2021 Irish Property Market chat - *mod warnings post 1*

cnocbui

PropQueries wrote: »

It's looks like many Irish citizens in their 20s, 30, and 40s are now actually living through one of those dystopian future sci-fi movies we used to watch years ago.

Why? What is the problem?

Ozark707

fliball123 wrote: »

No one will know until everything opens back up . They are taking a gamble but its a good way to keep your rent up offering a free month. Sure if they can afford to wait till covid is gone good luck to them

Yes it appears reality is dawning finally for many in this market. Rents still seem too high so they might have to throw in a few extra sweeteners.

MacronvFrugals

Was looking at the Richmond Hall apartments and came across this guy from 2006, out of curiosity leaving aside variables how bad/good of a decision was this?

Timing belt

PropQueries wrote: »

According to the FT today:

"European manufacturers are passing higher input costs on to their customers, sending eurozone inflation to its highest level for almost a year as shortages of materials and soaring shipping costs disrupt supply chains.

Efforts to cushion rising costs are driven by the sentiment that supply chain bottlenecks are unlikely to ease in the short term, according to industry and shipping executives. More expensive manufactured goods are in turn fuelling expectations of a further surge in inflation, which Germany’s central bank is already warning will reach its highest level since the 2008 financial crisis by the end of this year."

I think what you said about inflation is about right. It's coming and the ECB won't be able to control it without interest rate rises IMO. The USA is having a massive fiscal stimulus package so that's going to most likely raise inflation over there.

It's now regarded as near enough gospel that central bank policies had basically nothing to do with controlling inflation over the past 20 years and the primary reason for the low "official" inflation rates was cheaper and better technology for the masses in addition to China and Eastern Europe flooding the market with cheap goods and a large supply of additional relatively cheap labour which kept inflation down.

Both China and Eastern Europe are now much more advanced economies so this excess supply is drying up fairly fast and inflation is about to take off big time no matter what the ECB thinks they can do to try control it. The ECB economists will then revert to their old college textbooks on what to do and then raise interest rates more quickly and higher than many believe IMO

Link to article in FT today: https://www.ft.com/content/7aef28eb-ce0c-49a4-b7cc-06d89478c44c

The whole point is that the inflation is not showing up in the overall CPI because there is deflation still occurring and will for sometime yet while the economies of Europe struggle.

Everyone talks about bond yields rising because of inflation and yet the movement is in 5+ years and there is little movement in shorter term bonds which you would expect to see with inflation.

PropQueries

fliball123 wrote: »

I just watched it he never touched on some of the main differences between 2008 and 2017.

Credit - No 100% mortgages this time
Oversupply - ghost estates anyone

These 2 are not an issue now.

In relation to today's Irish Times article on the number of vacant luxury apartments, these two issues i.e. credit and oversupply definitely have parallels with the boom years IMO

Credit: Investors have just replaced the banks.The funds are taking money from investors and pouring it into luxury apartment schemes around the world for which there is apparently very little demand.

Yes, the banks are less exposed this time (still exposed to their boom time loans though), but the property market is definitely exposed once this investor cash stops flowing just like when the banks stopped lending last time.

Will the cash stop flowing? Well, if interest rates do rise, these investors will want their money back if they're getting little to no return from these empty "luxury" apartments. That will lead to a flood of them entering markets in many cities around the world.

Oversupply: These luxury apartment schemes were empty pre-covid. Just because they're labelled "luxury", they're still technically "ghost estates", just high rise "ghost estates" IMO

This investment strategy only works as long as interest rates remain at zero and investors don't ask any questions about when they will get a return. Once they ask, and they will ask once interest rates start rising, then it collapses IMO

Investing in empty luxury apartments is basically a bet on the future direction of interest rates. Very risky given that property is not a very liquid asset IMO

fliball123

Ozark707 wrote: »

Yes it appears reality is dawning finally for many in this market. Rents still seem too high so they might have to throw in a few extra sweeteners.

