2021 Irish Property Market chat - mod warnings post 1

hometruths · 07-05-2021 12:09PM

Hubertj wrote: »

They need an outrage gauge to determine what will cause greater outrage.

No, they need to start doing the right thing and not just kneejerk government depending on who is whining the loudest.

PropQueries · 07-05-2021 12:13PM

schmittel wrote: »

That's the problem. The government are afraid of the outrage. But there is outrage now so what is the difference?

It's just outrage from different quarters but so what?

But these quarters are adding up to a whole

You have the homeless, you have the working class, you now have the middle class (e.g. Maynooth) and you have the upper class (e.g. Ailesbury road billionaire residents against the RTÉ site plans).

That’s the four quarters adding up to everyone

PropQueries · 07-05-2021 12:19PM

Bass Reeves wrote: »

Disks building costs in 2018 could not compare to what they would quite now

So costs have increased by over 100% since 2018 as that’s the difference between Sisk Livings costs in 2018 compared to DCC stated costs this year?

hometruths · 07-05-2021 12:19PM

PropQueries wrote: »

But these quarters are adding up to a whole

You have the homeless, you have the working class, you now have the middle class (e.g. Maynooth) and you have the upper class (e.g. Ailesbury road billionaire residents against the RTÉ site plans).

That’s the four quarters adding up to everyone

Exactly, hence why I say they should not fret about the outrage because sooner or later everybody will find something to be outraged about.

You can't try and please all of the people all of the time.

Instead do the right thing and combat the outrage with good old fashioned common sense - we need to repossess houses because the level of default is a financial burden on everybody.

I suspect the silent majority will understand the point.

Hubertj · 07-05-2021 12:29PM

schmittel wrote: »

No, they need to start doing the right thing and not just kneejerk government depending on who is whining the loudest.

Yes you are correct but unfortunately they’re politicians..... will any political party retake the correct course of action? The answer isn’t Yes

Cal4567 · 07-05-2021 12:41PM

timmyntc wrote: »

The council dont build directly - its tendered out.
It will be expensive either way - after a 25year lease on a property they will have almost paid the whole value of the property but own nothing. Building makes sense as they get an asset in addition to housing someone. Its called long-term planning.

As for the housing list growing - the housing list will grow either way. In fact it might grow more if they continue to lease and buy properties instead of build, as it pushes rents and house prices up causing more people to *NEED* social housing. The only practical way to reduce social housing lists is to reduce house and rent prices, so that lower income people no longer need a govt provided house and can afford to rent or buy privately.

Your defence of the status quo because there might be some short term pain is a pathetic stance - and its thinking like that thats landed us where we are in the first place. Short term thinking.

Actually, that is them building directly but they have to tender out for each job. It's our very stringent take on the EU Procurement rules. That deserves a thread all of its own.

I must apologise but I am tied up today and was going to make some comments as some of what has been written here today, isn't quite correct. If you worked in the property sector, you'd be fully aware of what exactly has been going on.

This from Amadan Dubh early today sums it up perfectly.

The government has created a market of social housing/rental assistance tenants for private investors - it is a total housing bubble which has spilled into the main housing market. They have done this and continue to do it by competing with individuals in the private market, elbowing them out, which pushes up prices thereby making the private market unaffordable which means people can no longer afford their own home and need to be looked after by the government. Institutionals may have their place in a functioning housing market but definitely do not in a dysfunctional housing market which is what we have.

PropQueries · 07-05-2021 12:42PM

schmittel wrote: »

Exactly, hence why I say they should not fret about the outrage because sooner or later everybody will find something to be outraged about.

You can't try and please all of the people all of the time.

Instead do the right thing and combat the outrage with good old fashioned common sense - we need to repossess houses because the level of default is a financial burden on everybody.

I suspect the silent majority will understand the point.

I get the point on repossessions. But given that ECB rates are already rock bottom and can only go one way IMO and there will be little banking competition going forward, I’m not sure it will translate into lower rates or adding much to supply. The owners of the repossessed properties must live somewhere. But I agree with you and bring it in as soon as possible I say.

There’s only one solution that could possibly solve this supply issue in the morning and it’s a proper heavy and targeted vacant property tax.

If there aren’t that many vacant units then it’s not going to cost those property owners anything. But if there are a lot of vacant units and their primarily held by funds etc., it would solve the problem tomorrow morning IMO.

