Irish Property Market chat II - *read mod note post #1 before posting*

Bass Reeves

In 2013 we were at the low point of the property price crash in Dublin which started to rebound from then on. Cork, Galway and Limerick all took another 2-3 years to rebound. Builders could not build at below the cost of construction. We have had serious inward migration over the last 5 years. The case for the small landlord V the institutional landlord is varied. there is no such think as economies of scale in managing rental properties. The lad with 3-5 properties will always have lower costs as well as contacts and flexability than an institutional landlord to manage a group of properties. He will probably paint and carry out routine maintenance himself. It could cost 1.5-2K to repaint a 2-3 bed house or apartment for an institutional landlord, a smaller landlord will do this maybe for 3-500 euro. ditto for other minor repairs such as plumbing, heating replacing things such as fire alarms for certification.

As demand ramps ups Dublin's labour costs increase's substantially as there is loads of construction work nearer to workers. Commercial construction in Dublin has also increased building costs. This is transferring down the country. At present in the area I live 15+ miles from Limerick builders are charging 130-150/sqfoot to go to builders finish on houses. Smaller jobs are 170-200/sqfoot. Builders want an answer straight away after giving a quote and will only honour that quote for 7-14 days. Pre pandemic costs were 70-80/sqfoot for house construction. To put this into context a 1500 sq foot bunglow would have cost 110-120k to build two years ago now its 200K+. That is to builders finish. This was the BidX auction yesterday there is still alot of house selling out there at below construction costs

https://bidx1.com/en/en-ie/auction/properties/1731

drogon.

I know a good percentage of homes are/were being bought up by large organisations (Investments/Pension Funds/REIT etc), but do we have any reports on their occupancy rates?

Just want to see if there are any figures out there if they are just holding property as assets or do they have tenants and are being actively rented out.

Marius34

https://www.boards.ie/discussion/comment/117654797#Comment_117654797

"house prices should not be much higher than what they were in 2013-2015, which are more "natural"

That would be great, unfortunately that's not natural or realistic, regardless if its FFG or SF. Fundamentals of Demands/Supplies will dictate the price of private market. Hardly anyone would build new homes for 2013 prices. Even in 2013 there wasn't much of construction when costs were lower.

Marius34

https://www.boards.ie/discussion/comment/117656018#Comment_117656018

You can look at the companies annual reports. They provide rates, and where their incomes flowing from.

Overall Occupancy rate is around 90%-98%. Lower for the objects in Dublin city center, but higher outside city center.

< MOD SNIP >

bureau2009

Very good article on property by Fintan O'Toole in Irish Times today, 24/07/21 (Weekend Review section.)

Maybe someone could post a link? Article is titled "From aristocrats to fat cats - the story of an Irish building site."

mcsean2163

https://www.irishtimes.com/opinion/fintan-o-toole-marino-shows-us-what-the-state-could-do-on-housing-a-century-ago-1.4625770?mode=amp

Woah

Article is paywalled for me! Does anyone know if those apartments on Griffith Avenue that were sold to a fund were always intended to be build to rent or where they originally for sale on the open market? Very disappointing if it's the latter.

https://www.boards.ie/discussion/comment/117657708#Comment_117657708

Copy and paste to outline.com, if it isn’t up today, it usually is tomorrow.

mcsean2163

https://www.boards.ie/discussion/comment/117657747#Comment_117657747

The happy days of outline are coming to a close as some people can't stop shouting about it from the rooftops.

Basically, fintan says that the fund in South Carolina is an absentee landlord and paid €523k per unit so don't expect affordable rents in the new development.

MacronvFrugals

in 2008 it was easy credit, in 2021 the bubble lies in overleveraged funds!

Central Bank: Ireland could face property ‘fire sale’

"New report cites a need to explore possible policy interventions for indebted funds that hold €13.6 billion worth of real estate"

"The Irish real estate sector is susceptible to a “fire sale” of property due to international funds that control billions of euro worth of homes and offices carrying significant levels of debt that may not be paid on time.