Well with the current situation of no new immigration or tourism they seem to be able to offer things like this to get through the current problems. There is no way that after covid the same conditions will be the same. Personally as soon as I can I will be heading away for a holiday, can anyone on here say that once we open up you wont want to get away for a break. Same goes for everyone globally and Dublin is a much sought after location for tourism. We have one of the highest visitor to locals ratios in the world, beating places like New York, Paris etc. Regardless of what some here would have you think that Dublin is just a crap place to be, it seems from the outside looking in it is a city that many globally want to visit. Like the saying goes the grass is always greener when living in Dublin you dont always appreciate what you have. Have a read

https://www.dublinlive.ie/lifestyle/travel/dublin-one-highest-tourist-local-17371881

https://www.dublinlive.ie/lifestyle/travel/dublin-crowned-one-top-five-17616935

https://www.irishcentral.com/travel/best-of-ireland/dublin-among-the-top-50-most-visited-cities-in-the-world

https://www.rte.ie/lifestyle/travel/2019/1022/1084962-dublin-ranked-among-the-worlds-top-50-most-beautiful-cities/

I reckon if I could afford places like those being left idle or giving one month free rent to keep the rent price up I would until lockdown is gone and people are free to move around the globe again. short term pain for long term gain.

fliball123

PropQueries wrote: »

In relation to today's Irish Times article on the number of vacant luxury apartments, these two issues i.e. credit and oversupply definitely have parallels with the boom years IMO

Credit: Investors have just replaced the banks.The funds are taking money from investors and pouring it into luxury apartment schemes around the world for which there is apparently very little demand.

Yes, the banks are less exposed this time (still exposed to their boom time loans though), but the property market is definitely exposed once this investor cash stops flowing just like when the banks stopped lending last time.

Will the cash stop flowing? Well, if interest rates do rise, these investors will want their money back if they're getting little to no return from these empty "luxury" apartments. That will lead to a flood of them entering markets in many cities around the world.

Oversupply: These luxury apartment schemes were empty pre-covid. Just because they're labelled "luxury", they're still technically "ghost estates", just high rise "ghost estates" IMO

This investment strategy only works as long as interest rates remain at zero and investors don't ask any questions about when they will get a return. Once they ask, and they will ask once interest rates start rising, then it collapses IMO

Investing in empty luxury apartments is basically a bet on the future direction of interest rates. Very risky given that property is not a very liquid asset IMO

We will see when things open up. I have outlined in my last post what I think their strategy is as in small term pain (leaving it empty or giving a month free) while people have stopped moving around the globe and long term gain when things open up again and people are looking to come back to live and/or visit Dublin.

Villa05

schmittel wrote:

The important thing about the programme is was he living in a 7 figure house at the time. Or was it only 6 figures?

fliball123 wrote:

Credit - No 100% mortgages this time Oversupply - ghost estates anyone

fliball123 wrote:

It was comical and seemed really odd from the rock duo intros to the comic with the comb over and in the 4 years since prices have gone up a bit , come down a bit and gone back up a bit. No huge drops and no huge rises year on year. I am all for hearing opinions but he really only concentrated in Dublin just goes to show you how a show like this can date as there was no mention of working from home and how this will change the landscape of Dublin vs the rest of the country and never mentioned the fact that globally usually the capital cities are ones that people want to live in therefore you must pay a premium. He had no one in to dispute his opinion and looking at it 4 years on it was a waste of time making it, watching it and I have lost an hour I will never get back .

Watched it last night also

Did you miss the title of the programme. I believe it was asking the question, are we in a bubble?

He had developers, mortgage brokers, renters tackling the arguments that we traditionally hear from vested interests. We regularly hear the vested interest argument, however we rarely hear it being questioned on mainstream media

Bubbles are formed in the absence of credit, the credit follows and so it appears to be transpiring, As Dublin prices have moderated Government policy has been evolving to create new ways of driving up price in an already hugely expensive market.

Notable that the biggest issue to solving the crisis in 2017 was the availability of labour which has become far more favourable now, yet the government continue to pursue policies to push up prices rather than putting that labour to use to help ease the pressure on citizens.

WFH presents the danger of transferring the bubble nationwide, with Govt policy that is looking increasingly likely. So what appeared to me to be a potential solution now looks increasingly likely to be another outlet for Government to spread the problem rather than solve the problem, just like nama, state land, 0% interest rates, availability of labour and global stimulus to reboot economies.
So many opportunities to resolve the housing issue twisted and retooled by government policy to make the problem worse

It truly is amazing that a government can get away with it

Economics can be a bit boring to the general populace. Mcwilliams is a good communicator and has the ability to simplify, make it interesting and relevant to a wider audience

fliball123

Villa05 wrote: »

Watched it last night also

Did you miss the title of the programme. I believe it was asking the question, are we in a bubble?

