Irish Property Market 2020 Part 2

Graham

Please send him to the economics forum unless he's buying a house

Billythekid19

Wanderer78 wrote: »

neoclassical is largely nonsense, it has little or no connect to the way the world actually works, theres an enormous amount of research going into this now, particularly since the crash

I dont see how its nonsense, the bottom line is that higher demand for housing will always push the price up because housing supply is inelastic.

Pelezico

Graham wrote: »

Please send him to the economics forum unless he's buying a house

I hate neo. It is always a sign of trouble. My heart sank when I read the post, just before your intervention on the matter.

Look lads.....no more neo.

Hubertj

PropQueries wrote: »

As per the interview with RTE this morning, the CEO of Cairn Homes said that going forward, they will concentrate on selling homes in the €300k - €380k price range.

He then went on to say that most other developers can only build for that price given that most other developers have higher site costs, finance costs etc. (see link to SCSI cost of building report below).

He followed that up by stating that Cairn Homes purchased their sites at an average of €32k each. He also stated that he can sell his homes for a similar price to what the state can build them at. Seems to be their strategy going forward. Glenveagh have a similar strategy, so will be interesting to watch.

For anyone interested, the RTE interview with Cairn Homes is on Morning Ireland. It’s included in the 7:50 am Business News slot on their website.

Link to Morning Ireland: https://www.rte.ie/radio1/morning-ireland/

For anyone interested in the SCSI report "The Real Cost of New Housing Delivery" published in July 2020, they put the cost of building a 114 sq.m. home at €371,311, split between €178,902 hard costs and €192,409 soft costs.

Link to SCSI report here: https://www.scsi.ie/documents/get_lob?id=1551&field=file

Yes that’s right as it appears their site costs are about €30k cheaper than in the SCSI analysis. I presume that is because they acquired sites some time ago while site values were lower. Good strategy but question will remain how many people will be able to buy at those price points.

MacronvFrugals

Pelezico wrote: »

I hate neo. It is always a sign of trouble. My heart sank when I read the post, just before your intervention on the matter.

Look lads.....no more neo.

Not for here but the IMF have no bother talking about things with "Neo" in them.

Bass Reeves

Hubertj wrote: »

Yes that’s right as it appears their site costs are about €30k cheaper than in the SCSI analysis. I presume that is because they acquired sites some time ago while site values were lower. Good strategy but question will remain how many people will be able to buy at those price points.

In any good business model you watch replacement costs as much as the original cost. There is no point in selling product unless you can release margin to profit. If Cairns use the 30k saving in site costs to reduce there house prices it creates an issue for them when they go to purchase the next sites. Only reason to do that is if you think you will replace sites at what they are presently costing you.

Towards the end of the noughties boom a developer bought a site I. The local village. He paid about 30k/ semi detached house site. As the collapse started he change his plans from Semi D's to town houses and duplexes his reasoning '' buyers did not want semi D's''. Now the real reason was he got his pricing wrong the site was never developed.

It very easy to get costings wrong and Lise your shirt in the building/developing game. BSing that you costs are lower than everybody else is the sign that you are clutching at straws. Even if he is correct and Cairns stay building if most other builders cannot compete they will stop building. Supply collapses.

Labour costs will only fall so much before paddy the plasterer from Cavan or NI decided it not worth his while commuting 3-4 hours a day in and out of Dublin

mcsean2163

Were looking at this: https://touch.daft.ie/for-sale/detached-house-greenacre-ballybride-road-rathmichael-co-dublin/2560460

Just told today, already sold for above asking, cash buyer. Does cash buyer have any significance, i.e. does it mean developer?

Bass Reeves

mcsean2163 wrote: »

Were looking at this: https://touch.daft.ie/for-sale/detached-house-greenacre-ballybride-road-rathmichael-co-dublin/2560460

Just told today, already sold for above asking, cash buyer. Does cash buyer have any significance, i.e. does it mean developer?

Cash buyers are those that do not have to borrow to fund the purchase or have the funds in place to complete the purchase with out going through the hoops associated with mortgage drawdown.

It means they can complete the transaction in a faster time. They do not require engineers reports certification etc.

The_Conductor

mcsean2163 wrote: »

Were looking at this: https://touch.daft.ie/for-sale/detached-house-greenacre-ballybride-road-rathmichael-co-dublin/2560460

Just told today, already sold for above asking, cash buyer. Does cash buyer have any significance, i.e. does it mean developer?

