Property Market 2020

Villa05

Ray Palmer wrote:

No that is not what creates a bubble. It maybe the start of some bubbles but not cause and effect..

The following are contributing factors to asset price bubbles.

1 Low interest rates

2 Asset shortage: which in housing is systemically created as many barriers have been put their to restrict supply. Housing supply can be increased substantially were these barriers removed

3 Demand pull inflation: Basically demand supply imbalance bidding price up over its true worth

4 money printing: Traditionally done so that it filters its way down to the general public to increase inflation and economic activity. However this did not filter down after the last recession and instead stayed at the top and was used to drive up asset price mainly stocks, bonds and property

5 Taxation policy: allowing Reits in to buy up property without any tax on rents or capital appreciation. This policy becomes factored into the price paid for property and substantially increased price.
This means the state has foregone the the value it adds to price of property in terms of road, water/waste infrastructure, services so taxpayers are paying for services used by Reits whom drive up rents they pay. Your tax is being used to increase the profits of Foreign Reits an pension funds.

Do you think this is in the public interest?

Claw Hammer

cnocbui wrote: »

Rent is a large part of the problem in Dublin, I think. It is disproportionately high in comparison to house/apartment prices, compared with other cities in the EU.

This has made it an extremely attractive proposition for investment, given such high returns, evidenced by Vulture REITs buying over 90% of all new built apartments in Dublin last year. This sort of thing has a significant impact on supply.

With rents so high compared to the cost of mortgage repayments, there is a significant incentive for renters to purchase, but supply is limited, in part because supply has been reduced by corporations chasing the high rental returns.

The only ways rent will go down is if there is more supply or less demand. A lot of the new apartments wouldn't have been built at all but for funding by vultures.

combat14

and this is all why younger voters are starting to turn to alternative political parties in increasingly larger numbers, they have enough of high rents and property prices, eventually something will give

wassie

Ray Palmer wrote: »

When people blame the banks for it all they conveniently ignored all of this. Don't be fooled by the popular narrative about what went on. The people insisted on large mortgages while often lying. I was told how I could get more money by the estate agent and broker. I didn't do what they suggested, friends did and some got it and others didn't.

You mean the popular narrative that the banks actively encouraged reckless lending in an overheated market by incentivising staff & brokers to dish out credit on Joe Public, whom often was not financially literate enough to save their own skin.

Villa05

Ray Palmer wrote:

There is no requirement for the government to intervene. You may want them to but they don't have to and when they have it didn't help. Don't confuse your desires with what the government must do and what they will do. We have a massive undersupply of housing and there is no magic socialist solution. There also isn't public desire to do it so unlikely any major changes such as massive social housing builds.
Wait and see what happens in Coolock when they build all the housing planned. It will turn into the worst socially disadvantaged area in the country. That is with private building. Mass social housing has a proven track record of creating social disadvantaged areas. To create more is maddness that we will deal with for decades

Whether we desire Government intervention or not is irrelevant because no matter what party we put in power there will be meddling

My argument is what is in the countries best interests, not Tennant's, landlords or any other vested interest

Paying 1 billion per year in private rents plus hotel bills plus homeless hubs is easily the most expensive way of doing it therefore the least favourable solution.

There are plenty of example's around Europe of best practice in delivering housing for their people mainly Netherlands, Finland, and Austria, not exactly socialist utopias and very wealthy nations.

One of those countries has to manafacture their own land to deliver their housing so we have a significant advantage over them.

Our public sector is amongst the highest paid in Europe, I'm sure it's not beyond them to copy and paste solutions from best in class in europe to deliver sustainable affordable housing.

Even if they are unwilling we have housing associations that are experienced in not only building houses, but also communities

wassie

You're making a mockery of this forum with all your commonsense.

cnocbui

Claw Hammer wrote: »

The only ways rent will go down is if there is more supply or less demand. A lot of the new apartments wouldn't have been built at all but for funding by vultures.