He had developers, mortgage brokers, renters tackling the arguments that we traditionally hear from vested interests. We regularly hear the vested interest argument, however we rarely hear it being questioned on mainstream media

Bubbles are formed in the absence of credit, the credit follows and so it appears to be transpiring, As Dublin prices have moderated Government policy has been evolving to create new ways of driving up price in an already hugely expensive market.

Notable that the biggest issue to solving the crisis in 2017 was the availability of labour which has become far more favourable now, yet the government continue to pursue policies to push up prices rather than putting that labour to use to help ease the pressure on citizens.

WFH presents the danger of transferring the bubble nationwide, with Govt policy that is looking increasingly likely. So what appeared to me to be a potential solution now looks increasingly likely to be another outlet for Government to spread the problem rather than solve the problem, just like nama, state land, 0% interest rates, availability of labour and global stimulus to reboot economies.
So many opportunities to resolve the housing issue twisted and retooled by government policy to make the problem worse

It truly is amazing that a government can get away with it

Economics can be a bit boring to the general populace. Mcwilliams is a good communicator and has the ability to simplify, make it interesting and relevant to a wider audience

That was not relevant as I said his whole shtick was that "are we in a bubble" back in 2017 asking what will be the thing that pricks this Bubble and yet fast forward 2021 after Brexit and Covid two things that if a bubble existed it should of burst any kind of bubble that had been blowing up. The bubble only seems to exist in McWilliams head. As I said he had no one on to debate that we are not in a bubble there are plenty of people out there of that opinion. Proof is in the pudding 4 years on prices went down and then went back up no huge increase or decrease. We have had 2 major events in Brexit and Covid and yet property prices have not dropped.

He never touched on things like over supply and availability of credit pre 08 this is not the same now and regardless of what props says about the thousands of houses and rooms over shops not being used they are simply not part of the current supply for one reason or another and you only have to look at the thread there of "anyone currently buying or selling" on here to see the hoops and the amount of checks everyone now has to undertake to get any kind of credit from a bank.

Without access to easy credit you cannot have a bubble this is what happened pre 08 banks where giving cash out like confetti , 110% mortgages anyone. McWilliams never even touched on this. Yet he can talk about how credit did not play a huge role in the blowing up of the last bubble is completely ridiculous. If banks stopped lending or put in the the current restrictions we currently have back in 08 the property market would of been no where near as disastrous as it was. Fast forward 2021 we have more demand for housing and less supply and yet we are still a good 20% or so off the peak prices of 08 which would go a long way to prove that the prudent lending practices currently imposed on Irish lenders have stopped a bubble from blowing up.

It was a one sided, out dated program that has absolutely no relevance to 2021 property market, too many things have changed, such as WFH, Increased global competition with REITS/hedgefunds and local competition with the lefties leaning on government to buy now instead of been building. Add in the 2 events brexit and covid which have not brought down prices., McWilliams whole premise looking back at it now does not add up and looking at it in hindsight he is like the rest of us he doesn't know his ass from his elbow when it comes to the property market.

MacronvFrugals

Villa05 wrote: »

He had developers, mortgage brokers, renters tackling the arguments that we traditionally hear from vested interests. We regularly hear the vested interest argument, however we rarely hear it being questioned on mainstream media

That sweet sweet ad revenue, even leaving aside the vested interest in media outlets owning property websites look at the money the likes of Glenveigh must spend on ads with media orgs.

To quote Dr Julien Mercile from UCD speaking at the Oireachtas banking inquiry

“Indeed, there is a clear discrepancy between coverage of the housing bubble before and after it burst,” he said. “Before 2008, the media tended to largely ignore it and it is only months after it had started deflating that reality had to be faced.”

A similar situation arose in the area of sourcing information. Dr Mercille said journalists were reliant on established institutions for information and that this could be denied to them, again in cases where coverage was deemed negative or unhelpful.

He said the media made money from advertising the property sector, often through supplements, and he pointed out both the Irish Times and Irish Independent had invested in property related websites.

Timing belt

PropQueries wrote: »

In relation to today's Irish Times article on the number of vacant luxury apartments, these two issues i.e. credit and oversupply definitely have parallels with the boom years IMO

Credit: Investors have just replaced the banks.The funds are taking money from investors and pouring it into luxury apartment schemes around the worldfor which there is apparently very little demand.

Yes - I agree with you here except the point about demand but you must remember that property is only one asset class and the same is happening in every other asset class at a quicker pace than property.

Yes, the banks are less exposed this time (still exposed to their boom time loans though), but the property market is definitely exposed once this investor cash stops flowing just like when the banks stopped lending last time.

