Hold off buying for 18 months?


#1

So it looks like a recession is inevitable. How long depends on how long this emergency lasts I guess.

Should anyone thinking of buying in 2020 hold off to 2021 or 2022? I would say Yes!


#2

More like who still has a job/work… :ninja:


#3

Or could it be a cunning strategy to nip in ahead of those putting off the decision and grab a bargain. :icon_twisted:

Btw, just ran a quick check on myhome.ie as of today, March 20th. Asking prices in Dublin are slightly up on the start of the month. So even though I can’t imagine lots of people traipsing around to viewings, it certainly isn’t bargain hour yet.


#4

Don’t see this as a sustained depression. Deep V shaped recession for the year (as with all Countries) with a very quick rebound. Banks are healthy relative to 2018. Oil at rock bottom prices are actually a stimulus. All the debt Countries will take on will find its way into the economy. Key is to keep cash in the pockets of those hit hardest. Get them over this and their jobs will return.

In the long term some positives may come from this. Shines a much need light on the incredible work hospital staff do. I don’t see many people talking about the “trolley crisis” now.

Those is jobs which are actually important to the economy (incl. teachers) will become the focus.
Pent up demand will be very high for most consumer products / lifestyle discretionary spend.
If I could take an option on a pub licence for Sept 2020 I would.


#5

I don’t see pent up demand for discretionary spend - especially for those that have lost jobs.

I can only drink so many pints per night - and I won’t be making up for the lost number of pints over the last week.

It will take some time for vendors to realise the market has changed. Only those that need to sell will put their houses up for sale. It will then take some time for those transactions to close and then be disclosed to the price register. It will then filter into the expectations of some potential venders. Meanwhile those estates that need to sell houses will continue to sell. So I would wait for the 18 months if you can - but keep an eye out as something could pop up.

Someone looking at buying a house now will have to really think about their own job situation. I know a good few people already who have lost jobs as a result of the pandemic. While government related jobs will be rock solid, many other jobs will not be so safe.

And while the banks may be ok for the moment, imagine how the balance sheets of the Italian banks will look like when they don’t have interest and principle in on their residential mortgages. They won’t be keen on lending on new transactions, either business or residential.


#6

It seems heartless to speculate on property prices when people are dying but the social, economic and financial consequences of what the world is going through are fascinating.

At the level of the property market I’ve been looking to buy a retirement pad in Dublin for some time but I live outside Ireland so people like me are now unable to participate in the market, so there goes one potential buyer. I suspect that the whole property market will basically seize up. Only people who have to sell will do so but will people be willing to turn up at viewings? Moreover, are banks lending at the moment? Before all this kicked off I spoke to one estate agent about a new development in South Dublin that was of interest to me and five of the nine properties that met my criteria already had deposits from Chinese buyers. I wonder if these buyers have now pulled out (if indeed they were real in the first place!).

Also, I have heard that former AirBnB properties are now finding their way onto the rental market which is, in my opinion, a good thing. Will this create enough additional supple to impact rents? If so you that should hit yields (if you can find someone willing to sign a new rental lease).

There are so many competing forces at work I don’t really know what to think. My gut tells me that the economic hit will be severe (but hopefully relatively short-lived) and so property prices everywhere should come under pressure. Furthermore, look how the stock market and pretty much any quoted asset or commodity has suffered since the Covid panic began, it is difficult to see how property could be insulated from this.

I reckon that if the lock down persists for more than a month or two developers will soon be open to discounted offers if only to generate some cash flow. For people who want to sell their PPR I suspect that they will stay put until this period passes. However ,it is not difficult to imagine that individuals who are in the eye of this economic storm may soon be forced to sell whatever they can.


#7

My feeling is this virus will also cull many weak or zombie companies with poor products or service. New hungry startups and stronger companies will survive and flourish with less competition for a while.
My expectation is that prices will drop from here for about a year, maybe a bit more, before rocketing again (as usual here after a dip).


#8

Any further thoughts on benefits of waiting till 2021/22 to buy? Not worried about needing to secure a mortgage.


#9

“28 Days Later” - there is your answer.

This movie ain’t over yet and prey they have not a sequel in production due to current popularity, because as you know, sequels are often never as good as the original. :icon_eek:


#10

If you can hold off for 18 months, that would seem sensible. It will take time for vendors expectations to move downwards.

Everyone’s circumstances are different. Having spoken to a number of people who are sale agreed, just bought or thinking of buying some will want to continue to finish out sale agreeds, others will not. Some with families on the way etc might have a preference for owning etc.

The banks are changing their credit policies, I would think, so some people will feel like they want to get a loan while they still can.

People in chains will want to move forward due to the stars clinging so to speak.

Vendors will be told by EAs, that they see little reductions in price, but the reality is that new stock simply isn’t drawing attention because people have a collapse in confidence, or are worried because of their jobs, or being asked to take “temporary” pay cuts. This takes time to feed into the system, mainly because the market is so illiquid.

Some great deals on property rentals at the moment - If you need alternative accommodation I would ask what kind of flexibility the lessor has on price, because you won’t be the only one asking.


#11

Will there come a point where US funds will deem it attractive to sell of parts of their Dublin portfolios if prices are stickier than rents? With no real repossession culture in Ireland, they might act more swiftly than amateur landlords.


#12

Would a us fund sell their fund units, but leave the rental structure in place? I would think so, unless the asset management decide to sell.

My guy tells me that if you have an empty unit, you will extract more value by renting it in a recession environment, because you aren’t realising a “loss” on sale. After renting at a lower rent for a few years, you can then sell at a higher price in better times.


#13

You have to live somewhere and do you want to be buying forever or get that done and get on with living. A 10% drop is possible so that would be 50K on an 500K purchase. If you aren’t getting a mortgage cool that’s great it’s two to 3 years rent if you rent for another 18 months is it much of a saving?

So it all depends are you buying as an investment or as somewhere to live.


#14

But surely the fund unit price and the value of the underlying assets are correlated? If the price of property dips, so too does the price of the fund unit. If the market drops by 10%, then the unit drops by a similar value if the market is operating efficiently. But if you’re restricted from withdrawing your investment, which seems to be the case with some investment vehicles, maybe they can weather the storm.


#15

10% my backside


#16

A succinct comment, but I was replying to macannrb. The point was more to ascertain if and how the scenario mentioned would transpire. The percentage fall would undoubtedly be relevant, but wasn’t the question raised or an opinion on the degree of any fall.


#17

In Ireland investors are usually short term so they are looking for capital appreciation (see Wilbur Ross - who was
one of a number of supposedly “long term value investors”, in Ireland) . They won’t be dumb enough to catch a falling knife but you will want to be in before them before our leaders help them sew up the market.


#18

I have somewhere to live for next few years as needed (moved home) so won’t be wasting money on rent. 10% off would make a big difference. I felt that the market in Dublin was softening anyway but Covid-19 is a whole new ball game and makes me think I’ll benefit from waiting it out.


#19

You think it will be far more or less?


#20

A drop in the spot price would not necessarily change the longer term value. If there was a sudden drop, like oil, and oil company shares wouldn’t necessarily drop to zero because they are adding value to the product and there is a longer term value than just a spot price.