Dublin - Significant reduction in rents coming?

Sunny Disposition

https://www.boards.ie/discussion/comment/117894369#Comment_117894369

It probably has tbf, the pandemic didn't bring about a crash, but what's happening in Dublin is still fascinating. The prices are surely unsustainable at their current heights given the emergence of remote working and the fact its a huge political issue. But how long will it take?

I think it's probably impossible for rents to stay so high relative to income in the long term, but when/how will the bubble burst and what then?

Claw Hammer

https://www.boards.ie/discussion/comment/117894414#Comment_117894414

It all depends on what is done about the situation. In normal circumstances there would be developers building for the buy to let sector which would be seeking investment property in large numbers to take advantage of high rents. This is not happening and the only building is being carried out by or on behalf of institutional investors. In 2019 rents had started to soften. had the pandemic not occurred there might have been a gentle softening. The other factor is AirBnB. If tourism rebounds a key issue will be how much of the rental supply migrates to that segment of the market.

All government interventions inj the rental market since 2008 have been cack-handed. NPPR, RTB changes, ban on bedsits et. There seems to be little sign of anty changed mindset.

https://www.boards.ie/discussion/comment/117894414#Comment_117894414

It's fascinating, but it's also not unique, and by no means the worst around. Look at the entirety of West coast USA (San Francisco being the poster child for the whole thing), every European capital city, London, Bristol and other UK cities, Australia and NZ, and even here in Ireland it's not unique to Dublin.

Dublin is not going to correct in isolation to a correction in all these other global cities also (subject to local interventions). Sure, everywhere has its own nuances and differences, but the fundamental problem pervades the Western world....is not something just of Ireland's making

ghoulfinger

https://www.boards.ie/discussion/comment/117894414#Comment_117894414

Nail on head there, when will the bubble burst. Economic forecasts are notoriously precarious, if they were otherwise we would not have such great fluctuations.

Sunny Disposition

https://www.boards.ie/discussion/comment/117894530#Comment_117894530

The market is far more precarious than it may seem, because of the increase in remote working. There is an awful lot of pent up demand for sure, but living close to a workplace is far less important than it has been, and that's really the answer to the problem in Dublin. Hopefully the landing will be a bit gentler the next time.

Ray Palmer

https://www.boards.ie/discussion/comment/117894804#Comment_117894804

It always amuses me that people don't consider the population of people from Dublin wanting to live in Dublin. People with grown adults living at home have been working from home and don't want to move outside the city. They will buy in Dublin if they can thus keeping prices high. There are also a lot of people that want to live in Dublin from the rest of the country. WFH hasn't changed everything and people are in Dublin for more than work.

All the savings people have made during the lockdown will be released lots is and will go into housing and renovations. Labour is very hard to get at the moment for this reason

Many wish house prices to drop and are find theories to support this and ignoring other realities

Sunny Disposition

https://www.boards.ie/discussion/comment/117894999#Comment_117894999

Of course the majority have ties other than jobs, it'd be crazy to think otherwise. But there are thousands upon thousands who came for jobs, and their successors won't arrive in the same numbers. Also there are many who are living in the city for jobs, but would live elsewhere if work wasn't an important consideration.

Obviously the majority of the city's population aren't going to leave Dublin. But they don't have to for rents and sale prices to drop, something that is positive for most sections of society. Just not for landlords. I'd suggest inward migration to Dublin from other parts of Ireland is going to drop fairly significantly by 2030, while I would be far from surprised if 80-100,000 move out of the city by the end of the decade.

All this presents wider challenges for Dublin, but they can be dealt with. Clearly the city has become too expensive for those on average incomes and hopefully this will be reversed, it's past time for it.