Banks are just as exposed this time as they are lending to funds and there are no CBI caps involved. Furthermore Ireland and Luxembourg have the majority of funds in Europe.

Will the cash stop flowing? Well, if interest rates do rise, these investors will want their money back if they're getting little to no return from these empty "luxury" apartments. That will lead to a flood of them entering markets in many cities around the world.

This is what started to happen last March before central banks jumped in to save the day. And since then the funds have set up new credit facilities, improved liquidity and even changed T&C’s to introduce notice periods for investors to redemptions all which have/should prevent any fire sale

Oversupply: These luxury apartment schemes were empty pre-covid. Just because they're labelled "luxury", they're still technically "ghost estates", just high rise "ghost estates" IMO

only a small % of the overall property held by funds would be luxury apartment and are mainly held by a handful of funds.

This investment strategy only works as long as interest rates remain at zero and investors don't ask any questions about when they will get a return. Once they ask, and they will ask once interest rates start rising, then it collapses IMO

It all depends on when rates rise...if they don’t know rise or rise slowly then it is probably the best investment available at present. Also remember that stock markets, commodities, bonds and the very other asset class will loose value when rates rise.

Investing in empty luxury apartments is basically a bet on the future direction of interest rates. Very risky given that property is not a very liquid asset IMO

for the past 45 years investing in most asset classes has been a bet on the direction of interest rates. Why is it different now?

PropQueries

Timing belt wrote: »

for the past 45 years investing in most asset classes has been a bet on the direction of interest rates. Why is it different now?

In Ireland's case, in the past, the vast majority of residential investment properties were owned by thousands of mom and pop type investors.

Now the funds own a relatively massive share of the residential investment property market in Ireland. And, I'm not talking just about the REITs etc. The vulture funds have also swallowed up a significant share of this market under the radar.

If interest rates do rise, last time, many of the mom and pop type investors would probably hunker down until better times. If a few did decide to sell, it wouldn't really impact the market given that each investor owned a tiny share of the market.

This time, we have a few funds who control a significant share of the market. If just one fund decides to get out, suddenly we have thousands of properties entering the market.

Basically these funds leaving would have the same impact on the market as if we had proper repossession laws last time. Property prices wouldn't have fallen by 50%, they would have fallen by at least 75% and probably much more.

This time is much different IMO

Mic 1972

cnocbui wrote: »

It's a 125 sq m. It's a pokey little cramped hole with a supposed valuation of €520 K.

It's not worth €300K, let alone 450. There must be next to no availability in Cork whatsoever.

Agree, that house looks terrible. Awful layout, tiny rooms

hometruths

fliball123 wrote: »

they are simply not part of the current supply for one reason or another

There are hundreds of thousands of residential properties that are not "part of the current supply for one reason or another".

But they do exist. At some stage they will become part of the current supply for one reason or another.

And when that happens, you will have your oversupply.

Timing belt

PropQueries wrote: »

In Ireland's case, in the past, the vast majority of residential investment properties were owned by thousands of mom and pop type investors.

Now the funds own a relatively massive share of the residential investment property market in Ireland. And, I'm not talking just about the REITs etc. The vulture funds have also swallowed up a significant share of this market under the radar.

If interest rates do rise, last time, many of the mom and pop type investors would probably hunker down until better times. If a few did decide to sell, it wouldn't really impact the market given that each investor owned a tiny share of the market.

This time, we have a few funds who control a significant share of the market. If just one fund decides to get out, suddenly we have thousands of properties entering the market.

Basically these funds leaving would have the same impact on the market as if we had proper repossession laws last time. Property prices wouldn't have fallen by 50%, they would have fallen by at least 75% and probably much more.

This time is much different IMO

Let me get this right:
- interest rates will rise so fast that a 4% yield on property will look unattractive
- investors pull their money from the funds as they can make more money elsewhere
- this will lead to a fire sale of property owned by the funds
- funds will need cash so badly they will sell for 25c on the €
- investors take 25% of their original investment ( as the rest is now a loss due to fire sale) and invest in a different asset class with a higher yield

You do know that regulation is in place to ensure funds have adequate liquidity and that funds have the ability to implement redemption suspensions to specifically avoid the scenario you are outlining.

Hubertj

Following on from yesterday. I like the setting and location a lot more than the gaff. Stayed in parknasilla a few times and think I’ve seen this pace from a boat

https://www.myhome.ie/residential/brochure/long-lake-house-tahilla-sneem-co-kerry-v93-v8w3/4235982

Cyrus

schmittel wrote: »

There are hundreds of thousands of residential properties that are not "part of the current supply for one reason or another".

