Property Market 2016

Michael D Not Higgins

Cuddlesworth wrote: »

I could be wrong but I was always of the understanding that the developer was liable for the cost. For example, you are required to pay them if you don't want to meet the requirement and apply for exemption. Or transfer equivalent assets or land of the completed houses.

The developer has to list the costs with 'reasonable' profit which is then paid to them for their percentage of the development. The payments could be made instead, which is what was done during the bubble since the profit on the open market was so much higher than the cost of paying off their obligation under Part V. They're now trying to remove that provision so it must be complied with by providing housing.

This is another reason the social housing stock has dwindled over the last 10 years.

Michael D Not Higgins

Uriel. wrote: »

Of course he would considering he represents that industry.

I know, and I know he's trying to start from a better bargaining position for any future discussions with the government on housing costs, but a flat out unwillingness to budge on their own margin or costs is really my point.

sapper

This market is dead dead dead.

Only 8 second hand houses in the 450-650k bracket have come up for sale to myhome in the last 4 weeks in all of Dublin West.

handlemaster

I was thinking at also the market looks very stagnant. .. Nothing much coming on

gaius c

Michael D Not Higgins wrote: »

That would only make sense if longer lets were becoming the norm which, granted, could have some effect, e.g. people happy where they are and not moving especially when there's a crisis ongoing.

However, a drop of nearly 80% in daft's rental supply stats is not significantly due to longer lets. It's clear those 14,000 odd properties went somewhere and the obvious answer is on landlords selling up, increased demand and no additional supply.

The main blockage I see is the lack of supply. There is certainly a case to be made that people are sitting on empty properties to realise a better return as the market rises and an empty site tax should be encouraged in these instances. I know in London some new apartment blocks are empty because foreign billionaires buy them up as investment vehicles.

The builders then say the costs are too high which I think is probably them looking at it from their 2006 hats on comparing it to the building costs and sale prices then. There's a few things that have to happen, builders need to be more realistic about their margins, something needs to be done about the high costs and something needs to be done about the non-use of properties and sites. What these measures should look like is the tricky part.

No I don't think those things are clear at all.
You're confusing currently available stock with total stock.

We don't have data on total stock that I know of and we certainly don't have data to make conclusions such as "landlords selling up". That's a mantra getting repeated ad nauseum by landlords themselves as part of their beal bocht agenda and it doesn't really have any evidence to support it.

As pointed out, builders' margins are fairly tight. It's the lads higher up the food chain who are the problem.

gaius c

sapper wrote: »

This market is dead dead dead.

Only 8 second hand houses in the 450-650k bracket have come up for sale to myhome in the last 4 weeks in all of Dublin West.

Have you tried searching below 450k?

gaius c

Sleepy wrote: »

I found it interesting in that Newstalk piece that Tom Parlon was touting 15% as the expected margin on a build. That seems a fairly high return on investment to me so surely there's some room for maneouver there.

How far have wages fallen in the Construction Industry? Are semi-skilled workers still expecting professional salaries?

A special VAT rate for construction of residential homes would seem to make as much sense as the special rate the hoteliers are getting...

Focusing on apartment building is a mistake IMO. The market wants 3 bedroom family homes so lets build solid 3 bed semis / terraces with standard fit-outs rather than ****ty apartments / town houses / duplexes done to a "high spec" i.e. tarted up as cheaply as possible. Apartments are for young urban professionals in city centre locations, not for families trying to raise children and no matter what standard or size they're built to, you're not going to convince the average Irish house buyer otherwise, particularly when for most of us, our only experience of apartments are the disasters that were build during the celtic tiger: cramped, poorly insulated ****-boxes in complexes with high management fees, no storage space and tripping over your bike on the way to bed because the underground car park is either flooded or a magnet for thieves.

That said, the height restrictions within the city centre are a nonsense, as is our tolerance of what should be prime real estate being used for social housing ghettos.

And is he talking 15% margin factoring in the price that his dopey CIF member paid for the site back in 2006?

Developers are flailing around desperately trying to avoid crystalising losses (now that the market has stopped rising again) and if they can find a sucker to bail them out, they'll take them.

