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

JimmyVik

PropQueries wrote: »

Ok, according to the RTB, the number of registered private landlords in Q3 2020 was 166,615 and in Q3 2017, it was 176,251, so a fall of c. 20,000 over 3 years.


Isn't it a real possibility that the investors who purchased properties between 2012 and 2014 to avail of the CGT tax exemption from 2018 onwards (i.e. they can now sell without paying CGT) are now a significant percentage of these sellers? i.e. it's not the "unfair" tax system, but more due to cashing in their profits from their investments during 2012 and 2014.

It is possible. Also councils and REITS might be buying them, therefore keeping them in the rental market.

And yet the supply of properties to rent has dwindled.
Remember also that the RTB arent averse to hiding the real figures on the number of landlords leaving the market. They have form.

Browney7

JimmyVik wrote: »

There is no investment that is more risky than being a private landlord in Ireland.


I had about €100k ready to invest 3 years ago.
I wanted to invest it in an investment property in Ireland.
While i did my research I left it in ETFs. S&P and world UCITS. I probably could have found a more tax efficient way to invest it, but that was nice and easy.
Anyway I couldnt make the risk/reward on residential property work for me so i left it there. I am glad now that it worked out that way.

Were you adding leverage to your initial 100k and didn't you assess the risk of borrowing a similar level of cash with your 100k to add to the equity market investment for your comparison?

As a rough Proxy, IRES REIT is roughly flat from this time three years ago with a 4% gross div p.a. yield or so over that time. Eurostoxx 50 is also flat with a lower dividend yield whilst S&P 500 is up about 35% (adjusted for currency) before dividends. A lot of that S&P growth driven by FAANG and tech stocks over the past nine months.

Nice gain on your S&P 500

hometruths

PropQueries wrote: »

Ok, according to the RTB, the number of registered private landlords in Q3 2020 was 166,615 and in Q3 2017, it was 176,251, so a fall of c. 20,000 over 3 years.


Isn't it a real possibility that the investors who purchased properties between 2012 and 2014 to avail of the CGT tax exemption from 2018 onwards (i.e. they can now sell without paying CGT) are now a significant percentage of these sellers? i.e. it's not the "unfair" tax system, but more due to cashing in their profits from their investments during 2012 and 2014.

Undoubtedly the CGT exemption played a part but not the only thing. Eoin Ó Broin:

He said: "For about 20 years, every single year, the total number of rental tenancies registered with the Rental Tenancies Board [RTB] increased right up until 2016 — partly because there were tax breaks during the Celtic Tiger era.

"What happened literally from quarter one of 2017, every single quarter since then — 2017, 2018, 2019, and 2020 — has seen a loss of tenancies."

Literally from Q1 2017? What happened in Q4 2016 so?

RPZs were introduced in Q4 2016.

JimmyVik

MacronvFrugals wrote: »

Darragh O'Brien: Ambitious aims and imaginative solutions can solve housing woes

Darragh O Brien in the Examiner this morning speaking to the 18/35s demo - https://www.irishexaminer.com/opinion/commentanalysis/arid-40212971.html



The increase in the average age of buying a home from 26 in 1991 to 35 today reflects the much harder path that young people must travel to own their own place.

This is a demographic financial time-bomb when these households retire and need state support for their rent.

The political implications of the age divide can be seen in a more profound crisis of democratic legitimacy.

Wasnt it on FFs watch that the push to make it the norm for two people to be working to afford a house was made. What did they think was going to happen to prices? Oh of course , they knew.

The blame is totally with FF if you ask me.

JimmyVik

Browney7 wrote: »

Were you adding leverage to your initial 100k and didn't you assess the risk of borrowing a similar level of cash with your 100k to add to the equity market investment for your comparison?

As a rough Proxy, IRES REIT is roughly flat from this time three years ago with a 4% gross div p.a. yield or so over that time. Eurostoxx 50 is also flat with a lower dividend yield whilst S&P 500 is up about 35% (adjusted for currency) before dividends. A lot of that S&P growth driven by FAANG and tech stocks over the past nine months.

Nice gain on your S&P 500

Leverage? And you want to talk about risk?
You go do that. Make yourself rich if you think its so easy.

Browney7

JimmyVik wrote: »

Wasnt it on FFs watch that the push to make it the norm for two people to be working to afford a house was made. What did they think was going to happen to prices? Oh of course , they knew.

The blame is totally with FF if you ask me.

One man's blame is another man's credit.

I thought from the talk on this forum is it's Sinn Féin's fault for the high prices and high rents and housing shortage. Plenty blame to go round these days!

