Key Post The impact of Covid-19 on house prices

This past weekend had zero viewings listed for the entire country! As above, SF and a few other agents are offering virtual tours to try keep the show on the road. I spoke to an agent in another firm who wondered who would ever buy based on a virtual tour!

Up to this weekend, they had been facilitating private viewings, one or two people at a time, but the new restrictions have put a stop to that. For as long as these restrictions last, the only people who will be able to complete a purchase are cash buyers. No bank is going to release a mortgage while they are unable to carry out a valuation.
 
We are looking to buy at the moment and there seems to be a bit of panic in the market at the moment.

We were bidding on a property recently. Another party had put a higher offer in on a Friday afternoon and the agent reverted to us. I told them we would think about it over the weekend and when I got back to them with a higher offer on the following Monday, he told me that the vendors had paniced and accepted the lower offer due to the current covid-19 pandemic.

Perhaps we were saved money by their panic, only time will tell.
 
I am also following this thread with great interest. As an executor we have recently gone sale agreed, booking deposit paid, surveys and valuations done and contracts issued.

As yet the buyers have not signed and returned the contracts, nor have they asked for their booking deposit back. No idea what their intentions are but we will not be considering a 20% reduction or anything near it. We would consider a small reduction rather than lose the sale.

Gas, electric, house insurance, phonewatch, property tax on this vacant house come to about €3.5k annually, in this case a 20% reduction would be many multiples of €3.5K.

If our buyer pulls out or looks for a substantial reduction, we are prepared to wait and take our chances even if it goes to next year or even 2022.
 
The "market will go down by 20%" thesis seems to make sense in that it seems reasonable that demand will dry up in many sectors. But the unknown thing is supply - unless someone is in a forced sale situation, is there not a chance that supply dries up as well. Which makes it difficult to know if the thesis holds up.

If I was selling now, if there wasn't time pressure, I think I'd be taking it off market.
 
candor said:
We were bidding on a property recently. Another party had put a higher offer in on a Friday afternoon and the agent reverted to us. I told them we would think about it over the weekend and when I got back to them with a higher offer on the following Monday, he told me that the vendors had paniced and accepted the lower offer due to the current covid-19 pandemic.
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An agreement to buy or sell property is not enforceable until written contracts have been signed and exchanged.

Up until that point, the estate agent is legally obliged to pass on all offers received. It's up to the vendor to decide whether or not they wish to proceed on the basis of your higher offer.
 
What effect will the shutdown of the building industry have on supply?

I guess the key thing is what will have happened the the financial position of the buyers?

Are the people who’ve been unlucky to lose their jobs buyers or renters? And what impact will people’s inability to pay rent have on their landlords?
 
EmmDee said:
The "market will go down by 20%" thesis seems to make sense in that it seems reasonable that demand will dry up in many sectors. But the unknown thing is supply - unless someone is in a forced sale situation, is there not a chance that supply dries up as well. Which makes it difficult to know if the thesis holds up.

If I was selling now, if there wasn't time pressure, I think I'd be taking it off market.
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The market is effectively going to shut down for the next 3 to 6 months minimum. The supply will dry up, there should be few people who are in forced sale positions due to Covid-19 given the mortgage breaks and other government supports. It may be a delayed reaction once we go back to work and certain employers don't reopen.

As I am selling a house, if I receive an offer of 20% less, I will reject. I will reevaluate in 6 months.
 
With “best” not always being the highest. It’s not uncommon for a vendor to accept a lower bid from someone with greater scope to complete the deal efficiently.
 
Ronan Lyons is usually fairly good. He is forecasting significant falls in house prices.

Irish House Price Report Q3 2024 | Daft.ie

www.daft.ie www.daft.ie

These extraordinary real economic consequences will, of course, translate into housing market effects. COVID-19 represents an extraordinary shock to housing demand and we should expect to see significant falls in housing prices - both sale and rental - as the economic effects unwind. There are important differences between sale and rental segments, though. While rental listings are up year-on-year, especially in central Dublin, the sales market has frozen somewhat. As the first graph below shows, there were just 1,300 sale listings in the two weeks starting March 15 - compared to almost 2,600 in the same period last year. This is a fall of almost one half and is relatively evenly spread across the country and across segments.

...

