2021 Irish Property Market chat - *mod warnings post 1*

TheSheriff

HotDudeLife wrote: »

"Foolish", how so?

I think I explained this in my post, it's not a difficult concept.

If 2nd houses in a certain region are selling for e.g 400k, and a new build estate is created in that area where they sell the houses for 450k, this will undoubtedly cause an upwards price trajectory of the neighbouring 2nd hand homes. They may not reach 450k, but they will approach it.

This can be seen in multiple areas of Dublin I am familiar with.

Unless the new builds are built and sold at significantly less than the 2nd hand homes they will not have a negative impact on price.

As much as I wouldn't want to see property rise further (FTB property I mean) , this is now all I see as a consequence of this planned shared equity scheme. It's an awful idea.

Villa05

TheSheriff wrote:

If 2nd houses in a certain region are selling for e.g 400k, and a new build estate is created in that area where they sell the houses for 450k, this will undoubtedly cause an upwards price trajectory of the neighbouring 2nd hand homes. They may not reach 450k, but they will approach it.

2nd houses are generally better located to new houses
Proximity to essential services, schools, bigger gardens and floor area plus potential to expand

TheSheriff

Villa05 wrote: »

2nd houses are generally better located to new houses
Proximity to essential services, schools, bigger gardens and floor area plus potential to expand

I agree.

The point I was trying to make is that any shared equity scheme will increase the prices of all houses, regardless of new or 2nd hand.

It's a really terrible idea for Irelands housing market.

The previous posters idea that it will reduce the price of 2nd hand homes, and impact new builds in isolation is fundamentally wrong.

A rising tide lifts all boats..etc. etc.

Zenify

TheSheriff wrote: »

It's a really terrible idea for Irelands housing market.

Shared equity is such a bad plan. Any idea how we can stop it from happening?

hometruths

Mic 1972 wrote: »

Do you have reasons to believe otherwise?

Asking prices are up because properties have being going for higher than asking prices all year, and particularly in Q4

I had my personal experience with biddings going way over asking prices to believe than 9.2% seems quite realistic

Yes, a few other sources, eg the CSO, would seem to contradict this. Admittedly I don't think their full year data is released yet, but I would be surprised if it suggested that prices in South Dublin increased by 9.2%

Villa05

Zenify wrote:

Shared equity is such a bad plan. Any idea how we can stop it from happening?

Make a complaint to EU, The government were expecting issues there

In particular
Circumventing financial prudential rules regarding mortgages

Anti competitive in favouring developers selling over existing homeowners selling

Timing belt

schmittel wrote: »

Yes, a few other sources, eg the CSO, would seem to contradict this. Admittedly I don't think their full year data is released yet, but I would be surprised if it suggested that prices in South Dublin increased by 9.2%

I know there has been a lot of activity in Nov/Dec and we are hearing stories here about bidding wars but I would be shocked if the CSO data showed a increase of 9.2% for the full year.

It will be interesting to see what the data is like when the November data is released on the 19th.

Timing belt

Villa05 wrote: »

Make a complaint to EU, The government were expecting issues there

In particular
Circumventing financial prudential rules regarding mortgages

Anti competitive in favouring developers selling over existing homeowners selling

An objection like that is very unlikely to be successful as the EU have previously allowed such schemes.

Zenify

Timing belt wrote: »

An objection like that is very unlikely to be successful as the EU have previously allowed such schemes.

What do you think we should do?

Villa05

Timing belt wrote:

An objection like that is very unlikely to be successful as the EU have previously allowed such schemes.

Would it help to include the info that our Government were advised against this scheme by officials as it would only increase price

I'm sure the EU would be very interested if our government were introducing measures that was contributing to another property bubble

Marius34

Villa05 wrote: »

Would it help to include the info that our Government were advised against this scheme by officials as it would only increase price

I'm sure the EU would be very interested if our government were introducing measures that was contributing to another property bubble

You can equally say that rapid increase in social housing construction, may increase private residential property price. Don't see what EU can do about it.

Dav010

Villa05 wrote: »

Would it help to include the info that our Government were advised against this scheme by officials as it would only increase price

I'm sure the EU would be very interested if our government were introducing measures that was contributing to another property bubble

Increased rates of pay is also a contributing factor, should the EU intervene to prevent the Government from agreeing to union demands for increases?

Timing belt

Villa05 wrote: »

Would it help to include the info that our Government were advised against this scheme by officials as it would only increase price

I'm sure the EU would be very interested if our government were introducing measures that was contributing to another property bubble

This made me laugh.... It would be Ironic if the EU intervened seeing as they are contributing to bubbles in every asset class with QE.

Villa05

Timing belt wrote:

This made me laugh.... It would be Ironic if the EU intervened seeing as they are contributing to bubbles in every asset class with QE.

