2021 Irish Property Market chat - mod warnings post 1

timmyntc · 13-05-2021 10:37AM

Hubertj wrote: »

The point I am making is that if you introduce policies to make investment unattractive and drive investors out of the market you cause uncertainty in that market (whatever that market is property or otherwise). If there is uncertainty in a market it will deter investors as they may not want to take the additional risk. Are you really suggesting that introducing uncertainty in a market will not deter investment? That’s just nonsense, total nonsense. Rents obviously need to fall but to suggest regulating the sh*t out of the market will have the desired effect without unintended consequences is nonsense

And if you introduce "incentives" to use property & land as speculative assets you also get unintended consequences. Some of which we are seeing right now, such as apartments being kept empty, central buildings & sites being left derelict because the speculative price keeps rising.

I'm not a fan of over regulation in any aspect of live, but property and land in this country needs it to stop speculators.

Marius34 · 13-05-2021 10:40AM

timmyntc wrote: »

In order to achieve same yield, they would need to buy in at a lower price. So their maximum affordability drops which will stop price inflation to a certain degree.

Inevitably there will be some loss in supply as some investors will pull out, but plenty will remain and some new ones will enter to buy in once prices dip enough to get that yield again.

Its not a silver bullet - the govt cant just hand-wave the rent to be 40% lower than it is anyways. Just stating that should rents fall 40%, its not the end of the world for the landlord class - and it certainly isnt a reason to want to keep rents high in the first place.

The rents definitely needs to go down, I'm all for it, Dublin rents are really high, but the only real solution, is increase level of supplies, and increased competition on supplies side. All the restrictions, and price controls does not help to increase it.

awec · 13-05-2021 10:45AM

Today's Indo has a piece about the housing crisis: "IMF says Irish government can afford to boost public spending and must tackle housing crisis"

https://www.independent.ie/business/imf-says-irish-government-can-afford-to-boost-publicspending-and-must-tackle-housing-crisis-40418593.html

An interesting take by the IMF on how the government can address the housing crisis. Increased spending is the overall gist. Tax rises to pay for it, but not until the impact of covid is over. Supports the increase in borrowing by the government.

DataDude · 13-05-2021 10:51AM

awec wrote: »

Today's Indo has a piece about the housing crisis: "IMF says Irish government can afford to boost public spending and must tackle housing crisis"

https://www.independent.ie/business/imf-says-irish-government-can-afford-to-boost-publicspending-and-must-tackle-housing-crisis-40418593.html

An interesting take by the IMF on how the government can address the housing crisis. Increased spending is the overall gist. Tax rises to pay for it, but not until the impact of covid is over. Supports the increase in borrowing by the government.

Think I read the line elsewhere that this was to be paid for by "widening the tax net"? Which really means - you need to tax lower paid workers more and increase property taxes. They're the two areas we lag behind peers, there's no more blood to be taken at the upper end give our 52% marginal tax rates.

Problem is both of those mechanisms of raising the tax take will be ferociously unpopular. I also think it's a real problem that, whilst it's clear those earning €10k - €30k don't pay anywhere near their "fair share" by international standards - given our very generous welfare system, how much can we increase taxes on lower paid workers before it becomes completely pointless to work at all? Choppy waters ahead for public finances.

timmyntc · 13-05-2021 10:52AM

Marius34 wrote: »

The rents definitely needs to go down, I'm all for it, Dublin rents are really high, but the only real solution, is increase level of supplies, and increased competition on supplies side. All the restrictions, and price controls does not help to increase it.

Price controls dont help, I agree.
However we need disincentives on keeping units vacant. And an actually enforceable vacant site levy.

REITs are dependent on rental prices to get their yields.
If they paid 400k+ for an apartment to get 3% yield, they are expecting an annual rent above 12k. If they rents fall in future, then so does their yield.

SO what they can do instead is trickle apartments on the market to ensure that rents stay high. Because if they rented all their units but then rents began to fall because of increased supply, it would hurt them more. Not only would they fail to achieve their desired rental yield, but the value of their properties would also fall along with the yield. Apartment prices are based around an expectation of what rents you *could* get. So if those expectations fall, so too do prices.

We need punitive measures to punish people for withholding rental supply to try and fix prices in the market.

MacronvFrugals · 13-05-2021 10:52AM

In todays SBP, Larry Summers reckons we need to wean ourselves off the FDI juice sooner or later...

