Irish Property Market 2020 Part 2

Hubertj · 26-10-2020 3:20pm

PropQueries wrote: »

Maybe colony capital and blackrock are the only investment funds selling/getting out due to bad investments, possible but not probable.

Here’s some advertised real estate in Dublin that Aviva is selling to meet redemption requests:

Hibernian way: https://www.irishtimes.com/business/commercial-property/aviva-tests-strength-of-market-with-80m-sale-of-royal-hibernian-way-1.4343825?mode=amp

Elm Park : https://www.irishtimes.com/business/commercial-property/aviva-set-to-market-prime-headquarter-office-at-elmpark-green-for-28m-1.4205105?mode=amp

And it’s not just commercial real estate that’s being forced to sell. Many residential developers are also being ‘forced to rent‘ as nobody was buying their properties pre-Covid. Forced to rent is very similar to forced selling and is a temporary measure until they are indeed forced to sell.

Here’s one example pre-Covid: https://www.irishtimes.com/life-and-style/homes-and-property/plan-b-for-d4-boutique-apartments-as-buyers-become-renters-instead-1.4161644?mode=amp

Many other apartments in Dublin that were for sale are now being offered on the rental market and it’s not because renting offers a better return. They’re being forced to rent as there’s very few buyers.

This temporary backstop won’t last long as they’re still empty due to little rental demand. These will be the forced residential market sellers in the next few months.

Everyone has left Dublin for the mystical vacant properties. The population of Leitrim has increased 243% since lockdown. Property boom in Leitrim. MNCs will relocate to their as well.

Marius34 · 26-10-2020 3:23pm

enricoh wrote: »

I reckon you're right, the government is buying over 40% of all the new builds, through various charities, housing associations etc etc.

Huge numbers of people are going to need the government to pay the rent for the foreseeable.
We're the 3rd most indebted developed country in the world iirc.
It won't be long before the lads lending us all the billions for this start charging us more interest imo. Surely that 40% figure will drop like a stone.

I saw few time already those figures. Where are you getting this from?
I don't think it's a factual numbers.

House Hunt · 26-10-2020 4:15pm

PropQueries wrote: »

Except that the investors and pension funds now selling in.dublin are forced sellers:

Colony capital: https://www.irishtimes.com/business/commercial-property/colony-capital-seeks-buyer-for-stakes-in-prime-dublin-offices-1.4257498?mode=amp

Pension funds: https://www.irishtimes.com/business/commercial-property/aviva-stops-investors-from-taking-money-out-of-irish-property-funds-1.4157574?mode=amp

Blackrock - Blanchardstown shopping centre: https://m.independent.ie/business/irish/blackstone-and-aib-in-standoff-over-blanchardstown-shopping-centre-debt-39463682.html

Blackstone, not BlackRock

enricoh · 26-10-2020 4:29pm

Marius34 wrote: »

I saw few time already those figures. Where are you getting this from?
I don't think it's a factual numbers.

Can't find the link, but pretty sure my numbers are right, it may be behind the paywall on this Irish times page-
Groups other than households bought almost half new homes in capital in last year
https://www.irishtimes.com/business/commercial-property/state-bodies-playing-role-in-squeezing-dublin-housing-market-1.4356642?mode=amp

Marius34 · 26-10-2020 5:05pm

enricoh wrote: »

Can't find the link, but pretty sure my numbers are right, it may be behind the paywall on this Irish times page-
Groups other than households bought almost half new homes in capital in last year
https://www.irishtimes.com/business/commercial-property/state-bodies-playing-role-in-squeezing-dublin-housing-market-1.4356642?mode=amp

Even your link says differently:
"As noted by Goodbody chief economist Dermot O’Leary, the non-household sector (private companies, charitable organisations, and State institutions) accounted for 41 per cent of new home purchases in July and for 39 per cent over the past 12 months."

So you think all those non-household purchase falls under government? It's a bit of mad to think, that REITs and other investors do not play role on new build sales.

PropQueries · 26-10-2020 6:11pm

Marius34 wrote: »

Even your link says differently:
"As noted by Goodbody chief economist Dermot O’Leary, the non-household sector (private companies, charitable organisations, and State institutions) accounted for 41 per cent of new home purchases in July and for 39 per cent over the past 12 months."

