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

PropQueries wrote: »

I'm basing my opinion on an article in The Economist on the 30th January 2021:

"How the pandemic reversed old migration patterns in Europe"

"In 2020 Europe saw a great reverse migration, as those who had sought work abroad returned home. Exact numbers are hard to come by. An estimated 1.3m Romanians went back to Romania—equivalent to three times the population of its second-biggest city. Perhaps 500,000 Bulgarians returned to Bulgaria—a huge number for a country of 7m. Lithuania has seen more citizens arriving than leaving for the first time in years. Other measures show the same. In Warsaw, dating apps brim with returning Poles looking for socially undistanced fun."

Link to article in The Economist here: https://www.economist.com/europe/2021/01/30/how-the-pandemic-reversed-old-migration-patterns-in-europe

Is there any reference to the fact that all of those that returned are highly trained and educated because I’d wager the majority of those held onto their jobs and probably stayed here and those in the services industries and construction went home.

Cyrus wrote: »

Is there any reference to the fact that all of those that returned are highly trained and educated because I’d wager the majority of those held onto their jobs and probably stayed here and those in the services industries and construction went home.

Maybe. Even The Economist admits it's very hard to gather the data. Either way, they're bringing back the western way of doing things skills. It's nothing but good news for the eastern EU countries IMO

PropQueries wrote: »

Maybe. Even The Economist admits it's very hard to gather the data. Either way, they're bringing back the western way of doing things skills. It's nothing but good news for the eastern EU countries IMO

Either that or they will all come back when things return to normal.

The eastern countries will be a force but they are a generation or two behind us.

PropQueries wrote: »

Once again, you're very good with the data. And I really do appreciate that. But when did property prices really start falling significantly in Ireland after the last bust? 2, 3, 4 years?

It's been about 12 months since this pandemic started and obviously until investors get their heads around what's really happening they will hold out.

Investors are generally optimists by nature. But they turn very pessimistic, very quickly when the data starts rolling in IMO

Yes it can take time after a recession for everything to flow through the pipes but the difference this time around is that the governments stepped in to fill the void created by the event. Will it enough to prevent a massive crash we don't know as it is to early to say so. With the US passing the stimulus on Saturday it ensures that the can is kicked down the road for another few months till the market starts screaming for more funds to boost it's already inflated prices.

At some stage the house of cards will crash but whether we are at that stage or not is unknow but the market doesn't look as if it is turning as you say it is.

Villa05 wrote: »

Does anyone know why apartments are suddenly far more expensive to build than houses, when the opposite was the case up to very recently? You would need some serious specific inflation turn that on its head

Is this another con job by the industry knowing that the main shortage of accomodation is 1 and 2 bed units and that the state and reits who pay no tax are the main customers?

When Rents started to rise so did the value of the underlying properties.... Most of these were flats (or apartments to make them sound nicer).

You have a bee in your bonnet about Reits and Tax.... The reason they are not taxed is to stop investors from being taxed twice on the investment. Would you be happier if the Reit's paid the tax and the investors didn't pay tax.

The investor is paying the same tax as a normal landlord. It is just that he/she has chosen to invest in a REIT so that his investment is not tied up in one single property that could devalue massively depending on who moved in next door.

Villa05 wrote: »

Does anyone know why apartments are suddenly far more expensive to build than houses, when the opposite was the case up to very recently? You would need some serious specific inflation turn that on its head

Is this another con job by the industry knowing that the main shortage of accomodation is 1 and 2 bed units and that the state and reits who pay no tax are the main customers?

https://mk0societyofchag3d3v.kinstacdn.com/wp-content/uploads/2021/01/SCSI_RealCostofNewApartmentDelivery_final.pdf

This is a pretty detailed analysis but according to some the SCSI is in on the whole things so this breakdown should be rejected.

PropQueries wrote: »

I don't know. The political narrative in the bigger world economies appears to be taking a turn. They may have finally accepted that we have reached the end of that road with the can and there's no more room for kicking.

Basically burst that bubble now before it gets totally out of control.

"Times they are a changin'" as they say IMO

One example is, according to The Times today:

"Rishi Sunak has enlisted America’s support to launch an international campaign to raise taxes on online companies such as Amazon that have cashed in on the coronavirus pandemic.

The chancellor plans to use the G7 summit, which Britain is hosting in June, to push for changes to global laws so he can increase taxes on internet firms. Sunak revealed he had already had talks with Janet Yellen, the US Treasury secretary.

One of my priorities in the G7 this year, which I’ve already started work on, is to try and get international agreement on a new way to tax these companies,” the chancellor said. “I spend a lot of time talking to my finance minister colleagues around the world about this issue."

Link to The Times article here: https://www.thetimes.co.uk/article/rishi-sunak-recruits-us-to-raise-taxes-on-internet-giants-z9qtstdln

The bubble is already totally out of control and it's not just in the property market.... Interest rates have been falling for 45 years and every-time rates are reduced the market reprices assets by increasing the asset cost to reflect the new yield. It is the main reason why the stock market always gives a return and why people say in the long term you are better investing in the stock market. Every time rates rise or when a central bank tappers its QE the market crashes just look at the market last week they were expecting the fed to announce new QE with a Twist to manage the yield curve and it didn't happen and prices started heading south. Will the central banks continue to step in and try and pump the markets and keep them going... yes until they have used every last thing in there arsenal and they still have a bit of dry powder left so I wouldn't be surprised if rates went lower to keep the boat afloat.

