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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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Assetbacked

The_Conductor wrote: »

Apparently we're expecting an increase of 137-140k in Dublin by 2022 (ESRI predictions).
Where these people are supposed to live- is beyond me.

I hope that, given we have so many MNCs that try to adapt to market trends, working from home becomes a more common option. It would bring so many more lovely towns and villages into scope for people to live if there was more flexibility with working conditions.

For example, look at the amount of places within an hour's drive of Dublin without traffic - quite a lot of nice places and these could become realistic housing options for people who work in Dublin if they had greater flexibility. Even just looking at Wicklow: Avoca and Roundwood are just over an hour's drive outside of rush hour into Dublin city centre. If people only needed to do that two times per week and/or had a bit of flexibility with start time, it would definitely lead to more people moving outside of Dublin.

This leads me to something where I see an opportunity in this housing crisis, spreading the growth and jobs from outside of Dublin. Getting high speed Internet around the country and promoting flexible working conditions on the philosophy of a work life balance and this could assist at least a bit with the housing crisis. It seems like the logical evolution for so long as Ireland continues to seek to encourage job creation and company expansion.

OwlsZat

Wildly Boaring wrote: »

There is a serious construction hangover and fear. Once bitten twice shy.

This does seem to be a part of it. It's a very split camp in terms of those who thing the high prices are sustainable and it seems the construction industry itself isn't convinced. It's reluctant to go into overdrive which is fair enough considering the history.

OwlsZat

Mad_maxx wrote: »

It's a key component of the demand side, you could build a hundred thousand units per year but if one hundred and fifty thousand people arrive into the country ( overwhelmingly the cities), your going to be short accommodation

Unfortunately this obvious reality has been politicised

While I doubt this explains much of the housing shortage. There is most certainly a media silence in reporting anything to do with the negatives of inward immigration.

2018_GrossNetMigration_28.08.20181.png

beauf

el Fenomeno wrote: »

Does that figure take into account the lack of available accommodation or is it just based on economic growth, job creation etc.

ie. surely that number will drop quite substantially when they realise they can't find anywhere to live?

A lot of High Skilled workers coming over. Around the IFSC/Docklands lots of apartments were empty of years. Recently they've all filled up the vast majority don't seem to be Irish. But they seem to affluent, and well educated, highly skilled. I've heard some big companies might be subsidising accommodation. They will have a lot of buying power when it comes to accommodation.

A bigger problem might be people working in construction. I've heard of people a good big out looking for house for construction workers. You also see a lot more construction workers on the trains these days. You never used to.

beauf

In the end its always been about supply.

yagan

beauf wrote: »

In the end its always been about supply.

Supply of finance is important too. House prices continued to rise as supply outstripped demand during the bubble. In many instances the ghost estates were in existence years before the credit bubble popped.

That's what makes the current situation hard to read, how much of the Dublin rental market is been inflated by multinationals driving up rents with tax deductible allowances for their staff?

Not all bubbles are the same.

beauf

Its a multi faceted problem for sure. I would agree that its not the same as the last time. The last time was mostly a credit bubble. This time isn't.

I don't think allowances are making a significant impact. They ware likely only in very central locations which are out of the reach of most anyway.
Its more that that people shouldn't assume that immigrants are low paid workers, would then struggle to find accommodation.
Often they are looking at the high end of the market anyway. They are looking for something on a par with whats available internationally at that level.
We are part of a Global economy and workforce.

Fol20

Subutai wrote: »

Here's a table. It's 10%. If you include the 40-50k band it is about 16%. That band is mostly (if not entirely) people on below 50k. Those on 50k should start in the 50k-60k band.