Above asking?
Fecking hell- it needs *major* work.
Don't get me wrong- it looks lovely- but the amount of single pane glass in there is staggering- the place must be like an ice box.

I'm staggered that it sold to a cash-buyer and for more than asking- it would seem that a few people were very fond of it.

Graham

2 acre plot.

Narrower neighbouring plot about two-thirds the size appears to have 3 fairly new-builds on it.

rks

Its been there for quite a few months:

https://www.myhome.ie/residential/brochure/6-st-kevin-s-place-donovan-lane-blackpitts-dublin-8/4453820

They were trying to sell it for over €750000 for months. I am not sure if they managed to sell any of them.

Price updated to €695000 today. Thats over 50k drop.

Still way overpriced I think.

PropQueries

Bass Reeves wrote: »

In any good business model you watch replacement costs as much as the original cost. There is no point in selling product unless you can release margin to profit. If Cairns use the 30k saving in site costs to reduce there house prices it creates an issue for them when they go to purchase the next sites. Only reason to do that is if you think you will replace sites at what they are presently costing you.

Towards the end of the noughties boom a developer bought a site I. The local village. He paid about 30k/ semi detached house site. As the collapse started he change his plans from Semi D's to town houses and duplexes his reasoning '' buyers did not want semi D's''. Now the real reason was he got his pricing wrong the site was never developed.

It very easy to get costings wrong and Lise your shirt in the building/developing game. BSing that you costs are lower than everybody else is the sign that you are clutching at straws. Even if he is correct and Cairns stay building if most other builders cannot compete they will stop building. Supply collapses.

Labour costs will only fall so much before paddy the plasterer from Cavan or NI decided it not worth his while commuting 3-4 hours a day in and out of Dublin

Good points. But I think the advantage for Cairn Homes is that they already have a 17,000 unit landbank and 78% of their sites were purchased in 2015 and 2016. So, they're probably not that interested in replacement costs.

As a public company, they also have the added pressure of having to please shareholders who need to see that houses are selling year in, year out. Cairn Homes must publish how many sales they achieve every quarter or six months, so land hoarding probably won't benefit them as investors probably won't hang around that long for a possible future uplift.

It does seem that Cairn Homes and Glenveagh may be in the opening stages of a potential price war at the lower end of the market, so price falls may happen much quicker than last time. Where Cairn Homes plans to slash their costs is open to debate though.

Link to the Cairn Homes 2020 interim report here: https://www.cairnhomes.com/f/42974/x/2176d67ae7/cairn-homes-plc-2020-interim-results-investor-presentation-for-release.pdf

Ursabear

I'm sorry I am just catching up on todays thread and also wonder why that guy was asked not to open up this thread more to the economics that drive the property market. I don't mean to argue against the mods either but its odd to me that some people are asked not to mention the forces that are affecting the market but then there are posts about individual houses being sold - which would be more suited to the buying and selling thread. Talking about the economic theory is surely important on a thread that is about the market.

Graham

Mod Note

asked & answered already.

Graham

PropQueries wrote: »

Where Cairn Homes plans to slash their costs is open to debate though.

I predict a swift 'adjustment' to day-rates.

MacronvFrugals

Ulster bank cutting 266 jobs - https://www.thejournal.ie/ulster-bank-job-cuts-5200894-Sep2020/

Smouse156

MacronvFrugals wrote: »

Today its for the young professionals with fast lives, tomorrow OAPs thats my worry

I thought OAPs would love “Very Trendy Boutique Hotels”...

MacronvFrugals

Smouse156 wrote: »

I thought OAPs would love “Very Trendy Boutique Hotels”...

The mental gymnastics people pull defending these is hilarious, 'oh look these are great for 1300 a month you can even wash your feet in the shower while lying on the bed watching your pizza cook in the oven simultaneously'

hometruths

Ursabear wrote: »

I'm sorry I am just catching up on todays thread and also wonder why that guy was asked not to open up this thread more to the economics that drive the property market. I don't mean to argue against the mods either but its odd to me that some people are asked not to mention the forces that are affecting the market but then there are posts about individual houses being sold - which would be more suited to the buying and selling thread. Talking about the economic theory is surely important on a thread that is about the market.

I think it is a bit odd too.

Especially when this sort of thing passes for intelligent comment on how houses are priced:

fliball123 wrote: »

As in if I have 10 apples and 10 people want to buy then the price is set, if 5 people no longer want an apple then the price drops but if we take 5 apples out then the price reset to what it was.

