Rents to Rocket?

Caseywhale

Monty Burnz wrote: »

We are way, way past recession. This is a depression.

See what I mean.

StillWaters

Monty Burnz wrote: »

We are way, way past recession. This is a depression.

No it's not! We are in fact dipping in and out of recession. Thankfully nowhere near depression measures.

Solair

In other news : tooth fairy to donate billions to Ireland in act of philanthropy!

Monty Burnz

StillWaters wrote: »

No it's not! We are in fact dipping in and out of recession. Thankfully nowhere near depression measures.

Yes, 15% unemployment is indicative of a country 'dipping in and out of recession'...I wonder how our GNP numbers would look if we weren't running a double-figure deficit for the last few years?

Milk & Honey

Recession or depression does not rule out a rise in rents in Dublin. There is little or no building. That will not change in a recession or depression. Households are forming needing housing. Providers are going out of business, something that s unlikely to change in a recession or a depression.
Short of wholescale internal relocation within Ireland or mass emigration on an epic scale, there will be a shortage of rental properties on the market in the years to come.

Mr. Loverman

Milk & Honey: Who are you? Estate agent, landlord...?

desertcircus

Milk & Honey wrote: »

Short of wholescale internal relocation within Ireland or mass emigration on an epic scale, there will be a shortage of rental properties on the market in the years to come.

Where are these houses all going to go? We still have an overhang, we're still at 15% unemployment, we still don't know how the government are going to balance the books, and we're not even certain we'll be in the euro in a year's time. Any one of these would in normal circumstances be enough to kill any serious rise in the rental market, and we have all four.

Monty Burnz

Milk & Honey wrote: »

Recession or depression does not rule out a rise in rents in Dublin.

This is true, but if everybody has less money (due to tax increases), and we are agreed there is no shortage of property in the country, and even rent supplement is being cut, I'm not sure how this adds up to increasing rents?

This is before we get into the 15% official unemployment rate etc.

Ray Palmer

Monty Burnz wrote: »

Milk & Honey wrote: »

Recession or depression does not rule out a rise in rents in Dublin.

This is true, but if everybody has less money (due to tax increases), and we are agreed there is no shortage of property in the country, and even rent supplement is being cut, I'm not sure how this adds up to increasing rents?

This is before we get into the 15% official unemployment rate etc.

I think you are confusion empty property in the country with rental property available in Dublin. Wages are higher in Dublin and as there is more work in Dublin people can pay rent.
There is going to be a lot of property pressure in Dublin. More people living looking for rentals and less of it. More students, more weekday workers, more fly the nesters and there are more split families. While many would rather not pay rent they will as they have no choice. There will be more money in the rental market. Reduced incomes really doesn't play as it versus no income. 60% of the last place I worked were weekday workers. Another 10% were foreign nationals here as there is work here.
You don't seem to considering working people can pay rents and ignoring the have not choice. Lots of people can afford an extra €40-50 a month without any real hardship. I would think if you removed long term unemployed Dublin has a low unemployment %

Solair

If there is any rental rise, it's because NAMA is manipulating the market by keeping vast numbers of rental units off the market.

I seriously can't see the IMF standing over this for much longer. It's blatantly a system designed to protect vested interests.

We need to see drastically reduced property costs to make the economy more competitive, otherwise we can't grow out of this mess.

People need to realise that high property prices drove costs up here. They trickle down to every aspect of the economic life of this country.

Prices of consumer goods, groceries, restaurants, your cup of coffee etc etc are high largely because cost of rental commercial properties were astronomically high. This drove prices up and kept competition low as the cost of doing business became unattractive to new entrants eg major chains etc Then wage inflated to both pay for high home prices and to keep pace with prices which inflates largely due to huge rents.

It's a pyramid system that only benefits a handful of big property speculators.

A well run country has good quality, affordable housing.

