2021 Irish Property Market chat - mod warnings post 1

PropQueries · 26-04-2021 12:46PM

awec wrote: »

Can you point out where in the article you linked this is stated?

Perhaps I missed it.

Paragraph two: "M&G Investments says it's time to start shorting peripheral debt".

timmyntc · 26-04-2021 12:50PM

PropQueries wrote: »

Cut where though? For example, of the 2019 c. €20 Billion welfare budget, only c. €4.5 Billion was due to all the various levels of unemployment or income supports and many of those were people just collecting their insurance i.e. PRSI payments.

So, even if the state now decides to say that PRSI is actually not insurance and is now actually a tax and removes all those supports, where will the other c. €7.5 Billion in potential required cutbacks come from? And, come from on an annual basis permanently going forward.

Housing & Health
Also if the state were to borrow and build housing rather than just agree long term leases and HAP they would eventually have state assets that they can charge a rent on. It will also lessen the existing HAP burden because market rents will drop (more supply/less demand).

Health as we all know is a massive money pit, it wouldnt be easy (or good for optics) but major reform of the HSE is well overdue.

awec · 26-04-2021 12:54PM

PropQueries wrote: »

Paragraph two: "M&G Investments says it's time to start shorting peripheral debt".

You said they are considering shorting "peripheral countries". The article talks about peripheral debt.

The two things are different.

timmyntc · 26-04-2021 12:58PM

awec wrote: »

You said they are considering shorting "peripheral countries". The article talks about peripheral debt.

The two things are different.

Props said they are looking at shorting the debt of peripheral countries.

Citigroup Inc. is bracing for a taper of bond buying as early as June, and M&G Investments says it’s time to start shorting peripheral debt.

The entire article talks about peripheral debt meaning bond yields of Greece Portugal Italy and Spain.

is that not the same?

awec · 26-04-2021 01:01PM

timmyntc wrote: »

Props said they are looking at shorting the debt of peripheral countries.

The entire article talks about peripheral debt meaning bond yields of Greece Portugal Italy and Spain.

is that not the same?

It was worth clarifying that the article PropQueries linked to had nothing to do with Irish debt and his dropping it into his post about the Irish economy was fairly disingenuous (but unfortunately, par for the course).

mcsean2163 · 26-04-2021 01:19PM

awec wrote: »

It was worth clarifying that the article PropQueries linked to had nothing to do with Irish debt and his dropping it into his post about the Irish economy was fairly disingenuous (but unfortunately, par for the course).

We're the most indebted country per capita in the EU and third in the entire world. We have the lowest proportion of our population over 65 meaning that pension spending will increase as that approaches the EU norm

I think you're naive if you think the article doesn't apply to us. If the government reduces hap payment rents collapse, if it doesn't EU will intervene. Either way I can't see an easy escape for property prices.

awec · 26-04-2021 01:30PM

mcsean2163 wrote: »

We're the most indebted country per capita in the EU and third in the entire world. We have the lowest proportion of our population over 65 meaning that pension spending will increase as that approaches the EU norm

I think you're naive if you think the article doesn't apply to us. If the government reduces hap payment rents collapse, if it doesn't EU will intervene. Either way I can't see an easy escape for property prices.

Ok, and?

I was pointing out that PropQueries is once again being misleading in how he is portraying the facts in order to suit the narrative he wants to push.

PropQueries wrote: »

While it's not reported in the Irish media, some funds are already looking at shorting the debt of the EU's periphery countries.

There was a good article on it last week on Bloomberg titled "Europe’s Most Indebted Countries Aren’t Ready for Market Reality". While Michael McGrath is looking at "weaning" PUP payments off PUP recipients, the ECB and EU are already looking at weaning countries like Ireland off their supports.

Let's see if Michael McGrath is in favour of such "weaning off", once the shoe is on the other foot

To be clear, in case anyone else gets confused by this, there are no funds anywhere, that anyone knows of, talking of shorting Irish debt. There is no link between this and Ireland's PUP payments. There is no "shoe on the other foot".

And, lest it need said, there is no Irish media conspiracy to avoid reporting on it.

Hubertj · 26-04-2021 01:34PM

mcsean2163 wrote: »

We're the most indebted country per capita in the EU and third in the entire world. We have the lowest proportion of our population over 65 meaning that pension spending will increase as that approaches the EU norm

I think you're naive if you think the article doesn't apply to us. If the government reduces hap payment rents collapse, if it doesn't EU will intervene. Either way I can't see an easy escape for property prices.

