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Dublin - Significant reduction in rents coming?

  • 04-04-2020 9:56pm
    #1
    Registered Users Posts: 1,552 ✭✭✭ WhiteMemento9


    It has been well publicised that supply in Dublin has increased dramatically over the last couple of months. This IrishTimes article claims we have an 86% increase in available properties.

    Comparison of 2 bedroom flats under €2000 from February to now

    Map from that thread showing the supply increase Apartments - https://imgur.com/xUObSsj

    Prices still haven't significantly reduced to match the current supply. We have other pressure from people who have lost jobs, salary reductions etc.
    There is likely to be a lag before we see a reduction across the board but it should come.

    I think many of the Airbnb's that have come back onto the market recently, initially thought they would just make them available for 2-3 month short term rentals and then return to their illegal business after this is over but many of them are seeing the truth that this will likely last longer and even after restrictions lift it will be 6-12 months before confidence gets restored around the world in travel and in turn demand for Airbnb. I expect to see more of these being offered as full long term rentals as the penny drops. I laugh looking at some of them that have come onto the market as 2-3 month rentals at over market rate even before this mess. Some people live in an alternative reality.

    I think the prices will drop as I know from talking to people who are looking at the moment that they are going in with offers for places well below asking and getting accepted.


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Comments

  • Registered Users Posts: 664 ✭✭✭ Ozark707



    I think the prices will drop as I know from talking to people who are looking at the moment that they are going in with offers for places well below asking and getting accepted.

    Can you tell what price range and % drop?


  • Moderators, Music Moderators Posts: 19,594 Mod ✭✭✭✭ Mr.S


    Short term, yes they’ll probably drop due to the non-existent demand.

    Long term, after all this goes back to normal - we’re still going to have a supply issue and rent prices will climb again.

    Let’s assume life goes back to normal in September, why would rent prices continue to drop massively? The “bounce back” would presumably be quick and strong.


  • Registered Users Posts: 1,552 ✭✭✭ WhiteMemento9


    Ozark707 wrote: »
    Can you tell what price range and % drop?

    I have no idea. Supply and demand will adjust this accordingly in the marker over time but at the moment it is completely out of whack. New properties coming onto the market are doing so at the current market rate so as of yet no real adjustment has taken place.


  • Registered Users Posts: 664 ✭✭✭ Ozark707


    I have no idea. Supply and demand will adjust this accordingly in the marker over time but at the moment it is completely out of whack. Properties coming onto the market at doing so at the current market rate so as of yet no real adjustment has taken place.

    You mentioned you were talking to people who had obtained reductions? I am guessing it is over 10% otherwise would not be sizeable IMHO.


  • Registered Users Posts: 1,552 ✭✭✭ WhiteMemento9


    Mr.S wrote: »
    Short term, yes they’ll probably drop due to the non-existent demand.

    Long term, after all this goes back to normal - we’re still going to have a supply issue and rent prices will climb again.

    Let’s assume life goes back to normal in September, why would rent prices continue to drop massively? The “bounce back” would presumably be quick and strong.

    We we will most likely have a decent amount of normaility returned by September but without a vaccine the landscape of travel will look very different for much longer. Even just returning confidence of people to travel will take time. Confidence in self catering style accommodation will also be a hard sell for the foreseeable future. I think the outlook for Airbnb is very bleak for at least a year.


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  • Registered Users Posts: 1,552 ✭✭✭ WhiteMemento9


    Ozark707 wrote: »
    You mentioned you were talking to people who had obtained reductions? I am guessing it is over 10% otherwise would not be sizeable IMHO.

    2300 -- > 1800. That Irish Times article I quoted notes simialr kind of reductions of people going in below asking.


  • Registered Users Posts: 895 ✭✭✭ DubCount


    We don't have a real market at the moment. Agents are closed for viewings, businesses are closed, people are staying at home. Its really hard to base "movement" on what is happening at this time.

