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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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cnocbui

Hubertj wrote: »

It’s the same globally. Raw materials have increased in price, supply chain issues, manufacturing, specilation. My brother is a plumber in Boston. Materials have increased in prices and there is up to 6 week waiting time for some basic raw materials. Look at other industries having similar issues - semi conductors, chips etc. Some car manufacturers have had to slow production.

Yes, the US media is making a big fuss over the soaring cost of timber which has added significantly to the cost of house construction:

Lumber prices have soared 230% in the last year, pushing timber and homebuilding ETFs to record highs

https://markets.businessinsider.com/news/stocks/lumber-prices-spot-futures-etf-wood-nail-timber-homebuilding-stocks-2021-4-1030323956?op=1

hometruths

Hubertj wrote: »

It’s the same globally. Raw materials have increased in price, supply chain issues, manufacturing, specilation. My brother is a plumber in Boston. Materials have increased in prices and there is up to 6 week waiting time for some basic raw materials. Look at other industries having similar issues - semi conductors, chips etc. Some car manufacturers have had to slow production.

And agricultural commodities rocketing as well. But no doubt some bright spark will post up the CPI figures and tell us there is no fear of inflation.

RichardAnd

schmittel wrote: »

And agricultural commodities rocketing as well. But no doubt some bright spark will post up the CPI figures and tell us there is no fear of inflation.

Given the amount of funny-money created over the past year, commodities are rising just about everywhere.

EddieN75

Tomorrow's front pages

https://twitter.com/gavreilly/status/1391137864767918086?s=20

combat14

'Cost of building our house has risen by 30% in a year'

https://www.rte.ie/news/regional/2021/0508/1217765-construction-costs-rising/

hard to see banks lending 30% extra for mortgages with current income limits

people will have to demand even higher wages from employers who have been decimated from a year long shutdown .. hard to see employers paying more at present

something is going to have to give ...

yer man!

RichardAnd wrote: »

Given the amount of funny-money created over the past year, commodities are rising just about everywhere.

So this is just flat out inflation then no?

[Deleted User]

Deleted User wrote: »

I've contacted my 5 local TDs. One gave a generic reply (FG), one gave an actual reply, asking for my number, to discuss it further (Ged Nash, Labour) and the other three didn't reply.

Ged hasn't actually rang me yet, but I'm curious to see will he. I'd imagine there's a lot of them being swamped with this. Not sure what good talking to me will do, though, but it's brilliant that he actually wrote a (real) reply. Though in saying that, I've his heart broke (or more specifically, his assistant's heart) with issues where I live, so maybe he's just familiar with me.

Just to follow up on this, Ged Nash rang me and we spent about half an hour talking about housing, the various issues and where we'll likely be in another 10 or 20 years.

Of course, we didn't achieve anything (it's not like I could greenlight any of his ideas, or him, mine) but it was good to hear his perspective and thoughts. He seems a genuine enough chap and we have similar opinions. I am surprised that he spent so much time on it. I have 5 local TDs:

Ged Nash (Labour): Personal email and spent 30 mins on the phone.
Fergus O'Dowd (FG): Generic email reply.
Imelda Munster (SF): No reply.
Ruairí Ó Murchú (SF): No reply.
Peter Fitzpatrick (Ind): No reply.

Amadan Dubh

combat14 wrote: »

'Cost of building our house has risen by 30% in a year'

https://www.rte.ie/news/regional/2021/0508/1217765-construction-costs-rising/

hard to see banks lending 30% extra for mortgages with current income limits

people will have to demand even higher wages from employers who have been decimated from a year long shutdown .. hard to see employers paying more at present

something is going to have to give ...

This would also significantly affect fixer uppers presumably, the increased building costs? That would put a ceiling on what sellers were hoping to obtain as well.

combat14

Amadan Dubh wrote: »

This would also significantly affect fixer uppers presumably, the increased building costs? That would put a ceiling on what sellers were hoping to obtain as well.

very valid point if fixer uppers will cost far more to 'fix up' people will need to pay less for them given lending constraints .. these prices will have to drop

otherwise buyers especially FTB may as well wait for new house and avail of govt 10% deal till end of this year anyway

Villa05

Amadan Dubh wrote:

This would also significantly affect fixer uppers presumably, the increased building costs? That would put a ceiling on what sellers were hoping to obtain as well.

Inflation of that nature will redefine what a fixer upper is. The days of chucking out a perfect kitchen to be replaced by an inferior one because you don't like the look of it may be over

yagan

yer man! wrote: »

So this is just flat out inflation then no?

