Irish Property Market 2020 Part 3

Marius34

drogon. wrote: »

50% of people in this thread will say, everything will crash and burn.
another 50% will say everything will be grand, prices will continue to rise.

So honestly very hard to gauge where it will go with that question in here !

Property market is quite inertial, and not very volatile, you can estimate near term in the matter of price movement, where as stock market you can't.
Anyone who would know with confidence major future price change (over 20%), may become rich, but they don't. Best not to listen to radical experts.

Pelezico

BryanMartin21 wrote: »

Next election, don't vote for FF and FG. It's as simple as that for anyone who has an issue with the state of the property market. As simple as that to give two fingers to the current state of the market. I would strongly recommend a protest vote.

By protest, if you mean SF, murdering, child abusing, rapists, no thanks.

I would prefer the status quo because it is better.

SF has no answer to the frustrations of people wishi g to purchase property....or anything else for that matter.

But they do protect their own.

Graham

Mod Note

Take the politics debate to the appropriate forum.

mcsean2163

https://www.rte.ie/news/business/2020/1213/1184129-daftie-wealth-report-house-prices/

Bass Reeves

Daft property report is say that this year property prices rose by 3.5%. When you consider that at mid year at early stages of the COVID pandemic prices were back by 3.5% it a surprising strong recovery. New builds expect to be in the 18-20k bracket.

While likesome here I did not expect collapse I had not expected a strong recovery. What more surprising is that prices in Dublin have gone up as well as the rest if the country. As well student rents have remained strong this was kind of predictable because of the PUP which has left many students and there parents as well if not better off than they expected.

Where now. Affordability in Dublin remains a huge problem. It will encourage those that can to move to the outer surburbs or into the commuter belt. However demand will still be strong in the big smoke for a while. It is supported by demographics where younger people move out of home after college. However rents remain very High in Dublin in particular. Because of all this Dublin could see a correction at some stage in the next 1-2 years if prices continue to rise.

However outside of Dublin prices in Urban area's could strengthen as rural planning becomes harder to get and new one off housing becomes a thing of the past. This will increase demand in towns, villages and cities. However a shortage of serviced land in a Towns and villages will create bottlenecks in places.

The bears lost this one and those that predicted a steady or slight slowing or rising were on the ball. It was not a bull market but rather a steady to strong recovery.

2020 was not a year for property bears neither will 2021 I expect

Ozark707

Bass Reeves wrote: »

.

Affordability in Dublin remains a huge problem. It will encourage those that can to move to the outer surburbs or into the commuter belt. However demand will still be strong in the big smoke for a while. It is supported by demographics where younger people move out of home after college. However rents remain very High in Dublin in particular.

So based on this if more people move out of Dublin it should help lessen demand in Dublin, is that what you are saying?

Bass Reeves

Ozark707 wrote: »

So based on this if more people move out of Dublin it should help lessen demand in Dublin, is that what you are saying?

Read what I said. Affordability is an issue, but while some may move to the suburbs or commuter area demand will remain strong as younger people move out of the family home. I do not think demand will lessen to any great extent. The continual surge in demand should lessen. However people born and bred in the bid smoke will not move to Bundoran or Castlereagh to WFH. Prices seem to have risen there again in Dublin over the last six months. This was surprising and if it continues Dublin will start heading into bubble territory IMO.

It would take substantial numbers moving from Dublin to cause a collapse. This is hindered by lack of supply around the rest of the country.

hometruths

Bass Reeves wrote: »

Daft property report is say that this year property prices rose by 3.5%. When you consider that at mid year at early stages of the COVID pandemic prices were back by 3.5% it a surprising strong recovery. New builds expect to be in the 18-20k bracket

You’ll get no argument from me that the bears (including myself) called this year wrong, but daft are not claiming property prices have risen by 3.5% in 2021.

No doubt the misrepresenting data police will be along soon on their high horses.