This is why the developers should have been liquidated and the sites sold in a firesale. We are being held to ransom because of LTEV codology.

Sono

sapper wrote: »

This market is dead dead dead.

Only 8 second hand houses in the 450-650k bracket have come up for sale to myhome in the last 4 weeks in all of Dublin West.

Yeah, it's really quiet out there since before xmas, very little coming onto the market at all.

PhoenixParker

If landlords are selling up in droves as is claimed where is the corresponding increase in properties for sale?

MAJJ

Sono wrote: »

Yeah, it's really quiet out there since before xmas, very little coming onto the market at all.

Same in Ballinteer / Dundrum so little available for anyone trading up. Finally, traded up recently so know focusing on builders!

El_Dangeroso

PhoenixParker wrote: »

If landlords are selling up in droves as is claimed where is the corresponding increase in properties for sale?

It's bizarre, lowest ever vacant rental stock and nothing on the market, where the hell are all the houses?

OfflerCrocGod

El_Dangeroso wrote: »

It's bizarre, lowest ever vacant rental stock and nothing on the market, where the hell are all the houses?

Central bank killed the market saying they will review the rules later this year? If that's the case the whole year is a write off.

RandomAccess

El_Dangeroso wrote: »

It's bizarre, lowest ever vacant rental stock and nothing on the market, where the hell are all the houses?

Eh.. being rented out I guess?

slowjoe17

El_Dangeroso wrote: »

It's bizarre, lowest ever vacant rental stock and nothing on the market, where the hell are all the houses?

When there is little to no building, what would you expect?

Apparently Apple warned the government that lack of housing is forcing them to reduce hiring: http://uk.businessinsider.com/a-lack-of-housing-could-affect-the-expansion-of-apples-irish-empire-2016-2

This will get worse before it gets better.

brownbeard

gaius c wrote: »

We are being held to ransom because of LTEV codology.

Gaius c, forgive my ignorance but could you explain the LTEV acronym?

I Am The Law

OfflerCrocGod wrote: »

Central bank killed the market saying they will review the rules later this year? If that's the case the whole year is a write off.

I don't see why that is? If property owners put their houses up for sale at realistic prices I'm sure it would be a very busy year. Lower prices means it's easier to save for a deposit and easier to get a mortgage relative to peoples income.

Michael D Not Higgins

brownbeard wrote: »

Gaius c, forgive my ignorance but could you explain the LTEV acronym?

I had to look it up too, it's long term economic value, something Nama took into account for the property they bought up. In other words, waiting for the price to rise.

gaius c

PhoenixParker wrote: »

If landlords are selling up in droves as is claimed where is the corresponding increase in properties for sale?

And that's what we call a headshot!

gaius c

Michael D Not Higgins wrote: »

I had to look it up too, it's long term economic value, something Nama took into account for the property they bought up. In other words, waiting for the price to rise.

It's the voodoo economic idea that an asset is worth something other than what somebody will pay for it now.

Think of it buying 2 litres of milk for €1.50 but the supermarket deciding that milk is actually worth €2 for a 2 litre bottle and they keep 95% of their milk stock in the freezer in order to create a shortage on the supermarket shelf and in the resulting panic, consumers have no option but to buy the milk at €2.

There's loads of milk but the amount that is readily available on the shelf is very limited. That's the key strategy behind coercing debt free people to stump up and bail out the indebted.

There's no actual shortage of housing stock, even in Dublin where they have double the number of empties that other developed cities do. What is bottlenecking the market is the extremely low transaction rate.

And when people can't buy, they have to rent and the Irish rental market was never that well developed to start with.

Michael D Not Higgins

gaius c wrote: »

It's the voodoo economic idea that an asset is worth something other than what somebody will pay for it now.

Think of it buying 2 litres of milk for €1.50 but the supermarket deciding that milk is actually worth €2 for a 2 litre bottle and they keep 95% of their milk stock in the freezer in order to create a shortage on the supermarket shelf and in the resulting panic, consumers have no option but to buy the milk at €2.

