home builders.

The only relevant points to compare is Pre-Covid (Dec/Jan) & now! The banks share prices have collapsed and the home builders share price is down significantly. As markets are forward looking, at this point in time the fact that all are down significantly is an expectation of falling property prices and rising defaults/bad loans. This is especially true given the market bounce since Covid and all the QE money inflating stock prices. Aka, if they’re down in this environment it’s quite bad!

While this is the current situation, this can all change over time as further information is digested. However, right now that’s the outlook!

awec

Smouse156 wrote: »

They mightn’t be the best proxy for the state of the economy overall but they are a useful proxy for the property market (residential & commercial).

The reality is the market is usually right and has the best information and is a far better indicator than the vested interests on boards.ie. The best proxies for the residential market are the banks & home builders.

The only relevant points to compare is Pre-Covid (Dec/Jan) & now! The banks share prices have collapsed and the home builders share price is down significantly. As markets are forward looking, at this point in time the fact that all are down significantly is an expectation of falling property prices and rising defaults/bad loans. This is especially true given the market bounce since Covid and all the QE money inflating stock prices. Aka, if they’re down in this environment it’s quite bad!

While this is the current situation, this can all change over time as further information is digested. However, right now that’s the outlook!

How?

When the property market was booming, their shares were still garbage. When the property market is not booming, their shares are garbage.

There is a point to be made with regards the share prices of the developers, but the banks is not an indicator.

When the big crash happened they were poor. Then when things improved, they were still poor. When things started booming, they remained poor. Pre-Covid, they were poor. Right now, they are poor. What do you think this indicates?

Pelezico

awec wrote: »

How?

When the property market was booming, their shares were still garbage. When the property market is not booming, their shares are garbage.

There is a point to be made with regards the share prices of the developers, but the banks is not an indicator.

The banks are a very good indicator for the state of the markets in which they are lending.

Their share prices have collapsed this year. They lend primarily in property.

AIB has put aside 1.2bn loan loss provisions in last few weeks. That will hardly be enough.

awec

Pelezico wrote: »

The banks are a very good indicator for the state of the markets in which they are lending.

Their share prices have collapsed this year. They lend primarily in property.

Yes, rubbish share prices are more rubbish than they were. They have been rubbish for a decade. Their shares trended downward even when prices were at their highest, share prices in BOI were lower in 2018 than in 2015.

"Look! The Irish bank prices are terrible". Are you really only noticing this now?

There is a dedicated thread to BOI shares in the investing forum if you are interested in reading the sentiment there. There is some very knowledgeable posters on there who understand this stuff a lot more than you or I.

Pelezico

A dream home...is a modern construct, invented by the aspirational journalists who ply their trade in rags like the Irish Times and similar newspapers.

It is a lie...and its intention is to encourage young couples to borrow more than is prudent and subject themselves to huge chunks of debt.

Dream home...my ass.

Smouse156

awec wrote: »

How?

When the property market was booming, their shares were still garbage. When the property market is not booming, their shares are garbage.

There is a point to be made with regards the share prices of the developers, but the banks is not an indicator.

When the big crash happened they were poor. Then when things improved, they were still poor. When things started booming, they remained poor. Pre-Covid, they were poor. Right now, they are poor. What do you think this indicates?

Their share prices while poor is still an indicator of the markets they lend in. What’s important is not what price they’re at but the relative change between Dec/Jan and now! It’s a massive fall!

They’re historical share price based on legacy debts and bad loans from the boom years is why they’ve been so poor but it’s the change since Feb which shows the coronavirus impact and that’s what we are talking about...property prices this year. The change in share price (Pre Covid to now) reflects updated information of the effect of Covid on their business!

As I stated, it’s just one of the proxies for the forward outlook. Taken with the home builders, it’s pretty clear what the big money thinks about the future of the Irish property market!...and they were spot on last time (Anglo 08) 😉

Cyrus

Pelezico wrote: »

A dream home...is a modern construct, invented by the aspirational journalists who ply their trade in rags like the Irish Times and similar newspapers.

It is a lie...and its intention is to encourage young couples to borrow more than is prudent and subject themselves to huge chunks of debt.

Dream home...my ass.

I’m sorry for your outlook, the place where you spend most of your time should be a place that makes you happy .

What newspaper do you read ?

Pelezico

Cyrus wrote: »

I’m sorry for your outlook, the place where you spend most of your time should be a place that makes you happy .

What newspaper do you read ?

Dont be sorry. Ask anybody of a certain age if they bought their family home as a dream home and they will be amused.

As I said, it is purely a modern construct. It wa not part of the lexicon in my generation.

