Why has rent not tumbled? 1000s apts empty / unemployment / can't sell / over supply

worded

Tenants were shafted last year for rent hikes, its so slow to reduce though in these bad times.

Does everyone have to suffer because invertors / landlords property is turning sour?

Im not seeing apt for rent for 1100 - 1200 yet Ive heard ... "oh 1000s apts unsold, they will have to rent them" - well where are they?

pvt.joker

We had to reduce the rent in the room we rented out last week in our house by 40 euro per month to get someone in. So rents are going down.

faceman

pvt.joker wrote: »

We had to reduce the rent in the room we rented out last week in our house by 40 euro per month to get someone in. So rents are going down.

I wouldnt use just one example to cite the market's position.

It seems to be me that rent prices are being dictated by local demand and local supply as opposed to national demand and supply. Some areas are holding steady, others are not.

seamus

There may also a bit of bull-headedness at play, with some people simply refusing to drop their price and opting instead to leave it idle.

I think half of the problem is that people expect city centre rents to drop, but as faceman quite rightly points out, rental markets tend to be very local, not national or even regional.

cinneide

I think that the generally people aren't buying gaffs anymore because prices are going down and people want to wait to see just how low things will go.

But they have to live somewhere, so they decide to rent for a while. This means that there are more people looking to rent, which pushes rent up for everyone.

I was looking for a two bedroom city centre-ish apartment recently and found only scandalously over-priced dumps. Seemingly, the sky is the limit on how much landlords are willing to gouge tenants...

Stephen

There's still 3 times as many properties for rent on Daft now as there was this time last year. Rents should fall, but this is Ireland :rolleyes:

sydthebeat

when interest rates take another hike, pay freezes, VAT increases and unemployment rise, then you will see people begging for their investor properties to be rented. give it 6 months.

bugler

Rents are sticky. There has been a massive boost in the supply of rental accommodation, that cannot be disputed. We also have fewer immigrants to rent, and with more likely to leave.

There is definitely a lot of stubborness out there. I've seen LLS forfeit 2 months rent and counting rather than the drop the price to get a tenant. The rental reports from http://www.irishpropertywatch.com/ have been telling the story. You want to rent the place out, the best way is to drop the price. Rents will continue to fall, but who knows at what rate.

Moonbeam

To me it seems that renting a room is cheaper but renting a house/Apt in a central location isn't.

worded

bugler wrote: »

Rents are sticky. There has been a massive boost in the supply of rental accommodation, that cannot be disputed. We also have fewer immigrants to rent, and with more likely to leave.

There is definitely a lot of stubborness out there. I've seen LLS forfeit 2 months rent and counting rather than the drop the price to get a tenant. The rental reports from http://www.irishpropertywatch.com/ have been telling the story. You want to rent the place out, the best way is to drop the price. Rents will continue to fall, but who knows at what rate.

I think the same as most people so far.

Its such a pity they cant drop a few % fast so everyone can have a better life versus LLS pissed off having to reduce it 2 months later with a vacant property and feeling grieved

brianthebard

cinneide wrote: »

I think that the generally people aren't buying gaffs anymore because prices are going down and people want to wait to see just how low things will go. But they have to live somewhere, so they decide to rent for a while. This means that there are more people looking to rent, which pushes rent up for everyone. I was looking for a two bedroom city centre-ish apartment recently and found only scandalously over-priced dumps. Seemingly, the sky is the limit on how much landlords are willing to gouge tenants...

sorry but do you have any evidence that a large number of first time buyers are sitting on their hands,causing rent increases?Cause i don't believe it tbh.

worded

brianthebard wrote: »

sorry but do you have any evidence that a large number of first time buyers are sitting on their hands,causing rent increases?Cause i don't believe it tbh.

FTB renting - to a certain extent this steadies the market as they might continue to rent - but add the 1000s of those who have gone / are about to leave. Unemployment to 600 new per week. We have all seen massive rent hikes over the years, this is just the bull**** that is being fed to the media / new tenants. “Oh FTB are floating the market”

faceman

brianthebard wrote: »

sorry but do you have any evidence that a large number of first time buyers are sitting on their hands,causing rent increases?Cause i don't believe it tbh.

I dont have the answer to that one either.
Do you have any evidence that FTB's arent sitting on their hands?

bugler

Potential FTBs would presumably already be in the rental market, rather than adding to it, except for those who were living at home and decided to leave to rent while they waited to buy(!).