    Some of the impacts of this will last longer than the lockdown. There will be some level of economic downturn/recession. Unemployment will rise. Rents reduced to deal with short term shock will be caught in RPZ restrictions and cant bounce quickly.

    How supply v demand will move when life gets back to normal is difficult to predict. Will some stock go back into AirBnB. Will more Landlords sell up. Will there be more HAP funded tenants chasing rental property. Will the number of properties being built be impacted.

    For 12 months from now, I think its too early to call where we will be. I believe its too early to call long term impacts until lockdown is over and we can see the position unfold.


  • Registered Users Posts: 347 ✭✭ Reversal


    Mr.S wrote: »
    Let’s assume life goes back to normal in September, why would rent prices continue to drop massively? The “bounce back” would presumably be quick and strong.

    Just on this point. The experts have given up on a bounce back. This situation has already got too big and gone on too long allow a V shaped recovery. All the economic predictions out there point to half of COVID job losses being permanent. And earnings will take a hit across the board.

    A number of weeks ago there was hope of a bounce back but it's gone.

    https://www-irishtimes-com.cdn.ampproject.org/v/s/www.irishtimes.com/business/economy/goodbye-leprechaun-economics-hello-another-grim-milestone-1.4219469?amp_js_v=a3&amp_gsa=1&usqp=mq331AQFKAGwASA=#referrer=https://www.google.com&amp_tf=From %1$s&ampshare=https://www.irishtimes.com/business/economy/goodbye-leprechaun-economics-hello-another-grim-milestone-1.4219469


  • Moderators, Society & Culture Moderators Posts: 31,991 Mod ✭✭✭✭ Gumbo


    Short term, many are back on the market, removed from Air BnB due to C19 and lack of tourists.

    Tenants need to be mindful of the 6 month (Part 4) rule as I insignia the same properties will be back on the short term let scene in 6 months.


  • Registered Users Posts: 664 ✭✭✭ Ozark707


    Gumbo wrote: »

    Tenants need to be mindful of the 6 month (Part 4) rule as I insignia the same properties will be back on the short term let scene in 6 months.

    Surely anyone signing anything would look for a 12 month lease? Most of the new stock that I am seeing is looking for 12 months...


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  • Registered Users Posts: 10,986 ✭✭✭✭ Dav010


    Ozark707 wrote: »
    Surely anyone signing anything would look for a 12 month lease? Most of the new stock that I am seeing is looking for 12 months...

    Written tenancy agreements are not a requirement. So if the agreement is verbal, or only 6 months written tenancy is offered, then it’ll be a take it or leave it situation.

    Personally, the reasons for me choosing to leave the rental market as tenants move out hasn’t changed. I have an Airbnb house that I am just going to wait it out with, and put it up on Airbnb again when things open again later in the year. If rents are falling, the benefits of Airbnb will be even more obvious.


  • Registered Users Posts: 1,552 ✭✭✭ WhiteMemento9


    Dav010 wrote: »
    Personally, the reasons for me choosing to leave the rental market as tenants move out hasn’t changed. I have an Airbnb house that I am just going to wait it out with, and put it up on Airbnb again when things open again later in the year. If rents are falling, the benefits of Airbnb will be even more obvious.

    Where do you expect demand for the Airbnb market to come from when we reopen? Is it in Dublin?


  • Registered Users Posts: 2,736 ✭✭✭ runswithascript


    Dav010 wrote: »
    I have an Airbnb house that I am just going to wait it out with, and put it up on Airbnb again when things open again later in the year. If rents are falling, the benefits of Airbnb will be even more obvious.

    Shame on you. You are a major part of the property problem in our society.

    I hope we will soon have a government here that will restrict or even better yet ban Airbnb completely, just like these places:

    https://www.passiveairbnb.com/top-cities-and-countries-where-airbnb-is-illegal-or-restricted/


  • Registered Users Posts: 2,874 ✭✭✭ KilOit


    Shame on you. You are a major part of the property problem in our society.

