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

JDD

schmittel wrote: »

Brendan Kenny of DCC fame says:



Which means that we have thousands of taxpayers desperate to buy because rent is dead money, being priced out of the market because the council are desperate to spend taxpayers money on rent.

:rolleyes::rolleyes:

Social housing - investor goldmine or public good?

I haven't read the article but there probably are some good reasons for this.

Say the council buy a block of 50 apartments and have a churn of social housing residents through them for 20 years.

Compare that to a family buying a house that they expect to be in for 20 years.

After 10 years of social housing turnover, the council will find that the wear and tear on the building will start to cost money. It's not to say that social housing residents will wreck the place, but inevitably you are less "bought in" to keeping a place nice if you are renting rather than owning it. And churn, even of excellent renters, is going to increase wear and tear. Outside of that it will be the usual plumbing, roofing and landscaping costs that will start to hit. They'll have none of that if they lease from a REIT - the cost will all be on the REITs side. And perhaps REITs are better at keeping those wear and tear costs low, what with economies of scale over many apartment blocks and well, being a private company who are more focussed on costs.

A family will probably find that it takes a bit longer for that wear and tear to kick in, because they have been the only ones to live in the house and issues tend to be nipped in the bud before a pipe breaks or there's a hole in the roof.

A family will probably be happy to pay those structural costs because they need that asset at the end of the mortgage as security in retirement. The council doesn't need that kind of security.

Lastly housing regulations change over 20 years meaning a building bought 20 years ago may not comply with housing regulations now. Look at all the cost of taking down council flats in town in order to build compliant apartments and houses. The council will have none of that risk in this case. They just end the lease, and enter into a lease for a newer block of apartments.

I agree that in basic terms, it is better to be the owner of a property rather than paying dead money to a landlord. But for a council there's a lot more to be considered.

timmyntc

JDD wrote: »

I haven't read the article but there probably are some good reasons for this.

Say the council buy a block of 50 apartments and have a churn of social housing residents through them for 20 years.

Compare that to a family buying a house that they expect to be in for 20 years.

After 10 years of social housing turnover, the council will find that the wear and tear on the building will start to cost money. It's not to say that social housing residents will wreck the place, but inevitably you are less "bought in" to keeping a place nice if you are renting rather than owning it. And churn, even of excellent renters, is going to increase wear and tear. Outside of that it will be the usual plumbing, roofing and landscaping costs that will start to hit. They'll have none of that if they lease from a REIT - the cost will all be on the REITs side. And perhaps REITs are better at keeping those wear and tear costs low, what with economies of scale over many apartment blocks and well, being a private company who are more focussed on costs.

A family will probably find that it takes a bit longer for that wear and tear to kick in, because they have been the only ones to live in the house and issues tend to be nipped in the bud before a pipe breaks or there's a hole in the roof.

A family will probably be happy to pay those structural costs because they need that asset at the end of the mortgage as security in retirement. The council doesn't need that kind of security.

Lastly housing regulations change over 20 years meaning a building bought 20 years ago may not comply with housing regulations now. Look at all the cost of taking down council flats in town in order to build compliant apartments and houses. The council will have none of that risk in this case. They just end the lease, and enter into a lease for a newer block of apartments.

I agree that in basic terms, it is better to be the owner of a property rather than paying dead money to a landlord. But for a council there's a lot more to be considered.

Except in a lot of cases, the council does the maintenance and pays for wear and tear also. Certainly it does for the leasing deals with REITs. The property will be handed back like new, from the council. They manage the property, do maintenance, handle tenants in & out. The REIT does nothing but collect money from the council.

It most certainly is a bad deal.

Great talks was on Newstalk today morning about bubble on property market
Same as I was talking about last week

https://www.newstalk.com/news/house-prices-will-go-beyond-celtic-tiger-levels-without-dramatic-change-rory-hearne-1213914

And same songs again "this never gonna happen" "we have different situation"
And when this finally happening they saying This been Unexpected and should happen ! We could not do anything about it ! Not Us !

