Increase in population renting... ticking time bomb?

An_Toirpin

Graces7 wrote: »

The_Conductor wrote: »

+100
However- all of that land and/or property- is rightfully the property of the communities in which such land or property is located- and in a lot of cases serves multiple functions and purposes. Look at all the schools and their attached lands that are vested in orders- if you sell off the land (as has happened)- all of a sudden the playing pitches the school imagines are 'theirs' suddenly have planning permission for houses- and the kids have no where to play.

Yes- it is ridiculous that the religious orders have not paid what they owe (which arguably should be the entire bill for their past misdeeds- and not the token gesture that was agreed- which they haven't even paid). However- if they did-  
and it massively impacted on the locals- it would be entirely counter productive.
     
It suited the state to use the church as a substitute to social welfare- and it suited the church to assume the role and impose its beliefs and whatever rules it  deemed fit, on those on whom it deemed worthy to 'assist'. This was a historical arrangement- that should have been tackled at the founding of the state- rather than regularised- and the fact that it wasn't addressed- means decades later the impact of that decision is coming home to roost.

We need funds to assist with some of the coming needs of our impending retirees- and while the religious orders could doubtlessly provide some of those funds and/or resources- their means, substantial though they doubtless are- are a drop of the ocean of what is necessary- and we have to ensure than if we insist on following through- that there is not a law of unintended consequence in our current actions.

I think you underestimate the funds and saleable assets the orders hold.  And complicate the issues far too much .This invalidating real assets

And the number of fine empty convents...

The Indo reported this month that those orders have paid 96% of what they committed to pay. There really isnt many fine empty convents still in the original hands. There are quite a few in developers etc hands but not original hands. Mostly the abuse concerned teaching orders and one would hope the Gov wouldn't try to thief working schools to house the homeless.

The Student

tom1ie wrote: »

I know of one builder who is drip feeding houses to the market at a rate of 50 a year from the one site even though he could go ahead and build more houses quicker, but he doesn’t want to saturate the market with houses and constrict house price growth in that area.

Assuming this is the case it is hardly indicative of the whole construction industry. I suspect it is a relatively small project of maybe one or two hundred properties. I doubt its in the thousands otherwise it would take years to develop them all.

If you believe it is I think we are going into conspiracy theories territory now.

The Student

Arthur Daley wrote: »

Or in some cases your customers vote with their feet and leave. Especially when they are transient in their 20s/early 30s and renting for the rest of their life might be your plan, but they get aspirational and it is not in their plans. Or there is a very substantial political and cultural change for Ireland where people accept they are renting for life, but renters are so fed up that security of tenure etc has to improve.

But then that's why the thread refers to a ticking time bomb I guess.

If we had a proper functioning rental market then renting for life would not be an issue (it happens in continental Europe) although this too is changing for retirees. I know in Ireland the rental market is not fit for purpose because of the constant interference by the State.

Accommodation is becoming an issue for Europe and perhaps we need to revisit our mentality on all sides. Maybe a house for life will not be achievable for some people. Perhaps this is the new way we have to think and accept.

Graces7

An_Toirpin wrote: »

The Indo reported this month that those orders have paid 96% of what they committed to pay. There really isnt many fine empty convents still in the original hands. There are quite a few in developers etc hands but not original hands. Mostly the abuse concerned teaching orders and one would hope the Gov wouldn't try to thief working schools to house the homeless.

The Indo is incorrect.

So sadly is much of what you write but that is fine too as not up to you or I what gets done . We are from different sources.

tom1ie

The Student wrote: »

Assuming this is the case it is hardly indicative of the whole construction industry. I suspect it is a relatively small project of maybe one or two hundred properties. I doubt its in the thousands otherwise it would take years to develop them all.

If you believe it is I think we are going into conspiracy theories territory now.

Lol! There are plenty of builders doing this. There are plenty of landowners hanging onto landbanks in the hope that prices continue to rise. You say I’d be going into conspiracy theories suggesting that someone who provides a product restricts the flow of said product to increase its value. Really?
I’d call you nieve in the extreme to be honest.