Ray Palmer

https://www.boards.ie/discussion/comment/117895279#Comment_117895279

See you are starting with the hope because you think it is past due and explaining how it will happen. The dynamics changed decades ago and home ownership is not going to return to have Ireland with the highest home ownership in the world. Dublin is a very well serviced place and the rest of the country is way behind it. You can practically do anything in Dublin that can be done in the rest of the country, if not a small journey and you can. Lots of non nationals came for Dublin itself. People I know didn't want to stay in a village and don't want their kids to be stuck there either. Other people from many other countries came because they prefer Dublin to where they are from.

The general suggestion is everyone wants out of Dublin but I would say most don't and affordability is the only issue. Supply and demand kick in and prices stay high. Wouldn't pin my hopes on a mass exodus as how prices will drop. Strange how most of the people I went to college from outside Dublin actually stayed.

If prices drop in Dublin you can be sure it will be from an economic shock that will effect the entire country and Dublin will recover first as is the nature of the main income of any country.

WFH is also looking like it will be part time so you will still need to be close to work to be in semi regularly. Also means homes with office space. Where are all the people going to stay for the 2 days a week they need to be in? They going to separate from their families during this time. I think it is likely many people will realize the WFH is not great as they still need to go into the office and the bargain home with WFH commute and/or staying overnight is horrible. Then they starting moving back. Quite a few people I know bought new houses in the "outer" suburbs due to house prices and sizes etc... all moved closer because of the commute.

This all seems more likely to me than population reduction in Dublin

ghoulfinger

https://www.boards.ie/discussion/comment/117894804#Comment_117894804

This is the exact thing I am wondering about. What way the whole cookie will crumble. But the argument seems to be going that almost everybody can work from home, which is not the case, eg medical staff, hospitality, transport and an awful lot more who supply on-location services. That said, even my GP has been doing it a lot! There’s another thread on this subject, and whilst the trend is for increasing WFH, there may be some limitations arising from factors as yet unrealised.

ghoulfinger

https://www.boards.ie/profile/Ray%20Palmer

WFH is also looking like it will be part time so you will still need to be close to work to be in semi regularly. Also means homes with office space. Where are all the people going to stay for the 2 days a week they need to be in?

I suggested this might be a factor in the WFH thread, but it depends on whether or not a significant number of companies insist on implementing the hybrid model. There was talk of that on the radio recently, and how people who have settled far away from where most companies are located might factor this in. It was kind of argued on the thread that people will simply refuse to take up employment if companies insist on it, and that business concerns will be forced to accept that people are simply not prepared to ever show up in an office again.

It’s hard to forecast what will actually happen at the end of the day. If potential workers refuse to take up employment offered the companies have basically two choices. Relent or move to another country. How they respond depends on many variables.

The idea of staying overnight in Dublin part-time might defeat the purpose of moving away for economic reasons alone. Options to avoid paying a second rent for even a basic apartment could be to, eg, stay with a relative or the AirBnB market could step in here. With the latter it could still be quite costly, as cleaning is required between occupancy, even if a regular weekly booking for a suite is made for, eg, “Monday & Tuesday nights for Pat Murphy, Wednesday nights for Mary Ryan, Thursday & Friday nights for Tom O’Brien”. Then in the case of two partners working this model, they will see even less of each other which might not be the best.

Amadan Dubh

https://www.boards.ie/discussion/comment/117893928#Comment_117893928

There is a bigger picture with the economy and how the rental market inflation interacts with it. What is the impact of high rents on the economy to date and what will further impacts result in?

Rents are already so high that the quality of life in Ireland is greatly impacted; people have far less money to spend in the economy as they spend so much on rents and the looming pension crisis is going to be mega if renters cannot put enough money away to cover themselves post-retirement to death. As well, the attractiveness of companies and businesses to set up and expand is significantly hampered by high rents and this does and will require much higher wages than are currently paid to workers in order to be able to hire people.