Timing belt

Pelezico wrote: »

https://www.google.com/url?sa=t&source=web&rct=j&url=https://www.businessinsider.com/stock-market-outlook-mohamed-el-erian-warns-vicious-economic-slowdown-2020-12&ved=0ahUKEwjqjM3wxMvtAhXJVsAKHU0LDUAQxfQBCC4wAA&usg=AOvVaw1DJK-cNKJ-A0qEuzk9mLcS


Mohamed El Erian, a regular and thoughtful commentator on Bloomberg talks about a vicious general economic downturn.

Not sure I would concur that the bulls have won. Current policies have mitigated a property downturn but unlikely to last indefinitely.

PUP cannot last and taxes must increase. This must impact property prices.

There is noting new in regards to these comments. All he is saying is that if Covid cases increase over the Christmas/January period and stimulus can not be agreed we could see the economic downturn stretch into 2021 which would mean GDP growth need to be revised downward which is something that is not priced into the markets as they are expecting a extremely strong rebound in 2021.

The only way that this will impact property prices is if this leads to job losses in Ireland as companies cut costs.

Hubertj

schmittel wrote: »

You’ll get no argument from me that the bears (including myself) called this year wrong, but daft are not claiming property prices have risen by 3.5% in 2021.

No doubt the misrepresenting data police will be along soon on their high horses.

Whatever people’s perspective or own agenda nobody could have foreseen the actions taken by governments, central banks etc. The impact on the economy hasn’t been fully realised yet and until that happens we don’t know what impact that will have on property. People can speculate/hope all they like but we don’t know how this will end.

hometruths

Hubertj wrote: »

Whatever people’s perspective or own agenda nobody could have foreseen the actions taken by governments, central banks etc. The impact on the economy hasn’t been fully realised yet and until that happens we don’t know what impact that will have on property. People can speculate/hope all they like but we don’t know how this will end.

The market has been incredibly resilient given the circumstances, and if Ireland was an outlier in this, I'd be rather more worried, but it does seem other markets appear to be holding up as well.

My assessment in March/April was to a large extent based on an expectation (hope) that a new government would use the cover of covid to take some tough decisions on approach to the housing crisis. At this stage it is clear that is not going to happen!

Whilst this offends whatever remnants of societal idealism I retain, on a personal level I am much less gloomy, as I have more confidence that I'll be able to sell a property strongly in Spring 2021. Fingers crossed.

I certainly have come around to the idea that the impact of covid economic damage on the market seems to be much more uncertain than the idea rising unemployment = falling prices. As you say nobody could have foreseen actions by multiple governments and central banks.

At the risk of triggering your conspiracy theory radar I think this uncertainty is currently having two contradictory impacts on the market.

At the lower end prices are holding up because people are desperate, getting in before the lock, before the banks pull up the mortgage drawbridge, they lose their job etc. This demand is greater than the tight supply at this level.

At the higher end €1m supply is better because this market had stalled pre covid and some big price properties were backing up on the market. But there are reports that this sector is moving and I think that might be driven by inflation worries by the wealthy looking to preserve that wealth.

So we have a situation were both the dumb money and the smart money are panic buying!

And before someone like Marius gets on my back for making stuff up, yes I made that up. As in formed an opinion based on what I see. That should be ok on a discussion forum.

Medium long term I still remain bearish because of economic/work/lifestyle impacts of covid, demographic issues, reversions to mean etc but in the short term I am hopeful it will be business as usual.

Bubbaclaus

13k planning permissions approved for new dwellings in Q3 2020, 47k approved in the last 12 months.

Just a case of having the resources in place to build them.

Bass Reeves

schmittel wrote: »

You’ll get no argument from me that the bears (including myself) called this year wrong, but daft are not claiming property prices have risen by 3.5% in 2021.

No doubt the misrepresenting data police will be along soon on their high horses.

I presume you mean 2020 not 2021. Daft may not be claiming it but it looks like we had a very strong end to the year. Unless a hard Brexit or another shock happens it is likely we will see a strong market in the First half of 2021. Demand will stay strong. It interesting that Good few companies are continuing to return the COVID support they drew down this year. This will means these employees will not have any impediment drawing down or applying for a mortgage.

Villa05

schmittel wrote:

So we have a situation were both the dumb money and the smart money are panic buying!