    I hope we will soon have a government here that will restrict or even better yet ban Airbnb completely, just like these places:

    https://www.passiveairbnb.com/top-cities-and-countries-where-airbnb-is-illegal-or-restricted/

    His property to do what he likes with it, even using it as a Airbnb he is benefiting tourism.
    your beef should be with the government not building enough properties or selling 95% of new apartments to vulture funds


  • Registered Users Posts: 1,552 ✭✭✭ WhiteMemento9


    KilOit wrote: »
    His property to do what he likes with it, even using it as a Airbnb he is benefiting tourism.
    your beef should be with the government not building enough properties or selling 95% of new apartments to vulture funds

    There are now laws in place since last July which mean in many cases people need to apply for a license if they want to use the property as an Airbnb.
    The maximum fine for non-compliance with planning breaches is a €5,000 fine or six months imprisonment – or both.

    Edit - It has been pretty clear that these laws are being completely ignored - Link


  • Registered Users Posts: 2,736 ✭✭✭ runswithascript


    KilOit wrote: »
    His property to do what he likes with it, even using it as a Airbnb he is benefiting tourism.
    your beef should be with the government not building enough properties or selling 95% of new apartments to vulture funds

    Yes right now Airbnb is perfectly legal but just because someone can do something, does not make it right.

    With any luck the collapse of the Airbnb market will continue for a long time.

    What tourism?

    Up until now there has not been a tourism crisis, the rental property crisis has long been with us.


  • Registered Users Posts: 17,528 ✭✭✭✭ Idbatterim


    I think there will be a short - ish term drop in rents, but construction is now frozen. People arent going to emigrate like before, as we are all in the same boat. I believe the population is still growing. They are going to do down alright, but I dont think this will be a case of years of drops, it really depends on how quick the situation with this virus evolves...

    I mean, how many students etc gave up expensive leases in dublin, to move back home and gave up their accomodation here, assuming probably correctly, this will go on for months and also that finding new accomodation in short term, would be easy IF needs be? if college starts again in September and classroom based lessons resume, they will all be back looking for accomodation...


  • Registered Users Posts: 17,528 ✭✭✭✭ Idbatterim


    Shame on you. You are a major part of the property problem in our society.

    I hope we will soon have a government here that will restrict or even better yet ban Airbnb completely, just like these places:

    https://www.passiveairbnb.com/top-cities-and-countries-where-airbnb-is-illegal-or-restricted/

    laughable! the government are to blame for the lack of supply, local government mainly, blocking anything over a few floors in dublin, tourism generates billions for the country and employment. Blame the morons responsible for the idiocy! Also when you are getting hit with a fifty percent marginal rate of tax, people are going to go for the bigger bucks, again go back to government. Sick of these misplaced, ignorant attacks!


  • Registered Users Posts: 2,736 ✭✭✭ runswithascript


    Idbatterim wrote: »
    laughable! the government are to blame for the lack of supply, local government mainly, blocking anything over a few floors in dublin, tourism generates billions for the country and employment. Blame the morons responsible for the idiocy! Also when you are getting hit with a fifty percent marginal rate of tax, people are going to go for the bigger bucks, again go back to government. Sick of these misplaced, ignorant attacks!

    Yes, all of that is a problem but to believe Airbnb is not is folly. Tourism would still go on without Airbnb, the greater problem is the property crisis, and again right now and for what looks like a long time to come: what tourism.


  • Moderators, Society & Culture Moderators Posts: 17,643 Mod ✭✭✭✭ Graham


    Talk of AirBnB is all a bit academic in the current environment.

    I suspect that will remain the case for at least the remainder of 2020.

    My guess; AirBnB hosts are about to see several years of healthy profits completely wiped out. Hundreds of ex-STLs will be returned to residential use.


