2021 Irish Property Market chat - mod warnings post 1

hometruths · 14-01-2021 11:16PM

fliball123 wrote: »

how is one person moving from one house to another not a zero sum game? 1 - 1 = 0

Apologies I phrased that badly - by dual impact I mean you create demand for one house and supply for another.

If increased savings are driving demand I think it will also increase supply that would not otherwise have come on stream. And this supply will beget further supply etc etc.

This idea that FTBs are squirrelling away 50% deposits and they are suddenly going to be unleashed on the market where supply is still falling is nonsense.

hometruths · 14-01-2021 11:20PM

Timing belt wrote: »

I agree.. The only caveat that I would put on demand is that if after all the QE and government spending we don't see a strong recovery with inflation... Then the markets will turn and we could very quickly go into a Depression for 3-4 years and that will kill any demand. Their are a lot of economic indicators flashing orange/red at the moment.

I agree with all that.

In my pent up demand/supply theory I am talking about even if we go back to normal in a sort of base case scenario - i.e all vaccinated, get back to business with largely no ill effects on the property buying/owning class other than people losing 18 months of their lives with nothing to do but save money.

Even in that scenario demand faces headwinds whilst I see tailwinds for supply.

Things could be a whole lot worse.

Timing belt · 14-01-2021 11:23PM

PropQueries wrote: »

It’s a good point. The moment the small investors currently keeping their units vacant to beat the RPZ zones etc. in the hope of a rebound in 2022 see property prices falling, they will either sell or rent out immediately.

What’s amazing is that at the start of last year there was nothing about the sort of supposed housing shortage reported later in 2020.

All that means is that many pulled their properties due to the uncertainties and as another poster stated, these will most likely start flooding back into the market once this pandemic starts going away.

But, and here’s the clincher IMO. New build housing supply in 2020 hasn’t reduced by much compared to 2019. Potential probate sales are still there in the background with the beneficiaries wanting their inheritance sooner rather than later.

There’s many other bigger sources of supply I could mention but I don’t go into them at the moment in case it gives some here a panic attack ��

Your not going to mention Brexit and the impact!!!!!

new building completions have done well but where the slow down has been is on new building commencements as no-one wants to start on a new site in case the economy turns.. It will be next year and the year after where we will see the impact of covid on supply.

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Timing belt · 14-01-2021 11:26PM

schmittel wrote: »

I agree with all that.

In my pent up demand/supply theory I am talking about even if we go back to normal in a sort of base case scenario - i.e all vaccinated, get back to business with largely no ill effects on the property buying/owning class other than people losing 18 months of their lives with nothing to do but save money.

Even in that scenario demand faces headwinds whilst I see tailwinds for supply.

Things could be a whole lot worse.

Agree they could be.... and fingers crossed it stays like that and we can go back to your base case scenario.

PropQueries · 15-01-2021 12:19AM

Timing belt wrote: »

Your not going to mention Brexit and the impact!!!!!

new building completions have done well but where the slow down has been is on new building commencements as no-one wants to start on a new site in case the economy turns.. It will be next year and the year after where we will see the impact of covid on supply.

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Thanks for those. I’ll admit again, you’re good with the figures.

I looked up how they define commencements: “ A Commencement Notice is a notification to a Building Control Authority that a person intends to carry out either works or a Material Change of Use to which the Building Regulations apply. ... Once validated by the building control authority, works must commence on site within the 28 day period.”

So, given that the number of commencements doesn’t appear to match the official figures for completed new builds over the following years, would it give a good indication of previously vacant houses that were refurbished and have re-entered supply but aren’t counted in the new build figures that everyone concentrates on for their measurement of new supply entering the market each year to meet demand?

Browney7 · 15-01-2021 12:19AM

Timing belt wrote: »

If you look at all the tax take will pobably come in around target if there is a fall in income tax (Which there was not in 2020) just look at the extra cash they are making on CGT at the moment...

Investors will make there money from the capital appreciation of the asset rising in value. If you took out a 20 year bond the yield is 0.1%..... the stock market has adjusted prices already for a low yield which you can see in the p/E ratios.. That means that for property the prices of the asset rises or the investor will accept a lower rent. Even taking into account the risk premium on property there is a lot of room for investors to play with.

