Irish Property Market 2020 Part 2

Graham

The_Conductor wrote: »

As a measure- I don't think this would generate meaningful government revenue

I think the estimates are an additional €9million over the year, a rounding error in the grand scheme of things.

Cyrus

brisan wrote: »

We will have to wait up to 6 months to see what the PPR reveals
However if a house priced at 500 k drops to 475 k after a few months on the market I think it’s safe to say it did not achieve 500k sale price.

thats still not the point. the same house may have sold for 450k a year before.

asking prices are flawed data.

The_Conductor

schmittel wrote: »

Based on those figures- even if an additional 25k in tax was applied on average to the sale price for properties of >1m- it would have a total income of 23m- which is a drop in the ocean of the tax receipts that the government *needs* to raise.

Edit:
Just saw Graham's message that this should raise 9m per annum- this is the equivalent of an additional 10k in tax on each sale (on average).
Its pure playing to the media, pure optics, little/no substance

brisan

Cyrus wrote: »

thats still not the point. the same house may have sold for 450k a year before.

asking prices are flawed data.

As I said we will have to wait 6 months for the PPR
At this present moment in time asking prices are all we can go on.

Cyrus

The_Conductor wrote: »

Based on those figures- even if an additional 25k in tax was applied on average to the sale price for properties of >1m- it would have a total income of 23m- which is a drop in the ocean of the tax receipts that the government *needs* to raise.

its the kind of manure that the left try to feed people as a solution.

brisan

timmyntc wrote: »

The majority of people to suffer in this latest "recession" were the low paid - mostly retail & hospitality workers.

Why would this lead to much of a drop in house prices at all? Many of the people who lost jobs weren't really in a position to buy anyways, and if they were it would be near the bottom of the market - a segment that's not really doing to drop any lower as plenty of average wage IT workers and so on will happily make up the shortfall in demand for those types of houses.

If people in those sectors lose their jobs you don’t think it will affect prices
Shop worker on 30 k gets laid off
Spouse/partner in secure job on 100k
Their AIP is automatically reduced by 105k
Not all shop workers marry other shop workers
Some do believe it or not marry above their station
Very elitist to assume people in certain occupations are not in the property market.

Assetbacked

The_Conductor wrote: »

Just how many homes of >€1m are sold in Ireland on an annual basis? I suspect its a very small number (I could be wrong). As a measure- I don't think this would generate meaningful government revenue- it would be a hugely populist gesture, certainly, however, other than getting plaudits in the media for taxing the wealthy- I don't see how it would that it would make much of a difference.

This is a populist measure- nothing more, nothing less.

I am totally against any new property taxes unless they go to fixing the problems rather than to allowing the situation to pervade by funneling it into the foreign-owned institutional landlords via some form of rental assistance. The problem is the money goes to the councils who are happy to just pay extortionate rents to institutional landlords which exacerbates the problem. This is what I also hate about populism; it ends up being more damaging. If the councils were severely underfunded they wouldn't have the luxury of paying €2k per month on behalf of a tenant to an institutional landlord. That's what I pay for my rent and someone else is getting a similarly priced place for nothing!

Marius34

brisan wrote: »

As I said we will have to wait 6 months for the PPR
At this present moment in time asking prices are all we can go on.

The problem that even if some adds price are falling it doesn't tell if overall asking price are falling. You need to compare trends or average prices with previous months/year to be able to tell what happens with asking prices on the market level.
I do agree that asking price on market level is at least some kind of indicator if you compare on average prices, although it's not great at all, and requires to look for number of months with significant change in price, to see some directions.
But finding some properties with reduced prices on their adds is not an indicator of anything.

The_Conductor

Assetbacked wrote: »

I am totally against any new property taxes unless they go to fixing the problems rather than to allowing the situation to pervade by funneling it into the foreign-owned institutional landlords via some form of rental assistance. The problem is the money goes to the councils who are happy to just pay extortionate rents to institutional landlords which exacerbates the problem. This is what I also hate about populism; it ends up being more damaging. If the councils were severely underfunded they wouldn't have the luxury of paying €2k per month on behalf of a tenant to an institutional landlord.

It all dates back to government policy which gave tenants significant discounts to purchase the local authority housing they were renting- without providing any compulsion on local authorities to replace the rental stock that they were divesting themselves of.

Right now- the only sane solution- is building new council estates- and running them properly- and any antisocial behaviour on the part of tenants- gets properly punished- with immediate consequences.

Local authorities should be accommodating those incapable of providing their own accommodation- not the private sector.