Cyrus

PropQueries wrote: »

It does seem that Cairn Homes and Glenveagh may be in the opening stages of a potential price war at the lower end of the market, so price falls may happen much quicker than last time. Where Cairn Homes plans to slash their costs is open to debate though.

what leads you to believe that they are at the opening stages of a price war?

Cyrus

rks wrote: »

Its been there for quite a few months:

https://www.myhome.ie/residential/brochure/6-st-kevin-s-place-donovan-lane-blackpitts-dublin-8/4453820

They were trying to sell it for over €750000 for months. I am not sure if they managed to sell any of them.

Price updated to €695000 today. Thats over 50k drop.

Still way overpriced I think.

outside space is a lot more important to people than it was 6 months ago which is an issue with these.

Pelezico

schmittel wrote: »

I think it is a bit odd too.

Especially when this sort of thing passes for intelligent comment on how houses are priced:

Read my lips....no more neo.

PropQueries

Cyrus wrote: »

what leads you to believe that they are at the opening stages of a price war?

From listening to the interview with the CEO of Cairn Homes on RTE this morning. He seemed to be laying out a strategy to aggressively target the lower end of the market over the coming years to drive sales. We have two big boys i.e. Cairn Homes and Glenveagh. Both bought their sites near the bottom of the market, can operate at scale, have to publish their sales every quarter or six months and have shareholders to keep happy.

Cairn Homes has 17,000 sites and I think they're going to do their level best to ensure anybody thinking of buying a new home over the next few years will be buying from them and from the interview, he appeared to be putting across the message that price is going to be their primary differentiator/ advantage in the market going forward. That puts them head to head with Glenveagh, who seem to have a similar strategy.

He said that going forward, they will concentrate on selling homes in the €300k - €380k price range.

He then went on to say that most other developers can only build for that price given that most other developers have higher site costs, finance costs etc. (see link to SCSI cost of building report below).

He followed that up by stating that Cairn Homes purchased their sites at an average of €32k each. He also stated that he can sell his homes for a similar price to what the state can build them at.

For anyone interested, the RTE interview with Cairn Homes is on Morning Ireland. It’s included in the 7:50 am Business News slot on their website.

Link to Morning Ireland: https://www.rte.ie/radio1/morning-ireland/

For anyone interested in the SCSI report "The Real Cost of New Housing Delivery" published in July 2020, they put the cost of building a 114 sq.m. home at €371,311, split between €178,902 hard costs and €192,409 soft costs.

Link to SCSI report here: https://www.scsi.ie/documents/get_lo...551&field=file

Cyrus

PropQueries wrote: »

From listening to the interview with the CEO of Cairn Homes on RTE this morning. He seemed to be laying out a strategy to aggressively target the lower end of the market over the coming years to drive sales. We have two big boys i.e. Cairn Homes and Glenveagh. Both bought their sites near the bottom of the market, can operate at scale, have to publish their sales every quarter or six months and have shareholders to keep happy.

Cairn Homes has 17,000 sites and I think they're going to do their level best to ensure anybody thinking of buying a new home over the next few years will be buying from them and from the interview, he appeared to be putting across the message that price is going to be their primary differentiator/ advantage in the market going forward. That puts them head to head with Glenveagh, who seem to have a similar strategy.

He said that going forward, they will concentrate on selling homes in the €300k - €380k price range.

He then went on to say that most other developers can only build for that price given that most other developers have higher site costs, finance costs etc. (see link to SCSI cost of building report below).

He followed that up by stating that Cairn Homes purchased their sites at an average of €32k each. He also stated that he can sell his homes for a similar price to what the state can build them at.

For anyone interested, the RTE interview with Cairn Homes is on Morning Ireland. It’s included in the 7:50 am Business News slot on their website.

Link to Morning Ireland: https://www.rte.ie/radio1/morning-ireland/

For anyone interested in the SCSI report "The Real Cost of New Housing Delivery" published in July 2020, they put the cost of building a 114 sq.m. home at €371,311, split between €178,902 hard costs and €192,409 soft costs.

Link to SCSI report here: https://www.scsi.ie/documents/get_lo...551&field=file

can i ask a favour, if you link something or reference something just do it the once, it doesnt lend your posts any more weight by doing it multiple times.

what you wrote above doesnt point to a price war between the two, it just points to the section of the market the majority of their houses will be in, which was always the case for both of them, this isnt a new strategy.

Graham

Mod Note

ok folks, to put the 'Neo' thing to bed.

There is no issue discussing economics in as much as it relates to the Irish property market.