Why doesn’t the article refer or Ireland though? I’m not disagreeing with you but why not reference Ireland?

The_Conductor · 26-04-2021 01:43PM

Forget about HAP payments for a moment- and look at the 30k lumpsum for first time buyers- that could be abolished handily.
The HSE is going to see all its Covid induced largess evaporate.
Education is going to get hit.
DSP will see its budget slashed.

Outside of this- all the special projects (think pie-in-the-sky rural railways, cyle-links etc etc)- are next on the chopping block.

I don't see much in the way of additional tax rises (for the short to medium term) but I do see a lot of potential slash and burn in expenditure. One potential development will be a third rate of tax of 15% to kick in on all income above 12,940 per annum.

Of all the parties- the Greens are going to be furious- they seem to love splurging money around like there is no tomorrow- well, guess what, tomorrow is beckoning.

In the public sector- there are rumours of an early retirement scheme in the civil service open to those aged 51+
A new embargo on recruitment esp. in the HSE
A ban on the use of agency staff in all public sectors
A ban on all overtime payments (staff to be granted time-in-lieu where-ever possible)

etc etc

I reckon the focus will be firmly on expenditure reduction, as opposed to tax increases- however, there will also be a concerted effort to bring more into the tax regime- through a third tax rate- set immediately above the COAP rate.

It ain't gonna to be pretty.

awec · 26-04-2021 01:45PM

The_Conductor wrote: »

Forget about HAP payments for a moment- and look at the 30k lumpsum for first time buyers- that could be abolished handily.
The HSE is going to see all its Covid induced largess evaporate.
Education is going to get hit.
DSP will see its budget slashed.

Outside of this- all the special projects (think pie-in-the-sky rural railways, cyle-links etc etc)- are next on the chopping block.

I don't see much in the way of additional tax rises (for the short to medium term) but I do see a lot of potential slash and burn in expenditure. One potential development will be a third rate of tax of 15% to kick in on all income above 12,940 per annum.

Of all the parties- the Greens are going to be furious- they seem to love splurging money around like there is no tomorrow- well, guess what, tomorrow is beckoning.

In the public sector- there are rumours of an early retirement scheme in the civil service open to those aged 51+
A new embargo on recruitment esp. in the HSE
A ban on the use of agency staff in all public sectors
A ban on all overtime payments (staff to be granted time-in-lieu where-ever possible)

etc etc

I reckon the focus will be firmly on expenditure reduction, as opposed to tax increases- however, there will also be a concerted effort to bring more into the tax regime- through a third tax rate- set immediately above the COAP rate.

It ain't gonna to be pretty.

Is this big today?

timmyntc · 26-04-2021 01:57PM

awec wrote: »

It was worth clarifying that the article PropQueries linked to had nothing to do with Irish debt and his dropping it into his post about the Irish economy was fairly disingenuous (but unfortunately, par for the course).

The shorting of peripherals is a sign that almost all EU bonds are artificially undervalued, but also that its likely the yields will begin to rise and that the ECB will begin to wind down its stimulus somewhat.

Whether or not they short Irish govt bonds, they will rise. ALL EU govt bonds are artificially low right now. Going forward it will mean we have less access to cheap finance and cannot keep borrowing as easy.

RichardAnd · 26-04-2021 02:27PM

The_Conductor wrote: »

Forget about HAP payments for a moment- and look at the 30k lumpsum for first time buyers- that could be abolished handily.
The HSE is going to see all its Covid induced largess evaporate.
Education is going to get hit.
DSP will see its budget slashed.

Outside of this- all the special projects (think pie-in-the-sky rural railways, cyle-links etc etc)- are next on the chopping block.

I don't see much in the way of additional tax rises (for the short to medium term) but I do see a lot of potential slash and burn in expenditure. One potential development will be a third rate of tax of 15% to kick in on all income above 12,940 per annum.

Of all the parties- the Greens are going to be furious- they seem to love splurging money around like there is no tomorrow- well, guess what, tomorrow is beckoning.

In the public sector- there are rumours of an early retirement scheme in the civil service open to those aged 51+
A new embargo on recruitment esp. in the HSE
A ban on the use of agency staff in all public sectors
A ban on all overtime payments (staff to be granted time-in-lieu where-ever possible)

etc etc

I reckon the focus will be firmly on expenditure reduction, as opposed to tax increases- however, there will also be a concerted effort to bring more into the tax regime- through a third tax rate- set immediately above the COAP rate.

It ain't gonna to be pretty.

