Irish Property Market 2020 Part 2

awec · 08-09-2020 6:29pm

PropQueries wrote: »

Wasn't there a similar scheme in Ireland back in the celtic tiger years? I remember that it caused a lot of difficulties for the county councils after the bust.

Can't find anything at the moment about it online but if anyone can provide information.

I think the councils used to give out mortgages to people on low incomes, is that what you're talking about?

PropQueries · 08-09-2020 6:30pm

awec wrote: »

I think the councils used to give out mortgages to people on low incomes, is that what you're talking about?

Aww, that's it. Thanks.

awec · 08-09-2020 6:32pm

neutral guy wrote: »

The first at all I am losing money which I pay for rent
In this situation I pay mortgage already and I dont lose money
Or you lose money paying rent or you lose money on price fall is the same
I am seriously dont know how this system gonna work and who gonna use it but we have plenty people with money when yesterday we had only conservative buyers and mortgage takers.
The property prices started falling and lets see what gonna be next.There will be various options in future I am sure .

The guy who bought the property signed contract with company
All money he pay will go out of the property price
After 1 year he will have to go to bank and ask for mortgage
If bank say No,he simply signing another contract for another year with company and this would continue until the bank will give mortgage
The bad thing if he will leave property the money he paid will never be returned
Company could pay bills for building the property simply collecting the money from renters.
Win-Win from all sides.

I think you need to re-check your facts here.

If all the money he pays goes against the property price, then the developer has essentially given your mate a mortgage with a 0% interest rate, and is losing a lot of money.

There is no way this is happening. A developer builds a house, and is willing to wait an indefinite period of time before seeing any return whatsoever. Your mate is spoofing you.

Springy Turf · 08-09-2020 6:37pm

awec wrote: »

I think you need to re-check your facts here.

If all the money he pays goes against the property price, then the developer has essentially given your mate a mortgage with a 0% interest rate, and is losing a lot of money.

There is no way this is happening. A developer builds a house, and is willing to wait an indefinite period of time before seeing any return whatsoever. Your mate is spoofing you.

Not only that but you can just walk away if property values fall - makes no sense...

Mic 1972 · 08-09-2020 6:40pm

Cyrus wrote: »

again over priced but this is more like it

i run past this place 2 or 3 times a week and wondered what was in there,

wonder no more!

https://www.myhome.ie/residential/brochure/camelot-victoria-road-killiney-co-dublin/4453236

some of the best views in dublin.

I've always wondered what the interior was like! thanks for posting this.
Super location, also it has lots of character and an interesting layout

neutral guy · 08-09-2020 6:41pm

awec wrote: »

I think you need to re-check your facts here.

If all the money he pays goes against the property price, then the developer has essentially given your mate a mortgage with a 0% interest rate, and is losing a lot of money.

There is no way this is happening. A developer builds a house, and is willing to wait an indefinite period of time before seeing any return whatsoever. Your mate is spoofing you.

It was in 2008

The first at all builder who took loan from bank had choice or his property will take government and builder will have nothing
Or builder will get buyers who will pay his bills and make profit for builder
Yes,sure,there was not 0 interest
And the builder still renting property ,some of property sold already but builder made money.
He probably made even more money renting some property he did not sold by higher prices.
Couple houses are for sale there at the moment at same as pre recession 2008 price.
As I said before lets see what gonna happen process started and there will be plenty options from builders which many of them work with private investors not with banks as before.
There is plenty buyers who made money on Bitcoin,Honest fire,IT ,gold investments,ets,etc.
Do you remember who was main property buyers in pre 2008 ?
Main buyers in pre 2008 was people who got mortgage !

Mic 1972 · 08-09-2020 6:52pm

neutral guy wrote: »

The property prices started falling and lets see what gonna be next.There will be various options in future I am sure .

