End of tenants market?

Milk & Honey

Rents on the way up again? Seems very peculiar when there are a lot of empty apartments in South Dublin.

http://www.irishtimes.com/newspaper/property/2010/0909/1224278506949.html

jdivision

Students come back and need accommmodation so lettings are achieved. Nonsense story beyond that

Theboinkmaster

jdivision wrote: »

Students come back and need accommmodation so lettings are achieved. Nonsense story beyond that

i agree, pure nonsense. the irishtimes are a vested interest in trying to get the property market going again - both sales & rentals

mikemac

It's September.

Tens of thousands of students are renting rooms or arranging to gang up and rent apartments and houses together.

September is probably the busiest month of the year for renting.

They act like it's a big shock and breaking news

And a national newspaper and national letting agents and the entire article is listing suburbs of Dublin but never mention another town or city.
Not very informative

Inquitus

Theboinkmaster wrote: »

i agree, pure nonsense. the irishtimes are a vested interest in trying to get the property market going again - both sales & rentals

I concur with the story being nonsense, just wondering what is the Irish Times vested interest in the property market?

mathie

Inquitus wrote: »

I concur with the story being nonsense, just wondering what is the Irish Times vested interest in the property market?

They get massive profits from the "Property Section" aka 'the magical money printing supplement that loaded a generation with negative equity'.

But sure whats a few hundred thousand poor suckers in negative equity wehn the editors and staff can make a few quid off property adverts?

Scumbags.

tara73

omg, another one of this articles again, hope not one person is believing this bs.

again sth. for a laugh at the weekend although it's not written in the best style...:D

djimi

This week I took out a lease on an apartment for 750 a month where 2 years ago apartments in the same building were going for anything upwards of 900-1000, and that even last year would have been about 850. From what I have seen anyway rents are not on the rise, and its still a renters market.

Treehouse72

Holy Mother of God. The article says rents are rising and all the evidence they present is some anecdotes from letting agents!!! Not even data from them, just chit-chat. Beyond risible.

who_ru

just another idiot journo writing what he is told to write by his bosses & their estate agent mates. junk.

Raskolnikov

It all depends on what you're renting.

From what I can see, there is a huge glut of apartments in Dublin, a lot of which have been to let for months and months. On the otherhand, the market for three-bed houses seems to be very competitive. I have friends who have rented in south county Dublin, and each time they have reported queues of people at property viewings.

OMD

Treehouse72 wrote: »

Holy Mother of God. The article says rents are rising and all the evidence they present is some anecdotes from letting agents!!! Not even data from them, just chit-chat. Beyond risible.

While the article may be anectdotal it is backed up by the DAFT survey in August which said in Co. Dublin North and South rents increased between April and June. The article seems to concentrate on South Dublin so it sounds very reasonable that the DAFT trend continues.

jmayo

Inquitus wrote: »

I concur with the story being nonsense, just wondering what is the Irish Times vested interest in the property market?

They own myhome.ie AFAIK.
They were the smucks that bought it off Sherry fitzgerald et al.
Funny how the EAs sold out or offloaded property and assets at height of bubble. :rolleyes:

Victor

Can we ease off on the abusive comments?

gurramok

OMD wrote: »

While the article may be anectdotal it is backed up by the DAFT survey in August which said in Co. Dublin North and South rents increased between April and June. The article seems to concentrate on South Dublin so it sounds very reasonable that the DAFT trend continues.

Here http://www.daft.ie/report/Daft-Rental-Report-Q2-2010.pdf You pick up a 0.2% rise to €1289 and a 0.4% rise to €979 as a rise in rents.

The press release is all about still falling rents everywhere http://www.daft.ie/news/2010/daft-rental-report-q2-2010.daft

Whats this trend you speak of? Here's Q1 2010 http://www.daft.ie/report/Daft-Rental-Report-Q1-2010.pdf

South Dublin posted a 0% change in rents in Q1, North Dublin posted a -0.4% decline. Hardly to call a trend yet. Perhaps you should use less of the estate agent type soundbites please?