A research paper published by the Central Bank said large property funds in Ireland with more than €13.6 billion in assets face narrow timeframes to start repaying borrowed cash, which could spark a “fire"

https://www.businesspost.ie/investing/central-bank-ireland-could-face-property-fire-sale-a9324b12

fliball123

https://www.boards.ie/discussion/comment/117641415#Comment_117641415

Having said that if property keeps going up in the manner we have seen over the last 18 months you will have a property worth as much if not more than in 2008 as well as having equity in your back pocket by paying off a mortgage instead of rent, put it this way you would be in a much better position financially having paid off 13/14 years of a mortgage than someone who did not buy in 2008 and decided tor rent. Your case proves that buying is probably the the safest option even in the face of a pandemic or property crash and as Ireland do not do family home repossessions its no longer a bet for the person buying they can be secure in the knowledge that the left leanings of our political class will keep you in your family home even if you don't bother paying

fliball123

https://www.boards.ie/discussion/comment/117645317#Comment_117645317

and if anything with our new time scales going from 8 years to 4 months to get undocumented refugees to documented status if anything we are going to see a swarm of emigration inwards and guess what folks add that to our left leaning political class the mantra of housing for all will mean an even tighter squeeze on the supply side.

Amadan Dubh

https://www.boards.ie/discussion/comment/117656340#Comment_117656340

I just don't think the supply/demand forces are being allowed to function as they would in a less-State/central bank influenced, more competitive market. For example, it's just not sustainable for the State to compete with individuals for rentals (with the State now supporting a third of all tenancies in Ireland - a third! That goes to show the staggering and severe problems with affordability in the market). Other examples are with RPZs putting a floor under rents, laws that go too far protecting non-paying tenants and mortgagors, uneven tax regime for landlords. Bigger factors include central bank money-printing the last 10 years which is lighting a fire under the demand side with institutionals hoovering up properties around the world, including Ireland, in direct competition to individuals - again it's important to say that, with QE, it should not be required at these phenomenal levels if the financial system was on solid footing. Not to be too overdramatic but large parts of the financial system (with the property market included) are based on foundations of sand with QE printers being the equivalent of pumping more and more sand under the structure as it begins to sink in the hope it stays upright.

All that being said, whilst being a part of the problem, QE is giving our government a fantastic, blank cheque to at least light a fire under the supply side with a proper, sustainable and long term housing strategy. Targeted outcome of significant increases in supply mixed with a gradual, but material correction in rents and house prices will go a long way to creating a more stable market.

Timing belt

https://www.boards.ie/discussion/comment/117662339#Comment_117662339

I don't agree with the policy of long term leases but even if the government built their own properties this would have an impact on the supply side as less properties would be built in the private sector due to a shortage of builders who were building for the government and no longer the private sector.

The Shortage in supply is down to 2 things in my eyes:

• Planning laws that take years and years
• Lack of government Planning/willingness to address the issues.

mcsean2163

https://www.boards.ie/discussion/comment/117661867#Comment_117661867

Really annoying, this is not in yesterday's newspaper. Can you give a general thrust?

Marius34

https://www.boards.ie/discussion/comment/117662339#Comment_117662339

QE printing is not a foundation of sand. As dollar is not just a paper. I was involved in "bye bye Dollar" discussions back in 2008. The "papers" are still there, with it's value.

You say state support third of rentals, and calling not sustainable. I'm not sure if you even looked at the expenses, what part it cost for Public, to evaluate that it's not sustainable.

Marius34

https://www.boards.ie/discussion/comment/117662708#Comment_117662708

Those are some of the reasons for supply constrains, but there much more than that for the constrains.

Workforce, building costs, price, etc.

If price goes let say 30% up from 2020. I'm fairly confident construction output would increase to 30K/annual, in matter of couple of years.

Amadan Dubh

https://www.boards.ie/discussion/comment/117662946#Comment_117662946

It's unsustainable as it is in a viscious upward spiral, creating higher rents despite apparently being a measure supposed to deal with people falling through the cracks due to high rents, which then leads to more people falling through the cracks due to the high rents and needing support. It requires the State to constantly raise cash to throw at the problem, which is already a billon annually on this measure alone and will need to keep rising unless significant supply and big drops in rents happen.

