Vacant Properties in Ireland

Timing belt wrote: »

Unless wages get cut by 50% this drop in house prices to the extent you talk about is not going to happen

You're assuming there are plenty of more Googles, Facebooks etc. out there. You're also assuming these Googles, Facebooks etc. will remain here.

You're also assuming that the state can continue to employ more and more people at the current wages. They already cut the wages and benefits of the new entrants after 2011 so I believe cuts (both in salaries and actual job numbers) are coming in the next few years in both the public sector and in the multinational sector.

Our wages are eventually going to have to realign to Eastern European levels to remain competitive. Sounds insane, I know, but we're an island off an island off continental europe. Without our tax advantages, these multinationals are moving. With WFH, we mightn't even realise they're gone until one day we wake up and people start asking where are all those Google and Facebook jobs gone. I don't remember Enda Kenny cutting that ribbon for the 8,000 jobs Google created. It can also work in reverse.

PropQueries wrote: »

You're assuming there are plenty of more Googles, Facebooks etc. out there. You're also assuming these Googles, Facebooks etc. will remain here.

You're also assuming that the state can continue to employ more and more people at the current wages. They already cut the wages and benefits of the new entrants after 2011 so I believe cuts (both in salaries and actual job numbers) are coming in the next few years in both the public sector and in the multinational sector.

Our wages are eventually going to have to realign to Eastern European levels to remain competitive. Sounds insane, I know, but we're an island off an island off continental europe. Without our tax advantages, these multinationals are moving. With WFH, we mightn't even realise they're gone until one day we wake up and people start asking where are all those Google and Facebook jobs gone. I don't remember Enda Kenny cutting that ribbon for the 8,000 jobs Google created. It can also work in reverse.

It sounds insane because it is. If you think MNCs such as google and Facebook are going to leave Ireland you’re stupid. You clearly have no understanding of MNCs and how they operate. To say without our tax advantages they are gone is stupid. This has been discussed multiple times and you’ve been corrected multiple times so no point doing it again. There are multiple reasons MNCs have a large presence in Ireland. Maybe consider sociopolitical Issues when looking at Eastern Europe. Maybe take a look at how many roles AWS and google have posted in the last 6 weeks.
What I think will happen with MNCs, specifically tech, over short term is a slow down and in some cases a freeze on increasing headcount.
Idiots can’t even issue work visas at the moment to get people in.

schmittel wrote: »

The figures for the vacant properties classified For Sale in Dublin on Census night are just as curious as the rentals.

Total: 4196 - (2682 + 9.5% of 'Other')

Most properties for sale are actually occupied, estimated to be approximately equal to the 2016 home ownership rate of 67.6%.

Thus you would expect the vacant properties classified as for sale to constitute approximately 35% of all properties for sale.

Leading us to conclude that there should have been a total of approximately 12,000 properties for sale in Dublin on April 24th 2016 - 35% of 12k = 4200.

Myhome Q1 2016 report says:



By way of comparison Myhome lists 4471 properties for sale today.

So the For Sale in Dublin vacancy figures are in the region of 2.5 times higher than you might expect.

Have I missed something? Can anybody else think of a good reason why there would have been an unusually high number of vacant properties for sale in Dublin on census night?

If not, then just like the rental figures, the census is telling us that we had very healthy supply , and the real live indicators are telling us we are in the midst of a housing crisis.

Does MIAVI or other estate agent bodies publish figures from members on how many properties they offered for sale? Compare to MyHome and daft then compare to census. Whatever about vacant or not. Property is either for sale or it isn’t - on web and/or sign up

Here's an interesting article about the San Francisco rental market posted on another forum titled: "There is a housing shortage and an inventory shortage until there suddenly isn’t.".

The San Francisco rental market appears to be very similar to the rental market for the new build apartments in the Ballsbridge, Docklands areas etc. in Dublin.

Link to article here: https://wolfstreet.com/2020/10/07/san-francisco-condo-boom-turns-to-condo-glut-bust/

schmittel wrote: »

I suspect this might turn out to be prescient in a Dublin context.

And everybody will say "Hang on, how did we not see this coming?! We were told there was a massive shortage."

I think the market will resolve this issue sooner rather than later, as shown by Glenveagh very publicly cutting their prices by c.20% (at the higher end) due to their shareholders demanding a game plan instead of a kicking the can down the road solution.

As I see it, the biggest players in town on the supply side are the investment funds who purchased those €200 billion in property and business loans between 2012 and 2016. The biggest player on the demand side is the state.

As this pandemic plays out, these same investment funds are going to see better opportunities in both Europe and the USA and are most likely already looking at how to reallocate their assets (i.e. existing investments and new cash) to take advantage of any opportunities.

If they see a chance to sell their assets here and move them into these other opportunities with higher returns they will most likely act on such decisions very quickly. I can see these investment funds and and state acting together to kill two birds with one stone i.e. they want to reallocate their resources (i.e. exit) and the state wants a quick solution to the housing issue.

That of course presumes the state does want a solution to the housing issue. If this housing issue is resolved the downsides are actually quite large. Property values fall, the home owning section of the population gets disillusioned with how much they're personal wealth really is etc.

But I can't see how long we can keep pretending that we're wealthier than we are by pretending our personal assets (i.e. our homes) are worth more than they really are in the long run. And, we still have that pensions problem even if our debt wasn't there.

