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

hometruths

Timing belt wrote: »

It's a solid investment for institutional investors as it has a high yield with minimal risk.

I don't see institutional investors selling existing properties in a low interest rate environment as they will not be able to find a similar risk free asset with a better yield. If anything I think we will see a lot more of investments from institutional investors as they chase yield.

Of course if institutional investors think Irish property is a risk free asset they will carry on hoovering it up. I'd be very surprised if they share your view of risk though!

To have an impact, they don't actually need to start selling - if they stop buying, it will have a significant impact.

yagan

fliball123 wrote: »

And if more people/Reits/companies see Irish rentals as a good investment with a solid ROI more properties may be bought for rent. People still have to live some where and before 2020 (which we can all agree is an anomaly due to corona) we had a fairly hefty net inward immigration into Ireland and our births have been out pacing deaths for the last 100 years. People still need to live somewhere.

I remember a builder in 2006 telling me that we needed to build more houses for the people coming to build houses.

The investor model is prone to bubbles too.

Hubertj

schmittel wrote: »

Of course if institutional investors think Irish property is a risk free asset they will carry on hoovering it up. I'd be very surprised if they share your view of risk though!

To have an impact, they don't actually need to start selling - if they stop buying, it will have a significant impact.

Will it though? Do we know if FTBers can afford at current market prices if they have the opportunity to purchase? Does industry provide stats on average value and number of mortgages approved / drawn down? Compare to prices of new builds? Seems to be a lot of stories (everyone loves anecdotes) about FTBers not being able to buy.

fliball123

yagan wrote: »

I remember a builder in 2006 telling me that we needed to build more houses for the people coming to build houses.

The investor model is prone to bubbles too.

Well the fact that you can give your property to the state for anywhere between 10 and 25 years and you get a guaranteed 85% of the current rent benchmarked against private rentals of the same style and location then add in any interest on the mortgage can 100% be written off in tax. The state also has an obligation to give the property back to you the way you gave it to them. This is the definition of a high yield and very low risk bet. The only thing that would stop this is Ireland Inc going bust and I cannot see that happening while we are in the EU. This is not bursting anytime soon.

ongarite

Report on 2020 from Davy/MyHome.

Too much cash chasing too few homes with house prices up nationally.
As mentioned previously on the thread, those looking to buy had jobs which were not affected by COVID.

https://www.rte.ie/news/business/2021/0105/1187730-myhomeie-house-prices-report/

The report said that prospective home-buyers have largely been insulated from job losses, while Government supports have protected incomes and removed the risk of forced selling.

It also noted that mortgage lending hit a new cycle high of €1.1 billion in October, adding that housing supply issues have become more acute with too much cash chasing too few homes.

Conall MacCoille, chief economist at Davy, said that house price increases were now likely in 2021.

As we head into 2021, homebuyers have saved additional funds to purchase homes, with sentiment helped by the likely recovery in the economy as vaccines are disbursed. Given that homebuilding will remain impaired, with banks seeking lending opportunities, too much cash is chasing too few homes - which can only push prices higher," the economist added.

yagan

fliball123 wrote: »

Well the fact that you can give your property to the state for anywhere between 10 and 25 years and you get a guaranteed 85% of the current rent benchmarked against private rentals of the same style and location then add in any interest on the mortgage can 100% be written off in tax. The state also has an obligation to give the property back to you the way you gave it to them. This is the definition of a high yield and very low risk bet. The only thing that would stop this is Ireland Inc going bust and I cannot see that happening while we are in the EU. This is not bursting anytime soon.

Are you sure? Projects hitting the market now were commissioned five years ago and the volume of new projects ballooned over the same period.

I'm hearing a few big sites that were at foundation level when Covid hit have been mottballed since. Not exactly a sign of confidence in the short to medium term.

Then there's the massive amount of apartment units that have sought retrospective planning permission to switch from student accommodation to long term letting.

fliball123

yagan wrote: »

Are you sure? Projects hitting the market now were commissioned five years ago and the volume of new projects ballooned over the same period.

I'm hearing a few big sites that were at foundation level when Covid hit have been mottballed since. Not exactly a sign of confidence in the short to medium term.

Then there's the massive amount of apartment units that have sought retrospective planning permission to switch from student accommodation to long term letting.

