Rents to Rocket?

Monty Burnz

Milk & Honey wrote: »

That linked article is almost two years old. Any rented properties which have been kept off the market will reduce supply whenever they are sold. Many have in fact been put into receivership and sold off.
NAMAs strategy appears to be to sell and not rent. That is why they are trying to guarantee against negative equity.

Indeed. Check out this article for a month ago that suggests NAMA may have been understating all along the number of properties it controls...

Fact: NAMA claims that it controls loans underpinning 10,000 houses and apartments in the Republic of Ireland. It told an Oireachtas hearing in September 2011 “We believe that we have 10,000 residential units in our portfolio. Fewer than 2,000 of these would be regarded as houses, whether detached or semi-detached. We have approximately 8,000 apartments.”

<snip>

So 10,000 homes subject to NAMA’s loans is significant but out of an overhang of 80-100,000 it doesn’t give NAMA a dominant position, unlike the Irish commercial property market where NAMA control 15 times the size of the total market in 2011. However the figures above indicate NAMA has either control over relatively expensive housing or it controls more than it is letting on.

Milk & Honey

8,000 apartments in the republic of Ireland? Considering how many vacant units there are all over the West it would seem that 6,000 in Dublin is an overestimate. that article also predates the 20% guarantee scheme Nama has launched.

Monty Burnz

Milk & Honey wrote: »

8,000 apartments in the republic of Ireland? Considering how many vacant units there are all over the West it would seem that 6,000 in Dublin is an overestimate. that article also predates the 20% guarantee scheme Nama has launched.

This 20% guarantee thing was for about 50 houses only. The 6000 apartments figure stands unless you can show me evidence that these apartments have been sold.

I don't know where you get the notion that the apartments have to be evenly distributed around the country?

jmayo

Feckin hell what an opening post.
Just back from holiday in France and needed a laugh.
I have to say we Irish do have a hell of a sense of humour.

No matter how sh**e the situation and how unrealistic the hopeful outcome, someone will believe it is true and pedal it for all they are worth.

I suppose that mindset did help us survive famines and centuries of colonisation.
Then again it may have helped prolong those things as well.

gurramok

Milk & Honey wrote: »

8,000 apartments in the republic of Ireland? Considering how many vacant units there are all over the West it would seem that 6,000 in Dublin is an overestimate. that article also predates the 20% guarantee scheme Nama has launched.

For your eyes http://airomaps.nuim.ie/flexviewer/?config=Census2011.xml

http://irelandafternama.wordpress.com/2012/03/30/housing-vacancy-at-the-new-small-area-level/

In contrast, South Dublin, Fingal and Dún Laoghaire-Rathdown have more than 80% of their SAs with less than 10% vacancy. That is not to say that there is little vacancy in the cities. Figure 2 shows the vacancy levels for the Dublin city centre (dark orange and red is above 25% vacancy). Dublin City local authority has 7,995 vacant houses and 16,321 vacant apartments, with an oversupply of 9,815 given a 6% base vacancy rate (how many units we would normally expect to be vacant). 787 Small Areas in Dublin City (out of 2202) have vacancy levels over 10%, 115 of which have vacancy levels over 25%.

Ray Palmer

It is easily possible to have a shortage of rental property in Dublin. Next year a ton of bedsits are to disappear. Those residents will take up a portion of the many apartments.
There really isn't ghost estates in the Dublin . People are moving up to Dublin to work. People are staying during the week and going home at the weekends. More people are going to college as there are no jobs. That is an increase in renters.
Rent will go up but better accommodation for some. Others will pay more to be away from some types of neighbours.
I don't ever remember minimum wage getting you a place to rent of any worth in Dublin.That won't change now either.

desertcircus

This evening I had to decide between cycling home past Elmpark in Booterstown and getting the bus past the Grange in Stillorgan. If the price of three-bed semi rental goes up, people will start looking at these places instead - presuming they eventually go on the market.

iguana

I know it's not any sort of indicator for the whole market but that article couldn't be further from my experience. I rent a lovely house in D6W and last week our landlord called round and knocked €100pm off the rent. We didn't even ask him to, he just suggested it as he wanted to incentivise us to stay.

Kosseegan

desertcircus wrote: »

This evening I had to decide between cycling home past Elmpark in Booterstown and getting the bus past the Grange in Stillorgan. If the price of three-bed semi rental goes up, people will start looking at these places instead - presuming they eventually go on the market.