MacronvFrugals

Theres something about the REITs paying no tax that really gets under my skin

brisan

Marius34 wrote: »

The problem that even if some adds price are falling it doesn't tell if overall asking price are falling. You need to compare trends or average prices with previous months/year to be able to tell what happens with asking prices on the market level.
I do agree that asking price on market level is at least some kind of indicator if you compare on average prices, although it's not great at all, and requires to look for number of months with significant change in price, to see some directions.
But finding some properties with reduced prices on their adds is not an indicator of anything.

The MyHome site gives the average price drop for an area/county
I agree it’s not a great way but it’s all we can on for a snapshot of prices as they are today.
The PPR takes 6 months or more to update and not all properties are correctly listed

MacronvFrugals

Any teeth local authorities had was taken away in 2011 by Hogan and co.

Its hard to imagine there was a time when the state took an active role in building

brisan

The_Conductor wrote: »

It all dates back to government policy which gave tenants significant discounts to purchase the local authority housing they were renting- without providing any compulsion on local authorities to replace the rental stock that they were divesting themselves of.

Right now- the only sane solution- is building new council estates- and running them properly- and any antisocial behaviour on the part of tenants- gets properly punished- with immediate consequences.

Local authorities should be accommodating those incapable of providing their own accommodation- not the private sector.

Unfortunately it was the cost of maintaining and the anti social aspect that stopped councils building large scale council housing estates.
Do you think we will ever see another area the same size as Ballymun being built as social housing
With the number of people on HAP or other wage subsidies it would take a few areas the size of Ballymun to solve the problem.
Plus the cost of building a social housing scheme always came in at a much higher cost than a comparable private build

MacronvFrugals

brisan wrote: »

Unfortunately it was the cost of maintaining and the anti social aspect that stopped councils building large scale council housing estates.
Do you think we will ever see another area the same size as Ballymun being built as social housing
With the number of people on HAP or other wage subsidies it would take a few areas the size of Ballymun to solve the problem.
Plus the cost of building a social housing scheme always came in at a much higher cost than a comparable private build

Look at Hampton Wood in Ballymun, IRES own a fair share of the apartments, a lot are HAP tenants, the cost of this dead money must be huge.

Assetbacked

MacronvFrugals wrote: »

Theres something about the REITs paying no tax that really gets under my skin

It is a very high proportion of their shareholders that are not Irish-based as well so essentially they act as conduits to hoover money out of the Irish economy.

14627043

Its ridiculous that people think recessions only effect low paid workers, they effect everyone. The majority of junior counsel barristers are on the PUP, ryanair and aer lingus pilots have taken major paycuts and likely big job losses, private GP and health clinic incomes has fallen through the floor leading to assistant GP job loses. These are just a few examples of high paying jobs that have been effected that i personally know of, im sure theres many more. A recession effects everyone

Talking about a recovery while government subsidies are still propping up the entire economy is a bit ridiculous. The question is how much longer can these subsidies be paid for and what things will look like after they have been withdrawn

Marius34

brisan wrote: »

The MyHome site gives the average price drop for an area/county
I agree it’s not a great way but it’s all we can on for a snapshot of prices as they are today.
The PPR takes 6 months or more to update and not all properties are correctly listed

It gives the average change only for the existing adds which change the price, nothing to do with market asking price change.

I would think there are always more adds that has price decrease than increase, as this is absolutely normal to reduce price on particular property if it doesn't sell.

I have checked previous months, and it was always more add price decreased, than increased. If you check the change for every month, add it up and you would find that in a year since last September, asking prices are down by 50% or any other crazy number. No need to wait for another 6 months to find this out.

hometruths

Leozord wrote: »

I work in IT myself, most of my friends bought houses in the last 9 months

having many foreigners with 6-digit salary, in uncertain times, made loads of people purchase and ensure their place in Ireland

The top-bracket earners (some foreign couples working in the sector) are getting new 600k+ houses in south Dublin without much effort. It is a common thing.

Leozord wrote: »

I should have be more specific: IT sector instead of IT professionals, so internet companies, services etc are doing great. FANGS specially.

If the theory that these companies are based here because of the well educated and highly skilled workforce then your point is valid - and long may it continue.

There is another school of thought that suggests these companies are here because of our corporate tax rate, and it is a handy spot to account for the billions made in France, Germany, UK and beyond.

If this theory is true then those jobs might start to look just as vulnerable as the baristas and bar staff.