Have property prices started falling tho or is it the usual speculation?
I did a viewing today for a 1bed in Smithfield. By the time i got there there was already an offer "almost finalized" at asking price. Needless to say the place was bits and in need of complete renovation

The_Conductor · 08-09-2020 6:54pm

neutral guy wrote: »

Win-Win from all sides.

Nope.
Developers do not get the same types of terms on their loans from lenders- as do people who buy houses to live in them. A typical mortgage might be for say 3% (give or take). The developer meanwhile is paying 10-11% on their working capital- with strict covenants including a timetable on selling the underlying asset and a repayment schedule for the loan.
Back in 2016-2017- the cost of this finance could be as high as 15-16% - mitigated from the developer's perspective by the fast turnover that he/she has for completed units.

Property developers are not setup (financially) to leave assets hanging around gathering dust- esp. when a 300k value property could be costing them 30k in interest- whereas it would only generate 10k of interest for a purchaser.

And further- why allow a prospective buyer get any upside of an increase in value of a property- but none of the downside of potential falls in the value of the property- enabling them to simply walk away- handing the property back to the developer- who now can't sell it as 'new' any longer- and all the tax benefits for a prospective purchaser are extinguished- aka the developer would have to sell it at perhaps a 40-50k discount on the new purchase price (ignoring any changes that may have happened in the property market in the intervening period of time).

The only possible way of making this work- is to set the 'rent' on the property at a level at very least commensurate to 1) the developer's cost of servicing the debt associated with the asset and 2) the expected 'discount' that the prospective buyer would receive from the developer.

This sort of scheme- is so incredibly one sided- and stacks considerable costs and risks on a developer- I'd argue that any developer would have to be clinically insane to consider such an arrangement- it just doesn't stack up.

If a prospective buyer cannot afford to buy a property- they have not right to expect the sort of bribery that you're describing- and further- they would drive the developer bankrupt before they knew what was happening.

Mic 1972 · 08-09-2020 6:58pm

Cyrus wrote: »

its bland and uninspiring and id suspect relatively cheaply done, it wouldnt impress me at all.

Every house can be relativity cheaply done if you only look at MyHome pictures.

The picture are also showing that the house was lived in and that it hasn't just been done up for selling, which might be evidence that renovations weren't cheaply done.

As for the style, anything can be said about it except it's bland. It's very definitively done with style. Bland is any newly built 4-bed showroom house.

neutral guy · 08-09-2020 7:02pm

The_Conductor wrote: »

Nope.
Developers do not get the same types of terms on their loans from lenders- as do people who buy houses to live in them. A typical mortgage might be for say 3% (give or take). The developer meanwhile is paying 10-11% on their working capital- with strict covenants including a timetable on selling the underlying asset and a repayment schedule for the loan.
Back in 2016-2017- the cost of this finance could be as high as 15-16% - mitigated from the developer's perspective by the fast turnover that he/she has for completed units.

Property developers are not setup (financially) to leave assets hanging around gathering dust- esp. when a 300k value property could be costing them 30k in interest- whereas it would only generate 10k of interest for a purchaser.

And further- why allow a prospective buyer get any upside of an increase in value of a property- but none of the downside of potential falls in the value of the property- enabling them to simply walk away- handing the property back to the developer- who now can't sell it as 'new' any longer- and all the tax benefits for a prospective purchaser are extinguished- aka the developer would have to sell it at perhaps a 40-50k discount on the new purchase price (ignoring any changes that may have happened in the property market in the intervening period of time).

The only possible way of making this work- is to set the 'rent' on the property at a level at very least commensurate to 1) the developer's cost of servicing the debt associated with the asset and 2) the expected 'discount' that the prospective buyer would receive from the developer.

This sort of scheme- is so incredibly one sided- and stacks considerable costs and risks on a developer- I'd argue that any developer would have to be clinically insane to consider such an arrangement- it just doesn't stack up.

If a prospective buyer cannot afford to buy a property- they have not right to expect the sort of bribery that you're describing- and further- they would drive the developer bankrupt before they knew what was happening.