OMD

gurramok wrote: »

Here http://www.daft.ie/report/Daft-Rental-Report-Q2-2010.pdf You pick up a 0.2% rise to €1289 and a 0.4% rise to €979 as a rise in rents.

Well of course it is a rise.

gurramok wrote: »

South Dublin posted a 0% change in rents in Q1, North Dublin posted a -0.4% decline. Hardly to call a trend yet. Perhaps you should use less of the estate agent type soundbites please?

I didn't think I would have to spell out the trend but here we go.
In Q4 2009 rents in South Co. Dublin fell 4.7%
In Q1 2010 Rents in South Co. Dublin Changed 0%
In Q2 2010 Rents in South Co. Dublin rose 0.4%.

Now can you see the trend?

If you feel the Daft report is wrong then fair enough. If you feel rents are actually falling in South Co. Dublin then fair enough. If you feel Q2 was simply a blip, then fair enough, but could you give a little evidence rather than simply call me an estate agent?

gurramok

OMD wrote: »

Well of course it is a rise.

Yes, 0.2% is indeed a rise. So big it makes headlines that it fools the OP.

OMD wrote: »

I didn't think I would have to spell out the trend but here we go.
In Q4 2009 rents in South Co. Dublin fell 4.7%
In Q1 2010 Rents in South Co. Dublin Changed 0%
In Q2 2010 Rents in South Co. Dublin rose 0.4%.

Now can you see the trend?

If you feel the Daft report is wrong then fair enough. If you feel rents are actually falling in South Co. Dublin then fair enough. If you feel Q2 was simply a blip, then fair enough, but could you give a little evidence rather than simply call me an estate agent?

I didn't call you an estate agent. I said 'soundbites'

Yes, i'd agree its a blip as the graph is all over the place for that region.

'Changed 0%' should be no change?

Why does South Dublin feel immune from falling rents is beyond belief considering its neighbour South City where rents are still falling.

Still, overall in Dublin rents are still falling so to answer the OP...No, it is still a tenants market in Dublin.

OMD

gurramok wrote: »

Yes, i'd agree its a blip as the graph is all over the place for that region.

'Changed 0%' should be no change?

Why does South Dublin feel immune from falling rents is beyond belief considering its neighbour South City where rents are still falling.

Still, overall in Dublin rents are still falling so to answer the OP...No, it is still a tenants market in Dublin.

I am not sure what you mean that the graph is all over the place. Looking at the actual graph on page 8 of the Q2 2010 report, it looks pretty clear to me, with a definite levelling off of rents in Dublin in the last 12 months. The report says "Rents in the North and South County regions – outside
the postcodes – rose for the second quarter in a row."

Add to that the point the report makes re the market in July (ie start of Q3 2010). They say that:

"July saw a high number of transactions, bringing the stock available to rent on August 1 back to 20,000."

It all seems very likely that rents are rising in Dublin and especially in South Co. Dublin. We won't know until the next report comes out but I am just saying, based on the evidence from Daft, it sounds reasonable that rents may be rising. You are saying, based on nothing, that you feel the article is rubbish. You may be right but as I said a little evidence wouldn't go ammiss.

quozl

Point 1:
For one thing, what percentage of properties in dublin are 'outside the postcodes'.

If, and I guess this is the case, the majority are in the post-codes, and are dropping according to all daft reports, then the fact that those out-side are rising slightly would still mean that rents in dublin are dropping.

Point 2:

That latest daft report shows drops of -1.2, -1.5 and -1.9 for the post-codes of dublin. With rises of 0.4 and 0.2 for the north and south counties.

So unless there are 4 times the number of properties in the non-postcode than in the post-code areas there is no suggestion in that report that asking rents are rising in dublin. Note: West county dublin is also a drop. I'd guess that you would need something like 6 or 7 times the number of properties in south and north county dublin as in the whole rest of dublin to make a claim based on that that

It all seems very likely that rents are rising in Dublin

Even if you were to continue this 'trend' and add a positive .5% to all the figures, i think you'd still find that rents on-average in dublin, were dropping. The positive numbers would still only be .7% and 1%, and the negatives would be as large, and apply to a greater number of houses I would hazard.