If France and Germany are being asked to bail out poorer EU neighbours in a global recession it is possible they might start to agitate a bit more about Ireland's tax arrangements.

Our cosy relationships with FANG type tech companies might be about to come under a lot of pressure from the EU. If we need a favour, either because we need Covid cash or the EU to have our Brexit backs, we might find it tough to stare the tax critics down.

And on Brexit - in less than 6 months time, the UK can do whatever they want to attract the FANG taxes and jobs. It's much more likely to be a carrot than a stick.

On top of that, most of these companies are American. Perfectly possible the US might want to a slice of some of those taxes and jobs, either by carrot or stick.

To counter the inevitable accusations of doommongery I'll reiterate that there is absolutely nothing to worry about if these companies are here for our abundant talents.

But if they are here for the tax I would not be counting on 6 digit tech workers propping up the 600k South Dublin housing market.

Apologies for bringing up global macroeconomics but it has some relevance.

JimmyVik

Marius34 wrote: »

It gives the average change only for the existing adds which change the price, nothing to do with market asking price change.

I would think there are always more adds that has price decrease than increase, as this is absolutely normal to reduce price on particular property if it doesn't sell.

You are correct.

You will rarely if ever see increases.
When properties get bid up they just get changed to sale agreed after the house is sold.
The ad will never show the sale price.

Necronomicon

Whatever about prices falling, at this stage I'd take prices not climbing. I'm not sure if this is country-wide, but Cork seems to be in something of a bubble. A tiny trickle of properties coming onto Daft, each one invariably going for 15-20k above the asking price (those that we've looked at, in any case). Getting a bit soul destroying.

PropQueries

The_Conductor wrote: »

It all dates back to government policy which gave tenants significant discounts to purchase the local authority housing they were renting- without providing any compulsion on local authorities to replace the rental stock that they were divesting themselves of.

Right now- the only sane solution- is building new council estates- and running them properly- and any antisocial behaviour on the part of tenants- gets properly punished- with immediate consequences.

Local authorities should be accommodating those incapable of providing their own accommodation- not the private sector.

I don't think they gave them significant discounts on the actual build cost. A-rated 3 bed homes today only cost between €110k - €150k to build and most council homes were so cheaply built, they couldn't have cost more than €20k to build at the time.

I understand the argument that people make about selling council homes to tenants and it's impact on the social housing rental sector, but I think if the tenants actually owned the homes from day one, it would solve most anti-social behaviour as they would all then have a stake in the community.

The only thing that stops anti-social behaviour is parents and if they're renting, why would they care about their local community? I personally wouldn't care as much as I do in my area if I was renting. Why would/should I? Once the parents pass away, the council kick their adult children out quicker than a private landlord can kick a tenant out.

It's a debate, but I think many many problems would be solved by just letting them buy their homes at initial build cost (even much cheaper than build cost) from day one and not at some made-up inflated build cost but the actual true cost of building. It would benefit all sections of Ireland and everyone would actually feel better.

The council could have easily built new council homes to replace the older ones, so I don't like the distraction of pitting one section of society against another due to the incompetence/corruption of the local authorities.

But, I understand your argument.

Here's a few interesting snippets from an article in the Irish Times about the history of social housing in Ireland:

"The Land Commission of the 1880s established a system of government loans to enable tenant farmers to buy their homes from their former landlords, and to build new homes."

"Tenants of council houses have been able to buy their homes from individual local authorities since the 1930s, and a scheme for the sale of council houses was introduced in 1973."

Link to Irish Times article here: https://www.irishtimes.com/news/social-affairs/a-century-of-housing-how-the-state-built-ireland-s-homes-1.3785939

Lolle06

brisan wrote: »

If people in those sectors lose their jobs you don’t think it will affect prices
Shop worker on 30 k gets laid off
Spouse/partner in secure job on 100k
Their AIP is automatically reduced by 105k
Not all shop workers marry other shop workers
Some do believe it or not marry above their station
Very elitist to assume people in certain occupations are not in the property market.

What exactly is „above“ a shop workers „station“? How do you know the professional, or academical background of a „shop worker“ that marries „above their station“?
I think you are the one that sounds a bit elitist here, tbh.

Leozord

schmittel wrote: »

There is another school of thought that suggests these companies are here because of our corporate tax rate, and it is a handy spot to account for the billions made in France, Germany, UK and beyond.

I think it is a mix: Here you have an english speaking country which easy tax laws (and questionable schemes like the double-irish with dutch-sandwich) and pretty straight forward immigration procedures for bringing talents from another countries, as well as a country where is among the world's highest HDIs.

