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Property Market 2019

The_Conductor

As is now becoming a custom- we'll start a new thread to discuss all topics as they pertain to the property market in general, alongside people's predictions and experiences- for the year 2019.

Its going to be an interesting year- with Brexit, if it comes to pass, at the end of March- and to misquote Donald Rumsfeld - the unknown unknowns that are likely to jump out at us, when we least expect them to.

2018 thread is now closed.

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Zenify

Bob24 wrote: »

Yep, the business of that particular REIT in the commercial property space is not doing great.

But I don’t see how it helps people struggling to buy/rent a home?

As far as I can see they dont need the cash. They want out of the property market. Two very different situations.

They may be getting out because profits are low and share price is less than asset price but that's not forced selling to pay liabilities. They are choosing to get out based on their decision of the market.

Assetbacked

So much for institutional landlords being in it for the long-term. Never understood how this line was trotted out as a justification for supporting institutional investors.

No tax on acquisition of property, very easy to avoid tax on rental income as a REIT. If there was a bit of a crash in commercial property, it would affect the non-Irish domiciled shareholders and have a limited impact on Irish taxpayers.

coolshannagh28

Assetbacked wrote: »

So much for institutional landlords being in it for the long-term. Never understood how this line was trotted out as a justification for supporting institutional investors.

No tax on acquisition of property, very easy to avoid tax on rental income as a REIT. If there was a bit of a crash in commercial property, it would affect the non-Irish domiciled shareholders and have a limited impact on Irish taxpayers.

The only possible explanation is that the government has shrewdly moved risk from Irish people to MNCs.

voluntary

Zenify wrote: »

As far as I can see they dont need the cash. They want out of the property market. Two very different situations.

They may be getting out because profits are low and share price is less than asset price but that's not forced selling to pay liabilities. They are choosing to get out based on their decision of the market.

Here'r the ownership structure of the green reit
https://www.greenreitplc.com/shareholder-analysis/

These are not funds which need cash. They shift investments where they analyse profit can be made.

5.93% GP Holdings / GP REIT Ventures
3.95% APG Asset Management
3.34% Blackrock, Inc.
3.16% Lansdowne Partners
3.05% Thames River Capital

Assetbacked

voluntary wrote: »

Here'r the ownership structure of the green reit
https://www.greenreitplc.com/shareholder-analysis/

These are not funds which need cash. They shift investments where they analyse profit can be made.

5.93% GP Holdings / GP REIT Ventures
3.95% APG Asset Management
3.34% Blackrock, Inc.
3.16% Lansdowne Partners
3.05% Thames River Capital

Interesting that only 11% of shareholders are based in Ireland. But potentially out of that 11% ownership, the shareholders are Irish domiciled funds which would probably have non-Irish shareholders so the 11% figure could be even lower.

In terms of the mechanics of what's happening with the sale, is Green REIT plc selling its investment positions, returning cash to the shareholders and being terminated?

voluntary

Assetbacked wrote: »

Interesting that only 11% of shareholders are based in Ireland. But potentially out of that 11% ownership, the shareholders are Irish domiciled funds which would probably have non-Irish shareholders so the 11% figure could be even lower.

In terms of the mechanics of what's happening with the sale, is Green REIT plc selling its investment positions, returning cash to the shareholders and being terminated?

Yes.

"The Board of Green REIT plc ("Green REIT" or the "Company") announces that it has undertaken a comprehensive and carefully considered review of the strategic options open to the Company to maximise value for its shareholders. As a consequence of this review, the Board has taken a decision to initiate a process for the sale of the Company or its portfolio of assets."

L1011

Green's history goes back to 1876, building houses for rent and rent-to-buy back then. Obviously name changes and strategy changes have happened a few times since!

NIMAN

Is it 2006 again?

https://www.independent.ie/business/personal-finance/property-mortgages/like-the-hunger-games-dozens-of-people-sleep-overnight-in-cars-in-attempt-to-buy-houses-in-cork-38016585.html

The_Conductor

NIMAN wrote: »

Is it 2006 again?

https://www.independent.ie/business/personal-finance/property-mortgages/like-the-hunger-games-dozens-of-people-sleep-overnight-in-cars-in-attempt-to-buy-houses-in-cork-38016585.html

Thats a single estate in a high demand area- with lots of interest (obviously priced to sell). Its not 2006 by any means- other estates have viewings with the only thing missing being tumbleweed..........