The article I read on it stated that the developers did not build the apartments at the behest of the funds, but that they were approached by the funds once they were complete and took the easy option of selling the whole development, rather than piecemeal. This is not a case of funds commissioning and paying for construction from the start; they purchased them from developers once they were complete.

perfectkama

combat14 wrote: »

and this is all why younger voters are starting to turn to alternative political parties in increasingly larger numbers, they have enough of high rents and property prices, eventually something will give

The only way this can work is subsidized housing supports
costs to build or rental supply are subject to high taxation, regulations and risk

Borrowing is higher because bank cant reprocess defaulters and LL cant evict non payment renters for up to 18 month in some cases
So i guess some people must be happy probably voted the same way

JimmyVik

cnocbui wrote: »

The article I read on it stated that the developers did not build the apartments at the behest of the funds, but that they were approached by the funds once they were complete and took the easy option of selling the whole development, rather than piecemeal. This is not a case of funds commissioning and paying for construction from the start; they purchased them from developers once they were complete.

Lots of developers approaching the council and funds and flogging the lot to them in advance of building.

Ray Palmer

Shelga wrote: »

I know the banks don’t have to lend me anything. I’m not in the civil service. I’m just saying, the possibility of an exemption, but with no clarity as to how to get it, “get in early in the year to get one”, “you have to be earning more than €45k, no wait you have to be earning more than €65k, no wait you don’t have a hope in hell no matter what you do” just all adds to the frustration and stress that is the process of trying to buy a property in 2020 in Ireland.

I’m not stamping my feet, I’m just saying exemptions are just another headache.

You probably shouldn't say you work in the public service if you don't want people to think you are a civil service.

It really sounds like you are stamping your feet. They are exemptions the clue is in the name.

JimmyVik

Shelga wrote: »

I know the banks don’t have to lend me anything. I’m not in the civil service. I’m just saying, the possibility of an exemption, but with no clarity as to how to get it, “get in early in the year to get one”, “you have to be earning more than €45k, no wait you have to be earning more than €65k, no wait you don’t have a hope in hell no matter what you do” just all adds to the frustration and stress that is the process of trying to buy a property in 2020 in Ireland.

I’m not stamping my feet, I’m just saying exemptions are just another headache.

The nature of exemptions im afraid.
There is a finite number and once they are used up the only way for the banks to have more is for the numbers buying to increase, which increases prices too.

eagle eye

wassie wrote:

You mean the popular narrative that the banks actively encouraged reckless lending in an overheated market by incentivising staff & brokers to dish out credit on Joe Public, whom often was not financially literate enough to save their own skin.

I got an email from them in 2007 telling me I was pre-approved for another mortgage up to €270,000.
I had two houses at that time, one bought in 1999, the other in 2002. Lost them both in the crash.

SozBbz

eagle eye wrote: »

I got an email from them in 2007 telling me I was pre-approved for another mortgage up to €270,000.
I had two houses at that time, one bought in 1999, the other in 2002. Lost them both in the crash.

I got an email from BOI (with whom I had my current account at the time and a student credit card with a low limit) in the latter years of the boom telling me I was "underborrowed" and suggesting mortgage products.

I was still in college and had no income beyond what my parents gave me and any summer work I took on.

Ray Palmer

Villa05 wrote: »

The following are contributing factors to asset price bubbles.


Do you think this is in the public interest?

None of which are the cause just contributing factors and badly described.The way you stated point 2 is laughable. Such unbelievable bias.

You are in the camp that wants to will change into existence by exaggerating the arguments. Not sure if you are trying to convince others or yourself. There is some basis to what you are saying but certainly this is not the information to be given out as public interest. It is basically badly worded propaganda.

You claimed demand > supply caused bubbles. That remains untrue

Claw Hammer

cnocbui wrote: »

The article I read on it stated that the developers did not build the apartments at the behest of the funds, but that they were approached by the funds once they were complete and took the easy option of selling the whole development, rather than piecemeal. This is not a case of funds commissioning and paying for construction from the start; they purchased them from developers once they were complete.

