2021 Irish Property Market chat - mod warnings post 1

Smiley11 · 06-02-2021 10:29PM

Timing belt wrote: »

100% agree as a 10% drop on a FTB home is equivalent to 2 years rent.

A potential 10% drop wouldn't deter us from buying now in the slightest. We will never be selling again so its irrelevant to us. What worries me at the moment is the volumes of cash & savings hovering & the pent up bidding aggression!

Supply is chronic. I'm really worried that it won't improve significantly this year which means more rabid bidding wars. The CB rules are containing the potential for huge price hikes to a degree but I'm in awe at the money out there. We have a good deposit & low outgoings thanks to our families. We have AIP til August. We're extremely fortunate & I never imagined being in this position but...our prospects of buying this year are actually pretty slim in the grand scheme of things. There are a hell of a lot of people in Cork with a hell of a lot more money than us. I just find the whole situation so worrying but I really hope something gives as the year goes on.

PommieBast · 06-02-2021 10:57PM

Smiley11 wrote: »

Sounds like you had a lucky escape! Its interesting to see properties re-emerge having been sale agreed over 6 months but I guess you never know whats going on in the background

It was the 2nd Sale Agreed I pulled out of. With the first one the solicitor uncovered the full-house of legal issues (pun intended). Based on my experience I'm guessing that something like 30-50% of Sale Agreed's are aborted.

Timing belt · 06-02-2021 11:00PM

Smiley11 wrote: »

A potential 10% drop wouldn't deter us from buying now in the slightest. We will never be selling again so its irrelevant to us. What worries me at the moment is the volumes of cash & savings hovering & the pent up bidding aggression!

Supply is chronic. I'm really worried that it won't improve significantly this year which means more rabid bidding wars. The CB rules are containing the potential for huge price hikes to a degree but I'm in awe at the money out there. We have a good deposit & low outgoings thanks to our families. We have AIP til August. We're extremely fortunate & I never imagined being in this position but...our prospects of buying this year are actually pretty slim in the grand scheme of things. There are a hell of a lot of people in Cork with a hell of a lot more money than us. I just find the whole situation so worrying but I really hope something gives as the year goes on.

There does seem to be more activity with planning applications and sites lately in Cork when your out and about but most of that won't come on line for year or two or have already been sold off the plans so won't help much with your situation.

I think there are a lot of people who may have been renting in Dublin that may look to WFH in cork which won't be helping with the supply add on top that they will probably be able to pay more which will drive up prices.

I know there are big plans for the docklands all the way down to Páirc Uí Chaoimh but that will be long time coming and when it does I would imagine will be snapped up by REIT's and rented out.

Anyway hopefully supply improves and you find your perfect house

The Spider · 06-02-2021 11:56PM

Smiley11 wrote: »

Very difficult to know what direction we're heading this year really. I know myself that I started off positive in January but the tediously slow roll out of vaccines seems to be a huge problem for the foreseeable. Retail & tourism are scuppered for the time being & I'm wondering what effect all of this will have in the long term. I'm hearing opinions that we could effectively be in lockdown until late summer which is so depressing & I really hope is untrue.

We're just at an age where we don't have the luxury of being able to wait a couple of years to buy & we certainly can't impose on our parents for much longer.

If the property market remains as stagnant as it is presently, the outlook is very bleak for 2021. I'd give anything for a surge in second hand homes coming onto the market but I can't see it happening any time soon. Hopefully things will pick up after March because there are so many people who need homes & the current situation has to be unsustainable for myriad reasons.

2021’s a write off I agree we’re in lockdown until at least after the summer, we’ll actually be more locked down this year than last year for the simple reason we know there’s a vaccine and it’s being rolled out. Last year there was no vaccine so in the summer it was all about living with covid so some things were opened tentatively, restaurants, food pubs etc, and it was possible to have a decent enough staycation. Don5 think we’ll see that this year until at least 70% of the population are vaccinated, last year the vaccin3 wasn’t an option this year they’ll keep everyone locked in to prevent variants multiplying

Smiley11 · 07-02-2021 12:42AM

PommieBast wrote: »

It was the 2nd Sale Agreed I pulled out of. With the first one the solicitor uncovered the full-house of legal issues (pun intended). Based on my experience I'm guessing that something like 30-50% of Sale Agreed's are aborted.