Developers does not work with banks as they did before
They simply make IPO and getting money from market
Or simply getting investors
Classic bank lending does not work anymore and banks avoid invest into builders business.
The builders does not getting loans from banks same easy as they did before.
Today REIT invest to Glenveagh property not the banks
And Glenveagh getting money from investors not from banks
Due with this buyer does not have to go to bank anymore,he dealing with private investment structure which take own risk working with property and bank play his role only if they would like to step in.

neutral guy · 08-09-2020 7:10pm

REIT make IPO and getting money from market
After that REIT go to Glenveagh and buy lets say 200 houses which will be used for rent
Glenveagh making profit and getting investors who would like get money invested to Glenveagh
Guys,were you see word bank in this story ?
When before 2008 builder was getting money from bank
The bank was give mortgage to buyer who was buying property from builder
And on every step was word bank ,bank,bank only

Cyrus · 08-09-2020 7:17pm

Mic 1972 wrote: »

Every house can be relativity cheaply done if you only look at MyHome pictures.

The picture are also showing that the house was lived in and that it hasn't just been done up for selling, which might be evidence that renovations weren't cheaply done.

As for the style, anything can be said about it except it's bland. It's very definitively done with style. Bland is any newly built 4-bed showroom house.

We will have to agree to disagree

The_Conductor · 08-09-2020 7:44pm

neutral guy wrote: »

Developers does not work with banks as they did before
They simply make IPO and getting money from market
Or simply getting investors
Classic bank lending does not work anymore and banks avoid invest into builders business.
The builders does not getting loans from banks same easy as they did before.
Today REIT invest to Glenveagh property not the banks
And Glenveagh getting money from investors not from banks
Due with this buyer does not have to go to bank anymore,he dealing with private investment structure which take own risk working with property and bank play his role only if they would like to step in.

Statistics from the Central Bank here:

https://www.centralbank.ie/docs/default-source/statistics/_ie_financial_statistics_summary_chart_pack.pdf

As of Q1 2020 - 48% of all finance advanced by Irish financial institutions is to the property sector- including financial intermediation this accounts for 49 billion Euro. Consumer debt meanwhile accounted for 28 billion Euro.

Irish Financial Institutions are most certainly funding property development in the country- albeit under a tough regulatory regime.

Meanwhile the REITs have been cashing out, to different extents and for different stated reasons- for over 2 years- with their shares almost across the board, trading at less than the book values of their holdings (looks like shareholders are a better gauge of the Irish property market than REITs are).

Your suggestion that REITs (and others) are simply tapping the stock markets- does not make sense- when the stock markets are insisting on discounting the book value of the assets underpinning the offerings- most REITs and property developers- are finding it cheaper to borrow from financial institutions- than to book the discounts that shareholders have been insisting on (for quite some time).

No good deed goes unpunished.

Hubertj · 08-09-2020 7:52pm

schmittel wrote: »

It also tends to be the segment that sees price drops first when the market corrects.

Hence seeing much bigger drops in DLR since 2018, those houses in Sandymount I posted a few weeks ago, developers cutting prices at top end etc etc.

This is exactly what happened last time.

I think the quality of some of these high end developments Has been a problem So people who can afford them won’t pay the silly money for an average product. Remember these places in Blackrock

https://www.myhome.ie/residential/brochure/30-temple-park-avenue-blackrock-co-dublin/4427504

TheSheriff · 08-09-2020 7:58pm

Hubertj wrote: »

I think the quality of some of these high end developments Has been a problem So people who can afford them won’t pay the silly money for an average product. Remember these places in Blackrock

https://www.myhome.ie/residential/brochure/30-temple-park-avenue-blackrock-co-dublin/4427504

Complete madness.

neutral guy · 08-09-2020 8:07pm

The_Conductor wrote: »

Statistics from the Central Bank here:

https://www.centralbank.ie/docs/default-source/statistics/_ie_financial_statistics_summary_chart_pack.pdf

As of Q1 2020 - 48% of all finance advanced by Irish financial institutions is to the property sector- including financial intermediation this accounts for 49 billion Euro. Consumer debt meanwhile accounted for 28 billion Euro.