Classic line
Anyone feel its like the mid noughties
When we had the effect of ssia"s and 100% mortgages at the same time

Now we have the government pumping the bubble through
Purchasing in expensive locations for social and (ironically) affordable
Tax incentives for investment funds to buy property plus long term leases making it virtually risk free for them to purchase
Grants of up to 30k for FTB-s to compete against each other for the left overs


How sustainable is this level of Govt intervention given the debt levels of the state plus a nasty looking Brexit around the corner that will fuel significant inflation outside accomodation costs

Marius34

schmittel wrote: »

And before someone like Marius gets on my back for making stuff up, yes I made that up. As in formed an opinion based on what I see. That should be ok on a discussion forum.

I'm not against opinion, I'm happy with everyone's opinion, and that's what forum about.
But when it comes to data, and opinion is stated as a fact, that's another story, better avoid me.. :-)

Timing belt

Marius34 wrote: »

I'm not against opinion, I'm happy with everyone's opinion, and that's what forum about.
But when it comes to data, and opinion is stated as a fact, that's another story, better avoid me.. :-)

And if you give a timeline to a prediction....Lol

Hubertj

https://www.irishtimes.com/business/economy/legal-general-agrees-landmark-54m-deal-to-deliver-200-social-homes-1.4435737?mode=amp

Some interesting points in this article including analysis from the ESRI regarding new housing requirements. Factors such as population growth, immigration and household size considered. Seems to be a different conclusion to some of the “discussion” on this thread. Also positive news that more social housing will be delivered.

Wanderer78

Hubertj wrote:

Some interesting points in this article including analysis from the ESRI regarding new housing requirements. Factors such as population growth, immigration and household size considered. Seems to be a different conclusion to some of the “discussion†on this thread. Also positive news that more social housing will be delivered.

Ah shur, we ve known this for years, it's great to see we listened to this type of advice then, and reacted accordingly!

hometruths

Hubertj wrote: »

https://www.irishtimes.com/business/economy/legal-general-agrees-landmark-54m-deal-to-deliver-200-social-homes-1.4435737?mode=amp

Some interesting points in this article including analysis from the ESRI regarding new housing requirements. Factors such as population growth, immigration and household size considered. Seems to be a different conclusion to some of the “discussion” on this thread. Also positive news that more social housing will be delivered.

Very interesting and welcome analysis from the ESRI, recognising some of the shortcomings of previous projections. One of the things they study is internal migration - i.e the movement of people within the country. The change between pattern of movement between 1996 and 2006 in this visual representation is striking:



Seems to be a different conclusion to some of the “discussion” on this thread!

Graham

schmittel wrote: »

Seems to be a different conclusion to some of the “discussion” on this thread!

Out of interest, what was the conclusion almost a decade and a half ago?

How would that compare to now?

brisan

Bass Reeves wrote: »

I do not know the value of houses in Inchicore but assuming a two week vacancy period every 12 months between rentals the return is 5% return on a 300k house. That a very minimum that any investor would require as a return on a rental.

In general in lower rental value areas you need a higher return as you run a great risk as well as having the same maintenance charge rates. A plumber or painter will not charge less per hour just because you get 1300/month compare to 2k/ month. He may even charge less at a higher rental value as he may need no one to sit in the van while he is carrying out a repair

Or he may look at the property in the nicer area and say to himself
This is a nice gaff ,there must be a few bob here, Ill rub it in a bit

brisan

PropQueries wrote: »

But 4% is still 4 times the risk free rate of return on deposit. That's a significant excess return for what is minimal risk and more than compensates for any of the risks or costs etc. you outline. Yes, there is a very very slim chance of getting a bad tenant who won't pay the rent, but that risk is minimal and is more than covered by receiving 4 times the return on deposit.

Most rental properties won't require that much maintenance if done properly to begin with and if the landlord treats the tenants reasonably, they will also treat the landlord in a reasonable way in the vast majority of instances.

I find it amazing that landlords and the state seem to believe that the rental yields on property should remain the same as if deposit rates were still 4%-5%.

For cash buyers and investors with no buy to let loan, rental yields should be no more than 2% in a properly functioning rental market (i.e. rents should be half the current level in today's market) if people truly believe current interest rates are going to remain this low for a considerable amount of time.

