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

Browney7

fliball123 wrote: »

Have you any evidence of this or like all of your other statements the hamster in your head done a somersault and you put your post up?

Well his last point is more than likely true. Plenty "investment" properties bought by people to rent out by people who took BTL interest only mortgages with interest rates above 5% when gross rental yields wouldn't have covered this. ECB interest rates were at 2.5% at year end 2016 so the risk premium for property from income alone was very small.

As an aside, the levels of BTL mortgages as a % of the overall lending book of banks was above 20% in Dec 2006 whereas the % of BTL is 10% as at SEP 20. Interestingly, the level of borrowings by BTL investors jumped between Jun 20 and SEP 20 by 780 million most likely due to payment breaks filtering through to overall lending balances.

Mic 1972

PropQueries wrote: »

And, as I've stated before, the current rental yields achieved by BTL landlords more than compensate for the risk of a tenant not paying their rent.

.

Strongly disagree

PropQueries

Mic 1972 wrote: »

Strongly disagree

A cash buyer buys a €400k investment property at e.g. 5% rental yield = €20,000 per annum.


Over 10 years, that's gross income of €200,000


If that person decides to leave that €400k sitting in the bank = 0% maximum = €0 per annum


Over 10 years, that's income of €0


If the landlord is incredibly unlucky and his tenants don't pay any rent for 5 years, after 10 years, he's still €100,000 better off (gross) than leaving it sitting on deposit. More than compensates for the "hassle" of renting a property IMO



Even if he spends €50k over that 10 years on "improvements", "fixing things", replacing a €250 cooker etc. he would still be better of by the 10's of thousands after 10 years.



Taxation doesn't come into it because he still wouldn't be paying any tax on the €0 he would achieve by leaving it in the bank.


The "hard work" entailed in managing a property shouldn't come into play either as if he's a decent landlord, the property should be in good condition to begin with before he's letting it out.

PropQueries

According to the Irish Independent today: "Property prices rise in November despite pandemic"


The last two paragraphs state "Currently construction has been halted. It is estimated that around 20,000 housing units will be built this year. But the Economic and Social Research Institute estimates that there is demand for 28,000 units."


So, over the past several months, we have gone from different reports stating we require c.35,000 a year to 47,000 per year to 30,000 per year and now we're down at 28,000 per year...


Link to article in Irish Independent here: https://www.independent.ie/business/personal-finance/property-prices-rise-in-november-despite-pandemic-39985075.html

Timing belt

PropQueries wrote: »

A cash buyer buys a €400k investment property at e.g. 5% rental yield = €20,000 per annum.


Over 10 years, that's gross income of €200,000


If that person decides to leave that €400k sitting in the bank = 0% maximum = €0 per annum


Over 10 years, that's income of €0


If the landlord is incredibly unlucky and his tenants don't pay any rent for 5 years, after 10 years, he's still €100,000 better off (gross) than leaving it sitting on deposit. More than compensates for the "hassle" of renting a property IMO



Even if he spends €50k over that 10 years on "improvements", "fixing things", replacing a €250 cooker etc. he would still be better of by the 10's of thousands after 10 years.



Taxation doesn't come into it because he still wouldn't be paying any tax on the €0 he would achieve by leaving it in the bank.


The "hard work" entailed in managing a property shouldn't come into play either as if he's a decent landlord, the property should be in good condition to begin with before he's letting it out.

If you used the Yield on a Reit it would be better for comparative purposes.

Say the average yield is 3.5% (14,000 per Annum)

Over 10 years they would earn 140k compared to 200k BTL.

Both investment properties could be damaged by tenants but the BTL tenant would be more exposed.

Timing belt

PropQueries wrote: »

According to the Irish Independent today: "Property prices rise in November despite pandemic"


The last two paragraphs state "Currently construction has been halted. It is estimated that around 20,000 housing units will be built this year. But the Economic and Social Research Institute estimates that there is demand for 28,000 units."


So, over the past several months, we have gone from different reports stating we require c.35,000 a year to 47,000 per year to 30,000 per year and now we're down at 28,000 per year...