Today panic on building sites make me think that developers are on hurry to get last seat in last wagon in last train.That is all about.

Marius34

Was trying to find out data how much new builds are allocated to different types of buyers.
Unfortunately can't find such information
But here is some data for 2020.
There were total completion of 20,676. None apartments 16.662
From what I hear in here, almost all apartments are sold to Funds/REIT's. Thus we mostly can exclude from private resident sales.
In 2020 there were 8.496 mortgage drawdowns by FTB/Movers on new properties. Cash buyers accounts for around 25%. Thus this could be around 11.300 of sales to FTB/Mover purchase (could be slightly less wouldn't argue that).
What's left for Funds buying whole projects (none apartment)? Housing bodies buying whole estates? Social housing developments (none apartment)? Self build? And another 40% properties allocated for social housing in private estates?
It just tells how much the numbers in here are exaggerated from reality.

hometruths

Marius34 wrote: »

Was trying to find out data how much new builds are allocated to different types of buyers.
Unfortunately can't find such information
But here is some data for 2020.
There were total completion of 20,676. None apartments 16.662
From what I hear in here, almost all apartments are sold to Funds/REIT's. Thus we mostly can exclude from private resident sales.
In 2020 there were 8.496 mortgage drawdowns by FTB/Movers on new properties. Cash buyers accounts for around 25%. Thus this could be around 11.300 of sales to FTB/Mover purchase (could be slightly less wouldn't argue that).
What's left for Funds buying whole projects (none apartment)? Housing bodies buying whole estates? Social housing developments (none apartment)? Self build? And another 40% properties allocated for social housing in private estates?
It just tells how much the numbers in here are exaggerated from reality.

You should take a look at Overview of Social Housing Activity 2016-2021 Q1

Look at the figures for 2020, new build acquisitions + leasing, then take a look at completion figures 2020.

I think you'll find it suggests that claiming social housing provision is low i.e only about 10% in new build developments - is indeed exaggerated from reality.

Marius34

schmittel wrote: »

You should take a look at Overview of Social Housing Activity 2016-2021 Q1

Look at the figures for 2020, new build acquisitions + leasing, then take a look at completion figures 2020.

I think you'll find it suggests that claiming social housing provision is low i.e only about 10% in new build developments - is indeed exaggerated from reality.

I haven't seen anyone suggesting it, so apparently you arguing with yourself

hometruths

schmittel wrote: »

I think you'll find it suggests that claiming social housing provision is low i.e only about 10% in new build developments - is indeed exaggerated from reality.

Marius34 wrote: »

I haven't seen anyone suggesting it, so apparently you arguing with yourself

Maybe you missed these posts:

Marius34 wrote: »

Most new housing developments (for sale) are middle income. They consist of low percent of social housing.

Marius34 wrote: »

Which development?
Normally its 10%

Marius34 wrote: »

And yes I still see that most of those projects for private individual sales are with 10% social, and not 40%.

Marius34 wrote: »

Yes, but all the new estates that I know for private resident sales, are only around 10% for social housing. You can read as well on boards people discussing about new developments of interest, they all see around 10%.

Marius34 wrote: »

Here some projects are for 100% social housing, some 100% Rentals, and the ones for private market sale, are mostly only 10% for social housing.

I am not arguing with myself, but also I am not about to get into another circular argument with you. We've already had any and all discussion of an important property market related topic banned on here because of it. Let's not risk having discussion of social housing numbers banned too.

As Yurt said, the goalposts have left the stadium at this stage, I totally agree:

Yurt! wrote: »

This is not a good faith conversation. I'm out.

Marius34

schmittel wrote: »

Maybe you missed these posts:


I am not arguing with myself, but also I am not about to get into another circular argument with you. We've already had any and all discussion of an important property market related topic banned on here because of it. Let's not risk having discussion of social housing numbers banned too.