Subutai, where sid you get those figures from. Interesting stats

Assetbacked

https://www.centralbank.ie/news/article/financial-stability-note-real-estate-concentration-in-irish-banking-system and https://www.centralbank.ie/docs/default-source/publications/financial-stability-notes/no-4-real-estate-concentration-in-the-irish-banking-system-(lyons-nevin-and-shaw).pdf?sfvrsn=4

Central Bank Financial Stability Note: Real-estate concentration in the Irish banking system released today. Echoes of Patrick "well capitalised" Honohon around the time of the crash https://www.irishtimes.com/business/honohan-forecasts-rosy-future-for-banks-1.786127

Some high level points from the note;

"Ireland’s 2008-2013 financial crisis highlights the risks attached to real-estate lending. A credit-driven real-estate bubble was followed by a sharp correction in real-estate prices between December 2007 and September 2013.Commercial and residential real-estate prices declined by 67 and 51 per cent respectively in this period."

"The Committee of Inquiry into the Banking Crisis (Lynch et al., 2016) pointed to over-concentration in real-estate lending and found consensus among interviewees that “commercial property broke the banks”."

"Commercial real estate is observably more risky than residential real estate (see ESRB (2018) for detailed discussion on risks in the commercial real-estate sector). As future returns and rents on commercial real estate are closely tied to the business cycle, commercial
real-estate prices are highly sensitive to changes in economic variables. High sensitivity to economic variables can cause commercial prices to be more volatile than residential prices. In addition, commercial real estate in Ireland is even more volatile than in other countries
(IMF, 2018)."

"the Irish banking system is more concentrated in its lending than the banking systems of other euro area countries. This concentration is primarily in residential real estate. Using alternative European cross-country data sets (results not shown but available on request from authors), the Irish banking system consistently ranks among the most concentrated in real-estate exposures."

Conclusion

We find that the Irish banking system remains highly concentrated in real-estate lending. Irish banks have increased their share of residential
mortgage lending while reducing their share of commercial mortgage lending. In a European context, the Irish banking system is among the most concentrated in terms of residential mortgage lending. This level of concentration of the Irish banking system in real-estate lending warrants close attention.

The high degree of concentration of the Irish banking system to real-estate exposures underlines the importance of prudent underwriting by the banking system. The Central Bank’s mortgage market measures help in this regard, by protecting banks and borrowers against a marked loosening of such underwriting. In doing this, the measures serve to strengthen the resilience of a concentrated system. Furthermore, the banking system has increased resilience by virtue of having more stable funding sources and by having higher capital and liquidity ratios, which contribute to an increased capacity of the system to absorb shocks.

This is despite the system itself being concentrated in real-estate exposures, as shown in this Note.

Assetbacked

https://www.irishtimes.com/opinion/cuckoo-funds-are-not-the-enemy-1.3878811?mode=amp
A defence of institutional investors or cuckoo funds is what I thought this article would solely be about as it was written by an economic adviser to an estate agent. However, a key point for me is this line:

If we are to halt the outflow of private landlords, it is essential that we offer them a more equitable tax treatment, particularly given the very favourable tax structure offered to other investment vehicles.

Sherry Fitz economic adviser acknowledging and calling for a solution to the problem with institutional investors! They are hoovering money from the economy via renters while private landlords pay huge tax. More likely private landlords are Irish based as well so the rent they get after tax would stay in the economy most likely. The government is terrified of poking the international investment beast which I think is the main reason for a delay in addressing the uneven playing field.

EDIT: And just to add to the above as I was reading a stat about the "homeless" figures being up 6% year on year to March 2019. The millions of euro it's costing to house these people each year is funded by tax payers - institutional property investors do not contribute to this at all! It's a disgrace how the institutionals are allowed to suck so much from the economy. When they build their apartments to rent out, that just enables them to hoover more money tax free from the economy. I feel this is directly perpetuating the housing crisis and the tax efficient regime needs to be closed as a matter of urgency to share the burden with Irish tax payers.

hmmm

Assetbacked wrote: »

I feel this is directly perpetuating the housing crisis and the tax efficient regime needs to be closed as a matter of urgency to share the burden with Irish tax payers.

So we drive out the institutional landlords ("cuckoo funds") who are paying for thousands of apartments to be built. Let's be clear - developers are building these apartments only because the funds are paying for them to be built, this supply will vanish if the campaign succeeds.