It is a lie and it has had a malignant influence on the lives of young people.

Dream home...what a joke.

If anyone says he has bought his dream home, I say he has overpaid.

hometruths

Cyrus wrote: »

Negative equity is really only an issue if you need to sell , negative equity in and of itself is a moment in time and doesn’t necessarily impact you if the property suits your needs and you can afford the repayments.

I seem to recall lots of this sort of comment back in 07 when people started to say things might be getting a bit frothy. Sure, value of your house doesn't matter unless you need to sell etc.

Fast forward a few years and we were bombarded with tales of woe, people living with the hell of negative equity, trapped, lives on hold etc etc.

We seem to have come full circle - negative equity doesn’t necessarily impact you etc etc.

I kind of agree with you about the idea of negative equity in theory. I wish I had as much faith as you do that it wont become a big deal in practice.

Cyrus

schmittel wrote: »

I seem to recall lots of this sort of comment back in 07 when people started to say things might be getting a bit frothy. Sure, value of your house doesn't matter unless you need to sell etc.

Fast forward a few years and we were bombarded with tales of woe, people living with the hell of negative equity, trapped, lives on hold etc etc.

We seem to have come full circle - negative equity doesn’t necessarily impact you etc etc.

I kind of agree with you about the idea of negative equity in theory. I wish I had as much faith as you do that it wont become a big deal in practice.

It’ll certainly be less of an issue now anyway, LTV ratios are much better and people are skipping the one bedroom apt situation.

You are only trapped if you need to sell, if the property suits and you can afford it you don’t need to.

Pelezico

Cyrus wrote: »

It’ll certainly be less of an issue now anyway, LTV ratios are much better and people are skipping the one bedroom apt situation.

You are only trapped if you need to sell, if the property suits and you can afford it you don’t need to.

Ten percent of mortgages not being serviced. I say that sounds like trouble brewing.

Hubertj

schmittel wrote: »

I seem to recall lots of this sort of comment back in 07 when people started to say things might be getting a bit frothy. Sure, value of your house doesn't matter unless you need to sell etc.

Fast forward a few years and we were bombarded with tales of woe, people living with the hell of negative equity, trapped, lives on hold etc etc.

We seem to have come full circle - negative equity doesn’t necessarily impact you etc etc.

I kind of agree with you about the idea of negative equity in theory. I wish I had as much faith as you do that it wont become a big deal in practice.

I suppose it will be an issue for people looking to trade up from an apartment to house when the want to start a family or for people with investment property. How big an issue it is will depend on how much prices fall by.

Cyrus

Pelezico wrote: »

Ten percent of mortgages not being serviced. I say that sounds like trouble brewing.

In another 10 years they will all be evicted

Hurrah

hometruths

We have plenty of evidence that banks cannot repossess houses for non payment of mortgages with people going on for ten years without payment.

What happens if you reach the end of your mortgage term and mortgage is not cleared? Presumably banks won't have any better luck then?

I know of one particular case, issued with 15 year interest only jumbo mortgage in 2005. Mortgage not serviced since 2011, property deep in negative equity, mortgage term now over, no chance of refinancing, and mortgage holder in no mood to leave.

Do the banks just wait for them to die?!

shatners bassoon

Can people stop pedalling this nonsense about it taking 10-15 years to repossess a property? It happens but it's by no means the norm. The system is dysfunctional and rates are comparatively low but repossessions happen.

A reluctance to take someone's family home off them is not an inherently bad thing either. Sit through a County Registrar's repossession list and tell me how many borrowers you think are getting off lightly.

hometruths

shatners bassoon wrote: »

Can people stop pedalling this nonsense about it taking 10-15 years to repossess a property? It happens but it's by no means the norm. The system is dysfunctional and rates are comparatively low but repossessions happen.

A reluctance to take someone's family home off them is not an inherently bad thing either. Sit through a County Registrar's repossession list and tell me how many borrowers you think are getting off lightly.

If it is not 10-15 years, what is the norm?

PropQueries

When the media start reporting on the September figures in the Property Price Index, what month would people think it most accurately reflects when the majority of homes included in the data actually went sale agreed?

awec

PropQueries wrote: »

When the media start reporting on the September figures in the Property Price Index, what month would people think it most accurately reflects when the majority of homes included in the data actually went sale agreed?

It's nothing to do with sale agreed.

The RPI uses stamp duty returns, so it's when the sale is completed and ownership formally transferred. So for September, it is likely based off complete data up to ~May/June, and incomplete data for July/August. So if there were a load of sales at low prices in July/August, they may not be accurately reflected yet in September's RPI.