Cyrus · 07-05-2021 12:43PM

PropQueries wrote: »

I get the point on repossessions. But given that ECB rates are already rock bottom and can only go one way IMO and there will be little banking competition going forward, I’m not sure it will translate into lower rates or adding much to supply.

the issue is the margin on the ECB rates and its too high and if the base rates increase the margin will still be too high.

PropQueries · 07-05-2021 12:48PM

Cyrus wrote: »

the issue is the margin on the ECB rates and its too high and if the base rates increase the margin will still be too high.

I don’t think the margin is too high. If repossessions become too easy, who already owns many of these non-performing loans?

The funds.

If they can repossess easily, they will flood the market with repossessed homes, cause an almighty collapse in home prices which will then justify the ECBs capital requirements to begin with IMO

And given what the funds paid for the non-performing mortgages, they can most likely sell at a significant discount to current market prices and still walk away with a hefty profit IMO

hometruths · 07-05-2021 01:00PM

PropQueries wrote: »

I don’t think the margin is too high. If repossessions become too easy, who already owns many of these non-performing loans?

The funds.

If they can repossess easily, they will flood the market with repossessed homes, cause an almighty collapse in home prices which will then justify the ECBs capital requirements to begin with IMO

And given what the funds paid for the non-performing mortgages, they can most likely sell at a significant discount to current market prices and still walk away with a hefty profit IMO

The ECB capital requirements are based on the number of NPLs not property prices.

We need repos to lower the capital requirements.

Hubertj · 07-05-2021 01:11PM

schmittel wrote: »

The ECB capital requirements are based on the number of NPLs not property prices.

We need repos to lower the capital requirements.

Did you also say something about % recovered from repossessions is very low compare to other countries? Does that also impact? And is the % recovered low because the length of time that elapses means interest accrues on top?

PropQueries · 07-05-2021 01:15PM

schmittel wrote: »

The ECB capital requirements are based on the number of NPLs not property prices.

We need repos to lower the capital requirements.

I agree and it will work out as a positive in the long run.

But I do think that it would destroy the economy/banking sector in the short to medium term. Maybe even destroy it permanently. Does the state have the resources to house the occupants of the repossessed homes?

Catch 22’s are everywhere in relation to the property market and I don’t see how the state is getting out of this one.

There’s one thing that I believe is 100% true though. Since Rebuilding Ireland was introduced c. 5 years ago, have the state built many new homes?

I don’t think so. That means the plan all along must have been to use this (now debunked) leasing model to resolve the waiting lists. The purchase/ leasing of both new and second hand homes appears to have been plan A from day one.

Given that this can’t continue (in its current form) and they obviously have no plan B, I honestly can say that I don’t know where this is heading over the next few months.

But it will most likely result in something really really big happening around August IMO

jay0109 · 07-05-2021 01:19PM

mcsean2163 wrote: »

House prices recovered and flatlined by 2019. We've had a covid19 surge imo fueled by government spending, leases/ direct purchases.

https://www.gov.ie/en/press-release/71cfc-99-decrease-in-the-number-of-households-on-social-housing-waiting-list-nationally/

Now that restrictions are easing will be interesting to see what happens to house prices especially if the government stops intervening.

'recovered'! Recovered to the mental 2008 prices I presume you mean.
House prices in 2019 were also mental. House prices are even more mental now.

hometruths · 07-05-2021 01:19PM

Hubertj wrote: »

Did you also say something about % recovered from repossessions is very low compare to other countries? Does that also impact?

Yep the % is very low, something like 11%. I would guess that impacts capital requirements too but not 100% sure.

Hubertj wrote: »

And is the % recovered low because the length of time that elapses means interest accrues on top?

I'm not sure about that. I understood it as the % recovered is low because the numbers of repossession is low. i.e it is % of value in loans in default recovered, rather than % of individual loan recovered.

But I guess either way interest over a longer period of time will impact that number.

I will try and find the paper that discussed the 11% - it was an academic study of competition in eurozone banks.

hometruths · 07-05-2021 01:22PM

PropQueries wrote: »

I agree and it will work out as a positive in the long run.

But I do think that it would destroy the economy/banking sector in the short to medium term. Maybe even destroy it permanently.

How will it destroy the economy/banking sector? Genuine question. I've heard this notion touted but never heard anybody explain why.

PropQueries wrote: »

Does the state have the resources to house the occupants of the repossessed homes?

Yes.

