2021 Irish Property Market chat - mod warnings post 1

Cyrus · 11-03-2021 01:18PM

johnnyskeleton wrote: »

I'm not sure that this was the reason why prices starting falling. Prices seemed to have hit a ceiling and didn't drop dramatically. The drops since then have been modest, with an equally modest increase at the end of last year. All points to property being overvalued and stagnating or dropping, rather than a catastrophic crash which would be caused by funds dumping their property. Other funds have been buying more property during that period, so it isn't a case of a dramatic net reduction in investment properties.

i think we bounced off the affordability limits that the CB rules created to be honest.

Villa05 · 11-03-2021 01:27PM

fliball123 wrote:

Well it will all depend on how supply goes as well as WFH if both of these go up in significant numbers then a cuople on the median wage will well be able to afford the average house in Ireland. Its all ifs and buts.

You may well have noticed that prices are rising much quicker outside the main cities. This was a trend seen in the 00's also. Spreading the problem does nothing to resolve it. Rents are also way above their peak and one would have to ask how sustainable this is considering who the largest rent payer is

fliball123 wrote:

But we were not in a boom and bust cycle up until last year as the historical prices since 2017 reflect this in how they trended.

One would expect Brexit uncertainty and a global pandemic to put the brakes on any bubble. The fact that they have not corrected somewhat during these events would give clues to the level of interference in the market

MacronvFrugals · 11-03-2021 01:43PM

Was reading this piece on apartments in Australia and noted the lets not do it like those guys section...

Build-to-rent surge will change apartment living for Australians, but for better or worse?

"In Ireland, permissive planning concessions enable build-to-rent developers to circumvent design standards. This has raised concerns that build-to-rent may deliver smaller, less diverse and lower-amenity housing (less storage, for example) than standard build-to-sell development."

https://theconversation.com/build-to-rent-surge-will-change-apartment-living-for-australians-but-for-better-or-worse-154839

PropQueries · 11-03-2021 01:45PM

johnnyskeleton wrote: »

My point more generally is that there are a variety of different reasons for funds to decide whether to sell or hold on to Irish property. But more specifically, on those funds, the point is that the business model was to buy and hold for 7 years, and then decide whether to sell or not. While some probably decided to sell, others decided to hold on. But their dynamic is very different to the pension fund who are looking at a 20, 30 or 40 year etc investment and are less prone to making decisions based on the immediate market forces.

Well Dublin peak seems to be October, 2018, and the scheme was introduced in December, 2011, so yeah, a lot of those funds who had a 7 year cycle in mind would have sold during this period.

I'm not sure that this was the reason why prices starting falling. Prices seemed to have hit a ceiling and didn't drop dramatically. The drops since then have been modest, with an equally modest increase at the end of last year. All points to property being overvalued and stagnating or dropping, rather than a catastrophic crash which would be caused by funds dumping their property. Other funds have been buying more property during that period, so it isn't a case of a dramatic net reduction in investment properties.

Also, doesn't the quoted stated that you think they have been disposing of them quietly since 2018 undermine your main point that you think a big crash is on the way due to them suddenly all exiting at once? How can they all suddenly exit if they are already exiting?

To me the 7 year rule (now 4 year rule since 2018) isn't the biggest problem that will impact prices from funds and other large investors selling.

Many small cash-rich Irish investors also bought one or two investment properties during that 2012 - 2014 period. Many bought them because of the e.g. bedsit ban (2013) etc. and required time to refurbish them etc.

Many of these properties would have started entering the market from 2018 onwards either for sale or in the rental market (after refurbishment).

This partly explains to me the lack of media coverage of people queuing for either rental of buying over the past 3 years.

The rule change also caught many investors (big and small) off guard and they may start bringing forward their selling timeline now IMO

I think that was the point of changing the 7 years to 4 years and I think I mentioned before that I think the state is currently fighting the housing issues from 3 years ago and it may already be resolved.

johnnyskeleton · 11-03-2021 01:51PM

Cyrus wrote: »

i think we bounced off the affordability limits that the CB rules created to be honest.