So you think all those non-household purchase falls under government? It's a bit of mad to think, that REITs and other investors do not play role on new build sales.

Well to be fair, if the government isn’t buying them directly, they’re most likely funding their purchase through the back door through long term lease agreements or HAP.

One example is Herbert Hill in Dundrum here: https://www.dublinlive.ie/news/property/dundrum-housing-lease-deal-cost-17369248

Bluefoam · 26-10-2020 6:26pm

PropQueries wrote: »

Well to be fair, if the government isn’t buying them directly, they’re most likely funding their purchase through the back door through long term lease agreements or HAP.

One example is Herbert Hill in Dundrum here: https://www.dublinlive.ie/news/property/dundrum-housing-lease-deal-cost-17369248

But the government clearly isn't purchasing 40% of residential property, nor have they been... Nothing close & there's nothing to back up that arguement.... It's just not true nor nearly true. Nor can you just say that they are probably buying 40% of property through other means... No they're not.

PropQueries · 26-10-2020 6:42pm

Bluefoam wrote: »

But the government clearly isn't purchasing 40% of residential property, nor have they been... Nothing close & there's nothing to back up that arguement.... It's just not true nor nearly true. Nor can you just say that they are probably buying 40% of property through other means... No they're not.

Well the housing minister said in July: “You’ll know that for 2020, the target was to deliver 11,167 social homes through the Build, Acquisitions and Leasing programmes combined,” O’Brien said.“

That’s a lot of government purchases/leases in the private market, directly competing with first time buyers, especially given how little dedicated social housing they’re building.

Basically, the government is the housing market now and they’re taxing/ will be taxing younger workers more and more to continue outbidding them for housing in the marketplace. Basically younger workers are funding their main competitor in the marketplace i.e. the government. Hard to win a bidding war against them IMO.

Link here: https://www.thejournal.ie/housing-minister-local-authorities-buy-up-new-properties-5155602-Jul2020/

CorkRed93 · 26-10-2020 7:37pm

PropQueries wrote: »

The governments removal from the market through either not being able to borrow any more or not needing social housing anymore (that’s very possible in my opinion and may happen sooner than many people realise) will be equivalent (probably worse) to the banking bust over 10 years ago.

why would they "not need" it anymore? and why do you feel its possible? genuine q as seen with 2020 election housing a major issue and one would assume less/no social housing = annihilated in election?

Wanderer78 · 26-10-2020 7:47pm

PropQueries wrote:

This will stop sooner than many people realise and thatâ€™s probably when the real major crash will happen. The governments removal from the market through either not being able to borrow any more or not needing social housing anymore (thatâ€™s very possible in my opinion and may happen sooner than many people realise) will be equivalent (probably worse) to the banking bust over 10 years ago.

Central banks can never run out of money, but our government can run into limitations in borrowing, but I wouldn't be worrying about that, as always, private debt is the far more dangerous debt, as the previous crash showed us. For the forseeable future, increasing public debt is more than likely the only way to get out of this one, and should be far safer to, as history shows us, there's been far less and far less serious crashes from public debt

PropQueries · 26-10-2020 8:19pm

Wanderer78 wrote: »

Central banks can never run out of money, but our government can run into limitations in borrowing, but I wouldn't be worrying about that, as always, private debt is the far more dangerous debt, as the previous crash showed us. For the forseeable future, increasing public debt is more than likely the only way to get out of this one, and should be far safer to, as history shows us, there's been far less and far less serious crashes from public debt

Well just in my short lifetime the UK needed an IMF bailout in the 1970s and Ireland was in deep trouble in the 1980s. The ECB will not keep printing money to continue lending to Ireland to allow the government to continue paying landlords €2,000 a month to rent apartments or to pay €350 a week in PUP payments which is more than many workers received per working week in many other countries in the EU pre-Covid.

jgt3 · 26-10-2020 8:30pm

PropQueries wrote: »

€350 a week in PUP payments

I think it's a siding scale now, so you don't just get the fixed amount, unless it was similar to your previous income.

