Property Market 2018

ELM327

awec wrote: »

I doubt many horses deliver 6 figure sums when it comes time to cash in.

Landlords aren't making a cash profit month-to-month, but they are getting someone else to pay off a large chunk (if not all) of the payments toward acquiring an asset that medium-to-long-term will deliver them a very healthy return.

But then you pay 52% of the income received and you pay CGT on the profit made on the asset.
You can have a situation where the tax bills undo any profit bar the (leveraged in most cases) capital investment.

cruizer101

Bob24 wrote: »

, but it would still have the same type of effects on demand for property.

I'd argue that the breakdown of the demand this time round is different. At the peak of the boom a lot of demand was from people wanting a second investment property, or young people being encouraged to get straight on the property ladder (2007 I was 23 just out of college and there was pressure to buy). When the crash happened that demand dryed up very quickly. People no longer wanted to invest in a depreciating asset and young people decided to emigrate or keep living at home.

This time around a significant amount of the demand is from couples in mid 30's trying to get out of extortionate rents or still living at home (this didn't exist in peak back then mid 30 no property was seen as failure). This kind of demand does not vanish as easily overnight.

I've no figures or that to back this up but I definitely think there is an element of this to today's demand and so even a bad downturn wouldn't have quite the same effect.

Bob24

cruizer101 wrote: »

I'd argue that the breakdown of the demand this time round is different. At the peak of the boom a lot of demand was from people wanting a second investment property, or young people being encouraged to get straight on the property ladder (2007 I was 23 just out of college and there was pressure to buy). When the crash happened that demand dryed up very quickly. People no longer wanted to invest in a depreciating asset and young people decided to emigrate or keep living at home.

This time around a significant amount of the demand is from couples in mid 30's trying to get out of extortionate rents or still living at home (this didn't exist in peak back then mid 30 no property was seen as failure). This kind of demand does not vanish as easily overnight.

I've no figures or that to back this up but I definitely think there is an element of this to today's demand and so even a bad downturn wouldn't have quite the same effect.

This difference in how demand is structured is a fair point related to property sales, but while it makes it a bit more stable I am not sure I would take it as significantly protecting demand in case of a crisis:
- while it is hard to get figures, I would tend to agree that overall there is less investment money and more future owner-occupiers on the national market today than back then. But I am not sure it is true in high demand areas where people want to live: back in 2007 a lot of the investment money was directed to future ghost estates where people didn’t want to live and that money was supporting prices in those locations, but I’m not sure how much that same think would have been true in Dublin back then compared to 2018.
- while probably more stable than pure investment money, those 30something couples are not insulated from an economic crisis. If many start losing job, leaving the country, and/or credit becomes less readily available, they will also be leaving the market as they did back then.
- one additional part of the current demand is from REITS paying very high figures to purchase whole apartment blocks in high demand areas as they expect very high rents in return, which applies strong upwards pressure on prices and dries up the sales market. If the rental market cools down due to a poor economy / net emigration, this will stop happening.

Related to property rentals, I don’t think it makes a difference though?

Browney7

ELM327 wrote: »

But then you pay 52% of the income received and you pay CGT on the profit made on the asset.
You can have a situation where the tax bills undo any profit bar the (leveraged in most cases) capital investment.

Which is no different to borrowing to purchase shares (where you can't offset any interest expenses either - so no one does it). LLs who purchased in 2013 and 2014 are getting it CGT free aswell if they cash in before 7 years which isn't available to people who purchased shares in that time.

Hardly adverse special treatment for residential property investors under our taxation regime that's punitive for everyone.

hots

The_Conductor wrote: »

For specific permanent posts- in very specific conditions.
Last time round- we were offered 7.5 times gross annual salary by BOI (in 2006- to buy a specific house in Portlaoise)- which seems absolutely crazy- but then again- 5 times is too..........

I thought they were tied to the 4.5 times rules regardless?

