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Eddie Hobbs: "Starter homes will be 175,000 euros in 2 years"
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I've seen estimates of over 200,000, although the CSO seems to feel there is around 125,000 or thereabouts.
And how many of these are A) empty and
the owner is trying to sell them ? .... a hell of a lot less than that. I know that where i am from (rural west of Ireland - although don't live) there are about 350 houses in the entire parish of which about 80 are holiday homes that are only occupied for a few weeks a year. Not one of these are currently for sale (judging by daft.ie and all local auctioneering sites) and thus these 80 should not be considered in the 200K you state. Its the same throughout the entire west coast of Ireland with thousands and thousands of holiday homes. Another huge portion of unoccupied homes are in the section 23 counties (Roscommoon, Longford, Leitrim, etc) and on the outskirts of regional towns (in the west think Ballinasloe, Ballina, Claremorris, Ballinrobe, Ballyhaunis, Loughrea, Roscommon town, etc) where it was crazy to build in the first place. Are there really a huge amount of empty houses in Dublin and its commuter belt, same for Galway, Cork, etc.
As for using stats from daft.ie - well there are 2,300 properties for rent in the west of Ireland but approx 16,500 for sale (although includes sites, land, etc) ..... yes a lot of people wanting to sell but this is not backlog as the houses are obviously to a large degree occupied given the mismatch in figures
For what its worth i don't think any builder in his right mind will build a house over the next 2 years unless its building a one off house for a specific client thus meaning the figure of 20K units is very optimisitic i would say.Given that Ireland's annual natural demand could be said to be in the region of 35k per year, thats around 3 or 4 years where little to no building is required. Ongoing building seems to be in the region of 20k per year, which extends the overhang even further.
But the key pieces of land in and around the major cities are still owned by the key big players who will survive no matter what happens and will only start building there once there is a hefty profit to be made be that 2 years, 5 years or 10 years. I know in Kilcock for example that 2 huge chunks of land are owned by builders who bought with cash in anticipation of the Dublin outer orbital route being built. If thats in 10 years or more, the key point is they hold the power.Prices for land will and are dropping.
Same applies in many other places - take the huge interchange that will be on the M3 a few miles south of Navan ... all the surrounding land which can be developed is owned by all the big players (why do you think FF would not re-route) ... again they hold the power.
A few miles up the road, all the land to the east of Dunshaughlin is owned by builders who reckon they can build 5-7,000 houses on it if they can the Navan railway line to run right through it. The railway line will not be built in the next 2-3 years but in the long term, these builders again hold all the power.
Its the same crack everywhere, i.e.: all the strategic land is owned by builders who can sit on it and will only build on it when there is hefty profit to be made even if that is 10 years down the line ..... hence also why CIF hold the power that i suggested0 -
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While I see what you're saying about commuter towns and poor locations, there was a good lot of prime location development that went on during the boom as well. The prices for these will drop as well, mostly because they saw the greatest price rises.And how many of these are A) empty and the owner is trying to sell them ? .... a hell of a lot less than that.
Look at the graphs here. There are 75,000 houses for sale nationally, and 20,000 for rent. The figures themselves are important, but more important are the trends. Keep in mind this is just on Daft.
So what will they do for money over the next two years? Are they all prudent savers and have enough saved from the boom to comfortably tide them over two years? How about three years? What if they only started working in 2005? Emigration won't answer these questions either, the property collapse is a fairly global phenomenon.For what its worth i don't think any builder in his right mind will build a house over the next 2 years unless its building a one off house for a specific client thus meaning the figure of 20K units is very optimisitic i would say.
Well first of all I don't know how you can say with any certainty that all the strategic land in the country has been bought out by developers. Some of them do hold large land banks for sure, but many of them bought in the latter years of the boom, and bought with money from the banks. This money needs to be repaid sooner rather than later, and we've already started to see some large development firms go bust.all the strategic land is owned by builders who can sit on it and will only build on it when there is hefty profit to be made even if that is 10 years down the line ..... hence also why CIF hold the power that i suggested
The banks may be reluctant to foreclose on such massive losses, but foreclose they eventually must.0 -
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Bankruptcy means the bank will seize and sell their assets, including land banks.
Exactly, so why would a builder build in the curent climate and end up bankrupt .... as mentioned before i think 10K units being built never year is about as much all we will see - and that will be very much driven by one-off private houses. The early evidence of it is there already in that by Christmas, the guys in construction that work at "shuttering" (laying concerete for foundations etc) will have no work at all .... and the work that these guys have been doing over the last 6 months has not been in house fondations - has been more bridge building for motorways, motorway signs etc. I drink with guys that work at this when i am at home for the weekends and this is direct from them. As said before, CIF have turned off the taps completelybased on your wildly unfounded assumptions the oversupply is closer to 1 year.