Point 3:
Those are asking rents, not actual rents. Ronan Lyons acknowledges the added vagueness this gives. Anything based on them is vague and nebulous, from either side of the argument. I do accept it's about the best we have but I don't think anybody can really say much based on them.


I personally don't believe that dublin rents are rising. I absolutely would accept that the rate of falls is slowing. I believe RA is a big factor in that. I would expect it to pick up again after the next budget though. I also don't believe all these un-rented apartments being held un-used by NAMA'd developers can be left idle forever. They must depress the rental market.

gurramok

OMD wrote: »

I am not sure what you mean that the graph is all over the place. Looking at the actual graph on page 8 of the Q2 2010 report, it looks pretty clear to me, with a definite levelling off of rents in Dublin in the last 12 months. The report says "Rents in the North and South County regions – outside
the postcodes – rose for the second quarter in a row."

Only South & North county Dublin looks to be levelling off to my eyes since Q4 '09 with a tiny slow upward slope for South Dublin which woudn't even register on the richter scale. The rest including the core city are still falling.

OMD wrote: »

Add to that the point the report makes re the market in July (ie start of Q3 2010). They say that:
"July saw a high number of transactions, bringing the stock available to rent on [/SIZE]August 1 back to 20,000."[/I]

Its been hovering up and down all year around 20,000. All over the place. No trend at all.

OMD wrote: »

It all seems very likely that rents are rising in Dublin and especially in South Co. Dublin. We won't know until the next report comes out but I am just saying, based on the evidence from Daft, it sounds reasonable that rents may be rising. You are saying, based on nothing, that you feel the article is rubbish. You may be right but as I said a little evidence wouldn't go ammiss.

Nope, totally wrong. You're basing this on properties outside the postcodes with exclusivity on South County Dublin.
Are there more properties for rent outside the postcodes than inside the postcodes? Even judging by the map, you're stretching it with imagination.

You cannot claim rents are rising in Dublin based on 2 geographic areas which more than likely have the least amount of properties available for rent than the areas like the city core(postcodes) where rents are still plummeting.

OMD

gurramok wrote: »

Nope, totally wrong. You're basing this on properties outside the postcodes with exclusivity on South County Dublin.
Are there more properties for rent outside the postcodes than inside the postcodes? Even judging by the map, you're stretching it with imagination.

You cannot claim rents are rising in Dublin based on 2 geographic areas which more than likely have the least amount of properties available for rent than the areas like the city core(postcodes) where rents are still plummeting.

We will see when the next report comes out. I say rents may be rising (as distinct to the 0.9% national fall last quarter). You say rents are falling and in Dublin "Postcodes" rents are plummeting. Dare I ask what quarterly drop will count as "plummeting"?

gurramok

OMD wrote: »

We will see when the next report comes out. I say rents may be rising (as distinct to the 0.9% national fall last quarter). You say rents are falling and in Dublin "Postcodes" rents are plummeting. Dare I ask what quarterly drop will count as "plummeting"?

You said Dublin rents were rising. That is labelling all of Dublin without any foundation.
Constant drops over time to me says plummeting.

jmayo

gurramok wrote: »

You said Dublin rents were rising. That is labelling all of Dublin without any foundation.
Constant drops over time to me says plummeting.

No that would be rising in the opposing direction

pooch90

quozl wrote: »

Point 3:
Those are asking rents, not actual rents. Ronan Lyons acknowledges the added vagueness this gives. Anything based on them is vague and nebulous, from either side of the argument. I do accept it's about the best we have but I don't think anybody can really say much based on them.

We are not from Dublin but we have recently had to look for a new home in a large town and I can tell you that asking rates are irrelevant.

Every house we looked at was willing to accept a significantly lower rent (e50-100 less) than they were asking on rents of around the e750 mark - despite our handicap of having a large dog which is allowed indoors.
Most of the them bleated on about having to cover the mortgage but we made it clear that it was our offer or no offer and they were all more than happy to take it. It was great as we had a pick of properties where a couple of years ago nobody would even entertain the idea of a dog - let alone one which would be allowed indoors.