You make a big deal of the Tax issue and I understand where you are coming from but the US and the UK have to many vested interests to allow any meaningful change. If they were serious about that they would close loopholes first but that hasn't happened and won't so it is just a smoke screen to make people think that they are doing something.

Villa05 wrote: »

Sorry, I phrased my question badly
Rents rising should not effect the cost of construction. Less land required for apartments so land appreciation would imply houses should be more expensive

I'm trying to figure out what input has made apartments more expensive to build than houses

Basically when developers copped on that the council was willing to lease 3 bed apartments at c. €3k per month (€36k per annum) on 25 year leases (e.g. Herbert Hill, Dundrum) which they could then sell onto pension funds.

It's basically the state's leasing policy that has driven up the "cost" of building apartments i.e. which is primarily the value of the land underneath.

They will say it's lifts etc. but that's absolute nonsense as they're fitting in ten times the amount of residential units per site than if it was granted planning permission for e.g. 3 bed semis.

It's land costs and the land costs are now based upon what DCC will eventually lease the end apartments for IMO

And who bought much of the development land in Dublin between 2012 and today?

Timing belt wrote: »

It might have something to do with complying with fire regulations and not just throwing up any type of building like they did previously. It would be interesting to see how Dublin compares with London in costs of building mid to high rise apartments.

You're joking right? Fire regulations have added e.g. c. €300k to the cost of building each and every apartment in a block of say 100 apartments?

I wouldn't be looking at London. I would be looking at the UK's provincial towns to arrive at more realistic costs to building apartments IMO

PropQueries wrote: »

You're joking right? Fire regulations have added e.g. c. €300k to the cost of building each and every apartment in a block of say 100 apartments?

I wouldn't be looking at London. I would be looking at the UK's provincial towns to arrive at more realistic costs to building apartments IMO

No it's not all Fire regulation but if you look at the properties that SF property developer McFeely’s brought to the market ignoring Fire regulation certainly cut costs in developing them.

Why would I look at a UK Provincial town and not London's development costs.... Are you not the one that has been saying that it costs the same to build in Waterford as it does in Dublin

Hubertj wrote: »

More posturing by the uk. Only an idiot would suggest the uk could influence global tax policy. Either it happens at OECD or it doesn’t happen. If anyone move unilaterally it turns into a sh*tshow and they lose out in medium term. Uk he the triple whammy of brexit, Covid and changed US administration to deal with. I also believe digital tax is covered under Pilar 1 of the proposed oecd tax reforms.

Well in 2019, the BBC reported:

"France passes tax on tech giants despite US threats"

These upcoming OECD global tax reforms need to appease the UK, France etc. and the United States, but especially the many EU countries who have their legislation ready to go to tax the multinationals if they don't like the end agreement IMO

Link to BBC article here: https://www.bbc.com/news/world-europe-48947922

Timing belt wrote: »

No it's not all Fire regulation but if you look at the properties that SF property developer McFeely’s brought to the market ignoring Fire regulation certainly cut costs in developing them.

Why would I look at a UK Provincial town and not London's development costs.... Are you not the one that has been saying that it costs the same to build in Waterford as it does in Dublin

I would actually compare Waterford to Dublin more than I would compare Dublin to London

https://www.myhome.ie/residential/brochure/nedanone-castlecove-kerry/4401120

How would you go about getting this evaluated? First step to get a building contractor and or engineer to evaluate work done to date then estimate costs to finish it? I presume contractors could be reluctant to take on a half finished job due to uncertainty about quality of work carried out by someone else?

Timing belt wrote: »

your argument was that costs should be the same with the exception of land..

I would expect Dublin to be more expensive that London in building mid to high rise apartments (excluding land) because London have been doing it longer and will be more efficient at it but neither the less it does give you something to compare and benchmark against.

Yes, between different towns in Ireland, not between Dublin and London

The costs of building a house in Dublin is much the same as the cost of building a house in Co. Waterford compared to Dublin when land costs are removed from the equation IMO

London has a completely different dynamic and cost base. You can't put a shovel in the ground in London without hitting something of historical importance and they have much more complex and rigid building regulations etc.

In Dublin there's nothing but empty fields so that doesn't really apply, southside or northside IMO

There's absolutely no reason why new build a-rated 2 bed terraced houses in e.g. Swords, should cost more (maybe 10% max) than the new build a-rated 2 bed terraced houses that a developer was selling in Co. Waterford last year for c. €160k IMO

Hubertj wrote: »

https://www.myhome.ie/residential/brochure/nedanone-castlecove-kerry/4401120

How would you go about getting this evaluated? First step to get a building contractor and or engineer to evaluate work done to date then estimate costs to finish it? I presume contractors could be reluctant to take on a half finished job due to uncertainty about quality of work carried out by someone else?

The first thing I would do is to find out the real history of the property to make sure that there was no dispute behind it that would result in local tradesmen not wanting to work on it. From the photo's its hard to tell but it does look as if it is only internal work and that it is sealed from the weather.