Property Market 2019

The_Conductor

fliball123 wrote: »

that is a point a lot of people think they are only competing with Ann the nusre and bill the guard for houses but Ireland current rental yields are huge its no wonder the vultures are swooping as it is an attractive prospect.

The institutional investors are swooping in- because they can structure their holdings in such a manner that they do not create a taxable income in Ireland. Irish small investors- on the otherhand- even now, pay up to 54% tax on their 'unearned income' (the umbrella under which rental income falls).

I would suggest that a fairer way of dealing with rental income is a flatrate deduction for all landlords- of perhaps 25% of the gross rental income- and *no* allowable deductions whatsoever- anything that has to be funded or paid for- comes out of the remaining 75% (including management charges etc). The 'vultures' as you call them- are structuring their holdings to be loss making even in the current climate (aka a REIT just last week bought 800 units in cash that they raised with a coupon value of 12.5%- and large management charges- so the international investors get a decent return, the property managers get a decent return, the tenant gets a decent service- and the Irish taxpayer gets screwed..........

The biggest issue I have with allowable deductions for landlords- is how the costs associated with debt are allowable- I firmly do not believe debt should ever be an allowable cost- and even venerable publications such as 'The Economist' agree with me- however, until such time as there is a multinational approach to bring everyone onto the same hymnsheet- its not plausible for any one country to do a solo run on this.

SozBbz

fliball123 wrote: »

Either way it furthers the gap (as in these are not available for sale) between the supply vs. demand paradigm that will push prices up in the long run. This is the fundamental point that no one talking about a price drop can dispute, this gap is there and regardless of brexit prices will over time continue to rise.

Not necessarily.

Yes thats the case if they've bought something that was in turn key condition and ready to be let/sold, but in many cased they bought up half finished estates and blocks of apartments that otherwise may have remained uncomplete for god knows how long.

Theres also plenty of examples of them building from scratch, purely with rental income in mind. These are units that don't distort the sales market, because they wouldnt exist otherwise. These companies are finance/property management/service type companies, they're not by nature property developers.

I'd only love some fund to come in and take over that monstrossity for a shell thats been neglected for over a decade in Sandyford. Let them rent it at whatever rate they like, because its not helping anyone lying idle.

This was proposed 2 years ago yet still nothing.
https://www.irishtimes.com/news/environment/abandoned-sandyford-eyesore-to-be-turned-into-offices-with-beds-1.3269036

beauf

fliball123 wrote: »

Either way it furthers the gap (as in these are not available for sale) between the supply vs. demand paradigm that will push prices up in the long run. This is the fundamental point that no one talking about a price drop can dispute, this gap is there and regardless of brexit prices will over time continue to rise.

Within that is another story.

Supply is increasing both rental and housing. When people talk about of shortage, they mean available to buy and rent. Not the total number of rental and housing in units occupied and not occupied.

The demand is the population increasing, out stripping supply.

https://www.irishexaminer.com/breakingnews/ireland/irish-population-rises-by-64500-bringing-it-to-almost-5m-946672.html

https://www.thejournal.ie/irelands-population-rise-to-4-9-million-4784098-Aug2019/

Only if the supply increases dramatically, (unlikely) or demand (population) decreases dramatically are things likely to change. Its possible for economic events could cause this.

Samuel T. Cogley

beauf wrote: »

The big funds are very concentrated in small areas. because they are the areas with the highest rent. Even if they are only a small % of the market.

https://www.irishtimes.com/news/environment/potential-price-setting-power-of-institutional-landlords-flagged-1.3794427

I suspect they are distorting the rental yields.



https://www.thejournal.ie/cost-of-renting-in-ireland-4485911-Feb2019/

Everyone is trying (and encouraged) to live in Dublin.

It's important to note that those were asked for rents rather than averages of current rents. So you're absolutely right about a distortion of the market.

Cyrus

pearcider wrote: »

People forget the entire financial system was bailed out in 2008. Numbers are hard to come by but it’s cost at least 10 trillion to the ECB. Not sure how much of that has gone to Ireland but Ireland debt is now over 200 billion. It was 40 billion before the crash. Global debt is now approaching 300 trillion. It was under 200 trillion in 2008. So the entire bubble has been “reflated” by the central banks and by extension the taxpayer. If you think this has a happy ending, I admire your confidence.

Didnt make a redbrick in ranelagh worthless in 2012 though , what is your point exactly ?