OMD

gurramok wrote: »

You said Dublin rents were rising. That is labelling all of Dublin without any foundation.

What I have been saying is things like Rents "may" be rising, it is "possible" rents are rising or even it is "likely" rents are rising based on the available information. I have also quoted the fact that in last quarter rents in South Co. Dublin (one of the places discussed in the original article) did actually rise during the last quarter.
Somehow you are saying rents could not possibly be rising but have again failed to back it up at all.

gurramok wrote: »

Constant drops over time to me says plummeting.

Obviously rents have been falling. I am talking about what we believe the current situation to be. The period say from August to October. The period discussed in the original article.

By the way you have a very poor definition of plummeting. Most people regard plummeting as dropping very fast as distinct from over a long period of time. Think of an airoplane plummeting.

mathie

gurramok wrote: »

Constant drops over time to me says plummeting.

Just to argue semantics gurramok

intr.v. plum·met·ed, plum·met·ing, plum·mets
1. To fall straight down; plunge.
2. To decline suddenly and steeply:

Rents could fall .1% a month for a few months.
I wouldn't call that plummeting.

gurramok

OMD wrote: »

What I have been saying is things like Rents "may" be rising, it is "possible" rents are rising or even it is "likely" rents are rising based on the available information. I have also quoted the fact that in last quarter rents in South Co. Dublin (one of the places discussed in the original article) did actually rise during the last quarter.
Somehow you are saying rents could not possibly be rising but have again failed to back it up at all.

You based your rents is rising for Dublin mantra on one micro area called South Dublin and yet ignored what must be the majority of the other areas of Dublin where rents are still declining.
Thats whats under discussion, not solely on South Dublin

OMD wrote: »

Obviously rents have been falling. I am talking about what we believe the current situation to be. The period say from August to October. The period discussed in the original article.

By the way you have a very poor definition of plummeting. Most people regard plummeting as dropping very fast as distinct from over a long period of time. Think of an airoplane plummeting.

You introduce a time period of 3 months now. I had been reading the graph you had highlighted and the plunge in rents over the last year nevermind 1yr+ is quite indeed a plunge.

As the decline for the Dublin area overall has still not stopped, that plunge is still plunging.

Will the decline level off in the next report? We'll see.

mathie wrote: »

Just to argue semantics gurramok

intr.v. plum·met·ed, plum·met·ing, plum·mets
1. To fall straight down; plunge.
2. To decline suddenly and steeply:

Rents could fall .1% a month for a few months.
I wouldn't call that plummeting.

Time period was not defined Mathie! Falling yes if its just over a few months.

Treehouse72

If rents are so important and they have indeed stopped falling, then the corollary is that yields must also be important. And if that's the case, then in an instant it is proven that sales prices are 30% - 50% too high as of today based on yield. You can't have low yields, high rents and high house prices in perpetuity - it is impossible and would defy the laws of economic gravity.

So either those prices fall or rents rise. If it were to be the latter, we'd be back to 2006! And since only a nutcase would think that is possible, the only conclusion is that even if rents are at the bottom now, significant sales price falls are inevitable.

Which would indeed mark the end of the renters' market - but only because all those renters would go out and buy!!

OMD

Treehouse72 wrote: »

If rents are so important and they have indeed stopped falling, then the corollary is that yields must also be important. And if that's the case, then in an instant it is proven that sales prices are 30% - 50% too high as of today based on yield. You can't have low yields, high rents and high house prices in perpetuity - it is impossible and would defy the laws of economic gravity.

So either those prices fall or rents rise. If it were to be the latter, we'd be back to 2006! And since only a nutcase would think that is possible, the only conclusion is that even if rents are at the bottom now, significant sales price falls are inevitable.

Which would indeed mark the end of the renters' market - but only because all those renters would go out and buy!!

But what is the average yield on a rental property? Also what should it be?