Not necessarily.

When demand for any commodity suddenly drops there's an overhang of supply, oil actually went negative for a brief period back in March/April 2020.

As the global economy reopens mining and other extraction operations take time to reopen.

After the first reopening I went to buy some patio slabs but they were awaiting stock as producers everywhere were reopening at the same time.

You call it the whiplash to the slack from shutdowns.

cnocbui

Amadan Dubh wrote: »

This would also significantly affect fixer uppers presumably, the increased building costs? That would put a ceiling on what sellers were hoping to obtain as well.

Depends on the scale of upgrading we are talking about. The amount of structural work required for most fixer uppers is going to be vastly less than that involved in building from scratch, therefore the affect of these cost increases is going to be far greater on a new build than something existing.

The exception might be roof insulation, which likely wouldn't be any less, but not many fixer uppers need the roof taking off and a new one constructed from scratch.

A lot of what fussy people call fixer-uppers is little more than re-decorating. Very rarely is the term meant for taking something built in 1893 from stone and turning into something more suited to current expectations of comfort.

I see this as increasing the attractiveness of existing homes while also increasing their relative value and the price sellers can expect.

Villa05

jill_valentine wrote:

Just as a reminder for the sake of it - these chaps, the IIP, who would so generously consider allowing a number of serfs to buy a plot, got the IT to print a full on puff piece about how brilliant the Shared Equity scheme actually is, with the framing we're all just too stupid to appreciate it and a disclosure of Pat Farrell's affiliation only very delicately tucked in at the very end, on Monday.

I see on the sindo today that Pat Farrel is the former General secretary of the Fianna Fail party

You have former ministers of ffg being the mouthpieces for the banking, construction and now this guy for investment funds

Quite a gravy train for our politicians

cnocbui

I think any notions of housing price falls people were expecting, have well and truly been trumped by reality.

The only thing that could bring housing price declines in the next few years would be anothe GFC. With the US expecting something like 6.5% GDP increase, the UK 7.5, and proabably simmilar throught the OECD countries, the next financial market meltdown is likely years further out now.

People taking themselves out of the current market because they think it is too extreme, hoping for it to calm down and become more affordable, are making a mistake.

Idbatterim

The cost of vat on building materials and house price purchase is a joke. If there was a proper lpt and appropriate rents for social housing, you wouldn't need to rob one cohort of society... at the moment, huge amounts are benefitting colossal and immoral, at our expense...

But they wont touch lpt etc, they are totally screwed, they have made their own bed, cant wait for the fallout and political carnage now over the next few years...

Mic 1972

cnocbui wrote: »

I think any notions of housing price falls people were expecting, have well and truly been trumped by reality.

The only thing that could bring housing price declines in the next few years would be anothe GFC. With the US expecting something like 6.5% GDP increase, the UK 7.5, and proabably simmilar throught the OECD countries, the next financial market meltdown is likely years further out now.

People taking themselves out of the current market because they think it is too extreme, hoping for it to calm down and become more affordable, are making a mistake.

Agreed.

For me there were never any signs of prices slowing down, the asking prices were all pointing upwards in 2020 and still do now.

Prices will continue to go up

cnocbui

Idbatterim wrote: »

The cost of vat on building materials and house price purchase is a joke. If there was a proper lpt and appropriate rents for social housing, you wouldn't need to rob one cohort of society... at the moment, huge amounts are benefitting colossal and immoral, at our expense...

But they wont touch lpt etc, they are totally screwed, they have made their own bed, cant wait for the fallout and political carnage now over the next few years...

There's the activities of REITS and the tax breaks offered to them and the revenue greed of the government and councils and their on-costs, but you see the problem as people who currently own homes?

RichardAnd

yer man! wrote: »

So this is just flat out inflation then no?

Well I don't doubt that demand is certainly playing a part, but there is a awful lot of cash floating around now. Apparently, about nine trillion dollars was printed in 2020 alone.

In relation to houses here in Ireland, lockdowns have robbed people of the opportunity to spend their wages, thus cash has piled up. Add to this the large amount of very well paying jobs to be had in certain industries and the state's handing out of "free money", and it becomes a case that the country is rolling in cash.

I have heard talk of a "post-covid boom", but I see this as being nothing more than a stimulus fueled, runaway train. States around the world are clocking up national debts that haven't been seen since the World War II. I'm not an economist, and I don't know where this is going to end, but one need only look at what's happening in the property market to see that something is very, very wrong.