Regarding a happy ending again I'm not sure what you mean , I needed a family home for my family and bought one two years ago, at a price I could afford , the idea of hanging around for an impending implosion of the market wasn't really on my agenda

fliball123

The_Conductor wrote: »

The *net* cost after our bailout of the banking system (and predominantly from the Anglo mess but also keep ILP, INS and others in mind) is 40 billion with an annual cost of servicing this debt of 1.4 billion (this is according to the September 2017 C&AG Report on the cost of the banking bailout).

The rest of the 200 billion was a result of no major cuts in social welfare (including pensions) disbursements during the downturn- and other expenditure which could theoretically have been offput to later, but wasn't.

Benchmarking- which was quite contentious back in 2008- was not a feature in the 200 billion- as the public sector took large paycuts (of an average of 24%) alongside increases in hours and massive revisions to future pension rights etc. I don't think anyone is seriously blaming benchmarking for anything anymore- recent reports show comparable employees earning signficantly more in the private sector than in the public sector- and there are massive staff recruitment and retention problems in many public sectors areas (including in admin/jnr management areas, ironically enough).

Our national debt of 200 billion- is one of the highest per head of population in the world- however, it exists predominantly because of a conscious decision that was taken not to cut social welfare and pension disbursements (which in 2018 amounted to over 20 billion- and thats *after* we were stated to be in full employment conditions...............) If things get bad again- and appropriate cuts aren't made- we're screwed.

Really so you think that paying above the norm for ps wages for the decade preceding the bust and during the bust and after the bust and borrowing to do so had nothing to do with our debt?? REALLY not only is ps pay one of the biggest factors (if not the biggest with regard to the debt) and benchmarking was a stunt pulled by bertie to buy votes and butter up to the unions they had no basis for it and when asked what it was based on the actual accounting of it all documentation had been destroyed it also had the knock on effect to the ps pensions both for existing and future ps pensions which unlike private sector pensions during the downturn went up in value where as the private sector nose dived.

fliball123

SozBbz wrote: »

Not necessarily.

Yes thats the case if they've bought something that was in turn key condition and ready to be let/sold, but in many cased they bought up half finished estates and blocks of apartments that otherwise may have remained uncomplete for god knows how long.

Theres also plenty of examples of them building from scratch, purely with rental income in mind. These are units that don't distort the sales market, because they wouldnt exist otherwise. These companies are finance/property management/service type companies, they're not by nature property developers.

I'd only love some fund to come in and take over that monstrossity for a shell thats been neglected for over a decade in Sandyford. Let them rent it at whatever rate they like, because its not helping anyone lying idle.

This was proposed 2 years ago yet still nothing.
https://www.irishtimes.com/news/environment/abandoned-sandyford-eyesore-to-be-turned-into-offices-with-beds-1.3269036

Well it is still a factor if it is not finished to put into the stock of property available for the public then it is taking away from the supply. I agree with you on your last point totally

fliball123

beauf wrote: »

Within that is another story.

Supply is increasing both rental and housing. When people talk about of shortage, they mean available to buy and rent. Not the total number of rental and housing in units occupied and not occupied.

The demand is the population increasing, out stripping supply.

https://www.irishexaminer.com/breakingnews/ireland/irish-population-rises-by-64500-bringing-it-to-almost-5m-946672.html

https://www.thejournal.ie/irelands-population-rise-to-4-9-million-4784098-Aug2019/

Only if the supply increases dramatically, (unlikely) or demand (population) decreases dramatically are things likely to change. Its possible for economic events could cause this.

True there has been a baby boom in Ireland for at least 2 decades and people are living longer as well as net emigration into Ireland over the last number of years..All playing its part in supply vs demand

kippy

fliball123 wrote: »

Really so you think that paying above the norm for ps wages for the decade preceding the bust and during the bust and after the bust and borrowing to do so had nothing to do with our debt?? REALLY not only is ps pay one of the biggest factors (if not the biggest with regard to the debt) and benchmarking was a stunt pulled by bertie to buy votes and butter up to the unions they had no basis for it and when asked what it was based on the actual accounting of it all documentation had been destroyed it also had the knock on effect to the ps pensions both for existing and future ps pensions which unlike private sector pensions during the downturn went up in value where as the private sector nose dived.

Ah yes, the public sector wage bill. The root cause of all of our problems, including homelessness and rising rental and property prices.
Change the record.

fliball123

kippy wrote: »

Ah yes, the public sector wage bill. The root cause of all of our problems, including homelessness and rising rental and property prices.
Change the record.