As Yurt said, the goalposts have left the stadium at this stage, I totally agree:

I'm not claiming anywhere that social housing provision is low. So you trying to find argument, for the claims I don't stand for.
My post were related to new developments for private individual sales, not overall social housing market share, nor did I mentioned that its 10% on average, but rather most common in those developments. There are lots of projects dedicated to social housing, or bought 100% by housing estates, making social housing market way above 10%.
If you have questions what i mean, you welcome to ask, but don't push words to my mouth.

cunnifferous

Marius34 wrote: »

I'm not claiming anywhere that social housing provision is low. So you trying to find argument, for the claims I don't stand for.
My post were related to new developments for private individual sales, not overall social housing market share, nor did I mentioned that its 10% on average, but rather most common in those developments. There are lots of projects dedicated to social housing, or bought 100% by housing estates, making social housing market way above 10%.
If you have questions what i mean, you welcome to ask, but don't push words to my mouth.

Can you explain exactly what you are trying to say? After reading your last few posts I really am none the wiser.

Marius34

cunnifferous wrote: »

Can you explain exactly what you are trying to say? After reading your last few posts I really am none the wiser.

My initial comment was that middle class typically avoids areas with large amount of social housing. And looking for new developments, which typically has only 10% dedicated to social housing.
I was argued, that most new estates are pushed to around 40% for social housing.
My point is that social housing are not evenly shared across new developments, but rather there are development 100% for social housing, whereas the ones middle class buys are typically with only 10% of social housing (obviously there are many as well with higher percent).

drogon.

Do we have any stats on the occupancy rate for property owned by investment funds ?

Marius34

Marius34 wrote: »

My initial comment was that middle class typically avoids areas with large amount of social housing. And looking for new developments, which typically has only 10% dedicated to social housing.
I was argued, that most new estates are pushed to around 40% for social housing.
My point is that social housing are not evenly shared across new developments, but rather there are development 100% for social housing, whereas the ones middle class buys are typically with only 10% of social housing (obviously there are many as well with higher percent).

That's rubbish
You think that estates where 'middle class' people are buying are not selling more than 10% social.housing?

yagan

Marius34 wrote: »

My initial comment was that middle class typically avoids areas with large amount of social housing. And looking for new developments, which typically has only 10% dedicated to social housing.
I was argued, that most new estates are pushed to around 40% for social housing.
My point is that social housing are not evenly shared across new developments, but rather there are development 100% for social housing, whereas the ones middle class buys are typically with only 10% of social housing (obviously there are many as well with higher percent).

It would appear that many of those who would have middle class not long ago have been priced out of the private market.

rob316

Marius34 wrote: »

My initial comment was that middle class typically avoids areas with large amount of social housing. And looking for new developments, which typically has only 10% dedicated to social housing.
I was argued, that most new estates are pushed to around 40% for social housing.
My point is that social housing are not evenly shared across new developments, but rather there are development 100% for social housing, whereas the ones middle class buys are typically with only 10% of social housing (obviously there are many as well with higher percent).

We dont build 100% social housing developments anymore.

Marius34

bubblypop wrote: »

That's rubbish
You think that estates where 'middle class' people are buying are not selling more than 10% social.housing?

There obviously are developments that selling more, but around 40% in those developments are rare, you may have different opinion, but there is no data/reports to suggest that 40% social is common across the new developments.

Marius34

rob316 wrote: »

We dont build 100% social housing developments anymore.

Developers do

Marius34

Marius34 wrote: »

There obviously are developments that selling more, but around 40% in those developments are rare, you may have different opinion, but there is no data/reports to suggest that 40% social is common across the new developments.

No they are not rare, it's very common.

Amadan Dubh

The landlords of the retail sector in dire straits. The Irish Life property funds are likely to be part of the collection funds in big trouble, but pre-covid these guys had issues.

The 6% average decline in valuation of commercial real estate in 2020 is surely just the tip of the iceberg and is going to continue over the coming years as lease renewals arise and either aren't renewed or are renewed for lower rent / less space.

https://www.thetimes.co.uk/article/retail-property-drop-puts-stress-on-funds-2x305j6sk

The hit to office and retail valuations in the pandemic has caused ten property funds with combined assets of €2.3 billion to breach or come close to breaching the terms of their loan covenants, according to the Central Bank of Ireland.