As I see it, with rental supply sky high compared to a year ago, whether drops in house prices are causing some to rent rather than buy is a moot point. There is an abundance of rental property out there, and however long it takes, that means achievable rents are going to fall (which they are already).

brianthebard

faceman wrote: »

I dont have the answer to that one either. Do you have any evidence that FTB's arent sitting on their hands?

only the ten+ years of ftb's buying.There just isn't that many more ftb's than houses any more.

starky

seamus wrote: »

There may also a bit of bull-headedness at play, with some people simply refusing to drop their price and opting instead to leave it idle.

I think half of the problem is that people expect city centre rents to drop, but as faceman quite rightly points out, rental markets tend to be very local, not national or even regional.

I think this is the answer. I think this is also the answer to why the house prices are moving down so slowly. Pure and simple stubbornness.

faceman

brianthebard wrote: »

only the ten+ years of ftb's buying.There just isn't that many more ftb's than houses any more.

the last 10 years wasnt just FTB's. are there no more youngsters growing up to be FTB's?

Victor

Population is still growing and household size is dropping.

gurramok

And there are fewer younger people than those in their mid 20's upwards due to the tumbling birth rate in the mid 80's.
So immigrants are relied upon to make up the difference and fewer of them will be around that much in a recession.

foxhill

well Mostly Eeastern Eupns will go back home or somewhere else and that was perdicted already.
I think many Non-EUs will stay as they cnt go somewhere else easily and hard to move back home. Many nurses, doctors, Its bought houses already, so ofcourse they ll stay as they cnt sell their house now.
but there ll b no more new Non-EUs comin to Ireland as tight visas for Non-EUs and also anti Non-EU immigration Govt policy is doin nothing to attract Non-EUs into Ireland.

SkepticOne

I would go with the stubbornness/denial explanation. Landlords are holding out for higher rents even at the cost of void periods. It may not be entirely rational behaviour but if I had purchased an investment property near the top, I might be reluctant to accept that I may never cover my mortgage payments with rents. Better to hold out for the mere chance that someone may come along and pay the rent I'm asking than accept the reality that a bad investment decision was made that will take many years to sort out.

worded

SkepticOne wrote: »

I would go with the stubbornness/denial explanation. Landlords are holding out for higher rents even at the cost of void periods. It may not be entirely rational behaviour but if I had purchased an investment property near the top, I might be reluctant to accept that I may never cover my mortgage payments with rents. Better to hold out for the mere chance that someone may come along and pay the rent I'm asking than accept the reality that a bad investment decision was made that will take many years to sort out.

Unbelievable stubbornness. "I will throw that bike in the river rather than rent it for a penny less than the asking price" mentality. Can you imagine the amount of calls/excuses/reasoning going from agents to LLs as to why the gaffs are not shifting?

Take one month off the yearly rate of rent and a lot of places would go like a hot cake.

What about 13th month free for a good tenant that pays the rent on time with no hassle?


One thing I have noticed is some really quality places available for approx 10 - 20 % too much rent compared to average wages IMO and what Im prepared to spend (and had no choice to spend for the last few years). But its good that quality there, which will tempt tenants out of kips and pressure landlords to revamp. Im seeing more and more bargain town crap in the underground as tenants bail from here. Good news for all.

seamus

worded wrote: »

What about 13th month free for a good tenant that pays the rent on time with no hassle?

The problem with smalltime landlords (and this is not confined to Ireland) is that they don't view it as business. All they see is a dirty, filthy, would-rob-ya-blind-as-soon-as-look-at-ye, scrounger, living in their retirement property and getting a free ride. They view the monthly rent as their mortgage payment/car repayment/compensation/ivory backscratcher.

If they copped on and ran it as a business, they'd find themselves in a much healthier position (mentally and financially) very quickly.

is_that_so

My 2c worth.
It may be down to the fact that banks pushed interest only loans for rental properties, which means that those "investors" wouldn't necessarily be exposed as badly with interest rate increases. Also a landlord with multiple properties would get some tax benefit out of losses.
Buying rental property for people I know is more of a security - almost looked at as a pension plan. As Seamus pointed out not all so-called investors are following any kind of economic logic or good business sense.

meglome

I was looking at Dublin city centre rents a couple of weeks ago on Daft and I was pretty surprised at how high they were. Didn't make sense to me other than people are flat out refusing to lower the rents even though they may be having trouble letting the apartments.

worded

meglome wrote: »

I was looking at Dublin city centre rents a couple of weeks ago on Daft and I was pretty surprised at how high they were. Didn't make sense to me other than people are flat out refusing to lower the rents even though they may be having trouble letting the apartments.