Despite all its complexities, housing is still a case of supply and demand. It is clear that COVID-19 represents a dramatic contraction in demand for owner-occupied properties. Households will be far less likely to enter into a 30-year mortgage contract, for example, if they are unsure what their 3-, 6- and 12-month prospects are for being employed and for what they'll earn. Things may be different for rental properties. Clearly, unemployment will soar - but if government steps in to guarantee incomes and prevent evictions, then there may be far less change in the rental market than on the sales side.
 
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I would love a sense check on our situation from someone more financially qualified than I. It's causing me a decent amount of anxiety. We are sale agreed, buying for approx 200k more than we're selling for. Our (1st time) buyer hasn't yet pulled out or requested a renegotiation, though common sense would surely indicate that he will. If a renegotiation was requested by our buyer, we're have to try to bring that to our sellers.

This situation is so chaotic, we know that any number of things could still scupper the deal, but we're not thinking about those until they happen.

We proceeding under the assumption that even in the event of a large drop (20% ish) in the house market, the differential between the house that we're selling and the house that we're buying would still be in the range of 200k. Perhaps the adjustment could see that differential drop by 20k or so. Part of the deal for us is a top-up mortgage of approx 100k, so a reduction in the differential might see us saving a bit there. But is this saving worth dropping the deal and biding our time (12 months?) until supply returns to a reasonable level and some of the other variables that are causing the current chaos level out.

This is the rationale we're using to proceed. Anyone feel like telling us we're way off?
 
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I would probably agree with your rationale it it about more than money to you. We just sold our house to FTBs, about 3 weeks ago. We are now renting. The downside, if you exclude the prices side of things is that we have that old renting insecurity feeling. We will have to pack up all over again when we buy a place in 12 months or so. We can't really settle down in this new neighbourhood (which was stressful in itself trying to find a rental) as we will probably leave it too, when we buy. Renting now feels like a temporary measure when I'd like to enjoy a sigh of relief at finding a longer term home.
But the funny thing is, most people I speak to say we are very lucky, we sold at the right time, a few weeks later and we may not have, we should get more for our money in a year, etc. But I don't feel lucky. I would rather be using my own kitchen and tending my own garden, to be perfectly honest.
 
We are in the same position Super Sesame. We are closing the sale of our house next week
Our buyer is a first time buyer and is happy to buy and hasn't asked for a reduction. We went sale agreed on a property and have asked for a 10% discount. The seller rejected that but did offer a 20k reduction. We love the house and want to buy but having bought in the height of the boom last time we are treading carefully now. So we are lucky to have a place to rent for 6 months. We are going to do that. We told the seller that we would be willing to buy at agreed price in 6 months if nothing happens to prices but if not we would still respectfully ask for a reduction of 10% I understand that the seller is also effectively pausing their purchase also. I would much prefer to be in my forever home now but the uncertainty is too great.

Our estate agent tells me that buyers are seeking 15 to 20% reductions. Mind you, the estate agent acting for the buyer in our case said they have had no requests for reductions. ‍♀️
 
womble said:
We are closing the sale of our house next week
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A sale is not closed until you have the signed contracts returned to you.

A lot of people are getting anxious and they might yet request a last minute discount.

I don't think any seller is going to defer the sale for 6 months at a set price.

So if you are anxious, pull out of the purchase and buy a different house. If you pull out, they might well reduce the price when they put it back on the market.

Brendan
 
Thanks Brendan. I must admit that my nerves are shot and will be until closing day!
 
womble said:
We are closing the sale of our house next week
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Can this happen with the current lock down ?

As executors we are in a similar situation, contracts issued, surveys, valuations etc all done. Buyers are to sign, then we sign.

Had an email from the solicitor last week saying all is going ahead.

Presumably both buyers and sellers have to physically (As in not digitally) sign contracts witnessed by their respective solicitors.

Am I right in thinking that as neither party can sign due to the restrictions, everything can be ready to go but no binding contract can be in place until at least the 5th May when the current restrictions might or might not be lifted.
 
A contract doesn't have to be witnessed by a solicitor, a neighbour could witness it over the fence, then return to solicitor by registered post.
 
Mrs Vimes said:
I presume if womble is expecting to close next week that contracts have already been signed by both parties?
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Sorry, I was thinking that they were just going to exchange contracts next week. So, you are right, they should have already exchanged contracts and the sale of their house should go ahead.

Brendan
 
Mrs Vimes said:
A contract doesn't have to be witnessed by a solicitor, a neighbour could witness it over the fence, then return to solicitor by registered post.
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Ok, thanks.

Realistically, would a house sale ever be completed to the buyers solicitors satisfaction in this manner ?
 
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