Yes. I suppose the only difference is whether you think CB rules keep prices at the right levels, or whether they are artificially holding them back.

Personally I think they are (or at least ought to be) an upper ceiling, hence I think when prices start to exceed what people can afford (under the central bank rules) then properties are overvalued.

cnocbui · 11-03-2021 01:52PM

MacronvFrugals wrote: »

Was reading this piece on apartments in Australia and noted the lets not do it like those guys section...

Build-to-rent surge will change apartment living for Australians, but for better or worse?

https://theconversation.com/build-to-rent-surge-will-change-apartment-living-for-australians-but-for-better-or-worse-154839

Apartments are really on the nose in Australia. There are a couple major sagas involving buildings with significant structural flaws that look to cost apartment owners dearly. then there's the Grenfell cladding problem on numerous buildings which seem nigh insoluble due to cost.

I wouldn't touch an apartment with a barge pole, personally - in any country.

yagan · 11-03-2021 02:09PM

cnocbui wrote: »

Apartments are really on the nose in Australia. There are a couple major sagas involving buildings with significant structural flaws that look to cost apartment owners dearly. then there's the Grenfell cladding problem on numerous buildings which seem nigh insoluble due to cost.

I wouldn't touch an apartment with a barge pole, personally - in any country.

Projecting forward the apartment model is obsolete when businesses can relocate so much of their backoffice to WFH and away from high office rent clusters and having to offer city expenses packages.

We may well up with something similar to Bangkok where even today there's still over 20 empty skyscrapers 20 years after their vertical bubble.
https://edition.cnn.com/style/article/bangkok-abandoned-ghost-towers/index.html

Hubertj · 11-03-2021 02:18PM

yagan wrote: »

Projecting forward the apartment model is obsolete when businesses can relocate so much of their backoffice to WFH and away from high office rent clusters and having to offer city expenses packages.

We may well up with something similar to Bangkok where even today there's still over 20 empty skyscrapers 20 years after their vertical bubble.
https://edition.cnn.com/style/article/bangkok-abandoned-ghost-towers/index.html

Thank you for sharing. Have seen some of them when visiting Bangkok over the last few years. Good to get the background.

MacronvFrugals · 11-03-2021 02:20PM

yagan wrote: »

Projecting forward the apartment model is obsolete when businesses can relocate so much of their backoffice to WFH and away from high office rent clusters and having to offer city expenses packages.

We may well up with something similar to Bangkok where even today there's still over 20 empty skyscrapers 20 years after their vertical bubble.
https://edition.cnn.com/style/article/bangkok-abandoned-ghost-towers/index.html

That's insane, nice one for sharing!

yagan · 11-03-2021 02:33PM

Hubertj wrote: »

Thank you for sharing. Have seen some of them when visiting Bangkok over the last few years. Good to get the background.

I was staying for a few months in Bangkok a few years after their financial crisis when there was over fifty skyscrapers littering the skyline.

When I returned to it was impossible not to see the bubble while a lot of politicians, vested interests, family and friends told me not to talk down the economybubble!

Seeing is believing I guess, and I can see something similar brewing in the Dublin institutional investor driven apartment splurge in Dublin.

Marius34 · 11-03-2021 04:19PM

Joeyjoejoe43 wrote: »

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

There is no general consensus.
But here is what likely to happen.
Prices up this year. High demands and low supplies for next few years.
Wouldn't know price direction after 3 years, but there will be ups and downs, but very likely we will never see prices of lows of 2020.

thefridge2006 · 11-03-2021 05:21PM

Marius34 wrote: »

There is no general consensus.
But here is what likely to happen.
Prices up this year. High demands and low supplies for next few years.
Wouldn't know price direction after 3 years, but there will be ups and downs, but very likely we will never see prices of lows of 2020.

LOL

MacronvFrugals · 11-03-2021 05:49PM

Marius34 wrote: »

, but there will be ups and downs, but very likely we will never see prices of lows of 2020.