If the existing ministers were in their 60s, I could understand them kicking the can down the road until they retire and let the next few governments deal with it. But most are relatively young and will have to deal with the consequences of this housing/pension/debt problem for at least another two decades before they can retire. The proverbial hole just gets deeper and deeper every year they don't resolve it once and for all. We'll know for sure what their game plan is in a couple of weeks with the budget.

It does look like there will be more kicking of the can down the road stuff. But, I believe the market may put the proverbial wrench into that game plan.

schmittel wrote: »

Interesting article posted in the 2020 thread about Kildare co Co cutting their housing targets:



81% - that's a heck of a drop, and presumably there is a good reason.

But predictably the story focusses on the developer who feels hard done by because of missing out on their slice of future profits from 25,000 new houses, rather than shedding any light on why KCC might have taken such a decision.

This made me laugh. I think you have far more faith in public servants than i do. I would question any decisions made by councils on any matter.

Timing belt wrote: »

Thanks that is a good article and he is correct that the a indirect consequence of central bank policy at the moment is resulting in banks lending more to the fund industry rather than retail customers.

The reason for this is the banks see this as a safer bet as there logic is that funds are invested in all sectors, shares/property/debt etc... and these won't all be impacted at the same time. (Covid questions this risk logic)

In the UK they have protected the retail banks by ring-fencing them and not allowing them lend to funds but the same was never implemented in Europe and USA. This fact plus the massive increase in QE as a result of covid has resulted with Funds with even more cheap credit at a time when investors are getting zero in the banks so the funds industry is awash with cash so they do not need to sell assets in order to buy additional assets.

Even if the fund is a closed fund with a 5 year horizon what you are seeing is that the fund is selling to another fund directly or indirectly and hence the merry go round continues and the wealth gap between rich and poor grows.

When I say selling directly it may be a hedge fund selling property to a pension or insurance fund who are interested in rental yield.

When I talk about selling indirectly I am talking about where the hedge fund have securitised the debt that they have purchased along with some AAA rate debt and sold it on the market which is then purchased by a different fund chasing yield. (This is what I believe has happened to the majority of the Irish debt that was sold to the hedge funds)

Final point is that if the funds industry gets into trouble there is a serious risk that this could bring down banks in Europe and USA who have lent heavily to them. But this does not seem to be happening as the actions by the central banks are resulting in this sector growing. How long can this go on is the important question and why Central banks will not be able to pull the plug on QE without having major impacts.

Good points. It will be interesting if the central banks continue with the QE policy in a similar manner as last time especially as they now know the social problems it has caused. But, the central banks did admit at the very beginning that the whole purpose for QE was to get asset prices back up so I'm quite surprised by the ongoing debate on its impact as it did actually work as intended.

But, I would be very wary of a market that is dominated by so few funds with the real ability to move the market in either direction on a whim.

I think we agree that they will eventually exit. When and how they exit is the question and a very real potential problem and even more so if they do, as I believe, own/control a substantial percentage of those vacant properties.

If many of these properties are spread out across rural areas, the rental yield is meaningless and selling to other investors, bundling them up etc. is also really a non option. They only own/control them because they had to buy them as part of a package of loans that included assets they did want to own. Nobody else wants to own them.

The pessimism from my side primarily comes from their exit plan for these properties and the number is substantial. They may own/control properties capable of housing literally hundreds of thousands of people.

Timing belt wrote: »

I wanted to see where the properties were..... The other useful stat in the data is that only 60k of all vacant properties were vacant for 5 years or more which indicates that hedge funds have not just bought all the properties and left them vacant.

Never said they bought them all and kept them all vacant. There were 123,000 under no categorisation but also not categorised as either "Boarded up - habitable" or "Abandoned farm house" so were properly vacant in 2016 but perfectly habitable in the judgement of the enumerators at that time.

Even if half these (i.e. c. 60,000, which appears reasonable given that they did purchase €200 billion in property and business loans between 2012 and 2016) are owned/controlled by the investment funds, that's the equivalent of over 3 years of current new build housing supply.

As reasoned earlier, there's probably no demand for these homes from other investment/pension funds, so we're back to the problem of what they plan to do with them as I believe we both agree they're going to exit at some point and probably sooner rather than later.

Timing belt wrote: »

They won't exit all in one go as it would make no economical sense.... If they did have that many properties they would let them drip onto the market over a number of years.

Do you believe they will wait while existing new builds and potential probate sales continue to build up in the background? There's also too many risks on the horizon, for example, the OECD tax reforms, political risks (SF) etc. That's why they usually follow the “three and thirty” rule mentioned earlier.

I would also believe they have very little interest in maintaining a department dedicated to their property portfolios in rural Ireland for the next ten or twenty years. I would believe they most likely already have an exit plan and it's probably already in train and I wouldn't like to be on the other side of that bet when they implement it.

Timing belt wrote: »

As I said they will drip feed it to the market over a 5 year window. Plus I don't believe that they have the level of vacant house that you think they have. Your view is a very extreme view which I don't share.

Our property market is extremely distorted (we had one of if not the biggest property busts in modern world history). It's also most likely there is no other developed country in the world where such few short-term thinking funds probably control such a big share of the property market as they do in Ireland.

Extreme views are probably justified in such a scenario.