Scary time to be buying anything

HotDudeLife

TheSheriff wrote: »

I agree.

The point I was trying to make is that any shared equity scheme will increase the prices of all houses, regardless of new or 2nd hand.

It's a really terrible idea for Irelands housing market.

The previous posters idea that it will reduce the price of 2nd hand homes, and impact new builds in isolation is fundamentally wrong.

A rising tide lifts all boats..etc. etc.

So your sole rationale to think 2nd hand prices won't drop is the shared equity scheme on new builds causing prices across the board in general. Well that's...very tunnel visioned.



What about tonnes of other macro and micro indicators, global recession, thousands of businesses going under, reduced consumer confidence to name a few?


My prediction was second hand property will start to drop roughly 3 months after the economy full reopens and government support payments to both businesses and individuals are withdrawn. When i initially made that prediction i thought the economy will reopen in June/July and thus we will see drops in October, i still stand by that prediction that prices will drop 3 months after the economy reopens but i'm now doubtful on when that will happen.

hometruths

Timing belt wrote: »

This made me laugh.... It would be Ironic if the EU intervened seeing as they are contributing to bubbles in every asset class with QE.

Funny to think that when QE started those who said it would inflate share prices were conspiracy theorists!

Timing belt

Villa05 wrote: »

Scary time to be buying anything

It's not a scary time to be buying.... There are certain assets such as property in Ireland that have not seen a bubble yet thanks to the CBI LTI limits.

Then their is a school of thought that the stock market and other asset valuations are correct as the world embraces lower yields thanks to higher prices for assets. If this is correct then anyone that is not in a defined benefit pension is going to get totally screwed come retirement. Although I don't think this is the case I can see the logic behind it when it comes to Blue chip companies, property etc. as their is still a basis for the valuation.

Where there is no logic is in relation to the investors moving away from looking at yield and purely looking at capital appreciation such as in IT stocks. We saw this happen in the dot.com era and we are seeing it again. The Financial institutions are delighted to see it as they know what is happening and already have their exit strategy whilst the man on the street comes to the party looking for the 70/80% return like his friends got from investing in the stock.

We have not see investors in property chasing capital appreciation yet and hence why I say that there is no bubble in the Irish property prices.

Timing belt

schmittel wrote: »

Funny to think that when QE started those who said it would inflate share prices were conspiracy theorists!

QE encourages Asset inflation as it leads to a increase in demand for assets with a higher yield.

Where there is a limited supply of these higher yielding assets the price rises.

Asset inflation encourages further investments as investors start to look more at the capital appreciation and less on the yield of the asset. To compound the impact of this the yield on the asset reduces as the price increases.

This explains why on the stock market the share price for Blue chip dividend paying stocks has decreased and we see a increase in more speculative stocks such as IT and IPO’s that may bring a new product to market and increase the price of the share.

hometruths

Timing belt wrote: »

QE encourages Asset inflation as it leads to a increase in demand for assets with a higher yield.

Where there is a limited supply of these higher yielding assets the price rises.

Asset inflation encourages further investments as investors start to look more at the capital appreciation and less on the yield of the asset. To compound the impact of this the yield on the asset reduces as the price increases.

This explains why on the stock market the share price for Blue chip dividend paying stocks has decreased and we see a increase in more speculative stocks such as IT and IPO’s that may bring a new product to market and increase the price of the share.

I agree QE creates asset bubbles, and I held the same view when it started. Hence I remember the shouts of conspiracy theorists.

hometruths

Timing belt wrote: »

It's not a scary time to be buying.... There are certain assets such as property in Ireland that have not seen a bubble yet thanks to the CBI LTI limits.

Then their is a school of thought that the stock market and other asset valuations are correct as the world embraces lower yields thanks to higher prices for assets. If this is correct then anyone that is not in a defined benefit pension is going to get totally screwed come retirement. Although I don't think this is the case I can see the logic behind it when it comes to Blue chip companies, property etc. as their is still a basis for the valuation.

Where there is no logic is in relation to the investors moving away from looking at yield and purely looking at capital appreciation such as in IT stocks. We saw this happen in the dot.com era and we are seeing it again. The Financial institutions are delighted to see it as they know what is happening and already have their exit strategy whilst the man on the street comes to the party looking for the 70/80% return like his friends got from investing in the stock.

We have not see investors in property chasing capital appreciation yet and hence why I say that there is no bubble in the Irish property prices.

When the tech stocks crash, they will take down a lot of other asset prices with them. I'd be pretty cautious buying anything right now.

Timing belt

schmittel wrote: »

When the tech stocks crash, they will take down a lot of other asset prices with them. I'd be pretty cautious buying anything right now.

I don't know whether we will see contagion to other asset classes as everything is upside down and inside out at the moment. The normal reaction to a stock market crash is a flee to safety in government bonds. This would lower their yield and increase their already inflated value.