ELM327

Browney7 wrote: »

Which is no different to borrowing to purchase shares (where you can't offset any interest expenses either - so no one does it). LLs who purchased in 2013 and 2014 are getting it CGT free aswell if they cash in before 7 years which isn't available to people who purchased shares in that time.

Hardly adverse special treatment for residential property investors under our taxation regime that's punitive for everyone.

You pay 52% on the income used to purchase the asset then 52% again on the rental income.
Double taxation.
Triple with the exit CGT.

Rothmans

ELM327 wrote: »

You pay 52% on the income used to purchase the asset then 52% again on the rental income.
Double taxation.
Triple with the exit CGT.

Eh . . . . that's not double taxation. It would be double taxation if you were taxed twice on the same income.

theboringfox

I think you may see a cooling period or even slight fall off in market due to the affordability ceiling and saving rates being hit by high rents. But I suspect it will be temporary. I think prices will rise overall in coming years but I think it'll be more bumpy than the straight line growth that has been happening.

Browney7

ELM327 wrote: »

You pay 52% on the income used to purchase the asset then 52% again on the rental income.
Double taxation.
Triple with the exit CGT.

And it's the exact same for dividend income on equities, coupon payments on bonds etc. Again, not a special case for leveraged residential property investors (in fact their treatment is more advantageous coupled with a lot of accidental landlords keeping schtum and keeping their tracker rate from banks that more than likely have the Irish state as an investor..)

If you are an OAP landlord with an investment property to supplement the state pension income it'll be likely a rate closer to 20% on the income too.

Tax is high for all individual investors and savers (DIRT too don't forget) - not just landlords. Even if you as an individual buy shares in the REITs you pay income tax on your dividends and CGT on the share price appreciation.

handlemaster

For anybody interested in whats coming. The stock market crash will herald another property crash. Irish times article today says 12/24 months for stocks to crash and recession to kick in

handlemaster

For anybody interested in whats coming. The stock market crash will herald another property crash. Irish times article today says 12/24 months for stocks to crash and recession to kick in

mcbert

handlemaster wrote: »

For anybody interested in whats coming. The stock market crash will herald another property crash. Irish times article today says 12/24 months for stocks to crash and recession to kick in

Link? I dont see it online...

ELM327

Browney7 wrote: »

And it's the exact same for dividend income on equities, coupon payments on bonds etc. Again, not a special case for leveraged residential property investors (in fact their treatment is more advantageous coupled with a lot of accidental landlords keeping schtum and keeping their tracker rate from banks that more than likely have the Irish state as an investor..)

If you are an OAP landlord with an investment property to supplement the state pension income it'll be likely a rate closer to 20% on the income too.

Tax is high for all individual investors and savers (DIRT too don't forget) - not just landlords. Even if you as an individual buy shares in the REITs you pay income tax on your dividends and CGT on the share price appreciation.

Yes but under most ltd companies you can invest money and make the profits at corporate tax rates, only paying income tax if you withdraw the money as income.
You cannot do this as a business that trades mainly in renting property as the corporate tax rates are higher. At least that was the advice given to my syndicate before I got out of the game.

Pussyhands

handlemaster wrote: »

For anybody interested in whats coming. The stock market crash will herald another property crash. Irish times article today says 12/24 months for stocks to crash and recession to kick in

Please!

handlemaster

Pussyhands wrote: »

handlemaster wrote: »

For anybody interested in whats coming. The stock market crash will herald another property crash. Irish times article today says 12/24 months for stocks to crash and recession to kick in

Please!

Its on their website. If I were to give the link there would be no fun

Graham

handlemaster wrote: »

Its on their website. If I were to give the link there would be no fun

Mod Note

Cop on.

cruizer101

https://www.irishtimes.com/business/personal-finance/fretting-over-late-cycle-stock-market-risk-could-cost-you-1.3568111?mode=amp
Guessing this is it

Bluefoam

handlemaster wrote: »

12/24 months for stocks to crash and recession to kick in

& if you haven't bought property by that point, you won't be able to get a mortgage due to the recession & closed banking system... Plus all the vulture funds are laying in wait for any depression of the irish housing market, so you'll still be priced out...