No as I say I cant see the rental side of the market going off a cliff anytime soon the state are actively now competing with buyers to buy property and as I said they have a scheme in place for people with rentals at 85% of the going market rate. Why would you sell with such a state backed guaranteed ROI .. Would the fact that sites being mothballed not mean even less supply and therefor worsening the problem with suitable accommodation for the countries current population? As for building the government are doing everything it can to get developers building. Do you not think developers will have dollar signs in their eyes when the government announced the 30% of the mortgage from the government scheme..

Tea drinker

bubblypop wrote: »

That's a little OTT.
Crime happens everywhere

Crime is usually reported, the MSM ignored this.
The police were unable or unwilling to respond. This means the issues will not get dealt with and racist attacks (documented occouring before any shooting) will continue. Same thing happens in France after attacks on Jewish community, they left. Its a well worn predictable path. There's also no recourse for home sellers to recover lost value from the state.

Villa05

combat14 wrote:

look what is trotted out just when the country is about to go into 2 months hibernation and car dealers are stating that car sales are at recession levels despite bumper savings this year..

ongarite wrote:

Report on 2020 from Davy/MyHome.

ongarite wrote:

Too much cash chasing too few homes with house prices up nationally. As mentioned previously on the thread, those looking to buy had jobs which were not affected by COVID.

I suppose this is confirmation that Government policy is the biggest contributing factor to the affordability crisis.
We are marching head first into national bankruptcy entirely self inflicted by our politicians from a position of extreme strength to solve so many different issues

Depressing start to the year on so many levels

Well done FF/FG/Greens

yagan

fliball123 wrote: »

No as I say I cant see the rental side of the market going off a cliff anytime soon the state are actively now competing with buyers to buy property and as I said they have a scheme in place for people with rentals at 85% of the going market rate. Why would you sell with such a state backed guaranteed ROI .. Would the fact that sites being mothballed not mean even less supply and therefor worsening the problem with suitable accommodation for the countries current population? As for building the government are doing everything it can to get developers building. Do you not think developers will have dollar signs in their eyes when the government announced the 30% of the mortgage from the government scheme..

I was going to add that mott balling could be brought back into play later, but in reality developers aren't set up like speculators in this investor driven market. They need to offload and they don't have Irish banks rolling over their debt like from 06 onwards.

Anyway yields are heading south this year and building has continued on more supply to the market.

fliball123

Villa05 wrote: »

I suppose this is confirmation that Government policy is the biggest contributing factor to the affordability crisis.
We are marching head first into national bankruptcy entirely self inflicted by our politicians from a position of extreme strength to solve so many different issues

Depressing start to the year on so many levels

Well done FF/FG/Greens

First off where are you getting we are going bankrupt we borrowed 8/9 times as much 10/12 years ago and we didnt go bankrupt.

Also where are you getting the idea that property is not affordable. If you take the average wage in Ireland is about 39k and the average house price in Ireland is 267k. Now do the math of a couple on the average wage buying a house at the average price. . The average house price in the country is 267k is affordable 3.5 times 78k (couple) is 273k and then add in 10% for your deposit. Also other countries like America, France, the UK and a lot of other EU countries allow 5 times your salary.

I dont know where your getting that it is unaffordable. I know people will say but not everyone can afford 267k but in the example above both the property and wage are at the average and while we have people on less than the average wage we also have housing for less than the average house price.

fliball123

yagan wrote: »

I was going to add that mott balling could be brought back into play later, but in reality developers aren't set up like speculators in this investor driven market. They need to offload and they don't have Irish banks rolling over their debt like from 06 onwards.

Anyway yields are heading south this year and building has continued on more supply to the market.

Of course they headed south this year we had absolutely no tourism no influx of foreigners like the the preceding 5 years and no students. If your basing your outcome for rentals on 2020 when Corona more or less stopped international travel as well as protecting tenants in their rented accommodation (meaning very few people were on the move as some could stay there rent free) then your way off base. What your trying to convey is that if and when corona is no longer an issue ( which will be this year with the vaccine) is that tourists and students as well as our immigration inwards into Ireland will not continue. Is this what you think will happen?

yagan

fliball123 wrote: »

Of course they headed south this year we had absolutely no tourism no influx of foreigners like the the preceding 5 years and no students. If your basing your outcome for rentals on 2020 when Corona more or less stopped international travel as well as proptecting tenants in their rented accomadation (meaning very few people were on the move) then your way off base. What your trying to convey is that if and when corona is no longer an issue ( which will be this year with the vaccine) is that tourists and students as well as our immigration inwards into Ireland will not continue. Is this what you think will happen?