People like DMcW think you can look at average house price and compare it to average rent saying price should be 14 times rent. Now clearly no 1st world country I can think of has averaged this yield over the long term so there is no reason to assume Ireland will. More importantly the rental market and the buyers market are not directly comparable in Ireland. For example only 24% of properties for sale in Dublin are appartments yet 58% of properties for rent are apartments.

Treehouse72

OMD wrote: »

But what is the average yield on a rental property? Also what should it be?

People like DMcW think you can look at average house price and compare it to average rent saying price should be 14 times rent. Now clearly no 1st world country I can think of has averaged this yield over the long term so there is no reason to assume Ireland will. More importantly the rental market and the buyers market are not directly comparable in Ireland. For example only 24% of properties for sale in Dublin are appartments yet 58% of properties for rent are apartments.

I made no mention of absolute numbers, nor did I express a preference for what yield is neutral over the longer term. But it doesn't really matter because sales prices are still so high that whether we use a 5% or 7% gross figure the drops in sale prices still need to be of the order I suggest. But if you must, here is an Irish Independent article from this year that suggests 7% is indeed a gross yield one should be looking at:

http://www.independent.ie/lifestyle/property-plus/lucrative-yields-to-lure-investors-back-2060330.html

This article, on Manhatten, says that the 5.5% yield there is "modest", suggesting that a higher yield would be neutral:

http://www.globalpropertyguide.com/North-America/United-States/Rental-Yields

In those tables we also see Miami yelds touching 7%. And remember those figures would have been collated during the property bubble.

Most revealingly, NAMA is working off a 6% yield! As explained by Ronan Lyons (one of the most respected property economists in Ireland) here:

http://www.ronanlyons.com/2010/05/25/rents-stabilise-during-the-first-months-of-2010/

On your other point, the metric by which you come to the conclusion that yields aren't important in Ireland is simply incorrect. The issue isn't what types of property we have. The issue is that any property for sale in Ireland has a rental equivalent. Ronan Lyons again:

Yields are a hugely important indicator in property markets, especially in property markets where the rental segment is significant, as it is in Ireland’s urban centres. Indeed, given the much greater integration of rental and sales segments of the market over the past decade (i.e. you can now rent accommodation of the same standard as accommodation you can buy), yields are one of the most important medium-term indicators of health. Mathematically, of course, yields are essentially just a variant of the house-rent ratio.

http://www.ronanlyons.com/2009/06/19/yields-on-residential-property-point-to-scale-of-the-challenge/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+RonanLyons+%28Ronan+Lyons%29

He also says (in June 2009, same link):

For Dublin yields to adjust to a level of 5.25% in an environment where rents look like falling 33% from their peak, house prices would have to fall almost 60% from the peak.

So yes, yields do matter very much indeed, and all the evidence suggest that the 5% - 7% range is where it should be. Use either one and you'll see sales prices are STILL miles and miles out of whack. Which is the point I was making to begin with. Multiply by 14 or 20 - the truth is probably somewhere in between, but all the numbers will tell you is that prices need to fall a lot more.

Jo King

That survey seemed to focus on houses in Blackrock. Local conditions probably have have something to do with it. There was very little building in Blackrock during the boom years. During the boom years relatively few investors would have entered the market because of very low yields. Some 3 bed semis made over €1m with a potential annual rent of 22k. Some existing investors would have taken their profit.
The result is probably a local shortage in a relatively small geographical area and house type. There were a large number of apartments built on the N11 near Blackrock and the rents there have probably not increased as much if at all.

OMD

Treehouse72 wrote: »

I made no mention of absolute numbers, nor did I express a preference for what yield is neutral over the longer term. But it doesn't really matter because sales prices are still so high that whether we use a 5% or 7% gross figure the drops in sale prices still need to be of the order I suggest. But if you must, here is an Irish Independent article from this year that suggests 7% is indeed a gross yield one should be looking at:

http://www.independent.ie/lifestyle/property-plus/lucrative-yields-to-lure-investors-back-2060330.html

This article, on Manhatten, says that the 5.5% yield there is "modest", suggesting that a higher yield would be neutral:

http://www.globalpropertyguide.com/North-America/United-States/Rental-Yields

In those tables we also see Miami yelds touching 7%. And remember those figures would have been collated during the property bubble.