Pussyhands

Bluefoam wrote: »

& if you haven't bought property by that point, you won't be able to get a mortgage due to the recession & closed banking system... Plus all the vulture funds are laying in wait for any depression of the irish housing market, so you'll still be priced out...

some of us are building up substantial funds. ;-)

handlemaster

Bluefoam wrote: »

handlemaster wrote: »

12/24 months for stocks to crash and recession to kick in

& if you haven't bought property by that point, you won't be able to get a mortgage due to the recession & closed banking system... Plus all the vulture funds are laying in wait for any depression of the irish housing market, so you'll still be priced out...

True but there alot of fence sitters thinking great price drop will buy then. But access to credit and employment will be the issue

Islander13

handlemaster wrote: »

For anybody interested in whats coming. The stock market crash will herald another property crash. Irish times article today says 12/24 months for stocks to crash and recession to kick in

Remember, no one knows nothing when it comes to the markets

sightband

Islander13 wrote: »

Remember, no one knows nothing when it comes to the markets

I think that’s why it’s called a crash...the predictions are gas. Can’t recall anyone who has crashed their car saying ‘I’m heading out for a crash in 6 months’

whatever76

handlemaster wrote: »

True but there alot of fence sitters thinking great price drop will buy then. But access to credit and employment will be the issue

gotta remember your age as well in all this - if u hitting the 40's time ain't on your side and so just need to go for it if the time is right for you !!

Creamy Goodness

sightband wrote: »

I think that’s why it’s called a crash...the predictions are gas. Can’t recall anyone who has crashed their car saying ‘I’m heading out for a crash in 6 months’

As long as you keep saying there will be a crash in 6-12 months, you’re going to be right eventually.

Ray Palmer

Pussyhands wrote: »

some of us are building up substantial funds. ;-)

We heard that here before the crash. Amazingly none of the people making this claim returned and said they managed to buy a house at a really cheap price. Brought this up in another thread asking those who were going on about their investments and playing on the market worked out and came back here.

Any people I knew personally didn't manage it either. Their investments didn't bring them riches to buy a house and they couldn't get a mortgage from the bank for the properties they wanted. Others ate into their savings and investments when they lost jobs or their partner did. All still renting and 9 years left on my mortgage. Can afford to pay it off in 2 easily.

If had been just a matter of opinion I would say hard luck but most were down right aggressive about how stupid everyone was being and they were so smart. It turns out buying in a rising market isn't a bad idea but misjudging the peak and the effects of a crash is.

kala85

handlemaster wrote: »

For anybody interested in whats coming. The stock market crash will herald another property crash. Irish times article today says 12/24 months for stocks to crash and recession to kick in

Can you post a link to this please.

handlemaster

kala85 wrote: »

handlemaster wrote: »

For anybody interested in whats coming. The stock market crash will herald another property crash. Irish times article today says 12/24 months for stocks to crash and recession to kick in

Can you post a link to this please.

I think this was already done .. check thread

handlemaster

kala85 wrote: »

handlemaster wrote: »

For anybody interested in whats coming. The stock market crash will herald another property crash. Irish times article today says 12/24 months for stocks to crash and recession to kick in

Can you post a link to this please.

I think this was already done .. check thread

M.Cribben

handlemaster wrote: »

I think this was already done .. check thread

Well I'm convinced.

M.Cribben

Pussyhands wrote: »

some of us are building up substantial funds. ;-)

Even people with substantial funds wouldn't touch Irish property from 2008 - 2012. In a falling market, why would you pay 400,000 for a house when you can get it for 360,000 the following year? Or 324,000 the year after? And those are only 10% drops, I remember 15% annual drops during the recession. Like the current price rises, it happens slowly by a % every year and adds up (during the cycle duration) to 40-50% over say a 5 year period. There never has and never will be a drop of that magnitude in a single year.

Anyway all this is assuming prices will fall at all, which all the signs currently point in the opposite direction for the short- medium term future.