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2021 Irish Property Market chat - mod warnings post 1

hometruths

Happy new year to all.

2020 was the year of pent up demand. I think 2021 will be the year the pent up supply comes to market.

I think the pent up supply will exceed the pent up demand and prices will fall. By how much I have no idea!

edit: Mod Warnings

This thread is about the Irish Property Market, it is not about:
* Immigration
* Refugees
* Welfare recipients
* Welfare rates
* General Irish politics beyond its impact on property
* General Irish economy beyond its impact on property
* How wonderful Country X is to buy in

Additionally, the specific issue of Geodirectory vacancy figures has been done to death and is not to be discussed again.

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Villa05

Hubertj wrote:

You really should caveat your â€œpredictionâ€ by saying you have been predicting a crash for years. But you were wrong.

Have I?
I thought I was highlighting bad policies that increase price and make affordability issues worse. This creates high risk within a market that everyone needs to access

Would you not agree that current policy is boom/bust?

johnnyskeleton

PropQueries wrote: »

Many of the decision makers at many of these funds generally think the same way eventually.

Whether it’s a belief that interest rates will rise faster than many think to increasing government intervention in the property markets.

Doesn’t take much to scare them.

Back in 2014, David McWilliams said:

“Most vulture funds have a rule called the three-thirty rule. This means they buy and hold for a maximum of three years and once they make 30 per cent they are out.”

I think what he may have got wrong back them was that the vulture funds bought so much property that it’s taken them a bit longer to get through what they actually bought.

They should be through the paperwork by this stage in many cases IMO

Are you bundling all types of fund into one here?

You might have one fund that buys loan books of distressed assets from banks, sells them and then moves on. Another might be a pension fund which is looking at a long term e.g. 40 year investment at a reasonable return. Yet another might have been attracted by the tax scheme and rising prices in Ireland. Others might have had too much money and no other options so bought Irish property not to make massive profits but because it was safer than holding large amounts of cash. Some will be set up specifically as a way of investing as a professional landlord too.

The current choices for each of these entities will vary differently. The "vulture" funds will buy loans, not property, at a discount, in the hope of turning a profit. They don't hold property and have no interest in doing so. They hold loans.

Pension funds who invested in property say in 2015 have seen large gains in terms of capital appreciation and strong returns. The choice for them now is whether to reduce rents (and theoretically risk reducing the theoretical value of the property) or keep rents high and risk losing out on tenants for the short term. They will have a the risk of reducing rents baked into the pie, so to speak.

Those who bought based on rising prices and the corporation tax scheme have to wait 7 years from when they bought. I would anticipate that some of these investments will start to cash out, but most likely they will try to sell their investments en bloc to institutional investors e.g. pension funds.

The ones who had too much money will only sell if money is now tight or there is a strong investment opportunity elsewhere. With most central bank rates at negative, and on the basis that they are probably getting very low interest institutional loans (or are e.g. holding money as an investment bank or insurance company), their decision will be based on money flows, and right now there is more money in the world than ever before (scarily so).

The professional landlord model seems to me to be the most likely to move first. If they can't get the historically high rents that they were getting, then they will be less inclined to invest in more properties and might try to offload a few properties.

For all of the above, the best way to get out of the market is to offload their assets onto another fund. So long as there is too much money swashing around the world, it is hard to see how someone isn't prepared to buy them. Outside of that, they might try to slowly offload a few properties quietly. The only way in which there would be a flood of properties on the market is if they panic and start undercutting each other.

I still think property prices at the moment are unsustainable and have to drop. But I don't think the impetus to drop will come from investment funds.

fliball123

Hubertj wrote: »

You really should caveat your “prediction” by saying you have been predicting a crash for years.

I think prices will start to fall in the 2nd half of next year.

In fairness I dont think there many who have got it right over the last 4/5 years.

Hubertj

Villa05 wrote: »

1 up
3 to 5 crash

Loose prediction, but based on current policy not only is a crash inevitable but continuation of those policies will make the crash much harder when it happens

So basically the higher the rise, the greater the crash

World events may speed up the timing of the crash

You really should caveat your “prediction” by saying you have been predicting a crash for years. But you were wrong.

I think prices will start to fall in the 2nd half of next year.

fliball123

schmittel wrote: »

It's a bit of a recurring theme...

l

Hence why I thought it was odd after posting all of the above to reply to a post about London prices saying:

If you look at all of those references I am trying to get a point across that capital cities and highly desirable places across the globe will require a premium to be paid if you want to live there. There is no comparison of Dublin and London property prices in that list you put up. I have never actually gone and stated London property prices are x and Dublin property prices are y therefore we can assume z. If I have show me?

