Key Post The impact of Covid-19 on house prices

em_cat said:
We went sale agreed a bit before Xmas and we are now just about to sign contacts in the next week.
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I was sake agreed too before Christmas and twas all done and dusted (thankfully I might add) by 29th January. What took so long for you??
 
Saavy99 said:
I was sake agreed too before Christmas and twas all done and dusted (thankfully I might add) by 29th January. What took so long for you??
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We’ve bought an infill site and the executer wasn’t in too much of a hurry. Also we had a couple of queries regarding the contract and needed an accountant to look into something that was bugging me.

On the flip side I had a couple of calls, regarding a property I desperately thought I wanted and believed it’d be exactly what I wanted, from the EA offering us the property for a substantial drop from what we had offered months ago and was a little miffed that I had bought something else at a much better value and I the end it’ll be what I want.
 
Bilbo1 said:
Jackm, the owner had agreed to do a few small repairs before the sale. With the lockdown this was impossible. We agreed on a reduction instead and to buy it as is.
It still is over the previous offer, because we wanted to avoid the seller to go back to previous bidders.
If you are all ready to go, you could offer them a quick sale now in return for a reduction... Depending of the situation they may want to get rid of it soon
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Thanks Bilbo, that's really helpful. I will give this some thought.
 
Supply will be constrained on the basis that building has stopped. Supply will also be constrained on basis that it takes time to actually get a property on the market and, in the case of investment properties, it’s even harder to shift a tenant. If I had a property on the market right now, I’d be inclined to hold tight at my asking price. People here seem to hanging their hats on a 10% adjustment but what’s the basis for that? When I chat with friends the common theme seems be that people have more money now than they did 2 months ago. Yes, it is tragic how people have been impacted, but is it not fair to say that they’re mostly people in hospitality and retail? Were they really in the market to buy property to that great an extent?

Why should prices fall? There is still a supply issue and I’d argue that the bulk of the customer-base still have their income.
 
Gordon Gekko said:
Why should prices fall? There is still a supply issue and I’d argue that the bulk of the customer-base still have their income.
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So you think demand has only fallen as much as supply?

Despite the fact that a quarter of the labour force are on state supports right now?!
 
Gordon Gekko said:
Yes, it is tragic how people have been impacted, but is it not fair to say that they’re mostly people in hospitality and retail?
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No, I don't think that is fair at all.

I personally know of a significant number of (relatively) high-earning professionals that have seen their income cut by 20%+ over the last month. That directly impacts the amount they can borrow, which will indirectly impact their purchasing power (and hence house prices).

Remember house prices are set at the margin - if a significant number of potential purchasers have less purchasing power, prices will inevitably fall, everything else remaining constant.

The idea that a fall in demand will be balanced by a fall in supply seems entirely fanciful to me.
 
It’s interesting that you know a significant number of relatively high earning professionals who’ve seen their income cut; I don’t know any.

What sectors have been most impacted?

Retail ex food
Hospitality
Aviation
Personal services

Who are still doing fine?

Tech
Medtech
Financial services
State employees
Semi-State employees

I simply look at the shortage of supply that was already there and wonder whether the temporary devasation suffered by people who are paid by the hour will really have as much of an effect as people think.
 
NoRegretsCoyote said:
So you think demand has only fallen as much as supply?

Despite the fact that a quarter of the labour force are on state supports right now?!
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Meaning that 75% aren’t.

And what is the profile of the 25% you’re referring to? How many of them are barmen, air stewards, waitresses, cleaners, etc? I mean no disrespect to those people, but were they driving the property market?

There was already a supply shortage; now we have a roadmap to the reopening of the economy, we’re potentially talking about a three month hiatus right now set against the subsequent years and decades.

I’m coming to the conclusion that this will be an economic blip rather than the depression many naysayers secretly hope for.
 
