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Irish Property Market 2020 Part 2

Graham

Continued from here:

https://www.boards.ie/vbulletin/showthread.php?t=2058041687

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Bass Reeves

brisan wrote: »

My nephew and his wife (both in financial sector ) both work from home and given the choice will continue to do so even with a paycut.
They have a 6 year old child in school
Previously child was dropped to childminder at 8am and picked up around 6
200 A WEEK which was reasonable
60 euro in transport expenses every week
Now they take it in turns to drop the child and pick him up.
No transport costs ,no clothing costs for his wife (regarding work clothes),none for him ,less food costs etc.
More time with their son for him and her and more sleep time as they do not get up till 8am
All in all a much cheaper and less stressful life
They still live in Dublin but if WFH became a permanent option it opens up a much bigger area for them to live in.
He said even if wages went down 20k between them they would stay WFH
He misses the few pints on the odd Friday but its something he can live without

That gives them about 15k in extra discretionary spending. If they took a pay hit of 20k between them at the higher tax rate they still be 100euro a week better off.

However it will be impossible for employers to cut present employee pay, they may stop bonus and pay rises etc but core pay will remain the same.

This gives this couple 15k in extra spending power, it removes the stress of a Dublin mortgage from them. Then it become a lifestyle choice as to whether they move from Dublin or not

awec

Haven't they already tried to decentralise government departments from Dublin in the past? Which they managed to do to an extent, but eventually had to give up as staff didn't want to relocate?

PropQueries

Potatoeman wrote: »

You could argue the salary drop is because your expenses working remotely down the country are much less than in Dublin and your salary reflects that.

I think that's very likely to happen. Mercer etc. already do city cost of living reports for multinationals so can decide what's a fair wage in each of their worldwide locations.

Won't be long before a similar report is used as cover to reduce salaries of WFH workers in relation to rural vs. city living. Once Facebook, Google etc. implement such a policy, the others will follow through fairly quickly and as one poster just said some are already seeking 10% cuts in salaries for employees WFH.

tom1ie

Augeo wrote: »

If you are on a big wedge and WFH suited you a 10% pay cut mightn't be too bad. As mentioned it's 5% after tax..........

If you saved 4/5 hours a week commuting it's 10% ish less work/commute.

Now given that Dublin WFH is likely to be a thing for the foreseeable the short term gain is defo for the company and not the employee.

Fair enough but I personally would not be viewing a reduction in my wages as any kind of winning situation tbh.

[Deleted User]

Potatoeman wrote: »

But the business saves on office space and you pay extra on electricity.

If you're on a big wedge extra electricity costs aren't a huge issue to be fair.

For April, May, June, July and Aug for 2020 by utility cost hasn't increased over 2019 despite the other half working from home fulltime.
It wasn't the winter admittedly but modern lighting isn't a heavy user. Laptops and monitors mustn't be either from my experience.

PropQueries

awec wrote: »

Haven't they already tried to decentralise government departments from Dublin in the past? Which they managed to do to an extent, but eventually had to give up as staff didn't want to relocate?

I think the difference now is that we have a proper motorway network and the internet will be in every house in the country within a few years. For example, Limerick to Dublin is now only a 2 hour drive. Older staff will most likely not move but younger staff may be a lot more open to the idea.

Despite what many believe, the young people today spend most of their time online instead of going to the pub/niteclubs several nights a week. The benefits of city living are still there but the draw isn't as big as when I was a young man.

For example, if they want to hook up (or whatever word is used these days) with a partner, today they just use Tinder etc. When I was young, you had to go to the pub/niteclub to potentially engage in such activities.

cnocbui

awec wrote: »

Haven't they already tried to decentralise government departments from Dublin in the past? Which they managed to do to an extent, but eventually had to give up as staff didn't want to relocate?

Contrast that with the current PS union attitude in Australia where they are actually urging the government to decentralise:

Send NSW public servants to the regions, unions argue

https://www.smh.com.au/national/nsw/send-nsw-public-servants-to-the-regions-unions-argue-20200916-p55w5l.html

I have for years been arguing on here that corporate tax shouldn't be a flat rate it should be a formula based on, say, The population of the nearest town or city to it's employees. The higher the population density, the greater the tax rate. Now Covid and WFH are partially achieving that aim. France should definitely have something along those lines as the degree of centralisation around Paris is ridiculous.

[Deleted User]

tom1ie wrote: »

Fair enough but I personally would not be viewing a reduction in my wages as any kind of winning situation tbh.

Once you go over €70/€80k per annum many folk would happily drop 10% of gross earning if it freed up 5 hours/week for them.
Of course loads of folk want to earn as much as possible and wouldn't have any interest in having extra free time if they had to pay for that......... each to their own.

Browney7

Assetbacked wrote: »

why not let people know this and let them plan accordingly instead of throwing money at unnecessary rents?