The developers were approached by the funds either before building or in the early stages, whatever the developers are saying after the event. There is little attraction for a developer after building to sell to the funds. The funds offer part prepayment as the build progresses saving the developer the need for borrowing to fund construction and relieving him of the worry that there will be a market crash before the complex is complete. Spec building of apartments has almost disappeared because of financing issues. A spec builder could have had an almost complete lock quarantined because of Covid with massive interest accruing and no way of opening a showflat and getting deposits and sale in.

Hubertj

Villa05 wrote: »

The following are contributing factors to asset price bubbles.

1 Low interest rates

2 Asset shortage: which in housing is systemically created as many barriers have been put their to restrict supply. Housing supply can be increased substantially were these barriers removed

3 Demand pull inflation: Basically demand supply imbalance bidding price up over its true worth

4 money printing: Traditionally done so that it filters its way down to the general public to increase inflation and economic activity. However this did not filter down after the last recession and instead stayed at the top and was used to drive up asset price mainly stocks, bonds and property

5 Taxation policy: allowing Reits in to buy up property without any tax on rents or capital appreciation. This policy becomes factored into the price paid for property and substantially increased price.
This means the state has foregone the the value it adds to price of property in terms of road, water/waste infrastructure, services so taxpayers are paying for services used by Reits whom drive up rents they pay. Your tax is being used to increase the profits of Foreign Reits an pension funds.

Do you think this is in the public interest?

Regarding supply, where would one magic up the resources (manpower mainly) to build the required number of units (of whatever type)? You can't argue that resources could have been allocated from building offices as offices also needed to be built.
3 is true of any scarce resource, it is not just confined to property. I agree with you on 4 and 5.

Ray Palmer

Villa05 wrote: »

Whether we desire Government intervention or not is irrelevant because no matter what party we put in power there will be meddling

My argument is what is in the countries best interests, not Tennant's, landlords or any other vested interest

Paying 1 billion per year in private rents plus hotel bills plus homeless hubs is easily the most expensive way of doing it therefore the least favourable solution.

There are plenty of example's around Europe of best practice in delivering housing for their people mainly Netherlands, Finland, and Austria, not exactly socialist utopias and very wealthy nations.

One of those countries has to manafacture their own land to deliver their housing so we have a significant advantage over them.

Our public sector is amongst the highest paid in Europe, I'm sure it's not beyond them to copy and paste solutions from best in class in europe to deliver sustainable affordable housing.

Even if they are unwilling we have housing associations that are experienced in not only building houses, but also communities

Firstly the cost of providing housing by renting and hotels is not the most expensive way. Going around buying up every house for sale would be.

You pay a premium for instant housing. You also save money by not maintaining the property. As the government is exempt for rental regulations it means you get more. No white goods for social housing that have to be maintained nor heating. Of course the government do pay for these goods through emergency payments for some. Means test though so if you are on HAP and your boiler breaks down it costs you nothing. If a council tenant and you don't pass means test you pay. The money spent is paying for a service there is no alternative immediately available. You can't stop it while you build. It is not the least favourite solution.

The solutions in one country don't work in others. They have different starting points from simple existing housing stock to more complex things like social behaviour.
I don't believe the Netherlands creates land to build housing on but to farm. They are also having a bit of an issue with the rising sea levels.

It would be mad to copy and paste solutions to different problems and expect a good outcome.

Housing associations are a tiny part of the housing stock. There is a whole economy of scale issue and they are no way capable of producing enough.

Do you admit the large scale council housing of the past created areas of social disadvantage that we are still dealing with?

OwlsZat

Hubertj wrote: »

Regarding supply, where would one magic up the resources (manpower mainly) to build the required number of units (of whatever type)? You can't argue that resources could have been allocated from building offices as offices also needed to be built.
3 is true of any scarce resource, it is not just confined to property. I agree with you on 4 and 5.