Most revealingly, NAMA is working off a 6% yield! As explained by Ronan Lyons (one of the most respected property economists in Ireland) here:

http://www.ronanlyons.com/2010/05/25/rents-stabilise-during-the-first-months-of-2010/

I agree with all this as it backs up my point that a 7% yield is not sustainable in the long term. Indeed in the article you quote from Ronan Lyons(one of the most respected property economists in Ireland) he says:

"The problem is that yields show that people seemed to believe that the medium-term average cost of borrowing would be in the 3% range, not in the 5% range. The potential elephant in the property market room, therefore, is that the yield realistically will have to settle at somewhere close to 5% – perhaps 5.25% or so – to have anything like a normal property market"

Treehouse72 wrote: »

On your other point, the metric by which you come to the conclusion that yields aren't important in Ireland is simply incorrect. The issue isn't what types of property we have. The issue is that any property for sale in Ireland has a rental equivalent. Ronan Lyons again:

http://www.ronanlyons.com/2009/06/19/yields-on-residential-property-point-to-scale-of-the-challenge/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+RonanLyons+%28Ronan+Lyons%29

He also says (in June 2009, same link):

So yes, yields do matter very much indeed, and all the evidence suggest that the 5% - 7% range is where it should be. Use either one and you'll see sales prices are STILL miles and miles out of whack. Which is the point I was making to begin with. Multiply by 14 or 20 - the truth is probably somewhere in between, but all the numbers will tell you is that prices need to fall a lot more.

I don't know where you are getting the idea that yields are unimportant. I never said that. On an individual property or small group of properties yield is essential. My point is I don't think when you take the market as a whole, that it makes sense to base the price of properties that are mainly houses as a multiple of rent on properties that are mainly apartments. It is not the yield that I am questioning it is how that yield is calculated when looking at the market as a whole. Indeed add to this we are comparing estimated selling prices on one hand with asking rents on the other.

By the way the average Dublin rent is €940. Using Ronan Lyons's 5% yield that means the average property should be worth €225,000. It is actually worth €240,000. So based on those numbers, and accepting all their faults, it tells me prices have 5% further to fall.

Treehouse72

OMD wrote: »

I agree with all this as it backs up my point that a 7% yield is not sustainable in the long term. Indeed in the article you quote from Ronan Lyons(one of the most respected property economists in Ireland) he says:

"The problem is that yields show that people seemed to believe that the medium-term average cost of borrowing would be in the 3% range, not in the 5% range. The potential elephant in the property market room, therefore, is that the yield realistically will have to settle at somewhere close to 5% – perhaps 5.25% or so – to have anything like a normal property market"

OMD, I am not trying to sell you the 7% figure. You are the one that brought that up in quoting McWilliams. I repeatedly said in my past post that it doesn't matter if we call it 5% or 7% - either figure suggests sales prices are ludicrously out of line. Where one settles along that range is simply a measure of things like how much profit you want, where interest rates are, where we are in the economic cycle etc. It doesn't really matter - even the smallest sustainable yields imaginable still suggest property is no less than 30% overpriced.

And for what it's worth, I take Ronan Lyon's point above to be that 5% is a minimum requisite yield to keep ahead of likely rising interest rates over the medium term. But I'm very tired, so maybe I'm reading that wrong!

Let's put it this way. For a modest 5% yield - which I think you are happy enough with and which I think might be ok too (I don't know for sure) - then for any property for rent at €1,000 you should be able to buy it for c. €200,000. If you can find me any properties in Dublin even close to this I'll tip my hat to you. (Be warned, I have a long rebuttal post ready to go chock-full of examples of how far off the maths are on this! I won't post it now because it just appears too hectoring and evangelical. Suffice to say many 3 bed semi-d's are available in this ballpark price to rent but absolutely nowhere near to buy. If we were to demand a 6% or 7% yield - and Irish bonds pay 6%!! - it's even more out of whack.)