Wanderer78 · 26-10-2020 8:43pm

PropQueries wrote:

Well just in my short lifetime the UK needed an IMF bailout in the 1970s and Ireland was in deep trouble in the 1980s. The ECB will not keep printing money to continue lending to Ireland to allow the government to continue paying landlords â‚¬2,000 a month to rent apartments or to pay â‚¬350 a week in PUP payments which is more than many workers received per working week in many other countries in the EU pre-Covid.

Yup true, but again, history shows, globally, there has been far more, and far more serious crashes related to private debt, as 08 showed us. The ECB will probably continue to keep supplying the markets with money, making it available to countries such as ours, as long as we can continue to service these debts, because failing to, would probably prolong the downturn for major proportions of the Euro zone, including ourselves.

PropQueries · 26-10-2020 8:47pm

CorkRed93 wrote: »

why would they "not need" it anymore? and why do you feel its possible? genuine q as seen with 2020 election housing a major issue and one would assume less/no social housing = annihilated in election?

It’s based on an article I read last year about a planning application to the council to build student accommodation units in Dublin 7. It was under 200 beds so the SHD didn’t apply.

The council asked them to come back with a report on how much student accommodation had been or is planned to be built in the area before making their decision.

Then it hit me. The state has no idea what’s being or has been built anywhere. They have an idea of new builds but they have very little idea on how many homes have re-entered supply through probate sales or refurbished properties.

I believe it’s a lot more than many people (or the state) realise. It’s just a thought. No proof. But either does the government.

And that could be a problem if the state is making decisions on the basis of a housing undersupply that may not really exist. Maybe it does but I’m doubtful.

Hubertj · 26-10-2020 9:43pm

PropQueries wrote: »

It’s based on an article I read last year about a planning application to the council to build student accommodation units in Dublin 7. It was under 200 beds so the SHD didn’t apply.

The council asked them to come back with a report on how much student accommodation had been or is planned to be built in the area before making their decision.

Then it hit me. The state has no idea what’s being or has been built anywhere. They have an idea of new builds but they have very little idea on how many homes have re-entered supply through probate sales or refurbished properties.

I believe it’s a lot more than many people (or the state) realise. It’s just a thought. No proof. But either does the government.

And that could be a problem if the state is making decisions on the basis of a housing undersupply that may not really exist. Maybe it does but I’m doubtful.

This is 1 of your more stupid comments. It’s up there with linking government policy to maintain high property prices with direct provision. Truly mad stuff altogether.

PHG · 26-10-2020 11:10pm

PropQueries wrote: »

Well just in my short lifetime the UK needed an IMF bailout in the 1970s and Ireland was in deep trouble in the 1980s. The ECB will not keep printing money to continue lending to Ireland to allow the government to continue paying landlords €2,000 a month to rent apartments or to pay €350 a week in PUP payments which is more than many workers received per working week in many other countries in the EU pre-Covid.

You need to look up how the Money Supply works and eradicating debt using inflation. The UK only paid off the last of its WWII debt the other week I think.

The EU does not go, "oh well cannot give Ireland any more money because of those pesky landlords". More landlords are leaving the market than ever.

Finally, the cost of living is a lot higher in Ireland than in say Eastern Europe, it is not a correct comparison. But don't let facts and a bit of research get in your way.

KennisWhale · 27-10-2020 9:03am

https://www-irishtimes-com.cdn.ampproject.org/c/s/www.irishtimes.com/business/economy/mortgage-drawdowns-fall-by-almost-a-third-1.4391707?mode=amp

Fewer than 6,400 people took out mortgages to buy homes in the three months to the end of September as Covid-19 took its toll on the property market.

Banking and Payments Federation of Ireland statistics show the total number of home loans drawn down during the three-month period was 8,220, a fall of 30.3 per cent on the 11,794 mortgages taken out through the third quarter of last year.

Not great when we are again in lockdown for half of Q4 so presumably it won't be much better. Q3 was an improvement on Q2 apparently.

https://amp.rte.ie/amp/1172420/

Supply of houses was down 1/3 on Daft during the same period so there is a correlation between the lower supply and the lower demand for mortgages. Meaning, covid may have stunted supply but may not have muted demand, even at the current market levels. Not to sound like an agent or an IT article but signs of robustness in the housing market perhaps.