Hypothetical discussion of alternative economic models and associated abstract economic discussion are better suited to the economics forum, or a separate thread if the hypothesis are closely related to Accommodation/Property.

Pelezico

PropQueries wrote: »

From listening to the interview with the CEO of Cairn Homes on RTE this morning. He seemed to be laying out a strategy to aggressively target the lower end of the market over the coming years to drive sales. We have two big boys i.e. Cairn Homes and Glenveagh. Both bought their sites near the bottom of the market, can operate at scale, have to publish their sales every quarter or six months and have shareholders to keep happy.

Cairn Homes has 17,000 sites and I think they're going to do their level best to ensure anybody thinking of buying a new home over the next few years will be buying from them and from the interview, he appeared to be putting across the message that price is going to be their primary differentiator/ advantage in the market going forward. That puts them head to head with Glenveagh, who seem to have a similar strategy.

He said that going forward, they will concentrate on selling homes in the €300k - €380k price range.

He then went on to say that most other developers can only build for that price given that most other developers have higher site costs, finance costs etc. (see link to SCSI cost of building report below).

He followed that up by stating that Cairn Homes purchased their sites at an average of €32k each. He also stated that he can sell his homes for a similar price to what the state can build them at.

For anyone interested, the RTE interview with Cairn Homes is on Morning Ireland. It’s included in the 7:50 am Business News slot on their website.

Link to Morning Ireland: https://www.rte.ie/radio1/morning-ireland/

For anyone interested in the SCSI report "The Real Cost of New Housing Delivery" published in July 2020, they put the cost of building a 114 sq.m. home at €371,311, split between €178,902 hard costs and €192,409 soft costs.

Link to SCSI report here: https://www.scsi.ie/documents/get_lo...551&field=file

Well one thing is for sure. He did not answer any question put to him. That site at Montrose must be a noose around their neck.

fliball123

schmittel wrote: »

I think it is a bit odd too.

Especially when this sort of thing passes for intelligent comment on how houses are priced:

Go look at yourself in the mirror you come across as a know all who knows nothing and that response was to someone who doesn't seem to understand that price is made up of supply and demand so when you have posters on here thinking like a 5 year old sometimes I feel like I have to explain it like the person was a 5 year old. Just because I over simplified something don't try and make it out that I have no intelligence as you don't know me or my qualifications or my education and its always a sign of someone who has low intelligence or who is losing the argument when they go for the man and not the post, just as an aside was the statement I put up wrong ?? maybe I should explain things to you like your a 2 year old.

Also I have also never advised anyone on buying or selling so regardless of my wisdom or lack of it (according to your amazing self) no one will get stung by any comment I have put up. Most of my views I have tried to use sources such as Myhome, CSO and the property price register to back them up.

Graham

Mod Note

schmittel / fliball123 if you can't make your point without getting in a dig against another poster, don't post.

hometruths

fliball123 wrote: »

Go look at yourself in the mirror you come across as a know all who knows nothing and that response was to someone who doesn't seem to understand that price is made up of supply and demand so when you have posters on here thinking like a 5 year old sometimes I feel like I have to explain it like the person was a 5 year old. Just because I over simplified something don't try and make it out that I have no intelligence as you don't know me or my qualifications or my education and its always a sign of someone who has low intelligence or who is losing the argument when they go for the man and not the post, just as an aside was the statement I put up wrong ?? maybe I should explain things to you like your a 2 year old.

Also I have also never advised anyone on buying or selling so regardless of my wisdom or lack of it (according to your amazing self) no one will get stung by any comment I have put up. Most of my views I have tried to use sources such as Myhome, CSO and the property price register to back them up.

I made no comment about you personally, nor have I ever done.

My comment was about the post, which to answer your aside, may have some validity when it comes to apples but in the context of house prices is utter nonsense.

We are literally not comparing apples to apples here!

fliball123

schmittel wrote: »

I made no comment about you personally, nor have I ever done.

My comment was about the post, which to answer your aside, may have some validity when it comes to apples but in the context of house prices is utter nonsense.

We are literally not comparing apples to apples here!

You did make a comment about me with your post ok smart a$$ and most of your posts are utter nonsense and I am nearly put asleep by your incoherent rambling on here and now your trying to back away from where you slighted me now. My apple analogy was in regards to price nothing more nothing less it goes to show you your level of intelligence that you never bothered to read the context in which is was framed. So lets leave it now no point talking to someone I dont know and who can slag away from behind their keyboard and has shown themselves to be low intelligence and thinks they know everything so dont bother replying as I wont be baited in again I will just ignore you.