I don't know where you are getting the idea that yields are unimportant. I never said that. On an individual property or small group of properties yield is essential. My point is I don't think when you take the market as a whole, that it makes sense to base the price of properties that are mainly houses as a multiple of rent on properties that are mainly apartments. It is not the yield that I am questioning it is how that yield is calculated when looking at the market as a whole. Indeed add to this we are comparing estimated selling prices on one hand with asking rents on the other.

By the way the average Dublin rent is €940. Using Ronan Lyons's 5% yield that means the average property should be worth €225,000. It is actually worth €240,000. So based on those numbers, and accepting all their faults, it tells me prices have 5% further to fall.

In the first para there you are saying we can't extrapolate from a market of primarily apartments to the market as a whole...and then in the second para you are using the average rent for that very market to prove that prices across the whole market aren't too high!! You can't have it both ways OMD!

And you still seem to be missing the point about the relevance of yield to the whole market. The reason yield matters is because any property you could buy, you could rent instead. That's all that matters, not the mix of apartments in the rental sector. Because that is the case the marginal rental yield sets (or influences) the sales prices of their direct equivalents that are for sale. Since 99% of properties in the country can be bought or rented, this rule must apply across the board.

OMD

Treehouse72 wrote: »

OMD, I am not trying to sell you the 7% figure. You are the one that brought that up in quoting McWilliams. I repeatedly said in my past post that it doesn't matter if we call it 5% or 7% - either figure suggests sales prices are ludicrously out of line. Where one settles along that range is simply a measure of things like how much profit you want, where interest rates are, where we are in the economic cycle etc. It doesn't really matter - even the smallest sustainable yields imaginable still suggest property is no less than 30% overpriced.

And for what it's worth, I take Ronan Lyon's point above to be that 5% is a minimum requisite yield to keep ahead of likely rising interest rates over the medium term. But I'm very tired, so maybe I'm reading that wrong!

Let's put it this way. For a modest 5% yield - which I think you are happy enough with and which I think might be ok too (I don't know for sure) - then for any property for rent at €1,000 you should be able to buy it for c. €200,000. If you can find me any properties in Dublin even close to this I'll tip my hat to you. (Be warned, I have a long rebuttal post ready to go chock-full of examples of how far off the maths are on this! I won't post it now because it just appears too hectoring and evangelical. Suffice to say many 3 bed semi-d's are available in this ballpark price to rent but absolutely nowhere near to buy. If we were to demand a 6% or 7% yield - and Irish bonds pay 6%!! - it's even more out of whack.)

Average rent in Dublin now is €940. Using a 5% yield, and allowing for 11 months occupancy, as Ronan Lyons did, gives you an average price of about €200,000. Current average price for a property in Dublin is about €240,000. How do you work this out to mean properties are at least 30% overvalued? By the way I have no problem with the idea that house prices are going to fall further. I do believe that based on the evidence from the Daft report, rents in Dublin have stabalised and may actually rise slightly.

Treehouse72 wrote: »

In the first para there you are saying we can't extrapolate from a market of primarily apartments to the market as a whole...and then in the second para you are using the average rent for that very market to prove that prices across the whole market aren't too high!! You can't have it both ways OMD!

Which is why I said "accepting all its faults". Why don't you just give figures for current yields as I asked you before? Then perhaps you could show me how out of step yields are.

Treehouse72 wrote: »

And you still seem to be missing the point about the relevance of yield to the whole market. The reason yield matters is because any property you could buy, you could rent instead. That's all that matters, not the mix of apartments in the rental sector. Because that is the case the marginal rental yield sets (or influences) the sales prices of their direct equivalents that are for sale. Since 99% of properties in the country can be bought or rented, this rule must apply across the board.

The part in bold is the part I agree with. My point is I don't think the rental market is the direct equivalent of the sales market. How can it be when one is 75% houses and the other only 42% houses? The average house in Dublin is substantially dearer than the average apartment. Also the investor market only makes up about 5% of sales at present.

Look at it another way Treehouse72. You are saying if we went around Dublin and valued every rental property, (which are mainly appartments, flats & bedsits) the average price would be about the same as the overall average property price in Dublin (which would be mainly houses). I simply do not believe that.