Also, we must be aware that compared to US salaries, these 6-digits in Dublin are low. It is absolutely time-consuming for an American company to get a talents under H1B over - along with a high salary. In Ireland, it would be way easier.

But yeah, if I would bet what is the main reason, surely would be the tax avoidance.

Hubertj

schmittel wrote: »

If the theory that these companies are based here because of the well educated and highly skilled workforce then your point is valid - and long may it continue.

There is another school of thought that suggests these companies are here because of our corporate tax rate, and it is a handy spot to account for the billions made in France, Germany, UK and beyond.

If this theory is true then those jobs might start to look just as vulnerable as the baristas and bar staff.

If France and Germany are being asked to bail out poorer EU neighbours in a global recession it is possible they might start to agitate a bit more about Ireland's tax arrangements.

Our cosy relationships with FANG type tech companies might be about to come under a lot of pressure from the EU. If we need a favour, either because we need Covid cash or the EU to have our Brexit backs, we might find it tough to stare the tax critics down.

And on Brexit - in less than 6 months time, the UK can do whatever they want to attract the FANG taxes and jobs. It's much more likely to be a carrot than a stick.

On top of that, most of these companies are American. Perfectly possible the US might want to a slice of some of those taxes and jobs, either by carrot or stick.

To counter the inevitable accusations of doommongery I'll reiterate that there is absolutely nothing to worry about if these companies are here for our abundant talents.

But if they are here for the tax I would not be counting on 6 digit tech workers propping up the 600k South Dublin housing market.

Apologies for bringing up global macroeconomics but it has some relevance.

i would say it is a mix of skilled workers, low corporation tax rate and a long history of MNCs being in Ireland.

Regarding your other points, what use is the UK in accessing the EU?

From the US, they have a challenge with a lack of highly skilled workers is some sectors and rolling back visas by Trump. The US is more likely to try and reshore services from Asia, specifically China. The pandemic has shown up the supply chains of many MNCs with single points of failure - that won't be allowed happen again.
I don't have a clue what impact it will have on the housing market though!

brisan

Lolle06 wrote: »

What exactly is „above“ a shop workers „station“? How do you know the professional, or academical background of a „shop worker“ that marries „above their station“?
I think you are the one that sounds a bit elitist here, tbh.

I could not find the sarcastic font
If you followed the conversation you would see that the poster I replied to originally said that people in lower paid jobs were not in the property market.
I pointed out that they were invested in the property market and the effect that losing their job would have on a joint application for a mortgage
The OP was totally wrong in what they said and I sarcastically said that shop workers do often marry “above their station “ (insert sarcastic font )
Maybe if you followed the conversation instead of picking out out of context statements you would not be so quick to jump down somebody’s throat. I am the opposite of elitist

Pelezico

brisan wrote: »

I could not find the sarcastic font
If you followed the conversation you would see that the poster I replied to originally said that people in lower paid jobs were not in the property market.
I pointed out that they were invested in the property market and the effect that losing their job would have on a joint application for a mortgage
The OP was totally wrong in what they said and I sarcastically said that shop workers do often marry “above their station “ (insert sarcastic font )
Maybe if you followed the conversation instead of picking out out of context statements you would not be so quick to jump down somebody’s throat. I am the opposite of elitist

Worse than that, the OP was feeling sorry for people who does not have the home he/she has.

Now that is pretty elitist.

Assetbacked

https://www.centralbank.ie/docs/default-source/publications/financial-stability-notes/no-5-covid-19-payment-breaks-on-residential-mortgages-(gaffney-and-greaney).pdf?sfvrsn=4

The Central Bank published a financial stability note on the impact of covid19 payment breaks on residential mortgages as at 29 May, 2020 (it says it expects half to still be active as of the end of August when the data emerges). It compiled data from the five major retail breaks and sets it out in the PDF. It's not the most exciting thing to read to be honest, although maybe an observation on it is that to me it shows that the mortgage payment breaks weren't as significant as I thought in that they only occurred in around 11% of mortgages and half are expected to have ended already.

Here are some things which were interesting to me anyway;

1) The most common payment break is a full moratorium: a pause in interest payments and repayments of the balance of the loan. Some lenders extended a small share of short-term interestonly arrangements. A minority of payment breaks included partial repayments of the loan balance.

2) In total, 11.5 per cent of mortgage lending had a payment break request on file, whereas the remainder had no record of a request. The applicant approval rate was 96 per cent, leading to 11.1 per cent of total lending approved for a payment break. Just under 4 per cent of requests were cancelled or were awaiting a decision. The rejection rate was 0.3 per cent.

