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

looks like only 27-35% of new house purchases are by first time buyers

the government and foreign vulture funds continue to gobble up the supply

time is long over due to redress this terrible market distortion and imbalance


First-time buyer blues as new homes unaffordable

https://amp.rte.ie/amp/1217617/

coolshannagh28 wrote:

The state was persuaded by the Troika to adopt the long term rental model hence the red carpet for Funds.,

The funds were allowed in to to soak up nama property, a potential solution to the current issues would be that there tax free status only applies to construction projects they wholly fund and the tax free status ends after a period of time or when they sell

The Troika objective was to create a sustainable rental market so that people did not feel they had to buy to move on with their lives. In other words affordable fit for purpose alternatives to buying. The IMF and United nations have been highly critical of our policies on housing

Governments priority was to get the banks back everything else is collateral damage of that policy

Villa05 wrote: »

The funds were allowed in to to soak up nama property, a potential solution to the current issues would be that there tax free status only applies to construction projects they wholly fund and the tax free status ends after a period of time or when they sell

The Troika objective was to create a sustainable rental market so that people did not feel they had to buy to move on with their lives. In other words affordable fit for purpose alternatives to buying. The IMF and United nations have been highly critical of our policies on housing

Governments priority was to get the banks back everything else is collateral damage of that policy

Hindsight is great but is after the event.... I bet in 5-10 years time people will be saying how wrong QE was that it introduced massive risks and caused asset prices to be overvalued.... But saying this it is what the country does going forward is what really matters as the past can not be changed.

Revolution 1917 wrote: »

Started already
Did you ever heard about "domino effect "?
The domino are falling already just the "property market" brick did not fell yet.

What domino's have fallen already? Is it business impacted by covid where the domino fell on a soft cushion thanks to a global intervention. And yes a lot of these business will not recover but that does not mean that the system has crashed.

Graham wrote: »

I disagree.

If anything I expect markets/economies to get pretty frothy over the next few years. A post-pandemic mini-boom if anything.

I am not convinced that we will see a mini-boom.... maybe for 6 months or so when the economy opens up. I think we will see 10 years of stagnation with one step forward one step back as countries have used their fire power and have very little left to deal with anything new that will come along. I see major trouble for some of the peripheral countries in Europe as the markets will turn on them like they did before and the ECB will be limited to what they can do to help as they already own the majority of these countries debt and take on more may push them past the tipping point.

Revolution 1917 wrote: »

2 banks leaving market already and 1 cutting number of branches.
Nobody will tell you system are crashed and if anybody from officials will he will enjoy life on social welfare next day.

2 banks have left the market because they can't make a profit because the market is to small and small banks still have significant fixed costs which exist regardless of the environment we are in....bank profitability have been cut due to the negative interest rate environment.... This is a side effect of QE and the ECB answer is for banks to merge into bigger banks so they can benefit from economies of scale and survive in the low rate environment. This is not the system crashing this is just a well publicised side effect of QE and the low rate environment.

Villa05 wrote: »

Why do you think they were avid lobbyists for the shared ownership scheme to the point of writing an advertorial on the Irish Times

Now a business that was buying up property to rent out wouldn't be lobbying for a scheme that reduces the pool of renters and increases the cost of property unless they had the intention of turning over that property quickly to unsuspecting ftb pent up demand

These funds were in here for the fire sales, they won't be hanging around for the crash and the Government have fallen for it hook line and sink

unless the government step in and buy on bulk from the funds they will be hanging around.

A fund that is developing properties with the intention to sell has a different business model to a fund that is buying properties to rent out..

The funds that are buying properties or building them from scratch to rent out are looking for yield and guaranteed cash flows over a long period and that is why you are seeing the likes of pension funds investing.

Where as a fund that is financing the developing for properties is providing the funding in the same way banks used to provide the funding before 08 and is a short term investment from the fund.

Revolution 1917 wrote: »

Yes I am fully agree with Summer time post pandemic mini boom due with holiday abroad shortage but no more than that.

Cockoo funds has investors same as vulture funds.Once markets will start collapse the investors will take investment out of them and then they will have sell properties.
I think in about 1-2 years time we will see houses sales marathon.

All those media songs about cockoo funds hovering the markets I take as they just trying create property deficit atmosphere and make people hurry buy houses at any price.

But at same time I think cockoo funds started selling them making profit.

I do not believe a single word from any media source.

If the funds are structured right the investor redemptions out of the funds would not be possible in your scenario. We already saw this play out on with commercial property last year and the fire breaks that fund had in place worked and gave them time to adequately shore up there liquidity.

The only real risk is that unlike banking regulation... the regulation in place for funds is light touch and may prove to be inadequate in time and we will hear again about how the central bank was asleep at the wheel.

