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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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Cal4567

Villa05 wrote: »

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

It's not unusual to see deals such as this being sold on to other investors after 2/3 years. Every investment vehicle is different, some are here for 4/5 years. Then they go away after the next big thing, in another industry/country. Those who leave tend to be replace by pension funds who take a more long term view of their portfolios.

DataDude

hmmm wrote: »

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.

Interesting take - should someone who was born in Sandymount have an inherent right to own a home in Sandymount? To me that's an easy "no". Everyone should earn their own way. But would be interested to see if Society as a whole would support it. Not forgetting that if we want to give someone that right, we by definition, have to make someone born in a less affluent area suffer for it.

hmmm wrote: »

The focus has to be on people who can't afford to buy a property anywhere within reach of Dublin.

Two things. Firstly the article quotes a figure of 70% of applications countrywide having a gift attached. Not just in South Dublin. One example in the article is of a couple approved for a mortgage of €130k given a gift €220k. That's probably right at the lower end of what you can buy a house in Dublin for. There's very likely to have been a person with a budget of €345k on their own back who missed out because they didn't have a gift. Potentially pushing them out of Dublin. Is that fair? To me it's not.

Secondly, the entire market is interconnected. A large amount of inheritance pushing prices up in the most expensive areas, pushes priced out buyers from the best areas out into the second best areas. That pushes prices up there and people leave the second best area for the third best etc etc.

You can't look at them as separate entities. Large inhertiances/gifts in Dalkey have a ripple effect which push people out of the affordability net in the poorest parts of Dublin.

Villa05

cnocbui wrote:

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.

What about interest rate rises to cool that reported 30% inflation in building materials, might be smart to take a fixed rate for as long as possible

Marius34

Cal4567 wrote: »

It's not unusual to see deals such as this being sold on to other investors after 2/3 years. Every investment vehicle is different, some are here for 4/5 years. Then they go away after the next big thing, in another industry/country. Those who leave tend to be replace by pension funds who take a more long term view of their portfolios.

I think this would be good for Ireland, if It's an Irish pension fund. As the profits would stay within country.
And in general since there are lots Cash/Saving accumulated in Ireland, I would say it would be an important focus, how to keep wealth within country. One of the way maybe building Irish housing associates, that Irish people can put in their saving for Built-to-Rent products, rather then International Funds.

yagan

Cal4567 wrote: »

Those who leave tend to be replace by pension funds who take a more long term view of their portfolios.

Pension funds chase yields and according to the IMF some pension funds have raised their exposure to property rental yields from 20% a decade ago to over 50% now.

As they'll all piling into the same market they're effectively crowding eachother out. Pension fund managers take their bonuses from booking returns, so even if their funds get sink by subprime underperforming crud they'll have already made their commission money and will be long gone before pensioners hear that their pension is now worth less than what they contributed.

I'm forever blowing bubbles,
Pretty bubbles in the air,
They fly so high, nearly reach the sky,
Then like my dreams they fade and die.

hmmm

DataDude wrote: »

There's very likely to have been a person with a budget of €345k on their own back who missed out because they didn't have a gift. Potentially pushing them out of Dublin. Is that fair? To me it's not.

Agreed, if you can't buy within the greater Dublin area then that's a failure. However 345k is enough to buy within the greater Dublin area - and even in South Dublin. It might be a house in a less desirable area, or an apartment in South Dublin.

I'm personally not all that concerned about people who can't afford to buy a house in South Dublin, yet could afford to buy somewhere else. What I am concerned about are people who are on better than entry-level jobs, are paying much more than a mortgage in rent, and who can't afford to buy anywhere in Dublin.

In the end it all comes back to supply. We have to build more, and particularly we have to build more apartments within the M50.

Reins

https://www.irishtimes.com/business/financial-services/changes-may-be-needed-to-make-banks-address-bad-loans-faster-mcguinness-1.4558558

Mairéad McGuinness suggesting tougher regulations may be needed to force banks into faster restructuring of loans that enter arrears due to the pandemic. What about the ones that haven't been restructured in years Mairead?

yagan

Reins wrote: »

https://www.irishtimes.com/business/financial-services/changes-may-be-needed-to-make-banks-address-bad-loans-faster-mcguinness-1.4558558

Mairéad McGuinness suggesting tougher regulations may be needed to force banks into faster restructuring of loans that enter arrears due to the pandemic. What about the ones that haven't been restructured in years Mairead?