Paying significantly more on rent than what one would pay on a mortgage is, for me, the canary in the coal mine which died sometime around 2013-2015. The narrative of the lobbyists who have had the ear of the FG government the last decade is that younger people would prefer to rent and Ireland should adopt the European rental model. That is total BS and the biggest reason in Ireland people rent is that they are forced to. A mortgage is significantly lower than renting, not due to there being so many people who don't want to buy a home, but by design from goverment policy to herd young workers into a tight, suppressed rental market in order to inflate demand for the rentals of the lobbyists and to push up house prices as a side effect which is not unwelcome to existing homeowners. Where does it end though? You can't get blood from a stone and the rents being paid is going to strangle the real economy as those paying rent will tighten their belts unless salaries climb significantly, in isolation to climbs in rents and general cost of living (which will never happen).

I honestly don't know how the current rental market situation is sustainable as it is definitely linked with our economy at this point given how much after tax cash it hoovers out of the pockets of workers and it is already and will continue to suck good money away from the productive economy into the black hole of property. For me there is scope for a large correction but if, when and specifically how it happens is unknown to me with so many vested interests involved in propping the current structure up.

Sunny Disposition

Another canary… Just perused Daft.ie, students in Dublin are paying the price of a mortgage on a family home in the west of Ireland just to rent a room! Madness. Look at the islands second biggest city, Belfast rents are much better value, that’s another warning.

Things have gone too far, there has been a political backlash with the rise of SF and they will do better again next time. Inevitably younger people are going to have to give up on Dublin.

if you’re a young fella or girl of 23-24 the city won’t offer you much if all your money is going on rent. Bars, theatres, restaurants are going to be out of reach. Remote work is going to give a lot of people a fairly simple way out of a pretty dismal situation.

A correction is a certainty, and it may be sooner and deeper than people think. I reckon it’ll be underway by 2024.

Dav010

https://www.boards.ie/discussion/comment/117897781#Comment_117897781

Belfast is a different market to Dublin in a multitude of ways, but it is worth remembering that rents rises there are the sixth highest of any region in the UK, house prices have risen 7% in one year. Google is your friend.

Sunny Disposition

https://www.boards.ie/discussion/comment/117897970#Comment_117897970

Yeah it's a different market, and that's the point, the Dublin market is at an exceptionally high point, property way more expensive than Belfast which is two hours away. I doubt many people think there isn't a bubble already, that landlords will be able to keep charging such prices in the long term?

JimmyVik

Its a catch22 at this stage.

Rent controls have done as predicted and raised rents through the roof.

So what do they do now? More legislation. And make it (It never makes it better .. ever)

Basically its been a sh!tshow (easily predicted if they had bothered to look at anywhere else where rent control made an appearance) since the first rent controls were brought in.

It kind of went like this.

You had landlords start to get out of the market.

Then you had landlords trying to get up to market rate who got locked below it.

Most who couldnt decided to sell up. A lot did.

Rents went up. Tenants who were in one with a low controlled rent did not want to move. Tying those ones up.

New rentals came on and were priced very highly (seems low now though).

People wont move out of them either. Viscous cycle.

More landlords decided to get out.

Charities etc started telling people who were being asked to leave to overhold.

Landlords wanted out more than ever.

Prices through the roof again. No investors, bar reits, entering the market. They set rent very high. why - rent controls again.

Now the council have to enter the market in a big way, both buying and renting vacant properties. Making less supply for ordinary renters.

Any landlords left are now seeing the value of their property at a point they can sell without a loss and are selling up. Why stay in when its loads of hassle, everyone is against you, you are taxed very badly, you cant sell when you decide to, without jumping through hoops for perhaps years and now you have murmurings of never being able to sell it with vacant possession.

It all started with rent controls. Will it ever end.

Mad_maxx

https://www.boards.ie/discussion/comment/117898348#Comment_117898348

The solution to the problems caused by government interference are of course more government interference

Jmc25

https://www.boards.ie/discussion/comment/117901564#Comment_117901564

Edit - I didn't mean to quote a specific post here, apologies.

It seems to be a fairly commonly held belief on this forum that without rent controls rents would be lower. Rents are rising faster in areas outside of Dublin, many of which are not designed rent pressure zones. Rents had been rising long before rent controls were introduced, and in Dublin at least, have moderated since their introduction.