Graces7

The Student wrote: »

If we had a proper functioning rental market then renting for life would not be an issue (it happens in continental Europe) although this too is changing for retirees. I know in Ireland the rental market is not fit for purpose because of the constant interference by the State.

Accommodation is becoming an issue for Europe and perhaps we need to revisit our mentality on all sides. Maybe a house for life will not be achievable for some people. Perhaps this is the new way we have to think and accept.

It is more the rental market's reaction/response to measures taken by the govt to rectify issues ..

Graham

tom1ie wrote: »

I know of one builder who is drip feeding houses to the market at a rate of 50 a year from the one site even though he could go ahead and build more houses quicker, but he doesn’t want to saturate the market with houses and constrict house price growth in that area.

Must be a fairly small town/village if a single builder is able to assert any control at all over market prices.

My guess is most builders are 'drip feeding' housing stock for the simple reason they're unable to raise sufficient financing or get sufficient labour to complete hundreds of houses in one go. To my mind, that's much more likely than developers deluding themselves that they're able to control prices in anything other than a tiny geographical area.

tom1ie

Graham wrote: »

Must be a fairly small town/village if a single builder is able to assert any control at all over market prices.

My guess is most builders are 'drip feeding' housing stock for the simple reason they're unable to raise sufficient financing or get sufficient labour to complete hundreds of houses in one go. To my mind, that's much more likely than developers deluding themselves that they're able to control prices in anything other than a tiny geographical area.

So it would be outrageous to think that developers communicate with each other? Or that one developer might see what another developer is doing to achieve a higher sale price to him and thus follow that plan. Would you ever cop yourself on!
These are the same builders who had a part to play in bankrupting the state! Why do you think they would put people ahead of profit?

The Student

tom1ie wrote: »

Lol! There are plenty of builders doing this. There are plenty of landowners hanging onto landbanks in the hope that prices continue to rise. You say I’d be going into conspiracy theories suggesting that someone who provides a product restricts the flow of said product to increase its value. Really?
I’d call you nieve in the extreme to be honest.

So all (majority of) builders are doing this. The cost of building will go up as they can't enjoy economies of scale to build a lot of house's and drip feed them when they want.

Effectively you are suggesting that the construction industry is acting in almost complete unison.

If you are right then they are in for a big shock if prices don't increase. So while all this is happening people still don't have somewhere to live!

So a firm who can earn supernormal profits (those over just normal profits) will intentionally restrict supply in the belief prices will continue to rise. Have we not been here before?

Do you honestly think the developers can time the market? They did not the last time and nobody did nor can! I still here the "soft landing" claims.

tom1ie

The Student wrote: »

So all (majority of) builders are doing this. The cost of building will go up as they can't enjoy economies of scale to build a lot of house's and drip feed them when they want.

Effectively you are suggesting that the construction industry is acting in almost complete unison.

If you are right then they are in for a big shock if prices don't increase. So while all this is happening people still don't have somewhere to live!

So a firm who can earn supernormal profits (those over just normal profits) will intentionally restrict supply in the belief prices will continue to rise. Have we not been here before?

Do you honestly think the developers can time the market? They did not the last time and nobody did nor can! I still here the "soft landing" claims.

Well I guess we’ll just wait and see but I work with the construction industry and I can tell you it’s definitely going on. People are still getting mortgages to buy these houses but the mortgages they are taking on are massive debts. What’s going to happen when interest rates rise?
Even a 1% rate hike on 400k is the guts of €220extra a month!
There’s not many new houses in Dublin going for much less than 400k at the minute.
Considering the lowest var rate available at the moment is 2.75 and not so long ago 4% was the norm, I’d say we are heading for another problem.

tom1ie

tom1ie wrote: »

..............
Even a 1% rate hike on 400k is the guts of €220extra a month!
There’s not many new houses in Dublin going for much less than 400k at the minute.
Considering the lowest var rate available at the moment is 2.75 and not so long ago 4% was the norm, I’d say we are heading for another problem.

To borrow €350k you'd need an income of €90k ish.
That's €52k per annum after tax after contributing €9k to a pension.

There's plenty room for belt tightening if interest rates rise.

Lose the income and there's a problem.

How many folk buying €400k Dublin homes will likely be out of work? Who knows.