No.

But now that you mention it remember the roadmap for reopening the economy last summer? Truth is no one knows how Covid will affect the market, but I am positive that before covid that conveyor belt of supply was starting to meet demand.

I was working in the commissioning phase of development and this year was already slated to be peak crane in the skyline. The front end of the business is gone because there's enough in the pipeline already. It feels very similar to 06.

Sure there's more cash sloshing around to drive up asking prices, but overall sales for the year are down according to the PPR, same as happened in 06/07.

TheW1zard

My neighbours house is up for rent..
Our mortgage =1150
Neighbours rent =2940

Crazy

fliball123

yagan wrote: »

No.

But now that you mention it remember the roadmap for reopening the economy last summer? Truth is no one knows how Covid will affect the market, but I am positive that before covid that conveyor belt of supply was starting to meet demand.

I was working in the commissioning phase of development and this year was already slated to be peak crane in the skyline. The front end of the business is gone because there's enough in the pipeline already. It feels very similar to 06.

Sure there's more cash sloshing around to drive up asking prices, but overall sales for the year are down according to the PPR, same as happened in 06/07.

Covid vaccines are being given out as I type. Covid will be stop being an issue by the end of this year. Once again of course sales are down due to Coivd in 2020 sure when you think of all the moving parts of a property purchase.

Someone has to sell
Someone has to buy
Solicitor
Bank
Surveyor

The last 3 of these were severely hit by covid and it will be interesting to get the mean time it took for someone buying a property from start to finish you can bet that it was a lot longer in 2020 than in previous years. Throw in that people who were put on PUP were more or less barred from the market as well for the majority of 2020 as well.

As for the money sloshing around over 20 billion extra in irish bank accounts in 2020. Thats a lot of dosh to slosh. This will also continue as the main driver of the savings was working from home which will continue to be the norm instead of the exception for a lot of companies.

Regardless of the pipeline we currently have not got enough suitable accommodation to house our current population and if immigration inwards comes back to 2015 - 2019 levels then we are going to need a hell of a lot more new builds

Marius34

yagan wrote: »

No.

But now that you mention it remember the roadmap for reopening the economy last summer? Truth is no one knows how Covid will affect the market, but I am positive that before covid that conveyor belt of supply was starting to meet demand.

I was working in the commissioning phase of development and this year was already slated to be peak crane in the skyline. The front end of the business is gone because there's enough in the pipeline already. It feels very similar to 06.

Sure there's more cash sloshing around to drive up asking prices, but overall sales for the year are down according to the PPR, same as happened in 06/07.

It may feel to you, but it's not a case.
Have you seen new mortgage approvals, its recovering at very speedy pace, nothing like 2008. Sales for 2020 may have been down, but 2021 sales likely to be up, if there are sufficient supplies, for people to buy properties.

yagan

Marius34 wrote: »

It may feel to you, but it's not a case.
Have you seen new mortgage approvals, its recovering at very speedy pace, nothing like 2008. Sales for 2020 may have been down, but 2021 sales likely to be up, if there are sufficient supplies, for people to buy properties.

I suppose in making any comparison to 06/07 I set myself as saying there'll be an exact repeat. There won't, but there are similar obvious dynamics.

The multinational worker was, aside from the bailout tax, unaffected by the Bertie bubble bursting and that's the same now in a lot of industries that's have trucked through this pandemic.

I read somewhere else that the vast majority of the PUP recipients were in sectors like hospitality that are in the lowest taxable bracket, so the middle earners appear for the most part to continue on.

Other factors to consider is Covid's impact on the international student accommodation model, and we still don't know when and by what degree tourism will return. Many americans for instance might face travel insurance bills that make staying at home the wiser option.

fliball123

yagan wrote: »

I suppose in making any comparison to 06/07 I set myself as saying there'll be an exact repeat. There won't, but there are similar obvious dynamics.

The multinational worker was, aside from the bailout tax, unaffected by the Bertie bubble bursting and that's the same now in a lot of industries that's have trucked through this pandemic.