Ireland should not attract multinationals through tax policy, former US Treasury Secretary says

Ireland should move away from attracting multinational companies through tax policy, the former US Treasury Secretary and Chief Economist of the World Bank has said. Changing to attracting business through non-tax incentives will “pose certain challenges” for Ireland, Larry Summers added.

Summers said he hopes there will be “negative pressure” on Ireland to make itself attractive through “it's very substantial real advantages” rather than as a location to pay less tax.

I get the impression we're approaching a similar moment to "it's our currency but your problem"

https://www.businesspost.ie/economics/ireland-should-not-attract-multinationals-through-tax-policy-former-us-treasury-secretary-says-65e85f82

Villa05 · 13-05-2021 10:54AM

Hubertj wrote:

I was responding to the posters suggestion policy should drive rents down 40%. That wouldnâ€™t solve anything, in my opinion.

In the past 10 years rents have risen 100% in a period of close to 0 inflation in the non fire sector. Would you not agree that a bit of re balancing is required
I would imagine that 30 to 40% of that inflation occurred in the last 3 years. Every investment is based on some degree of certainty. Long term investors are put off by supernormal returns especially in a commodity that everyone needs as its a sure fire sign of a bubble

Is rent inflation creating an unsustainable bubble or helping to restore the supply/demand imbalance. The current situation would suggest the former and we are well aware of the consequences of real estate bubbles

Populism is dangerous, extremely dangerous if its for a small sector that has huge pricing power over everyone

We are at that point now. How we manage it will define the country for decades if not forever. I'm talking Argentina like

Cilldara_2000 · 13-05-2021 10:59AM

awec wrote: »

Today's Indo has a piece about the housing crisis: "IMF says Irish government can afford to boost public spending and must tackle housing crisis"

https://www.independent.ie/business/imf-says-irish-government-can-afford-to-boost-publicspending-and-must-tackle-housing-crisis-40418593.html

An interesting take by the IMF on how the government can address the housing crisis. Increased spending is the overall gist. Tax rises to pay for it, but not until the impact of covid is over. Supports the increase in borrowing by the government.

Their whole shtick is based on spending as a proportion of GDP. We know that GDP is a fundamentally flawed measure generally, and is particularly flawed as regards Ireland due to our FDI/corporation tax racket.

If we did big up spending in a big way, the average joe and josephine will be strangled with taxes and charges.

Marius34 · 13-05-2021 11:02AM

timmyntc wrote: »

Price controls dont help, I agree.
However we need disincentives on keeping units vacant. And an actually enforceable vacant site levy.

REITs are dependent on rental prices to get their yields.
If they paid 400k+ for an apartment to get 3% yield, they are expecting an annual rent above 12k. If they rents fall in future, then so does their yield.

SO what they can do instead is trickle apartments on the market to ensure that rents stay high. Because if they rented all their units but then rents began to fall because of increased supply, it would hurt them more. Not only would they fail to achieve their desired rental yield, but the value of their properties would also fall along with the yield. Apartment prices are based around an expectation of what rents you *could* get. So if those expectations fall, so too do prices.

We need punitive measures to punish people for withholding rental supply to try and fix prices in the market.

REITs rent almost all of their apartments. It's only speculation here that they keep large portion vacant. Yes, there is disruption during Covid with around 1000 or so unrented higher end apartments in city center. New policy would be abit late to solve it, as lockdowns may end in few months, and most of it will be rented out.

Although I agree on vacant site levy.

DellyBelly · 13-05-2021 11:06AM

DataDude wrote: »

Problem is both of those mechanisms of raising the tax take will be ferociously unpopular. I also think it's a real problem that, whilst it's clear those earning €10k - €30k don't pay anywhere near their "fair share" by international standards - given our very generous welfare system, how much can we increase taxes on lower paid workers before it becomes completely pointless to work at all? Choppy waters ahead for public finances.

This is a massive problem...and the fact that income tax didn't fall so much during the pandemic really shows up that those on lower incomes do not pay their "fair share" as you say...

MacronvFrugals · 13-05-2021 11:09AM

I know there's a Leinster House bubble but wow from Hugh O' Connell's Twitter -

The Tánaiste told colleagues about a Waterford Whispers article he had seen last week, headlined ‘Fine Gael and Fianna Fáil parliamentary parties have just discovered the housing crisis’, and said he doesn’t want this impression to be created

Hubertj · 13-05-2021 11:09AM

DataDude wrote: »

Think I read the line elsewhere that this was to be paid for by "widening the tax net"? Which really means - you need to tax lower paid workers more and increase property taxes. They're the two areas we lag behind peers, there's no more blood to be taken at the upper end give our 52% marginal tax rates.