Irish Financial Institutions are most certainly funding property development in the country- albeit under a tough regulatory regime.

Meanwhile the REITs have been cashing out, to different extents and for different stated reasons- for over 2 years- with their shares almost across the board, trading at less than the book values of their holdings (looks like shareholders are a better gauge of the Irish property market than REITs are).

Your suggestion that REITs (and others) are simply tapping the stock markets- does not make sense- when the stock markets are insisting on discounting the book value of the assets underpinning the offerings- most REITs and property developers- are finding it cheaper to borrow from financial institutions- than to book the discounts that shareholders have been insisting on (for quite some time).

No good deed goes unpunished.

Day before yesterday we was talking about when recession will come and will property prices will fall or not
Yesterday we found that recession came
Today we see prices falling
I dont try be right there or over there because I am neutral
Lets seat and look what gonna be next
Yesterday tax payers had pay for government help to the banks
Today we can watch investors who government will not help
Lets look how investors will help them self

PropQueries · 08-09-2020 8:14pm

The_Conductor wrote: »

Statistics from the Central Bank here:

https://www.centralbank.ie/docs/default-source/statistics/_ie_financial_statistics_summary_chart_pack.pdf

As of Q1 2020 - 48% of all finance advanced by Irish financial institutions is to the property sector- including financial intermediation this accounts for 49 billion Euro. Consumer debt meanwhile accounted for 28 billion Euro.

Irish Financial Institutions are most certainly funding property development in the country- albeit under a tough regulatory regime.

Meanwhile the REITs have been cashing out, to different extents and for different stated reasons- for over 2 years- with their shares almost across the board, trading at less than the book values of their holdings (looks like shareholders are a better gauge of the Irish property market than REITs are).

Your suggestion that REITs (and others) are simply tapping the stock markets- does not make sense- when the stock markets are insisting on discounting the book value of the assets underpinning the offerings- most REITs and property developers- are finding it cheaper to borrow from financial institutions- than to book the discounts that shareholders have been insisting on (for quite some time).

No good deed goes unpunished.

It seems the Irish banks have been lending into the Irish residential market big time recently. AIB recently gave €65 million to Marlet to build 216 apartments in the docklands.

Sunday Business Post article here: https://www.businesspost.ie/residential/marlet-secures-65m-aib-funding-for-docklands-residential-scheme-00ab8e2c

fliball123 · 08-09-2020 8:14pm

neutral guy wrote: »

Day before yesterday we was talking about when recession will come and will property prices will fall or not
Yesterday we found that recession came
Today we see prices falling
I dont try be right there or over there because I am neutral
Lets seat and look what gonna be next
Yesterday tax payers had pay for government help to the banks
Today we can watch investors who government will not help
Lets look how investors will help them self

Where are you seeing prices falling?

landofthetree · 08-09-2020 8:15pm

neutral guy wrote: »

Developers does not work with banks as they did before
They simply make IPO and getting money from market
Or simply getting investors
Classic bank lending does not work anymore and banks avoid invest into builders business.
The builders does not getting loans from banks same easy as they did before.
Today REIT invest to Glenveagh property not the banks
And Glenveagh getting money from investors not from banks
Due with this buyer does not have to go to bank anymore,he dealing with private investment structure which take own risk working with property and bank play his role only if they would like to step in.

Some funding is still via the banks

Tim Kenny, Group Finance Director of Cairn, commented: “We are delighted to have put this substantial and flexible new debt facility in place and continue our strong relationship with AIB and Ulster Bank, as well as building on our banking partners with the addition of Barclays and Pricoa. The new facilities will support the continued growth of our business as well as reducing our finance costs and extending the maturity profile of our debt.”

