Property Market 2016

The_Conductor

Sleepy wrote: »

Oh, I agree but my question would be:

Would a VAT reduction result in an extra 1,250 units?

It would result in perhaps an extra 1,250 Mercs and Audis being sold to builders here- and zero increase in the numbers of properties hitting the market.

While price is obviously an issue for may people (most starkly in the Dublin area)- absolute lack of supply is a more fundamental issue- and giving developers a dig out by reducing VAT isn't going to make one iota of difference to supply levels..........

SarahMollie

The_Conductor wrote: »

It would result in perhaps an extra 1,250 Mercs and Audis being sold to builders here- and zero increase in the numbers of properties hitting the market.

While price is obviously an issue for may people (most starkly in the Dublin area)- absolute lack of supply is a more fundamental issue- and giving developers a dig out by reducing VAT isn't going to make one iota of difference to supply levels..........

Humm, I tend to disagree. I think it would have an impact on supply (god only knows if it would be proportionate!) but crucially I don't think it would lead to enough of a jump in supply to bring down prices - not a hope of that.

The builders have to actually be building to make the extra money for all those fancy cars.

Bob24

SarahMollie wrote: »

The builders have to actually be building to make the extra money for all those fancy cars.

No necessarily. I think what The_Conductor that they can just keep the same selling prices (people are ready to pay this prices anyway) and cash-in the VAT reduction in their pocket. They do nothing more and they get the cars while the supply issue is not solved.

Not sure I would be that drastic myself, but this seems to be what the department of finance thinks will happen based on the article posted here earlier.

The_Conductor

SarahMollie wrote: »

Humm, I tend to disagree. I think it would have an impact on supply (god only knows if it would be proportionate!) but crucially I don't think it would lead to enough of a jump in supply to bring down prices - not a hope of that.

The builders have to actually be building to make the extra money for all those fancy cars.

How do you reckon a cut in VAT will increase supply though?
While obviously anyone in the market to buy a property would welcome either an increase in the number of properties for sale or (more likely) a decrease in asking prices- the CIF had a list before the last budget listing the reasons construction is so subdued. Wholly aside from anything else- they claim they're not capable of building dwellings profitably at the moment- which is principally why I imagine a measure such as a this would simply result in margin increases for developers.......

The biggest single issue (acknowledged by everyone) which is putting a brake on construction- is the lack of finance available to developers. Typically a developer needs to draw down the cost of construction in phases throughout the completion of a development- and repay the loan at the end. Lenders are lending to developers on such onerous terms that it becomes implausible for developers to proceed at the moment. Look at AIB and Bank of Ireland- they're charging between 12 and 16% for working capital. This is bonkers. This is the impediment to building- and this factor alone- along with gumming up the works- is adding at least 10% to the completed cost of every dwelling in the country.

Were the government- through whatever agencies it so choose- to make working capital available on reasonable terms- say at 6 or 7% interest- it would knock 10% off construction costs- and grease the wheel, giving developers the means to pay for a development in phases- as it has always happened.

Dropping the VAT rate- is all well and good- but if developers still can't access funds to pay for a development- its only going to result in increased margins for the few who do elect to draw down on pricey finances.........

Villa05

SarahMollie wrote:

Humm, I tend to disagree. I think it would have an impact on supply (god only knows if it would be proportionate!) but crucially I don't think it would lead to enough of a jump in supply to bring down prices - not a hope of that.

May have an impact on supply, but probably not in Dublin. We have moved into the commuter counties as far as affordability is concerned.

The result of the tax breaks will be building the wrong houses in the wrong place rather similarly to the last time this was tried

Shock Horror!!!!!!!!

johnp001

SarahMollie wrote: »

Humm, I tend to disagree. I think it would have an impact on supply (god only knows if it would be proportionate!) but crucially I don't think it would lead to enough of a jump in supply to bring down prices - not a hope of that.

The builders have to actually be building to make the extra money for all those fancy cars.

Conversely, about those cars...
Nama pays developers €11 million every year in wages
You don't seem to need to be building anything at all to pull down six-figure salaries when the taxpayer is as generous to failed speculators as the Irish taxpayer is...

Rew

Despite their "prices are going up" and a brief mention of CB rules the IT and my home seem to have stopped banging on the "its all the CB's fault drum" and started being a bit more realistic (a bit)

http://www.irishtimes.com/business/economy/house-prices-up-2-1-nationally-in-first-quarter-1.2596816

dubrov

The_Conductor wrote:

The biggest single issue (acknowledged by everyone) which is putting a brake on construction- is the lack of finance available to developers.

I don't think everyone agrees on that. If finance costs are high they are just factored into the cost of the building. Lowering funding costs would have the same impact as a VAT cut.

If builders can't make a profit at current land prices you would expect the price to fall to a level where they can. Of course that is in a normal free market

Cuddlesworth

dubrov wrote: »

If builders can't make a profit at current land prices you would expect the price to fall to a level where they can. Of course that is in a normal free market

No Opex cost with holding land in Ireland. In a developed area, its guaranteed to be largely profitable in Ireland long term.