Problem is both of those mechanisms of raising the tax take will be ferociously unpopular. I also think it's a real problem that, whilst it's clear those earning €10k - €30k don't pay anywhere near their "fair share" by international standards - given our very generous welfare system, how much can we increase taxes on lower paid workers before it becomes completely pointless to work at all? Choppy waters ahead for public finances.

Legalise, regulate and tax cannabis for medical initially and then recreational. It will happen in next 5 years, guaranteed. Look across Europe. We could even go full Amsterdam!

Link to property - increased use of industrial / commercial and office space in direct and indirect industries. Increased FDI. Increased tourism to support recovery.

JimmyVik · 13-05-2021 11:15AM

Marius34 wrote: »

REITs rent almost all of their apartments. It's only speculation here that they keep large portion vacant. Yes, there is disruption during Covid with around 1000 or so unrented higher end apartments in city center. New policy would be abit late to solve it, as lockdowns may end in few months, and most of it will be rented out.

Although I agree on vacant site levy.

Yeah it kind of smacks of the same people who said that making AirBnB illegal would bring so many properties onto the rental market that they would force rents down. Turns out most of them either sold to the council or rented to the council afterwards.

PropQueries · 13-05-2021 11:29AM

DataDude wrote: »

Think I read the line elsewhere that this was to be paid for by "widening the tax net"? Which really means - you need to tax lower paid workers more and increase property taxes. They're the two areas we lag behind peers, there's no more blood to be taken at the upper end give our 52% marginal tax rates.

Problem is both of those mechanisms of raising the tax take will be ferociously unpopular. I also think it's a real problem that, whilst it's clear those earning €10k - €30k don't pay anywhere near their "fair share" by international standards - given our very generous welfare system, how much can we increase taxes on lower paid workers before it becomes completely pointless to work at all? Choppy waters ahead for public finances.

But how many lower paid workers are also already in receipt of HAP and other family income supports etc. For example, Simon Coveney stated a few months ago that:

"there could be as many people in his department on the Working Family Payment as in the whole of the Defence Forces."

Tax them more? All that means is that HAP, family income supports etc. will just rise in tandem. And, remember, carbon taxes (home heating) are increasing, they will also be shortly strongly encouraging more of these low paid workers to pay into a pension (that's really a tax as the chances of them getting a return out of that are minimal IMO) etc. etc. Where's the benefit outside of making the less well off feel even worse than they do already and making their lives harder?

The real issue is the current artificial high cost of renting and purchasing a family home. The rest would resolve itself fairly rapidly were these two issues resolved IMO

Link to article on Simon Coveney here: https://www.independent.ie/irish-news/politics/coveney-many-civil-servants-in-my-department-are-on-family-income-top-up-like-members-of-defence-forces-39601376.html

Browney7 · 13-05-2021 11:36AM

JimmyVik wrote: »

Yeah it kind of smacks of the same people who said that making AirBnB illegal would bring so many properties onto the rental market that they would force rents down. Turns out most of them either sold to the council or rented to the council afterwards.

A knock on impact of the Funds and REITs advertising properties at aspirational rents and leaving them vacant is the state is most likely overpaying on these bad value for money inflation proofed leases it's entering into in the first place.

From DCC's own literature on their leasing schemes:

"Rents will be paid at 80% of the current DAFT rate for properties which do not have a Management Company in situ. Properties which do have a Management Company in situ will receive 85% of the DAFT rate. The rent is reviewed upwards or downwards at review date in accordance with the lease agreement. This rent discount is applied to take account of the management/maintenance of the property by DCC and the elimination of vacant periods where a property owner would normally not receive a rent payment."

Do we really have faith in a member of the DCC staff to engage in some critical thinking and challenge the initial rent levels being sought by generous investors approaching them with gifts of 25 leases on "discounted terms"?

I shudder to think of the deals being done at present from funds, REITs, HAP and even the immigrant Investor programme that we have running (used to fund some 3500 social homes between 2012 and 2019 -"however it should be noted the approval does not equate to actual builds" https://www.irishtimes.com/business/construction/cash-for-residency-scheme-has-funded-3-500-social-homes-1.4471395?mode=amp)

thomas 123 · 13-05-2021 12:15PM

Twice in two days in the dail it has been mentioned that homelessness has reduced.