I'm absolutely amazed by the whataboutery in some quarters on mortgages in arrears while the government competes with institutional funds in outbidding first time house buyers!

They don't seem to understand that it's their distorting of the market that has driven the likes of KBC and other mortgage lenders out of Ireland. Mortgage arrears over the last decade didn't send them packing before.

combat14

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.

where are people going to get the money to pay for these never ending increases in prices?

time for a round of massive pay rise requests from workers and their unions

ultimately this will collapse our economy

Mic 1972

combat14 wrote: »

where are people going to get the money to pay for these never ending increases in prices?

time for a round of massive pay rise requests from workers and their unions

ultimately this will collapse our economy

Inflation, it's where we are heading to

hometruths

yagan wrote: »

I'm absolutely amazed by the whataboutery in some quarters on mortgages in arrears while the government competes with institutional funds in outbidding first time house buyers!

They don't seem to understand that it's their distorting of the market that has driven the likes of KBC and other mortgage lenders out of Ireland. Mortgage arrears over the last decade didn't send them packing before.

You're correct in as far as I really don't understand how institutional investors buying properties has a greater adverse effect on the business of mortgage lenders than people not paying their mortgages.

Could you spell it out for me?

cnocbui

DataDude wrote: »

...
Two things. Firstly the article quotes a figure of 70% of applications countrywide having a gift attached. Not just in South Dublin.
...
You can't look at them as separate entities. Large inhertiances/gifts in Dalkey have a ripple effect which push people out of the affordability net in the poorest parts of Dublin.

So most people don't apply for a motgage to buy a house until their parents die? I somehow doubt that. Ireland already has amongst the highest inheritance taxes in the world, if not the highest.

I have never seen any suggestion inheritances are distorting the housing markets in Australia or NZ, and neither of them have any inheritance taxes.

I was on my third house when my parents died.

Parents allowing their children to stay in the family home and save a large deposit for a mortgage is also 'unfair' assistance. We need a tax to target that heinous and unfair distortion and tax it out of existence.

hometruths

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 doubt there is anything untoward about the Ministers investments but this really does not look good under the circumstances.

Are his days numbered already?

Villa05

yagan wrote:

They don't seem to understand that it's their distorting of the market that has driven the likes of KBC and other mortgage lenders out of Ireland. Mortgage arrears over the last decade didn't send them packing before.

I think they understand alright, gov own most of the Irish banking sector. Getting rid of competitors is beneficial

The irony being that many of the policies pursued in housing post 08 crash were to reduce the exposure of Irish people/banks to property

What we have ended up with is a duopoly in banking.
Investment funds hovering up property, successfully lobbying government to implement inflationary policies so that they can offload it to the pent up demand at the top of the bubble. They benefit from paying no tax plus benefit from tax spent on ftb incentives plus long term leases on social housing

The ducks are lining up for the investment funds

DataDude

cnocbui wrote: »

So most people don't apply for a motgage to buy a house until their parents die? I somehow doubt that. Ireland already has amongst the highest inheritance taxes in the world, if not the highest.

I have never seen any suggestion inheritances are distorting the housing markets in Australia or NZ, and neither of them have any inheritance taxes.

I was on my third house when my parents died.

Parents allowing their children to stay in the family home and save a large deposit for a mortgage is also 'unfair' assistance. We need a tax to target that heinous and unfair distortion and tax it out of existence.

The article suggests mostly gifts rather than inheritance. I lumped in together as taxed under the same CAT rules.

I’m not the one making up the figures, I just quoted the article. It’s an estate agent and a mortgage broker talking about how they’ve seen it in up 70% of mortgage applications. So either family wealth is a major factor in the housing market, or they’re both liars.

[Deleted User]

combat14 wrote: »

where are people going to get the money to pay for these never ending increases in prices?

time for a round of massive pay rise requests from workers and their unions

ultimately this will collapse our economy

Nobody will bring wages up
They simply will bring cheap labor from South America and Brasil same as they did before bringing labor from Eastern Europe
And irish landlords will continue investing in property for rent giving job for builders as this was before
Nobody care and nobody will about anybody wages!