In fairness SS6, there is as much logic to the argument presented by ZYX as yours. You have gone from earlier this evening saying an oversupply of 200K units to now saying an oversupply of 75K units based on the numbers of properties for sale. Again, to restate, even if there are 100K houses for sale in the country, that does NOT mean there is an oversupply of 100K units - a truer (but nonetheless not accurate) barometer is the amount of properties for rent (if you have a property for rent, it does not mean you want to sell it - equally there are many unsold houses not available for rent). The key question is how many properties fit into the categories of A) an unoccupied house and available to rent ? .... around 40K i would say - large numbers of which are in the section 23 counties and the type of towns i have previously mentioned.
My prediciton - the oversupply to be cleared in major population centres and commuter belts within 12-18 months. The regional towns and section 23 counties to have an imbalance for 5-10 years.0 -
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And how many of these are A) empty and the owner is trying to sell them ? .... a hell of a lot less than that. I know that where i am from (rural west of Ireland - although don't live) there are about 350 houses in the entire parish of which about 80 are holiday homes that are only occupied for a few weeks a year. Not one of these are currently for sale (judging by daft.ie and all local auctioneering sites) and thus these 80 should not be considered in the 200K you state. Its the same throughout the entire west coast of Ireland with thousands and thousands of holiday homes. Another huge portion of unoccupied homes are in the section 23 counties (Roscommoon, Longford, Leitrim, etc) and on the outskirts of regional towns (in the west think Ballinasloe, Ballina, Claremorris, Ballinrobe, Ballyhaunis, Loughrea, Roscommon town, etc) where it was crazy to build in the first place. Are there really a huge amount of empty houses in Dublin and its commuter belt, same for Galway, Cork, etc.
As for using stats from daft.ie - well there are 2,300 properties for rent in the west of Ireland but approx 16,500 for sale (although includes sites, land, etc) ..... yes a lot of people wanting to sell but this is not backlog as the houses are obviously to a large degree occupied given the mismatch in figures
The issue of empties has been debated to death here. I'm surprised you haven't dug up info on it as it was debated last week. See here http://www.boards.ie/vbulletin/showpost.php?p=57803050&postcount=36
Empties are based on ESB and CSO stats. See link provided. Vacancy rate in DCC is 15%+.
Empties are relative. Somebody somewhere has a mortgage on them plus a developer needs to sell some of them hence trouble for banks.
Now for oversupply.
There are 4,223 new developents listed on Daft right now http://www.daft.ie/searchnew_development.daft?search=1 which can easily add up to 50,000 units.(anyone bored enough to count?:D)
Now add in 7,000+ new houses being listed on their own so we hit 57,000+ now.
Add in the new houses not listed on Daft but listed on myhome, propertynews etc and you see the total gets higher.
Yes, they are all over the country but you will see a significant amount are in urban and commuterville areas.
To add, rental supply has doubled in Dublin from Oct 2007(3000) to Oct 2008(6,500) (daftwatch plus Daft themselves have stated this)
Normal sales demand is about 35,000, maybe 40,000 max. That includes new and 2nd hand houses, see previous years for house completions in pre bubble period. (hint: CSO have these as well)
That just shows how bad the situation is regarding oversupply.
If we get to the bottom in 18months, define what the bottom is. Is it a bottom price or a sustainable sales market?
As uncanny stated, i'd be delighted if the bottom was reached in mid 2010, it will mean there will be less damage to the economy. It will only happen if prices return to normal levels at 50% off prices.equally there are many unsold houses not available for rent). The key question is how many properties fit into the categories of A) an unoccupied house and available to rent ? .... around 40K i would say - large numbers of which are in the section 23 counties and the type of towns i have previously mentioned.
My prediciton - the oversupply to be cleared in major population centres and commuter belts within 12-18 months. The regional towns and section 23 counties to have an imbalance for 5-10 years.
How do you know there are 40,000 of the supply are above?
I'd agree of an oversupply of 18 months based on normal demand. The problem is the previously built empties which alot were based on speculation(capital appreciation). Once more of them reach negative equity with purchasers in difficulty, it will add further to the supply.
Add in difficulties in the rental market with plummeting rents putting some landlords in difficulty, its armageddon!
PS -I'm saving this post in my bookmarks for anyone who keeps bringing up these empty/oversupply topics without doing some research on previous threads. :P0 -
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