Are those living with parents into their 30’s considered homeless? (No)

Do we have any figures on how many people co habit with parents/family vs other years in the past?

If the vast majority of homes purchased in Ireland are bought on a buy to rent basis this housing crisis must be many many magnitudes greater than I or others ever thought.

Browney7 · 13-05-2021 12:21PM

JimmyVik wrote: »

And they are selling. But worse, there are no ordinary investors entering the market now. Its only REITs and councils on the government tit. And they arent interesting in sucking on smaller tits than the government funded ones.

Investors like these are a good example of this http://www.doublepropertygroup.ie/projects/

No shiny new multistory googleplex apartments, just bog standard tiger developments all leased to councils AHB's and underwritten by the department of housing

jill_valentine · 13-05-2021 12:34PM

thomas 123 wrote: »

Twice in two days in the dail it has been mentioned that homelessness has reduced.

Are those living with parents into their 30’s considered homeless? (No)

Do we have any figures on how many people co habit with parents/family vs other years in the past?

If the vast majority of homes purchases in Ireland are bought on a buy to rent basis this housing crisis must be many many magnitudes greater than I or others ever thought.

Indeed. Doesn't take into account people moving home temporarily or long term during the pandemic, the eviction moratorium, or the effects of both on wider rental demand (ie landlords more amenable to HAP etc) either.

FFFG are essentially trying to claim Covid's credit. And even then it's not as massive a reduction as we would expect to see, there is a literal global virus disaster and it only made the number of homeless families wobble. The underlying issues then remain unchanged.

Villa05 · 13-05-2021 12:41PM

thomas 123 wrote:

Twice in two days in the dail it has been mentioned that homelessness has reduced.

In theory homelessness has reduced but only because of the pandemic. It was rising prior to covid

cnocbui · 13-05-2021 12:47PM

thomas 123 wrote: »

Twice in two days in the dail it has been mentioned that homelessness has reduced.

Are those living with parents into their 30’s considered homeless? (No)

Do we have any figures on how many people co habit with parents/family vs other years in the past?

If the vast majority of homes purchased in Ireland are bought on a buy to rent basis this housing crisis must be many many magnitudes greater than I or others ever thought.

460,000 adults still living with their parents in 2018.

Villa05 · 13-05-2021 01:03PM

Watched Claire Byrne on the rte player last night after speaking to neighbour who was very annoyed about the content on investment funds

The junior minister for housing was on it and the usual legacy issues were mentioned for the slow pace of action. Not sure what that does for the working relation ship between an Fg senior and Fg junior minister

Now the junior min came across poor in the show but some snippets

When asked why we didn't start building more in 2014 when supply was forecast to be an issue
He said the state has to borrow at 14% and could not do more

This of course is BS and he wasn't pressed on it by Claire. I got my mortgage in 2014 at a variable rate of 4.2% the state was definitely borrowing for less than that rate
The issue at the time was that developers were charged 14% by entirely state controlled banks for any building projects.
Now one would have to ask why and consider was the state blocking any competition in the process of offloading NAMA assets

Another revelation is that the minister stated that currently 60% of new builds are for social housing so I suspect that most of this investment fund activity is being underwritten by the state in the form of long term leasing and the most expensive new build housing in the country is in fact social housing.
This of course will take our bubble to heights never seen before

mcsean2163 · 13-05-2021 01:24PM

JimmyVik wrote: »

Yeah it kind of smacks of the same people who said that making AirBnB illegal would bring so many properties onto the rental market that they would force rents down. Turns out most of them either sold to the council or rented to the council afterwards.

Imagine where we'd be if that didn't happen...

JimmyVik · 13-05-2021 01:26PM

mcsean2163 wrote: »

Imagine where we'd be if that didn't happen...

Where?

