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

That reflects my experience looking last year alright. Madness until about July/August and then the huge bidding wars became less frequent - although didn't entirely disappear.

Will he interesting to see if January brings a fresh batch of desperate buyers to the market and things start to go crazy again. Mortgage approvals seemed to be calming towards the end of last year so hopefully that's a sign we're not in for another 10+ per cent rise this year.

January will mean that banks will have a new quota and be able to offer more than 3.5 times salary again. So don’t be surprised if the market heats up a bit again.

Was the number/percentage of exemptions the banks can give out reduced recently

Yes bank of mom and dad may take hit of stock market crashed…Councils won’t stop buying…even if SF were in power councils will still compete with FTB’s as all political parties policies are to buy existing housing.

investors are still in a situation where there are limited investment opportunities. If inflation lasts then property will be a natural hedge. Interest rates would need to hit 2-3% before property stopped looking attractive and I can’t see that happening for at least 5 years.

Add on top that if people start getting 3-5% pay rises this will mean people will be able to borrow more.

I feel the rental rules and taxation for small landlords are very unfair. But I believe in a year or two, REIT's/Funds will start to feel competition in Dublin between each other. As there are many apartments coming on stream, the rental price increase in Dublin might stop by itself, due to supply/demands, particularly for apartments, even without rental price control. (if there is no significant increase in immigration)

Do you see any issues with property being a hedge against inflation?

Daft report would suggest general inflation outpacing house price inflation in Dublin?

Rents are at record levels, at some point supply has to eat into inflation in rents.

For almost 30 years housing inflation has been near multiples of general inflation. At some point there has to be a re-balancing

It would appear that housing has swallowed up savings and improvements in other areas of our lives through rent and price increases. A period of sustained general inflation could be the trigger for re-balance this situation

I agree that had some point supply in rents will cause a drop in rents but that is a long way off as not enough properties are being built.

prices. A sustained period of general inflation will only lead to higher house prices because workers will be looking for cost of living increases which will increase salaries and wages which will mean the can borrow more and push up house

People think that if we have inflation it will lead to higher rates which will mean that people will struggle to repay their debt. But they forget about the fact that wages increase as a result of inflation and the repayments as a % of salary reduces which provides room for any increase in interest rates.

property is a good hedge against inflation because you can be guaranteed house prices will increase because wages and salaries increase which means that people will be able to borrow more which will lead to higher house prices.

A 5% increase in wages = 2.5% increase in take home pay after tax

Many people in the rental sector are middle to low income in sectors hardest hit by covid. Will those businesses survive and be able to pay inflation linked wages plus high rents

I'd agree historically property has been an inflation hedge, but 30 odd years of being way above general inflation has to have consequences

The government is already spending like there's no tomorrow, paying people to sit at home, businesses not to trade, hoisting cash onto renters and homebuyers in different forms of grants. Our national debt is rocketing and COVID lit a rocket under government spending to send it to the stratosphere. The government is now stuck in this high spending mode where winding it down will lead to a small or large collapse in the economy bit continuing with it will keep pushing inflation higher. A strong feeling of sunk cost fallacy and that they've gone this far so to turn back would be even worse than continuing on this path. There are so many pressure points and elevated risk areas in the economy I really wouldn't want to be the person charged with cooling some of the overheated, riskier parts of the economy.

With the rents they are charging it is hard to see who is going to rent them in many cases. Government through HAP (or similar type of scheme)? Corporates for their staff?

I think from REIT's largest share will be rented to private individuals. I would be surprised if HAP or Corporates would be the dominant.

I wouldn't be surprised at all, that number of Built-to-rent apartment would be leased to DCC.

As far as I know it takes 2 years normally to go through the legal system to evict a tenant who is no longer paying rent There may be delays in the court system due to the effects of the pandemic social distancing rules on cases being processed etc my friend is a landlord he would only take single people working for certain company's or nurses etc so he always got paid rent on time every week

You would find more private residents, than council housing residents in REITs. There are lots of professional foreigners.