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

Marius34 · 21-06-2021 10:56AM

schmittel wrote: »

Well the fact that the government have recently felt the need to change stamp duty laws to stop them buying buying in bulk would be one.

I have no idea if it is as high as 40%, all I am saying is that I don't find Marius' argument that most new build estates only have 10% of social housing to be credible.

But for some reason it should be credible to say that housing authorities buys large volumes in most of new developments in addition to 10%.

am_zarathustra · 21-06-2021 10:56AM

I can't imagine the 36% of new build bought by instititutional investors as per the Irish Times article is all in 100% SH estates. I only know of a handful of those in the country and the fuss made when the government manage to do it is embarrassing so I'd imagine it's not likely to have fallen through the cracks. SH often goes in the last phase, Iif you look at the plans in most large scale new builds (lord knows I have) it's clear. The developer might wait til the last 40-50 when they don't care anymore and then just do a deal, CC will pay full price anyway, no EA cut, clean exit as the CC will snag. Desirable areas often aren't under as much pressure from housing lists ect

hometruths · 21-06-2021 11:00AM

JDD wrote: »

I don't think housing boards are able to buy up large volumes of new builds in housing estates that are in high demand areas. Honestly, while developers love cashflow, it would be counter productive for them to sell large chunks of their estate to the council for social housing. This is simply because larger estates are sold piecemeal - 30-50 units at the time as and when they are built - and an estate may get a "reputation" (rightly or wrongly) early on as having a high number of social housing units. They'll find it difficult to sell in later phases if a reputation like that takes hold. And why bother when there are many private buyers falling over themselves to buy the units?

For instance, in our estate the developers have released 30/40/50 units at a time for private sale (outside of what they build for the council - the 10% - and anything they might have directly sold to REITs). As far as I can see so far about 90% of the houses and 60% of the apartments have been sold to owner occupiers - based on Daft rental listings. I can't imagine there's too many houses left over for the council to buy.

I'm not saying you'd immediately know if the people next door owned the house or were renting it off the council, but you'd definitely know if 30/40% of your road was. And while you'd be reluctant to talk about that in case it ran down the value of your house, people outside the estate would know. It would be inevitable that word would get out and developers know that would be kryptonite to later sales.

Developers are selling entire estates to funds who in turn are leasing them in all or part to the council for social housing. Amidst the recent furore in Maynooth it turned out that the underbidder was an AHB bidding with council funds.

Everything you say makes a lot of sense in theory, but if in practice the developers are offloading in bulk, maybe the demand from private buyers is not high enough?

hometruths · 21-06-2021 11:03AM

Marius34 wrote: »

But for some reason it should be credible to say that housing authorities buys large volumes in most of new developments in addition to 10%.

Yes.

It's precisely because I believe that to be a credible statement, that I don't believe that they are mostly 10% social housing to be a credible statement!

Villa05 · 21-06-2021 11:10AM

schmittel wrote: »

No idea on the 40%, but I'd say it is closer to the true figure than 10%.

The report quoted below which goes up to 2019 may give clues

https://www.thejournal.ie/homes-bought-by-institutions-increase-5472495-Jun2021/

The report notes commitments in the Programme for Government to drastically increase the number of houses being built, and says these efforts are undermined by fewer homes going to families.
It states: “An increasing proportion of newly built homes were bought by ‘non-household’ entities.
“In 2010, the proportion of new homes purchased by non-household entities was 5.6%.
“By the end of the year 2016, the year Rebuilding Ireland was published, this had increased to 21.8%, increasing again to 32.9% in 2019.”

JDD · 21-06-2021 11:13AM

Offloading in bulk is different. If a developer is going to sell a whole estate to a REIT it's because they want a guaranteed flow of cash on a guaranteed date, which assists them in securing finance for other developments. There's usually plenty of private buyer interest, but it costs more in terms of estate agent fees and faffing around selling to a private buyer.

Developers do have their eye on the long term though. If they're buying a swathe of land in Cherrywood or Bettystown or Baldoyle, the one estate they sell to a developer isn't the sum total of their interests. And if there's a REIT estate on one side of the road, with 50% council renters, the estate that the developer is building on the other side of the road is going to have it's prices dampened by being so close to a purely rental estate. Unless the developer is going to sell every estate to a REIT, it knows it's going to be left with a pup when the REITs inevitably pull out of the Irish market.

Besides all of that, if REITs rent 50% of their stock to the council, they'll find that they won't be able to charge maximum market rents to other private renters. I think they'll be smart and keep that percentage low enough - enough to provide a guaranteed income but not so much that private renters are put off renting in the area.

I should say that I'm in favour of social housing and I think it is the ideal to have mixed developments. But you can't deny that where you have a high proportion of social housing in the area, there are more social problems. And that will put off private buyers and private renters.

