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Irish Property Market 2020 Part 2

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Comments

  • #7682
    KennisWhale
    Closed Accounts Posts: 186 ✭✭KennisWhale


    PropQueries wrote: »
    I don't think Brexit (pre-covid) would have had the potential impact on the City of London that many were assuming. Even the Irish Central Bank wrote a report last year that questioned that belief:

    "Interestingly, even though London is Europe’s primary GFC, the direct contribution of EU-based clients to UK financial services firms’ revenues is in fact quite moderate. Estimates show that in 2015, the portion directly attributable to EU clients was only around one fifth."

    In other words, in a worst case hard Brexit scenario, the City of London would lose some business but it wouldn't have been as catastrophic as many commentators appeared to suggest.

    Then you have to factor in that the UK fund managers run their back-office functions in Luxembourg or Dublin and it could work both ways if the EU ever did play hardball i.e. the UK could force their back-office functions back from Dublin. I can't find the statistics at the moment (maybe you can), but I would assume that Dublin is ahead of Luxembourg for back-office functions for UK based asset managers (due to our close relationship and history) and Luxembourg would be ahead of Dublin for back-office functions for EU based asset managers i.e. we potentially have more to lose than Luxembourg in such a scenario.

    Link to Central Bank report here: https://www.centralbank.ie/docs/default-source/publications/financial-stability-notes/no-9-the-future-of-global-financial-centres-after-brexit---an-eu-perspective-(calo-and-herzberg).pdf?sfvrsn=4

    In the area of financial services, London could be punished by the French-influenced European regulator ESMA; https://www.investmentweek.co.uk/news/4019204/esma-recommends-post-brexit-ucits-aifmd-changes-attack-london

    Essentially, post-Brexit with no deal, there would be an effort to punish the UK by restricting the level of financial services delegation to London. Given the way things are going with BoJo, it doesn't look like there will be deal in place so London is going to suffer quite badly in the area of financial services.

    Of relevance to property in Ireland; it should hopefully bolster our post-covid recovery as more demand for housing will be created. Obviously supply is constrained but if investors see demand in Ireland will rise for housing and commercial rents are not sustainable then they will invest in housing, aided by a pro-investment government.


  • #7683
    PropQueries
    Registered Users Posts: 2,203 ✭✭✭PropQueries


    KennisWhale wrote: »
    In the area of financial services, London could be punished by the French-influenced European regulator ESMA; https://www.investmentweek.co.uk/news/4019204/esma-recommends-post-brexit-ucits-aifmd-changes-attack-london

    Essentially, post-Brexit with no deal, there would be an effort to punish the UK by restricting the level of financial services delegation to London. Given the way things are going with BoJo, it doesn't look like there will be deal in place so London is going to suffer quite badly in the area of financial services.

    Of relevance to property in Ireland; it should hopefully bolster our post-covid recovery as more demand for housing will be created. Obviously supply is constrained but if investors see demand in Ireland will rise for housing and commercial rents are not sustainable then they will invest in housing, aided by a pro-investment government.

    The EU only account for one fifth of their business. The rest are unaffected. It's big but not enough to decimate the City of London.

    I would look at it the other way. In such an event (and I think it's unlikely that such a hard Brexit scenario will happen), the EU will probably spend the first ten years looking at ways to interfere and tax such funds. The UK will spend the first ten years looking at ways to get them back.

    Years ago they were asking were we Boston or Berlin. Without the UK backing us up, we're going to be firmly in the Berlin camp whether we like it or not and that's not good for Ireland.


  • #7684
    WhenPigsCry
    Closed Accounts Posts: 119 ✭✭WhenPigsCry


    PropQueries wrote: »
    Then we have different definitions of the word impact :) However, pre-covid, I was fully expecting the City of London to boom and be even bigger within 5 years if there was a worst case hard Brexit.

    Without the UK backing up the likes of Dublin and Luxembourg, the EU will come down hard on the funds domiciled in these countries. Wealthy investors/funds etc. can transfer cash in a very short period of time these days (as shown by your Irish Times link) and if the EU starts interfering with or taxing them (and they will), they will move their money to more investor friendly jurisdictions very very quickly e.g. the UK.