The Student

tom1ie wrote: »

Well I guess we’ll just wait and see but I work with the construction industry and I can tell you it’s definitely going on. People are still getting mortgages to buy these houses but the mortgages they are taking on are massive debts. What’s going to happen when interest rates rise?
Even a 1% rate hike on 400k is the guts of €220extra a month!
There’s not many new houses in Dublin going for much less than 400k at the minute.
Considering the lowest var rate available at the moment is 2.75 and not so long ago 4% was the norm, I’d say we are heading for another problem.

Well then people must therefore live with the consequences of their actions. As the old saying goes "a fool and his money are easily parted" so if people take on debts having seen what happened in the past then they must live with the outcome.

if they don't think they are getting value for money then don't buy!

tom1ie

Augeo wrote: »

To borrow €350k you'd need an income of €90k ish.
That's €52k per annum after tax after contributing €9k to a pension.

There's plenty room for belt tightening if interest rates rise.

Lose the income and there's a problem.

How many folk buying €400k Dublin homes will likely be out of work? Who knows.

Honestly I don’t know but relying on plenty of belt tightening space for when the inevitable happens in a couple of years or sooner isn’t a great plan.

tom1ie

The Student wrote: »

Well then people must therefore live with the consequences of their actions. As the old saying goes "a fool and his money are easily parted" so if people take on debts having seen what happened in the past then they must live with the outcome.

if they don't think they are getting value for money then don't buy!

But your not seeing the big picture. Think about it. People can’t afford to pay back bank. Bank has large hole in balance sheet. Bank contacts finance minister over said hole. Finance minister says oh no not again! Finance minister raises taxes for EVERYONE to plug said hole.
So you see, blaming people for there own stupidity is pointless, we will all get screwed because of that stupidity.
The only way is to reduce debt in the first place by building cheaper houses via affordable housing (not social)

The Student

tom1ie wrote: »

But your not seeing the big picture. Think about it. People can’t afford to pay back bank. Bank has large hole in balance sheet. Bank contacts finance minister over said hole. Finance minister says oh no not again! Finance minister raises taxes for EVERYONE to plug said hole.
So you see, blaming people for there own stupidity is pointless, we will all get screwed because of that stupidity.
The only way is to reduce debt in the first place by building cheaper houses via affordable housing (not social)

These people are not being forced to buy. If they think the property is over priced then buy somewhere else. If people did not buy then prices would not rise to unaffordable levels.

The banks won't need to be bailed out again as we have closer regulation by Europe and the IMF. We can't regulate ourselves that is a given.

People have to take responsibility for their own actions. The bondholders should have been burned after the last boom and bust cycle but they were not. Was it the right decision is for another thread but why can't people deal with the consequences of their own decisions if you can't afford the property or you think its over priced then don't buy.

tom1ie

tom1ie wrote: »

Honestly I don’t know but relying on plenty of belt tightening space for when the inevitable happens in a couple of years or sooner isn’t a great plan.

Loans are stress tested with interest rate rises in mind.

ELM327

tom1ie wrote: »

But your not seeing the big picture. Think about it. People can’t afford to pay back bank. Bank has large hole in balance sheet. Bank contacts finance minister over said hole. Finance minister says oh no not again! Finance minister raises taxes for EVERYONE to plug said hole.
So you see, blaming people for there own stupidity is pointless, we will all get screwed because of that stupidity.
The only way is to reduce debt in the first place by building cheaper houses via affordable housing (not social)

Instead of that, how about
=> bank repossess the asset which is held as security
=> bank sells asset
=> bank makes no loss

tom1ie

tom1ie wrote: »

...........we will all get screwed because of that stupidity.
The only way is to reduce debt in the first place by building cheaper houses via affordable housing (not social)

Who do you reckon has to build all this affordable housing?
Will a single person on €90k qualify for it? A couple of €90k combined?

ELM327

Augeo wrote: »

Who do you reckon has to build all this affordable housing?
Will a single person on €90k qualify for it? A couple of €90k combined?

+1, and who pays for the difference between "affordable" and "market rate".

Idbatterim

I was just thinking that with the ever increasing amount of people renting... What are these people going to do when they retire? You would need a great pension pot to continue renting at current rates which is sadly beyond many.

