Irish Property Market 2020 Part 2

Graham

PropQueries wrote: »

Worth a read as you appear to believe all those Celtic Tiger interest-only buy-to-let mortgages are all fine

Read the title of the article:

Day of reckoning looms......... in 2017
:rolleyes:

PropQueries

Timing belt wrote: »

If they have been on interest only they have made money on renting the properties. If they were relying on it as a pension then unfortunately it didn’t work out the same as a lot of people that put money into a pension only to find that the March crash wiped 50% of its value.

I am not surprised that you expected rent to drop that would be inline with your thinking that house prices are going to crash and everyone will move to Leitrim to WFH. The glass is never half full

You're assuming the initial rent freeze (2014) and the rent pressure zone legislation (2016) doesn't apply to most of these buy-to-let landlords? Those high rents you see advertised are captured by a relatively small percentage of the buy-to-let market in Dublin.

Timing belt

PropQueries wrote: »

You're assuming the initial rent freeze (2014) and the rent pressure zone legislation (2016) doesn't apply to most of these buy-to-let landlords? Those high rents you see advertised apply to a relatively small percentage of the buy-to-let market in Dublin.

Even with that they will have made money as they were only paying interest.

PommieBast

Ursabear wrote: »

Prime Dublin residential rents down 12% https://www.businessworld.ie/property-news/Prime-Dublin-residential-rents-down-12-since-March-574715.html

Not out of line with what is/was being discussed over in Dublin - Significant reduction in rents coming?

fliball123

Timing belt wrote: »

Even with that they will have made money as they were only paying interest.

They can also write off all interest on a mortgage now. This was not always the case it was 80% for a good few years and it crept up to 100% which is the case now. So they would of made money in the years to now. So the title of your is from 2017 how many of these properties have been forced into selling in the last 3 years?? Oh wait you don't do actual up to date figures, you do conjecture, doom and gloom and base most of your ideas on numbers from 3/4 years ago.

PropQueries

Timing belt wrote: »

Even with that they will have made money as they were only paying interest.

Ok, say they purchased their buy-to-let for c. €500,000 in 2006. Paying 1% interest. They receive rent of c. €1,500 per month and that would be at the high end for many landlords. After tax and paying interest, how much play money have they left?

Will all that savings make much of a dent in their €500,000 mortgage?

fliball123

PropQueries wrote: »

Ok, say they purchased their buy-to-let for c. €500,000 in 2006. Paying 1% interest. They receive rent of c. €1,500 per month and that would be at the high end for many landlords. After tax and paying interest, how much play money have they left?

Will all that savings make much of a dent in their €500,000 mortgage?

OK even at that low level of rent 1.5k a month for a 500k property which seems fairly low not sure where your getting this is at the high end. So 1% works out at 5k a year so 14 years of 5k is 70k and 1.5k a month over 14 years is 252k. Now you could write a substantial amount of that 70k of interest off on tax at least 80%. So 56k you will not pay tax on, so take away. So tax paid (assuming your already on the top rate of interest) will be on about 200k odd (rounding it up) you will lose about half of this on tax. So the person would of made (give or take) 100k or so .. and that is with a low rent of 1.5k on a 500k property. So if they sold up or in your words were frogmarched into the bank and told to sell and sell now even if they got 450k for the property (giving a 12.5% haircut on the original price) adding that to their 100k loan income they still made 50k odd profit. Now there are caveats like breakage, washing machine breaking, painting, etc. But you also have the huge increases in rent from 2013 onwards.

The questions I have for you are
Why would the bank force you to sell.

Why do you think a 500k property is only getting 1.5k a month.

Hubertj

PropQueries wrote: »

Ok, say they purchased their buy-to-let for c. €500,000 in 2006. Paying 1% interest. They receive rent of c. €1,500 per month and that would be at the high end for many landlords. After tax and paying interest, how much play money have they left?

Will all that savings make much of a dent in their €500,000 mortgage?

only an idiot would think mortgage holders wouldn't have been forward planning for when the interest only period expires.

Even if they run into arrears, according to some of your genius theories, the government could purchase at market value and use for direct provision. 2 objectives achieved by government.

waste of time reading some of the nonsense the last few pages.

Marius34

PropQueries wrote: »

Ok, say they purchased their buy-to-let for c. €500,000 in 2006. Paying 1% interest. They receive rent of c. €1,500 per month and that would be at the high end for many landlords. After tax and paying interest, how much play money have they left?

Will all that savings make much of a dent in their €500,000 mortgage?

You would need at least 10% deposit (normally more) if it's Buy-to-Let, even in 2006. The 100% mortgage was mostly for FTB buyers

Browney7

fliball123 wrote: »

Not very educated why would the bank force someone to sell at a loss when the mortgage has been interest only meaning the bank are still owed the full amount, what you suggest would mean the banks would also have to take a loss. where are you getting a 50% loss in rent over 2 years. They are going down now currently as we have no tourists , no students, no immigration inwards, in 2 years time I would hazard a guess that all three of these will be back along with the influx of foreigners coming to live in the only English speaking country in the EU. So there is only a snowball's chance in hell that rents will be down 50% in 2 years time. Corona will not be impacting us as severely in 2 years time as it is now.