I read somewhere else that the vast majority of the PUP recipients were in sectors like hospitality that are in the lowest taxable bracket, so the middle earners appear for the most part to continue on.

Other factors to consider is Covid's impact on the international student accommodation model, and we still don't know when and by what degree tourism will return. Many americans for instance might face travel insurance bills that make staying at home the wiser option.

You should consider the factors that are different than 08

Lack of suitable housing now in 08 there were plenty of houses for sale and the building of new housing was rampant even leading to ghost estates the same cannot be said for 2020

In 08 we had a net minus figure when it came to immigration and now we have a very big plus when it comes to immigration. This will return to the norm after corona has gone and these people need somewhere to live

Our population has gone up by 500k since 08 and the housing stock has increased by less than 100k. These people all need somewhere to live

In 08 we had a lot more private debt and less savings than today

In 08 the vast majority of sales within property were people looking to live in the property with the a small portion for buy to let. Fast forward 2020 and the same people looking to buy now have to compete in a global market as in REITS and other companies both foreign and domestic coming in and buying property not to mention the government hoovering up property as well. The rental yeild on Irish property is still very high and with an option of getting your return state backed

In 08 we had 110% mortgages and other silly lending practices that left the banks wide open for trouble when a downturn came. The same can not be said now the ECB put in the 80/20 rule and 3.5 your income so when the downturn came (last year and the start of this with corona) banks didn't even blink


As for toursim returning if you ask your self hand on heart that if covid simply disappeared tomorrow would you go abroad for a holiday this year. I would hazard a guess that well over 90% of Irish people in fact a very high % of the world population would go abroad from their home (no stats on this just judging by friends , relatives both here and in other countries who are desperate to get away for a holiday break)

As for students coming here with brexit signed and sealed we are now the only English speaking country in the EU this is a really big draw for students coming from the BRIC countries. There are stats out there about the amount of Brazilian, Russian, Chinese students and immigrants who are her in Ireland on an English speaking course Visa. Sure all you have to do now is walk around Dublin inner city D1, D2, D7 and D8 and a very high % of people talk without an Irish accent.

They are just some of the differences between 08 and 2020 I know the phrase this time its different is bandied about but This time it is different.

Dav010

https://www.rte.ie/news/business/2021/0105/1187730-myhomeie-house-prices-report/

Timing belt

fliball123 wrote: »

First off where are you getting we are going bankrupt we borrowed 8/9 times as much 10/12 years ago and we didnt go bankrupt.

Also where are you getting the idea that property is not affordable. If you take the average wage in Ireland is about 39k and the average house price in Ireland is 267k. Now do the math of a couple on the average wage buying a house at the average price. . The average house price in the country is 267k is affordable 3.5 times 78k (couple) is 273k and then add in 10% for your deposit. Also other countries like America, France, the UK and a lot of other EU countries allow 5 times your salary.

I dont know where your getting that it is unaffordable. I know people will say but not everyone can afford 267k but in the example above both the property and wage are at the average and while we have people on less than the average wage we also have housing for less than the average house price.

According to the central bank there is no over valuation of property in the Irish property market.

Looks like construction sites may be restricted soon.

https://twitter.com/VirginMediaNews/status/1346448163830435841

yagan

fliball123 wrote: »

They are just some of the differences between 08 and 2020 I know the phrase this time its different is bandied about but This time it is different.

I agree it different, it's a market disruptor so as there's no clear way to predict a long term trend.

However we're in the EU and we will not be letting in any students until the Pandemic is officially declared over, and with so many new variants popping up there's no guarantee that further rounds of vaccines won't be needed.

A lot of the models that were in place may well now be defunct if the WFH model carries on in third level, WIT moved online entirely this year for instance.

fliball123

yagan wrote: »

I agree it different, it's a market disruptor so as there's no clear way to predict a long term trend.

However we're in the EU and we will not be letting in any students until the Pandemic is officially declared over, and with so many new variants popping up there's no guarantee that further rounds of vaccines won't be needed.

A lot of the models that were in place may well now be defunct if the WFH model carries on in third level, WIT moved online entirely this year for instance.

Maybe but the idea that non English speaking students could learn from their own country sounds a bit silly. Everyone knows the best way to learn a language is to immerse yourself in it. But for other courses like IT where English is not a component i could see some of it working from home . Exams will e tricky as how would you know if people are cheating ?