[Deleted User]

Mic 1972 wrote: »

Inflation, it's where we are heading to

Never believe in songs from media
There will be massive deflation
When all printed money will simply burn when markets will collapse
Look to markets capitalization and you will see were printed money goes.
When buble will explode same as it was in 2008 everything will back to normal same as property prices.

MacronvFrugals

schmittel wrote: »

I doubt there is anything untoward about the Ministers investments but this really does not look good under the circumstances.

Are his days numbered already?

At the governments internal meeting Thursday the housing Minister spoke of “legacy issues” essentially implicating FG policies as to why we’re in this mess, looking at today’s Mail on Sunday it appears FG are now going on the attack. Oh dear!

https://ibb.co/mhmgZHf

mhmgZHf

MacronvFrugals

Today’s SBP

Property funds outbid housing bodies by ‘up to €80k per home’

With yesterday’s headlines of funds spending 52 million per week buying property in Ireland one has to wonder how long this is sustainable?

https://www.businesspost.ie/houses/property-funds-outbid-housing-bodies-by-up-to-eur80k-per-home-cae507dc

awec

combat14 wrote: »

where are people going to get the money to pay for these never ending increases in prices?

time for a round of massive pay rise requests from workers and their unions

ultimately this will collapse our economy

It's not that people will need to suddenly find an extra 30%, more that people will just be buying less house for their money.

Instead of shopping for a big 4 bed, they find they can only afford a small 4 bed for their money now (just a made up example).

[Deleted User]

Ireland is in an ideological trap within itself. We have the state robbing us blind with taxes and delivering under performing services and overpaid public servants. The same state is further robbing people by buying up property all around.

But the mention of a institutional fund buying an estate has sparked an explosion on anger and outrage this week. Where was this anger when it was state that was buying up available properties?

flexcon

awec wrote: »

It's not that people will need to suddenly find an extra 30%, more that people will just be buying less house for their money.

Instead of shopping for a big 4 bed, they find they can only afford a small 4 bed for their money now (just a made up example).

Nail on the head

Just put our deposit down on a new build 4 bedroom detached for 370,000 at 128sqm. Initially we had our name down for a bigger 144sqm in the same build but as of last week that hit 410,000 up from 380,00 last year.

So we decided to stick to budget rather than push higher again - even though we could “stretch” to it - we are going safer road and protecting us Incase of inflation and higher rates

Avant fixed rate for 7 years. 2.55 I think
Still feel I’m buying at a peak but at least I don’t feel like I’m on the edge of been torn apart in a few years.

Historic low interest rate for 7 years
82% LTV and 2.9 times our salary.

MacronvFrugals

Who can blame them in fairness with that type of yield…

Real estate firm collecting nearly $1,000 more in average rent here than in United States

Kennedy Wilson, which has 2,067 rental units in Ireland, plans to build more than 4,000 more here up to 2024

New filings published by the US real estate firm, which has 2,067 rental units in Ireland, show the average monthly rent in its Irish residential portfolio is now $2,525 (€2,075) per unit. This is significantly ahead of its average in the US, where it collects $1,598 per unit each month

.

https://www.businesspost.ie/houses/real-estate-firm-collecting-nearly-1000-more-in-average-rent-here-than-in-united-states-6d8fc786

[Deleted User]

I've said this elsewhere, but I don't really grasp the conversation on this topic (on the radio at least) always seemingly turning to social housing. Social housing is built-in to new estates. A guaranteed 10% (20% in future) are social houses. Then the other social housing bodies (McVerry, Housing Agency etc.) buy up a load of the houses, also.

Those on social housing are (as usual in Ireland) being disproportionately taken care of in comparison to private purchasers. The Covid rules even prevented private estates from working, but allowed social housing to continue. In other words: Those on the social housing list are more important.

The government either need to stop fulfilling social housing for a year or so and put all those houses on the private market, or change the rules so that people who are working, earning a wage, but still can't get anywhere near a house, can apply and get a new social house.