But they do exist. At some stage they will become part of the current supply for one reason or another.

And when that happens, you will have your oversupply.

there will always be properties like this, so as to whether they will become part of current supply or not, on the basis of the current framework of taxes and legislation i dont see any reason that will change.

hometruths

Hubertj wrote: »

Following on from yesterday. I like the setting and location a lot more than the gaff. Stayed in parknasilla a few times and think I’ve seen this pace from a boat

https://www.myhome.ie/residential/brochure/long-lake-house-tahilla-sneem-co-kerry-v93-v8w3/4235982

That's hideous. Even if I had over 2m to drop on a holiday home I'd buy the one you linked yesterday in preference to that.

hometruths

Cyrus wrote: »

there will always be properties like this, so as to whether they will become part of current supply or not, on the basis of the current framework of taxes and legislation i dont see any reason that will change.

And do you think the current framework of taxes and legislation might change?

Cyrus

schmittel wrote: »

And do you think the current framework of taxes and legislation might change?

it might, and it might not. certainly not before the end of 2021.

hometruths

Cyrus wrote: »

it might, and it might not. certainly not before the end of 2021.

:rolleyes:

Hubertj

schmittel wrote: »

That's hideous. Even if I had over 2m to drop on a holiday home I'd buy the one you linked yesterday in preference to that.

I agree. Like I said it is the setting I like. I’m just day dreaming about a home in Kerry. Hopefully be down there in august and will do some tyre kicking.

Cyrus

schmittel wrote: »

:rolleyes:

whats with the roll eyes? use your words.

hometruths

Cyrus wrote: »

whats with the roll eyes? use your words.

I think the regular "not going to happen 2021, so its irrelevant" comments are a bit tedious.

Villa05

fliball123 wrote:

It was a one sided, out dated program that has absolutely no relevance to 2021 property market, too many things have changed, such as WFH, Increased global competition with REITS/hedgefunds and local competition with the lefties leaning on government to buy now instead of been building. Add in the 2 events brexit and covid which have not brought down prices., McWilliams whole premise looking back at it now does not add up and looking at it in hindsight he is like the rest of us he doesn't know his ass from his elbow when it comes to the property market.

fliball123 wrote:

It was a one sided, out dated program that has absolutely no relevance to 2021 property market, too many things have changed, such as WFH, Increased global competition with REITS/hedgefunds and local competition.

How was it one sided
He had a developer, mortgage broker renters, owners etc
What relevant party was missing

Of course there is more competition, we are the country that keeps on giving to private business so much so that less than a 1/3 of new builds were made available for sale to the general public.
The general public can't compete against an entity that pays no tax and has access to free money and also government who are buying with taxes raised from workers priced out of the market

You might point me to a "leftie" politician that supports current housing policy
Even FG councillors are opposing shared equity
Buying existing housing in premium estates for social affordable is loose loose for everyone except developers
Taxpayer as the cost is far greater
Public as 4 to 5 houses could be provided for what the state is paying
The recipient as they are distanced from their support groups and often isolated from their neighbours

MacronvFrugals

Hubertj wrote: »

Following on from yesterday. I like the setting and location a lot more than the gaff. Stayed in parknasilla a few times and think I’ve seen this pace from a boat

https://www.myhome.ie/residential/brochure/long-lake-house-tahilla-sneem-co-kerry-v93-v8w3/4235982

The scenery is out of this world, the house reminds me of the hotel from The Shining

Graham

MacronvFrugals wrote: »

The scenery is out of this world, the house reminds me of the hotel from The Shining

Reminds me of a 80s style low rise apartment block. I wouldn't have believed you could fit that many UPVC double glazing units into one building.

Reins

optogirl wrote: »

Currently bidding on a house I've never been in (My Dad is rolling in his grave!) - has gone from 290-320 in 24 hours.

Not singling you out but can you not rekonize that your'e part of the problem and this is why we are where we are..

Graham

Reins wrote: »

Not singling you out but can you not rekonize that your'e part of the problem and this is why we are where we are..

Following that logic, anybody bidding on a property ever is 'part of the problem'.

MacronvFrugals

Graham wrote: »

Reminds me of a 80s style low rise apartment block. I wouldn't have believed you could fit that many UPVC double glazing units into one building.

I wonder when it was built