I'd never have thought it could be that high a percentage but I'd say the majority of us have no idea whats going on behind the scenes. I presume if a sale falls through, they contact the last bidders & hope they'll snap the property up. If they don't, they probably have other avenues to explore before they go to the extreme of re-listing. I call it extreme only because it reflects somewhat negatively on the market & agents hate that!

PropQueries · 07-02-2021 11:58AM

Looks like the Government has finally accepted what most regular people have noticed over the past few years i.e. the large number of vacant apartments.

“Darragh O’Brien, the Minister for Housing, is scoping out measures that would tax landlords who hoard vacant apartments, the Business Post can reveal.”

Link to SBP article here: https://www.businesspost.ie/houses/landlords-hoarding-homes-may-face-new-tax-505a28d5

Villa05 · 07-02-2021 12:19PM

PropQueries wrote:

Looks like the Government has finally accepted what most regular people have noticed over the past few years i.e. the large number of vacant apartments.

How long have we been talking about a vacant site tax
Past actions by government would suggest that they are more likely buy or offer a long term lease for social housing

paulcorkgolf · 07-02-2021 12:25PM

Prices forecast predicted to rise by 4% as supply struggles to meet demand in 2021.

Zenify · 07-02-2021 12:39PM

paulcorkgolf wrote: »

Prices forecast predicted to rise by 4% as supply struggles to meet demand in 2021.

Can you include a link?

PropQueries · 07-02-2021 12:40PM

Villa05 wrote: »

How long have we been talking about a vacant site tax
Past actions by government would suggest that they are more likely buy or offer a long term lease for social housing

I think it’s obvious to most that the government has no real intention of solving the housing “shortage” for whatever their reasons are.

But a lot of the leg work has been done, so when someone comes in and actually genuinely wants to resolve it, they should be able to do it very quickly IMO.

But, I’m still of the opinion that the market will eventually solve it given how concentrated the ownership of most of the vacant properties are in Ireland and once they decide to move, there’s not much the state can do to stop them IMO

Villa05 · 07-02-2021 02:08PM

PropQueries wrote:

But a lot of the leg work has been done, so when someone comes in and actually genuinely wants to resolve it, they should be able to do it very quickly IMO.

How much damage will be done in the meantime is the question
We can't just undo those long term leases and anyone coming in who wishes to resolve the issues will be severely handicapped by current policies that commit us to longterm outgoings

Hubertj · 07-02-2021 02:42PM

Villa05 wrote: »

How much damage will be done in the meantime is the question
We can't just undo those long term leases and anyone coming in who wishes to resolve the issues will be severely handicapped by current policies that commit us to longterm outgoings

Would our public and civil servants be stupid enough not to include review clauses in long term contracts? I’d say they are stupid enough. I’m sure you have a different view?

markodaly · 07-02-2021 03:11PM

Strong mutterings that we will have some sort of tax-based claw back this year in the budget, given that we are spending way above what was forecast last year.

To put simply, Ireland and Europe and a lot of the world to be fair are floating in money, to keep the show on the road during the pandemic. If we get out of it by the end of the year, the waterfall of new money will dry up and the bills will have to be paid, which means tax rises, unemployment and longer-term issues of debt.

No one really knows how all this is going to play out. But we could be in for a bit of a contraction over the next year or two.

Ozark707 · 07-02-2021 03:31PM

PropQueries wrote: »

Looks like the Government has finally accepted what most regular people have noticed over the past few years i.e. the large number of vacant apartments.

“Darragh O’Brien, the Minister for Housing, is scoping out measures that would tax landlords who hoard vacant apartments, the Business Post can reveal.”

Link to SBP article here: https://www.businesspost.ie/houses/landlords-hoarding-homes-may-face-new-tax-505a28d5

Well he has only been in the job for about 7 months and been their housing spokesman for years previously. You would hope it didn't take him this long to figure out there was a major issue here.

Timing belt · 07-02-2021 05:51PM

Ozark707 wrote: »

Well he has only been in the job for about 7 months and been their housing spokesman for years previously. You would hope it didn't take him this long to figure out there was a major issue here.

They have had over 6 years to figure what is happening.

Institutional investors came into the market looking for yield since QE was started and since then there has been a direct correlation between rent and house prices and the amount of QE undertaken.

What I don't understand is why these institutional investors manage to get twice the yield in Ireland circa 6% than they do in Germany circa 3%. For this to be possible it means one of two things:
- They are able to charge twice the rent that they would in Germany due to supply shortages (Whether real or managed via vacant units)
- Property prices are 50% cheaper than in Germany.