If there were a string of estates, countrywide, like this- it would be worrying- there isn't though..........

handlemaster

Agreed with above lots of property outside the main cities with very low prices. Its all about location with the higher prices as always.

Ush1

Any developments in Ballincollig get snapped up.

el Fenomeno

Plus, they are new builds so the HTB scheme makes a €400,000 new build affordable for a couple who wouldn't be able to afford the deposit for a second hand home that's half the price.

voluntary

el Fenomeno wrote: »

Plus, they are new builds so the HTB scheme makes a €400,000 new build affordable for a couple who wouldn't be able to afford the deposit for a second hand home that's half the price.

Another point of view is that these 30 or so families will free up 30 or so rental accomodations whenever they get the keys. A drop in the ocean, but any progress is still better than a total stagnation.

Dolbhad

https://www.independent.ie/business/personal-finance/property-mortgages/cuckoo-fund-buying-spree-easing-housing-crisis-claims-donohoe-38027492.html

I don’t expect things to get better if this is the opinion of the Government that cuckoo funds are helping the housing crisis.

Bluefoam

Dolbhad wrote: »

https://www.independent.ie/business/personal-finance/property-mortgages/cuckoo-fund-buying-spree-easing-housing-crisis-claims-donohoe-38027492.html

I don’t expect things to get better if this is the opinion of the Government that cuckoo funds are helping the housing crisis.

Better how? Encouraging development? Increasing rental supply? Professionalism of landlords? Effecting homeless figures? Yes

Helping citizens own their own property? Enabling first time buyers? Increasing home ownership figures? Enabling the population? No

I'm not sure they (powers that be) particularly care for people to get onto the property ladder... REITS are doing their job...

Dolbhad

Bluefoam wrote: »

Better how? Encouraging development? Increasing rental supply? Professionalism of landlords? Effecting homeless figures? Yes

Helping citizens own their own property? Enabling first time buyers? Increasing home ownership figures? Enabling the population? No

I'm not sure they (powers that be) particularly care for people to get onto the property ladder... REITS are doing their job...

It’s not about those purchasers who didn’t get the property. It’s as a first purchase of a property they can set the rent at whatever they want to which would be at the very high end (to protect themselves against RPZ) and to effectively pay little tax.

Bluefoam

Dolbhad wrote: »

It’s not about those purchasers who didn’t get the property. It’s as a first purchase of a property they can set the rent at whatever they want to which would be at the very high end (to protect themselves against RPZ) and to effectively pay little tax.

and...? I'm not denying any of that. But, the housing issues are being solved... renting is only a percieved issue. Renters can still afford to eat etc. So whats the problem? Rent is expensive, so is allot of stuff.

I'm not making the arguement, just presenting it, please counter argue and present the solution.

hmmm

Bluefoam wrote: »

I'm not making the arguement, just presenting it, please counter argue and present the solution.

If we drive institutional landlords out of the market, those apartments won't be built - the impact will be to reduce supply & keep rents high. The usual suspects are falling for this, and jumping on the bandwagon, not realising who stands to benefit. People need to be less naive.

Dolbhad

Bluefoam wrote: »

and...? I'm not denying any of that. But, the housing issues are being solved... renting is only a percieved issue. Renters can still afford to eat etc. So whats the problem? Rent is expensive, so is allot of stuff.

I'm not making the arguement, just presenting it, please counter argue and present the solution.

Housing issues aren’t being resolved though. It’s not just a case of needing more houses on the market but it’s needing more affordable housing on the market (renting and buying). And also to have a system of both renting and property ownership that is stable that seems to be possible in other countries. Yet we have not managed to get right here. It seems to be a lot of highs or lows in the market - boom to bust. IMO I had hoped we would have benefited more from Brexit in terms of jobs creation but it seems a lot of companies have been put off from the housing crises. And it’s not just buying houses but from high rents and also trying to secure a property to rent. It’s made companies decide to go elsewhere in Europe.