Four of the funds breached their loan agreements, while the remaining six came close to doing so. While all 10 avoided foreclosure, the Central Bank has warned of ongoing difficulties.

Funds own €23 billion of property, about 40 per cent of all Irish commercial real estate. Valuations fell by an average of 6 per cent in 2020, but the drop was 19 per cent for retail property. Another 5 per cent decline is expected this year.

1percent

Amadan Dubh wrote: »

The landlords of the retail sector in dire straits. The Irish Life property funds are likely to be part of the collection funds in big trouble, but pre-covid these guys had issues.

The 6% average decline in valuation of commercial real estate in 2020 is surely just the tip of the iceberg and is going to continue over the coming years as lease renewals arise and either aren't renewed or are renewed for lower rent / less space.

https://www.thetimes.co.uk/article/retail-property-drop-puts-stress-on-funds-2x305j6sk

Might this be the butterfly that flaps its wings to cause the hurricane? If funds need to cover losses in one portfolio they will have to liquidate others? it is a massively complex and interwoven mess of loans, investments, returns, yields ect accross every asset class and most countries and currencies and I don't think anyone on this planet has a full understanding of what is connected to what.

I think something will happen like in '08, no idea what or when but it will cause a scramble to see who is holding what, who owes who what, who can keep their head above water and can't. Massive volatility everywhere with winners and losers.

As the saying goes, you only find out who is swimming naked when the tide goes out.

yagan

1percent wrote: »

Might this be the butterfly that flaps its wings to cause the hurricane? If funds need to cover losses in one portfolio they will have to liquidate others? it is a massively complex and interwoven mess of loans, investments, returns, yields ect accross every asset class and most countries and currencies and I don't think anyone on this planet has a full understanding of what is connected to what.

I think something will happen like in '08, no idea what or when but it will cause a scramble to see who is holding what, who owes who what, who can keep their head above water and can't. Massive volatility everywhere with winners and losers.

As the saying goes, you only find out who is swimming naked when the tide goes out.

If I can find it I'll post it later but a while back I saw a very interesting discussion online about how in the USA bailout money was propping up a lot of retail units owned by banks and investment groups. They kept unsustainable units open in order to keep rents up in their performing assets.

They described it as financial facadism but I'm not sure how it can be unwound if the government continues to prop them up. At some stage something has to give, I've just no idea what that something is.

Amadan Dubh

yagan wrote: »

If I can find it I'll post it later but a while back I saw a very interesting discussion online about how in the USA bailout money was propping up a lot of retail units owned by banks and investment groups. They kept unsustainable units open in order to keep rents up in their performing assets.

They described it as financial facadism but I'm not sure how it can be unwound if the government continues to prop them up. At some stage something has to give, I've just no idea what that something is.

That's exactly it; everything is being underwritten by the Fed. The markets cannot seem to stomach even slight decreases and the risk warning "past performance is no gudie to future performance" is actually proving to be false. I am wondering whether the jokes about "stocks only go up" is actually true. A significant correction isn't being allowed to happen in assets (stocks and property), it is just being blocked. It's so bizarre and the whole thing is like a jenga block getting thinner or a house of cards.

yagan

Amadan Dubh wrote: »

That's exactly it; everything is being underwritten by the Fed. The markets cannot seem to stomach even slight decreases and the risk warning "past performance is no gudie to future performance" is actually proving to be false. I am wondering whether the jokes about "stocks only go up" is actually true. A significant correction isn't being allowed to happen in assets (stocks and property), it is just being blocked. It's so bizarre and the whole thing is like a jenga block getting thinner or a house of cards.

There just seems to be an aura of hypernormalisation about it all. In that discussion I mentioned an estimated 30% of commercial real estate owned by Fed supported banks and funds remain open at a loss.