Your guessing at how the borrower is fixed, you don't know if they can or cannot repay the interest + principal. Interest can be written off in tax so if they are getting current or even the current rent minus say 3/4% to allow for further rent reductions they may well be able to pay .. See everyone can make a scenario that suits their point of view. Your scenarios here always seem to have outrageous and unfounded figures for things like 50% drops in rent. Try being a bit more rational

The banks don't want to take ownership of assets and go through foreclosure processes and they have little to no appetite to sit on non performing loans and tie up capital against these loans (plus banks models for future expected defaults on a portfolio are based on their observed experience over time). Buy to let's also don't have the press toxicity of making some "poor cratur doing their best" homeless.

They focus on a macro level - a bank may have 1 billion of BTL loans secured on property worth 1 billion but due to capital regimes and prescribed rules they have to hold further capital on top of this to cover expected defaults on the portfolio which could be better deployed elsewhere. That's why they fire out these portfolios out the back door at a haircut. If the initial period of interest only has ended and the capital repayment portion has kicked in, if the borrower is in arrears, this moves to a default state triggering even more hassle and provisions for the bank.

I expect the number and amount of loans given out on an interest only basis in the mid 2000's on an interest only basis which are hitting their capital repayment period to be low at the same time.

It's not inconceivable that some property in Dublin is still trading at levels well below boom time prices (I know of 2 bed apartments in Dublin 15 that would have sold for mid to high 400s in the mid 2000s only getting low 300s at present and the gross rental on these is approx 1800 p.m. at present but would have been far lower in 2010-2014 for example).

Graham

Mod Note

Discussion of land costs split into a new thread

Smiley11

I think its safe to say that the market is utterly unpredictable for the foreseeable future. We're chain free buyers & the market in Cork City is chronically bad in my humble opinion. A few high end properties coming on, a few nice 3 bed semis in desirable areas. Seems to be a lot of former rentals being marketed but none of the above appeal to us to be honest. We're dying to buy a house & have a good upsizing budget but the supply is awful.

If I was selling, I'd be laughing & would probably get a bit more than we did this time last year. We don't know when we're going to find a house & worse, we may have an awful bidding war as seems to be standard these days. Spoke to my friend today who is a manager in one of the "big" banks & she said they're very busy with mortgage applications...same lady told me in March that we'd do very well out of all this as the banks wouldn't be lending. Again, utterly unpredictable. I wish prices would drop but I just don't see it happening any time soon.

PropQueries

Grafton Street landlord cuts high street property values by 26%

"One of the main landlords on Dublin’s Grafton Street, the capital’s premier shopping street, has slashed the value of its high street properties by 26 per cent over the first nine months of the year, as Covid-19 decimated retail trading in the city centre."

Link to Irish Times here: https://www.irishtimes.com/business/commercial-property/grafton-street-landlord-cuts-high-street-property-values-by-26-1.4393537

Graham

Mod Note

General discussion of FTBers moved to a new thread.

Smouse156

House prices surge as Covid upends economics
https://www.independent.ie/business/personal-finance/property-mortgages/house-prices-surge-as-covid-upends-economics-39679973.html

More property pumping from the IO & David Chancer. Trying to spin global rises into rising prices here. Desperately don’t want prices to fall as the last line highlights “ Sadly for us, the global nature of capital markets means contagion will spread here in the event of a crash elsewhere.”

Graham

PropQueries wrote: »

"One of the main landlords on Dublin’s Grafton Street, the capital’s premier shopping street, has slashed the value of its high street properties by 26 per cent over the first nine months of the year, as Covid-19 decimated retail trading in the city centre."

That's hardly surprising given the very immediate impact of the pandemic on retail. Retail/leisure were always going to bear the brunt of the loss in trade given that's it's not easy for the sector to switch to a WFH model.

When the pandemic is eventually behind us, I'd expect valuations to bounce back.

PropQueries

Graham wrote: »

That's hardly surprising given the very immediate impact of the pandemic on retail. Retail/leisure were always going to bear the brunt of the loss in trade given that's it's not easy for the sector to switch to a WFH model.

When the pandemic is eventually behind us, I'd expect valuations to bounce back.

Retail commercial space is primarily valued on footfall. The only way these valuations can 'bounce back' is if, post-Covid, all pre-covid office workers return to working 9 to 5 five days a week back at the office. Otherwise, footfall is down permanently and by extension, retail property values are down permanently.

Graham

PropQueries wrote: »

Retail commercial space is primarily valued on footfall. The only way these valuations can 'bounce back' is if, post-Covid, all pre-covid office workers return to working 9 to 5 five days a week back at the office. Otherwise, footfall is down permanently and by extension, retail property values are down permanently.

While that's true, I've no doubt footfall will return to premium retail areas like Grafton Street but that's probably a discussion for another thread.