The_Conductor

Cuddlesworth wrote: »

No Opex cost with holding land in Ireland. In a developed area, its guaranteed to be largely profitable in Ireland long term.

This is a large part of the problem- and it is also what the site tax is supposed to address........

johnp001

Independent 5/4/16:'Response to homes crisis could lead to another recession'

Se&#225 wrote: »

Why are we looking at houses for €1.7m, when we should be looking at houses that cost €160,000

Very rarely does the correct view that building houses that are affordable is the solution to the problem get an airing in the media, let alone the Indo.

Se&#225 wrote: »

In addition to changes in leadership, there arguably should have been penalties enacted against senior bank leadership that deliberately ignored sound data and information

I would go further and say that arguably not doing so guarantees that the same behaviour will be/is being repeated but I agree as far as it goes.

frankythefish

http://www.newstalk.com/Dublin-house-prices-are-going-up-again-but-at-a-slower-pace-than-the-rest-of-Ireland

rising but slowly in the capital

Bob24

frankythefish wrote: »

http://www.newstalk.com/Dublin-house-prices-are-going-up-again-but-at-a-slower-pace-than-the-rest-of-Ireland

rising but slowly in the capital

I would believe there is a trend if the sales prices from the PPR or the CSO are showing it ... asking prices as reported by daft or myhome, not so much (who knows if they are indicative of a increase in selling prices or just an increase in the gap between asking prices and selling prices).

Dr Strange

This should get prices to go up again in some of the areas mentioned, particularly Bray and North Dublin:

A Luas to Bray, Finglas and Lucan all included in €10 billion Dublin transport plan

http://www.thejournal.ie/luas-extensions-dublin-transport-plan-2702687-Apr2016/

lawred2

Dr Strange wrote: »

This should get prices to go up again in some of the areas mentioned, particularly Bray and North Dublin:




http://www.thejournal.ie/luas-extensions-dublin-transport-plan-2702687-Apr2016/

that's all very ambitious

Bob24

lawred2 wrote: »

that's all very ambitious

Yes - I think the top comment on thejournal pretty much summarises it :-) - "How many times are this plans going to be rolled out. …withdrawn and rolled out again. ..get on with it already".

Dr Strange

Yes, I agree, still, I bet there'll be those who will now reconsider and buy in these regions on the chance that the link-up and extension will happen, making them desireable commuting regions. Bray already is due to bus services and the Dart but a Luas would increase that I imagine.

PhoenixParker

Dr Strange wrote: »

This should get prices to go up again in some of the areas mentioned, particularly Bray and North Dublin:




http://www.thejournal.ie/luas-extensions-dublin-transport-plan-2702687-Apr2016/

They've been talking about DART to Maynooth for at least 30 years.
Until those projects are under construction prices won't go up in response to them.

I'll believe em when I see em.

Goat Paddock

Dr Strange wrote: »

Yes, I agree, still, I bet there'll be those who will now reconsider and buy in these regions on the chance that the link-up and extension will happen, making them desireable commuting regions. Bray already is due to bus services and the Dart but a Luas would increase that I imagine.

A luas upgraded to metro it says. Believe it when see it!

The_Conductor

PhoenixParker wrote: »

They've been talking about DART to Maynooth for at least 30 years.
Until those projects are under construction prices won't go up in response to them.

I'll believe em when I see em.

There is no proposal to bring the DART to Maynooth- it has been deemed feasible to electrify the line as far as Blanchardstown- but no further. Not sure where a story about the DART to Maynooth is coming from.

As for Luas for Lucan etc- I'll believe it when I see it- its been proposed so many times in the past- no-one believes it'll ever actually come to pass.

This is a 10 billion capital expenditure programme- from a lame duck Minister- when we can't form a government- it means precisely nothing whatsoever.

As for property prices and how they may be affected by developments such as these- its a bit of a how long is a piece of string question. There was a bump to prices on the Dart and Luas lines- especially in areas which (how to put this delicately) were not of particular interest to the vast majority of prospective purchasers for numerous reasons. So- Tallaght saw a spike- as did a few towns that were in decline (Dunlaoghaire being the obvious example of this- however- Greystones is also an obvious contender).

If they are stringing public transport (when we have never had an effective public transport system in the past) systems willy nilly around Dublin- any effect it may have on areas- will be diluted by virtue of public transport no longer being such a novel factor...........

I'm another person who doesn't believe these developments will come to pass- because I've seen most of the proposals in one form or another- numerous times down the years- and they have always been yanked- sometimes after a considerable planning process........... Lets wait and see........

Greenmachine

The_Conductor wrote: »

There is no proposal to bring the DART to Maynooth- it has been deemed feasible to electrify the line as far as Blanchardstown- but no further. Not sure where a story about the DART to Maynooth is coming from.