Ozark707

fliball123 wrote: »

Exams will e tricky as how would you know if people are cheating ?

They are already doing this and it seems to be going fine.

yagan

fliball123 wrote: »

Maybe but the idea that non English speaking students could learn from their own country sounds a bit silly. Everyone knows the best way to learn a language is to immerse yourself in it. But for other courses like IT where English is not a component i could see some of it working from home . Exams will e tricky as how would you know if people are cheating ?

I agree that immersion is the best method, but I've met no shortage of asians perficient in English without every being in any English language country. It always makes me smile when I can hear they've picked up an Irish twang from their tutor!

Plagiarism checks were already catching out on campus cheating. There are courses that will require physical attendance, sciences, engineering, medical etc.. but the humanities, businesses, languages etc can all go online.

This is the internets moment. When loads of auld ones are happy to catch Sunday mass on their smartphone you know the transition is complete.

fliball123

yagan wrote: »

I agree that immersion is the best method, but I've met no shortage of asians perficient in English without every being in any English language country. It always makes me smile when I can hear they've picked up an Irish twang from their tutor!

Plagiarism checks were already catching out on campus cheating. There are courses that will require physical attendance, sciences, engineering, medical etc.. but the humanities, businesses, languages etc can all go online.

This is the internets moment. When loads of auld ones are happy to catch Sunday mass on their smartphone you know the transition is complete.

Yeah maybe the old method of finding out which priest is giving mass and finding out off someone coming out what the sermon was about was how I caught mass as a kid haha but yeah I take the point everything is online these days

yagan

fliball123 wrote: »

Yeah maybe the old method of finding out which priest is giving mass and finding out off someone coming out what the sermon was about was how I caught mass as a kid haha but yeah I take the point everything is online these days

The disruption is exciting and frightening too.

I've a sibling a few years near retirement and he was told he's working from home until the pandemic is officially over, and he was in an office with hundreds in Dublin.

It isn't the end of the office by any means, but it is the accepted start of blended working. Companies will have to incorporate WFH options to stop workers being lured to rivals who do offer it.

heffo500

yagan wrote: »

The disruption is exciting and frightening too.

I've a sibling a few years near retirement and he was told he's working from home until the pandemic is officially over, and he was in an office with hundreds in Dublin.

It isn't the end of the office by any means, but it is the accepted start of blended working. Companies will have to incorporate WFH options to stop workers being lured to rivals who do offer it.

Correct gone are the days of having an office with a seat for every member of staff. Most places including mine were against WFH, now see the benefits and from their point of view potential huge cost savings. Talk of us having to WFH 2/3 days and booking hot desks the other days when we're in the office. No one will be allowed work 5 days in the office anymore as they don't want to pay for big offices to accommodate this.

Zenify

I've been following this property page for about 6 years and only have posted 2 or 3 times a month. I was always bearish about the Dublin property market and I've been wrong for 6 years! but I have learned something. I have come to realize our property market is being controlled by external forces: politics, banking, social and so so many more.

Banking is a major one. People say there is so much demand, it is the banks that control most of that demand, it is only there because they are allowing/fueling it. What will happen to property in 2021 is completely unknown. It all depends on politics (eg. stimulus), banking and all the rest.

Everyone who predicted a major drop in 2020 would have been absolutely correct if it wasn't for the external intervention (PUP and extra EU stimulus and policies to get banks lending etc.) Who honestly knows what policies will come in or go out in 2021. nobody could have imagined this level of stimulus for 2020 back in March. That's why so many got it wrong... even the normal property bulls said we would have a small fall.

If anyone here says we would have property increases in 2020 without all these external factors is a liar. imagine if they took away artificially low interest rates, got rid of Help to Buy, stopped buying social houses. taxed REITS 50% like all the Irish landlords.... They truth is we have high property prices because they are being kept high. I don't belive this is malicious, its just what the policy makers believe is best for the economy.

So please everyone stop arguing about a rise or a fall and look more into the factors that will influence the 2021 market.

SwimClub

Absolutely, the government are hugely invested in property in this country through NAMA and the banks. They are also lobbied and funded by the construction sector. The new central bank lending rules will prevent a repeat of what happened in '08, and prices still are nowhere near the levels in the boom up to that. Short of a new political ruling class there is not going to be a large drop in property prices, quantitative easing will be used to prop up asset prices even in a recession.