Irish Property Market chat II - *read mod note post #1 before posting*

coolshannagh28 wrote: »

IMO prices are backstopped by REITs and funds , they are hugely active in the market and price or capital is not and issue with them .Ireland is a tiny market and they are monopolising it , the higher they can drive prices the higher book value they can place on the assets .

REITs main focus is not property book value, but Rental profits. The cheaper the property, the higher the rents, the more investment you can expect from REITs.

timmyntc wrote: »

Yes, but if property value begins to fall after they have invested in property - it hurts them a lot, and they may look to sell rather than potentially lose even more.

It's more of a Rental price, not property value. If Rents doesn't fall as much as property price, they maybe happy to hold on.
And again, if you think REIT's control the price, why would they fall. My point is that it's not REIT's that controls the price, but demands from physical people has a way bigger impact on the price.

Marius34 wrote: »

It's more of a Rental price, not property value. If Rents doesn't fall as much as property price, they maybe happy to hold on.
And again, if you think REIT's control the price, why would they fall. My point is that it's not REIT's that controls the price, but demands from physical people has a way bigger impact on the price.

They dont control the price, but they are one of several large players in the market.

They see property as an investment - you pay the principle (sale price) and then collect the interest (rent price). The investment is the total of both.
If the sale price drops enough, it can erode the entire gain you get from rent, leaving you with a ROI of <0%. At some stage in the future they will seek to sell to realise their full investment - so are reliant on the sale price not dropping hugely by that time.

Unlike homeowners, investors will sell if they dont have confidence in prices (i.e. they think they are going to drop significantly).
And the sale prices are tied to the rent prices too, as rents set the yield you can get for a certain price. The big question is what will cause rents to fall.

FromADistance wrote: »

Were it not for the fact that we're highly dependent on tourism, I'd be reaching for the small violin.... some hoteliers could do with a swift kick up the arse... hotel prices in the city pre covid were obscene.

Good thing we've been spending so much of our building capacity building them the last few years eh?

Amadan Dubh wrote: »

Yes, for individual borrowers it looks like they are protected from themselves! Maybe some interest rate rises adding a couple hundred to mortgage interest repayments might also be sustainable. I just hope that the State (capital S) won't somehow put the Irish taxpayer on the hook for any crash which predominantly harms the institutional investors (e.g. reckless 20/25 year social housing leases at 90% market rents requiring property taxes to steadily be increased).

REITs shouldn't be backed by the government in the same way institutional banks or bonds were forced to be. You'd hope any government learned their lesson from that.

I do think there is a disconnect in the general public, due to poor numeracy when it comes to small percentages over a large periods of time. If you asked most people what a 1% change in interest rates would do to their mortgage they would struggle to tell you, even though its written on mortgage documents now. Outside of the new Finance Ireland 10/15/20 year fixed rates or the councils magic 2% for life most people are fixed for 2-5 years at a time. The strict rules, as you rightly said, protect people from themselves.

I'm actually against most exemptions on anything but guaranteed grounds, which would be a tiny percent. Interest rates will rise, and faster than expected if the eastern europe continues the way its going. Brokers try and give them to you if you fit certain parameters and I'd have some concerns about that.

The state needs to build fundamentally. I think a protest vote is coming. People I know who would have voted down the list to put Sinn Fein last a decade ago are talking about being forced to vote for them just to change something. We aren't Germany, there is always a sense of uncertainty around renting in Ireland, historically we carry scars and those scars may cause a massive upset in the next election. Unlikely we can get out of those 20/25 year leases though so in some way, shape or form REITs are unlikely to go anywhere.

Courtesy of Crazy House Prices...

https://eddempsey.ie/Residential-Property/9-Fortfield-Terrace-Rathmines-Dublin-6/136&ser=1

<1400 sq foot, latest bid 938k. Original asking 695k. Is it sitting atop a deposit of precious metals?

AlmightyCushion wrote: »

https://www.businesspost.ie/houses/new-rules-will-mean-only-social-and-affordable-housing-for-public-lands-in-dublin-and-cork-4b0af282

So the squeezed middle get shafted yet again. If you are a single person earning over €58,000 a year or a couple earning over €75,000 a year then though tits, no housing for you.

Nothing new there sadly. Always the way.

Browney7 wrote: »

Courtesy of Crazy House Prices...

https://eddempsey.ie/Residential-Property/9-Fortfield-Terrace-Rathmines-Dublin-6/136&ser=1

<1400 sq foot, latest bid 938k. Original asking 695k. Is it sitting atop a deposit of precious metals?

Wow. It’s a nice quiet road and the house does have a lot of potential - what would be the cost to extend and modernise?

AlmightyCushion wrote: »

https://www.businesspost.ie/houses/new-rules-will-mean-only-social-and-affordable-housing-for-public-lands-in-dublin-and-cork-4b0af282

So the squeezed middle get shafted yet again. If you are a single person earning over €58,000 a year or a couple earning over €75,000 a year then though tits, no housing for you.