Browney7

JimmyVik wrote: »

Leverage? And you want to talk about risk?
You go do that. Make yourself rich if you think its so easy.

You stated "there is no investment riskier than being a private landlord". Was that a 100k apartment on a standalone property with no loan or a 100k deposit with a 200k loan. It's unfair to compare a leveraged investment with an unleveraged one.

JimmyVik

Browney7 wrote: »

One man's blame is another man's credit.

I thought from the talk on this forum is it's Sinn Féin's fault for the high prices and high rents and housing shortage. Plenty blame to go round these days!

Well you can only blame the ones who had the power to enact it.
SF, while they talk a lot, can only do damage if they are in government.
FF however, are the masters of the destruction of the property market in Ireland. FG destroyed the rental market.

PropQueries

How do people believe this may impact the manufacturing FDI jobs in Ireland going forward and hence the demand for future housing in the areas where these facilities are currently operating from? For example, would it also apply to pharma supplies which would impact future housing demand in rural areas more so than Dublin?

According to the FT today:

"Biden set for ‘buy American’ push to boost domestic manufacturing.

US president Joe Biden is set to tighten “buy American” provisions as part of a push to boost domestic manufacturing, in a move that risks straining relations with key US allies.

Mr Biden is on Monday expected to order an increase in domestic content requirements for federal procurement contracts, following a campaign pledge to boost the US manufacturing industry as he aimed to outflank Donald Trump in key swing states.

Administration officials said Mr Biden would also reiterate his support for the Jones Act, which requires goods shipped within the US to be transported on American vessels."

You can read the article in the FT here: https://www.ft.com/content/5cb92834-ddba-4d34-ab8d-cbf11305a888

JimmyVik

PropQueries wrote: »

How do people believe this may impact the manufacturing FDI jobs in Ireland going forward and hence the demand for future housing in the areas where these facilities are currently operating from? For example, would it also apply to pharma supplies which would impact future housing demand in rural areas more so than Dublin?

According to the FT today:

"Biden set for ‘buy American’ push to boost domestic manufacturing.

US president Joe Biden is set to tighten “buy American” provisions as part of a push to boost domestic manufacturing, in a move that risks straining relations with key US allies.

Mr Biden is on Monday expected to order an increase in domestic content requirements for federal procurement contracts, following a campaign pledge to boost the US manufacturing industry as he aimed to outflank Donald Trump in key swing states.

Administration officials said Mr Biden would also reiterate his support for the Jones Act, which requires goods shipped within the US to be transported on American vessels."

You can read the article in the FT here: https://www.ft.com/content/5cb92834-ddba-4d34-ab8d-cbf11305a888

This kind of think happens with every election in the US. At the end of the day, nothing changes in Ireland that isnt related to the government interfering with the property market.
They are the single biggest force acting on it. Anything else doesnt really change. Even Brexit I think will have little impact on the property market.
And I think COVID-19 has a big impact on it now, I think that ompact will go away , with the virus.
Then its steady as she goes, until the next hair brained domestic rocket up the hole of the irish market.

JimmyVik

Browney7 wrote: »

You stated "there is no investment riskier than being a private landlord". Was that a 100k apartment on a standalone property with no loan or a 100k deposit with a 200k loan. It's unfair to compare a leveraged investment with an unleveraged one.

Just for a thought experiment.
Say I was to take out €100k of it now and invest that in property.
How do you think I should invest it in property? What would the risks and what do you believe I could expect to make from it?

Villa05

Graham wrote:

Given the volumes of landlords leaving the markets that doesn't appear to be a significant enough motivator to stay in the market.

Maybe with the tax rate on private LL, they may choose to have a close family member use the house and resume renting whem they are retired

Graham wrote:

Aren't most REITs looking for steady cashflow rather than increased share price / underlying asset value?

Are vulture funds more prevelant than reits, contrasting business models. Also Irish Reits may deviate from traditional business models


Anyone got data on the number of ll/tennant disputes instigated by LL to get a rough measure of the problem

Hubertj

JimmyVik wrote: »

This kind of think happens with every election in the US. At the end of the day, nothing changes in Ireland that isnt related to the government interfering with the property market.
They are the single biggest force acting on it. Anything else doesnt really change. Even Brexit I think will have little impact on the property market.
And I think COVID-19 has a big impact on it now, I think that ompact will go away , with the virus.
Then its steady as she goes, until the next hair brained domestic rocket up the hole of the irish market.