Elm Park apartments are let already.

hardCopy

dvpower wrote: »

No shortage of apartments, but a shortage of 3 bed semis in some areas of Dublin. Property prices have been rising in Dublin.

Found it very hard to find a 3 bed in D3 area last year, anything that came up was gone within the day, people must have been committing over the phone without viewing. Ended up taking an older 4 bed for similar money.

Ray Palmer

hardCopy wrote: »

[


Found it very hard to find a 3 bed in D3 area last year, anything that came up was gone within the day, people must have been committing over the phone without viewing. Ended up taking an older 4 bed for similar money.

what will happen is the areas close by will be taken next and then rent rises there too.
Nothing happens in a vacuum. Rents likely to rise when students return after the summer. I doubt they will rocket. Likely to have student parents buy houses near colleges again as it will be more affordable.

desertcircus

Kosseegan wrote: »

desertcircus wrote: »

This evening I had to decide between cycling home past Elmpark in Booterstown and getting the bus past the Grange in Stillorgan. If the price of three-bed semi rental goes up, people will start looking at these places instead - presuming they eventually go on the market.

Elm Park apartments are let already.

Really? There appears to be a fairly serious potential plan to convert the site to a children's hospital at the moment (mentioned on the Irish Medical Times website a fortnight ago).

Doc Ruby

I'd say the government cutting rent relief will put a lot more downward pressure on rents than any imagined shortage will drive them up.

gurramok

Ray Palmer wrote: »

Nothing happens in a vacuum. Rents likely to rise when students return after the summer. I doubt they will rocket.

If the rents rise when students return, what happens when the students leave in June?!:rolleyes:

kippy

On a serious note, what is the medium term future for the rental market?
I assume there are two distinct areas for rent, Dublin (and the cities) versus rural towns and rural areas.
I would assume that rents in Dublin are going to go up in the next few years.

gurramok

kippy wrote: »

On a serious note, what is the medium term future for the rental market?
I assume there are two distinct areas for rent, Dublin (and the cities) versus rural towns and rural areas.
I would assume that rents in Dublin are going to go up in the next few years.

For Dublin, there are of course migration patterns. Thrown into the mix is the recent reduction in Rent Supplement which might offset that demand. Of course if we get some renters deciding to buy, Nama releasing rental property, the unemployment situation improving(big if) and along with the unknowns of the Eurozone, we can rule out a rocketing of rents anyway.

Zamboni

kippy wrote: »

On a serious note, what is the medium term future for the rental market?
I would assume that rents in Dublin are going to go up in the next few years.

Based on what though?
As gurramok points out there are many variables affecting the market from both sides.

RATM

Ray Palmer wrote: »

It is easily possible to have a shortage of rental property in Dublin. Next year a ton of bedsits are to disappear. Those residents will take up a portion of the many apartments.
There really isn't ghost estates in the Dublin . People are moving up to Dublin to work. People are staying during the week and going home at the weekends. More people are going to college as there are no jobs. That is an increase in renters.
Rent will go up but better accommodation for some. Others will pay more to be away from some types of neighbours.
I don't ever remember minimum wage getting you a place to rent of any worth in Dublin.That won't change now either.

Directly across from where I live (Dublin 11, inside the M50) I can see 85 balconies. At night time there is 12 lit up and it has been like that since 2009. The building was built by the Bailey brothers who are now in Nama. Not a single unit has been let or sold in the last 3 years, all the while values are dropping sharply.

There may not be many ghost estates in Dublin in the Cavan/Leitrim sense but there are blocks of apartments lying wholly or partly empty. At some stage Nama will have to offload these. When they do it will undoubtedly affect the market. An 2 bed apartment in my own building has been for sale for 18 months now asking €125,000 with (obviously) no offers at the price they want. I reckon it could be had for €105,000 for a quick sale. Now if Nama go and release the 70 odd empty apartments across the road then my neighbour might be lucky to get €90,000 for his own place.

gurramok

There is also an empty block at Milners Square in Santry. Its quite visible as you walk by on the footpath. As stated by myself before, there are empty newly built houses at Heathfield, Finglas also visible from the roadside. You can even see some empties from the train at Clongriffin. I'm sure other posters can come up with more empty houses\apts in their local areas.