When rental yields are in excess of 2% in today's market, it means investors are either expecting a significant drop in property prices in the near future or we have a very very dysfunctional rental market. It's obviously the latter, but I believe the former is very likely also.

A lot of LLs want an income to live on ,not a return on an investment

brisan

Gael23 wrote: »

With savings I think I can manage 220k, a small bit more for somewhere perfect.

1 bedroom is ok but I need enough space for a home office and I’m not seeing one bed apartments with that. Also need to be close to amenities and public transport. Anywhere I’ve seen I can afford isn’t in a great area. Saw a lovely apartment in parkwest but right next door to cloverhill prison

https://www.myhome.ie/residential/dublin/property-for-sale-in-dublin-13?maxprice=225000&minbeds=2

hometruths

Graham wrote: »

Out of interest, what was the conclusion almost a decade and a half ago?

The ESRI have found that if prices in Dublin rise relative to the rest of the country, significant numbers of people in Dublin leave the city and settle somewhere with cheaper prices.

They have observed this phenomenon right up until 2016 - 4 years ago - when they have the recent detailed data.

They have looked back as far as 1991, nearly 30 years ago. Looking back this far gives them the confidence that the movement in any one particular year is not an outlier caused by some factor that is irrelevant to housing demand.

If patterns are observed over 30 years, this is what is known as a trend. It is useful to identify trends if making housing demand projections for the future.

Graham wrote: »

How would that compare to now?

Given that this is a trend, the assumptions is the same holds true now - when prices rise people move out of Dublin.

Does that clear things up for you?

JimmyVik

schmittel wrote: »

Very interesting and welcome analysis from the ESRI, recognising some of the shortcomings of previous projections. One of the things they study is internal migration - i.e the movement of people within the country. The change between pattern of movement between 1996 and 2006 in this visual representation is striking:



Seems to be a different conclusion to some of the “discussion” on this thread!

Yep,

Back when they were going mad building houses in the middle of nowhere and giving 100% mortgages for them. Loads of houses available outside Dublin and people couldnt afford houses in Dublin anymore.

I know lots of people who bought houses in the commuter belt then.
I only know one that is happy today that they did that.

Cyrus

schmittel wrote: »

The ESRI have found that if prices in Dublin rise relative to the rest of the country, significant numbers of people in Dublin leave the city and settle somewhere with cheaper prices.

is that in any way surprising?

hometruths

Cyrus wrote: »

is that in any way surprising?

Not in the slightest to me.

But judging by some of the arguments put forward on here as to why WFH trends will not effect Dublin property market it will be surprising to some.

Cyrus

schmittel wrote: »

Not in the slightest to me.

But judging by some of the arguments put forward on here as to why WFH trends will not effect Dublin property market it will be surprising to some.

The main argument has been around how prevalent wfh will be to be honest. If you believe everyone can work from home full time then of course this will have some impact on dublin, i dont think thats very likely personally though and the longer this has gone on the more people want to get back to a more normal working arrangement in my experience.

JimmyVik

schmittel wrote: »

Not in the slightest to me.

But judging by some of the arguments put forward on here as to why WFH trends will not effect Dublin property market it will be surprising to some.

After this covid business is over, How many people working in Dublin would you say will be allowed to work from home and for how many days per week?
And of those how many would actually want to live outside the pale.
Then you would have to consider that if only one half of a couple can or wants to work from home, what are they going to do?
And if there is a big number will there be enough houses in the countryside for them to move to or do we build the houses first and then ask them to come?
There are a lot of variables. I dont think that many people will actually be moving from Dublin, or the other cities for that matter. At least I wouldnt bet my house on it anyway.

Graham

schmittel wrote: »

Given that this is a trend, the assumptions is the same holds true now - when prices rise people move out of Dublin.

Does that clear things up for you?

Thanks, it certainly clarifies your previously un-posted conclusion.

I'd certainly be interested in seeing an updated version of the trend charts to see if the trends have changed in the last 4 or 5 years.

I'd certainly be wary of concluding too much about todays market based on outdated trend analysis.