Link to article in Irish Independent here: https://www.independent.ie/business/personal-finance/property-prices-rise-in-november-despite-pandemic-39985075.html

It is because there is little immigration at the moment (except an increase in Irish returning) and one set of numbers covers a shortage from prior years and the other doesn't.

Reins

https://www.rte.ie/news/business/2021/0119/1190675-cso-residential-property-prices/

CSO Figures

Timing belt

https://www.cso.ie/en/releasesandpublications/ep/p-rppi/residentialpropertypriceindexnovember2020/

"In Dublin, house prices decreased by 1.1% and apartment prices increased by 0.9%. The highest house price growth in Dublin was in South Dublin at 2.7%, while Dublin City saw a decline of 2.7%.

Outside Dublin, house prices were up by 1.1% and apartment prices up by 1.9%. The region outside of Dublin that saw the largest rise in house prices was the South East at 3% - at the other end of the scale, the Mid-West saw a 4.3% decline."

I can understand the decline in Dublin with WFH but why has the Mid-West (Clare, Limerick and Tipperary) declined by 4.3%?

johnnyskeleton

So apartments nationally and houses outside Dublin and in SoCoDo up a small bit, everything else down a small bit? Property prices still down from October, 2018 peak?

Certainly feels like there is a big disconnect between the CSO figures and the noises coming from estate agents and daft etc

fago

The asking price reports as any indication of trend just seems pointless - perhaps a combination of too few samples and an asking price being exactly that, a starting point for negotiation either up (good area, > 1 bidder, doesn't need renovation) or down (only one bidder, fixer upper)

Picking Galway as I'm familiar with the area, and 3 bed semi-ds as one would imagine there are enough samples.

Daft report to June 2020: 3 bed semi down 16% https://static.rasset.ie/documents/news/2020/07/daft.pdf
Daft report to Dec 2020: 3 bed semi up 8.3% https://ww1.daft.ie/report/2020-Q4-houseprice-daftreport.pdf?d_rd=1

I think it's reasonable to say no one is expecting a 25% swing (197k to 244k per the daft reports) over a 6 month window to be reflected in the PPR figures.
We won't have an answer anyway till mid 2021 - we should see the 2020 asking upswing reflect in PPR June (avg 4 months to sell + 44 days for stamping)

Might be interesting to normalize the daft asking prices and the cso PPR and see whether there's a lagging indicator how much they are correlated.

Browney7

Asking price versus realised will become clearer in another month or so. Many of those sales in Nov figures will be negotiated in Sep or Oct.

Looking at the micro regions and the split of new build to existing, there has been a divergence over the past 2 years between prices of new builds and existing builds. If you look at "Dublin City houses" in Nov and March (the start of the pandemic restrictions), the index has moved from 122.6 in Mar to 123.6.

I think its fair to say, there would be little or no new build houses in the Dublin City region. Taking this a little further, if you look at the "Mid East Houses" (Meath, Wicklow, Louth and Kildare), it's fair to say the proportion of new builds in this category would be far higher. Given the demand side incentive of HTB changing to a 10% refund, it's no surprise the index has jumped from 131.8 to 137.7. Fingal houses dropping is very puzzling though given the level of new build activity in North county Dublin.

The Mid west is somewhat baffling me also. Industry in Shannon (aircraft leasing) affected by lockdown is the only thing I can think of but that's very much clutching. Maybe volatility crept into the figures as the March 19 index level was 148.8 and Nov 19 jumped to 157.8 and now sits at 150.9 in Nov 20.

Zenify

Timing belt wrote: »

I can understand the decline in Dublin with WFH but why has the Mid-West (Clare, Limerick and Tipperary) declined by 4.3%?

Tourism...? or lack of...

Mad_maxx

market is on fire , my sister and her husband outbid on a four bedroom refurbished house in Dublin 8 , they bowed out at 740 k

Cyrus

PropQueries wrote: »

A cash buyer buys a €400k investment property at e.g. 5% rental yield = €20,000 per annum.