No not the root cause but the biggest factor with regard to the country's debt and it can be traced. Never said it had anything to do with property or homelessness

kippy

fliball123 wrote: »

No not the root cause but the biggest factor with regard to the country's debt and it can be traced. Never said it had anything to do with property or homelessness

Surely you can blame the narrow tax base, the lower corpo tax(totally out of line with our EU neighbours) and a multidue of other factors for our debt also?
But look it, isn't it easier blame the public service wage bill.

fliball123

kippy wrote: »

Surely you can blame the narrow tax base, the lower corpo tax(totally out of line with our EU neighbours) and a multidue of other factors for our debt also?
But look it, isn't it easier blame the public service wage bill.

There is a correlation to what was paid in wage to ps pay and penions and how much had to be borrowed to pay it regardless of how much tax was taken in or how narrow or wide a tax base, was it not the job of government to spend it better. There was the stamp duty problem when that tax started garnering very little back in the bust but Bertie over spent and over committed via benchmarking (twice) and borrowed billions to keep himself in government. So there is blame there to bertie and the ps unions. I dont blame anyone in the ps for taking their wage, its not like they were in control of it.

The_Conductor

Ok guys- back on-topic, if you want to discuss the public sector wage bill, its a topic for elsewhere.

shenanagans

https://open.spotify.com/episode/2lsX9HwFsqZ9IOPQq946gF?si=hSvL35I5SLCNxliX7FuBQQ

Episode from David Mcwilliams free podcast. Topic is International property cycles..... Skip first 12 minutes unless your interested in Greek mythology. Talks about Irish Market too. Might be interesting to anyone watching market at present or thinking about buying in future.

99problems1

People saying not every recession is like 2008. They are right. We don't have the same scope for reducing interest rates to revive the economy as we did back then.

For such a great financial crash and systematic breakdown, we sure recovered mighty quick!

You would wonder whether the majority of the pain was put temporarily on hold.

OwlsZat

You're dead right. You'd have to imagine the Global Debt crisis will catch up sooner or later.

Not a huge amount has changed since 2008. Some limited Government reform, and the bailing out of the banks toxic loan sheet by the tax payer.

Be grand they say, which it will be until it isn't.

Luckycharms_74

shenanagans wrote: »

https://open.spotify.com/episode/2lsX9HwFsqZ9IOPQq946gF?si=hSvL35I5SLCNxliX7FuBQQ

Episode from David Mcwilliams free podcast. Topic is International property cycles..... Skip first 12 minutes unless your interested in Greek mythology. Talks about Irish Market too. Might be interesting to anyone watching market at present or thinking about buying in future.

Thanks for that.

OwlsZat wrote: »

You're dead right. You'd have to imagine the Global Debt crisis will catch up sooner or later.

Not a huge amount has changed since 2008. Some limited Government reform, and the bailing out of the banks toxic loan sheet by the tax payer.

Be grand they say, which it will be until it isn't.

I would guess the main difference is we are not living on credit like many were back then ?

99problems1

Luckycharms_74 wrote: »

Thanks for that.







I would guess the main difference is we are not living on credit like many were back then ?

We (the country) are.

Our debt is massive.

I wonder will debts ever be paid off or what's the point of them if they don't?

Topgear on Dave

Luckycharms_74 wrote: »

I would guess the main difference is we are not living on credit like many were back then ?

Back then the government were taking in huge revenue from construction activity.

I think this past few years they took in very large amounts from a relatively small number of multinationals and FDI.

All our eggs may be in one basket yet again.

99problems1

Topgear on Dave wrote: »

Back then the government were taking in huge revenue from construction activity.

I think this past few years they took in very large amounts from a relatively small number of multinationals and FDI.

All our eggs may be in one basket yet again.

All our eggs may be in one basket yet again.

There is no "may be" about it. They are. A change in EU tax law could rightly do us.

Mickiemcfist

99problems1 wrote: »

There is no "may be" about it. They are. A change in EU tax law could rightly do us.

My take on it would be that most of the companies who are here 'specifically' for tax reasons, don't hire that many staff, i.e. Beats based in Cork. However the Microsofts, Facebooks, Amazons, Googles etc. have got large operations here & won't pull out even if our tax rate gets increased to the European average. In which case the shortfall left by companies leaving will hopefully be made up for by the near doubling of tax rates of the others.