Marius34 · 21-06-2021 11:17AM

Villa05 wrote: »

The report quoted below which goes up to 2019 may give clues

https://www.thejournal.ie/homes-bought-by-institutions-increase-5472495-Jun2021/

Which says:
“In 2010, the proportion of new homes purchased by non-household entities was 5.6%.
“By the end of the year 2016, the year Rebuilding Ireland was published, this had increased to 21.8%, increasing again to 32.9% in 2019.”

So it's only 32.9% in total? If social housing would be closer to 40% for projects for private individual sales, the total numbers including the whole project sales, would be way over 40%.

Villa05 · 21-06-2021 11:18AM

interesting take on how the cost of delivering housing can be reduced with details of projects being led by irish people in the UK and US, Starts @ 15 mins in, First sec on Corporation tax

https://play.acast.com/s/the-david-mcwilliams-podcast/143-g7-globalcorporatetaxes-disruptingthebuildingsector

Villa05 · 21-06-2021 11:27AM

Marius34 wrote: »

Which says:
“In 2010, the proportion of new homes purchased by non-household entities was 5.6%.
“By the end of the year 2016, the year Rebuilding Ireland was published, this had increased to 21.8%, increasing again to 32.9% in 2019.”

So it's only 32.9% in total? If social housing would be closer to 40% for projects for private individual sales, the total numbers including the whole project sales, would be way over 40%.

The pace of growth is interesting

State and AHB purchasing is for social/affordable.

Do we know what proportion of investment fund properties end up in long term leases to the state, must be quiet high given promoting and marketing we are seeing being posted on these boards

DataDude · 21-06-2021 11:29AM

https://www.irishexaminer.com/news/arid-40318424.html

Some seemingly major moves being planned. Although as always I'm skeptical about efficacy until something is actually implemented. One quote I found interesting was the following

"In Dublin, the median price for a new build home is €400,000, which would require a household income of over €100,000 to access the appropriate mortgage.

The Government’s objective is to achieve purchase prices in the range of €250,000 to €325,000 in Dublin."

The Government has often made general statements about getting people "affordable housing" etc. but it would be a big shift if they were to explicitly state "our desire/plan is for house prices in Dublin to fall by 20% - 35%". Part of me doubts they would target such a thing, although given voting demographics and recent poll results, maybe the penny will finally drop that the writing is on the wall for them unless something happens here.

It's an interesting conversation to have with FG supporters in particular (to clarify, I am one). Most naturally own their homes so have always assumed rising house prices = good...but now rising house prices all but ensure a Sinn Fein government. That has certainly clicked with a few I know.

hometruths · 21-06-2021 11:34AM

DataDude wrote: »

It's an interesting conversation to have with FG supporters in particular (to clarify, I am one). Most naturally own their homes so have always assumed rising house prices = good...but now rising house prices all but ensure a Sinn Fein government. That has certainly clicked with a few I know.

It's great to see the penny finally dropping.

All those property owners, happy to see ever increasing prices, and scaremongering would be buyers with "be careful what you wish for" should heed some of their own advice. SF will not be kind to them.

ELM327 · 21-06-2021 11:35AM

DataDude wrote: »

https://www.irishexaminer.com/news/arid-40318424.html

Some seemingly major moves being planned. Although as always I'm skeptical about efficacy until something is actually implemented. One quote I found interesting was the following

"In Dublin, the median price for a new build home is €400,000, which would require a household income of over €100,000 to access the appropriate mortgage.

The Government’s objective is to achieve purchase prices in the range of €250,000 to €325,000 in Dublin."

The Government has often made general statements about getting people "affordable housing" etc. but it would be a big shift if they were to explicitly state "our desire/plan is for house prices in Dublin to fall by 20% - 35%". Part of me doubts they would target such a thing, although given voting demographics and recent poll results, maybe the penny will finally drop that the writing is on the wall for them unless something happens here.

It's an interesting conversation to have with FG supporters in particular (to clarify, I am one). Most naturally own their homes so have always assumed rising house prices = good...but now rising house prices all but ensure a Sinn Fein government. That has certainly clicked with a few I know.

If you're spending that much - it's similar to our budget so I'm familiar with the workings - you need a household income of €91,400 if you are a second time buyer with the 20%/€80,000 deposit.

Hubertj · 21-06-2021 11:38AM

DataDude wrote: »

https://www.irishexaminer.com/news/arid-40318424.html

Some seemingly major moves being planned. Although as always I'm skeptical about efficacy until something is actually implemented. One quote I found interesting was the following

"In Dublin, the median price for a new build home is €400,000, which would require a household income of over €100,000 to access the appropriate mortgage.