Medtronic CEO commmented on this last year when trumped started on about it. Essentially they said for complex manufacturing processes only a simpleton would suggest all production could be moved back to the US. They are generally part of a global supply chain. Depending on the industry there could be risks in Ireland but I don’t know what they might be. There were discussions in the past as to why Nissan produces cars in Mexico etc...

Graham

schmittel wrote: »

What EA is getting 2/3?

I vaguely recall it was Sherry Fitz who said two thirds of their listings are landlords selling up but can't find the article. It was discussed earlier in the thread.

Similar commentary from another agent but with an even higher proportion:

Not surprisingly then that landlords selling up accounted for 78pc of the sales of estate agent Owen Reilly through the last 12 months.

Does go on to suggest some investors are coming back slowly.

Mic 1972

CorkRed93 wrote: »

"With the supply of properties for sale at a record low and robust demand, we now expect prices to grow this year by 4pc, a significant change from our previous estimate of -2pc"


https://www.independent.ie/business/irish/recovery-in-consumer-spending-will-be-swift-40005813.html

it doesn't come as a surprise to me.
prices were already increasing before, but now they are crazy

Reins

Graham wrote: »

I vaguely recall it was Sherry Fitz who said two thirds of their listings are landlords selling up but can't find the article. It was discussed earlier in the thread.

Similar commentary from another agent but with an even higher proportion:



Does go on to suggest some investors are coming back slowly.

https://www.businesspost.ie/houses/rents-set-to-rise-again-as-increasing-numbers-of-landlords-sell-up-a9def7e0

It says a third of its sales

Balluba

Mic 1972 wrote: »

it doesn't come as a surprise to me.
prices were already increasing before, but now they are crazy

Mic what goes up eventually comes down so I will just bide my time and not bid on houses recklessly

Graham

Reins wrote: »

https://www.businesspost.ie/houses/rents-set-to-rise-again-as-increasing-numbers-of-landlords-sell-up-a9def7e0

It says a third of its sales

Thanks, Reins. I stand corrected.

So we have one EA saying a third and and another over three-quarters.

It doesn't take much to work out it's not good for renters and it demonstrates that ex-rentals are returning to the market.

Reins

Graham wrote: »

Thanks, Reins. I stand corrected.

So we have one EA saying a third and and another over three-quarters.

It doesn't take much to work out it's not good for renters and it demonstrates that ex-rentals are returning to the market.

Doesn't Owen Reilly mainly deal with city centre properties? So not surprised to hear it's over three - quarters

Graham

Makes sense, highest density of rentals and STL properties, both of which an EA is likely to classify as ex-rental.

PropQueries

Mic 1972 wrote: »

it doesn't come as a surprise to me.
prices were already increasing before, but now they are crazy

My understanding was that prices (in Dublin anyway) had flat-lined or were falling since c. 2018 up to year end 2019?

random_banter

Balluba wrote: »

Mic what goes up eventually comes down so I will just bide my time and not bid on houses recklessly

My understanding was that prices (in Dublin anyway) had flat-lined or were falling since c. 2018 up to year end 2019?

On these two things. My understanding also is that the peak was c. 2018 and were plateaued/falling in 2019.

As a buyer in South Dublin, I can see reckless bidding happening now on very little stock and stock that's inferior to what could be got for similar prices at the peak in 2018. As an example, a property for sale in Dundrum at the moment which is just a minute's walk from one that sold in 2018 for a certain price, but is smaller, in much worse condition and has a north facing vs. south facing garden is now at bids higher than the final selling price of the one I mentioned in 2018 (which was a supposed peak).

The difference, as I see it, is the Pandemic - causing hesitation from sellers, who aren't putting properties on the market in the same numbers, and hence causing a lack of supply, which is again making them hesitant. Why decide to trade up and put your property on sale when there aren't many decent quality properties on the market for you to buy? And then you have those who feel they need to buy now, are putting in desperate bids on ever decreasing stock (mostly executor sales coming up at the moment). It's a pandemic-premium.

We have been trying for a year and now have accepted that until the situation is more stable, and there are more people selling, we've no interest in bidding over the odds for properties which were going for 50-70k less in 2018/19. But we have the luxury of waiting a while longer which not everybody does.

My experience comes from trying to buy in South Dublin, which I acknowledge can experience different conditions than other parts of the country.

Caveat: Obviously this is all anecdotal but the PPR will tell us the tale in time.

combat14

PropQueries wrote: »

If they cut rents (real or perceived), the value of all their property investments falls so it wouldn’t benefit them either way IMO

Rent of €20,000 at 3,5% yield values the property at c. €600k

Rent of €15,000 at 3.5% yield values the property at c. €400k

They could lose c. €200k just by lowering the rent by €5k.