Over 10 years, that's gross income of €200,000


If that person decides to leave that €400k sitting in the bank = 0% maximum = €0 per annum


Over 10 years, that's income of €0


If the landlord is incredibly unlucky and his tenants don't pay any rent for 5 years, after 10 years, he's still €100,000 better off (gross) than leaving it sitting on deposit. More than compensates for the "hassle" of renting a property IMO



Even if he spends €50k over that 10 years on "improvements", "fixing things", replacing a €250 cooker etc. he would still be better of by the 10's of thousands after 10 years.



Taxation doesn't come into it because he still wouldn't be paying any tax on the €0 he would achieve by leaving it in the bank.


The "hard work" entailed in managing a property shouldn't come into play either as if he's a decent landlord, the property should be in good condition to begin with before he's letting it out.

you are ignoring the opportunity cost of investing the 400k into equities, bonds, gold, any other asset class.

also gross yield is a nonsense, a landlord in that scenario will be paying 40-50% of that income in tax.

Mic 1972

Mad_maxx wrote: »

market is on fire , my sister and her husband outbid on a four bedroom refurbished house in Dublin 8 , they bowed out at 740 k

I know, I keep getting outbid by huge figures.
And now most agencies have stopped doing viewings, even if the driving distance is very short

Mic 1972

johnnyskeleton wrote: »

So apartments nationally and houses outside Dublin and in SoCoDo up a small bit, everything else down a small bit? Property prices still down from October, 2018 peak?

Certainly feels like there is a big disconnect between the CSO figures and the noises coming from estate agents and daft etc

Nothing is down, even the graphs that are listed in the article are clearly showing the increase. 2018 had lower prices than anything in 2020

Timing belt

Cyrus wrote: »

you are ignoring the opportunity cost of investing the 400k into equities, bonds, gold, any other asset class.

also gross yield is a nonsense, a landlord in that scenario will be paying 40-50% of that income in tax.

equities, bonds, gold will all have different risk profiles and premiums built into the yield that you need to take into account.

Cyrus

Timing belt wrote: »

equities, bonds, gold will all have different risk profiles and premiums built into the yield that you need to take into account.

sure, but what im saying is the decision isnt buy a property or leave it sit in a bank account earning no interest.

Timing belt

Cyrus wrote: »

sure, but what im saying is the decision isnt buy a property or leave it sit in a bank account earning no interest.

Yes you are correct but if you compared it to a asset that would have a similar risk profile such as an investment in REIT then you get a better picture on risk premiums of a BTL for a tenant not paying etc.

random_banter

Mad_maxx wrote: »

market is on fire , my sister and her husband outbid on a four bedroom refurbished house in Dublin 8 , they bowed out at 740 k

Was it this one by any chance? https://www.myhome.ie/residential/brochure/294-south-circular-road-dublin-8-d08-py9r/4475288

South Dublin is an absolute hellscape to be seeking in at the moment. We started looking a year ago and it's got worse and worse. We believe sellers of family sized homes are holding back until the pandemic is a little more settled. There is very little of good condition on the market and a high proportion of executor sales as those who have passed are the only ones wanting to put their home on the market right now!

So bidding wars from desperate people such as ourselves ensue.

Viewed a property in Dundrum at the weekend which was already over asking. Same type and size of house with similar condition was going for 560/570 at the peak in 2018 and already over 600k now, expect it to go to 620. We call it the pandemic premium.

Many will say these are just anecdotal stories but they are becoming increasingly common, and data is always much later to follow. I've been tracking 100 homes up till now which have been on the market, I have asking prices for and I'm checking on PPR as they go up. Will be interesting when I have more data so see if we are proven right.

Xoo2

random_banter wrote: »

Was it this one by any chance?

South Dublin is an absolute hellscape to be seeking in at the moment. We started looking a year ago and it's got worse and worse. We believe sellers of family sized homes are holding back until the pandemic is a little more settled. There is very little of good condition on the market and a high proportion of executor sales as those who have passed are the only ones wanting to put their home on the market right now!

So bidding wars from desperate people such as ourselves ensue.

Viewed a property in Dundrum at the weekend which was already over asking. Same type and size of house with similar condition was going for 560/570 at the peak in 2018 and already over 600k now, expect it to go to 620. We call it the pandemic premium.