It does sound bad news for middle class. Especially for families on 75K-100K incomes.
There maybe shift in policy, thus construction companies start looking for profits for public projects on public lands, leaving less capacity for private market.
The high end may have less impact, as those are in different locations, different style of developments.

javaboy wrote:

These “bubbles†are not comparable. For the most part, builders have no problem selling what they build even at the current prices. When prices rise, I don’t expect them to struggle to sell them either.

Was that not the case in 06/07 also

javaboy wrote:

There are loads of mortgage approved buyers out there clamouring for houses. Due to the central bank lending limits and the more risk averse mid-COVID lending from banks, these buyers are unlikely to default.

Default is a result of job loss rather than a small reduction in income

Amadan Dubh wrote:

Aparthotels, student accommodation, co-living, office buildings and hotels are our 10s ghost estates in Dublin. Pretty dire outlook for Dublin city hotels for the summer season.

Have we any idea how many hotel rooms were taken by Dublin councils pre covid for homeless?

coolshannagh28 wrote:

This time despite efforts to outsource risk.

Good General Post but, I'm puzzled that this commentary has become almost gospel.
We have not outsourced risk, the risk is firmly on the taxpayer when they underwrite many of these developments with long term Leasing

AlmightyCushion wrote: »

https://www.businesspost.ie/houses/new-rules-will-mean-only-social-and-affordable-housing-for-public-lands-in-dublin-and-cork-4b0af282

So the squeezed middle get shafted yet again. If you are a single person earning over €58,000 a year or a couple earning over €75,000 a year then though tits, no housing for you.

Essentially all the middle class worker will be in the commuter towns. This will damage the social fabric of the city. Without a middle class grouping schools will become even more polarized in the city. It's bad enough now. Most schools are already struggling for teachers, very few stay long term, hospitals have very few nurses staying and doing 10 years or more, most of the guards live miles out (a disaster if there was ever a real emergency that required all hands on deck). The city will become what other cities have already fallen into, rich and poor ghettos with life expectancies (education, medical, social) from each adjusted accordingly.

I'm all for building social housing, its vital for the state but affordable can mean lots of things. Townlands etc function better when the public and civil servants live in the areas they are serving. They earn too much for some areas and too little for other areas. There is a tipping point in everything and social cohesion is a very complicated thing that can't be fixed by populist grand gestures with no thought for the future.....that's what got us here.

I really do love Ireland but sometimes I wonder why given responsible adults tend to be punished.

am_zarathustra wrote: »

Essentially all the middle class worker will be in the commuter towns. This will damage the social fabric of the city. Without a middle class grouping schools will become even more polarized in the city. It's bad enough now. Most schools are already struggling for teachers, very few stay long term, hospitals have very few nurses staying and doing 10 years or more, most of the guards live miles out (a disaster if there was ever a real emergency that required all hands on deck). The city will become what other cities have already fallen into, rich and poor ghettos with life expectancies (education, medical, social) from each adjusted accordingly.

I'm all for building social housing, its vital for the state but affordable can mean lots of things. Townlands etc function better when the public and civil servants live in the areas they are serving. They earn too much for some areas and too little for other areas. There is a tipping point in everything and social cohesion is a very complicated thing that can't be fixed by populist grand gestures with no thought for the future.....that's what got us here.

I really do love Ireland but sometimes I wonder why given responsible adults tend to be punished.

We were never an urban society to begin with so every policy has been geared towards a town community mentality, which actually has its advantages if you've ever lived in a megapolis.

In some countries it's the cities that benefit at the expense of everyone else. I wouldn't cite Singapore in that as it's a city nation.

Remote is a reality now and cities around the world are going to lose out to it, which is no harm considering how the pandemic ripped through high density.

Villa05 wrote: »

Couple of points
Circa 14,000 units in one year is not small.
We also know from the apartment building in Tralee referenced earlier in the thread that investment funds are also active in the second hand market.

Would you agree that investment funds are most active in High demand areas thereby pushing out potential buyers who work in that area. Those potential buyers push out people in the area they migrate to. This creates a ripple effect in that every area becomes overpriced for the makeup of their local economy.

Killian woods stated that both the state and investment funds will outbid any ftb by 10's of thousands meaning that if they want a development they'll get it no matter what. Killian would have the market well researched judging by his output on the subject on the Sunday business post

What is 14.000? That's not the number of REIT's properties.
Note there are around 60K units sold a year, with over 20K for FTB alone. With majority of second hand homes.

Marius34 wrote:

It's more of a Rental price, not property value. If Rents doesn't fall as much as property price, they maybe happy to hold on. And again, if you think REIT's control the price, why would they fall. My point is that it's not REIT's that controls the price, but demands from physical people has a way bigger impact on the price.

Would some of the highest rents in the highest demand areas paid by the state for the lowest earners be a solid foundation for rent price stability?

DataDude wrote: »

Agreed. The EA selling that that operates that way, have seen a number advertised similarly. It's an auction style starting point rather than an asking price. €695k for that was clearly never even in the ballpark of what it would sell for.

A similar house in much better condition sold for 1.155 in 2018.

If this house goes for €900k ish how much to have it done proper is the question.