The map link I provided earlier gives an illustration where most of the vacants are.

Ray Palmer

Guys I didn't say empty places don't exist. Ghost estates in Dublin don't exist in any meaningful way. Well established NAMA has apartments too. Not really significant enough and when they are released and if the are rented are still unknowns.
Dublin City council empties is also misleading as they need to be fixed up and a selection process is involved.
Rent allowance reduction has not produced a rent drop after 6 months so the theory it kept rents up seems to be false.
More people renting is pretty much certain when nobody buys. That will push up rents. Rocket is unlikely afaik vacancy rate in Dublin always ran around 10% don't think it is much different now

Snakeblood

There's a boatload of empty flats in Tallaght, right by the Luas. Dunno if people would be bothered moving into them now, but they're there.

desertcircus

There's also Sandyford, which is a ghost town at this stage despite being on the Luas line and having huge numbers of employers in the area. There are developments right on transport links in good areas which have huge vacancy levels; they're not ghost estates, but there's a lot of currently unused capacity which will have to come on line sooner or later. Those places will have an impact: any rise in the cost of three-bed house rents will trigger decisions to change rental setups for cheaper options.

Milk & Honey

desertcircus wrote: »

Really? There appears to be a fairly serious potential plan to convert the site to a children's hospital at the moment (mentioned on the Irish Medical Times website a fortnight ago).

There is a plan to convert some unused buildings in front to a maternity hospital. These buildings were not built as apartments and do not have planning for such.
There are occupied apartments in other buildings on the site.

http://www.irishtimes.com/newspaper/frontpage/2012/0526/1224316734648.html

desertcircus

Fair enough. Wonder if there's any data on occupancy levels - going by what I can find, it's a 330-unit development, but the fact it's been NAMA'd would indicate that a huge chunk of it remains unsold (not a surprise, given that the last quoted price for a one-bed was a frankly hallucinogenic €420,000). Unless a serious majority is already occupied, that's a fairly big bump in supply when NAMA eventually seeks to get rid. To put it into perspective, Booterstown currently has fifteen homes for sale and twenty-one for rent on Daft.

Icepick

Milk & Honey wrote: »

The first law of economics. Supply and demand. Supply runs out and demand rises. What happens? Price goes up.

Why would demand rise?

Milk & Honey wrote: »

There are not many ghost estates in Dublin.

only most in the country

gurramok

Employment levels still falling, not good for any market. Where is the money coming from to support rocketing rents?!
http://www.rte.ie/news/2012/0607/unemployment-jobs-cso.html

Milk & Honey

desertcircus wrote: »

Fair enough. Wonder if there's any data on occupancy levels - going by what I can find, it's a 330-unit development, but the fact it's been NAMA'd would indicate that a huge chunk of it remains unsold (not a surprise, given that the last quoted price for a one-bed was a frankly hallucinogenic €420,000). Unless a serious majority is already occupied, that's a fairly big bump in supply when NAMA eventually seeks to get rid. To put it into perspective, Booterstown currently has fifteen homes for sale and twenty-one for rent on Daft.

Apartments in that development are on the market and have been for some time. Surrounding areas don't seem to have suffered very much, as the asking rents in the area are quite high.

http://www.property.ie/property-to-let/The-Links-Elm-Park-Ballsbridge-Co-Dublin/1140263/


Normal replacement building in the Dublin area would be about 10,000 homes per year. A few apartment blocks coming on stream would only ease supply for a short period. A lot of formerly rented property is for sale and is not going to be back on the rental market.

desertcircus

Milk & Honey wrote: »

Apartments in that development are on the market and have been for some time. Surrounding areas don't seem to have suffered very much, as the asking rents in the area are quite high.

http://www.property.ie/property-to-let/The-Links-Elm-Park-Ballsbridge-Co-Dublin/1140263/


Normal replacement building in the Dublin area would be about 10,000 homes per year. A few apartment blocks coming on stream would only ease supply for a short period. A lot of formerly rented property is for sale and is not going to be back on the rental market.

Who is buying this formerly rented property?

Zamboni

Can we also set up another thread called Rents to Plummet with no substantial reasoning attached?
I'm scared of self fulfilling prophecies and I think that is what Milk & Honey is up to.

Kosseegan

desertcircus wrote: »

Who is buying this formerly rented property?

First time buyers. A lot of them are Chinese apparently.