Do you have a source for this? That's a genuine question; I'm not saying that you're incorrect or anything. What could be coming is naturally of interest.

fliball123 · 26-04-2021 02:30PM

Villa05 wrote: »

Irrelevant as you continually state price is dictated by what people can afford rather than cost of building

Irrelivent go and tell the FTBs there that they could be paying another 10% for stamp duty and see absolute sh1tstorm any government will get for trying this.

Hubertj · 26-04-2021 02:30PM

The_Conductor wrote: »

Forget about HAP payments for a moment- and look at the 30k lumpsum for first time buyers- that could be abolished handily.
The HSE is going to see all its Covid induced largess evaporate.
Education is going to get hit.
DSP will see its budget slashed.

Outside of this- all the special projects (think pie-in-the-sky rural railways, cyle-links etc etc)- are next on the chopping block.

I don't see much in the way of additional tax rises (for the short to medium term) but I do see a lot of potential slash and burn in expenditure. One potential development will be a third rate of tax of 15% to kick in on all income above 12,940 per annum.

Of all the parties- the Greens are going to be furious- they seem to love splurging money around like there is no tomorrow- well, guess what, tomorrow is beckoning.

In the public sector- there are rumours of an early retirement scheme in the civil service open to those aged 51+
A new embargo on recruitment esp. in the HSE
A ban on the use of agency staff in all public sectors
A ban on all overtime payments (staff to be granted time-in-lieu where-ever possible)

etc etc

I reckon the focus will be firmly on expenditure reduction, as opposed to tax increases- however, there will also be a concerted effort to bring more into the tax regime- through a third tax rate- set immediately above the COAP rate.

It ain't gonna to be pretty.

It’s unfortunate that all they will do is cut spending instead of ensuring better use of money. For example, I work for a US MNC. over the last 3 years we have reduced costs by $14bn but are deivering better services for it. Why? Accountability and competence in procurement

yagan · 26-04-2021 02:49PM

PropQueries wrote: »

Paragraph two: "M&G Investments says it's time to start shorting peripheral debt".

M&G Investments are the Marlet group financial backers so I do wonder what their angle is here.
https://www.irishtimes.com/business/marlet-seeks-over-1bn-for-prime-dublin-residential-rental-portfolio-1.4505425

With demand for Dublin’s private rented sector (PRS) market undimmed by the Covid-19 pandemic, developer Pat Crean’s Marlet Property Group will be hoping to take advantage of the continuing appetite of institutional investors for prime opportunities in the capital by bringing Ireland’s largest-ever PRS portfolio to the market.

Previously Marlet never had to pitch as they were formed specifically to supply the demand for rental yield return for pension funds that had been struggling with low dividends in the bull market and low bond interest.
This is an excellent piece about pension funding problem and its influence on the property market.
https://www.ft.com/content/c95deea4-03e2-11ea-9afa-d9e2401fa7ca

To counteract the fading outlook for returns from mainstream bonds and equity markets, many pension plans are ratcheting up their investments in “alternative” or “private” assets, such as private equity, real estate, venture capital, infrastructure and untraded loans.

For long-term investors who can accept the illiquidity in return for the promise of higher returns, this makes sense. A housing project or toll road can produce a bond-like, steady income stream. Yet with almost every institutional investor exploring this avenue, it has led to froth in “private markets”.

The IMF estimates that pension plans have doubled their allocations to illiquid assets over the past 10 years, and for about a fifth of funds these capital commitments amount to more than half their liquid assets.

As covered in the piece the problem becomes compounded if there a pension fund property bubble bust as traditionally it's pension funds that pick up the slack when markets are in a bear market.

Marlet is an M&G puppy and all signs look like an major offloading out of a crowded trade in motion.

timmyntc · 26-04-2021 02:52PM

yagan wrote: »

Marlet is an M&G puppy and all signs look like an major offloading out of a crowded trade in motion.

What signs point to this?

handlemaster · 26-04-2021 02:55PM

are we looking at a property drop when the government spending drops an taxes go up. What will the difference be this time as compared to 2008 ? The banks we hear are well financed and also I would assume property buyers are not as indebted as before but sentiment means alot and if buyers think prices will drop . They will.

JimmyVik · 26-04-2021 02:59PM

fliball123 wrote: »

So you reckon that the "we cant afford houses" from the younger generation will be ignored and another 10% will come into play? Cant see it happening

On no.
It will be 1% up to €250k
2% up to €350K
5% up to €500K
and so on.
They will make it look like they care, but also that they have to cool the market

And of course added bonus of keeping the tax on rental property coming in too.
They might even stick a few percent on REITs for the craic.