Ive heard agent say about rentals - the "guide price is x" "not much room for negotiation on this place" Ive never heard that before.

Ive see on daft "a realistic price ......... " on a rental.

Ive also heard "Oh we have lots of interest in this place and the market is moving very fast ........." bull**** for most of the rentals .... perhaps for the top end quality places

Id say agents are pissed off bringing people to places multiple times as tenants get fussier about quality. (They want to let first showing) They are getting % and while they want to keep LLs happy they will drop a few quid to let it out and explain to the LLs that it has to drop for the right tenant.

If I was an agent Id let the place for 100 less to a good prospect than view it 10 times for too much $.

Tips:
Look like the right tenant
Have several references
If possible get 2/3 mths rent together and haggle for a discount.

More people need to do this to shake the market downwards.

Its just not possible that rents can stay the same in the current climate.


Note as someone said - Its local supply and local demand and local prices.
BUT ......... its still over priced everywhere I look

is_that_so

Isn't it also possible that it's to do with the summer, students moving out landlords giving places a chance to air a bit etc. ?Given the gloom elsewhere is there not also a possibility that too much is being read into this.

worded

is_that_so wrote: »

Isn't it also possible that it's to do with the summer, students moving out landlords giving places a chance to air a bit etc. ?Given the gloom elsewhere is there not also a possibility that too much is being read into this.

"giving places a chance to air" - LOL - I needed a laugh.

is_that_so

worded wrote: »

"giving places a chance to air" - LOL - I needed a laugh.

Yep. Woman I know did this twice. Left place empty for two months to air it.

seahorse

is_that_so wrote: »

Yep. Woman I know did this twice. Left place empty for two months to air it.

Did she leave the windows open? lol...

is_that_so

Lots of that, duvets and curtains hanging out and lots of banging noises. She'd also try to corner the other owners every so often to get some dirt on her tenants.

Calina

is_that_so wrote: »

My 2c worth.
It may be down to the fact that banks pushed interest only loans for rental properties, which means that those "investors" wouldn't necessarily be exposed as badly with interest rate increases.

Actually, interest only payments take a disproportionately high hit on rising interest rates. So I'm at a loss to understand what you think you're saying here.

is_that_so

Calina wrote: »

Actually, interest only payments take a disproportionately high hit on rising interest rates. So I'm at a loss to understand what you think you're saying here.

Agreed. My point is that the actual monthly payments are likely to be at a much lower level in cash terms.

Calina

is_that_so wrote: »

Agreed. My point is that the actual monthly payments are likely to be at a much lower level in cash terms.

Which is also not logical. The key reason that the payments would be much lower is if the principle was correspondingly low. You can't infer that from interest only - you require the LTV and purchase price to know that.

In any case, anyone who was interest only from about 3 years ago probably has seen their interest bill double. That probably does hurt.

is_that_so

Calina wrote: »

Which is also not logical. The key reason that the payments would be much lower is if the principle was correspondingly low. You can't infer that from interest only - you require the LTV and purchase price to know that.

In any case, anyone who was interest only from about 3 years ago probably has seen their interest bill double. That probably does hurt.

I'll take your word for it.

johnnyskeleton

A lot of people put their property for rent at a ridiculously high rent (lets say €1800 pm for a flat in an outer dublin suburb). When no one showed any interest they dropped the price to €1600, but only after 2 months. When only a few people showed any interest and turned it down or never called back they dropped further to €1400. When at this rent (which is a good deal lower than their monthly interest bill) there were still only a few people interested and they still turned it down or never called back, the landlord assumed that the rental market was dead and gave up dropping the price, waiting instead for the rent to go back up.

Meanwhile, landlords who realised instantly what the market would bear gobbled up tenants and/or did their best to retain the tenants they had, and coupled with the decrease in demand for rental properties due to less people around / less people working what we see is that the good properties / good landlords have tenants at a reasonable rent, while the turkeys sit on the market refusing to drop their rents.

The turkeys might only represent a small fraction of the market, but the thing is that the asking rents are highly visible (being advertised on daft etc) whereas the rents that people are actually paying are not as obvious.

Cantab.

If you want to have your choice of tenant, you need to be pitching 10-15% below market rates.

If you're at or above market rate, you can't pick and choose and could easily end up with a class-A drug user/waster who loses their job, gets pregnant and you can't kick them out.