Many will say these are just anecdotal stories but they are becoming increasingly common, and data is always much later to follow. I've been tracking 100 homes up till now which have been on the market, I have asking prices for and I'm checking on PPR as they go up. Will be interesting when I have more data so see if we are proven right.

Anecdotally I've observed the same but is there quite a simple explanation about house completions in the last year? I don't have the figures but I heard we need 35,000 / year to meet demand, but only 20,000 were completed last year. A lot of apartments in that number too, which makes it harder for folks like myself looking for a family home. If this continues again in 2021 does that mean further increases are on the cards? Ugh.

Zenify

https://youtu.be/z09OB9pxTWA

This is a FT video asking the question if there is a stock market bubble?

I hope people can see how this is relevant to property.

JimmyVik

Zenify wrote: »

https://youtu.be/z09OB9pxTWA

This is a FT video asking the question if there is a stock market bubble?

I hope people can see how this is relevant to property.

Probably relevant in the same way that nobody here is retired to the Bahamas yet from their guesses on property or the stock market.
Anyone can make a video and anyone can post a link to a video to confirm just about anything. I like the Elvis is alive ones myself

Moving!

random_banter wrote: »

Was it this one by any chance? https://www.myhome.ie/residential/brochure/294-south-circular-road-dublin-8-d08-py9r/4475288

South Dublin is an absolute hellscape to be seeking in at the moment. We started looking a year ago and it's got worse and worse. We believe sellers of family sized homes are holding back until the pandemic is a little more settled. There is very little of good condition on the market and a high proportion of executor sales as those who have passed are the only ones wanting to put their home on the market right now!

So bidding wars from desperate people such as ourselves ensue.

Viewed a property in Dundrum at the weekend which was already over asking. Same type and size of house with similar condition was going for 560/570 at the peak in 2018 and already over 600k now, expect it to go to 620. We call it the pandemic premium.

Many will say these are just anecdotal stories but they are becoming increasingly common, and data is always much later to follow. I've been tracking 100 homes up till now which have been on the market, I have asking prices for and I'm checking on PPR as they go up. Will be interesting when I have more data so see if we are proven right.

Was the one you viewed in Dundrum on Barton Rd East? We were looking at that - had gone sale agreed at €584k late last summer and then sale fell through recently. Last I heard, it was at €610k on Friday...
That's symptomatic of everything I have seen over the last few months.

Timing belt

Zenify wrote: »

https://youtu.be/z09OB9pxTWA

This is a FT video asking the question if there is a stock market bubble?

I hope people can see how this is relevant to property.

Good Video and good explanation that Inflation could be the trigger to bring down the house of cards for all asset classes including property.

JimmyVik

Timing belt wrote: »

Good Video and good explanation that Inflation could be the trigger to bring down the house of cards for all asset classes including property.

You got that out of a 3 minute video
Dont know why people spend lifetimes and billions of euro trying to figure that stuff out

Marius34

Zenify wrote: »

https://youtu.be/z09OB9pxTWA

This is a FT video asking the question if there is a stock market bubble?

I hope people can see how this is relevant to property.

I have to agree with this video.
In my 18 years time of investing in stock market, it's the first time I would call current stock market as a Bubble (mainly Tech).
I had the same opinion in 2006 around the Property market. Today I definitely would not call Irish residential Property in Bubble, although if stock crash it would have impact on Property, but by far lower impact than it was in in 2008 crisis Bubble.
Will be closely watching stock market this year.

Villa05

JimmyVik wrote:

You got that out of a 3 minute video Dont know why people spend lifetimes and billions of euro trying to figure that stuff out

The vast majority of people don't care or are disinterested in the stock market. This video helps people to understand the risks and dangers.

Sometimes the logic is simple

SmokyMo

There will be a lot of unfortunate people who will spend the rest of their lives repaying massive mortgages on properties that dont worth that.

fliball123

SmokyMo wrote: »

There will be a lot of unfortunate people who will spend the rest of their lives repaying massive mortgages on properties that dont worth that.

and others will spend their lives paying rent as they did not buy.