I think it’s more than people need to have enough money to just pay rent and eat and than that’s enough. Families dealing with homelessness is at an all time high, it appears to be, and putting pressure on resources to find them homes in the short term and a big cost to the government. Also rent is higher than in the “boom” but we don’t have the wages as such back then. It’s not enough to have wages to cover rent and food and that’s it. We need people spending in the economy. We need people having money to put a way in pensions etc for the future as we live longer. And possibly having the chance for people to buy a home in the future.

I’m sure loads of posters have offered solutions before but at the core we need to build and build smartly (high rises closer to cities). Yes we need professional landlords but we also just need landlords. Yes a lot of incidental landlords popped up as a result of the recession and are leaving now. But we should be encouraging all landlords. And you can’t have a two tier system where the REITs can make a massive profit through gaps in legislation (and the government not be benefit from the tax to use the money elsewhere) and tax so much of the private landlord. People are scared to rent out properties over the stories of it taking so long to remove tenants who don’t pay. RPZ won’t be anything if blocks of new apartments are bought and they set the rents very high to deal with the RPZ and even if you weren’t in a zone, no guarantee is stays that way so you’ll want to be able to set it as high as possible to protect yourself in the future.

I also think the government need to build houses once again. It seems a bad way to use resources to be bidding on the open market for the odd house here and there. The government is the biggest landlord owner in the country. They could do this if they planned correctly. It needs to be a property cause I think a good functioning property market where people are speculating as much would benefit the country as a whole. These reaction methods are not working.

That was much longer than I expected!

beauf

hmmm wrote: »

If we drive institutional landlords out of the market, those apartments won't be built - the impact will be to reduce supply & keep rents high. The usual suspects are falling for this, and jumping on the bandwagon, not realising who stands to benefit. People need to be less naive.

Drive them out of the market?

We are laying out the red carpet showering them with money...

David Ehrlich, former CEO of Ireland’s largest landlord, Ires Reit, explained: “We’ve never seen rental increases like this in any jurisdiction that we’re aware of.” He added, “I truly feel badly for the Irish people.”

David got a bonus top-up of €376,500 added to his €753,000 salary that year. And, when he subsequently moved on he sold his stock options for €4m.

https://www.independent.ie/irish-news/gene-kerrigan-with-the-reit-stuff-you-can-rake-in-the-money-37168703.html

Bluefoam

hmmm wrote: »

If we drive institutional landlords out of the market, those apartments won't be built - the impact will be to reduce supply & keep rents high. The usual suspects are falling for this, and jumping on the bandwagon, not realising who stands to benefit. People need to be less naive.

I believe it's a strategic move from the government... Once they have met or closed in on demand, they will close the loopholes and we'll return to a more regular market.

beauf

Dolbhad wrote: »

Housing issues aren’t being resolved though. It’s not just a case of needing more houses on the market but it’s needing more affordable housing on the market (renting and buying). And also to have a system of both renting and property ownership that is stable that seems to be possible in other countries. Yet we have not managed to get right here. It seems to be a lot of highs or lows in the market - boom to bust. ...

Exactly. Most people aren't getting that the housing is dysfunctional and distorted in Ireland, and getting worse.

beauf

Bluefoam wrote: »

I believe it's a strategic move from the government... Once they have met or closed in on demand, they will close the loopholes and we'll return to a more regular market.

They won't be able to.

Bluefoam

beauf wrote: »

They won't be able to.

I see. Although I am stuggling with the amount of detail you have provide and you present a very strong arguement...

JDD

I think there's going to be an issue if four or five REITs end up owning 50-60% of new build rental apartments in the cities.

Think of couples in their early thirties just starting families. In the past, these would be the couples buying first-time starter homes. Except those starter homes are €500k now and they don't have the salaries to cover the mortgage. So they look to buying a two or three bedroom apartment.