Is this now a ticking time bomb? I mean unless government provides social housing for this specific need it seems we are sleep walking into a disaster.

Thoughts?

we always have old people playing the poor mouth, cash poor, asset rich. Why not do a sale and leaseback arrangement, with the state or bank, penion funds etc?

seamus

Topgear on Dave wrote: »

I'd totally believe they would try it, what part of the country is it in?

He could also be remembering a few years ago when lots of builders got stuck with unsold houses and got totally f*cked with them.

It's probably a little from column A and a little from column B.

Banks aren't as flaithulach with development loans as they have been in the past - they're not just going to greenlight 300 houses and release funding as they go. Banks want developers to break it up into small chunks. The developer then has to sell a certain number of those houses before the bank will release the first tranche of funding, then he can't move onto the next chunk of houses until the first are nearly complete and most of them are sold.

You can see this in new builds, where each phase is between 5 and 20 units, not 30 or 50 like they were ten years ago.

This considerably slows down the rate of construction, but protects the banks from the farce of 2009 where developers had loans in the hundreds of millions of euro set against a field of half-built houses that nobody wanted to buy.

tom1ie

ELM327 wrote: »

Instead of that, how about
=> bank repossess the asset which is held as security
=> bank sells asset
=> bank makes no loss

Ah come on now. You know repossession is almost impossible in Ireland. That’s why we pay higher interest rates.

tom1ie

Augeo wrote: »

Who do you reckon has to build all this affordable housing?
Will a single person on €90k qualify for it? A couple of €90k combined?

That all has to be trashed out, but taking on debts of 400k is unsustainable.

tom1ie

ELM327 wrote: »

+1, and who pays for the difference between "affordable" and "market rate".

The difference is the cost of 0% vat applied to affordable housing, and the land transferred from Nama to the council at no cost.

tom1ie

tom1ie wrote: »

That all has to be trashed out, but taking on debts of 400k is unsustainable.

Not if you have an income of €90k and a €50k deposit

tom1ie

Augeo wrote: »

Not if you have an income of €90k and a €50k deposit

And what about the vast majority that don’t?

tom1ie

tom1ie wrote: »

And what about the vast majority that don’t?

Then they don't take on the debt, your point on thus occasion was taking on 400k debts isn't sustainable.

You seem to be shifting the goalposts now back to the prices in Dublin being high. Different point.

ELM327

tom1ie wrote: »

Ah come on now. You know repossession is almost impossible in Ireland. That’s why we pay higher interest rates.

That has been the attitude up to now but it's nonsensical really.
I pay interest to cover the fact that my neighbour can stop paying anything with no consequence? Ridiculous.

tom1ie wrote: »

The difference is the cost of 0% vat applied to affordable housing, and the land transferred from Nama to the council at no cost.

So who pays.
If the developer has 20 houses and needs to set them at 400k to make a profit margin of 20%
Say then he has to include 5 affordable houses at 250k/
The deficit of (5*150k) needs to be spread amongst the remaining 15 houses.


So instead of 20 400k houses you have 5 250k houses and 15 450k houses. In that scenario, the buyer that buys the normal houses subsidises their neighbor. I don't support that.


Additionally, any land transferred from Nama to the state will move it from off balance sheet to on balance sheet debt and as such reduce our capability to borrow as per EU GDP ratios. Again, it's not as simple as "just giving the nama property to deh council, joe"

ELM327

tom1ie wrote: »

And what about the vast majority that don’t?

They should move to somewhere they can afford to live.
We (myself and my partner) have a combined income in that region but didnt have the 58k deposit saved. More like half that.
And it wasnt our first property as I had some investment properties before that, and she had bought and sold a house with her ex husband.

So we cut our cloth accordingly and moved to Meath.

The Student

ELM327 wrote: »

They should move to somewhere they can afford to live.
We (myself and my partner) have a combined income in that region but didnt have the 58k deposit saved. More like half that.
And it wasnt our first property as I had some investment properties before that, and she had bought and sold a house with her ex husband.

So we cut our cloth accordingly and moved to Meath.

Exactly I fully agree with you on this. People seem to think they are somewhat entitled!