Revolution 1917 wrote: »

But look they will never rent those new builds in long future
I am seriously can not understand the logic of purchase when they buy property at top market price and then when recession will come they will lose value of the property which will not even covered by price of rent
I am pretty sure that they selling property bought in 2018 now creating panic trough the media trying get best price.
Or builders them self creating panic trying sell property at highest price possible
And the more I see in media about house crisis the more make me sure that they selling those houses and not keep them for rent
The only renting market left in Ireland is supported by HAP.The only way when is really worth buy house for them when they has long term renters which are supported by HAP.
But this could change by click of the fingers ! The labor from Eastern Europe will back home due with recession same as before and no new will come or government could say we pay HAPs only to working class and not unemployed

The fact is that we don't know where the top of the market is.... if we have meaningful inflation they didn't buy at the top of the market. There is plenty of room for yields on property to fall and funds to still be happy with their return as there investment is still growing.... If they sold what would they do with the cash? They won't leave it in a bank with negative rates, they won't buy government bonds with negative yields, they won't invest in the stock market as this has already been saturated which can be seen the price to earnings ratio's. They only way they could make money is if the timed it right and sold before government bond yields rise and the stock market crashes as investors pull out of stocks and shares and move back into government bonds. It's a big call to make as if they get the timing wrong they will loose big time.

Timing belt wrote: »

It's a big call to make as if they get the timing wrong they will loose big time.

Or as the old financial adage goes they could just sell in May and go away.

Villa05 wrote: »

Would you agree that both types of funds operate in the market and that current low rate/ high rents would evolve new business models

yes both type of funds exist in the market and their are even hybrids of both entering the market as the funds chase yield as they are limited in whatever else they can invest in to get the same return.

Would the practice of leaving units empty in high demand areas imply that asset value is more important than yield and cash flows and therefore disposal of assets is more important than total rent roll

No I disagree they are leaving vacant as they believe that they will get the high rent in the future. The yield on property is substantially higher than any other asset class at the moment that it gives them the ability to do so. The funds will settle for a lower yield, market forces will drive this yield down as more and more funds enter the market which can be evidenced by their willingness to pay more for property knowing that they will get the same rent.

There is an interesting research paper on the FRED website which looks at the impact of funds on a housing market and talks through the life cycle of the impact of the funds. The issue in Ireland is that we are not building enough houses which makes the property market inelastic which in turn drives up the prices.... In an elastic market you would see the funds start to exit as more supply comes on line and rent falls.

Revolution 1917 wrote: »

The multinationals keep them companies in Ireland due with low tax
But when tax will be the same in all world what the point keep company in Ireland when they could keep office in low paid work force similar tax country anywhere in world ?
That will bring renting market in Ireland way down
I am sure the new legislations will be brought due with Covid once it will be seasonal and people will work from home in any country they like.
Many many things could change property market
I am pretty sure if recession will not hit in 1-2 years time then other things will hit property market.

All the tax of tax reform is just a whitewash to make it look good... If the governments were serious they would not be creating new loopholes to facilitate lower taxes.... The only time I have ever seen a country close loopholes over night was when Mary Harney did so on the back of the Ansbacker scandal with the legislation she introduced it closed out more loopholes over night.... Loopholes that still exist 20 years on for most EU countries and for the UK and USA.

Villa05 wrote: »

Someone ressurected an old thread that was quickly shut down by the mods. It was titled. "Property market about to crash"

The most notable thing that hit me about it was the first post was 14 years ago in 2007

14 year cycles and the stopped clock, it just hit my gut for some strange reason

I remember in 2006 talking to a top banker in the UK and him saying that the banks have had a good run and need to ensure that they are in a healthy position to deal with the oncoming property crash..... It was in 2008 I saw the same banker enter downing street on the sky news following the collapse of the banking system.

You are right things do run in cycles but the problem is that by the time they come around again their are new people in charge that think it can't happen again. The big question is whether sufficient regulation has been introduced to prevent it from happening again and not just rely on people who have seen it happen before. I do think that from a banking perspective significant regulation has been introduced but unfortunately this has just pushed the risk away from the banks and into funds who are now undertaking shadow banking with limited regulation. The end result will be the same as it is the banks that are providing the lending the funds so if the funds go under the banks go under. Whether we are at that point or whether it is a years down the road is the big question and very difficult to call.

Revolution 1917 wrote: »

World changing so fast
That I will not surprised if I will go sleep in one country
And will wake up in different.

It's not changing it is only an illusion to make it look like something is being done to address the issues.... There is to much money to be made and to many lobbyists paying big bucks to ensure that their is no meaningful change and anything that is implemented is just a PR stunt