JamesMason wrote: » Expect REIT values to drop as investors get nervous. What happens to all those vacant high end apartments around Dublin?
beauf wrote: » Last time a lot of these apartments around the docklands sat empty for years. They didn't reduce the rents they were asking, just happy to let them sit there.
beauf wrote: » Quite a while...https://www.thelondoneconomic.com/property/almost-11-billion-worth-of-london-housing-is-sitting-empty/30/10/
Assetbacked wrote: » Dermot Desmond piece in the IT today, shovelling mud onto FF and FG housing policy of the last few decades. An article that will resonate with all renters and I'm sure many homeowners too.https://www.irishtimes.com/opinion/dermot-desmond-everyone-has-a-right-to-a-home-here-is-how-it-can-be-done-1.4195439?mode=amp Some quotes (it is a very long article); "Under any analysis Ireland is much wealthier now than it was in 1972. Many more people are at work, real incomes are higher and interest rates are at historic lows. Yet, we take it for granted that most households will require two incomes to meet the mortgage payments and even then, double income households on the average wage cannot afford a starter home in Dublin. At a societal level that is unacceptable. The State needs to pro- actively intervene." " "Currently institutional investors can acquire apartment blocks in Dublin with an initial return of about 3.6 per cent. Given that the current return on deposits is at best zero, the institution receives a substantial premium to cover any risk of delayed occupancy. The institution will borrow at less than 0.5 per cent. Depending on the amount of debt the institution is prepared to use, the institution can readily earn 12 per cent to 15 per cent on its equity. " "The wider implications of the financialisation of the apartment stock are obvious: 1. Apartment blocks will be designed solely to maximise income for the acquiring institution. They will not be designed to meet any social policy objectives. 2. Decisions on when to rent will be taken on commercial grounds notwithstanding that apartments may remain empty for a protracted period. With a scarcity of accommodation and developers/institutions focussed solely on profit is anyone surprised that many apartments remain vacant while the developer/institution seeks higher and higher rents. 3. In a low interest rate environment, the cost of land for apartments will continue to escalate rapidly. 4. There will be continuing upward pressure on rents. It should be noted that given; a. the relative shortage of housing, and; b. the relatively large stock of existing housing; constructing an additional 20,000 homes per year, less than 1 per cent of stock, will on its own have no noticeable impact on prices or rents. 5. There will be continuing upward pressure on the cost of suitable development land. As apartment buildings are financialised the value of the underlying land is ultimately determined by the yield at which the institution is prepared to acquire the apartment building. The cost of the construction is simply deducted from the final selling price to get the price that someone will pay for the underlying development land. The lower the yield the institution will accept and the greater the rental income the higher the underlying price for the land. Similar price pressures also apply to commercial land." " My suggested solutions come under three headings: 1. Make housing affordable – remove the rent to interest arbitrage 2. The State should direct and control policies for affordable housing. 3. Accelerate the use of existing space and avoid hoarding for expected higher future prices." "Some have warned on the dangers of the downward pressure on rents and housing costs if the State were to build 100,000 public sector houses over the next five years. Surely that downward pressure on prices and rents is precisely what, as a community, we should absolutely strive for. How can anyone justify having Dublin as the most expensive city in the EU to rent an apartment?"
An Ri rua wrote: » It's superb. What an intervention. It's rational, it's doable, and it's quite exposing of Ministerial ineptitude or worse. I read it from start to finish when I woke in bed this morning. It's a call to arms, a calling out of how things are currently being run. What a broadside. On target and deadly. Let's hope it stays on target with all of the unfortunate Covid19 smokescreen for inept (or worse) Ministers. It makes an absolute mockery of any of the political manifestos. Written from the hand of one who views the financial landscape and rewrites the checks and balances. Seismic yet straight forward.
lcwill wrote: » One of the main proposals are a series of measures to enable someone to pay off a 250k mortgage for 1125 a month. In Italy banks are giving fixed rate mortgages for 1%, and that means fixed for the entire period of the mortgage 20-30 years, not fixed for 3-5 years, fixed forever. On a 250k mortgage that it is about 1100 a month over 20 years. What can't Irish banks do the same? If the Government could get Irish banks lending at the same rates other European banks are lending at (or push for a proper common market in financial services across the EU) Irish buyers would have access to much lower cost financing..
J_1980 wrote: » No German bank would ever lend to an Irish domiciled person.)
TheSheriff wrote: » Well thats not true, I've two very good (Irish) friends in Hamburg who recently bought with a German mortgage.
Summer2020 wrote: » Viewed a house this morning. Had been sale agreed at 680k , estate agent told me the highest bidder is a senior BOI employee and pulled out of the sale. Next highest bidder also now doesn’t want to purchase so house is back on view. I questioned whether this is due to some inside knowledge that the economy and housing market are in for a correction - estate agent floundered some nonsense reply. I’d be very cautious bidding on property at the minute. The warning signs are starting to flash for me.
ZX7R wrote: » No estate agent would tell who or what the buyer is or worked at that pulled out. They would be out of business quickly. As for sings are starting to show it will be at least Christmas before you will see the house market adjust, even if there is a complete world economy chrash it takes considerable time for it to filter down
J_1980 wrote: » In Germany thats fine of course. The German house will be promptly reposessed by a German court irrespective how vulnerable they are. I bought with a German loan in Ireland. If I default I would be declared bankrupt in Germany.
TheSheriff wrote: » I'm not disagreeing with you, as I know nothing about German mortgages, but I can't imagine there being very many people living in Ireland who are Irish who are looking to take out a mortgage in Germany to buy a property in Ireland.....
J_1980 wrote: » Because the German banks would never do such business. If they did, the demand would be gigantic:https://hypotheken.fmh.de/rechner/fmh2/ Look at the interest rates (EFF ZINS), these are 10y fix rates
lcwill wrote: » Are we not all EU citizens? Isn't the idea for companies to be able to do business in all EU countries, with all EU citizens on an equal basis? If we were talking manufacturing there would be no question of any problems being able to sell to customers in another EU market. Still not there yet on mortgages, or car insurance, or other financial services, but that is just a political decision.
J_1980 wrote: » Where’s the money from? The same institutional investors buying up blocks are funding the entire irish banking system. Fight them and they pull the rug under this house of cards.
OwlsZat wrote: » I wish I was a member of the illuminati... Who exactly is funding the Irish banks?
Q&A wrote: » That would be me and you. Retail banks are primarily deposit funded these days. Was a different story in the boom. Deposit base couldn't keep up with increasing loan book so they turned to the debt markets. That is what caught them out in the crash. They couldn't raise new debt to pay off maturing bonds. Banks balance sheet shrank considerably after the crises. They've been growing over the past number of years but rather modestly compared to pre-crises rates.
OwlsZat wrote: » And as far as I'm aware the finance for the build to rent boom has come predominantly from America? Huge real estate and investment funds who deal frequency in pensions. It does make me very suspicious why we are extorting our renters for big gains to overseas pension funds. 1) if we have to create a favourable tax climate to line investment fund pockets could we not make it predominantly irish funds? 2) is there a threat against our Government of retaliation of some sort if we dont allow these funds coin money off our renters? It's actually galling that we could bunch the young generation with the debt burden of the last false economic expansion then on top of that hoar them out to be overseas investment gimps.