As for Luas for Lucan etc- I'll believe it when I see it- its been proposed so many times in the past- no-one believes it'll ever actually come to pass.

This is a 10 billion capital expenditure programme- from a lame duck Minister- when we can't form a government- it means precisely nothing whatsoever.

As for property prices and how they may be affected by developments such as these- its a bit of a how long is a piece of string question. There was a bump to prices on the Dart and Luas lines- especially in areas which (how to put this delicately) were not of particular interest to the vast majority of prospective purchasers for numerous reasons. So- Tallaght saw a spike- as did a few towns that were in decline (Dunlaoghaire being the obvious example of this- however- Greystones is also an obvious contender).

If they are stringing public transport (when we have never had an effective public transport system in the past) systems willy nilly around Dublin- any effect it may have on areas- will be diluted by virtue of public transport no longer being such a novel factor...........

I'm another person who doesn't believe these developments will come to pass- because I've seen most of the proposals in one form or another- numerous times down the years- and they have always been yanked- sometimes after a considerable planning process........... Lets wait and see........

Won't believe any of these till I see them. How many time have we heard about metro north, and the Luas as far as lucan etc.

What effect on capacity would Dart(ing) the Maynooth line have?
In fact how long have people been talking about Making use of the Tunnel under the Phoenix Park, for regular scheduled services.

Bob24

A market perspective from Sherry Fitzgerald (for what it is worth) : http://www.irishtimes.com/business/economy/property-market-is-in-crisis-sherry-fitzgerald-1.2606187

Key points:
- "the stock of property available to sell has fallen to the lowest point on record"
- "for every one private investor who has bought in the market during the year to date, two have exited the market"
- "the volume of property transaction slowed notably during the calendar year 2015"
- "cash-buyers accounted for 46 per cent of all residential transactions in 2015"

handlemaster

Bob24 wrote: »

A market perspective from Sherry Fitzgerald (for what it is worth) : http://www.irishtimes.com/business/economy/property-market-is-in-crisis-sherry-fitzgerald-1.2606187

Key points:
- "the stock of property available to sell has fallen to the lowest point on record"
- "for every one private investor who has bought in the market during the year to date, two have exited the market"
- "the volume of property transaction slowed notably during the calendar year 2015"
- "cash-buyers accounted for 46 per cent of all residential transactions in 2015"

Im not sure what the message is here as regards there been a disfunctional property market. Prices are stable

Macha

handlemaster wrote: »

Im not sure what the message is here as regards there been a disfunctional property market. Prices are stable

Prices are unsustainable.

seamus

There's a "dysfunctional" market? When has Ireland ever had a "functional" market?

Interesting though that they report that supply has collapsed but prices have effectively remained stable.

Could it be that investors fleeing the market has meant that only actual residential buyers are the ones buying property, putting an effective cap on what can be sought for properties?

EA's I've spoken to informally have said that anything over 500k simply isn't shifting. Traditionally this would have the been the market where people in their mid-forties with pre-teen children would have traded up to, but that cohort are just about emerging from negative equity, they don't have half a million to spend on a new house.

Without investors in the market there is nobody to pay higher prices.

Could we see another market dip to bring prices back in line, even though supply is so low?

Bob24

seamus wrote: »

Could it be that investors fleeing the market has meant that only actual residential buyers are the ones buying property, putting an effective cap on what can be sought for properties?

On one hands yes, but on the other hand while they are saying investors are fleeing they are also mentioning almost every second buyer is paying cash (so half the buyers are not affected by the ECB rules - and it is difficult to know how much cash they have left).

whiskeyman

seamus wrote: »

Could we see another market dip to bring prices back in line, even though supply is so low?

What seems to be happening is that the stock is simply being taken off the market or not put on at all, thus reducing stock further.
Many sellers probably feel they can achieve a better price at a later time?

Bob24

whiskeyman wrote: »

What seems to be happening is that the stock is simply being taken off the market or not put on at all, thus reducing stock further.
Many sellers probably feel they can achieve a better price at a later time?

I think this is part of it. Whereas it is reasonable or not is another question but I'd say many people who bought during the boom are would want to sell are still hoping they can recover their initial investment if they wait long enough (it is human nature to think that way and no-one would like to sell what is likely the the most expensive asset they ever purchased while in negative equity).

Eugene Norman

It wouldn't take much extra stock sold on the market to see it fall it again. I wonder if cash buyers (assuming they are investors) will buy into a market that was declining (if it were).

It's hard to get out of this. Supply has to come online as demand matches it. Or prices fall and future supply is curtailed. The costs of 2008 might be long lasting.

Cuddlesworth

seamus wrote: »

There's a "dysfunctional" market? When has Ireland ever had a "functional" market?

Late 90's? I know people were pointing out on this forum for nearly a decade that the actual total number of yearly sales have been way below normal. And before that it was boom city.