Unnecessary for whom? The colleges were facing a funding crisis so get the money off the students for the campus accommodation and stave off a funding crisis in the short term (not excusing it but this surely crossed the minds of the powers that be - an FOI request would be interesting...)

Bass Reeves

Browney7 wrote: »

Unnecessary for whom? The colleges were facing a funding crisis so get the money off the students for the campus accommodation and stave off a funding crisis in the short term (not excusing it but this surely crossed the minds of the powers that be - an FOI request would be interesting...)

I doubt if they would be stupid enough to put it on paper or email but ya some colleges looked at Students after spending the summer on the COVID payment and maybe still on it and taught ''ya we will have some of that''.

Students after a 5-6 months of being cooped up at home taught ya it will be great to be back living in Galway, Cork or Limerick and taught it will be great to be back to the freedom of college and I have money to burn. The ones who are working now realize the implications, the ones on the COVID payment now realize that there may be no big party as lockdown may be imminent

MacronvFrugals

New report from the ESRI - The State should increase the supply of social and affordable housing

https://www.rte.ie/news/business/2020/0930/1168331-esri-coronavirus-property/

Assetbacked

MacronvFrugals wrote: »

New report from the ESRI - The State should increase the supply of social and affordable housing

https://www.rte.ie/news/business/2020/0930/1168331-esri-coronavirus-property/

The FF backbenchers apparently were making noise about needing to make it a priority in the budget too (I read it yesterday but can't find it now). Maybe they do realise the Sword of Damocles is hanging over their political careers unless they take dramatic measures to significantly bring down the cost of housing.

SF holding the Sword; https://www.independent.ie/irish-news/politics/taoiseach-admits-impact-of-covid-19-to-blame-for-new-housing-being-way-down-on-original-estimate-of-24500-39576117.html

PropQueries

MacronvFrugals wrote: »

New report from the ESRI - The State should increase the supply of social and affordable housing

https://www.rte.ie/news/business/2020/0930/1168331-esri-coronavirus-property/

It's amazing that their 'report' is based upon housing demand remaining at pre-covid projections of net migration at c. 30,000 per annum.

As per their report: "Before the pandemic emerged, the Irish housing market was already faced with a significant problem of undersupply. Despite increases over the last number of years there were still only 21,000 housing completions in 2019. This is well short of the amount of housing needed to keep up with the level of structural demand, estimated to be in the region of 30,000-35,000. Issues of undersupply are likely to be amplified by the pandemic which will hinder both investment and construction of new housing."

Are they really assuming net migration will remain at these levels during and after the impact of Covid-19?

This type of "analysis" would be slammed even if it was written as part of a Junior Certificate business studies project.

Hubertj

Assetbacked wrote: »

The FF backbenchers apparently were making noise about needing to make it a priority in the budget too (I read it yesterday but can't find it now). Maybe they do realise the Sword of Damocles is hanging over their political careers unless they take dramatic measures to significantly bring down the cost of housing.

SF holding the Sword; https://www.independent.ie/irish-news/politics/taoiseach-admits-impact-of-covid-19-to-blame-for-new-housing-being-way-down-on-original-estimate-of-24500-39576117.html

Detonator instead of sword would be more appropriate

PropQueries

Hubertj wrote: »

Detonator instead of sword would be more appropriate

Definitely. The FF housing minister has two years to fix the problem as the Taoiseach role reverses back to Leo then.

Basically, whatever he introduces in this budget has to work within the next 12 to 18 months as he won't get a second chance. Then the public can blame both FF and FG for the housing crisis and SF can almost be guaranteed to be in government after the next election.

If he fixes the problem, house prices fall significantly and he annoys the home owner/investor class. If not, he's considered another failure and his out and he basically gives SF a free pass to winning the next election. He really can't win either way, so it will depend on where his priorities lie.

[Deleted User]

PropQueries wrote: »

.........

Basically, whatever he introduces in this budget has to work within the next 12 to 18 months as he won't get a second chance......................

If he fixes the problem, house prices fall significantly.........

No problem will be fixed in 12 to 18 months.
I thought you reckoned house prices were going to fall anyway?

PropQueries

Augeo wrote: »

No problem will be fixed in 12 to 18 months.
I thought you reckoned house prices were going to fall anyway?

Yes, that would have been my opinion, covid or no covid.

That's why I'm very interested in seeing what his solutions are in the budget. To work, any policies introduced will have to result in significant and near term losses for the investor class. Otherwise, the housing problem can't be solved quickly enough to save his and FFs skin.

hometruths

PropQueries wrote: »

Definitely. The FF housing minister has two years to fix the problem as the Taoiseach role reverses back to Leo then.

Basically, whatever he introduces in this budget has to work within the next 12 to 18 months as he won't get a second chance. Then the public can blame both FF and FG for the housing crisis and SF can almost be guaranteed to be in government after the next election.

If he fixes the problem, house prices fall significantly and he annoys the home owner/investor class. If not, he's considered another failure and his out and he basically gives SF a free pass to winning the next election. He really can't win either way, so it will depend on where his priorities lie.