Are they perfect? No. Do they sometimes unfairly target landlords who were previously decent to their tenants? Yes.

But they were/are the bare minimum the government could/can get away with. The government had to act, current RPZs are as good a deal as the government could have given landlords in the circumstances.

Mad_maxx

https://www.boards.ie/discussion/comment/117901749#Comment_117901749

Disagree , the problem is lack of supply, government interference doesn't work and all evidence points to this.

I realise for some ,government interference is seen as a moral necessity, results are ignored

It all started with rent controls. Will it ever end.

When the government said they 'would' be introducing rent controls of a maximum increase of 4%, my estate agent texted me that night to say the rent was going up by 8%. Then, when they brought in the regulation, the rent went up by another 4% - in line with the regulations.

https://www.boards.ie/profile/Jmc25

https://www.boards.ie/profile/Jmc25

Are they perfect? No. Do they sometimes unfairly target landlords who were previously decent to their tenants? Yes.

I am one of those non-greedy landlords. I let a lovely 3 bedroomed house (3 pretty equal sized double bedrooms you can walk around both sides of 2 single beds, 3 bathrooms, living room, sunroom, terrace, storage space) for € 1360 per month in west Dublin, on the Luas. Exact same houses are getting rents in excess of €1800.

I have no mortgage so it’s no big deal, I have very good tenants who even paint the place with original colour that they like. I had to reduce original rent in the downturn when main earner became unemployed. Since that he has got a degree in IT and has plenty of earning capacity, however I am restricted in how much I valued increase. Then came the pandemic, and though technically I had an opportunity to do so, in all decency I didn’t increase because I am not motivated by greed. I have enough for my needs as just want place to be respected, which it is in spades. In over 15 years they have never been late one day in payments.

However, had I a mortgage, this would not be a good situation and I would have put the full amount of pressure on simply because I would ha e actually needed to rather than wanted to.

JimmyVik

https://www.boards.ie/discussion/comment/117901907#Comment_117901907

Any landlord would have been mad to not raise it as much as possible at the time. For all they know they will never be able to raise it in the future.

So that was an unintended consequence of tenants - or was it. The government get 50% of the rises in rents :)

So you have tenants screwed, landlords screwed, and extra money in the government coffers.

No landlord can depend on anything in future. For all they know now some legislation will come in overnight to tax them 70% or not allow them to ever evict a non paying tenant.

How could anyone invest in that sort of climate. Investment needs clarity of the future.

PommieBast

https://www.boards.ie/discussion/comment/117901907#Comment_117901907

In the 3 years before RPZ I never had a rent rise. Afterwards the landlord even whinged about the agent rounding it to the nearest €10.

Rent controls fundamentally just kicked the can down the road. It only kept rents down for the few years of lag time it takes for people to exit the market, and the government wasted that breathing space.

Somebody suggested on this or another thread that if landlords were somehow incentivised to keep same tenants long term that it might be a good idea, and I would agree that this should be explored, also with rights for landlord to get rid of genuinely bad tenants without too much trouble. It’s got to be good for both parties.

In the 3 years before RPZ I never had a rent rise. Afterwards the landlord even whinged about the agent rounding it to the nearest €10.

Rent controls fundamentally just kicked the can down the road. It only kept rents down for the few years of lag time it takes for people to exit the market, and the government wasted that breathing space.

My agent didn't do any rounding. I was in hysterics when I got one of the rent increases and it was €1408.06c

Caller: We're too rich for the housing list.

Joe: Me too

Jmc25

https://www.boards.ie/discussion/comment/117903680#Comment_117903680

Yes. At the moment there's no reward for good tenants and bad behaviour from tenants is not only protected from consequence but in many cases actively rewarded.

Protecting these tenants is of benefit to absolutely nobody except them, and perhaps the state, who would of course end up becoming the landlord of last resort.