    The EU does not have power to impose tax; its competencies in the area of taxation are all about ensuring the functioning of the Single Market.


  • #7685
    PropQueries
    Registered Users Posts: 2,203 ✭✭✭PropQueries


    WhenPigsCry wrote: »
    The EU does not have power to impose tax; its competencies in the area of taxation are all about ensuring the functioning of the Single Market.

    Tell that to the European Commission:

    "The European Commission has proposed using a hitherto unused treaty provision to circumvent the national veto on taxation issues. The article would allow the need for unanimity on a taxation proposal to be circumvented if it were shown that the absence of the measure was causing a distortion in the single market."

    I think our taxation of multinationals, funds etc. would come under 'causing a distortion in the single market'.

    Link to article on RTE (July 2020) here: https://www.rte.ie/news/europe/2020/0715/1153554-european-commission-treaty-taxation/


  • #7686
    Timing belt
    Registered Users Posts: 3,406 ✭✭✭Timing belt


    PropQueries wrote: »
    The EU only account for one fifth of their business. The rest are unaffected. It's big but not enough to decimate the City of London.

    I don't think this is quite accurate as the real damage to the UK Financial Services will be in the underlying plumbing that is required for the financial services to operate.

    The UK can be severely impact by the EU if they were to not recognise the UK regulation as an equivalent.


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  • #7687
    PropQueries
    Registered Users Posts: 2,203 ✭✭✭PropQueries


    Timing belt wrote: »
    I don't think this is quite accurate as the real damage to the UK Financial Services will be in the underlying plumbing that is required for the financial services to operate.

    The UK can be severely impact by the EU if they were to not recognise the UK regulation as an equivalent.

    But isn't that where the UK's competitive advantage lies. They have the 'underlying plumbing' and the EU doesn't. It would take the EU many years to replicate the UK's infrastructure. There's also a thing called 'institutional memory' when attempting to solve, resolve or predict problems etc. and the EU will also take many years to replicate that.

    The EU needs the UK more than the UK needs the EU in relation to the provision of specialised financial services and that's why I don't believe the EU can play hardball with the UK on this particular part of the Brexit negotiations.


  • #7688
    WhenPigsCry
    Closed Accounts Posts: 119 ✭✭WhenPigsCry


    PropQueries wrote: »
    Tell that to the European Commission:

    "The European Commission has proposed using a hitherto unused treaty provision to circumvent the national veto on taxation issues. The article would allow the need for unanimity on a taxation proposal to be circumvented if it were shown that the absence of the measure was causing a distortion in the single market."

    I think our taxation of multinationals, funds etc. would come under 'causing a distortion in the single market'.

    Link to article on RTE (July 2020) here: https://www.rte.ie/news/europe/2020/0715/1153554-european-commission-treaty-taxation/


    It's a interesting proposal, but that's all it is right now. It might not be adopted, and it might not even be legal for it to encompass the sort of power you are talking about.


  • #7689
    PropQueries
    Registered Users Posts: 2,203 ✭✭✭PropQueries


    WhenPigsCry wrote: »
    It's a interesting proposal, but that's all it is right now. It might not be adopted, and it might not even be legal for it to encompass the sort of power you are talking about.

    Just wait until the UK leaves. They were the only real stumbling block up until now :)


  • #7690
    WhenPigsCry
    Closed Accounts Posts: 119 ✭✭WhenPigsCry


    PropQueries wrote: »
    Just wait until the UK leaves. They were the only real stumbling block up until now :)

    They left already.


  • #7691
    Timing belt
    Registered Users Posts: 3,406 ✭✭✭Timing belt


    PropQueries wrote: »
    Just wait until the UK leaves. They were the only real stumbling block up until now :)

    What about the OECD? Do you not think Europe will wait for global tax rules on BEPS before they go it alone.


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  • #7692
    Timing belt
    Registered Users Posts: 3,406 ✭✭✭Timing belt


    PropQueries wrote: »
    But isn't that where the UK's competitive advantage lies. They have the 'underlying plumbing' and the EU doesn't. It would take the EU many years to replicate the UK's infrastructure. There's also a thing called 'institutional memory' when attempting to solve, resolve or predict problems etc. and the EU will also take many years to replicate that.