Exactly - problem applies to both FF & FG. Up until this years election I always thought the dilemma for FF/FG was that fixing the problem in the short term would be political suicide, not fixing it would be long term political suicide.

After SFs showing in the general, I am beginning to think that the long term is here now. i.e they have to act now. Whether or not they will take that chance remains to be seen. Early signs are business as usual.

Hubertj

PropQueries wrote: »

Definitely. The FF housing minister has two years to fix the problem as the Taoiseach role reverses back to Leo then.

Basically, whatever he introduces in this budget has to work within the next 12 to 18 months as he won't get a second chance. Then the public can blame both FF and FG for the housing crisis and SF can almost be guaranteed to be in government after the next election.

If he fixes the problem, house prices fall significantly and he annoys the home owner/investor class. If not, he's considered another failure and his out and he basically gives SF a free pass to winning the next election. He really can't win either way, so it will depend on where his priorities lie.

How many social and affordable houses would expect to be built in 12-18 months. Policy will include short medium and long term objectives with deliverables. Government should be judged in that.

hometruths

Augeo wrote: »

No problem will be fixed in 12 to 18 months.
I thought you reckoned house prices were going to fall anyway?

Whilst maybe not completely fix it I reckon they could achieve enough in 18-24 months to stave off SF.

MacronvFrugals

PropQueries wrote: »

Yes, that would have been my opinion, covid or no covid.

That's why I'm very interested in seeing what his solutions are in the budget. To work, any policies introduced will have to result in significant and near term losses for the investor class. Otherwise, the housing problem can't be solved quickly enough to save his and FFs skin.

FF panicking and probably have realized someone needs to get hurt here especially in such a short time frame.

Assetbacked

Hubertj wrote: »

How many social and affordable houses would expect to be built in 12-18 months. Policy will include short medium and long term objectives with deliverables. Government should be judged in that.

Ideally but a generation in politics is only 4 years so that is the timeline they have to actually fix the problem. To be fair, they've had the last few years to do something so they only have themselves to blame.

SF detonating the investor market could result in investors offloading their supply to individual buyers as they fear the landscape has changed which could lead to SF getting more credit than they deserve for getting more people into home ownership.

The_Fitz

Assetbacked wrote: »

Ideally but a generation in politics is only 4 years so that is the timeline they have to actually fix the problem. To be fair, they've had the last few years to do something so they only have themselves to blame.

SF detonating the investor market could result in investors offloading their supply to individual buyers as they fear the landscape has changed which could lead to SF getting more credit than they deserve for getting more people into home ownership.

Would that not be a plan of SFs to do that already?

PropQueries

schmittel wrote: »

Whilst maybe not completely fix it I reckon they could achieve enough in 18-24 months to stave off SF.

And don't forget the gorilla in the room that many appear to be pretending isn't there... the foreign funds who bought up €200 billion in property and business loans between 2012 and 2016... What's their short-term plans?

And that doesn't include all the foreign investor cash that invested in property between 2016 and 2019. For example, Colony Capital (the backer of the facebook and salesforce buildings under construction in Dublin) placed both up for sale three months ago.

Irish Times link here: https://www.irishtimes.com/business/commercial-property/ronan-and-colony-selling-majority-stake-in-facebook-and-salesforce-offices-1.4310910

Assetbacked

The_Fitz wrote: »

Would that not be a plan of SFs to do that already?

Wouldn't be a bad plan to be fair; selling the BTLs to individuals rather than renting them out.

hometruths

PropQueries wrote: »

And don't forget the gorilla in the room that many appear to be pretending isn't there... the foreign funds own bought up €200 billion in property and business loans between 2012 and 2016... What's their short-term plans?

If the government was smart it could leverage that to their advantage.

The_Fitz

Assetbacked wrote: »

Wouldn't be a bad plan to be fair; selling the BTLs to individuals rather than renting them out.

Definitely, if it gets more people into singular home ownership then it would be. I'd give them the credit for this if they did it.

Smouse156

The_Fitz wrote: »

Definitely, if it gets more people into singular home ownership then it would be. I'd give them the credit for this if they did it.

It would be good but the rent slaves would get further screwed as rental supply would dwindle! Many argue the rental crisis is worse than the home ownership crisis

Pelezico

Smouse156 wrote: »

It would be good but the rent slaves would get further screwed as rental supply would dwindle! Many argue the rental crisis is worse than the home ownership crisis

There is no rental crisis. There are more houses for rent in Dublin than there have been for years.

Airbnb tourists, students and general unemployment have dented the rental market.

The_Fitz

Smouse156 wrote: »

It would be good but the rent slaves would get further screwed as rental supply would dwindle! Many argue the rental crisis is worse than the home ownership crisis

I suppose the only answer to both is to build more houses, and quickly. And not allow vulture funds to sweep them up, ensuring that rent coming back is coming back to the state?