Monty Burnz

Ray Palmer wrote: »

I think you are confusion empty property in the country with rental property available in Dublin. Wages are higher in Dublin and as there is more work in Dublin people can pay rent.
There is going to be a lot of property pressure in Dublin. More people living looking for rentals and less of it. More students, more weekday workers, more fly the nesters and there are more split families. While many would rather not pay rent they will as they have no choice. There will be more money in the rental market. Reduced incomes really doesn't play as it versus no income. 60% of the last place I worked were weekday workers. Another 10% were foreign nationals here as there is work here.
You don't seem to considering working people can pay rents and ignoring the have not choice. Lots of people can afford an extra €40-50 a month without any real hardship. I would think if you removed long term unemployed Dublin has a low unemployment %

Sure if you are removing long term unemployed, why not remove the short-term unemployed too?

We heard all these arguments during the bubble. They were wrong then, and they are wrong now.

BostonB

I would assume that a lot of the Nama properties especially in Dublin are in general are not in the most desirable places to rent. As in the near where people want to be. So releasing those properties won't have the direct effect on rents on property in the most desirable locations. Which is why a lot of places further out (even within the city) aren't renting while theres still big demand in central locations.

Solair

All I see in Ireland is a long history of manipulation of the planning process and now, it would seem NAMA is distorting the market too, to ensure that maximum profit is made for developers (property speculators) at all times.

I think the IMF really needs to investigate what's going on as it's now funding it and it will directly impact on our ability or inability to dig ourselves out of this mess.

Whatever about other aspects of our economy, we have a deep, systemic problem with property speculation and associated manipulation of the free market.

I can't really see how the housing market in Ireland could possibly inflate. There's just nothing fundamentally there to prop it up.

I'm sure you will see a few dead cat bounce moments where there'll be a slight rise in a small sector of some urban markets. The rental market may also not drop quickly as there will be demand from people who can't buy due to lack of access to mortgages, but essentially the market's bust.

Real situation in Ireland at the moment:

1) Falling incomes in terms of actual paid wages.
2) Substantially higher taxes, charges and other costs like insurance and interest on loans.
3) Massively reduced access to credit resulting in consumer spending slumps and collapsing businesses.
4) Massively reduced access to mortgages.
5) Emigration.
6) Reversal of trend where high-paid migrant construction workers from Eastern Europe filled a lot of rental units. Anecdotally, there would seem to be way fewer people from Poland etc around than there were even last year.
7) Macroeconomic climate - total instability. We don't even know if our currency will be around in 6 months!
8) State day-to-day costs being met by the IMF!!!

On the supply side :

1) Massive over supply in most areas.
2) Market distortion due to houses & apartments being kept off the market.
3) Artificially high commercial rents due to upward-only reviews in lease agreements.

If there was a property revival in that climate, it would be utterly bizarre and would probably set all sorts of alarm bells off in Christine Lagarde's office!

Ireland needs to see a rise in real GDP/GNP and actual exportable commodities and services and a major reduction in unemployment rates.
Selling / renting piles of bricks to each other is not economic activity. It's just yet more speculation!

We should be benefiting from lowering costs due to lowering commercial rents and lowering residential property costs as it should be making our economy more competitive.

Instead, we are allowing hype-mongers to whip us into property hysteria again.

Also, I wouldn't believe ANYTHING that a newspaper says about property. They spend nearly two decades being entirely funded by their property supplements and all lament the loss of all that advertising space.

You're far more likely to get a non-biased story from non-print media e.g. the likes of RTE, which to be fair to Prime Time, George Lee etc did actually point out the enormous property bubble that was coming our way.
It was largely the print media that stoked the fire.

BostonB

How will Nama make developers profit?

Monty Burnz

BostonB wrote: »

I would assume that a lot of the Nama properties especially in Dublin are in general are not in the most desirable places to rent.

Assume away, but you've no reason to think that. There are hundreds of apartments in Dundrum, hundreds at the Central Park Luas stop, hundreds in Sandyford, hundreds in Elm Park in Ballsbridge - thousands in total. And presumably not everyone wants to live in these areas either.

Solair

BostonB wrote: »

How will Nama make developers profit?