PropQueries · 26-04-2021 03:05PM

yagan wrote: »

M&G Investments are the Marlet group financial backers so I do wonder what their angle is here.
https://www.irishtimes.com/business/marlet-seeks-over-1bn-for-prime-dublin-residential-rental-portfolio-1.4505425

Previously Marlet never had to pitch as they were formed specifically to supply the demand for rental yield return for pension funds that had been struggling with low dividends in the bull market and low bond interest.
This is an excellent piece about pension funding problem and its influence on the property market.
https://www.ft.com/content/c95deea4-03e2-11ea-9afa-d9e2401fa7ca

As covered in the piece the problem becomes compounded if there a pension fund property bubble bust as traditionally it's pension funds that pick up the slack when markets are in a bear market.

Marlet is an M&G puppy and all signs look like an major offloading out of a crowded trade in motion.

But isn't that any funds modus operandi? Buy when the small guys don't see the potential of an upside and sell when the small guys don't see the potential of a downside.

These funds spend all day, every day analysing this kind of information and the small time investor or FTB can't as he generally has a dayjob or doesn't have the access to or the manpower to analyse all the information that these funds do.

The problems arise when Governments gets involved and continue to let the small guys believe that everything will be all fine and the small guys take them at their word IMO

yagan · 26-04-2021 03:06PM

timmyntc wrote: »

What signs point to this?

In recent years Marlet had their developments sold before completion, I think the Mount Argus development sale to pension fund Patrizia AG was agreed a year before completion.

The point is now they're bringing their largest ever volume of units to market in the next three months without any buyers agreed. I believe they've a few developments that they never restarted after the first shutdown.

tobsey · 26-04-2021 03:08PM

handlemaster wrote: »

are we looking at a property drop when the government spending drops an taxes go up. What will the difference be this time as compared to 2008 ? The banks we hear are well financed and also I would assume property buyers are not as indebted as before but sentiment means alot and if buyers think prices will drop . They will.

Biggest difference is we built around 130k homes in 2006 and 2007. We've barely built that many in the last 7 years. Supply was massive when the crash hit last time. I'm not saying prices can't drop but even if demand drops due to the impact on the economy, we don't have massive oversupply

yagan · 26-04-2021 03:11PM

PropQueries wrote: »

But isn't that any funds modus operandi? Buy when the small guys don't see the potential of an upside and sell when the small guys don't see the potential of a downside.

These funds spend all day, every day analysing this kind of information and the small time investor or FTB can't as he generally has a dayjob or doesn't have the access to or the manpower to analyse all the information that these funds do.

The problems arise when Governments gets involved and continue to let the small guys believe that everything will be all fine and the small guys take them at their word IMO

I reckon a lot of it those managing the pension funds know they're heading for a bust, but you don't get commission for hoarding your clients money.

The number one lesson they learned from the banking bust is that they'll get a bail out, so make hay when you can and then go away when the house of cards collapses.

The_Conductor · 26-04-2021 03:23PM

RichardAnd wrote: »

Do you have a source for this? That's a genuine question; I'm not saying that you're incorrect or anything. What could be coming is naturally of interest.

I don't have an official source- all I can say is it is being quietly discussed by civil servants who are weighing up options at the moment.

PropQueries · 26-04-2021 03:28PM

yagan wrote: »

I reckon a lot of it those managing the pension funds know they're heading for a bust, but you don't get commission for hoarding your clients money.

The number one lesson they learned from the banking bust is that they'll get a bail out, so make hay when you can and then go away when the house of cards collapses.

Will they get a bail-out or would many even need it though? I read the last day that e.g. the Danish and Dutch pension funds are among the best funded in the world.

Much like our debt levels and despite the narrative, we're most definitely not all in the same boat in the EU either pension fund deficit wise or government debt levels wise IMO

The only "bail-out" the pension funds in most of the rest of the EU really require is to get interest rates back up to the 2000's levels (at least). And, given what the head of the Bundesbank said a couple of weeks ago, they may get what they're wishing for sooner rather than later.

"There can be no lack of determination, even if rising interest rates increase countries borrowing costs. This is important for the credibility of monetary policy."