PropQueries

Graham wrote: »

While that's true, I've no doubt footfall will return to premium retail areas like Grafton Street but that's probably a discussion for another thread.

It's only 'prime' because of footfall e.g. office workers from the southside/northside travelling through Grafton Street to get to the other side. Less footfall, less potential customers, less sales, rents drop, property values drop. These are all businesses and sales are all that matters.

I'm also sure the new idea will be to make the area a 'recreational zone' or something similar with more restaurants etc. They tried that in the big shopping centres in the UK and all that happened was that there were more food outlets competing for the same limited number of visitors and sales of all existing food outlets went down.

PropQueries

Dublin City Council seeks to use Docklands tower block for social housing

"A 15-storey privately developed apartment block in Dublin’s south docklands could be used exclusively for social housing if permission is granted by An Bord Pleanála.

The council’s head of housing, Brendan Kenny, said any agreement with the developers would be pursued only if planning permission was granted and would also be subject to negotiations on price. However, he said the council would be “very, very interested” in acquiring the entire block.

We would get a lot of criticism over the scarcity of social housing in Dublin 4, so to have an opportunity like this, we would be very, very interested, if the place gets planning permission, if it gets built, and if the price is right.”

Given all this social housing being leased or purchased in Dublin 4, Dermot Desmond wasn't too far off for calling them 'Ballymun Towers South Dublin'.

Full story in Irish Times today: https://www.irishtimes.com/news/social-affairs/dublin-city-council-seeks-to-use-docklands-tower-block-for-social-housing-1.4393441

nerrad01

PropQueries wrote: »

Dublin City Council seeks to use Docklands tower block for social housing

"A 15-storey privately developed apartment block in Dublin’s south docklands could be used exclusively for social housing if permission is granted by An Bord Pleanála.

The council’s head of housing, Brendan Kenny, said any agreement with the developers would be pursued only if planning permission was granted and would also be subject to negotiations on price. However, he said the council would be “very, very interested” in acquiring the entire block.

We would get a lot of criticism over the scarcity of social housing in Dublin 4, so to have an opportunity like this, we would be very, very interested, if the place gets planning permission, if it gets built, and if the price is right.”

Given all this social housing being leased or purchased in Dublin 4, Dermot Desmond wasn't too far off for calling them 'Ballymun Towers South Dublin'.

Full story in Irish Times today: https://www.irishtimes.com/news/social-affairs/dublin-city-council-seeks-to-use-docklands-tower-block-for-social-housing-1.4393441

do they ever get it right!? the whole purpose of having a social housing requirement in new developments was to integrate people not create a bloody social housing tower!

PropQueries

nerrad01 wrote: »

do they ever get it right!? the whole purpose of having a social housing requirement in new developments was to integrate people not create a bloody social housing tower!

They are getting it right. It's basically the start of a back-door bailout for all those empty 'luxury' apartment blocks developers have being building over the past 3 years which they couldn't rent or sell.

It's like the carbon taxes. Dressed up as 'protecting the environment' while in reality, it's just a back-door tax increase on poor people to keep the Government coffers full.

fliball123

PropQueries wrote: »

They are getting it right. It's basically the start of a back-door bailout for all those empty 'luxury' apartment blocks developers have being building over the past 3 years which they couldn't rent or sell.

It's like the carbon taxes. Dressed up as 'protecting the environment' while in reality, it's just a back-door tax increase on poor people to keep the Government coffers full.

How do the government make out of this?

KennisWhale

Smouse156 wrote: »

House prices surge as Covid upends economics
https://www.independent.ie/business/personal-finance/property-mortgages/house-prices-surge-as-covid-upends-economics-39679973.html

More property pumping from the IO & David Chancer. Trying to spin global rises into rising prices here. Desperately don’t want prices to fall as the last line highlights “ Sadly for us, the global nature of capital markets means contagion will spread here in the event of a crash elsewhere.”

The famous line, "this time it's different". I love the optimism, he should replace Tony Holohan as CMO.

PropQueries

<SNIP>

PropQueries

PropQueries wrote: »

<SNIP>

What's a 'link dump'? For future reference

Graham

Mod Note

folks if you're going to link to an article/tweet/video, there's an expectation that it's relevant and that you include your opinion/connection to the discussion.

Specifically for this thread, that should be at least loosely how the linked item is connected to the Irish Property Market 2020.

nerrad01

seems to be an increase in the number of properties being listed, my daft/ my home notifications have definitely increased significantly over the last few days. I wonder is there an increased appetite to get places sold before xmas

fliball123

nerrad01 wrote: »

seems to be an increase in the number of properties being listed, my daft/ my home notifications have definitely increased significantly over the last few days. I wonder is there an increased appetite to get places sold before xmas

I don't know where you are seeing that if you look at the myhome.ie homepage available properties 16414 yesterday there was 50 more available so it is actually going down on a daily basis. Maybe the area you have set up for your notifications have had a few properties up for sale but its not typical of the rest of the country

I've a pretty broad range for my filter on daft.ie and there have been 2 new properties listed since the 23rd of October, if anything I've noticed things dry up