Personally, I'm unmarried, childless, and I have no family to care for. At 34, that may sound like a sad story, but I feel genuine sympathy for anyone trying to care for a family in the world that may be coming.

Villa05

cnocbui wrote:

People taking themselves out of the current market because they think it is too extreme, hoping for it to calm down and become more affordable, are making a mistake.

I think the issue is that people are involuntarily being removed from the market. When this increases further a collapse is inevitable

Idbatterim wrote:

But they wont touch lpt etc, they are totally screwed, they have made their own bed, cant wait for the fallout and political carnage now over the next few years...

I can see it being increased through current valuations being imposed rather than 2013 valuations as is currently the practice

Hubertj

Villa05 wrote: »

I think the issue is that people are involuntarily being removed from the market. When this increases further a collapse is inevitable

I can see it being increased through current valuations being imposed rather than 2013 valuations as is currently the practice

I could see prices level off and fall in some areas if funds and REITs are prevented from competing against FTBers. Prices had levelled off from the end of 2018 based on what others have said. Then we would see where there are affordability issues. I don’t see a crash short to medium term due to economic projections in eurozone and elsewhere.

Hopefully they will address the LPT valuations and begin moves to a site value tax medium term. Was that in the terms on the commission on taxation which is due to report next year?

Villa05

We now know that Pat Farrell (former FF General secretary) a lobbyist for the investment funds lobbied heavily for the shared ownership/equity scheme.

Now one would have to ask why a business with the implied intention of buying/building to rent would be lobbying for scheme that supposedly helps people escape the rental trap (reducing customers) and drives up the price of property (increasing price of there raw materials) thus potentially reducing the businesses future profits business viability

Could it be that these funds are buying up property en masse, lobbying for inflationary policies and make a quick killing once these inflationary polices have taken hold, hence the reason the long term funds in Germany and Switzerland are avoiding

DataDude

Interesting piece in the Sunday Independent titled ‘Bank of mum and dad is propping up South Dublin’. Pretty much as expected but nice to see it confirmed by an EA.

Owen O’Reilly saying in the properties he’s selling it’s routine for parents to be gifting €400k-€1m for their kids to live nearby and that prices would be considerably lower without this.

Same article has a mortgage broker saying 7 out of 10 applications they process have considerable gifts attached. Finding now that the vast majority of applicants who don’t have sizeable gifts are not renewing their applications when approval lapses and that, although they have lots of applications, very few are being drawn down and most just sit in the cabinet unused.

Wonder will it ever lead to a conversation about inheritance taxes if property ownership becomes an inherited, rather than an earned right!

https://m.independent.ie/irish-news/bank-of-mum-and-dad-is-propping-up-south-dublin-housing-market-40403979.html

MacronvFrugals

I have no doubt all of our pensions are invested in REIT in some form or another but with the week this government is having the optics of this really are starting to light a flame

Housing Minister Darragh O’Brien was an early investor in so-called ‘cuckoo’ funds

https://extra.ie/2021/05/09/news/irish-news/housing-minister-darragh-obrien-was-an-early-investor-in-so-called-cuckoo-funds

yagan

DataDude wrote: »

Interesting piece in the Sunday Independent titled ‘Bank of mum and dad is propping up South Dublin’. Pretty much as expected but nice to see it confirmed by an EA.

Owen O’Reilly saying in the properties he’s selling it’s routine for parents to be gifting €400k-€1m for their kids to live nearby and that prices would be considerably lower without this.

Same article has a mortgage broker saying 7 out of 10 applications they process have considerable gifts attached. Finding now that the vast majority of applicants who don’t have sizeable gifts are not renewing their applications when approval lapses and that, although they have lots of applications, very few are being drawn down and most just sit in the cabinet unused.

Wonder will it ever lead to a conversation about inheritance taxes if property ownership becomes an inherited, rather than an earned right!

It was the same in 2006 when 70% of FTBs in Dublin had to have parents put up their own property as guarantee.

One thing that really strikes me is how different and similar this time is to 2006. It was the government's non regulation of the market that let predatory lenders run wild then, and now it's the government crowding out FTBers and lenders.

c.p.w.g.w

Been looking around at different listings in Limerick...

I bought a place a few years back for 105,000...

Nearby houses in a similar state to when I bought going for 170-205 now...and I put a good bit of work into it...so I'd imagine I'd at have a good chance of clearing 250,000 ðŸ˜‚ðŸ€£ðŸ˜‚ðŸ€£

Hubertj

DataDude wrote: »

Interesting piece in the Sunday Independent titled ‘Bank of mum and dad is propping up South Dublin’. Pretty much as expected but nice to see it confirmed by an EA.