We're already driving out the local landlords with rent caps and other legislation, and SF are tabling a motion shortly to ban evictions which is going to remove even more. You'd be mad to become a landlord at the moment.

This is all going to drive up rents as supply vanishes.

I personally would like to see rents decrease and more supply to enable this to happen - I find the actions of certain political parties and newspapers absolutely disgraceful, and they should take the blame for what will happen if they succeed with their campaigns.

cannotlogin

€80k of a salary isn't anywhere near enough to buy a reasonable property in Dublin. It only allows €280k in terms of mortgage approval.

[Deleted User]

An article by a Sherry Fitz economic adviser.

I wouldn't line the budgies cage with it to be honest.

Their interests and those of the ordinary man in the street are unlikely to coincide.

devlinio

cannotlogin wrote: »

€80k of a salary isn't anywhere near enough to buy a reasonable property in Dublin. It only allows €280k in terms of mortgage approval.

If 80K can't buy someome a decent house, everyone is ****ed.

0gac3yjefb5sv7

devlinio wrote: »

If 80K can't buy someome a decent house, everyone is ****ed.

This! Times 100.

Jaster Rogue

R near enough to buy a reasonable property in Dublin. It only allows €280k in terms of mortgage approval.[/quote]

280k mortgage to buy property at 308k (with 28k deposit). Someone on 80k would also usually have significant portion of savings built up, I mean that's 6.6k /month before tax. If they're serious about buying property they would have more than 28k saved over the years. (You don't start career on 80k so likely they have been working a number of years). Also a lot of ftb now are couples so you could potentially double that value.

[Deleted User]

devlinio wrote: »

If 80K can't buy someome a decent house, everyone is ****ed.

No, don't think this makes sense. If someone on 80k is an FTB then the vast majority of their 'competition' in the market are couples with 2 incomes. There will be many many couples earning that between them.

The_Conductor

Topgear on Dave wrote: »

An article by a Sherry Fitz economic adviser.

I wouldn't line the budgies cage with it to be honest.

Their interests and those of the ordinary man in the street are unlikely to coincide.

While I hear what you're saying- they are one of the vested interests who made ministerial representations on the latest abomination of an RTA amendment- arguing that policies were driving landlords from the sector. When you even have the likes of Sherry Fitz arguing against self defeating policies- you can either cynically question why they care (its bad for their business is why)- or you can get onboard- look at the arguments on both sides of the equation- and draw your own conclusions.

Current policy is to slaughter the small scale landlords who make up 80%+ of the sector- meanwhile- give foreign investors and REITs (who contrary to what you hear some of the time- are predominantly foreign owned, despite being Irish entities). The obvious thing that will happen- is ye small scale landlord gets the hell out of the sector- the large scale landlords do their own property management- kicking Sherry Fitz in the gonads- and the tenant gets screwed- because supply becomes concentrated among larger landlords who can dictate prices (like we haven't seen this before?)

Its just not good policy- its pandering to the lunatic fringe without any analysis whatsoever on the long term effects of policies designed to spin a yarn in the media. Spin- eventually falls over- and we're in the process of falling over.........

skippy123!

I want to hear this one as well... Be careful what are you saying based on issued PPS numbers. A lot of those PPS numbers are inactive and dead for years as people moved back. The ones that stayed (most of us) pay taxes now not only for ourselves but for someone elses children and all other people on the social welfare (by use or abuse).

Assetbacked

hmmm wrote: »

So we drive out the institutional landlords ("cuckoo funds") who are paying for thousands of apartments to be built. Let's be clear - developers are building these apartments only because the funds are paying for them to be built, this supply will vanish if the campaign succeeds.

We're already driving out the local landlords with rent caps and other legislation, and SF are tabling a motion shortly to ban evictions which is going to remove even more. You'd be mad to become a landlord at the moment.

This is all going to drive up rents as supply vanishes.