    The EU needs the UK more than the UK needs the EU in relation to the provision of specialised financial services and that's why I don't believe the EU can play hardball with the UK on this particular part of the Brexit negotiations.

    When I mean plumbing I am talking about UK banks being allowed have non-customer branches in the EU so they can clear Euro's with the ECB. I am talking about all the clearing houses in Europe etc... I have to laugh as you always see it differently. The EU is the one that can play hardball....but Germany still need the UK to buy their car's and manufacturing.

    If there was a no deal then it is predicted that Ireland would get more FDI from it which would mean more demand for housing :-)

    (See slide 57 of the investors presentation re the FDI)
    https://www.ntma.ie/business-areas/funding-and-debt-management

    I personally don't think that there will be a no deal but saying that it looks like BOE are planning to go with negative rates in JAN and a big stimulus.


  • #7693
    PropQueries
    Registered Users Posts: 2,203 ✭✭✭PropQueries


    Timing belt wrote: »
    When I mean plumbing I am talking about UK banks being allowed have non-customer branches in the EU so they can clear Euro's with the ECB. I am talking about all the clearing houses in Europe etc... I have to laugh as you always see it differently. The EU is the one that can play hardball....but Germany still need the UK to buy their car's and manufacturing.

    If there was a no deal then it is predicted that Ireland would get more FDI from it which would mean more demand for housing :-)

    (See slide 57 of the investors presentation re the FDI)
    https://www.ntma.ie/business-areas/funding-and-debt-management

    I personally don't think that there will be a no deal but saying that it looks like BOE are planning to go with negative rates in JAN and a big stimulus.

    I always looked at it another way or as you say I "always see it differently" :)

    For example, in Q1 2017 (it's all I could find), Alphabet (that's Google) reported $8.1 Billion in sales across Europe, Middle East and Africa. Of this, $2.1 Billion (a quarter) was generated in the UK.

    A lot of big companies here make a significant percentage of their revenues in the UK.

    If the UK leaves and the EU plays hardball, wouldn't companies based here that currently sell into the UK need to move back to the UK?

    I don't know if this would be applicable to Alphabet or related companies, but it does show that FDI can potentially also move in the opposite direction too (back to the UK) in the event of a worst case hard Brexit? Not good for 'more demand for housing'?


  • #7694
    cnocbui
    Registered Users Posts: 19,651 ✭✭✭✭cnocbui


    PropQueries wrote: »
    Tell that to the European Commission:

    "The European Commission has proposed using a hitherto unused treaty provision to circumvent the national veto on taxation issues. The article would allow the need for unanimity on a taxation proposal to be circumvented if it were shown that the absence of the measure was causing a distortion in the single market."

    I think our taxation of multinationals, funds etc. would come under 'causing a distortion in the single market'.

    Link to article on RTE (July 2020) here: https://www.rte.ie/news/europe/2020/0715/1153554-european-commission-treaty-taxation/

    Well I for one would love to see the EU use that provision to tell the Irish government where to go in relation to VRT. That bareley disguised replacement for an import duty well and truly distorts the single market, hindering the free flow of goods.


  • #7695
    Timing belt
    Registered Users Posts: 3,406 ✭✭✭Timing belt


    PropQueries wrote: »
    I always looked at it another way or as you say I "always see it differently" :)

    For example, in Q1 2017 (it's all I could find), Alphabet (that's Google) reported $8.1 Billion in sales across Europe, Middle East and Africa. Of this, $2.1 Billion (a quarter) was generated in the UK.

    A lot of big companies here make a significant percentage of their revenues in the UK.

    If the UK leaves and the EU plays hardball, wouldn't companies based here that currently sell into the UK need to move back to the UK?

    I don't know if this would be applicable to Alphabet or related companies, but it does show that FDI can potentially also move in the opposite direction too (back to the UK) in the event of a worst case hard Brexit? Not good for 'more demand for housing'?