I think if you looked at each individual rental property, and looked at the yield on each one, that the average yield on these properties would be higher than simply taking the average rent for the city and comparing it to the average selling price.

OMD

OMD wrote: »

We will see when the next report comes out. I say rents may be rising (as distinct to the 0.9% national fall last quarter). You say rents are falling and in Dublin "Postcodes" rents are plummeting. Dare I ask what quarterly drop will count as "plummeting"?

Just to come back to this. I said we would see when the next report comes out.

http://www.daft.ie/report/Daft-Rental-Report-Q3-2010.pdf

Rents rose in all areas of Dublin in last 3 months (period of this discussion) with the exception of West Dublin where they fell 0.1% (or plummeted 0.1% as Gurramok would say).

Yields in Dublin City Centre are now 5.5% with yields about 4.5% for Dublin as a whole.

ixoy

It'll be interesting to see if the budget affect this - potentially a considerable cut in disposable income plus the potential for property taxes that may be pushed on to renters.

gurramok

OMD wrote: »

Just to come back to this. I said we would see when the next report comes out.

http://www.daft.ie/report/Daft-Rental-Report-Q3-2010.pdf

Rents rose in all areas of Dublin in last 3 months (period of this discussion) with the exception of West Dublin where they fell 0.1% (or plummeted 0.1% as Gurramok would say).

Yields in Dublin City Centre are now 5.5% with yields about 4.5% for Dublin as a whole.

So we have the Q3 report.

Q1, Q2, Q3
North County Dublin -0.4, +0.4, 0.0
North Dublin City 0.0, -1.5, +0.9
Dublin City Centre 1.3, -1.9, +0.9
South Dublin City -0.3, -1.2, +0.6
South County Dublin 0.0, +0.2, +1.1
West County Dublin +0.2, -0.7, -0.1

The numbers are tiny to draw a conclusion that it is sustainable rise well into next year, we'll see. Though I'd agree that South County Dublin is rising as per earlier discussion. As well as my own back yard where I have noticed and stated that they are stuck for the last year partly in thanks to Google still hiring.

Last time you had claimed wrongly that the whole of Dublin were seeing rent rises which was factually incorrect. This time you can claim it on tiny rises of a few quid, fair enough. We'll have to wait and see what the trend will be since we are in IMF territory for the foreseeable future.

wyndham

ixoy wrote: »

It'll be interesting to see if the budget affect this - potentially a considerable cut in disposable income plus the potential for property taxes that may be pushed on to renters.

Cut in rent allowance/supplement resulting in a fall in rents is a possibility.

OMD

gurramok wrote: »

Last time you had claimed wrongly that the whole of Dublin were seeing rent rises which was factually incorrect. .

I did not claim that.

Treehouse72

OMD wrote: »

Yields in Dublin City Centre are now 5.5% with yields about 4.5% for Dublin as a whole.

How are you coming to that conclusion? What properties are you including in that? There are hundreds of properties renting and selling for prices in the city centre that are a long, long, long way from a 5.5% yield. For example:

http://www.daft.ie/searchsale.daft?id=561463
http://www.daft.ie/searchrental.daft?id=964598

Not sure they are precisely equivalent, but it would be close enough and it's 30%+ overpriced on the sale side.

Blackjack

OMD wrote: »

Yields in Dublin City Centre are now 5.5% with yields about 4.5% for Dublin as a whole.

What are you basing your Yield calculations on?

OMD

Treehouse72 wrote: »

How are you coming to that conclusion? What properties are you including in that? There are hundreds of properties renting and selling for prices in the city centre that are a long, long, long way from a 5.5% yield. For example:

http://www.daft.ie/searchsale.daft?id=561463
http://www.daft.ie/searchrental.daft?id=964598

Not sure they are precisely equivalent, but it would be close enough and it's 30%+ overpriced on the sale side.

Yields are on page 10 of DAFT report as previously linked. Analysis by Ronan Lyons.

Treehouse72

Ok OMD, I didn't see that - I'll have a look at it later.