Considering the lockdowns and restrictions when not in lockdown, it looks like the economy won't be free of most restrictions until next spring or even summer, which means the fallout from covid with jobs that aren't directly in the firing line, like law, finance and tech, won't be seen until people are getting back to normal. This time next year we will know if the Central Bank interventions are enough to restore some sort of pre-Covid status quo to the economy. The pre-Covid issue of what to do about the mind boggling mountain of debt in the global economy will hopefully be a fight for a few years down the line.

handlemaster · 27-10-2020 9:23am

https://m.independent.ie/business/commercial-property/aviva-initiates-legal-action-against-carpetright-over-rent-dispute-39648718.html

There will l be alot more to come case like this. Covid hasn't gone away.

KennisWhale · 27-10-2020 9:30am

handlemaster wrote: »

https://m.independent.ie/business/commercial-property/aviva-initiates-legal-action-against-carpetright-over-rent-dispute-39648718.html

There will l be alot more to come case like this. Covid hasn't gone away.

Irish Life owns half of Grafton St on behalf of their pension funds. If you ticked the box for more risky investments in your portfolio, it could be a bumpy ride.

PropQueries · 27-10-2020 10:19am

According to the Irish Times today: 'Tourists and renters to be permitted in student accommodation'

"The decision by Dublin City Council to allow five purpose-built student facilities to be used for holiday or general rental was described by Labour Senator Maire Sherlock as setting a dangerous precedent for co-living by the back door. The council approved the use up to May 31st with a condition that short-term lets would be restricted to two months.”

Link here: https://www.irishtimes.com/news/ireland/irish-news/tourists-and-renters-to-be-permitted-in-student-accommodation-1.4391807

PommieBast · 27-10-2020 11:33am

KennisWhale wrote: »

Irish Life owns half of Grafton St on behalf of their pension funds. If you ticked the box for more risky investments in your portfolio, it could be a bumpy ride.

Probably still a better bet than the "non risky" option of government bonds. For someone of my age pension contributions is basically just another tax.

</off-topic>

fliball123 · 27-10-2020 12:44pm

dor843088 wrote: »

People in here dont seem very rational. If we are heading into the biggest economic shock in modern history what makes people think that property will be the only unaffected market ? All markets are bubbles right now. Nothing makes sense including the property market.

the thing is we have been in this shock for the last 8/9 months and prices have not dropped.

WhenPigsCry · 27-10-2020 12:50pm

fliball123 wrote: »

the thing is we have been in this shock for the last 8/9 months and prices have not dropped.

The Great Property Crash, originally scheduled for 2019 due to Brexit, is currently expected in 2021 due to Covid, or 2022 at the latest. Please defer any property purchases until after this date in order to avail of great bargains.

PropQueries · 27-10-2020 1:04pm

WhenPigsCry wrote: »

The Great Property Crash, originally scheduled for 2019 due to Brexit, is currently expected in 2021 due to Covid, or 2022 at the latest. Please defer any property purchases until after this date in order to avail of great bargains.

Technically it did

The developers couldn't sell their properties pre-covid so were forced into the renting their new build properties. These probably aren't renting either as the increases in Daft.ie listings has shown. The original financiers of these developments didn't sign up to fund long-term rental properties so will want their investment/loans back over the next few months. This is when we will begin see the 'forced rentals' converting into 'forced sales' IMO. They tried a similar tactic after the last crash.

This is just one example from February 2020 (pre-covid):

"But sales failed to materialise in line with expectations and developer Agricula has withdrawn the properties from the market and returned booking deposits to intending buyers. As of mid-January they have been advertised for rent through agent Bergins. Half the units have since been rented. Originally the apartments at 19 Pembroke Road were priced from €650,000 for a one-bedroom unit up to €1.1 million for a two-bed penthouse, but renters can now expect to pay from €3,000 per month for a 54sq m one-bed up to €3,400 for a 71.5sq m one-bed."

