Irish Property Market 2020 Part 2

beauf

Balluba wrote: »

Do you mind me asking Virginmedia what is your interest in property?
and do you think prices will go up or down for the remainder of quarter 4, 2020.
I am hoping to buy a house in Dublin myself.

You need to look at what happened last time. Then see how much happening now is similar and how much is different. Because its a mixed bag so far, some things the same some different. Some people are only looking at the bits that suit their argument. People shouldn't give their own situation, as unreasonable people will use that to dismiss any rational discussion.

If you are in a rock steady financial position, and see your one in a lifetime opportunity then I would buy. But knowing it will probable drop in price at some point. Anyone else should probably wait and see what happens.

Though life doesn't always give you opportunities when you want or need them. It usually gives them at the worst time possible. Most things end up being a compromise as a result.

Cyrus

TheSheriff wrote: »

Have to hand it to you PropQueries, you are able to turn and twist any post here to suit the concept that any minute now the housing market will collapse.

There have been absolutely zero reports of any budget incentives except HTB, nobody is waiting on these in the budget.....

Edit; conductor did this much more thoroughly above....

hi opening gambit of not having an agenda and just being interested has well and truely fallen away, i have not before seen such a concentrated effort to push an agenda.

to what end who knows, its just a bulletin board after all.

PropQueries

The_Conductor wrote: »

Whether people like it or not- there is a supplyside constraint.
The extent of the supplyside constraint is open to discussion- however, the scarcity factor is providing support to the market, come what may.

Outside of anecdotal evidence that there are supply side constraints, can you provide any trustworthy data i.e. actual numbers e.g. from the CSO or other etc. to back that up?

Geuze

The_Conductor wrote: »

Even Eoin O'Broin is on the record supporting a ramp up of building public housing units- and moving away from the current model (which pushes out FTBs and inflates prices from the sector)- I don't see how Sinn Féin would not applaud such an approach.

I don't support SF, but that lad seems sensible.

Geuze

PropQueries wrote: »

Outside of anecdotal evidence that there are supply side constraints, can you provide any trustworthy data i.e. actual numbers e.g. from the CSO or other etc. to back that up?

Supply is too low due to excessive costs:

massive land/site costs
financing costs too high
developer profit margins too high


As these costs are so high, then high selling prices are required to bring supply forward.

If these costs were cut a lot, then supply at any price would increase.

landofthetree

Geuze wrote: »

I don't support SF, but that lad seems sensible.

You will end up with a load of rough areas.

beauf

The_Conductor wrote: »

Whether people like it or not- there is a supplyside constraint.
The extent of the supplyside constraint is open to discussion- however, the scarcity factor is providing support to the market, come what may.
Some people are leaving rental units and buying- however, they are being offset by landlords selling volumes of rental units- so there is not a commensurate increase in rental units as people buy....

Market is certainly not behaving, as one might have predicted. But we've seen counter intuitive trends before. Its would be interesting to discuss them, but thats difficult. That said its difficult time for many, especially if they are buying or selling. All we can do is give them our opinion, in the hope that helps them. I do my best to stay away from the grandstanding, I find the boards ignore functionality works well to filter out the extremes, and personally I find it really helpful.

neutral guy

theballz wrote: »

Prices in Dublin will always be high.

This it is and always will be because survive in Dublin is a lot easier than in small town.

beauf

landofthetree wrote: »

You will end up with a load of rough areas.

That has been true in the past. We should look at other places if they have a model that works better.

https://www.newstatesman.com/spotlight/housing/2019/09/housing-basic-human-right-vienna-model-social-housing

We seem to take on these ideas but fall down on implementation, so they they distorted in practice here.

PropQueries

Geuze wrote: »

Supply is too low due to excessive costs:

massive land/site costs
financing costs too high
developer profit margins too high


As these costs are so high, then high selling prices are required to bring supply forward.

If these costs were cut a lot, then supply at any price would increase.

Well Cairn Homes purchased all their sites for an average of c. €32k each and most pre-2016, so site costs won't impact them significantly going forward and they won't be in the market for more sites for the foreseeable future. It's the same situation with Glenveagh and many of the investment fund/NAMA backed sites.

Financing costs also don't really impact Cairn Homes or Glenveagh significantly as most of their capital was generated through share sales. Many other developments are also funded by state backed loans from Government agencies or NAMA and not the banks, so financing costs would be resolved quite easily by the state, if they should wish to do so.

In relation to developer margins, I would say that property development is a risky business, so their relatively high margins may be justified to some extent.

Cyrus

PropQueries wrote: »

Well Cairn Homes purchased all their sites for an average of c. €32k each and most pre-2016, so site costs won't impact them significantly going forward and they won't be in the market for more sites for the foreseeable future. It's the same situation with Glenveagh and many of the investment fund/NAMA backed sites.

Financing costs also don't really impact Cairn Homes or Glenveagh significantly as most of their capital was generated through share sales. Many other developments are also funded by state backed loans from Government agencies or NAMA and not the banks, so financing costs would be resolved quite easily by the state, if they should wish to do so.