The landlords of boards.ie need a 6% minimum rental yield to pay them and compensate them for the remote risk of a rogue tenant blowing their house up so it'll be interesting to see how low yields go and whether it will be fuelled by reducing rents or increasing property values.

Timing belt · 15-01-2021 12:29AM

PropQueries wrote: »

Thanks for those. I’ll admit again, you’re good with the figures.

I looked up how they define commencements: “ A Commencement Notice is a notification to a Building Control Authority that a person intends to carry out either works or a Material Change of Use to which the Building Regulations apply. ... Once validated by the building control authority, works must commence on site within the 28 day period.”

So, given that the number of commencements doesn’t appear to match the official figures for completed new builds over the following years, would it give a good indication of previously vacant houses that were refurbished and have re-entered supply but aren’t counted in the new build figures that everyone concentrates on for their measurement of new supply entering the market each year to meet demand?

No these are new builds.. it takes roughly 1.5-3 years to feed through into completions report depending on the size and complexity

Timing belt · 15-01-2021 12:32AM

Browney7 wrote: »

The landlords of boards.ie need a 6% minimum rental yield to pay them and compensate them for the remote risk of a rogue tenant blowing their house up so it'll be interesting to see how low yields go and whether it will be fuelled by reducing rents or increasing property values.

The small LL will be squeezed out of the market (especially if he a BTL loan) when yields drop.... I am talking about the institutional investors

Bass Reeves · 15-01-2021 01:56AM

PropQueries wrote: »

It's simple. Because you stated "Are sisk still building houses for SDCC at 180k a pop? the circumstances that led to them taking that contract (one assumes in 2015/2016) may not prevail now" and are suggesting that the cost of construction has increased significantly between 2018 and 2020 and that one can't compare Sisk Living designing and building A2-rated homes in Tallaght for c. €180k each in 2018 with the cost of construction today.

Yesterday, Cairn Homes stated that their average selling price during 2020 was c. €350k including VAT.

Once VAT, site costs and profit margin are removed, that shows that construction costs haven't increased significantly since Sisk Living completed their contract two years ago. Sisk Living didn't have to pay either VAT on the end selling unit or site costs.

It also shows that DCC recently stating that they can't build units for less than €400k on their own land is most likely not true given that Cairn Homes also contracts out most of their construction to building contractors.

If the cost of construction i.e. labour, materials etc. hasn't increased significantly over the past two years, where is all the extra money going (apparently costs have doubled in the past two years based on the Sisk Living contract in Tallaght and comparing it with the DCC cost of building in 2020 statement) as it's not going on the site, VAT or profit margin as DCC doesn't have these costs?

You are not comparing like for like. I presume you are inferring that Disk charged 177k not Inc vat.

However I presume DCC had planning and services provided to sisks. Neither did Sisk have to pay a development levy. There was only one legal contract not one for each individual house. Sisk will have a profit margin over and above contractor costs included in the 177K. Finance would be less of an issue as I imagine DCC were paying for houses as they were completed Building costs have climbed substantially since 2016. I say by 20-30% at least.

Bass Reeves · 15-01-2021 02:00AM

PropQueries wrote: »

And we’re still continuing to build all that student accommodation they couldn’t fill even pre-covid.

They will have their choice of student accommodation places to choose from should they decide to return in similar numbers to the pre-covid levels for the 2022/2023 academic year.

In relation to data, I suppose daft.ie is the only one to go by even though many now rent homes through Facebook etc. and the local councils snap them up before they even get a chance to be advertised, so it hasn’t been a meaningful report for many years.

This is similar to your prediction last summer that rents would collapse in September 2020 as no students would be renting accomodation.

hometruths · 15-01-2021 08:52AM

WFH here to stay:

People will have a legal right to seek to work from home in the future under Government plans being announced on Friday.

The Government says it will legislate to provide employees with the right to request their employer allow them work remotely.

https://www.irishtimes.com/news/ireland/irish-news/new-laws-will-give-employees-in-the-state-the-option-to-permanently-work-from-home-1.4458770

hometruths · 15-01-2021 09:29AM

Mortgage approvals no longer valid for a year?

