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

hometruths

https://www.boards.ie/discussion/comment/120649965#Comment_120649965

Many similarities to here, not least this:

But it's not simply an issue of supply. Researcher and activist Rita Silva, who helped set up the housing movement Habita, says there are "more houses than people, but prices don't go down".

combat14

more downward pressure on affordability

Mortgage rates set for another summer of rises, experts warn

Borrowers were warned that fixed rates were set to go to 5.5pc in the coming months.

https://m.independent.ie/business/personal-finance/mortgage-rates-set-for-another-summer-of-rises-experts-warn/a1641468493.html

Villa05

https://www.boards.ie/discussion/comment/120644927#Comment_120644927

Not a whole pile dissimilar to 06 as everything is/was inflated by the abundance of cheap money

One could argue even moreso now as there are more middlemen/women creaming off the top through complicated financing, not fit for purpose expensive regulation and the exit of smaller builders/developers resulting in a monopolisation of building and renting

DownByTheGarden

https://www.boards.ie/discussion/comment/120652888#Comment_120652888

Just a guess on my part but my opinion is

Major difference is that there was a whole lot of property being built which was being bought up as second homes then too. That market is no longer there. Now you do have the institutional investors and the councils and charities now, but that tap is not likely to be turned off as suddenly as it was in 2007 on.

If there is an economic shock now the builders will stop building, the government, charities and institutional investors will pick up the overhang of propeties nearly finished. Builders will only go back and build what has been sold already. There will be no surplus of rental property to bring down rents.

fliball123

https://www.boards.ie/discussion/comment/120652935#Comment_120652935

So builders will just stop building? Really so they don't have bills to pay, commitments to keep? So what do all of these companies do just hit the wall and die as you seem to think that in the real world companies can just stop producing and keep going which is not reality. I say let it happen let the leeches hit the wall, the government could snap up unfinished jobs at a pittance, set up a public company and give yearly visas and incentives to get lads who work in construction in from all over the world to finish. Too long has the property market been held to ransom by construction companies.

DownByTheGarden

https://www.boards.ie/discussion/comment/120652975#Comment_120652975

I dont think you understand what happens with a big enough economic shock to effect house prices significantly. Building stops. If people arent there to buy the new builds, they will stop building them. Bills to pay or not. They wont be building houses at a loss.

Hint : Read the news from about 15 or so years ago.

fliball123

https://www.boards.ie/discussion/comment/120653023#Comment_120653023

We are in a much different time than 15 years ago, back then we had an over supply and the focus on housing was no where on the agenda where as now its the number 1 concern by the unwashed masses. You also seem to think that if building stops that these construction companies can stay viable and solvent that is fantasy stuff. The reality is if they don't build they dont get fed. The biggest issue for the cartel that is the construction industry will be the change of government which is coming. The government (and it will probably be the shinners if the new polls are anything to go by) will have a chance to give the construction company the option to build at a much lower price point and cut their profit margin or hit the wall and when in liquidation the government could buy unfinished assets at a pittance. At this point I would incentivize short term visa and construction workers to come in and finish off these sites and ramp up the modular homes initiative. Your opinion is based on a parallel universe where when company stops producing it can stay solvent which if you ask any company owner this is not reality.

Timing belt

https://www.boards.ie/discussion/comment/120653058#Comment_120653058

I think you’re living in the parallel universe….A builder will not build at a loss and instead will let the employees (most of who are subcontractors) go.. They may continue on a few jobs that are profitable to keep the company ticking over.

As after ‘08 the builders let go tend to move to different non building jobs.

fliball123

https://www.boards.ie/discussion/comment/120653101#Comment_120653101

Looking at a builders lot between now and 08 where back then there was a ramping up on the commercial property side. Commercial property is dying a death (working from home and online selling has really put the skids on commercial) world wide currently, so the viable options are to stop building, company goes insolvent and builders emigrate or what they just stop building and hit the dole queue? The company if they stop producing cannot stay solvent in Ireland forever which is where the opportunity for those in power lie. The question is how long can they survive if they are not building?