Wanderer78

salonfire wrote: »

Ireland is in an ideological trap within itself. We have the state robbing us blind with taxes and delivering under performing services and overpaid public servants. The same state is further robbing people by buying up property all around.

But the mention of a institutional fund buying an estate has sparked an explosion on anger and outrage this week. Where was this anger when it was state that was buying up available properties?

yes it is an ideological trap, but not truly driven by the government, its ultimately driven by the fire sectors(finance, insurance and real estate), but is facilitated and encouraged by our government, but again, this cannot be discussed here

Sweet.Science

Deleted User wrote: »

I've said this elsewhere, but I don't really grasp the conversation on this topic (on the radio at least) always seemingly turning to social housing. Social housing is built-in to new estates. A guaranteed 10% (20% in future) are social houses. Then the other social housing bodies (McVerry, Housing Agency etc.) buy up a load of the houses, also.

Those on social housing are (as usual in Ireland) being disproportionately taken care of in comparison to private purchasers. The Covid rules even prevented private estates from working, but allowed social housing to continue. In other words: Those on the social housing list are more important.

The government either need to stop fulfilling social housing for a year or so and put all those houses on the private market, or change the rules so that people who are working, earning a wage, but still can't get anywhere near a house, can apply and get a new social house.

Yeah it's all so bizarre . Private buyers by ex council homes . Councils buy new builds

[Deleted User]

Wanderer78 wrote: »

yes it is an ideological trap, but not truly driven by the government, its ultimately driven by the fire sectors(finance, insurance and real estate), but is facilitated and encouraged by our government, but again, this cannot be discussed here

Where was your objections when it was the State pricing young people out of their homes? You had plenty to say this week only because it was not the State doing the pricing out.

Wanderer78

salonfire wrote: »

Where was your objections when it was the State pricing young people out of their homes? You had plenty to say this week only because it was not the State doing the pricing out.

yup, this is so messed up now, any move we make is further exasperating outcomes, including state intervention

coolshannagh28

salonfire wrote: »

Ireland is in an ideological trap within itself. We have the state robbing us blind with taxes and delivering under performing services and overpaid public servants. The same state is further robbing people by buying up property all around.

But the mention of a institutional fund buying an estate has sparked an explosion on anger and outrage this week. Where was this anger when it was state that was buying up available properties?

The state has played an ideological 3 card trick , they have managed to reinflate house prices using tax incentives to investment funds and at the same time offshored the downside risk should things collapse .
We are known for this and face headwinds as globally there is a concerted effort to regularise taxation on corporations.

fliball123

Deleted User wrote: »

I've said this elsewhere, but I don't really grasp the conversation on this topic (on the radio at least) always seemingly turning to social housing. Social housing is built-in to new estates. A guaranteed 10% (20% in future) are social houses. Then the other social housing bodies (McVerry, Housing Agency etc.) buy up a load of the houses, also.

Those on social housing are (as usual in Ireland) being disproportionately taken care of in comparison to private purchasers. The Covid rules even prevented private estates from working, but allowed social housing to continue. In other words: Those on the social housing list are more important.

The government either need to stop fulfilling social housing for a year or so and put all those houses on the private market, or change the rules so that people who are working, earning a wage, but still can't get anywhere near a house, can apply and get a new social house.

What you outline is one way our many left leaning policies which have favored those who are the poorest. What is happening is the poor and disadvantaged are given advantages that working people dont get and for a long time now welfare has been competing with low paying jobs. You only have to look at supermarkets, fast food outlets and other low paying jobs here you can see a shift in the workforce from being Irish to foreign workers. Irish workers dont do cheap labour as they know the system is geared towards them. We need a system where a % of your tax is actually put by for the person paying it and cannot be used for anyone else. There should also be some way of stopping our government from borrowing in our name and being used to pay out to people who dont deserve it (not saying all on welfare dont deserve help, some do some dont)

It gets worse the more you earn before AIW over 50% of what you earn you have to pay back. Ireland has become a country that does not reward working or as Leo says those who get up in the morning. Its like if you are anyway successful in this country your wallet is a target for Poor, Public servants and the Rich who dont want to pay the bill when things go wrong.

The effect is that we now have a good % working who are worse off than some who are not working and that should never be the case in a functioning employment market.