Even you know that's complete fantasy

combat14 · 11-03-2021 05:55PM

Marius34 wrote: »

There is no general consensus.
But here is what likely to happen.
Prices up this year. High demands and low supplies for next few years.
Wouldn't know price direction after 3 years, but there will be ups and downs, but very likely we will never see prices of lows of 2020.

price lows of 2020 .. the sky is the limit so

Marius34 · 11-03-2021 06:00PM

MacronvFrugals wrote: »

Even you know that's complete fantasy

If you ever follow my comments you would understand that I'm serious.
It's not possible to predict well the future, but if you follow you will find out that my past prediction are much better than opposing ones.

Marius34 · 11-03-2021 06:01PM

combat14 wrote: »

price lows of 2020 .. the sky is the limit so

sky is not the limit, but neither inflation is dead.

PropQueries · 11-03-2021 07:39PM

Some interesting comments on Bloomberg about today's ECB meeting and the possible impact of interest rate movements on house prices this year.

While I think since interest rates are at rock bottom and current property prices fully reflect this, some may think that ever lower interest rates may indeed boost property prices or at least keep them stable going forward.

According to Bloomberg:

"Most European Central Bank policy makers have no intention of expanding their 1.85 trillion-euro ($2.2 trillion) emergency stimulus program despite their pledge on Thursday to step up the pace of bond buying to keep yields in check, according to officials familiar with the matter."

They said "Policy makers will spend more now but plan to pull back later"

But, more importantly (IMO):

"Policy makers agreed that there had been some tightening of financial conditions as a consequence of higher yields in recent weeks, though a majority of those who expressed their views also said they weren’t too concerned, according to the officials."

In my opinion, and I fully realise many disagree, there are far more countries in the eurozone who don't have a debt problem compared to the few countries who do (relatively speaking) and they appear to be increasingly making their voices heard at the table IMO

Link to Bloomberg article here: https://www.bloomberg.com/news/articles/2021-03-11/ecb-doesn-t-intend-faster-bond-buying-to-lead-to-more-stimulus?srnd=premium-europe

The_Conductor · 11-03-2021 07:43PM

We have a bond sale tomorrow- lets see what is happening in an Irish context.
I think its inevitable that the price we pay- is going to have to rise, which in turn, over time, will prove a drag on equities and other asset prices.

We are in the beginning of pulling the brakes..........

PropQueries · 11-03-2021 07:47PM

The_Conductor wrote: »

We have a bond sale tomorrow- lets see what is happening in an Irish context.
I think its inevitable that the price we pay- is going to have to rise, which in turn, over time, will prove a drag on equities and other asset prices.

We are in the beginning of pulling the brakes..........

I would say tomorrow may be fine. ECB is still there. The issue in my mind is how long will they be there for?

Was it today?

From the Irish Times today:

"The National Treasury Management Agency (NTMA) raised a further €1.5 billion on Thursday with a bond auction, taking the total value of benchmark bonds issued in the year to date to €7 billion.

The auction was the first to not feature Davy after the NTMA last week withdrew the stockbroker’s mandate to act as a primary dealer of Government bonds, due to a bond-trading scandal dating back to 2014.

The latest auction consisted of the sale of two different Irish Government bonds. These were a 0 per cent treasury bond maturing in October 2031, and a 1.5 per cent bond maturing in May 2050."

Link here: https://www.irishtimes.com/business/markets/ntma-sells-1-5bn-of-bonds-in-first-auction-without-davy-1.4507525

Timing belt · 11-03-2021 09:05PM

PropQueries wrote: »

This partly explains to me the lack of media coverage of people queuing for either rental of buying over the past 3 years.
.

Do you consider it normal for people to have to Queue up in a line outside somewhere to buy or rent? People are buying houses online now

Mic 1972 · 11-03-2021 09:06PM

johnnyskeleton wrote: »

My point more generally is that there are a variety of different reasons for funds to decide whether to sell or hold on to Irish property. But more specifically, on those funds, the point is that the business model was to buy and hold for 7 years, and then decide whether to sell or not. While some probably decided to sell, others decided to hold on. But their dynamic is very different to the pension fund who are looking at a 20, 30 or 40 year etc investment and are less prone to making decisions based on the immediate market forces.