We are in huge over supply of commercial property. 626 commercial properties for sale across Dublin alone. It went through a huge bubble and a soft landing there looks unlikely. The WFH and decimation of the high street spells disaster on that front.

cnocbui

Claw Hammer wrote: »

The developers were approached by the funds either before building or in the early stages, whatever the developers are saying after the event. There is little attraction for a developer after building to sell to the funds. The funds offer part prepayment as the build progresses saving the developer the need for borrowing to fund construction and relieving him of the worry that there will be a market crash before the complex is complete. Spec building of apartments has almost disappeared because of financing issues. A spec builder could have had an almost complete lock quarantined because of Covid with massive interest accruing and no way of opening a showflat and getting deposits and sale in.

Purchased, not built.

Dublin with the higher density apartment developments in the capital being predominantly purchased by the funds and Irish and international investors for use in the higher end rental market.

http://pdf.dng.ie/pdf/DNGResidentialMarketReview2019&Outlook2020.pdf

Government helping vulture funds push citizens out of homes - UN...

The United Nations has condemned Ireland for allowing multinational vulture funds to buy up vast swathes of properties and then rent them out at sky-high costs.

The international body hit out at what it called the "egregious" business practices of the giant private equity and investment firms.

It said they were scooping up low-income and affordable homes, upgrading them, and substantially raising rents - forcing tenants out of their own homes.

In the past 12 months alone, hundreds of new apartments distributed across several schemes have been acquired by institutional investors here with a view to offering them to the rental market.

https://www.independent.ie/business/personal-finance/government-helping-vulture-funds-push-citizens-out-of-homes-un-37955106.html

None of these sources state the investors commissioned, instigated or built the properties in question.

Hubertj

OwlsZat wrote: »

We are in huge over supply of commercial property. 626 commercial properties for sale across Dublin alone. It went through a huge bubble and a soft landing there looks unlikely. The WFH and decimation of the high street spells disaster on that front.

according to a survery carried out by the SCSI, nearly 60% of respondents highlighted a lack of suitably sized and located modern offices. I don't know what type of commercial properties are for sale but it looks ot me that over the last few years there was definitely a shortage of quality offices.

TheSheriff

OwlsZat wrote: »

We are in huge over supply of commercial property. 626 commercial properties for sale across Dublin alone. It went through a huge bubble and a soft landing there looks unlikely. The WFH and decimation of the high street spells disaster on that front.

Think this is over egged tbh; for many companies I would expect a hybrid WFH approach where people are in the officer x% of the week; therefore there will still be footfall.

I doubt the likes of grafton street or <insert high street name> will see tumbleweed blowing by any time soon.

JimmyVik

Hubertj wrote: »

according to a survery carried out by the SCSI, nearly 60% of respondents highlighted a lack of suitably sized and located modern offices. I don't know what type of commercial properties are for sale but it looks ot me that over the last few years there was definitely a shortage of quality offices.

Commecials are bought and sold all the time.
They building my company is in has been bought and sold twice in the 5 years.
All that you would see different is the logo over the main door into the lobby.

Villa05

Hubertj wrote:

Regarding supply, where would one magic up the resources (manpower mainly) to build the required number of units (of whatever type)? You can't argue that resources could have been allocated from building offices as offices also needed to be built. 3 is true of any scarce resource, it is not just confined to property. I agree with you on 4 and 5.

We are part of the EU, There is no shortage of labour, more a shortage of will.

Our beef industry would be non existent if it we're not for Brazilian workers.

Caution would be needed of course to prevent overheating our econonmy

PommieBast

cnocbui wrote: »

With rents so high compared to the cost of mortgage repayments, there is a significant incentive for renters to purchase, but supply is limited

When I was looking at apartments a few months ago, everyone had the same story - landlord selling up so they decided to buy rather than rent again.

OwlsZat wrote: »

We are in huge over supply of commercial property. 626 commercial properties for sale across Dublin alone.

The Debenhams store on Henry Street in itself is a huge contribution to the glut. I also suspect estimates on how much real estate would be needed by Brexit relocations was grossly overestimated.

SozBbz

TheSheriff wrote: »

Think this is over egged tbh; for many companies I would expect a hybrid WFH approach where people are in the officer x% of the week; therefore there will still be footfall.

I doubt the likes of grafton street or <insert high street name> will see tumbleweed blowing by any time soon.