Politically I can see why they'd want to support semblances of economic activity, but if wages remain flat while rents increase then the correction may be on the streets and not in the markets.

timmyntc

yagan wrote: »

There just seems to be an aura of hypernormalisation about it all. In that discussion I mentioned an estimated 30% of commercial real estate owned by Fed supported banks and funds remain open at a loss.

Politically I can see why they'd want to support semblances of economic activity, but if wages remain flat while rents increase then the correction may be on the streets and not in the markets.

If the ass falls out of commercial rents, surely that would make things worse for residential property?

If funds are denied earnings from one sector, they will try make up the shortfall through the only profitable sector left (residential rents)

wassie

Hibernia REITs CEO take on Govt response to housing in the Independent today.

Earlier this month the government introduced measures aimed at tackling the housing crisis. Stamp duty on the purchase of 10 or more houses has increased to 10pc, however, apartments will not be subject to the higher tax rate. The tax increase won’t make much difference to Hibernia, Mr Nowlan said.

“We own about 350 apartments, we don’t have any houses, it’s not really relevant for Hibernia."

"The big issue is we have a massive housing crisis, and the reality is we need delivery from all angles of the market,” he said.

“Ireland is a pretty small market, we don’t have enough capital in Ireland to solve this problem and the government doesn’t have access to the type of capital that is required. This is going to need to be a blended resolution to this problem and I think international capital is part of the solution, probably focusing more on apartment construction,” he added.

Can anyone enlighten me as to what is meant by 'the Govt doesn't have access to the right type of capital'?

My first take on this was that Nowlan as CEO is simply supporting his own agenda, but as he said, Hibernia don't have a lot of skin in the game so I find the comment curious.

DMcW also been pretty vocal on the idea that the state can fund a large scale housing programme if it wanted. Naomi O’Leary on Housing Europe blog last month published an article that also clearly suggests otherwise.

yagan

timmyntc wrote: »

If the ass falls out of commercial rents, surely that would make things worse for residential property?

If funds are denied earnings from one sector, they will try make up the shortfall through the only profitable sector left (residential rents)

This of course can lead to societal revolt.

I've an elderly relation who's gone from being a life long Fianna Failer to a Sinn Feiner solely on the issue of housing for younger generations. She acknowledges that she benefitted massively from investment in social housing, she bought out her own house from the council.

I'm sure this heave is happening in all markets affected by Fed backed hot money.

Amadan Dubh

wassie wrote: »

Hibernia REITs CEO take on Govt response to housing in the Independent today.

Earlier this month the government introduced measures aimed at tackling the housing crisis. Stamp duty on the purchase of 10 or more houses has increased to 10pc, however, apartments will not be subject to the higher tax rate. The tax increase won’t make much difference to Hibernia, Mr Nowlan said.

“We own about 350 apartments, we don’t have any houses, it’s not really relevant for Hibernia."

"The big issue is we have a massive housing crisis, and the reality is we need delivery from all angles of the market,” he said.

“Ireland is a pretty small market, we don’t have enough capital in Ireland to solve this problem and the government doesn’t have access to the type of capital that is required. This is going to need to be a blended resolution to this problem and I think international capital is part of the solution, probably focusing more on apartment construction,” he added.

Can anyone enlighten me as to what is meant by 'the Govt doesn't have access to the right type of capital'?

My first take on this was that Nowlan as CEO is simply supporting his own agenda, but as he said, Hibernia don't have a lot of skin in the game so I find the comment curious.

DMcW also been pretty vocal on the idea that the state can fund a large scale housing programme if it wanted. Naomi O’Leary on Housing Europe blog last month published an article that also clearly suggests otherwise.

I would have more time for the REIT representatives than the US vultures like Kennedy Wilson, Greystar, Round Hill. REITs are not really the enemy as it is not in their interest to keep properties vacant - they are publicly listed vehicles that are answerable to their shareholders and need cashflow to pay dividends each year. You and I can go and buy shares in a REIT if we wanted to. As far as I can see, the only issue with REITs is their tax treatment makes the playing field uneven with small landlords and that needs to be corrected.