Link to FT article on what the head of the Bundesbank said a few weeks ago: https://www.ft.com/content/c587dd18-...2-6b7ab94ba2dd

Hubertj · 26-04-2021 03:30PM

yagan wrote: »

M&G Investments are the Marlet group financial backers so I do wonder what their angle is here.
https://www.irishtimes.com/business/marlet-seeks-over-1bn-for-prime-dublin-residential-rental-portfolio-1.4505425

Previously Marlet never had to pitch as they were formed specifically to supply the demand for rental yield return for pension funds that had been struggling with low dividends in the bull market and low bond interest.
This is an excellent piece about pension funding problem and its influence on the property market.
https://www.ft.com/content/c95deea4-03e2-11ea-9afa-d9e2401fa7ca

As covered in the piece the problem becomes compounded if there a pension fund property bubble bust as traditionally it's pension funds that pick up the slack when markets are in a bear market.

Marlet is an M&G puppy and all signs look like an major offloading out of a crowded trade in motion.

I wonder how many of these developments Marlet have actually started. Delivery date of some is out to 2024.

yagan · 26-04-2021 03:38PM

PropQueries wrote: »

Will they get a bail-out or would many even need it though? I read the last day that e.g. the Danish and Dutch pension funds are among the best funded in the world.

Much like our debt levels and despite the narrative, we're most definitely not all in the same boat in the EU either pension fund liabilities wise or government debt levels wise IMO

The only "bail-out" the pension funds in most of the rest of the EU really require is to get interest rates back up to the 2000's levels (at least). And, given what the head of the Bundesbank said a couple of weeks ago, they may get what they're wishing for sooner rather than later.

"There can be no lack of determination, even if rising interest rates increase countries borrowing costs. This is important for the credibility of monetary policy."

Link to FT article on what the head of the Bundesbank said a few weeks ago: https://www.ft.com/content/c587dd18-...2-6b7ab94ba2dd

Did you read the FT article I linked earlier?

Jan-Pieter Jansen, a 77-year-old retiree from the Netherlands, had high hopes for a worry-free retirement after having saved diligently into a pension during his working life.

But Mr Jansen, a former manager in the metal industry, has been forced to reappraise his plans after receiving notice from his retirement scheme, one of the Netherland’s biggest industry-sector funds, of plans to cut his pension by up to 10 per cent. Understandably, the news has hit like a sledgehammer.

Can you imagine the uproar on Joe Duffy when silver service pensions suffer losses?

If the property bubble was a transfer of wealth from young to old then the pension bust will be the water hitting the other side of the tub. However housing policy should never have allowed it to be that a family struggles to save for a deposit while funding someone else's private pension via rent.

Don't burn the bondholders/private pensions etc.....

mcsean2163 · 26-04-2021 03:39PM

Hubertj wrote: »

Why doesn’t the article refer or Ireland though? I’m not disagreeing with you but why not reference Ireland?

You'd have to ask Bloomberg not me, I'm just extrapolating based on the information at hand. My guess, Italy is a basket case. Greece already fell off the wagon and we're still walking the tight rope.

As I've said before, I think we're in a worse position now than Greece but hopefully Irish ingenuity will get us across the line. In saying that, I've completely lost faith in the public sector.

PropQueries · 26-04-2021 03:52PM

yagan wrote: »

Did you read the FT article I linked earlier?

Can you imagine the uproar on Joe Duffy when silver service pensions suffer losses?

If the property bubble was a transfer of wealth from young to old then the pension bust will be the water hitting the other side of the tub. However housing policy should never have allowed it to be that a family struggles to save for a deposit while funding someone else's private pension via rent.

Don't burn the bondholders/private pensions etc.....

I suppose what I meant is that rising interest rates will help many of them more than any kind of explicit bailout.

But, excluding private pension funds, our public sector pension liabilities must also be among the most grossly under-funded (non-funded?) in the world.

It does look like many of the countries in the EU would now rather rising interest rates and let the few other countries with any debt problems to deal with the consequences of such rising rates themselves in whatever way they see fit IMO

MacronvFrugals · 26-04-2021 03:57PM

PropQueries wrote: »

It does look like many of the countries in the EU would now rather rising interest rates and let the few other countries with any debt problems to deal with the consequences of such rising rates themselves in whatever way they see fit IMO

"It's our currency but your problem"

yagan · 26-04-2021 04:02PM

PropQueries wrote: »

I suppose what I meant is that rising interest rates will help many of them more than any kind of explicit bailout.

But, excluding private pension funds, our public sector pension liabilities must also be among the most grossly under-funded (non-funded?) in the world.

It does look like many of the countries in the EU would now rather rising interest rates and let the few other countries with any debt problems to deal with the consequences of such rising rates themselves in whatever way they see fit IMO

Rising interest rates?

The whole pension problem is cash chasing return, and when that expectation of pensions always grows goes pop it ain't going to be an inflationary event.

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

Comments

2021 Irish Property Market chat - mod warnings post 1