The other way it could happen would be if tax on Revenues have to be paid in the juristiction they're earned (i.e German revenue in Germany, French Revenue in France) which would hit us, but it would take so long to implement we'd know it was coming for a long while & there's be Transfer pricing loopholes etc. found fairly quick. If not, at least we'd have notice.

OwlsZat

Luckycharms_74 wrote: »

Thanks for that.
I would guess the main difference is we are not living on credit like many were back then ?

Individuals over borrowed from the Banks. Tax payers bailed out the banks. The debts are now owed by us the tax payers to the IMF. In a period of economic expansion and austerity we have so far paid back zero. To date we have covered the interest payments, during in a time of economic expansion and near zero interest rates. The writing is firmly on the wall for what will happen here. Germany is in recession the UK isn't fair behind them.

Back on track to Irish property. Our output is underwhelming. Construction sector wages are overly inflated as are building costs in general. Under supply appears to be supporting current prices. It feels precarious but if nothing else changes then who's to say how long it can continue.

L1011

99problems1 wrote: »

We (the country) are.

Our debt is massive.

I wonder will debts ever be paid off or what's the point of them if they don't?

The hope was that we'd have a significant period of slightly above average inflation making them deflate away in value.

Which hasn't happened. Nor is likely to!

Noonan even made comments about then when restructuring on to longer term bonds.

Luckycharms_74

OwlsZat wrote: »

Individuals over borrowed from the Banks. Tax payers bailed out the banks. The debts are now owed by us the tax payers to the IMF. In a period of economic expansion and austerity we have so far paid back zero. To date we have covered the interest payments, during in a time of economic expansion and near zero interest rates. The writing is firmly on the wall for what will happen here. Germany is in recession the UK isn't fair behind them.

Back on track to Irish property. Our output is underwhelming. Construction sector wages are overly inflated as are building costs in general. Under supply appears to be supporting current prices. It feels precarious but if nothing else changes then who's to say how long it can continue.

Yeah I have been watching the reports coming from the daft quarterly reports and on the fence whether to sell my investment property of not.

Background:

2 bed terraced house Waterford City (3 min walk to City centre)

Bought 2003 - €157k less €30k deposit = €127k mortgage

Crash then in 2009-2011 saw me in negative equity but as it was rented out didnt hurt too much.

I got it valued in 2013 and was worth around €50k . I got it revalued last summer when re-letting the property and it was valued around €95k

There is a balance on mortgage of roughly €75k.

Property in my area increasing average year on year over the past 4 years of about 12%. I know this can't sustain

Thoughts / opinions would be most welcome

Mickiemcfist

You'd probably need to give a bit more detail, is it commercial property? Location etc.

Luckycharms_74

Mickiemcfist wrote: »

You'd probably need to give a bit more detail, is it commercial property? Location etc.

Sorry . I edited it above

Samuel T. Cogley

Luckycharms_74 wrote: »

I would guess the main difference is we are not living on credit like many were back then ?

Three little letters: PCP

Mad_maxx

Samuel T. Cogley wrote: »

Luckycharms_74 wrote: »

I would guess the main difference is we are not living on credit like many were back then ?

Three little letters: PCP

Minimal effect, irish banks not exposed for the most part

beauf

Despite the decline in debt levels, compared to other EU countries, Irish households are still relatively highly indebted, the Central Bank said. The Republic now ranks fourth in terms of debt to disposable income; the most indebted country is Denmark.

https://www.irishtimes.com/business/economy/irish-household-debt-falls-but-levels-still-high-compared-to-eu-neighbours-1.3785558
https://www.irishtimes.com/business/economy/fall-in-irish-household-debt-ratio-flatters-to-deceive-1.3928491
https://www.independent.ie/business/irish/household-debt-shrinks-to-2003-levels-but-economic-risk-remains-37931046.html

pearcider

Mad_maxx wrote: »

Minimal effect, irish banks not exposed for the most part

If 2008 showed us anything it’s that every bank is exposed in a credit crunch since the entire system is connected. Once Bear Sterns went down, Lehman wasn’t far behind, then AIG was next. This prompted the 780 billion dollar bailout in October 2008 as by Hank Paulsons own admission this would have caused the systematic collapse of all banks worldwide within days. Alistair Darling made similar comments in his book on the bailout of RBS in October 2008 where he stated that most ATMs in the UK would have been emptied in 2 hours.