Browney7

thefridge2006 wrote: »

European investor to seek €1bn from sale of Irish residential rental portfolio

https://www.irishtimes.com/business/commercial-property/european-investor-to-seek-1bn-from-sale-of-irish-residential-rental-portfolio-1.4506736

I'm pretty sure Props called this situation previously......this thread is turning into Props prophecies that are coming true. fair play

Strange they are looking to exit all of a sudden considering they were buying and expanding in 2019. That operation look to have a substantial commercial property line which may not be as lucrative/attractive to sell. Or else they see the Irish market as topping out and looking to cash in.

Still, €1 billion would give them a chunky profit looking at what they paid for some of the acquisitions and the average sale price being near 600k (unless they have a landbank included in there also).

Villa05

Joeyjoejoe43 wrote:

What is the general consensus on where the Irish property market goes in the next 1/3/5 years?

1 up
3 to 5 crash

Loose prediction, but based on current policy not only is a crash inevitable but continuation of those policies will make the crash much harder when it happens

So basically the higher the rise, the greater the crash

World events may speed up the timing of the crash

yagan

Joeyjoejoe43 wrote: »

What is the general consensus on where the Irish property market goes in the next 1/3/5 years?

I think it's way too early to say.

Covid has made WFH a cost saving option for businesses so no one except commercial landlords are going to argue against it.

I don't see why uni courses that don't require presenteeism won't be an accessible online option too.

Both are negative headwinds for Dublin rents but a boon for regional areas. Before Covid arrived the Dublin building boom was probably near peak anyway, and with major developers like Marlet now hawking for buyers where before they were selling off plan I reckon the dynamic is downhill.

Once covid restrictions end it will be interesting to see if there'll be more pent up sellers than buyers. As there's better value outside Dublin I reckon anyone with cash and able to avail of WFH will relocate.

Joeyjoejoe43

What is the general consensus on where the Irish property market goes in the next 1/3/5 years?

hometruths

ebayissues wrote: »

I dont see fund(s) leaving Ireland. If you work in the funds industry you would know that recently a new corporate vehicle structure was drafted. It's forecasted that this should increase funds domiciled in Ireland from 3 trillion to 5 trillion in 5 years.

Funds are not specific to QIAIF, UCITS, hedge funds, property funds etc.

Also given that most funds in UK that want to passport their product in Europe, Ireland is one of the top choices.

I don't see funds leaving Ireland anytime soon.

When Props is talking about funds leaving Ireland I am pretty sure he is not worried about them changing their domicile.

ebayissues

I dont see fund(s) leaving Ireland. If you work in the funds industry you would know that recently a new corporate vehicle structure was drafted. It's forecasted that this should increase funds domiciled in Ireland from 3 trillion to 5 trillion in 5 years.

Funds are not specific to QIAIF, UCITS, hedge funds, property funds etc.

Also given that most funds in UK that want to passport their product in Europe, Ireland is one of the top choices.

I don't see funds leaving Ireland anytime soon.

thefridge2006

European investor to seek €1bn from sale of Irish residential rental portfolio

https://www.irishtimes.com/business/commercial-property/european-investor-to-seek-1bn-from-sale-of-irish-residential-rental-portfolio-1.4506736

I'm pretty sure Props called this situation previously......this thread is turning into Props prophecies that are coming true. fair play

Timing belt

PropQueries wrote: »

It just takes one fund to start it. Just like a real fire, they may all rush for the exit. One wouldn’t want to risk being the last to leave the building in such a scenario.

Which Funds are you including in your latest prediction?

Pension Funds
Reits
Investment Funds
Fixed income funds (you keep talking about the Nama Debt that was bought)
Hedge Funds

And in the current market what asset class would the funds flow into following your fire sale or are you predicting a run on the funds by investors.

PropQueries

TheSheriff wrote: »

So now your opinions extend to the inner workings of Vulture funds and specifically how their internal administrative processes work?

And of course more importantly, the vulture funds are now ready to instigate their own fire sale. Right now of course, any day now....

It just takes one fund to start it. Just like a real fire, they may all rush for the exit. One wouldn’t want to risk being the last to leave the building in such a scenario.

PropQueries

TheSheriff wrote: »

It's funny how sometimes we are exactly aligned with what is happening in London, and other times we are not....

Nice to see you’ve a keen interest in all my posts

However, the common theme in the posts you reposted was they were in relation to local demand.

My current argument is in relation to how many of the funds may exit many of the different markets they’ve invested in at the same time leading to property falls in many major cities at the same time. Just like when many world cities increased in tandem over the past few years, they may fall in tandem as the funds exit in mass.

But interesting how people can drag up so many posts

TheSheriff

PropQueries wrote: »

Many of the decision makers at many of these funds generally think the same way eventually.

Whether it’s a belief that interest rates will rise faster than many think to increasing government intervention in the property markets.

Doesn’t take much to scare them.

Back in 2014, David McWilliams said:

“Most vulture funds have a rule called the three-thirty rule. This means they buy and hold for a maximum of three years and once they make 30 per cent they are out.”