Hubertj · 13-05-2021 01:54PM

Villa05 wrote: »

Watched Claire Byrne on the rte player last night after speaking to neighbour who was very annoyed about the content on investment funds

The junior minister for housing was on it and the usual legacy issues were mentioned for the slow pace of action. Not sure what that does for the working relation ship between an Fg senior and Fg junior minister

Now the junior min came across poor in the show but some snippets

When asked why we didn't start building more in 2014 when supply was forecast to be an issue
He said the state has to borrow at 14% and could not do more

This of course is BS and he wasn't pressed on it by Claire. I got my mortgage in 2014 at a variable rate of 4.2% the state was definitely borrowing for less than that rate
The issue at the time was that developers were charged 14% by entirely state controlled banks for any building projects.
Now one would have to ask why and consider was the state blocking any competition in the process of offloading NAMA assets

Another revelation is that the minister stated that currently 60% of new builds are for social housing so I suspect that most of this investment fund activity is being underwritten by the state in the form of long term leasing and the most expensive new build housing in the country is in fact social housing.
This of course will take our bubble to heights never seen before

What was our capacity to build in 2014? How many houses could we build per year vs how many we actually built?

13-05-2021 02:10PM

Anyone else been looking at the property market and not noticed any increase in supply at all, even as restrictions have loosened? Thought it would have picked up even a little bit by now

derekgine3 · 13-05-2021 02:24PM

AdamD wrote: »

Anyone else been looking at the property market and not noticed any increase in supply at all, even as restrictions have loosened? Thought it would have picked up even a little bit by now

Saw a major uptick in North Dublin 1-3 weeks ago but now that restrictions have been lifted it's been eerily quiet, which is odd.

fliball123 · 13-05-2021 02:30PM

derekgine3 wrote: »

Saw a major uptick in North Dublin 1-3 weeks ago but now that restrictions have been lifted it's been eerily quiet, which is odd.

Even when things lift there will not be the resurgent of properties people think. People who are looking to sell will also be looking to buy, personally and I would hazard a guess anyone with a family or other commitments will not put their property up for sale until they have found one they like themselves.

derekgine3 · 13-05-2021 02:35PM

fliball123 wrote: »

Even when things lift there will not be the resurgent of properties people think. People who are looking to sell will also be looking to buy, personally and I would hazard a guess anyone with a family or other commitments will not put their property up for sale until they have found one they like themselves.

Leaning towards hogwash with that post. I fully expect a flood of second hand properties to hit the market once the majority of the population are vaccinated.

Amadan Dubh · 13-05-2021 02:36PM

Villa05 wrote: »

Watched Claire Byrne on the rte player last night after speaking to neighbour who was very annoyed about the content on investment funds

The junior minister for housing was on it and the usual legacy issues were mentioned for the slow pace of action. Not sure what that does for the working relation ship between an Fg senior and Fg junior minister

Now the junior min came across poor in the show but some snippets

When asked why we didn't start building more in 2014 when supply was forecast to be an issue
He said the state has to borrow at 14% and could not do more

This of course is BS and he wasn't pressed on it by Claire. I got my mortgage in 2014 at a variable rate of 4.2% the state was definitely borrowing for less than that rate
The issue at the time was that developers were charged 14% by entirely state controlled banks for any building projects.
Now one would have to ask why and consider was the state blocking any competition in the process of offloading NAMA assets

Another revelation is that the minister stated that currently 60% of new builds are for social housing so I suspect that most of this investment fund activity is being underwritten by the state in the form of long term leasing and the most expensive new build housing in the country is in fact social housing.
This of course will take our bubble to heights never seen before

Same as before - cheap and readily available money has found its way into property to create another property bubble, abetted by government policy.

It's quite obvious that the economic "growth" the past few years has been isolated to certain sectors (e.g. property); no income tax/USC reform, little to no infrastructure development, education spending pitifully increased, yet property prices are booming - why and how is property booming while the government is struggling to support society as a whole? The policies which have lead to so much cash sloshing around the property market need to be reformed to get it out and back into the wider economy. Taxing institutionals a premium for doing business here would be a great start.

fliball123 · 13-05-2021 02:40PM

derekgine3 wrote: »

Leaning towards hogwash with that post. I fully expect a flood of second hand properties to hit the market once the majority of the population are vaccinated.

The majority got back to work twice last year and guess what it didnt happen and people who were receiving pup is going down on a weekly basis. So while there will be some extra properties coming onto the 2nd hand market it is going to take a long time for this flood that your looking for. Anyone looking in this market and who has a house is going to hold off putting their house up until they find a property they want and until more properties come on stream meaning things will stagnate for longer than people think. Sure no point in arguing we will see when the country opens up and see who was right or wrong

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

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2021 Irish Property Market chat - mod warnings post 1