The problem is that NAMA has essentially become a developer itself i.e. it has a heap of properties and is drip feeding them onto the market to ensure maximum profits.

It's just a state-owned property speculation fund.

The whole thing seems daft. Instead of letting the market correct and find its actual value and allowing the fire sales to occur and losses to be taken, we are distorting the market using NAMA.

The result is that the Irish economy is not seeing the benefits of a housing market collapse and is instead using tax payers' money to ensure that the banks, their investors, and speculators do not make a substantial loss on their absolutely insanely bad investments.

The deal we got was : 1) Pay over the odd for houses and get into extreme negative equity and then 2) have the state essentially use our money to place a price floor on the market to ensure that we do not benefit from the down cycle of the market thus totally protecting the idiots who slashed money into a bubble.

It's a lose:lose deal for the normal punter and a can't lose deal for the big speculators and banks.

Ray Palmer

Monty Burnz wrote: »

Sure if you are removing long term unemployed, why not remove the short-term unemployed too?

We heard all these arguments during the bubble. They were wrong then, and they are wrong now.[/Quote]
reason for removal of long term unemployed is they aren't really a changing group of people when it comes to rental. They tend to stay within the area and section of the rental market.
You may think you heard reasons for rental increases before but they apply differently now. No new property and more increased demand. Your argument claims people aren't there and have no money. Simple argument ignoring the actual reality. Not everybody is broke. Still more employment in Dublin. Less property than the forseeble demand.
One earner in Dublin with family outside means two properties needed. More and more common. Rents will go up but not likely to rocket.
Nama property is not enough for this in Dublin. It won't really effect me but I assure you LL are waiting to make returns from new costs and will up rents as quickly as they can.

Solair

Just wait until they are forced by the troika to dramatically slash the rent allowance and you'll see where the rental market really is at!

BostonB

Monty Burnz wrote: »

Assume away, but you've no reason to think that. There are hundreds of apartments in Dundrum, hundreds at the Central Park Luas stop, hundreds in Sandyford, hundreds in Elm Park in Ballsbridge - thousands in total. And presumably not everyone wants to live in these areas either.

Someone I know was buying an apt recently, as a buy to let, and there was a substantial price difference, and storage of supply in the city centre, but move out even a short distance, and its a completely different story. Seems like people are let less willing to pay a high rent and have to commute. Even a short distance. They prefer to pay the extra and not commute at all.

BostonB

Solair wrote: »

The problem is that NAMA has essentially become a developer itself i.e. it has a heap of properties and is drip feeding them onto the market to ensure maximum profits.

It's just a state-owned property speculation fund.

The whole thing seems daft. Instead of letting the market correct and find its actual value and allowing the fire sales to occur and losses to be taken, we are distorting the market using NAMA.

The result is that the Irish economy is not seeing the benefits of a housing market collapse and is instead using tax payers' money to ensure that the banks, their investors, and speculators do not make a substantial loss on their absolutely insanely bad investments.

The deal we got was : 1) Pay over the odd for houses and get into extreme negative equity and then 2) have the state essentially use our money to place a price floor on the market to ensure that we do not benefit from the down cycle of the market thus totally protecting the idiots who slashed money into a bubble.

It's a lose:lose deal for the normal punter and a can't lose deal for the big speculators and banks.

Theres two sides to that. The state needs to reduces the losses it makes on these. (futile IMO but there you go). Also if you fire-sale all these properties, you may drive a lot of people who are hanging on, out of the market and out of the country, and they will leave their debts behind and also stop paying into the economy. These debts and lose of income will directly effect the banks and now the state. It may further suppress the economy. Of course all Nama may end up doing is delaying this as it maybe inevitable.

Ray Palmer

Solair wrote: »

Just wait until they are forced by the troika to dramatically slash the rent allowance and you'll see where the rental market really is at!