Pat Crean’s Marlet Property Group has secured €65 million in development finance from AIB to fund the construction of One Lime Street, a new scheme of 216 apartments it is delivering in Dublin’s south docklands

Melanchthon · 08-09-2020 8:15pm

Mic 1972 wrote: »

Have property prices started falling tho or is it the usual speculation?
I did a viewing today for a 1bed in Smithfield. By the time i got there there was already an offer "almost finalized" at asking price. Needless to say the place was bits and in need of complete renovation

Not in the lower end around Dublin anyway, seems like madness, places seem to be getting bid up past the price they would have probably reached in 2019.

Whatever about the argument there won't be a big fall in property prices, AFAIK in late 2019 and 2020 property prices had already started stabilising so to me at least these bidding wars very irrational considering the possible impact of Corona and the fact that the market had already slowed before it.

What I do not understand is why there isn't more sellers considering properties are selling fast and for prices that a seller would have found acceptable last year.

The_Conductor · 08-09-2020 8:16pm

fliball123 wrote: »

Where are you seeing prices falling?

Asking prices are falling- I'm not clear whether achieved prices are though.
On average asking prices in the greater Dublin have seen reductions of 6%, year to-date. However, thats asking prices.

fliball123 · 08-09-2020 8:19pm

The_Conductor wrote: »

Asking prices are falling- I'm not clear whether achieved prices are though.
On average asking prices in the greater Dublin have seen reductions of 6%, year to-date. However, thats asking prices.

That argument again thats asking price as you state the CSO and Property price register (which are of actual selling prices) are showing no decrease in price up until the end of August? Look at the last 200 price changes in myhome 1/4 are showing a price increase and how many properties are not showing a price change at all when it comes to asking price. As you say we are in a recession but as of yet there is no proof of prices actually dropping YET

The_Conductor · 08-09-2020 8:20pm

Pat Crean’s Marlet Property Group has secured €65 million in development finance from AIB to fund the construction of One Lime Street, a new scheme of 216 apartments it is delivering in Dublin’s south docklands .

AIB should have more sense.
Its looking increasingly likely that they'll get their fingers burnt on this.
I don't think the Irish people would stand for a third bailout for AIB........
This is just one in a string of recent questionable loans they've partaken of.

PropQueries · 08-09-2020 8:25pm

neutral guy wrote: »

Developers does not work with banks as they did before
They simply make IPO and getting money from market
Or simply getting investors
Classic bank lending does not work anymore and banks avoid invest into builders business.
The builders does not getting loans from banks same easy as they did before.
Today REIT invest to Glenveagh property not the banks
And Glenveagh getting money from investors not from banks
Due with this buyer does not have to go to bank anymore,he dealing with private investment structure which take own risk working with property and bank play his role only if they would like to step in.

You do have a point. But the banks appear to have being getting greedy again over the past couple of years and wanted their slice of the action. As always, the old Irish banks are late to the party.

They entered the market late last time as well after letting Anglo etc. take an increasing share of the market.

The_Conductor · 08-09-2020 8:25pm

fliball123 wrote: »

That argument again thats asking price as you state the CSO and Property price register (which are of actual selling prices) are showing no decrease in price up until the end of August? Look at the last 200 price changes in myhome 1/4 are showing a price increase and how many properties are not showing a price change at all when it comes to asking price. As you say we are in a recession but as of yet there is no proof of prices actually dropping YET

I agree 100%
I suspect that the extremely thin volumes changing hands- will act to cushion any structural weaknesses in the market (for now)- however, as a 'new normal' (I hate that term) becomes established, it'll be difficult not to adjust expectations to the new means that people find at their disposals.

If WFH becomes embedded in the Irish economy- it'll be exceptionally hard to justify lofty prices for units in D2/4/6 (hell even D1 is positively frothy).

However- for now there just isn't sufficient throughput other than purchases/sales that were organised some time ago (perhaps even last year)- so the effects of Covid and whatever the hell happens with Brexit- will possibly be in a year to 18 month's time.