In relation to developer margins, I would say that property development is a risky business, so their relatively high margins may be justified to some extent.

what they purchased the sites for isnt relevant now, if they are building on them they will be internally valuing the site at its opportunity cost i.e. what they could sell it for instead of developing it.

IAmTheReign

PropQueries wrote: »

The recent ESRI report also referenced the same central bank report from December 2019 as the basis of a coming housing supply shortage.

However, neither the ESRI nor the REA advertorial draw much attention to the fact that the central bank report projections on future housing demand were based upon net inward migration remaining at c. 30,000 per annum between now and 2030.

That level of net inward migration is hardly likely given the current state of our hospitality and construction sectors which will most likely require less workers, or at the very least will not require many additional workers, for the foreseeable future.

Hang on, are you saying that the construction industry itself is a primary reason for the current housing shortage? That we're bringing in so many construction workers that they can't build houses fast enough to house themselves and that if there was just fewer foreigners coming in to build our houses there'd be more houses available? That makes no sense.

beauf

IAmTheReign wrote: »

... if there was just fewer foreigners coming in to build our houses there'd be more houses available? That makes no sense.

A booming economy always has housing issues. However you want slow and steady not boom and bust cycles, if the latter is inevitable, the should be flattened as much as possible by economic policy.
But not enough to stifle the economy. Achieving that is difficult, and mostly politically difficult.

PropQueries

IAmTheReign wrote: »

Hang on, are you saying that the construction industry itself is a primary reason for the current housing shortage? That we're bringing in so many construction workers that they can't build houses fast enough to house themselves and that if there was just fewer foreigners coming in to build our houses there'd be more houses available? That makes no sense.

Sort of. Construction workers need to live somewhere while building. But I believe we can all agree that the construction of new offices, hotels and student accommodation will most likely fall significantly over the next five years.

Even if residential construction picks up significantly, will there be demand for the same number of construction workers in Ireland in 2021/22/23 as in 2018/19?

Mad_maxx

limerick city appears not to have dropped at all price wise , granted it was still about 15% lower than galway pre covid 19 but id have thought it would have slipped a little

supply is chronic so that might be the one reason ?

havent been following cork ?

PropQueries

Mad_maxx wrote: »

limerick city appears not to have dropped at all price wise , granted it was still about 15% lower than galway pre covid 19 but id have thought it would have slipped a little

supply is chronic so that might be the one reason ?

havent been following cork ?

Any ideas on what the plans would be for the property owners who rented on AirBnB and to students? Will they keep them vacant for the next 12 months?

IAmTheReign

PropQueries wrote: »

Sort of. Construction workers need to live somewhere while building. But I believe we can all agree that the construction of new offices, hotels and student accommodation will most likely fall significantly over the next five years.

Even if residential construction picks up significantly, will there be demand for the same number of construction workers in Ireland in 2021/22/23 as in 2018/19?

Obviously construction workers need somewhere to live but for migrant construction workers coming in to have a net negative effect on the availability of housing they would have to be taking up more accommodation than they themselves were responsible for building. This is the part that doesn't make sense.

You're also completely ignoring the fact that the construction industry is only responsible for a small fraction of total immigration. Only about 2,000 of the 82,000 (2.5%) recent immigrants into Ireland work in construction. If you look at all industries likely to be significantly impacted by COVID - construction, retail and hospitality, they only account for about 11,000 of that 82,000 (13.5%). See figure 3.1 here So, while net migration might decrease slightly due to COVID, there's no reason to think that most of the predicted net migration won't happen.

hometruths

The_Conductor wrote: »

Whether people like it or not- there is a supplyside constraint.
The extent of the supplyside constraint is open to discussion- however, the scarcity factor is providing support to the market, come what may.
Some people are leaving rental units and buying- however, they are being offset by landlords selling volumes of rental units- so there is not a commensurate increase in rental units as people buy.

There is evidence of the supplyside being constrained by a large number of properties being left vacant. There is clear evidence that this is happening, but no clear answers as to why.

This is does not appear to be open to discussion either on here or by government.

On here, any time it comes up, there are a group of posters who dismiss the claim of high vacancies as proganda, conspiracy theories, spin etc.

And government explains the figures away by saying of course you have to consider a lot of these properties are vacant because they are active supply on market for sale or for rent and are classified as such. Perfectly normal.

But if you look at the available data it suggests that the number classified as active supply on the market for rent is 4 times higher than the true number of properties actually available.

My gripe with this is nothing to do with an agenda or a vested interest in property prices, but rather that it seems like there are potentially short term measures the government can take to make a massive positive impact on the housing crisis, but nobody is willing to even talk about it.

Graham

schmittel wrote: »

There is evidence of the supplyside being constrained by a large number of properties being left vacant. There is clear evidence that this is happening, but no clear answers as to why.

This is does not appear to be open to discussion either on here or by government.

There's a dedicated thread for Vacant Properties in Ireland

PropQueries

IAmTheReign wrote: »

Obviously construction workers need somewhere to live but for migrant construction workers coming in to have a net negative effect on the availability of housing they would have to be taking up more accommodation than they themselves were responsible for building. This is the part that doesn't make sense.