As they already cut ra and rent didn't go down people may have misjudged the relationship. RA is actually meant to follow rent and it has been taken that it has been leading it.
Lots of people subsidise RA as is. If you were to slash it you are more likely to end up with property in places non RA tenants wont live. A lot of the LL won't even accept it as is so likely not to effect them.

Solair

BostonB wrote: »

Theres two sides to that. The state needs to reduces the losses it makes on these. (futile IMO but there you go). Also if you fire-sale all these properties, you may drive a lot of people who are hanging on, out of the market and out of the country, and they will leave their debts behind and also stop paying into the economy. These debts and lose of income will directly effect the banks and now the state. It may further suppress the economy. Of course all Nama may end up doing is delaying this as it maybe inevitable.

Thanks to the state's and the ECB's No Banker Left Behind policy, the losses will be absorbed by the state / the EU one way or the other anyway.

As I see it, you can either have the plaster pulled off very slowly and painfully over a decade or so. Or, just get it over with.

The obvious thing to do with Rent Allowance, would be a proper social housing programme where the state owned the properties, not private landlords getting special Landlord Supplement.

The cost of providing housing to those on rent allowance could be massively reduced and the quality of accommodation on offer to them increased.

Paying private landlords the going rate isn't good value for money for the tax payer or the IMF.

Perhaps ring fence some NAMA'd properties for social housing.
Setup a fund, where by the loans against those houses were converted into some kind of long-term bond. The minimal rental payments of social housing tenants would slowly pay down that cost over a very long time, much as any piece of state-owned infrastructure. As it would be a state asset, not a private mortgage, it would be possible to do something like that over 50+ years.

Ray Palmer

Solair wrote: »

The obvious thing to do with Rent Allowance, would be a proper social housing programme where the state owned the properties, not private landlords getting special Landlord Supplement.

The cost of providing housing to those on rent allowance could be massively reduced and the quality of accommodation on offer to them increased.

Paying private landlords the going rate isn't good value for money for the tax payer or the IMF.

What you don't understand there is anything to do with social housing and lessons learned.
Firstly nobody wants to create any more deprived areas where people are all on social housing.
It would mean people would have to move to these areas of social housing if their life took a downturn no matter how temporarily.
As for it being cheaper, apparently not. Maintaining council property is massively expensive. One reason is the classic €2000 hammer. The other is the ongoing expense of maintenance.
People don't want to live in social housing.

Dublin council has property and can't get their act together as is. Stated here as something equal to Nama.

It is not some sweetheart deal for LL with the majority not wanting RA tenants.

It isn't going to ever happen again where the government provide housing like they once did. Privatisation of everything is pretty much what has happened because public is so inefficient

gurramok

Ray Palmer wrote: »

There is going to be a lot of property pressure in Dublin. More people living looking for rentals and less of it. More students, more weekday workers, more fly the nesters and there are more split families. While many would rather not pay rent they will as they have no choice.

Have a read
http://irelandafternama.wordpress.com/2012/06/07/demographic-contraction-in-irelands-house-buying-cohort/

There is a serious demographic contraction of both renters and buyers in the next 15 years(and then will go up again after 15yrs) due to historic birth rates. Their numbers went down by 25,000 from 1980 to 1994, they are aged 32 and 18 today respectively. This will affect the numbers of workers, students, RS recipients, you name it.

What you are relying on for Dublin to buck this trend is massive internal migration and some immigration of 20-40yr olds plus they need to have jobs to afford the rents. Its quite optimistic.

If one takes a quick look at the Census 2011 results it suggests that the population is still growing quite rapidly. Between 2006-2011 the population increased by 348,404 people (8.2%). If we look at the data in a bit more detail, however, it is clear that during this five year period a fairly fundamental shift occurred. Basically, the strong growth all happened in 2006 and 2007. After that, growth slowed markedly. Whilst population is still growing, it is now at a very low rate. According to the CSO, population growth in 2010 was 11,400, in 2011 it was 13,600. Nearly all of this growth is through natural increase: a falling death rate and growing birth rate. People who are very old are more likely to go into sheltered accommodation or nursing homes (freeing up stock) and children under the age of five will not be buying anything any time soon. In other words, what population growth there is is unlikely to translate into the take-up of housing.