    They already have company's in the UK so don't think it would make much difference.... Maybe slightly less Corporation Tax but noting that would impact the property market :-)

    I think that with all the government spending we are going to see inflation in 12 months time as there is a lot extra cash in the economy chasing the same goods/assets. Previous QE all stayed in the financial Institutions but this time it is getting out to the wider economy and is in circulation.


  • #7696
    cnocbui
    Registered Users Posts: 19,651 ✭✭✭✭cnocbui


    Timing belt wrote: »
    They already have company's in the UK so don't think it would make much difference.... Maybe slightly less Corporation Tax but noting that would impact the property market :-)

    I think that with all the government spending we are going to see inflation in 12 months time as there is a lot extra cash in the economy chasing the same goods/assets. Previous QE all stayed in the financial Institutions but this time it is getting out to the wider economy and is in circulation.

    That extra cash in the economy is not in the pockets of consumers, which it would have to be to cause inflation. A lot of the economic woes in the world - concentration of wealth, globalisation, governemnts having insufficient revenue streams, MN company wholesale tax avoidance, people not seeing income increases for 30 years, all stem from neo-con policies, particularly the crushing of unions, which were the only force that countered wealth concentration.


  • #7697
    stefanovich
    Registered Users Posts: 5,490 ✭✭✭stefanovich


    cnocbui wrote: »
    That extra cash in the economy is not in the pockets of consumers, which it would have to be to cause inflation. A lot of the economic woes in the world - concentration of wealth, globalisation, governemnts having insufficient revenue streams, MN company wholesale tax avoidance, people not seeing income increases for 30 years, all stem from neo-con policies, particularly the crushing of unions, which were the only force that countered wealth concentration.

    When everyone is poor there is no wealth to distributed.

    Before Maggie tackled the unions the UK economy was completely broken.


  • #7698
    PropQueries
    Registered Users Posts: 2,203 ✭✭✭PropQueries


    S&P sees Irish house prices falling by 1.6% this year

    "House prices in Ireland will buck the European trend and fall this year, according Standard & Poor’s (S&P).

    In a report on housing across Europe, the ratings agency predicts house prices in most markets are likely to rise further in 2020 despite the Covid-19 lockdowns and the unprecedented fall in economic activity.

    However, it pinpoints Ireland, Spain and Portugal as exceptions, suggesting prices in these countries will decline, albeit by a small margin.

    In Ireland, house prices had been softening already ahead of the crisis, which now adds to the downward pressure, it says."

    Link to Irish Times article here: https://www.irishtimes.com/business/economy/s-p-sees-irish-house-prices-falling-by-1-6-this-year-1.4386124


  • #7699
    poker--addict
    Registered Users Posts: 1,702 ✭✭✭poker--addict


    PropQueries wrote: »
    S&P sees Irish house prices falling by 1.6% this year

    "House prices in Ireland will buck the European trend and fall this year, according Standard & Poor’s (S&P).

    In a report on housing across Europe, the ratings agency predicts house prices in most markets are likely to rise further in 2020 despite the Covid-19 lockdowns and the unprecedented fall in economic activity.

    However, it pinpoints Ireland, Spain and Portugal as exceptions, suggesting prices in these countries will decline, albeit by a small margin.

    In Ireland, house prices had been softening already ahead of the crisis, which now adds to the downward pressure, it says."

    Link to Irish Times article here: https://www.irishtimes.com/business/economy/s-p-sees-irish-house-prices-falling-by-1-6-this-year-1.4386124

    Fake news, how dare they cast down on the irish property market :D;)

    😎



  • #7700
    Springy Turf
    Closed Accounts Posts: 173 ✭✭Springy Turf


    More from that article:

    "The underlying trend combined with the fall-off in economic activity and consumer demand arising from the pandemic will see prices here decline by 1.6 per cent this year and 1.1 per cent next year, S&P says. However, house price growth is forecast to pick-up again to 4.6 per cent in 2022 and 4.2 per cent in 2023."

    This is one of the most optimistic projections that I have seen - if you believe this projection then now is a good time to buy a house.

    From what I can see, the price of a house can easily vary by ±5% depending on how well its presented. I wouldn't worry at all about ±2% variations.


