Key Post The impact of Covid-19 on house prices

Gordon Gekko said:
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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The profile of the people laid off would be predominantly made up of the tourist, hospitality and aviation industries predominanly low earners apart from the many hundreds of pilots being laid off. However these unemployment figures will lead to a ripple effect throughout the rest of the economy, how many small and medium size businesses are struggling to stay afloat right now. Accountants, insurance firms, car sales, home improvements will all be affected not alone what the impact of the wider global recession will be that's coming down the tracks. The world is going through one massive economic shock. It will take years to recover from it.
 
Gordon Gekko said:
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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I would have to agree with you. The up demand that exists may be some what reduced but more likely to a point where supply equals demand or thereabouts.
 
Saavy99 said:
The profile of the people laid off would be predominantly made up of the tourist, hospitality and aviation industries predominanly low earners apart from the many hundreds of pilots being laid off. However these unemployment figures will lead to a ripple effect throughout the rest of the economy, how many small and medium size businesses are struggling to stay afloat right now. Accountants, insurance firms, car sales, home improvements will all be affected not alone what the impact of the wider global recession will be that's coming down the tracks. The world is going through one massive economic shock. It will take years to recover from it.
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People still need somewhere to live and supply is nowhere near demand. Why would a developer commence building if there is a risk they won't make a profit.
 
The Horseman said:
People still need somewhere to live and supply is nowhere near demand. Why would a developer commence building if there is a risk they won't make a profit.
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No one knows what the impact will be until normality resumes, whenever that will be.
 
While I agree that the supply side will be affected and it wasn’t overly strong to begin with another factor is that banks are currently restricting heavily or in the case of KBC & BOI halting all exemptions for the foreseeable future. This alone is going to bring prices down in that 20% of all house purchases (excluding cash) are going to be reduced in the amount they could otherwise offer.
This in itself is going to drastically drag down prices for the rest of this year and the mooted worldwide economic recession will quite likely force it to continue beyond that.
 
Saavy99 said:
No one knows what the impact will be until normality resumes, whenever that will be.
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I agree but supplying housing takes time. You can't just switch on supply overnight.

Developers also need finance which the banks will only supply in stages. Additional finance will only be supplied as a phase is sold.

The developer therefore can't avail of economies of scale and therefore costs are higher as a result.
 
People need to put any moves around mortgage exemptions in context. My understanding from a conversation with someone close to it is that this is more to do with the crazy rules around how the banks have to manage these exemptions and can be punished for not doing so. If five us us apply for an exemption and get it, the bank has no idea whether five, three, or none of us will proceed. That uncertainty is more pronounced now.

I believe the point that people consistently seem to miss is that the economy hasn’t collapsed; we put it into hibernation deliberately. Now we have a roadmap for its restart. I don’t know about you, but I will be spending and supporting SMEs as much as I can and getting out there to bring things back to normality.

And all of this is against a backdrop where the State can access free money and distribute it into the economy. Whatever this hibernation costs Ireland Inc, €7bn, €10bn, €15bn, €20bn, whatever, it doesn’t really matter. The mistakes around austerity etc won’t be repeated. The money will be borrowed at no cost and put on the never-never for the good of society. The net result is that we’ll be fine; I firmly believe that.
 
I agree with most of that , but in the short term i.e. 2/3 years until we are back on our feet I genuinely believe property prices will have to reflect the
effect of this unprecedented pandemic. ( even Michael O Leary has written of 2020 + 2021 )
 
Gordon Gekko said:
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.
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You're making a testable hypothesis here.

The CSO property price index was 134.3 in February 2020. Let's say a drop of at least 5% for materiality, so you're predicting a reading of no less than 127.6 in February 2021.

@Gordon Gekko Are you willing to take the challenge and we'll see in a year's time?
 
Brendan Burgess said:
If you have had it surveyed, the seller will probably be less likely to give you a reduction as you have some commitment to it.
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A survey costs tuppence in relation to a house purchase. No way would that influence a seller as regards the commitment of a buyer.
 
Bronte said:
A survey costs tuppence in relation to a house purchase. No way would that influence a seller as regards the commitment of a buyer.
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Hi Bronte

It shouldn't.

But it's a question of commitment. If you have paid out the cost of a survey, you might not want to throw away the money by walking away from the deal.

It also shows you are interested.

He asked when should he ask for a reduction, and it's clear to me, that he should do it before the survey.

Brendan
 
We were in the process of bidding right before the lockdown kicked in and were outbid on a property that subsequently went sale agreed at ~5% over asking (asking was 795k). That sale feel through in late March and the EA came back to us saying the seller would accept asking price. We weren't (and still aren't) sure what will happen the market this year, so held off making an offer. The EA came back to us again a few times in the last month and the seller will now accept ~5% below asking price as we can move quickly and otherwise they could be waiting months for another offer to come in.

We're now in an interesting position and unsure how to proceed. On one hand, we think the seller is being quite realistic and reasonable, but on the other, we know we're the only bidders and are in a strong position so want to ensure we're maximising it before making an offer.
 
That is an interesting position.

There is a risk that either a) someone else comes along outbids you and gets the property or,
B) you offer a lower amnt and annoy the seller such that they dont want to sell to you.

Ultimately, and to avoid the above, shouldnt you just offer what you think its worth, presumably close to asking price?
 
Gordon Gekko said:
I am appalled at people’s attitude to be honest; what ever happened to ‘a deal is a deal’?

For the avoidance of doubt, if a purchaser’s financial circumstances have changed, that’s another matter, but reneging on deals is poor form.
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Gordon - as someone who bought our first house in 2006 and sold 14 years later at a significant loss I make no apologies for re-negotiating the original offer on the house we are trying to buy. The last thing we want is to walk straight in to negative equity again, which we undoubtedly would.

No Seller is under any obligation to accept a lower price. Likewise, no buyer should agree to a price that they are now uncomfortable paying (assuming contracts have not been signed).

In normal circumstances I may agree with your opinion, but these are not normal times. My family comes first.
 
Folks

This is deteriorating into the same depths we had when we allowed house price discussion.

New users registering just to talk about house prices making wild assertions without providing any back-up for them.

Brendan
 
I think it's probably worth opening this thread to review it. If it deteriorates the same way as the previous discussion, I will close it again.

Despite there being 6 pages in the thread, I have heavily edited it to remove a lot of the noise and repetition.

I have moved this very interesting debate to a separate thread:

Is it ethical to ask for a price reduction due to Covid after having gone sale agreed?

Out of principle, I would sell at a lower price to someone else rather than deal with a person who sought to renegotiate our deal.
www.askaboutmoney.com

I must say that I am surprised that house prices have not fallen.
 
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