If the banks adjust their valuations as the brokers have confirmed then many transactions will collapse , if this happens vendors will have to reduce
their asking prices in order to sell their properties. I suggest property prices will reduce by 15%.
 
robert 200 said:
If the banks adjust their valuations as the brokers have confirmed then many transactions will collapse , if this happens vendors will have to reduce
their asking prices in order to sell their properties. I suggest property prices will reduce by 15%.
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15%? As opposed to 10% or 12%?

Where are people plucking these figures from?

My sister is in the process of buying a house right now; the bank are happy to proceed, they’re happy to proceed, everyone’s happy to proceed.
 
Your sister shouldnt proceed as the property is certainly worth less now than pre Covid and she could start her experience in property purchasing in
the dreaded " negative equity "
 
Ryanair is laying off 5,500 pilots - this is just one business in one sector . If you believe a pandemic of this magnitude is not going to effect the price af property you are not being realistic.
 
“Laying off”...so not letting them go...and that’s across Europe, not in Ireland. And they’ll be back to normal in all likelihood inside of a year
 
Hmm, I know quite a few people relatively unaffected in last crisis who are steeling themselves this one. Small business owners who provide services to retail and hospitality, pension services, insurance along with those public servants expecting salary cuts and car sales estate agents etc. the last recession hit certain sectors very hard, this will be wider.
Besides that ongoing costs of business will increase for everyone
 
I can’t see where the 10%-12% is coming from either, we bought a site that was relatively slow to sell in the first place and we are building instead of renovating or doing up. Also we are not ftb so, but this is our forever home as I never want to move again nor do I want a mortgage again so that is the basis for not seeking a reduction.

I suppose there well might be a drop in second hand house prices now, but I personally think if your buying from an individual as oppose to a new build in a development then seeking a reduction in your agreed price isn’t fair to the seller as they didn’t cause the pandemic. Developers are different as they can wind up and start again if the market tanks so I’m not particularly considering the impact this will have on them.
 
Gordon Gekko said:
And what is the profile of the 25% you’re referring to? How many of them are barmen, air stewards, waitresses, cleaners, etc? I mean no disrespect to those people, but were they driving the property market?
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If these people aren't buying houses they are renting them, and less rental demand pushes down prices too.

On the supply side, the short-run impact of Covid-19 will be microscopic. If 6k units are not completed by year-end means that the stock of dwellings will still be 99.7% of what people expected at the start of the year.

House supply down only 0.3%, with unemployment likely 10% at year end, up from an expectation of 5% a few months ago. Department of Finance anticipates total earnings to in the economy to fall 14% this year.

There's an order of magnitude difference here in what's happening to supply and demand!
 
NoRegretsCoyote said:
If these people aren't buying houses they are renting them, and less rental demand pushes down prices too.

On the supply side, the short-run impact of Covid-19 will be microscopic. If 6k units are not completed by year-end means that the stock of dwellings will still be 99.7% of what people expected at the start of the year.

House supply down only 0.3%, with unemployment likely 10% at year end, up from an expectation of 5% a few months ago. Department of Finance anticipates total earnings to in the economy to fall 14% this year.

There's an order of magnitude difference here in what's happening to supply and demand!
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The employment picture should be a lot rosier than that when normality returns.

But even then, what’s their prediction for 2021?

Let’s remember that this is an economic crisis we chose to have ‘cause we could afford to have it.
 
Gordon Gekko said:
The employment picture should be a lot rosier than that when normality returns.
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Unemployment still forecast to average nearly 10% in 2021, up from 5% a few months back.

A lot of houses are still going to be bought and sold in the next 12 months.

I think you're acknowledging that prices will be hit, at least short term.
 
NoRegretsCoyote said:
Unemployment still forecast to average nearly 10% in 2021, up from 5% a few months back.

A lot of houses are still going to be bought and sold in the next 12 months.

I think you're acknowledging that prices will be hit, at least short term.
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No, I’m acknowledging that the property market, like everything else, has been deliberately and consciously shut-down. It will re-open, and when it does, I don’t believe that prices will be hit in any material way.

Again, those unemployment figures are terrible, but what is the profile of the people? I would venture that, in the main, they’re not house-buyers.
 
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