  • #7701
    KennisWhale
    Closed Accounts Posts: 186 ✭✭KennisWhale


    PropQueries wrote: »
    S&P sees Irish house prices falling by 1.6% this year

    "House prices in Ireland will buck the European trend and fall this year, according Standard & Poor’s (S&P).

    In a report on housing across Europe, the ratings agency predicts house prices in most markets are likely to rise further in 2020 despite the Covid-19 lockdowns and the unprecedented fall in economic activity.

    However, it pinpoints Ireland, Spain and Portugal as exceptions, suggesting prices in these countries will decline, albeit by a small margin.

    In Ireland, house prices had been softening already ahead of the crisis, which now adds to the downward pressure, it says."

    Link to Irish Times article here: https://www.irishtimes.com/business/economy/s-p-sees-irish-house-prices-falling-by-1-6-this-year-1.4386124

    However;
    Property price inflation in Ireland has declined in recent years, falling from nearly 12 per cent in 2017 to 7.2 per cent in 2018 and to 1 per cent in 2019.

    The underlying trend combined with the fall-off in economic activity and consumer demand arising from the pandemic will see prices here decline by 1.6 per cent this year and 1.1 per cent next year, S&P says.

    However, house price growth is forecast to pick-up again to 4.6 per cent in 2022 and 4.2 per cent in 2023.

    Good returns to be made for investors who get in now or already in. Speaking of which;

    https://www.irishtimes.com/business/construction/glenveagh-attracts-growing-hedge-fund-interest-1.4385441
    Glenveagh attracts growing hedge-fund interest

    and of course my post last week; https://www.boards.ie/vbulletin/showpost.php?p=114949617&postcount=7425


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  • #7702
    Claw Hammer
    Registered Users Posts: 6,149 ✭✭✭Claw Hammer


    PropQueries wrote: »
    But what if they exchanged the 42 acres they occupy at Cathal Brugha Barracks for 42 acres in Phoenix Park. Actually, give them 100 acres to sweeten the deal. Phoenix Park has 1,752 acres. Then, they would still be within walking distance of Leinster House if security concerns are indeed the prime reason?

    This must be the daftest post in this thread. Why not simply build houses on the 100 acres of the Phoenix Park instead of decommissioning an army barracks full of buildings which will have to be preserved and then re-establishing the barracks in another location involving considerable expense.


  • #7703
    PropQueries
    Registered Users Posts: 2,203 ✭✭✭PropQueries


    Claw Hammer wrote: »
    This must be the daftest post in this thread. Why not simply build houses on the 100 acres of the Phoenix Park instead of decommissioning an army barracks full of buildings which will have to be preserved and then re-establishing the barracks in another location involving considerable expense.

    Not really. The state could do something similar to the existing newish development on the Clancy Quay Barracks site with the Cathal Brugha Barracks site.

    If the state wanted to build homes on Phoenix Park, the powers that be would have that stalled for the next 20 years. If an army barracks was built on a few acres in Phoenix Park, there would be less opposition as the Barracks would be mostly open ground anyway. A switch is the best way to go in my opinion.


  • #7704
    TheSheriff
    Registered Users Posts: 1,108 ✭✭✭TheSheriff


    PropQueries wrote: »
    S&P sees Irish house prices falling by 1.6% this year

    "House prices in Ireland will buck the European trend and fall this year, according Standard & Poor’s (S&P).

    In a report on housing across Europe, the ratings agency predicts house prices in most markets are likely to rise further in 2020 despite the Covid-19 lockdowns and the unprecedented fall in economic activity.

    However, it pinpoints Ireland, Spain and Portugal as exceptions, suggesting prices in these countries will decline, albeit by a small margin.

    In Ireland, house prices had been softening already ahead of the crisis, which now adds to the downward pressure, it says."

    Link to Irish Times article here: https://www.irishtimes.com/business/economy/s-p-sees-irish-house-prices-falling-by-1-6-this-year-1.4386124

    Good time to buy based on that article PropQueries, perhaps you should delete your post :)


  • #7705
    PropQueries
    Registered Users Posts: 2,203 ✭✭✭PropQueries


    TheSheriff wrote: »
    Good time to buy based on that article PropQueries, perhaps you should delete your post :)

    :) But then again, S&P are always a bit late to the party as per below from January 2010:

    "IRELAND’S BANKING system has been downgraded by international credit rating agency Standard & Poor (SP) over concerns that continued weakness in the economy will push up the number of problem loans. Little more than 12 months ago, Ireland was ranked alongside Canada and Sweden in group one, which includes those countries considered by S&P to have the strongest banking systems in the world."