Better to be able to choose between 4/5 prospective candidates and save yourself the hassle of dealing with wasters/promiscuous types liable to get preggers/skangers/mentally ill people.

johnnyskeleton

Here are two examples from irishpropertywatch.

http://www.irishpropertywatch.com/rentalsPriceDropReport.php?ReportDate=2008-07-03&Beds=any&Region=any

Millrace, Saggart, 5 bed, was €2600 now €1450 that’s a drop of €1150 or 44.23%

http://www.daft.ie/searchrental.daft?id=542544

No. 3 Camac View, Kilmainham, 2 bed, was €1450 now €800 (drop of €650 or 44.83%)(not surprisingly, this property has now rented).

beeno67

johnnyskeleton wrote: »

Here are two examples from irishpropertywatch.

http://www.irishpropertywatch.com/rentalsPriceDropReport.php?ReportDate=2008-07-03&Beds=any&Region=any

Millrace, Saggart, 5 bed, was €2600 now €1450 that’s a drop of €1150 or 44.23%

http://www.daft.ie/searchrental.daft?id=542544

No. 3 Camac View, Kilmainham, 2 bed, was €1450 now €800 (drop of €650 or 44.83%)(not surprisingly, this property has now rented).

In fairness according to your link the Saggart property was originally on at €1700 not €2600

Victor

Cantab. wrote: »

If you want to have your choice of tenant, you need to be pitching 10-15% below market rates.

If you're at or above market rate, you can't pick and choose and could easily end up with a class-A drug user/waster who loses their job, gets pregnant and you can't kick them out.

Better to be able to choose between 4/5 prospective candidates and save yourself the hassle of dealing with wasters/promiscuous types liable to get preggers/skangers/mentally ill people.

You realise how many good tenants you have just written off?

johnnyskeleton

beeno67 wrote: »

In fairness according to your link the Saggart property was originally on at €1700 not €2600

It was on for 1700-1750 for about 2 weeks, then was 2600 for 3 months, then dropped down again, but I take your point.

I was just picking out the largest drops from the IPW report.

Cantab.

Victor wrote: »

You realise how many good tenants you have just written off?

What do you mean?

astrofool

johnnyskeleton wrote: »

It was on for 1700-1750 for about 2 weeks, then was 2600 for 3 months, then dropped down again, but I take your point.

I was just picking out the largest drops from the IPW report.

Sounds like they meant to drop it to 1600 but mis typed

shoegirl

faceman wrote: »

I wouldnt use just one example to cite the market's position.

It seems to be me that rent prices are being dictated by local demand and local supply as opposed to national demand and supply. Some areas are holding steady, others are not.

Rent allowance max levels usually create a floor for rents, few landlords will drop beneath this level.

shoegirl

Cantab. wrote: »

If you want to have your choice of tenant, you need to be pitching 10-15% below market rates.

If you're at or above market rate, you can't pick and choose and could easily end up with a class-A drug user/waster who loses their job, gets pregnant and you can't kick them out.

Better to be able to choose between 4/5 prospective candidates and save yourself the hassle of dealing with wasters/promiscuous types liable to get preggers/skangers/mentally ill people.

Unlikely that you'll get this looking for over the market rate. Most of the crazies are already likely to be unemplyable so they will be unable to pay market rates never mind above, except maybe families.

But agreed you'll have more limited choice - thing is upping the rent may eliminate some of the more transient people who are less likely to be on higher incomes and thus have more to spend on rent. Contrary to popular opinion, most rent allowance recipients are not entitled to market rates (except for maybe 2 parent families with several kids) so they won't turn up to look at what they can't afford.

johnnyskeleton

astrofool wrote: »

Sounds like they meant to drop it to 1600 but mis typed

And then left it on the market for 3 months without correcting it?

beeno67

johnnyskeleton wrote: »

And then left it on the market for 3 months without correcting it?

Or of course the site could be full of mistakes and daft to take seriously

gurramok

beeno67 wrote: »

Or of course the site could be full of mistakes and daft to take seriously

You wish

Still in denial about rental reductions then?

astrofool

johnnyskeleton wrote: »

And then left it on the market for 3 months without correcting it?

You honestly believe that someone put a property to rent at 1700, then after not getting it rented, upped it by 900, and then dropped it a couple of months later by 1150?

Sounds like some are being as stupid about property on the way down as others were on the way up.

beeno67

astrofool wrote: »

You honestly believe that someone put a property to rent at 1700, then after not getting it rented, upped it by 900, and then dropped it a couple of months later by 1150?

Sounds like some are being as stupid about property on the way down as others were on the way up.

Astrofool is right. Then the site counts it at least 3 times on first page.

gurramok

One mistake on a listing don't mean the other few hundred are dodgy, there's a thing called margin of error and its extremely low with IPW!