PropQueries · 07-05-2021 01:32PM

schmittel wrote: »

How will it destroy the economy/banking sector? Genuine question. I've heard this notion touted but never heard anybody explain why.

Yes.

Basically because I believe the funds, Reits etc. control a much bigger share of the property market than many assume and as they leave they will destroy all value gained in the property market over the past several years.

Easier repossessions would mean they’re not going to hang around to see if a SF or similar party enters power in the next few years IMO

And it doesn’t look like we can rely on massive future increases in FDI or borrowing going forward to pay for such a fallout.

Either way, your right and it’s a good policy. But I think the Irish economy is going to be much much different in two years time. I’m thinking near enough a modern day equivalent of the 1950’s and I’m not actually exaggerating a point to make a point this time

timmyntc · 07-05-2021 01:39PM

PropQueries wrote: »

Basically because I believe the funds, Reits etc. control a much bigger share of the property market than many assume and as they leave they will destroy all value gained in the property market over the past several years.

Easier repossessions would mean they’re not going to hang around to see if a SF or similar party enters power in the next few years IMO

And it doesn’t look like we can rely on massive future increases in FDI or borrowing going forward to pay for such a fallout.

Either way, your right and it’s a good policy. But I think the Irish economy is going to be much much different in two years time. I’m thinking near enough a modern day equivalent of the 1950’s and I’m not actually exaggerating a point to make a point this time

I would agree with you on most but predictions of a return to 1950s value property :pac:

While it might be nice for a cheap house, I cant see it happening at all.
Prices will stagnate or rise if anything - investment funds need to chase yield, and if they do control so much of the property market, why would they all pull the plug? They can keep rents high and property values high using the large amount of assets they have - a SF govt cant change this.

If govt started a massive house building scheme, prices may slowly decline. But I cannot see any crash like last time. There is at its crux, a supply and demand issue.

hometruths · 07-05-2021 01:39PM

PropQueries wrote: »

Basically because I believe the funds, Reits etc. control a much bigger share of the property market than many assume and as they leave they will destroy all value gained in the property market over the past several years.

Easier repossessions would mean they’re not going to hang around to see if a SF or similar party enters power in the next few years IMO

And it doesn’t look like we can rely on massive future increases in FDI or borrowing going forward to pay for such a fallout.

Either way, your right and it’s a good policy. But I think the Irish economy is going to be much much different in two years time. I’m thinking near enough 1950’s and I’m not actually exaggerating a point to make a point this time

This is what I am trying to understand. The idea that if the REITS leave thus destroying all value gained in the property market over the past several years means our economy is destroyed?

It's simply equating high property prices with a healthy economy and it does not make sense.

It's not like vulture funds leaving is going to drive up unemployment, or hammer MNC earnings. I doubt ta take will be heavily impacted, sure they don't pay much tax anyway.

So yes, property prices will fall because there would be a dramatic increase in supply, but how does the increase in supply of houses destroy our economy?

timmyntc · 07-05-2021 01:42PM

schmittel wrote: »

This is what I am trying to understand. The idea that if the REITS leave thus destroying all value gained in the property market over the past several years means our economy is destroyed?

It's simply equating high property prices with a healthy economy and it does not make sense.

It's not like vulture funds leaving is going to drive up unemployment, or hammer MNC earnings. I doubt ta take will be heavily impacted, sure they don't pay much tax anyway.

So yes, property prices will fall because there would be a dramatic increase in supply, but how does the increase in supply of houses destroy our economy?

IF that were too happen (big if) - the value of existing houses could drop well below the cost to build new houses, and developers would go out of work due to a glut of supply. Once our construction industry is gone then we'll be in trouble.

hometruths · 07-05-2021 01:53PM

timmyntc wrote: »

IF that were too happen (big if) - the value of existing houses could drop well below the cost to build new houses, and developers would go out of work due to a glut of supply. Once our construction industry is gone then we'll be in trouble.

The health of our economy is no longer reliant on the health of the construction sector thank goodness.

Going back to Props point about Sisk building for 180k it sounds like they have room to drop. And if builders are all downing tools because margins have collapsed sounds like the perfect opportunity for the government to use the money saved on HAP payments and divert to employ the construction sector to build social houses.

They're already giving them a dig out taking 2 bed apartments off them for 750k a pop, I'd have no problem if the government bailed out the builders at 300k a pop.

Still not convinced any of the above means our economy is in the toilet.