Who knows the central banks may welcome a crash as they would not be blamed and it might give them an opportunity to cut back on rolling some of the QE and be able to deal with inflation if it actually does become a issue.

I don't think the Irish property market would be impacted directly through contagion of the financial systems but would take a heavy hit if the IT companies started to cut staff no's on the back of it.

Update: The one area that would cause contagion is if any of the funds went under due to a run on investors pulling their funds. This shouldn't happen as they have fire breaks included in their T&C's and need to hold liquidity to deal with such an event.... but if it did then the brown stuff would really hit the fan.

Marius34

schmittel wrote: »

Funny to think that when QE started those who said it would inflate share prices were conspiracy theorists!

schmittel wrote: »

I agree QE creates asset bubbles, and I held the same view when it started. Hence I remember the shouts of conspiracy theorists.

Well... You was the one who saw assets and property price falling from the start on QE. You was the one reminding that it looks same as 2008. And not opposite.

hometruths

Marius34 wrote: »

Well... You was the one who saw assets and property price falling from the start on QE. You was the one reminding that it looks same as 2008. And not opposite.

Eh? There is enough that we disagree on with the need to invent more.

As far as I recall I have not commented on other assets (apart from commodities, and I certainly have not said they will fall thanks to QE, quite the opposite). I am saying that I agree with Timing belt on QE creating asset bubbles, but I think the tech stock market bubble driven by QE will crash and bring the rest of the stock market down with it.

As far as property is concerned I have never said it would be QE that would bring prices down. I have consistently said the only bullish argument I can get on board with is the property prices will rise as an inflation hedge theory.

As far as saying things look the same as 2008 - by that I mean the constant bullish claims of how strong the underpinning fundamentals of the property market are, and the bullying tone to deal with anybody who claims those fundamentals might not in fact be so sound.

hometruths

Timing belt wrote: »

I don't know whether we will see contagion to other asset classes as everything is upside down and inside out at the moment. The normal reaction to a stock market crash is a flee to safety in government bonds. This would lower their yield and increase their already inflated value.

Who knows the central banks may welcome a crash as they would not be blamed and it might give them an opportunity to cut back on rolling some of the QE and be able to deal with inflation if it actually does become a issue.

I don't think the Irish property market would be impacted directly through contagion of the financial systems but would take a heavy hit if the IT companies started to cut staff no's on the back of it.

Update: The one area that would cause contagion is if any of the funds went under due to a run on investors pulling their funds. This shouldn't happen as they have fire breaks included in their T&C's and need to hold liquidity to deal with such an event.... but if it did then the brown stuff would really hit the fan.

I think the Fed/Biden/Congress would welcome a crash before Jan 20th - (but this forum is probably not the correct one for that particularly theory!)

TheSheriff

HotDudeLife wrote: »

So your sole rationale to think 2nd hand prices won't drop is the shared equity scheme on new builds causing prices across the board in general. Well that's...very tunnel visioned.



What about tonnes of other macro and micro indicators, global recession, thousands of businesses going under, reduced consumer confidence to name a few?


My prediction was second hand property will start to drop roughly 3 months after the economy full reopens and government support payments to both businesses and individuals are withdrawn. When i initially made that prediction i thought the economy will reopen in June/July and thus we will see drops in October, i still stand by that prediction that prices will drop 3 months after the economy reopens but i'm now doubtful on when that will happen.

This is not my sole rationale, never said it was.

I was merely stating your understanding of the impact of these schemes on 2nd property prices was incorrect.

Timing belt

I think this is a new slide that has been added to the NTMA pack (updated in Jan 2021) for anyone that is interested in how the housing market is now compared to the peak in 2008



There is also another slide that all you property bears will like where they say they expect a drop in demand..... but don't look at that instead look at the 40% of property being non-mortgage transactions :D:D:D:D:D

hometruths

Timing belt wrote: »

There is also another slide that all you property bears will like where they say they expect a drop in demand..... but don't look at that instead look at the 40% of property being non-mortgage transactions :D:D:D:D:D

Sorry if I am being a bit thick but I don't get the point? What is the 40% being non mortgage transactions telling us?

Timing belt

schmittel wrote: »

Sorry if I am being a bit thick but I don't get the point? What is the 40% being non mortgage transactions telling us?

Noting it is to distract you from the point that they say there might be a drop in demand:eek::eek:

hometruths

Timing belt wrote: »

Noting it is to distract you from the point that they say there might be a drop in demand:eek::eek:

OK.

And am I reading the phrase "Demand will fall off given lower migration" correctly as meaning they think demand will fall off given lower migration? Or am I interpreting information to justify my opinion again?!

Graham

Timing belt wrote: »

Noting it is to distract you from the point that they say there might be a drop in demand:eek::eek:

Do they say the drop in demand will be enough for supply to finally meet demand?