    Link to Irish Times article here: https://www.irishtimes.com/business/ireland-s-bank-system-downgraded-by-s-p-1.1273434


  • #7706
    HotDudeLife
    Closed Accounts Posts: 157 ✭✭HotDudeLife


    Do people foresee a crash in the rental market and it perhaps cascading onto house prices?

    I know a handful of people who have managed to negotiate 10-20% reductions off their rent when it came to renewing the lease, all reductions were none covid related (couples still working, not impacted).

    Personally most younger workers in my org from down the country have all stopped renting in Dublin or left their house share and returned home, that and the lack of students/tourists will surely drive rents down a lot? Maybe i am wrong but if i was a landlord i would sell now and if i was an investor a buy to let would be one of the last items on my list to invest in.


  • #7707
    handlemaster
    Registered Users Posts: 6,003 ✭✭✭handlemaster


    HotDudeLife wrote: »
    Do people foresee a crash in the rental market and it perhaps cascading onto house prices?

    I know a handful of people who have managed to negotiate 10-20% reductions off their rent when it came to renewing the lease, all reductions were none covid related (couples still working, not impacted).

    Personally most younger workers in my org from down the country have all stopped renting in Dublin or left their house share and returned home, that and the lack of students/tourists will surely drive rents down a lot? Maybe i am wrong but if i was a landlord i would sell now and if i was an investor a buy to let would be one of the last items on my list to invest in.

    Handful wouldn't represent the market. Rents will remain around where they are is my guess.


  • #7708
    Marius34
    Registered Users Posts: 1,173 ✭✭✭Marius34


    HotDudeLife wrote: »
    Do people foresee a crash in the rental market and it perhaps cascading onto house prices?

    I know a handful of people who have managed to negotiate 10-20% reductions off their rent when it came to renewing the lease, all reductions were none covid related (couples still working, not impacted).

    Personally most younger workers in my org from down the country have all stopped renting in Dublin or left their house share and returned home, that and the lack of students/tourists will surely drive rents down a lot? Maybe i am wrong but if i was a landlord i would sell now and if i was an investor a buy to let would be one of the last items on my list to invest in.

    It might be that rental prices is going and will go down in the short term, but it's likely to return to pre-covid levels in August/Septermber of 2021.


  • #7709
    PropQueries
    Registered Users Posts: 2,203 ✭✭✭PropQueries


    Marius34 wrote: »
    It might be that rental prices is going and will go down in the short term, but it's likely to return to pre-covid levels in August/Septermber of 2021.

    But by September 2021 we will also have an additional c. 20,000 new build homes, thousands of additional probate sales and probably a very small increase in (if any) net inward migration.


  • #7710
    Marius34
    Registered Users Posts: 1,173 ✭✭✭Marius34


    PropQueries wrote: »
    But by September 2021 we will also have an additional c. 20,000 new build homes, thousands of additional probate sales and probably a very small increase in (if any) net inward migration.

    That's a low number for growing population.
    And you forgot to add obsolescence property.


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  • #7711
    PropQueries
    Registered Users Posts: 2,203 ✭✭✭PropQueries


    Marius34 wrote: »
    That's a low number for growing population.
    And you forgot to add obsolescence property.

    Obsolescence wouldn’t be much of a factor for new builds or new probate sales.

    Between new builds and probate sales over the next twelve months there’s enough new housing supply entering the market to accommodate at least 90,000 persons (average of one couple and one child per unit) based on c. 20,000 new builds and c. 10,000 potential probate sales.

    In relation to the “growing population”:

    Total increase in population 2011 – 2016 was 173,613 as per Census 2016:

    0 - 34 Years: -72,493 (yes, minus)
    35 - 64 Years: +143,932
    65 - 85+ Years: +102,174


This discussion has been closed.
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