3) In total, 53 per cent of all payment breaks in the analysis are on mortgages originated between 2004 and 2008. The highest propensities are for loans issued in 2008 and 2009: just under 14 per cent of these loans have payment breaks. The lowest propensities are in the early 2010s, when credit standards were restrictive and lenders issued few mortgages. Around 7 per cent of loans issued in 2012 and 2013 have payment breaks. Loans issued since the introduction of the mortgage measures in 2015 are less likely than the average mortgage to be on a payment break.

4) Payment break propensity by age follows a similar pattern to maturity date and origination year. Borrowers between 50 and 60 years of age are more likely to have borrowed in the mid-2000s, and are more likely to have a payment break. Beyond age 60, borrowers are more likely to be close to mortgage maturity. There is evidence that payment breaks are more common than average among the very youngest borrowers, aged under 28. However, the sample is small, containing only one thousand mortgages, compared to tens of thousands at each year of age between 35 and 60.

5) Chart 4 shows that counties Meath and Kerry have the highest shares of mortgage payment breaks, followed by Louth and Wicklow, then Donegal and Wexford. Meath, Louth and Wicklow are Dublin commuter counties with many mid-2000s mortgages, which were shown in the previous subsection to have high rates of payment breaks. Kerry, Donegal and Wexford have large shares of employment in the “accommodation and food service” industry sector, which was strongly affected by business closures due to COVID-19.

6) Loan-to-income ratio (LTI) at origination is closely correlated with the tendency of loans to have a payment break.7 The payment break share almost doubles between LTI 2 and 4.5. The increase is particularly strong among second- and subsequent-time buyers (SSB), and slightly less among firsttime buyers (FTB). In contrast to LTI, loan-to-value ratio (LTV) at origination is not strongly associated with payment break propensity, except at the lowest and highest levels, which are sparsely populated. In particular, loans originated in negative equity are typically restructures of pre-existing distressed mortgages.

7) There is no apparent correlation of payment breaks with interest rate type or level.

8) Loans with forbearance history were more than twice as likely to have a payment break when compared to those never forborne. Most loans that received a payment break had no history of arrears or forbearance, and almost 90 per cent of loans that received a payment break
were performing in December 2019.

https://www.thejournal.ie/living-with-covid-plan-5204908-Sep2020/

"Taoiseach announces entire country is now on 'Level 2' of new Covid plan

People are being advised to work from home where possible across the country. The plan explains:

If you can work from home, you are advised to only attend work for essential on-site meetings, inductions and training"

It doesn't look like our city centres are going back to normal while we are at level 2 .......... that would suggest limited folk on public transport etc to continue and city centre businesses that depend on office workers etc to continue to struggle.

Commerical property rents are going to be a struggle for many to pay ........... to me it seems the Level 2 stage doesn't do much to stimulate the economy.

Cyrus

Augeo wrote: »

https://www.thejournal.ie/living-with-covid-plan-5204908-Sep2020/

"Taoiseach announces entire country is now on 'Level 2' of new Covid plan

People are being advised to work from home where possible across the country. The plan explains:

If you can work from home, you are advised to only attend work for essential on-site meetings, inductions and training"

It doesn't look like our city centres are going back to normal while we are at level 2 .......... that would suggest limited folk on public transport etc to continue and city centre businesses that depend on office workers etc to continue to struggle.

Commerical property rents are going to be a struggle for many to pay ........... to me it seems the Level 2 stage doesn't do much to stimulate the economy.

yep i called that one wrong, no change, even level 1 still says wfh if you can,

city centre is fooked

Assetbacked

Augeo wrote: »

https://www.thejournal.ie/living-with-covid-plan-5204908-Sep2020/

"Taoiseach announces entire country is now on 'Level 2' of new Covid plan

People are being advised to work from home where possible across the country. The plan explains:

If you can work from home, you are advised to only attend work for essential on-site meetings, inductions and training"

It doesn't look like our city centres are going back to normal while we are at level 2 .......... that would suggest limited folk on public transport etc to continue and city centre businesses that depend on office workers etc to continue to struggle.

Commerical property rents are going to be a struggle for many to pay ........... to me it seems the Level 2 stage doesn't do much to stimulate the economy.

The really worrying aspects are that (1) Level 1 is hardly a full business-as-usual and (2) this is a 6-9 month state of affairs. Very worrying.