With the likes of Kennedy Wilson, they make their investment through private funds (typically structured as Irefs) and, while they are answerable to their shareholders, we don't know who these shareholders are as there is little public information which can be obtained about the funds. These are the investors quite clearly happy to leave properties vacant and hoover up new builds (Round Hill for example are the crowd that took over the Maynooth estate that kicked off the media furore a few weeks ago).

yagan

Amadan Dubh wrote: »

I would have more time for the REIT representatives than the US vultures like Kennedy Wilson, Greystar, Round Hill. REITs are not really the enemy as it is not in their interest to keep properties vacant - they are publicly listed vehicles that are answerable to their shareholders and need cashflow to pay dividends each year. As far as I can see, the only issue with REITs is their tax treatment makes the playing field uneven with small landlords and that needs to be corrected.

With the likes of Kennedy Wilson, they make their investment through private funds (typically structured as Irefs) and, while they are answerable to their shareholders, we don't know who these shareholders are as there is little public information which can be obtained about the funds. These are the investors quite clearly happy to leave properties vacant and hoover up new builds (Round Hill is another one of these non-public US vultures - the crowd that took over the Maynooth estate that kicked off the media furore a few weeks ago).

Kennedy Wilson really are the intermediary, developing assets to sell to the likes of pension funds.

As more boomers retire the stain on these already underfunded pension schemes will increase as more draw down while less contribute and rental yields fail to cover the shortfall.

Once one major pension fund collapses the rush will be out of illiquid assets like property and into cash.
(edit to add, I'm merely musing hypertheticals)

rob316

Reading about this Housing for All 12bn plan, are they finally acknowledging its a supply issue? You can't make houses affordable unless their is plentiful supply, all the schemes created so far have just driven demand and prices up.

Hubertj

wassie wrote: »

Hibernia REITs CEO take on Govt response to housing in the Independent today.

Earlier this month the government introduced measures aimed at tackling the housing crisis. Stamp duty on the purchase of 10 or more houses has increased to 10pc, however, apartments will not be subject to the higher tax rate. The tax increase won’t make much difference to Hibernia, Mr Nowlan said.

“We own about 350 apartments, we don’t have any houses, it’s not really relevant for Hibernia."

"The big issue is we have a massive housing crisis, and the reality is we need delivery from all angles of the market,” he said.

“Ireland is a pretty small market, we don’t have enough capital in Ireland to solve this problem and the government doesn’t have access to the type of capital that is required. This is going to need to be a blended resolution to this problem and I think international capital is part of the solution, probably focusing more on apartment construction,” he added.

Can anyone enlighten me as to what is meant by 'the Govt doesn't have access to the right type of capital'?

My first take on this was that Nowlan as CEO is simply supporting his own agenda, but as he said, Hibernia don't have a lot of skin in the game so I find the comment curious.

DMcW also been pretty vocal on the idea that the state can fund a large scale housing programme if it wanted. Naomi O’Leary on Housing Europe blog last month published an article that also clearly suggests otherwise.

I expect it is reference to government challenges in EU Capex rules. The argument is if you spend more on housing cut backs will be required on other capital projects due to whatever limits are in place at EU level. Is there a way around this without impacting other projects?

Amadan Dubh

yagan wrote: »

Kennedy Wilson really are the intermediary, developing assets to sell to the likes of pension funds.

As more boomers retire the stain on these already underfunded pension schemes will increase as more draw down while less contribute and rental yields fail to cover the shortfall.

Once one major pension fund collapses the rush will be out of illiquid assets like property and into cash.
(edit to add, I'm merely musing hypertheticals)

Of course it's all hypothetical, speculative, opinion-based etc. but this is why we're on Boards.ie to thrash these things out. The more Boomers retiring and the more the next generations take over the management, executive, political etc. positions they occupy the more we will see a trend away from boom/bust housing markets and the commoditization of housing.

I would love to see data on the trends for home ownership in 5, 10, 15, 20 years among the various demographics as I would be curious as to whether we are trending towards the majority of the working age population being non-home owners. I won't even start on how this would affect property prices in the long term!