Link to article here: https://www.irishtimes.com/life-and-style/homes-and-property/plan-b-for-d4-boutique-apartments-as-buyers-become-renters-instead-1.4161644

fliball123 · 27-10-2020 1:09pm

PropQueries wrote: »

Technically it did The developers couldn't sell their properties pre-covid so were forced into the renting their new build properties. These probably aren't renting either as the increases in Daft.ie listings has shown. The original financiers of these developments didn't sign up to fund long-term rental properties so will want their investment/loans back over the next few months. This is when we will begin see the 'forced rentals' converting into 'forced sales' IMO. They tried a similar tactic after the last crash.

This is just one example from February 2020 (pre-covid):

"But sales failed to materialise in line with expectations and developer Agricula has withdrawn the properties from the market and returned booking deposits to intending buyers. As of mid-January they have been advertised for rent through agent Bergins. Half the units have since been rented. Originally the apartments at 19 Pembroke Road were priced from €650,000 for a one-bedroom unit up to €1.1 million for a two-bed penthouse, but renters can now expect to pay from €3,000 per month for a 54sq m one-bed up to €3,400 for a 71.5sq m one-bed."

Link to article here: https://www.irishtimes.com/life-and-style/homes-and-property/plan-b-for-d4-boutique-apartments-as-buyers-become-renters-instead-1.4161644

and prices still have not dropped

PropQueries · 27-10-2020 1:13pm

fliball123 wrote: »

and prices still have not dropped

Of course not. Property is highly illiquid. But transactions are well down which doesn't bode well for the future direction of the property market.

As many have said here before, the only ones able to purchase are multinational employees and similar workers etc. who haven't been impacted by Covid-19.

Where are all these buyers if transactions are down. Plus there's only so many workers who aren't impacted that actually do require to purchase a home. The supply of these non-impacted covid-19 workers seeking to purchase a home is not unlimited.

JimmyVik · 27-10-2020 1:26pm

WhenPigsCry wrote: »

The Great Property Crash, originally scheduled for 2019 due to Brexit, is currently expected in 2021 due to Covid, or 2022 at the latest. Please defer any property purchases until after this date in order to avail of great bargains.

Ive moved my prediction date twice now.
Do I have to move it out another year until im right.
I will be right eventually, even if I have to move it for the next 10 years

KennisWhale · 27-10-2020 1:34pm

PropQueries wrote: »

Technically it did The developers couldn't sell their properties pre-covid so were forced into the renting their new build properties. These probably aren't renting either as the increases in Daft.ie listings has shown. The original financiers of these developments didn't sign up to fund long-term rental properties so will want their investment/loans back over the next few months. This is when we will begin see the 'forced rentals' converting into 'forced sales' IMO. They tried a similar tactic after the last crash.

This is just one example from February 2020 (pre-covid):

"But sales failed to materialise in line with expectations and developer Agricula has withdrawn the properties from the market and returned booking deposits to intending buyers. As of mid-January they have been advertised for rent through agent Bergins. Half the units have since been rented. Originally the apartments at 19 Pembroke Road were priced from €650,000 for a one-bedroom unit up to €1.1 million for a two-bed penthouse, but renters can now expect to pay from €3,000 per month for a 54sq m one-bed up to €3,400 for a 71.5sq m one-bed."

Link to article here: https://www.irishtimes.com/life-and-style/homes-and-property/plan-b-for-d4-boutique-apartments-as-buyers-become-renters-instead-1.4161644

Brexit blamed for sluggish sales market

The delusion! Nothing to do with the prices being advertised.

KennisWhale · 27-10-2020 1:37pm

nerrad01 wrote: »

Its a simple supply and demand issue, not enough properties and still enough people in secure well paid employment to keep the prices sustained. I cant see this changing, and i had previously been convinced we would be in for a crash.

The rental market on the other hand is in for a major correction (or at least should be if the reits were made pay tax on all those vacant properties they are using to price fix the rental market with). What effect this will have, if any, on the purchasing market is anyones guess

On that; in Dublin, the average asking rents for 1 and 2 bed apartments has dropped 15-20% in 6 months of covid. Could end up being even worse the longer these restrictions go on.

Shoden · 27-10-2020 1:37pm

Here's an interesting video on the subject just posted by Shane Fleming: https://youtu.be/H_rSohgB6JU

Irish Property Market 2020 Part 2

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