I personally would like to see rents decrease and more supply to enable this to happen - I find the actions of certain political parties and newspapers absolutely disgraceful, and they should take the blame for what will happen if they succeed with their campaigns.

We don't drive out institutionals, we lower tax for private landlords and actually tax institutionals because right now they acquire land and pay no tax on the acquisition of that land. They then build apartments and rent them out to Irish tax paying workers who pay them rent which then exits the country having incurred no tax on its way out. Meanwhile the private landlord pays quite a lot of tax on the rent they receive and will pay other taxes if they acquire more land to build.

IT is not fair and needs to be made more fair. This is not driving out institutional investors as these are here for the long term so are prepared for changing markets.

cannotlogin

devlinio wrote: »

If 80K can't buy someome a decent house, everyone is ****ed.

Can you find me 5 examples of a decent house for less than €350k in Dublin?

- Safe Area
- Close to Public Transport
- Local amenities
- Good schools nearby
- Walk in condition (as no budget for same)
- 3 bedrooms
- not an apartment
- max 45 min commute to Dublin City Centre

Must meet all of the criteria. It's more difficult than you would think!

0gac3yjefb5sv7

cannotlogin wrote: »

Can you find me 5 examples of a decent house for less than €350k in Dublin?

- Safe Area
- Close to Public Transport
- Local amenities
- Good schools nearby
- Walk in condition (as no budget for same)
- 3 bedrooms
- not an apartment
- max 45 min commute to Dublin City Centre

Must meet all of the criteria. It's more difficult than you would think!

Can tick all those boxes for a 2 bed?

Samuel T. Cogley

Pheonix10 wrote: »

Can tick all those boxes for a 2 bed?

Including 3 bedrooms? :pac:

Littleredcar

Samuel T. Cogley wrote: »

Including 3 bedrooms? :pac:

Kilmore West , beaumont , some santry can all be under those prices possibly donnycarney too

0gac3yjefb5sv7

Samuel T. Cogley wrote: »

Including 3 bedrooms? :pac:

Nada!

Bbborris

I hope for more of this thinking. There's a definite market for Co- living housing.

https://www.rte.ie/news/ireland/2019/0501/1046753-co-living-housing-application/

OwlsZat

Bbborris wrote: »

I hope for more of this thinking. There's a definite market for Co- living housing.

https://www.rte.ie/news/ireland/2019/0501/1046753-co-living-housing-application/

If you create a path to higher yield per sq foot don't be surprised to see every developer go that route. Doesn't actually mean it's going to be any more useful than apartments. Just better returns for the financiers.

[Deleted User]

Bbborris wrote: »

I hope for more of this thinking. There's a definite market for Co- living housing.

https://www.rte.ie/news/ireland/2019/0501/1046753-co-living-housing-application/

It's pretty dire, in fairness.

There's a market because it'll be all people can afford. It won't be because anyone actually wants to live in a shared floor with 40 other people (ie; a hotel).

ontheditch2

[Deleted User] wrote: »

It's pretty dire, in fairness.

There's a market because it'll be all people can afford. It won't be because anyone actually wants to live in a shared floor with 40 other people (ie; a hotel).

I don't know about that. I'm at a different stage in my life now, but when I moved to Dublin 14 years ago, something like this would prove attractive to me. My own bed and quarters without having to house share. Could see a lot of younger people being happy to live there once there are adequate facilities (laundry, cafes, pubs, green space, public transport) in close proximity.

Graham

Deleted User wrote: »

It's pretty dire, in fairness.

There's a market because it'll be all people can afford. It won't be because anyone actually wants to live in a shared floor with 40 other people (ie; a hotel).

It's alway been the case that some people can't afford a 3 bed semi in the burbs. A huge number of people leaving home for the first time start out sharing a house or until relatively recently might have sought out a studio flat.

I probably spent most of my twenties sharing houses/apartments with anything from 1 - 7 other people. Had purpose built co-living spaces been around at the time it would have been quite an appealing option.

Most of the benefits of house share with some of the pain points removed.