When there's such price power amongst a small number of REITs (most of whom are foreign-owned) they can price fix the rental amounts. High rents attract more investors to the apartment markets - pushing the selling price up of those apartments. Suddenly, Joe and Josephine can't afford the apartments either, even if they could find a developer that is going to sell to the owner occupier market.

So they continue to rent, paying €1500-2000 a month on 2 bed apartment. They have two kids, paying upwards of €2000 a month on childcare. Nothing left over to save more so that they have the increasing deposit required to buy a property.

At some point prices will drop. The economy will contract. The REITs will sell. And inevitably, banks will become more conservative in their lending. But J&J are now forty, and the repayments on their now shorter term mortgage (because they are older) and their outgoings on two children means the bank will only lend them enough to buy a property on the outskirts - a starter home. They know they are forty, and wherever they buy now is where they are going to live for the rest of their lives. Their kids are in the local school. They've put down roots where they are renting. So they decide to stay.

There are loads of single people, couples and families like this that I know. Fast forward 20 years, when they retire, we are going to have a MASSIVE problem. Their pensions (if they have one) won't cover continuing to pay rent. Even a gold-plated pension with 40 years service only pays 2/3 of your salary, on the assumption that your mortgage will be paid off. There's going to be a lot of people turning to social welfare, and not enough workers to subsidise that. So you, and me, in 20 years are going to be forking out a ****load more in tax to cover this.

And the REITs will have well gone back to the Canada and the UK, rolling in their rental cash.

So no, I don't think block-selling to a small amount of REITs for the purposes of providing supply to the rental market is a solution to anything.

beauf

Bluefoam wrote: »

I see. Although I am stuggling with the amount of detail you have provide and you present a very strong arguement...

I was quoting your links.

alwald

Bluefoam wrote:

I believe it's a strategic move from the government... Once they have met or closed in on demand, they will close the loopholes and we'll return to a more regular market.

You criticise other posts but you start yours with "I believe"...facts are facts and, putting aside sentences that start with "I believe", "I wish" and any other nonsense, it's clear that the current government doesn't have a clear and solid strategy to tackle the housing crisis as a whole both for first time buyers and renters.

They did put in place a number of measures but those didn't include building or increasing the current supply which is what's required - especially around affordable housing.

hmmm

JDD wrote: »

So no, I don't think block-selling to a small amount of REITs for the purposes of providing supply to the rental market is a solution to anything.

The blocks won't be built. Developers don't have the funding, and aren't going to take the chance when it's safer to build low density houses.

The only people who will benefit are existing landlords and property owners as supply dries up.

DubCount

We used to have a functioning housing market in this country, but government policy has brought about this situation. If you want to make housing affordable, you need to look at what is making housing expensive:
- building regulations requiring top grade insulation etc. are great, but this costs money and adds to housing cost
- Planning process is slow and difficult, and this adds time, risk and therefore cost
- Finance is difficult to obtain and expensive when it can be obtained
- Wage levels for skilled (Electricians, plumbers etc.) and non-skilled (laborers etc) staff is expensive here. Its great we give people a better living wage now, but for something as labor intensive as building, its going to add to cost.
- A significant portion of a house price is made up of taxes from either VAT or local authority charges

If you are wondering why developers are not churning out houses/apartments at affordable levels, go ask them what is needed to build at affordable levels. All these populist politicians that are blaming developers, and vulture funds and the banks and landlords and everyone else are missing the point. The current system we have does not allow a developer to build a house for €200k - so dont expect that anyone is going to take on to build an estate where they are expected to sell houses for less than they cost to build.

Bluefoam

alwald wrote: »

You criticise other posts but you start yours with "I believe"...facts are facts and, putting aside sentences that start with "I believe", "I wish" and any other nonsense, it's clear that the current government doesn't have a clear and solid strategy to tackle the housing crisis as a whole both for first time buyers and renters.

They did put in place a number of measures but those didn't include building or increasing the current supply which is what's required - especially around affordable housing.

I think you're missing my point... why would they bother funding or building affordable housing? Let people rent instead. You are working from an outdated model where people would expect to own their houses. The current model would be to use big business to fund building and provide for the masses...