It's like using a bucket to empty the water from a boat with a hole in it, with the water seeping in the equivalent of demand for social housing and the bucket the State supports for the rental market. If the hole (ie high rents) was smaller, then maybe we would be okay and could empty the water faster than it fills, but right now the water is filling up quicker than the State can empty the boat while the State decides to just use a bigger bucket as the hole gets bigger rather than fixing the cause of the leak.

timmyntc

https://www.boards.ie/discussion/comment/117662957#Comment_117662957

Where would the extra output come from?

There's already a massive shortage of construction workers/tradies, and there is far from a shortage of money in the sector. Also for the foreseeable, price rises due to materials will outstrip price rises due to increasing demand - if anything we may hit a point where prices are too low for new builds to be affordable from construction POV, but any higher and most buyers could not get finance to purchase!

Ireland's construction sector will soon be in crisis if materials keep rising - we need a quick solution for the forestry/lumber backlog first of all, and then proper trade schools that can train up larger numbers of new carpenters/plumbers/electricians/plasterers etc etc. Current apprenticeship approach doesnt have the capacity for large volume of new tradies needed in this country going forward. We need to copy the European model for teaching these things

Marius34

https://www.boards.ie/discussion/comment/117663484#Comment_117663484

Some people are fairly flexible with their jobs/location. There are people if they see financial benefits by changing location/work, they are willing to change it.

timmyntc

https://www.boards.ie/discussion/comment/117663572#Comment_117663572

There is already a large premium charged for construction labour - at what price point will we see more people relocate to Ireland? It can't get much higher really, because if labour costs increase too much then the houses are unaffordable and wont sell - so they wont build them in the first place.

Whatever happens with short term fluctuations, reading all the climate news over the weekend (most notably the fires in the US that are now staggering in their scale and duration) makes me think that Ireland will become a destination of choice for many. Seems like one of the best places to see out what is happening in the world. We have a massive diaspora and all those west and mid-west Americans, and British Columbias and Australians etc etc with an Irish grandparent will be looking for somewhere to go.

long term, Irish real estate will benefit from climate related migration IMO, so no reason to hesitate buying now. Pressures will only be upward due to migration as Ireland becomes the place to be

timmyntc

https://www.boards.ie/discussion/comment/117663705#Comment_117663705

It's just as likely that Ireland becomes frozen over and inhospitable than it becomes some kind of tropical island paradise - climate change could change anything - if the gulf stream were no longer warming us we would be frozen over. Not to mention being an island, and the prospect of rising sea levels. We are far from a climate safe haven

Marius34

https://www.boards.ie/discussion/comment/117663692#Comment_117663692

there is no specific price point, the more benefits, the higher the wage growth in construction, comparing to other sectors/locations, the more people you can expect to move in.

Seeds2098

New home prices in US dropped 5 percent from $380,700 to $361,800 median in the last month.

This is a massive drop and interesting to see if other Countries start to follow.

Hold on tight.

flintash

nothing to see here.

the price of timber droped drastically, its just a blip.

Amadan Dubh

https://www.boards.ie/discussion/comment/117663705#Comment_117663705

That's so mad you posted this as I had the exact same thought last week, that longer term when Africa becomes uninhabitable and Southern Europe unbearable in summer, they'll be flocking up north, possibly skipping even Central European countries who may also be prone to extreme temperatures and ending up at us. But as you say, they could also come from the likes of the US or Australia. The so called "locked out" generation of the present might find that when they eventually get their mortgage, when the time comes to sell in a few decades, they will achieve a great appreciation in the value of their home like the older generations now who have done so well.

https://www.boards.ie/discussion/comment/117665813#Comment_117665813

What prompted me was actually comments under a recent NY times article about the heat dome in the USA and Canada in which people said they were looking at moving to Ireland. True or not, I think is perceived as a relative safe haven from what is going on in the world and I think that that will manifest in increasing inward immigration and wealth transfer over the next decade or two. There’ll be more pressure on supply of housing stock for sure

just thinking about the long game, rather than whether there’ll be an imminent price fall

tigger123

https://www.boards.ie/discussion/comment/117665979#Comment_117665979

I've been thinking something similar for a while. I remember 10 to 15 years ago there was a massive heatwave in France, and a whole load of French people came to Ireland on their holidays as the climate was much more bearable.

I can very easily see people relocating to more moderate climates in the coming years.