I will leave it up to your self to work which one you think it is.

The following graph shows the link between QE (dotted line) and Irish rent and property prices

Ozark707 · 07-02-2021 06:29PM

Timing belt wrote: »

What I don't understand is why these institutional investors manage to get twice the yield in Ireland circa 6% than they do in Germany circa 3%. For this to be possible it means one of two things:
- They are able to charge twice the rent that they would in Germany due to supply shortages (Whether real or managed via vacant units)
- Property prices are 50% cheaper than in Germany.

I will leave it up to your self to work which one you think it is.
]

Is there any difference tax wise how they are handled in Germany to here?

Graham · 07-02-2021 06:30PM

markodaly wrote: »

Strong mutterings that we will have some sort of tax-based claw back this year in the budget

muttering from........

hometruths · 07-02-2021 06:47PM

Ozark707 wrote: »

Is there any difference tax wise how they are handled in Germany to here?

Not sure about the precise taxation position, but the article I linked yesterday highlights a notable difference.

In successful economies such as Germany, housing tends to be regarded as a cost rather than an asset. This means that the thrust of policy is towards fair housing costs, without an implicit bias towards upward house prices.

The difference in government attitude and thus policy is why investors can get twice the yield in Ireland as they do in Germany.

https://www.irishtimes.com/opinion/david-mcwilliams-a-solution-to-irish-house-price-silliness-1.4476967?localLinksEnabled=false

Timing belt · 07-02-2021 07:02PM

schmittel wrote: »

Not sure about the precise taxation position, but the article I linked yesterday highlights a notable difference.

The difference in government attitude and thus policy is why investors can get twice the yield in Ireland as they do in Germany.

https://www.irishtimes.com/opinion/david-mcwilliams-a-solution-to-irish-house-price-silliness-1.4476967?localLinksEnabled=false

Germany has seen similar increases in property values as Ireland with prices increasing since QE was introduced as institutional investors have also been buying property there.

The big difference between the two is the Rent......In Ireland it has been rising with the property prices and in Germany it has remained flat.

The higher the rent goes the higher the demand to purchase.

Albertie · 07-02-2021 07:07PM

The balance between the property demand and supply level will be very much related to the money parked in the banks or financial institutes, the move we can see when the money will start moving from there to both sides to sellers and buyers. With this, the interest rate will also make a good impact to the market and so to match the supply and demand to make it more flexible for both ways, let see what the future hold for us hope all will be fine and on track soon.

hometruths · 07-02-2021 07:14PM

Timing belt wrote: »

Germany has seen similar increases in property values as Ireland with prices increasing since QE was introduced as institutional investors have also been buying property there.

The big difference between the two is the Rent......In Ireland it has been rising with the property prices and in Germany it has remained flat.

The higher the rent goes the higher the demand to purchase.

And the reason the rents have remained flat in Germany is due to government policy.

Hence my comment:

The difference in government attitude and thus policy is why investors can get twice the yield in Ireland as they do in Germany.

Timing belt · 07-02-2021 07:15PM

Hubertj wrote: »

Would our public and civil servants be stupid enough not to include review clauses in long term contracts? I’d say they are stupid enough. I’m sure you have a different view?

I would not be surprised if they have included rent clauses to limit prices increase and ignored downward rents.

Timing belt · 07-02-2021 07:23PM

schmittel wrote: »

And the reason the rents have remained flat in Germany is due to government policy.

Hence my comment:

The difference in government attitude and thus policy is why investors can get twice the yield in Ireland as they do in Germany.

I am not arguing with you and don't want another long tread... All I am doing is showing the data as I think it is relevant and interesting as it highlights the impact that institutional investors have had on the market so decided to share it.

Hubertj · 07-02-2021 07:33PM

schmittel wrote: »

And the reason the rents have remained flat in Germany is due to government policy.

Hence my comment:

The difference in government attitude and thus policy is why investors can get twice the yield in Ireland as they do in Germany.

I would presume tax and regulation (landlord and tenant rights) of rental property is stable and consistent in Germany. Compare that to Ireland.... people can go on about funds and REITs but when government keep interfering and introducing populist policies it will have an impact, generally negative impact. I would also suggest the strength of the German economy means they do not have to be as reliant on property / construction etc to support “growth” or “progresss”.

hometruths · 07-02-2021 07:48PM

Hubertj wrote: »

I would presume tax and regulation (landlord and tenant rights) of rental property is stable and consistent in Germany. Compare that to Ireland.... people can go on about funds and REITs but when government keep interfering and introducing populist policies it will have an impact, generally negative impact. I would also suggest the strength of the German economy means they do not have to be as reliant on property / construction etc to support “growth” or “progresss”.