PommieBast

https://www.boards.ie/discussion/comment/120653142#Comment_120653142

These days a lot of building operations are a web of shell companies so those who are really in charge can just walk away. Pretty rotten for the contractors, which is still unfixed ever since Carillion.

fliball123

https://www.boards.ie/discussion/comment/120653313#Comment_120653313

They cant walk away if they have significant assets. Once again with the shinners coming in they have been spouting on about how ridiculously low our vacant land tax is and I can see them upping this tax significantly. So it will be a case of use it or lose it one way or the other, it doesn't matter how many shell companies there are in operation if they are not building at the price point that people can afford (and currently our younger generation 30 downward cannot afford to buy or rent) then the value of their asset will diminish on a annual basis. If the shinners were no where near power I dont think anything would change in construction too many brown envelope dealings and self interests issues with regards to the current gov and the construction lobbyists. Be interesting to see how this plays out over the next 5 years or so.

DownByTheGarden

https://www.boards.ie/discussion/comment/120653101#Comment_120653101

Sometimes when you wish for something hard enough. If you close your eyes and keep wishing for it, and blank everything else out of your mind. it will come true.

Someone told fliball123 that when he was a child and he hasnt forgotten it. He is trying so hard to see a crash coming that he will say anything. But at the end of the day he is only guessing. Like the rest of us mere mortals. :)

fliball123

https://www.boards.ie/discussion/comment/120653535#Comment_120653535

Where am I guessing. Look at the construction outputs and PMIs for the last year they are way down. Look at our population under 30 the vast majority are locked out of owning or renting somewhere, the vast majority of home owners are over 30 so it will be our younger population who will be looking to buy these new houses and they simply cannot afford the current price point.. Look at the profit margin made by just the top 50 construction companies alone in Ireland over 10 billion last year and the narrative that its all about the raw materials when in a lot of areas these costs have come right back down and no one questions how much the industry is making.. Sinn Fein in the last pole are more popular then both FF and FG combined.

So who is dreaming we have already seen property prices drop 6 months in a row in Dublin and 3 months for the rest of the country. Yet you think that this pattern is going to flip? Don't think so not with another 2 interest rate increases before July further taking demand for property away via affordability. So like I say its a question of how long construction companies can operate when the shinners are in power, when access to cheap credit is no longer an option for them, while other revenue options like building commercial properties is no longer viable either, while they are not building ergo not making any profit and after the vacant land tax is upped.. Also other indicators like permits for new build are also dropping.

So who is living in the fantasy world. this is all happening currently no guess work involved.

https://irishbuildingmagazine.ie/2022/06/28/2021-turnover-at-irelands-top-50-contractors-tops-e10bn/

https://tradingeconomics.com/ireland/construction-pmi

https://tradingeconomics.com/ireland/construction-output

https://tradingeconomics.com/ireland/building-permits

https://tradingeconomics.com/ireland/house-price-index-mom

https://www.breakingnews.ie/ireland/poll-finds-sinn-fein-has-more-support-than-fianna-fail-fine-gael-combined-1325432.html

https://www.sundayworld.com/news/irish-news/sinn-feins-eoin-o-broin-says-irish-property-owners-akin-to-people-hoarding-food-during-a-famine/41766032.html

hometruths

https://www.boards.ie/discussion/comment/120653535#Comment_120653535

In fairness to @fliball123 in 2020/21 when I was here predicting falls of 20%+, fliball was one of the posters who were adamant prices would rise. We had many a to and fro on the subject, and he had plenty of thoughts and comment to back up his opinions, rather than just closing his eyes and wishing for it.

TBH I thought he was a blinkered fool.

But he has been proved correct.

fliball123

https://www.boards.ie/discussion/comment/120653684#Comment_120653684

Thanks for that and I also predicted prices would start dropping this year around April of last year due to the interest rate hikes and got ridiculed again basically changing my opinion on property prices from 2020 and its happening currently and some here stick the head in the sand and refuse to believe it.

DownByTheGarden

https://www.boards.ie/discussion/comment/120653684#Comment_120653684

He is closing his eyes and wishing for it now though to be fair. Imagine thinking that builders are going to keep building houses if they cant make a profit from it. Its not even the most outlandish thing he has said either.

DataDude

https://www.boards.ie/discussion/comment/120653684#Comment_120653684

Can second this. Have been on this thread since 2020 and of all the posters making predictions, fliball has been by far the most accurate.

Predicted a boom in 2020 when conventional wisdom suggested otherwise. Predicted a fall a few months in advance of all the CSO stats turning negative late last year.