Well Dublin peak seems to be October, 2018, and the scheme was introduced in December, 2011, so yeah, a lot of those funds who had a 7 year cycle in mind would have sold during this period.

I'm not sure that this was the reason why prices starting falling. Prices seemed to have hit a ceiling and didn't drop dramatically. The drops since then have been modest, with an equally modest increase at the end of last year. All points to property being overvalued and stagnating or dropping, rather than a catastrophic crash which would be caused by funds dumping their property. Other funds have been buying more property during that period, so it isn't a case of a dramatic net reduction in investment properties.

Also, doesn't the quoted stated that you think they have been disposing of them quietly since 2018 undermine your main point that you think a big crash is on the way due to them suddenly all exiting at once? How can they all suddenly exit if they are already exiting?

Prices haven't peaked in 2018, and very clearly aren't decreasing, this narrative is incorrect

Timing belt · 11-03-2021 09:18PM

PropQueries wrote: »

Some interesting comments on Bloomberg about today's ECB meeting and the possible impact of interest rate movements on house prices this year.

While I think since interest rates are at rock bottom and current property prices fully reflect this, some may think that ever lower interest rates may indeed boost property prices or at least keep them stable going forward.

According to Bloomberg:

"Most European Central Bank policy makers have no intention of expanding their 1.85 trillion-euro ($2.2 trillion) emergency stimulus program despite their pledge on Thursday to step up the pace of bond buying to keep yields in check, according to officials familiar with the matter."

They said "Policy makers will spend more now but plan to pull back later"

But, more importantly (IMO):

"Policy makers agreed that there had been some tightening of financial conditions as a consequence of higher yields in recent weeks, though a majority of those who expressed their views also said they weren’t too concerned, according to the officials."

In my opinion, and I fully realise many disagree, there are far more countries in the eurozone who don't have a debt problem compared to the few countries who do (relatively speaking) and they appear to be increasingly making their voices heard at the table IMO

Link to Bloomberg article here: https://www.bloomberg.com/news/articles/2021-03-11/ecb-doesn-t-intend-faster-bond-buying-to-lead-to-more-stimulus?srnd=premium-europe

The ECB can do QE to keep rates low without the governments needing to increase borrowing.

The_Conductor · 11-03-2021 09:28PM

Timing belt wrote: »

The ECB can do QE to keep rates low without the governments needing to increase borrowing.

They can do it- however, increasingly, as individuals, the council members are expressing a reluctance to continue to do so. They are continuing to make nice fuzzy sounding noises to the media- but talk is cheap, and the perception is, if it comes to it, the ECB doesn't have the willpower to continue down the expansionary path. I'm not sure how much they've spent- seem to remember the figure 2.7 Trillion from somewhere......... Its a lot of money.

National governments are going to have to do the heavy lifting as soon as Covid is no longer the financial drain that it currently is. In the context of heavily indebted nations- that is going to mean a whole lot of pain. Even with historically low interest rates- Ireland still paid over 7 billion in interest payments on its sovereign debt in 2020.

Ireland is living on borrowed time- both literally and figuratively.

Hubertj · 11-03-2021 09:46PM

The_Conductor wrote: »

They can do it- however, increasingly, as individuals, the council members are expressing a reluctance to continue to do so. They are continuing to make nice fuzzy sounding noises to the media- but talk is cheap, and the perception is, if it comes to it, the ECB doesn't have the willpower to continue down the expansionary path. I'm not sure how much they've spent- seem to remember the figure 2.7 Trillion from somewhere......... Its a lot of money.

National governments are going to have to do the heavy lifting as soon as Covid is no longer the financial drain that it currently is. In the context of heavily indebted nations- that is going to mean a whole lot of pain. Even with historically low interest rates- Ireland still paid over 7 billion in interest payments on its sovereign debt in 2020.

Ireland is living on borrowed time- both literally and figuratively.