A leading lender has reduced to six months the period that mortgage approvals in principle will stay in place.

Haven, which is the broker-focused part of EBS, said mortgage applications approved after this week will no longer be valid for a year.

Other lenders are now expected to follow

Not an Indo subscriber, so cannot see the rest. Interesting comment that other lenders will follow - if that is the case, it suggests that banks are not bullish.

Hubertj · 15-01-2021 09:45AM

schmittel wrote: »

Mortgage approvals no longer valid for a year?

Not an Indo subscriber, so cannot see the rest. Interesting comment that other lenders will follow - if that is the case, it suggests that banks are not bullish.

They discussed on Newstalk earlier. Something to do with people sitting on approvals and exemptions plus having multiple approvals from different banks.

odyssey06 · 15-01-2021 09:45AM

schmittel wrote: »

Not an Indo subscriber, so cannot see the rest. Interesting comment that other lenders will follow - if that is the case, it suggests that banks are not bullish.

Can you expand on that, you think that they expect a deterioration in people's finances in second half of the year, so restricting their horizon to 6 months?

bilbot79 · 15-01-2021 09:46AM

schmittel wrote: »

Mortgage approvals no longer valid for a year?

Not an Indo subscriber, so cannot see the rest. Interesting comment that other lenders will follow - if that is the case, it suggests that banks are not bullish.

Probably reflects the fact that lockdown has made everyones finances look a lot better than they really are.

hometruths · 15-01-2021 09:58AM

odyssey06 wrote: »

Can you expand on that, you think that they expect a deterioration in people's finances in second half of the year, so restricting their horizon to 6 months?

If it was just one lender then I'd say it was down to in house admin, but if others follow it is clearly something across the market.

To me it suggests the banks have some or all of these concerns:

Firstly, as businesses and employees are rolling off government covid supports, a lot of employees who appear to be in secure employment today might find that changes very quickly.

Secondly, they need to balance out their mortgage books with new lending and existing loans. If a large number of existing mortgages are taking payment breaks and exisitng loand might be impaired by future job losses, banks need to be prudent about thenumber of new loans they issue.

Thirdly, general confidence in the economy. Are they positioning to tighten lending because of a downturn.

Whatever the reasoning is, it does not sound bullish.

Cyrus · 15-01-2021 10:22AM

schmittel wrote: »

WFH here to stay:

https://www.irishtimes.com/news/ireland/irish-news/new-laws-will-give-employees-in-the-state-the-option-to-permanently-work-from-home-1.4458770

id say the devil will be in the detail, look at the headline you quoted, gives employees the right to request to WFH, what does that even mean?

tigger123 · 15-01-2021 10:40AM

Cyrus wrote: »

id say the devil will be in the detail, look at the headline you quoted, gives employees the right to request to WFH, what does that even mean?

That part does stick out alright.

It may be the it put the onus back on the employer to provide reasons why the request can't be accommodated.

Quite significant I'd imagine for public and civil service.

Zenify · 15-01-2021 10:41AM

I haven't had mortgage approval in the last 2 years but had it rolling (kept updating) for about 24 months before that. Mixture of KBC and Haven. It was only 6 months we got, I assumed 6 months was normal?

tigger123 · 15-01-2021 10:44AM

Zenify wrote: »

I haven't had mortgage approval in the last 2 years but had it rolling (kept updating) for about 24 months before that. Mixture of KBC and Haven. It was only 6 months we got, I assumed 6 months was normal?

I was mortgage approved with a couple of places before buying in the last few years, and it was always 6 months at a time

awec · 15-01-2021 10:45AM

Zenify wrote: »

I haven't had mortgage approval in the last 2 years but had it rolling (kept updating) for about 24 months before that. Mixture of KBC and Haven. It was only 6 months we got, I assumed 6 months was normal?

Approval in principle was a year. 6 months for full approval.

Timing belt · 15-01-2021 11:26AM

schmittel wrote: »

Mortgage approvals no longer valid for a year?

Not an Indo subscriber, so cannot see the rest. Interesting comment that other lenders will follow - if that is the case, it suggests that banks are not bullish.