You're also completely ignoring the fact that the construction industry is only responsible for a small fraction of total immigration. Only about 2,000 of the 82,000 (2.5%) recent immigrants into Ireland work in construction. If you look at all industries likely to be significantly impacted by COVID - construction, retail and hospitality, they only account for about 11,000 of that 82,000 (13.5%). See figure 3.1 here So, while net migration might decrease slightly due to COVID, there's no reason to think that most of the predicted net migration won't happen.

Thanks for the link, but that is for the four quarters up to Q2 2016. Here's the breakdown of new residential unit completions over each of the following four years and this excludes the significant amount of office, hotel and student accommodation development also undertaken over the past 4 years:

Q2 2015 - Q1 2016: 7,826 residential units
Q2 2016 - Q1 2017: 10,672 residential units
Q2 2017 - Q1 2018: 15,056 residential units
Q2 2018 - Q1 2019: 18,730 residential units
Q2 2019 - Q1 2020: 21,848 residential units

awec

PropQueries wrote: »

He did ask "If spectacular units like that- are being withdrawn- I'd have to question what on earth is happening........."

I gave my opinion on a possible reason. What's your opinion on why sellers are withdrawing properties from the market?

I suspect that many sellers are looking at the realities of society at the moment and realising that they do not want the extra headache of trying to move house in the middle of a pandemic, particularly coming up to Christmas.

I also suspect that many sellers, if they are in any way uncertain about their future financial prospects, are going to sit tight if the house they currently live in is in any way decent.

I also suspect that in addition to the above, there are many potential sellers who now cannot sell as they have no chance of getting the new mortgage they require as one or both of them is on the government wage top up.

I imagine that the number of sellers withdrawing properties pending some additional government scheme for buyers is almost zero.

PropQueries

awec wrote: »

I suspect that many sellers are looking at the realities of society at the moment and realising that they do not want the extra headache of trying to move house in the middle of a pandemic, particularly coming up to Christmas.

I also suspect that many sellers, if they are in any way uncertain about their future financial prospects, are going to sit tight if the house they currently live in is in any way decent.

I also suspect that in addition to the above, there are many potential sellers who now cannot sell as they have no chance of getting the new mortgage they require as one or both of them is on the government wage top up.

I imagine that the number of sellers withdrawing properties pending some additional government scheme for buyers is almost zero.

Thanks. All excellent points. But each of your points also show that there would be no corresponding increase in demand as the potential sellers you mention would also be in the market for another property to live in once they sell their own property so the status quo remains in relation to the current supply/demand dynamics.

I guess the only real impact would be less commissions for estate agents?

hometruths

Graham wrote: »

There's a dedicated thread for Vacant Properties in Ireland

I wasn't posting OT, I was replying to conductor in this thread who said "Whether people like it or not- there is a supplyside constraint. The extent of the supplyside constraint is open to discussion"

For future reference, so I don't make the same mistake again, if somebody posts here about reasons for tight supply, a reply about vacancies is not relevant?

I get the logic that we have had a number of posts on the topic, but "Nothing to see here, put the tin foil hat away and quit the propaganda" does not really constitute a discussion.

awec

PropQueries wrote: »

Thanks. All excellent points. But each of your points also show that there would be no corresponding increase in demand as the potential sellers you mention would also be in the market for another property to live in once they sell their own property so the status quo remains in relation to the current supply/demand dynamics.

I guess the only real impact would be less commissions for estate agents?

Agreed, which is why prices are relatively steady, yet we are seeing a significant drop in transactions.

beauf

schmittel wrote: »

There is evidence of the supplyside being constrained by a large number of properties being left vacant. There is clear evidence that this is happening, but no clear answers as to why......

Well its not the only reason, not even the main reason.

beauf

awec wrote: »

Agreed, which is why prices are relatively steady, yet we are seeing a significant drop in transactions.

..and there is more than one reason for the drop in transactions, and that is changing over time, as the lock down ebbs and flows. It also hasn't always been downward either, even if thats the general trend.

awec

beauf wrote: »

..and there is more than one reason for the drop in transactions, and that is changing over time, as the lock down ebbs and flows. It also hasn't always been downward either, even if thats the general trend.

I predict we'll see a sharp fall in transactions for the next 3-4 months.

The combination of lockdown, Christmas and New Year is going to make house hunting unappealing.

PropQueries

awec wrote: »

I predict we'll see a sharp fall in transactions for the next 3-4 months.

The combination of lockdown, Christmas and New Year is going to make house hunting unappealing.

I would agree with you on that but most likely for different reasons. All the while new built stock and potential probate sales continue to build up silently in the background.

td2008

Yeah I wonder are many people breaking the travel restrictions to view places - would be a bit of a pain for first time buyers if the HTB grant is only valid until December but they can't view anywhere

awec

td2008 wrote: »

Yeah I wonder are many people breaking the travel restrictions to view places - would be a bit of a pain for first time buyers if the HTB grant is only valid until December but they can't view anywhere

The HTB will almost certainly be extended.