They really are better off keeping them vacant and pretending they’re worth something, in the short-term at least.

Unless there’s a very real upfront cost to keeping them vacant I.e. a vacant property tax

the trouble is if rental yield is 6.64% which apparently is average rental yield here -

According to the Business Insider, Ireland is the eighth best country to invest in rental property, with an average rental yield of 6.64%

https://www.4property.com/top-rental-yields-in-dublin/#:~:text=According%20to%20the%20Business%20Insider,average%20rental%20yield%20of%206.64%25.

aforementionned properties are worth a lot less at same rents:


Rent of €20,000 at 6,64% yield values the property at c. €300k

Rent of €15,000 at 6.64% yield values the property at c. €225k


but maybe everyone is happier with lower yields in current risk free environment

PropQueries

combat14 wrote: »

the trouble is if rental yield is 6.64% which apparently is average rental yield here -

According to the Business Insider, Ireland is the eighth best country to invest in rental property, with an average rental yield of 6.64%

https://www.4property.com/top-rental-yields-in-dublin/#:~:text=According%20to%20the%20Business%20Insider,average%20rental%20yield%20of%206.64%25.

aforementionned properties are worth a lot less at same rents:


Rent of €20,000 at 6,64% yield values the property at c. €300k

Rent of €15,000 at 6.64% yield values the property at c. €225k


but maybe everyone is happier with lower yields in current risk free environment

Thanks for that.


It's just a few posters were stating that the yield accepted by these large funds was much lower than the yield acceptable to the small BTL landlord. Made sense given the amount of money flowing their way.


But, apparently the funds are achieving near enough the same yield as the small BTL landlord which means there's no incentive for either to be leaving the market at the moment unless they believe both rents and property values will collapse in the near future.



Ires Reit's Gross Yield in 2020 was 5.7%.


Link here: https://investorrelations.iresreit.ie/sites/ires-ir/files/reports-presentation/presentations/interim-results-2020.pdf

Timing belt

PropQueries wrote: »

Thanks for that.


It's just a few posters were stating that the yield accepted by these large funds was much lower than the yield acceptable to the small BTL landlord. Made sense given the amount of money flowing their way.


But, apparently the funds are achieving near enough the same yield as the small BTL landlord which means there's no incentive for either to be leaving the market at the moment unless they believe both rents and property values will collapse in the near future.



Ires Reit's Gross Yield in 2020 was 5.7%.


Link here: https://investorrelations.iresreit.ie/sites/ires-ir/files/reports-presentation/presentations/interim-results-2020.pdf

The point I have been making is that institutional investors will pile in to property with yields like that which will push up prices and push yields lower.

Villa05

Timing belt wrote:

The point I have been making is that institutional investors will pile in to property with yields like that which will push up prices and push yields lower.

How is the yield calculated, does it include properties they have paid for and left empty

Timing belt

Villa05 wrote: »

How is the yield calculated, does it include properties they have paid for and left empty

It is the return on the investment.... so if they are leaving places empty then they will have a lower yield.

combat14

PropQueries wrote: »

Thanks for that.


It's just a few posters were stating that the yield accepted by these large funds was much lower than the yield acceptable to the small BTL landlord. Made sense given the amount of money flowing their way.


But, apparently the funds are achieving near enough the same yield as the small BTL landlord which means there's no incentive for either to be leaving the market at the moment unless they believe both rents and property values will collapse in the near future.



Ires Reit's Gross Yield in 2020 was 5.7%.


Link here: https://investorrelations.iresreit.ie/sites/ires-ir/files/reports-presentation/presentations/interim-results-2020.pdf

also most regular landlords have to pay proper taxes perhaps higher paye, prsi, maybe usc rates

reits probably avail of corporate tax rate so can accept lower yield if that makes any sens

Graham

PropQueries wrote: »

apparently the funds are achieving near enough the same yield as the small BTL landlord which means there's no incentive for either to be leaving the market at the moment unless they believe both rents and property values will collapse in the near future.

Yet the small BTL landlords are leaving in droves and the REITS appear quite happy to stay where they are.

Something else driving out the small BTL investors?

PropQueries

Graham wrote: »

Yet the small BTL landlords are leaving in droves and the REITS appear quite happy to stay where they are.

Something else driving out the small BTL investors?

You're right. The fact that the investors who purchased their investment properties between 2012 and 2014 can now sell then without incurring CGT