The Government’s objective is to achieve purchase prices in the range of €250,000 to €325,000 in Dublin."

The Government has often made general statements about getting people "affordable housing" etc. but it would be a big shift if they were to explicitly state "our desire/plan is for house prices in Dublin to fall by 20% - 35%". Part of me doubts they would target such a thing, although given voting demographics and recent poll results, maybe the penny will finally drop that the writing is on the wall for them unless something happens here.

It's an interesting conversation to have with FG supporters in particular (to clarify, I am one). Most naturally own their homes so have always assumed rising house prices = good...but now rising house prices all but ensure a Sinn Fein government. That has certainly clicked with a few I know.

The challenge for whatever new policy they come out with will be results in the short term but that is very difficult when it comes to housing. Will they get the time? Or will any possible benefit from their policies not be realised until well after they’re gone.
Looking at Sinn Fein, the same will apply. They talk a great game but why will happen if there are not immediate results, which there won’t be…

cnocbui · 21-06-2021 11:39AM

The Swedish government has been toppled by a no confidence vote - the first time in history. The topic that did it? An argument over rent controls. That should help it sink in with the Irish government that they are as good as finished and that housing shouldn't only be for foreign owned investment companies and one smallish sector of the electorate, sponging off the rest.

javaboy · 21-06-2021 11:43AM

ELM327 wrote: »

If you're spending that much - it's similar to our budget so I'm familiar with the workings - you need a household income of €91,400 if you are a second time buyer with the 20%/€80,000 deposit.

Presumably, they're looking at FTBs too so why are they glossing over HTB? If you're on a salary in that ballpark, you're probably looking at maxing out your HTB grant @ 30k.

These calculations always assume the absolute minimum deposit especially when trying to push an agenda.

Sheeps · 21-06-2021 11:46AM

schmittel wrote: »

It's great to see the penny finally dropping.

All those property owners, happy to see ever increasing prices, and scaremongering would be buyers with "be careful what you wish for" should heed some of their own advice. SF will not be kind to them.

Sinn Féin in power will be good for home owners who want to see their house prices rise.

Villa05 · 21-06-2021 11:53AM

More clues,

In fact, in 2019, 61% of the property purchased under the 'non-occupier' category in 2019, according to Goodbody’s, was purchased by the State.

https://www.rte.ie/news/business/2021/0508/1217617-housing-analysis/

JDD · 21-06-2021 12:07PM

Villa05 wrote: »

More clues,

https://www.rte.ie/news/business/2021/0508/1217617-housing-analysis/

If it is just new builds, then that works out at the state buying 21% of new builds (if we're saying 35%ish of new builds are bought be non-occupiers).

10% is automatically sold to them, so that means they are buying one in every nine units outside of that. A significant player, but nowhere near the 40% that others have bandied about.

That said, they could be buying 21% of new builds outright, and then renting some stock from private landlords/REITs that buy the remainder of the new builds. So you could have closer to 30% social housing in any new estate.

Marius34 · 21-06-2021 12:15PM

JDD wrote: »

If it is just new builds, then that works out at the state buying 21% of new builds (if we're saying 35%ish of new builds are bought be non-occupiers).

10% is automatically sold to them, so that means they are buying one in every nine units outside of that. A significant player, but nowhere near the 40% that others have bandied about.

That said, they could be buying 21% of new builds outright, and then renting some stock from private landlords/REITs that buy the remainder of the new builds. So you could have closer to 30% social housing in any new estate.

As well we would need to exclude development that entirely were sold to social/Reits, thus the actual number is even lower. All those articles point that the average real numbers of social housing in estates for private residents would be way less than 40% and closer to 20%, or even less.

JimmyVik · 21-06-2021 01:41PM

JDD wrote: »

If it is just new builds, then that works out at the state buying 21% of new builds (if we're saying 35%ish of new builds are bought be non-occupiers).

10% is automatically sold to them, so that means they are buying one in every nine units outside of that. A significant player, but nowhere near the 40% that others have bandied about.

That said, they could be buying 21% of new builds outright, and then renting some stock from private landlords/REITs that buy the remainder of the new builds. So you could have closer to 30% social housing in any new estate.

In Donabate the council made a deal with a REIT to rent all of the properties that the REIT buys in the area off them for 25 years. The REIT then negotiated with developers and bought the properties. This is ongoing. And im sure its happening in other areas. Thats just the only place i have first hand knowledge of.

Villa05 · 21-06-2021 01:58PM

JimmyVik wrote:

In Donabate the council made a deal with a REIT to rent all of the properties that the REIT buys in the area off them for 25 years. The REIT then negotiated with developers and bought the properties. This is ongoing. And im sure its happening in other areas. Thats just the only place i have first hand knowledge of.