Owen O’Reilly saying in the properties he’s selling it’s routine for parents to be gifting €400k-€1m for their kids to live nearby and that prices would be considerably lower without this.

Same article has a mortgage broker saying 7 out of 10 applications they process have considerable gifts attached. Finding now that the vast majority of applicants who don’t have sizeable gifts are not renewing their applications when approval lapses and that, although they have lots of applications, very few are being drawn down and most just sit in the cabinet unused.

Wonder will it ever lead to a conversation about inheritance taxes if property ownership becomes an inherited, rather than an earned right!

https://m.independent.ie/irish-news/bank-of-mum-and-dad-is-propping-up-south-dublin-housing-market-40403979.html

It’s such an emotive subject - inheritance which usually involves property/family home. I’ve never viewed my gaff as other than a place to live, not an asset or any of that bollo*. However, selling the family home in 2016 following my father’s passing was a very emotional experience. None of use needed to live there but it is a very different situation for some who have to sell the home they live in to settle taxes etc. As I understand it the section 86 exceptions are very narrow as they were taken advantage of in the past.

DataDude

Hubertj wrote: »

It’s such an emotive subject - inheritance which usually involves property/family home. I’ve never viewed my gaff as other than a place to live, not an asset or any of that bollo*. However, selling the family home in 2016 following my father’s passing was a very emotional experience. None of use needed to live there but it is a very different situation for some who have to sell the home they live in to settle taxes etc. As I understand it the section 86 exceptions are very narrow as they were taken advantage of in the past.

For sure. But I do think what’s stopped it ever being looked at, is that it’s poorly understood. People think ‘I’m going to inherit €200k. Therefore I don’t want higher inheritance taxes because I’ll pay it too’…but they don’t realise that everyone around them is inheriting multiples of that and therefore they are relatively worse off.

Generally, Irish people are fairly anti ‘rich-people’ and that’s why SF rhetoric around taxing high earners lands so well. But if you want to tackle inequality, it’s not the PAYE worker earning 100k who’s your enemy. It’s the guy inheriting a €5m home on Coliemore road.

If someone manages to run an educational campaign saying the reason Joe and Mary can’t afford a house despite having good jobs is largely because their parents were poorer than those they are competing for house with, I think they might get some support. I think it naturally runs counter to any sense of ‘fairness’

That said the anti-inheritance tax mantra and all it’s illogical ‘that money has already been taxed before’ type nonsense runs deep in Ireland. For my sake, I guess I hope it continues…but it really shouldn’t!

yagan

MacronvFrugals wrote: »

I have no doubt all of our pensions are invested in REIT in some form or another but with the week this government is having the optics of this really are starting to light a flame

Housing Minister Darragh O’Brien was an early investor in so-called ‘cuckoo’ funds

https://extra.ie/2021/05/09/news/irish-news/housing-minister-darragh-obrien-was-an-early-investor-in-so-called-cuckoo-funds

I love it. It al feels like it's coming full circle.

All it needs now is one major international pension to collapse because of failing rental returns and they'll all be trying to dump their illiquid property assets and then we'll be left with another Fianna Fail bill for property bought at prices which they themselves helped over inflate.

It's like the fire brigade trying to smother a fire with petrol.

Cal4567

Villa05 wrote: »

I see on the sindo today that Pat Farrel is the former General secretary of the Fianna Fail party

You have former ministers of ffg being the mouthpieces for the banking, construction and now this guy for investment funds

Quite a gravy train for our politicians

I was wondering when someone would make that link after his performance on Prime Time. The Irish version of Six Degrees of Separation could just be done and dusted in 2/3 links.

hmmm

DataDude wrote: »

Interesting piece in the Sunday Independent titled ‘Bank of mum and dad is propping up South Dublin’. Pretty much as expected but nice to see it confirmed by an EA.

Owen O’Reilly saying in the properties he’s selling it’s routine for parents to be gifting €400k-€1m for their kids to live nearby and that prices would be considerably lower without this.

I'm not sure that article is telling us all that much. That's an expensive area to live in, and I imagine many of those buying could have chosen to live elsewhere in Dublin using just their own funds.

If our expectation is that you will always be able to buy property (particularly a house) near where you grew up then I don't see how that is achievable - not without huge subsidies towards people who grew up in affluent areas which sounds a bit unfair. The focus has to be on people who can't afford to buy a property anywhere within reach of Dublin.