Time will tell.

hometruths · 08-09-2020 8:34pm

Hubertj wrote: »

I think the quality of some of these high end developments Has been a problem So people who can afford them won’t pay the silly money for an average product. Remember these places in Blackrock

https://www.myhome.ie/residential/brochure/30-temple-park-avenue-blackrock-co-dublin/4427504

Sure there may be quality control issues in individual developments but I am talking about demand in this segment as a whole.

The reason this segment falls first is because there is generally very little buying pressure - i,e if consumer confidence falls it costs very little or nothing to wait.

Unlike FTBs somebody buying a €1m+ home probably already has a pretty decent house, is not beholden to a landlord, has space for the kids etc. i.e their life is not on hold.

They are also probably less worried about being unable to get finance if banks reduce lending.

The two biggest psychological drivers of demand are not significant factors - i.e there is none of the panic buying that we see in FTB market.

On top of that I'd argue that they are more price sensitive that many FTBs, particular if confidence is falling.

Many FTBs transact at a level that represents the maximum amount they can borrow + the minimum deposit required. They then buy the best house they can find in that budget. Depending on individual circumstances, that maybe €250k, €300k, €350k or whatever. The point is they are arguably more sensitive to the amount they can borrow than the price of the house.

The majority of people buying a €1m+ property are unlikely to be operating with 10% deposit and 3.5 times income, calculating that even if the price drops 20% they'll probably still be better off as the payments will be lower than their current rent.

They'll be bringing substantial funds to the table, and are more likely to be looking at a 20% fall as being a very real 200k hit to their wealth.

Also, in addition to the fact their lives are not on hold by waiting, the financial incentive to wait and see if prices fall further is far greater. If you think property might fall 20% you are going to make very significant savings (or get a substantially better property for the same money.)

The risk/reward ratio is skewed completely differently. It is wrong to believe these buyers are less price sensitive just because they have more money.

The different dynamics are why this segments falls first, as we are seeing now.

neutral guy · 08-09-2020 9:03pm

PropQueries wrote: »

You do have a point. But the banks appear to have being getting greedy again over the past couple of years and wanted their slice of the action. As always, the old Irish banks are late to the party.

They entered the market late last time as well after letting Anglo etc. take an increasing share of the market.

Yesterday builders was playing with banks money today they play less dangerous game with investors money because when government took control over banks creating NAMA and builders lost them property and sites builders decided play with investors less dangerous game.Today is plenty investors with money which getting pieces of papers with numbers on them when this piece are not covered or covered by couple square mtrs of selling by builder property which changing price depends on economy situation in country.
I had choice invest into building company and my money was protected only by property I investing in.I simply said No.But in number of days this company collected enough to build the building which already losing value and investors losing them money.

Marius34 · 08-09-2020 9:43pm

The_Conductor wrote: »

Asking prices are falling- I'm not clear whether achieved prices are though.
On average asking prices in the greater Dublin have seen reductions of 6%, year to-date. However, thats asking prices.

Where did you find that it's 6%? I haven't seen this in daft or myhome reports.

Latest Myhome report(2020 Q2):
"The report, which is published in association with Davy, found that quarterly asking price inflation fell by 1.5% nationally, by 2.1% in Dublin, and by 0.9% elsewhere around the country. Annual asking price inflation fell by 2.9% nationwide and by 2.6% in Dublin."

I'm not sure if there was update from Daft since 2020 Q1

hometruths · 08-09-2020 10:02pm

fliball123 wrote: »

Where are you seeing prices falling?

Annual % change to June 2020

All Dublin - all residential properties: -0.7%
All Dublin - houses: -0.9%
Dublin City - houses: -1.1%
Fingal - houses: -0.4%
South Dublin - houses: -2.7%

https://www.cso.ie/en/releasesandpublications/ep/p-rppi/residentialpropertypriceindexjune2020/

cubatahavana · 08-09-2020 10:11pm

https://www.daft.ie/12690251

Am I missing something?

Irish Property Market 2020 Part 2

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