They (council members ) are somewhat stuck between a rock and a hard place. You are correct in what you say but on the other hand if the taps are turned off too quickly it will be counter productive due to the destabilising impact it will have. I think when the dust settles there will be a longer term plan to allow countries, such as Ireland, get ready for the heavy lifting.

Timing belt · 11-03-2021 10:05PM

The_Conductor wrote: »

They can do it- however, increasingly, as individuals, the council members are expressing a reluctance to continue to do so. They are continuing to make nice fuzzy sounding noises to the media- but talk is cheap, and the perception is, if it comes to it, the ECB doesn't have the willpower to continue down the expansionary path. I'm not sure how much they've spent- seem to remember the figure 2.7 Trillion from somewhere......... Its a lot of money.

National governments are going to have to do the heavy lifting as soon as Covid is no longer the financial drain that it currently is. In the context of heavily indebted nations- that is going to mean a whole lot of pain. Even with historically low interest rates- Ireland still paid over 7 billion in interest payments on its sovereign debt in 2020.

Ireland is living on borrowed time- both literally and figuratively.

You are mixing two things into one... QE has been undertaken since 2015 without countries increasing their Debt or without countries increasing there fiscal spending..... All that happens is the ECB Balance sheet expands and rates are kept low.

It just so happens that the QE is financing the fiscal spending but it can be undertaken with no fiscal spending and has limited impact on inflation as most of the money stays within the financial system and does not get out into the real world to generate CPI inflation. The majority of the inflation comes from a weaker Euro and the price increase on imported goods.

Inflation is the worry because if we do see significant inflation then the ECB will need to put brakes on the economy and their main way of doing this will be to reduce QE and possibly accelerate Quantitative tightening QT.

woejus · 11-03-2021 11:13PM

@Cyrus

I see Mount Prospect on Killiney Hill Road is back on the market again

https://www.myhome.ie/residential/brochure/mount-prospect-killiney-hill-road-killiney-co-dublin-a96-v09h/4468912

johnnyskeleton · 11-03-2021 11:51PM

Mic 1972 wrote: »

Prices haven't peaked in 2018, and very clearly aren't decreasing, this narrative is incorrect

Interesting argument. Im basing my view on the CSOs published data:

https://www.cso.ie/en/releasesandpublications/ep/p-rppi/residentialpropertypriceindexdecember2020/

However Id be interested to see where youre coming from. Is it because there was a modest increase at the end of last year? Cos I mentioned that in my post, in case thats why you consider my narrative to be incorrect.

Zenify · 12-03-2021 12:28AM

johnnyskeleton wrote: »

Interesting argument. Im basing my view on the CSOs published data:

https://www.cso.ie/en/releasesandpublications/ep/p-rppi/residentialpropertypriceindexdecember2020/

However Id be interested to see where youre coming from. Is it because there was a modest increase at the end of last year? Cos I mentioned that in my post, in case thats why you consider my narrative to be incorrect.

Maybe I'm wrong but as long as that graph is above the 0 line it would indicate the market has not peaked...? That line indicates the growth percentage, it doesn't actually represent growth.

Cyrus · 12-03-2021 07:55AM

woejus wrote: »

@Cyrus

I see Mount Prospect on Killiney Hill Road is back on the market again

https://www.myhome.ie/residential/brochure/mount-prospect-killiney-hill-road-killiney-co-dublin-a96-v09h/4468912

Yes I had noticed a few weeks back that the sale agreed sticker had been removed ! Been for sale a long time now. I wonder what It was sale agreed at ? 2m is too much for it anyway.

Hubertj · 12-03-2021 08:09AM

https://www.irishtimes.com/news/ireland/irish-news/british-recruitment-drive-for-builders-sparks-fear-of-exodus-1.4508053

This is unfortunate but to be expected. It will further delay the completion of existing projects, the start of new projects and the renovation of the 1 million + vacant units out there. All part of the conspiracy to further reduce / restrict supply?

My friends brother ended up driving machinery at a mine in Ghana after 2008.

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

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2021 Irish Property Market chat - mod warnings post 1