Certainly true in my experience. I lived in Germany for a few years - hence the username.

Idbatterim · 07-02-2021 08:02PM

PropQueries wrote: »

Looks like the Government has finally accepted what most regular people have noticed over the past few years i.e. the large number of vacant apartments.

“Darragh O’Brien, the Minister for Housing, is scoping out measures that would tax landlords who hoard vacant apartments, the Business Post can reveal.”

Link to SBP article here: https://www.businesspost.ie/houses/landlords-hoarding-homes-may-face-new-tax-505a28d5

bloody ridiculous, all simple measures that couldnt have been implemented years ago I suppose. Now they know they are likely going to lose more seats and power due to their disgraceful attitude towards housing here. Or their lust for the rip off prices...

I reckon its too little too late now any way. Its a huge issue and they wont do anything but tinker around the issues. I reckon they would be prepared to lose power, before they would self harm and touch their golden goose of rip off property...

they could introduce schemes to encourage more development, tax incentives to sell existing houses on large sites or infill sites, or even develop just a single house on corner sites etc. To increase supply. They need to start diverting investment and resources from hotel and commercial to housing... Put these workers up in student accomodation, co living etc...

enricoh · 07-02-2021 09:05PM

Was reading cormac luceys article in the Sunday times today, it really pointed out how Ireland is a one trick pony n totally reliant on corporation tax. 40% of all tax generated comes from mnc's.

Corporation tax is either going to reduce a bit or a lot- not great options.theres going to be a lot of holes in the coffers n housing will be in the firing line imo. I can't see government levels of spending on housing continuing. Property tax won't be peanuts either as I don't think they can tax working much more. I don't think wages can rise much more either or competitiveness goes out the door. Better chance of price drops than price rises imo.

07-02-2021 10:22PM

PropQueries wrote: »

Looks like the Government has finally accepted what most regular people have noticed over the past few years i.e. the large number of vacant apartments.

“Darragh O’Brien, the Minister for Housing, is scoping out measures that would tax landlords who hoard vacant apartments, the Business Post can reveal.”

Link to SBP article here:

Double tax for same thing ? Property and empty apartment ?

Villa05 · 07-02-2021 11:07PM

Hubertj wrote:

I would presume tax and regulation (landlord and tenant rights) of rental property is stable and consistent in Germany. Compare that to Ireland.... people can go on about funds and REITs but when government keep interfering and introducing populist policies it will have an impact, generally negative impact. I would also suggest the strength of the German economy means they do not have to be as reliant on property / construction etc to support â€œgrowthâ€ or â€œprogresssâ€.

Tax is dodged by reits here, I'd doubt it very much if that is the case in Germany

What are the "populist" policies in the Irish housing market. I'm struggling to pinpoint one. Is it rent controls
Its quiet clear to most here that the private sector is dictating policy and their agenda is profit for them and risk to the state

No country should be any way reliant on construction. It is a sector that is byproduct of the economy not a driver of it

How difficult is it to plan for a supply demand balance when you have over 20 years notice of a person being born and at an age when they might have a housing need or 30 years when they might buy.
We know from income data that 50% of the population will struggle to buy/rent then we need to have alternatives to the private sector for that.

We are not trying to reinvent the wheel here

Hubertj · 07-02-2021 11:25PM

Villa05 wrote: »

Tax is dodged by reits here, I'd doubt it very much if that is the case in Germany

What are the "populist" policies in the Irish housing market. I'm struggling to pinpoint one. Is it rent controls
Its quiet clear to most here that the private sector is dictating policy and their agenda is profit for them and risk to the state

No country should be any way reliant on construction. It is a sector that is byproduct of the economy not a driver of it

How difficult is it to plan for a supply demand balance when you have over 20 years notice of a person being born and at an age when they might have a housing need or 30 years when they might buy.
We know from income data that 50% of the population will struggle to buy/rent then we need to have alternatives to the private sector for that.

We are not trying to reinvent the wheel here

RPZs would be 1 instead of actually addressing the systemic issues. How many times has legislation been changed in the last few years negatively impacting a landlords control of their own property instead of addressing the actual issues the sector faces? You believe it’s all a conspiracy when it’s more complex than that.

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

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2021 Irish Property Market chat - mod warnings post 1