There's loads of milk but the amount that is readily available on the shelf is very limited. That's the key strategy behind coercing debt free people to stump up and bail out the indebted.

There's no actual shortage of housing stock, even in Dublin where they have double the number of empties that other developed cities do. What is bottlenecking the market is the extremely low transaction rate.

And when people can't buy, they have to rent and the Irish rental market was never that well developed to start with.

So basically what De Beers do with diamonds then, gotcha.

sapper

So if want a decent supply of houses to choose from for my purchase I have to wait until the indebted start to think that their assets may be worth less in the future, so they start dumping their assets.

Its much harder for someone to chase an ever increasing loss, better to stick your head in the sand and hope you breakeven some day

I only want one litre of milk

cnocbui

gaius c wrote: »

It's the voodoo economic idea that an asset is worth something other than what somebody will pay for it now.

No. Voodoo economics is saying that if a piece of land costs €80 K, and a house is built on it for a construction cost of €320 K, the resulting property is worth €250,000 because that is all people 'want' to pay for it.

slowjoe17

cnocbui wrote: »

No. Voodoo economics is saying that if a piece of land costs €80 K, and a house is built on it for a construction cost of €320 K, the resulting property is worth €250,000 because that is all people 'want' to pay for it.

Ronan Lyons has said that the cost of planning and other government-related items like contributions adds €60,000 to a property. Obviously, the builder has to pass that on to the buyer.

Remove that, and the numbers are 260k and 250k.

How have the regulatory costs changed over the years?

OfflerCrocGod

I Am The Law wrote: »

I don't see why that is? If property owners put their houses up for sale at realistic prices I'm sure it would be a very busy year. Lower prices means it's easier to save for a deposit and easier to get a mortgage relative to peoples income.

People don't think like that? All they can see is that if they wait they might get more for their house, they don't consider the fact that what they buy will cost more. I don't expect any move by the CB, unless the situation becomes much worse.

OfflerCrocGod

cnocbui wrote: »

No. Voodoo economics is saying that if a piece of land costs €80 K, and a house is built on it for a construction cost of €320 K, the resulting property is worth €250,000 because that is all people 'want' to pay for it.

If I bought a barrel of oil for $100 two years ago that does not mean that same barrel of oil is still worth $100. That's not how markets work.

cnocbui

OfflerCrocGod wrote: »

If I bought a barrel of oil for $100 two years ago that does not mean that same barrel of oil is still worth $100. That's not how markets work.

If you are only prepared to pay $20 for a barrel of oil and it costs the producers $40 to provide - you won't be able to buy barrels of oil for long - that IS how markets work.

gaius c

cnocbui wrote: »

If you are only prepared to pay $20 for a barrel of oil and it costs the producers $40 to provide - you won't be able to buy barrels of oil for long - that IS how markets work.

So stamp your feet and demand that buyers pay double the actual market value?

cnocbui

slowjoe17 wrote: »

Ronan Lyons has said that the cost of planning and other government-related items like contributions adds €60,000 to a property. Obviously, the builder has to pass that on to the buyer.

Remove that, and the numbers are 260k and 250k.

How have the regulatory costs changed over the years?

Planning permission fee is €65. I imagine VAT would make up a huge whack. I don't really get what you are saying. The cost of building a house is what it is. Vat and other charges are incorporated in those costs, but they can't be subtracted.

gaius c

sapper wrote: »

So if want a decent supply of houses to choose from for my purchase I have to wait until the indebted start to think that their assets may be worth less in the future, so they start dumping their assets.

Its much harder for someone to chase an ever increasing loss, better to stick your head in the sand and hope you breakeven some day

I only want one litre of milk

What we need is the transaction rate to increase to something approaching normality. That means either:
1) People pay more for houses and prop up the developers' broken business model and bail people out of their debts
2) Prices drop to what the market can sustain and the debtors in trouble have to make their own arrangements

El_Dangeroso

cnocbui wrote: »

If you are only prepared to pay $20 for a barrel of oil and it costs the producers $40 to provide - you won't be able to buy barrels of oil for long - that IS how markets work.

Unless the providers are drowning in inventory and need cash. That's also how markets work sometimes.