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  • Registered Users Posts: 2,736 ✭✭✭ runswithascript


    Graham wrote: »
    My guess; AirBnB hosts are about to see several years of healthy profits completely wiped out.

    I imagine it would be difficult for people who cannot find or afford to live closer than more than an hour or two away from their places of work or study to be sympathetic.

    It would be prudent for these hosts to cut their losses by starting to let their properties.


  • Registered Users Posts: 1,552 ✭✭✭ WhiteMemento9


    I imagine it would be difficult for people who cannot find or afford to live closer than more than an hour or two away from their places of work or study to be sympathetic.

    It would be prudent for these hosts to cut their losses by starting to let their properties.

    That penny will eventually drop but may take a little time. My guess is many of them haven't actually considered how little demand there will be for the properties in the coming year and maybe beyond. Hopefully they will come on quite quickly as those who do wlll see the best rent deals now rather than if they wait and supply keeps increasing.


  • Moderators, Society & Culture Moderators Posts: 17,643 Mod ✭✭✭✭ Graham


    It would be prudent for these hosts to cut their losses by starting to let their properties.

    They are, just look at daft.

    The usual giveaway is the obligatory rolled towels in each of the bedroom photos.


  • Registered Users Posts: 664 ✭✭✭ Ozark707


    That penny will eventually drop but may take a little time. My guess is many of them haven't actually considered how little demand there will be for the properties in the coming year and maybe beyond. Hopefully they will come on quite quickly as those who do wlll see the best rent deals now rather than if they wait and supply keeps increasing.

    Yes it will be interesting to see if some AirBnB'ers get out in front and just get their place let ASAP or will wait for a number of months in the hope that it goes back to the way it was.


  • Registered Users Posts: 5,875 ✭✭✭ Edgware


    If you are letting a property e.g. a one bed and pulling in 15000/16000 a year you would need a high occupancy level with an Airbnb to match that. With letting of a properly organised property you could go 12 months without having any contact with tenants. In an Airbnb you have cleaning, laundry, taking bookings etc all the time. Hard to see that this is worth whatever extra income you might get


  • Registered Users Posts: 664 ✭✭✭ Ozark707


    Edgware wrote: »
    If you are letting a property e.g. a one bed and pulling in 15000/16000 a year you would need a high occupancy level with an Airbnb to match that. With letting of a properly organised property you could go 12 months without having any contact with tenants. In an Airbnb you have cleaning, laundry, taking bookings etc all the time. Hard to see that this is worth whatever extra income you might get

    Well it is obviously worth it for many landlords to do exactly this.


  • Moderators, Society & Culture Moderators Posts: 17,643 Mod ✭✭✭✭ Graham


    Ozark707 wrote: »
    Well it is obviously worth it for many landlords to do exactly this.

    was


  • Registered Users Posts: 347 ✭✭ Reversal


    Graham wrote: »
    was

    Is there anything that will stop these properties going back to Airbnb once the short term let's are up? Will the fact a property was in the residential rental market make it easier to enforce the law?


  • Moderators, Society & Culture Moderators Posts: 17,643 Mod ✭✭✭✭ Graham


    Economics initially. I don't expect there to be any significant demand for STLs for the rest of the year.

    By the time demand does return, I would expect the local authorities have their enforcement teams/processes firmly established.


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  • Registered Users Posts: 1,552 ✭✭✭ WhiteMemento9


    Reversal wrote: »
    Is there anything that will stop these properties going back to Airbnb once the short term let's are up? Will the fact a property was in the residential rental market make it easier to enforce the law?

    Some of them are being offered as 12 month rentals already. So they won't be returning to Airbnb. Most I see are being offered as 2-3 month rentals. I think they will soon start to realise that the demand for the properties on Airbnb will be low for much longer than when we see most of the restrictions lifted and will will join others in putting them into the long term rental pool. In many cases they won't have a choice as they will get into massive financial difficulty if these properties aren't generating any revenue.


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