I suspected as much with how they are advertising specifically for financial opportunities in social housing. On the primerime program the rep for the funds was asked why they don't sell the building to the council, he replied that the councils want to lease not purchase and they were open to selling

hometruths · 21-06-2021 02:09PM

Villa05 wrote: »

I suspected as much with how they are advertising specifically for financial opportunities in social housing. On the primerime program the rep for the funds was asked why they don't sell the building to the council, he replied that the councils want to lease not purchase and they were open to selling

Brendan Kenny of DCC fame says:

But Brendan Kenny of Dublin City Council said the idea of having an asset at the end of the rental term is not necessarily all it's cracked up to be.

Which means that we have thousands of taxpayers desperate to buy because rent is dead money, being priced out of the market because the council are desperate to spend taxpayers money on rent.

:rolleyes::rolleyes:

Social housing - investor goldmine or public good?

Hubertj · 21-06-2021 02:48PM

schmittel wrote: »

Brendan Kenny of DCC fame says:

Which means that we have thousands of taxpayers desperate to buy because rent is dead money, being priced out of the market because the council are desperate to spend taxpayers money on rent.

:rolleyes::rolleyes:

Social housing - investor goldmine or public good?

Makes sense… if you’re a public servant but aren’t that bothered about actual public service…..

Sheeps · 21-06-2021 03:10PM

JimmyVik wrote: »

In Donabate the council made a deal with a REIT to rent all of the properties that the REIT buys in the area off them for 25 years. The REIT then negotiated with developers and bought the properties. This is ongoing. And im sure its happening in other areas. Thats just the only place i have first hand knowledge of.

Which development is that? Semple Woods?

PropBuyer101 · 21-06-2021 03:13PM

what are people's thoughts on the fact that this over bidding in property may lead to issues in loan offer/mortgage drawdown if the banks view that the property is not worth the value that it has gone sale agreed on. Surely if a house goes for 550K and its the same house that sold a few years ago for 450K then a bank will be like.. um no

timmyntc · 21-06-2021 03:18PM

PropBuyer101 wrote: »

what are people's thoughts on the fact that this over bidding in property may lead to issues in loan offer/mortgage drawdown if the banks view that the property is not worth the value that it has gone sale agreed on. Surely if a house goes for 550K and its the same house that sold a few years ago for 450K then a bank will be like.. um no

Banks will lend against whatever the market value of the house is - i.e. whatever it goes sale agreed for.

Aside from serious issues, they will not refuse to lend based on what they think the house is really worth - to do that youd have to speculate that prices would fall which isnt a guarantee.

Timing belt · 21-06-2021 03:20PM

PropBuyer101 wrote: »

what are people's thoughts on the fact that this over bidding in property may lead to issues in loan offer/mortgage drawdown if the banks view that the property is not worth the value that it has gone sale agreed on. Surely if a house goes for 550K and its the same house that sold a few years ago for 450K then a bank will be like.. um no

It won’t be an issue unless house is totally overvalued compared to similar house that are currently selling. The loan to value covers this.

PropBuyer101 · 21-06-2021 03:21PM

timmyntc wrote: »

Banks will lend against whatever the market value of the house is - i.e. whatever it goes sale agreed for.

Aside from serious issues, they will not refuse to lend based on what they think the house is really worth - to do that youd have to speculate that prices would fall which isnt a guarantee.

sounds good. bit bizarre though as i thought the whole point of a valuation report was to check house is in line with other properties in area ie. check property register and you are not buying it for more than its worth according to other similar houses in area. but maybe thats more so in other countries than in here. great to know then we wont all have issues when it comes to the valuation reports as this over bidding is crazy!!

PropBuyer101 · 21-06-2021 03:22PM

Timing belt wrote: »

It won’t be an issue unless house is totally overvalued compared to similar house that are currently selling. The loan to value covers this.

aww ok so its what other properties in the area or currently being sold for as of that date - gotcha!

am_zarathustra · 21-06-2021 03:34PM

PropBuyer101 wrote: »

sounds good. bit bizarre though as i thought the whole point of a valuation report was to check house is in line with other properties in area ie. check property register and you are not buying it for more than its worth according to other similar houses in area. but maybe thats more so in other countries than in here. great to know then we wont all have issues when it comes to the valuation reports as this over bidding is crazy!!

I think it was also to stop shady dealings on the market which could be flagged to the bank based on a odd, extreme over valuation or undervaluation. Including your deposit it would be hard to argue the actual equity in most of the houses currently for sale in the current market. Value is a moving target for sure but I suppose you have to take the snapshot you have. I can't see prices across the board suddenly falling by 10% so the LTV should keep banks safe. Probably the best anyone can hope for is a stabilisation of prices really.

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

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