I think what he may have got wrong back them was that the vulture funds bought so much property that it’s taken them a bit longer to get through what they actually bought.

They should be through the paperwork by this stage in many cases IMO

So now your opinions extend to the inner workings of Vulture funds and specifically how their internal administrative processes work?

And of course more importantly, the vulture funds are now ready to instigate their own fire sale. Right now of course, any day now....

hometruths

TheSheriff wrote: »

It's funny how sometimes we are exactly aligned with what is happening in London, and other times we are not....

Nail on head!!

hometruths

fliball123 wrote: »

When have I ever compared London prices to Dublin prices? Why not Sydney prices, or New York prices, or Paris prices or Manchester prices..What correlation has London got to Dublin or Irish property prices? If you are to compare to Dublin to London how many people left London recently

It's a bit of a recurring theme...

fliball123 wrote: »

its a place the majority would like to live in and as such there is a premium to be paid. Just like London, Paris, New York, Sydney, Rome, Brussels, Copenhagen, Madrid, Berlin the list goes on and on. Why should Dublin be any different

fliball123 wrote: »

How does your population vs accommodation compare to within other major cities in the world I believe the problem is not just isolated to Dublin/Ireland you only have to look at London/England or Paris/France to see the same issues..

fliball123 wrote: »

Unfortunately the idea that if you want to live in an area that a lot of other people want to live in as in Dublin along the coast or leafy Foxrock. You have to pay a premium to do so. I also told you this is not unique to Ireland Look at America, Australia, England, France and look at places in here like Sydney, Manhattan, London and Paris..There is a premium needed to be paid to live in a desirable area.

fliball123 wrote: »

As for paying a price over the average or median. Look at the likes of New York, London, Paris and other major/captial cities throughout the world they have historically come with a premium so Dublin is not alone in this regard.

fliball123 wrote: »

How does the likes of New York and London and Paris and Sydney function with the same dynamics

fliball123 wrote: »

Lots of other houses bigger and for less in other areas if people want to live somewhere and if there is competition for the house price goes up. We are not unique in this look at New York, London, Sydney, Paris, Berlin and other Captial cities around the globe

fliball123 wrote: »

look at London, New York, Paris and other major hubs and before the sh1t of Dublin should not be compared to these, the simple fact is Dublin is now a major attraction for MNCs, foreign investment aswell as Software and Pharma and will be the the only English speaking Capital in the EU once England go so it is now up there or very close.

Hence why I thought it was odd after posting all of the above to reply to a post about London prices saying:

fliball123 wrote: »

AND what connection has your brain made to the Irish property market?

TheSheriff

PropQueries wrote: »

I think the main problem these days is that the property markets in many of the worlds cities is heavily invested in by the same relatively few global funds.

Once they start panicking and pulling out of one market they may pull out of many other similar markets at the same time leading to a flood of property entering the market at the same time.

Property prices have being rising in relative tandem among the main cities for the past few years. They may now fall in tandem.

It's funny how sometimes we are exactly aligned with what is happening in London, and other times we are not....

PropQueries wrote: »

But, then we’re back to the nonsense that land is expensive in Dublin because it’s a “city” and there’s not much of it. We’re not London or Tokyo. There’s nothing but land in and around the city. Actually, there’s plenty of land around london. Not sure about Tokyo, but probably plenty of land there as well though.

PropQueries wrote: »

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

PropQueries wrote: »

I’m not sure that argument stands. London is a real city and Greater London has a population about twice the size of Ireland in an area about one and a half times the size of Co. Dublin.

Outside a few areas, it’s also not that high rise and they still appear to have more and better parks than Dublin has (the park thing is a guess from the times I’ve been there).

PropQueries wrote:

In my opinion we're not London or New York. Is there really much demand for such units. Our "IT" jobs are mostly in sales etc. The real work in done in the United States, London or some other EU country. I think everyone believes we're the silicon valley of Europe but the truth and the wages are much different from the reality.

PropQueries wrote:

Some day. But from just looking at the number of a-rated turn-key apartments and houses for sale and rent in Dublin on MyHome.ie, the figure must be at least in the 5,000-6,000 range. That’s a fairly significant number of new build homes looking for occupiers and is significant for such a small city, We’re not London. And we’re still expected to build c.16,000-18,000 this year with most to be built in the greater Dublin region...

PropQueries

Timing belt wrote: »

Why would they start panicking and pulling out of all markets at the same time and start a fire sale? What would be the driver that would make this happen?

Many of the decision makers at many of these funds generally think the same way eventually.

Whether it’s a belief that interest rates will rise faster than many think to increasing government intervention in the property markets.

Doesn’t take much to scare them.