And what of the household formation age and the next few years? There are two factors at play here. The first is emigration. There was net out-migration of 34.5K in 2010 and 34K in 2011, principally of people aged 20-40. The second is the size of the cohort aged 15-25. As the figure below shows, taken from the Census 2011 report, this cohort is substantially less in size than the cohort aged 25-40, the group that bought at the height of the boom (2002-2007), when house building was at an all-time high. The reason for this is low birth rate in the late 1980s and early 1990s. The birth rate in 1980 was 74,064. In 1994, the lowest rate and presently aged 17-18, it was 48,255. In 2010 it was 76,762. In other words, we now have a relatively small cohort working its way up the population pyramid and this age cohort is now entering household formation age. Demand for housing is thus going to be much reduced than in the past decade. It will start to grow again in about 10 years time as the younger, larger cohort works its way up, but we don’t need to start building for them until they reach household formation age.

steve9859

Monty Burnz wrote: »

Assume away, but you've no reason to think that. There are hundreds of apartments in Dundrum, hundreds at the Central Park Luas stop, hundreds in Sandyford, hundreds in Elm Park in Ballsbridge - thousands in total. And presumably not everyone wants to live in these areas either.

That's right....no-one wants to live in these areas (except for possibly the Ballsbridge one). Especially not in a flat.

You used to choose to live either in an apartment in the city (walking distance of the centre), or else a house (with a garden) in the country or outlying suburbs. One of the results of the Celtic Tiger was this growth of peripheral amorphous and soulless estates of flats and tiny townhouses miles away from the city centre. These satisfied neither of these needs.....and simply provided cheap homes for those desperate to get on the property ladder at any cost. So the hundreds of apartments that you quote, are simply not where people, esp young people, in employment want to be

We have thank goodness reverted to the normal. There is a strong demand for flats in the immediate surroundings of Dublin city. And the prices (buying and renting) in those dundrum, swords, citiwest, sandyford, tallagh estates quite rightly continue to fall

Monty Burnz

steve9859 wrote: »

That's right....no-one wants to live in these areas (except for possibly the Ballsbridge one). Especially not in a flat.

I would happily live in any of those areas - good transport links, close to shopping and so forth. Apartments are fine to live in until you have a couple of kids* - and these days, with people having families later, this could be from when you leave home in your late teens until your mid-thirties, a good quarter of your life.

By the way, your experience seems very Dublin-centric - in most cities, you don't expect to be within easy walking distance of the centre just because you live in an apartment.

*assuming you want/have a partner and want/have children - plenty of people don't and will live in apartments happily for their whole lives.

BostonB

Solair wrote: »

Thanks to the state's and the ECB's No Banker Left Behind policy, the losses will be absorbed by the state / the EU one way or the other anyway.

As I see it, you can either have the plaster pulled off very slowly and painfully over a decade or so. Or, just get it over with......

Don't disagree. But I don't where you see anyone making a profit from the current situation. Its losses for everyone who got stuck with a property (who paid too much, or left with the debt) when the music stopped and there were no chairs left.

BostonB

Monty Burnz wrote: »

I would happily live in any of those areas...

If everyone else feels the same they'll be able to sell/rent them. Assuming they are affordable for the people who want to. If they can't sell/rent them, then its suggest people, don't want them, can't afford them.

BostonB

Apologies if this was posted before
http://www.thejournal.ie/fewer-houses-for-sale-in-dublin-that-at-any-other-time-in-last-five-years-482742-Jun2012/

Monty Burnz

BostonB wrote: »

If everyone else feels the same they'll be able to sell/rent them. Assuming they are affordable for the people who want to. If they can't sell/rent them, then its suggest people, don't want them, can't afford them.

I'm sure everyone won't think the same!

But they could rent or sell them if they really wanted to - the point is that they don't want to, they are waiting for a miracle that will double Irish property prices to allow them to make their money back.