PropQueries · 07-05-2021 02:02PM

schmittel wrote: »

This is what I am trying to understand. The idea that if the REITS leave thus destroying all value gained in the property market over the past several years means our economy is destroyed?

It's simply equating high property prices with a healthy economy and it does not make sense.

It's not like vulture funds leaving is going to drive up unemployment, or hammer MNC earnings. I doubt ta take will be heavily impacted, sure they don't pay much tax anyway.

So yes, property prices will fall because there would be a dramatic increase in supply, but how does the increase in supply of houses destroy our economy?

From my perspective, we have four main areas. Multinationals, property, tourism and agriculture.

All four are under sustained attack at the moment.

The public sector and most of the rest of the economy live off these and their workers wages.

Multinationals here are under attack from the Biden/EU tax reforms. Agri is under attack from CAP reform/ climate change etc. Tourism is under attack by plans in Europe to try get rid or limit low cost air travel due to climate change (e.g. france is planning to ban or limit short-haul flights in France etc.). The property market is massively influenced by the future decisions of the funds in Ireland.

The future direction of the Irish economy and property market is now in the hands of people/organisations we have little or no control over IMO

L1011 · 07-05-2021 02:07PM

PropQueries wrote: »

Tourism is under attack by plans in Europe to try get rid or limit low cost air travel due to climate change (e.g. france is planning to ban or limit short-haul flights in France etc.). [

The French plans are specifically and solely for domestic flights with alternative high speed rail. International flights are very hard to restrict due to the treaties involved. It will be quite some time before there's a realistic restriction even proposed for that.

yagan · 07-05-2021 02:12PM

PropQueries wrote: »

From my perspective, we have four main areas. Multinationals, property, tourism and agriculture.

All four are under sustained attack at the moment.

The public sector and most of the rest of the economy live off these and their workers wages.

Multinationals here are under attack from the Biden/EU tax reforms. Agri is under attack from CAP reform/ climate change etc. Tourism is under attack by plans in Europe to try get rid or limit low cost air travel due to climate change (e.g. france is planning to ban or limit short-haul flights in France etc.). The property market is massively influenced by the future decisions of the funds in Ireland.

The future direction of the Irish economy and property market is now in the hands of people/organisations we have little or no control over IMO

I think I read that workers in tourism paye contributions were miniscule as it's mostly lower/no tax band jobs and these days mostly employing students, immigrants, and part timers.

There was a time when working in a tourist office was a mortageagable job but that ended decades ago. Older voters might think it's an important sector but it really isn't in the greater scheme of things.

PropQueries · 07-05-2021 02:15PM

L1011 wrote: »

The French plans are specifically and solely for domestic flights with alternative high speed rail. International flights are very hard to restrict due to the treaties involved. It will be quite some time before there's a realistic restriction even proposed for that.

Maybe. But they may start taxing them at an EU level to combat climate change etc. a lot sooner.

The Germans and French don’t like Ryanair etc. due to it’s impact on their national carriers.

Throw in multinationals limiting business travel to boost their carbon footprint image and the tourism sector (especially in the cities) could be hit badly IMO

hometruths · 07-05-2021 02:17PM

PropQueries wrote: »

From my perspective, we have four main areas. Multinationals, property, tourism and agriculture.

All four are under sustained attack at the moment.

The public sector and most of the rest of the economy live off these and their workers wages.

Multinationals here are under attack from the Biden/EU tax reforms. Agri is under attack from CAP reform/ climate change etc. Tourism is under attack by plans in Europe to try get rid or limit low cost air travel due to climate change (e.g. france is planning to ban or limit short-haul flights in France etc.). The property market is massively influenced by the future decisions of the funds in Ireland.

The future direction of the Irish economy and property market is now in the hands of people/organisations we have little or no control over IMO

Getting back to the original point, none of the above explains why repossessing homes in default would tank our economy.

I believe Irish thinking is too ingrained with high prices = good economy, low prices = bad economy.

We have heard it loads of times on here, be careful what you wish for, if prices dropped, we're all f8cked why would you wish for that etc etc.

It completely ignores the question of what causes prices to drop.

If prices drop because the economy falters and unemployment rockets, then yes we're all f8cked to some degree or another.

But the economy does not falter because property prices drop.

A lot of people have got their ideas of cause and effect arseways. IMO.

yagan · 07-05-2021 02:22PM

schmittel wrote: »

Getting back to the original point, none of the above explains why repossessing homes in default would tank our economy.