Back in 2014, David McWilliams said:

“Most vulture funds have a rule called the three-thirty rule. This means they buy and hold for a maximum of three years and once they make 30 per cent they are out.”

I think what he may have got wrong back them was that the vulture funds bought so much property that it’s taken them a bit longer to get through what they actually bought.

They should be through the paperwork by this stage in many cases IMO

Timing belt

PropQueries wrote: »

I think the main problem these days is that the property markets in many of the worlds cities is heavily invested in by the same relatively few global funds.

Once they start panicking and pulling out of one market they may pull out of many other similar markets at the same time leading to a flood of property entering the market at the same time.

Property prices have being rising in relative tandem among the main cities for the past few years. They may now fall in tandem.

Why would they start panicking and pulling out of all markets at the same time and start a fire sale? What would be the driver that would make this happen?

PropQueries

fliball123 wrote: »

When have I ever compared London prices to Dublin prices? Why not Sydney prices, or New York prices, or Paris prices or Manchester prices..What correlation has London got to Dublin or Irish property prices? If you are to compare to Dublin to London how many people left London recently

I think the main problem these days is that the property markets in many of the worlds cities is heavily invested in by the same relatively few global funds.

Once they start panicking and pulling out of one market they may pull out of many other similar markets at the same time leading to a flood of property entering the market at the same time.

Property prices have being rising in relative tandem among the main cities for the past few years. They may now fall in tandem.

[Deleted User]

MacronvFrugals wrote: »

THE State’s two pillar banks “cannot be trusted” and the banking and investment system has “utter contempt” for the Government, the Fine Gael parliamentary party has been told.

Lol

fliball123

schmittel wrote: »

Odd how prices rising in London is held up as an example why prices rising in Dublin is perfectly normal, but if somebody points out prices are falling in London you come out with a comment like that.

When have I ever compared London prices to Dublin prices? Why not Sydney prices, or New York prices, or Paris prices or Manchester prices..What correlation has London got to Dublin or Irish property prices? If you are to compare to Dublin to London how many people left London recently

MacronvFrugals

How long before AIB and BOI have a defacto duopoly

'State's two main banks ‘cannot be trusted’, Fine Gael parliamentary party is told'

THE State’s two pillar banks “cannot be trusted” and the banking and investment system has “utter contempt” for the Government, the Fine Gael parliamentary party has been told.

https://www.independent.ie/irish-news/politics/states-two-main-banks-cannot-be-trusted-fine-gael-parliamentary-party-is-told-40182761.html

[Deleted User]

Reading today news as

Irish Life seeks buyer for Cork city centre retail investments
European investor to seek €1bn from sale of Irish residential rental portfolio
Sharp decline in investors using buy-to-let mortgages to fund investments
Irish mortgage interest rates highest in euro zone again

Keep me working hard creating bag of cash and any PA will not prove me that property prices will up

PropQueries

Marius34 wrote: »

I'm giving a chance to change your opinion, otherwise I'll remind you in 5 months

Just give me until the 31st of the month

Even though I understand there's normally not much movement in any markets during August, It's my call...

Thinking about it now, I should have said end of October, but I'll stick with it and see where it goes.

Marius34

ReturnOfThe wrote: »

So if someone is looking for house prices to fall, they would have to be looking out for at least one of the below headlines in the papers..

Economic outlook deteriorating
Population growth being reversed
Demand falling
Mortgage approvals falling
Supply increasing and outpacing demand
Interest rates rising

PropQueries wrote: »

I'm calling it

Every single one of those boxes will be ticked by August 2021.

I'm giving a chance to change your opinion, otherwise I'll remind you in 5 months

yagan

combat14 wrote: »

by all accounts london has seen a drop in its population ot 700,000 in the last year - the uk an overall drop in 1m - that tends to have some effect eventually

I have been wondering if the whole HK visa offer was partly driven by business looking for a replacement for EU workers. The Tories sell it as wealthy HKers adding to the national wealth etc.. but wealthy HKers never needed help siphoning their money out of China with many countries around the world competing with Golden Visas.

The Hong Konger most likely to move is an average worker looking for a change.

combat14

PropQueries wrote: »

Looks like the house price falls have started in London. According to Bloomberg today:

"House Prices Are Plummeting in London’s Financial Districts.

House prices in the City of London slumped 10.8% in the year through January, while Tower Hamlets, where rival financial district Canary Wharf is based, saw values drop 9.5%, according to a report by chartered surveyors e.surv.

The best bargains are to be found in City of Westminster, the heart of the nation’s government. Prices there tumbled 37% compared with a year earlier - the sharpest drop seen in the capital."

Link to article in Bloomberg here: https://www.bloomberg.com/news/articles/2021-03-10/house-prices-are-plummeting-in-london-s-financial-districts

by all accounts london has seen a drop in its population ot 700,000 in the last year - the uk an overall drop in 1m - that tends to have some effect eventually