I disagreed with him most of the time so think that makes me the least accurate 😂

fliball123

https://www.boards.ie/discussion/comment/120653705#Comment_120653705

So In your opinion 10 Billion profit made by 50 construction companies = no profit :) now who is in fantasy land there? I have simply tried to explain to people like yourself that the squeeze will be put on construction companies once the shinners get into power the status quo that has been there for 2/3 decades will be broken and they have made no secret about the vacant property tax and am pointing to other facts like the continuous upping of interest rate hikes will mean a higher % of our population will not be able to afford the current price point for property, this can already be seen with the property price drops seen over the last 6 months.

https://www.boards.ie/discussion/comment/120653741#Comment_120653741

Profit isn’t realised at the start though, unless the developer sells early to an institutional/state investor. A project which begins today may be at last two years away from going for sale, and longer again before developers see the profit. So it is highly probable that if prices are stagnating/falling now, they may be lower in two years time. Developers are trying to predict profit margins in the future, something that was easier to do a few years ago, if they are in doubt, then like all investors, they choke off investment.

hometruths

https://www.boards.ie/discussion/comment/120653716#Comment_120653716

 Have been on this thread since 2020 and of all the posters making predictions, fliball has been by far the most accurate.

Agreed. And that's from a pretty big field, there has been no shortage of posters making predictions!

hometruths

https://www.boards.ie/discussion/comment/120653705#Comment_120653705

If you're a builder sitting on a land bank with a whopping great use it or lose it tax you will either build on it if you can do so at a profit or sell the land to somebody else who is able to build on it profitably.

Houses will still be built.

fliball123

https://www.boards.ie/discussion/comment/120653805#Comment_120653805

Yeah I understand this but most developers develop in phases so that they can realise profit on an ongoing basis. They may well choke investment like you say, but if the Shinners get in (and its looking more likely) and significantly up the vacant land tax. The question I am asking is how long can any construction company continue with an asset basically decreasing in value as the vacant site tax is eating into it and the property prices are dropping, throw in the new paradigm of higher and higher interest rates this will mean liquidity via loans is not really a viable option and this is going to be a serious issue one that will push many to the wall and if they are not building they have no revenue stream coming in either. DBTG may think I am wishing, but I have put up facts figures and interview links and he has more or less played the man and not the ball ( a sure sign your losing the argument) but I honestly cant see any company (construction or not) surviving using this model

https://www.boards.ie/discussion/comment/120653835#Comment_120653835

If paying the tax is cheaper than building, then of course builders will pay the tax, also developers broadly all work in the same trading conditions, if one can’t turn a profit, there will be significant risk that the next one can’t either . Besides, there will be so many necessary exemptions that there is no guarantee that any new vacant property tax will be anymore successful than the current one.

hometruths

https://www.boards.ie/discussion/comment/120653868#Comment_120653868

That all depends on who is implementing the tax and how motivated they are to make it work.

As I understand it, fliballs point is that a) SF are likely to lead the next government and b) they are less likely to cater to the needs of developers with lots of necessary exemptions

That seems like reasonably sound logic to me. Certainly not wishful thinking.

dontmindme

https://www.boards.ie/discussion/comment/120653865#Comment_120653865

You're getting slightly ahead of yourself in the scenario you're painting. We have higher interest rates currently, the SF government however, if it ever happens that is, is at least another twelve months away, and it remains to be seen what they actually do once they take the reins.

fliball123

https://www.boards.ie/discussion/comment/120653868#Comment_120653868

That approach of paying the tax will mean that construction companies have to charge an even higher price for these properties to achieve the same profit margin. Already with property prices dropping it would suggest affordability has become a real issue for those buying so square peg round hole I don't know how they expect to sell at a higher price point when due to affordability prices are dropping.. The current vacant site tax is at too low a rate to make any difference currently

DataDude

https://www.boards.ie/discussion/comment/120653816#Comment_120653816

Bring back PropQueries. He was just a little ahead of the curve with his predictions!

https://www.boards.ie/discussion/comment/120653906#Comment_120653906

The exemptions will not just be for the benefit of developers, they will apply to all vacant land owners and therefore must take into account the circumstances which may arise.

hometruths

https://www.boards.ie/discussion/comment/120654012#Comment_120654012

PropQueries was great! I actually PM'd him a few months ago with my shock late realisation:

Could fliball be a leading indicator?!

His reply:

😂 I actually noticed the same thing over the past 6 months or so.

fliball123

https://www.boards.ie/discussion/comment/120653939#Comment_120653939

True it is 12 months away but I dont think the shinners will be able to back down from fixing the "housing crisis" they have basically built up their credentials on the promise to fix this. So yeah it could be more of the same but if your a construction company looking at this in the current climate what would you do? 12 months is a short time in the construction game I mean as a previous posted pointed out some construction project last years. Sure look at the Childress hospital :)