Agree - my job certainly will never be 100% WFH. I always did at least one day a week from home anyway, and maybe that will become 2/3 days going forward.

I'll still probably go to Henry Street/Grafton St on the days that I do work in town. I don't need to shop 5 days a week anyway, sometimes I'd only go for a mooch if I'd nothing better to do, so in reality I'd say I'll probably buy the same amount of stuff.

I do slightly feel for small coffee shops that depend on the lunch trade from office workers. I'd say they'll be harder hit that high street retailers.

Hubertj

Villa05 wrote: »

We are part of the EU, There is no shortage of labour, more a shortage of will.

Our beef industry would be non existent if it we're not for Brazilian workers.

Caution would be needed of course to prevent overheating our econonmy

where would all of the extra required workers live with such an accomodation crisis? My understanding is that there was recruitment from Eastern Europe but still a significant shortage.
You can say there was a shortage of workers but you can't blame that on government.

Villa05

Ray Palmer wrote:

None of which are the cause just contributing factors and badly described.The way you stated point 2 is laughable. Such unbelievable bias.

No recession has one root cause, it's a collection of factors that lead to a recession. Bank lending was not the only root cause identified from the last recession.
I'm not sure what you mean, my only bias is to solve problems which the private sector have stated they can't solve on their own
It think it's quiet clear that Gov policy for the past 8 years was to restrict supply and increase demand largely because of their stake in Nama and the banks.

Somebody has to pay the price for that policy. I feel that the people least culpable for that mess are paying that price, mainly our youth.

Villa05

Ray Palmer wrote:

Firstly the cost of providing housing by renting and hotels is not the most expensive way. Going around buying up every house for sale would be.
You pay a premium for instant housing. You also save money by not maintaining the property. As the government is exempt for rental regulations it means you get more. No white goods for social housing that have to be maintained nor heating. Of course the government do pay for these goods through emergency payments for some. Means test though so if you are on HAP and your boiler breaks down it costs you nothing. If a council tenant and you don't pass means test you pay. The money spent is paying for a service there is no alternative immediately available. You can't stop it while you build. It is not the least favourite solution.

Rent levels are well ahead of the cost of a mortgage and that is in the private sector. Housing associations claim to be able to supply at a fraction of that cost using land that is idle

The housing shortage was first flagged in 2013 by Ronan Lyons I believe. At that time the Gov was the largest holder of land and property in the world

Yes finance was an issue but we could have gone to the EU and explained to them that we have a serious housing shortage and it has the potential to create another housing bubble in the future. Can you help us to alleviate it by building 5000 extra affordable houses per year. They will be self financing so can we borrow to fund it.

Land labour and capital pretty plentiful at that time. Opportunity lost. Imagine what it would have done for people at that time also

I use this example as we have an even bigger opportunity now to correct it.

I would target the housing at working people at rents significantly below market rate but sufficient to cover costs. Buying would be at replacement cost plus a small profit of say 5 %

When workers have considerably reduced rents, the will find it easier to either continue renting or save to buy a place of their own.

Simple anti social behaviour laws, where for continued breaches you loose your right to subsidised accommodation would help

Hubertj

Villa05 wrote: »

No recession has one root cause, it's a collection of factors that lead to a recession. Bank lending was not the only root cause identified from the last recession.
I'm not sure what you mean, my only bias is to solve problems which the private sector have stated they can't solve on their own
It think it's quiet clear that Gov policy for the past 8 years was to restrict supply and increase demand largely because of their stake in Nama and the banks.

Somebody has to pay the price for that policy. I feel that the people least culpable for that mess are paying that price, mainly our youth.

what about personal responsibility? Irish people love blaming everyone else and not accepting their role.

Mr Hindley

Purely anecdotal, but I was just talking to a removals company that cover the UK and Ireland and they commented on how many enquiries they'd had in the last couple of weeks from people relocating from the UK to Ireland. Reasons varying from people who'd lost their jobs and were heading home, to people who'd seen Ireland coping with the pandemic better and having fewer deaths.