It suggests that banks are watching capital and starting to conserve it. Meaning tightening lending conditions

PropQueries · 15-01-2021 11:40AM

Zenify wrote: »

I haven't had mortgage approval in the last 2 years but had it rolling (kept updating) for about 24 months before that. Mixture of KBC and Haven. It was only 6 months we got, I assumed 6 months was normal?

How does that skew the mortgage approval statistics from the past three months that the media have been using to predict the big increase in demand for housing this year.

Given how easy it is now for people to apply for approval online from several lenders at the same time and with people working from home, they also have more time to research and apply across several lenders, would comparing approval statistics over the past few months to approvals in previous years be misleading?

Cyrus · 15-01-2021 11:46AM

PropQueries wrote: »

Given how easy it is now for people to apply for approval online from several lenders at the same time and with people working from home, they also have more time to research and apply across several lenders, would comparing approval statistics over the past few months to approvals in previous years be misleading?

applying for AIP was never difficult, are you actually suggesting the fact people are wfh means they are applying for more AIP than when they were at the office :rolleyes: is there no tangent you wont try and go off on?

You are also suggesting then that people are less productive when working at home if they are spending their time researching mortgages and applying for AIP i presume?

Mic 1972 · 15-01-2021 11:51AM

PropQueries wrote: »

Given how easy it is now for people to apply for approval online from several lenders at the same time and with people working from home, they also have more time to research and apply across several lenders, would comparing approval statistics over the past few months to approvals in previous years be misleading?

can I just say that this makes no sense?
People are supposed to work during their working hours, applying for a mortgage can be done easily outside of working hours

PropQueries · 15-01-2021 11:52AM

Cyrus wrote: »

applying for AIP was never difficult, are you actually suggesting the fact people are wfh means they are applying for more AIP than when they were at the office :rolleyes: is there no tangent you wont try and go off on?

You are also suggesting then that people are less productive when working at home if they are spending their time researching mortgages and applying for AIP i presume?

Well, I think it would be interesting if the data was there to look at. Two years ago, people might have applied to 2 or 3 lenders seeking approval. Now they might apply to 4 or 5.

The approvals statistics might then show that e.g. 3,000 unique people were approved for a mortgage in November, when it may have only being e.g. 1,500.

It's a big difference when attempting to predict future demand for housing and would be especially important to developers when planning their construction targets for 2021?

tigger123 · 15-01-2021 11:54AM

Mic 1972 wrote: »

can I just say that this makes no sense?
People are supposed to work during their working hours, applying for a mortgage can be done easily outside of working hours

You save a lot of time commuting if you're working from home. You could put that 5 to 10 hours per week you're saving into other pursuits.

PropQueries · 15-01-2021 11:55AM

Mic 1972 wrote: »

can I just say that this makes no sense?
People are supposed to work during their working hours, applying for a mortgage can be done easily outside of working hours

Many workers now have up to an extra two hours a day to play with due to less commuting etc. Maybe they are using that time to seek additional approvals so it wouldn't be impacting much on their "productivity".

Vikings · 15-01-2021 12:05PM

PropQueries wrote: »

Well, I think it would be interesting if the data was there to look at. Two years ago, people might have applied to 2 or 3 lenders seeking approval. Now they might apply to 4 or 5.

The approvals statistics might then show that e.g. 3,000 unique people were approved for a mortgage in November, when it may have only being e.g. 1,500.

It's a big difference when attempting to predict future demand for housing and would be especially important to developers when planning their construction targets for 2021?

Maybe this is more to do with the incentives that are now being offered across the board by lenders to attract customers that weren't previously there.

Cash back offers, legal fees etc.

Cyrus · 15-01-2021 12:16PM

PropQueries wrote: »

Well, I think it would be interesting if the data was there to look at. Two years ago, people might have applied to 2 or 3 lenders seeking approval. Now they might apply to 4 or 5.

The approvals statistics might then show that e.g. 3,000 unique people were approved for a mortgage in November, when it may have only being e.g. 1,500.

It's a big difference when attempting to predict future demand for housing and would be especially important to developers when planning their construction targets for 2021?

its not, sorry its nonsense, what basis do you have for believing that people are applying to more lenders because they are WFH?

2021 Irish Property Market chat - *mod warnings post 1*

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2021 Irish Property Market chat - mod warnings post 1