A better repossession regime would be better for everyone, but before that's politically acceptable the current fiasco of FTB having to bid for a home against their own government and vulture funds has to end.

Bringing up repossessions as a priority after this weeks events is political suicide.

It's grand to talk hypotheticals but try selling repossessions to the voter. After the Maynooth fiasco I've hear life long Fianna Fail voters say their going SF next just to get the piggies snout out of the trough. I reckon this week will have as big an effect on Irish politics as the Eamon Casey affair had on the RCC faithful.

JimmyVik · 07-05-2021 02:25PM

PropQueries wrote: »

Maybe. But they may start taxing them at an EU level to combat climate change etc. a lot sooner.

The Germans and French don’t like Ryanair etc. due to it’s impact on their national carriers.

Throw in multinationals limiting business travel to boost their carbon footprint image and the tourism sector (especially in the cities) could be hit badly IMO

If that happens, the EU will have to subsidize flights to and from a little Island isolated off the coast of Europe. We will be to the EU what the Arran Isands are to Ireland.

Villa05 · 07-05-2021 02:27PM

RichardAnd wrote:

If one attempts to question the ethical nature of the council's out-biding working people to provide social housing, they will be attacked by an army of lefties.

This is incorrect, they advocate self build from what I have heard

Cyrus wrote:

The argument for years was that we dont have enough institutional landlords and there is no option to rent long term, thats what these funds will provide but now we dont want that either.

I don't know if you watched the prime time episode on Tuesday related to this topic, but in summary
Government have attracted short term funds whose objective is to maximise rents, price appreciation so in effect they manafacture a bubble to maximise returns.
The long term pension funds that operate in Germany and other mature markets were contacted and asked why they were not getting involved and they cited this reason and that they wanted long term consistent returns. What was happening here was unsustainable and likely to be boom bust

Cyrus wrote:

Maybe Sisk can make more money doing other things now?

Sisk have a specific division for building affordable homes. Common sense probably drove them to set up such a division. Unfortunately common sense is lacking in politics/market

Bass Reeves wrote:

We have over the last twenty years increased the specification on houses and this had added to cost. As well costs will be higher in Dublin than elsewhere for tradespeople and time inefficiency effects costs. Sisks building costs in 2018 could not compare to what they would quite now

With regard to the 2018 costs. Specification Standards for build to rent have reduced to drive activity

PropQueries · 07-05-2021 02:29PM

schmittel wrote: »

Getting back to the original point, none of the above explains why repossessing homes in default would tank our economy.

I believe Irish thinking is too ingrained with high prices = good economy, low prices = bad economy.

We have heard it loads of times on here, be careful what you wish for, if prices dropped, we're all f8cked why would you wish for that etc etc.

It completely ignores the question of what causes prices to drop.

If prices drop because the economy falters and unemployment rockets, then yes we're all f8cked to some degree or another.

But the economy does not falter because property prices drop.

A lot of people have got their ideas of cause and effect arseways. IMO.

Depends on if or how much property values fall I guess. When the newspapers publish those household wealth reports, what percentage is down to property values?

hometruths · 07-05-2021 02:35PM

yagan wrote: »

A better repossession regime would be better for everyone, but before that's politically acceptable the current fiasco of FTB having to bid for a home against their own government and vulture funds has to end.

Bringing up repossessions as a priority after this weeks events is political suicide.

It's grand to talk hypotheticals but try selling repossessions to the voter. After the Maynooth fiasco I've hear life long Fianna Fail voters say their going SF next just to get the piggies snout out of the trough. I reckon this week will have as big an effect on Irish politics as the Eamon Casey affair had on the RCC faithful.

I think this political suicide thing is another fairly weak argument against repossessions.

Its become the accepted narrative because it would have been political suicide in the climate of ten years ago, when the economy was in the toilet etc etc.

But now? 10 years later.

A politician stands up and says one of the reasons our housing market is f8cked is because we have the highest rates of mortgage defaults in the world, people who have not paid their mortgage in over 10 years, and all of us are paying for it. It is time to tackle the problem for the greater good.

Is that really political suicide today? If saying that we should allow people to not pay their mortgage for years on end and retain ownership of their homes is genuinely political suicide then we deserve the housing problems we have.

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

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2021 Irish Property Market chat - mod warnings post 1