Irish Property Market 2020 Part 2

Browney7

Browney7 wrote: »

Yup its all gearing up for the state to become the renter of last resort for these blocks. Its genius from the REITs really - put up the apartments for 2200 a month and get no takers, then approach the council and offer to give a "discount" to 85% of the "market" rent that wasn't being achieved in the first place and secure a 20 year state guaranteed cashflow with upward only reviews.

The council/state spins it is deploying significant funds to alleviate the housing crisis and getting a deal versus the market rent despite it being a woeful waste of taxpayers money in the long run compared to direct ownership. It will be just like the Realis deal in Dundrum all over again

Not surprising to see this in the Sunday business post

“ New figures released as part of a parliamentary question asked by Cian O’Callaghan, the Social Democrats TD, has shown that Dún Laoghaire-Rathdown County Council spent more than €2,300 a month per unit to lease social homes from private owners.

The rent being paid per unit is significantly above the rent levels in the Dún Laoghaire-Rathdown area. According to the latest Residential Tenancies Board report, the standardised average rent in the area was €1,800 a month.”

https://www.businesspost.ie/residential/state-pays-2300-a-month-for-social-housing-units-dc3c0910

Hubertj

Browney7 wrote: »

Yup its all gearing up for the state to become the renter of last resort for these blocks. Its genius from the REITs really - put up the apartments for 2200 a month and get no takers, then approach the council and offer to give a "discount" to 85% of the "market" rent that wasn't being achieved in the first place and secure a 20 year state guaranteed cashflow with upward only reviews.

The council/state spins it is deploying significant funds to alleviate the housing crisis and getting a deal versus the market rent despite it being a woeful waste of taxpayers money in the long run compared to direct ownership. It will be just like the Realis deal in Dundrum all over again

Do we know if the state has break clauses in the contracts, price reviews linked to market rate etc? Surely not locked in for term?
Short to medium term what choice do they have? Even if government decided to build 20k social houses how long would it take to deliver? 3,4,5 years or more. Walked themselves into a sh*tshow.

Browney7

Marius34 wrote: »

Update 1
Another 2.6K properties has been added in the past 2 weeks on PPR. And the signs for Q4 haven't changed. More confidence in likely increase in property price.

Dublin:



Ireland(ex-Dublin):

The index may or may not increase - the median increasing doesn't necessarily mean that the index goes up. The latest figures from the BPFI show that new build purchases have made up the highest %s of mortgage drawdowns since 2010 (think it was near 40%).

New build price inflation has outpaced second hand (as per the CSO) this year due to a range of factors (help to buy changes, building standard changes, Covid costs etc) so when the CSO apply their standardisations, the index may not increase.

Median is strong though so an increase looks likely

Browney7

Hubertj wrote: »

Do we know if the state has break clauses in the contracts, price reviews linked to market rate etc? Surely not locked in for term?
Short to medium term what choice do they have? Even if government decided to build 20k social houses how long would it take to deliver? 3,4,5 years or more. Walked themselves into a sh*tshow.

https://www.dublininquirer.com/2019/08/07/council-signs-agreement-to-lease-social-housing-from-bartra - it's an interesting read albeit a year old. The lack of disclosure on the rent to be paid doesn't inspire confidence.

What's also interesting is that Bartra received funding from Activate Capital (From their website "Founded in 2015 in partnership with the Irish sovereign development fund (ISIF)") which is backed by the strategic Ireland investment fund which is owned by Joe taxpayer.

So one arm of the state helped fund construction of a project to then be leased back to a different arm of the state....interesting concept for delivering housing

Marius34

Browney7 wrote: »

The index may or may not increase - the median increasing doesn't necessarily mean that the index goes up. The latest figures from the BPFI show that new build purchases have made up the highest %s of mortgage drawdowns since 2010 (think it was near 40%).

New build price inflation has outpaced second hand (as per the CSO) this year due to a range of factors (help to buy changes, building standard changes, Covid costs etc) so when the CSO apply their standardisations, the index may not increase.

Median is strong though so an increase looks likely

I know what you mean, CSO index is not a Median price indicator. But due to major Median price increase since beginning of Q4 2020, I highly believe this will reflect on CSO index.

The share of new build sales, is around 17%-20% of total sales, for the last few years, there are no major change this year.

Browney7

Marius34 wrote: »

I know what you mean, CSO index is not a Median price indicator. But due to major Median price increase since beginning of Q4 2020, I highly believe this will reflect on CSO index.

The share of new build sales, is around 17%-20% of total sales, for the last few years, there are no major change this year.

https://www.bpfi.ie/publications/bpfi-mortgage-drawdowns/ as I said - the BPFI are noting that new build mortgage sales are making up a very large portion of drawdowns in the latest quarter so could partially explain the observed jump in the median

Villa05

cisk wrote:

“ New figures released as part of a parliamentary question asked by Cian O’Callaghan, the Social Democrats TD, has shown that Dún Laoghaire-Rathdown County Council spent more than €2,300 a month per unit to lease social homes from private owners.

The Irish Times article last week had DLR self build units by the council priced at 205,000
8 years payback on building there own units based on rents quoted.

JimmyVik

PropQueries wrote: »

In the same paper, Greystar in apparently putting in a €180 million bid for the 385 units Cairn Homes is building at Griffith Avenue in Marino.

In relation to the Stillorgan purchase, it looks like their buying the 25 remaining apartments that Ires Reit don't own in that development.

Looks like both Greystar and Ires Reit are gearing themselves up to take some or more of that long-term lease agreement money the councils have been splashing around lately.

Link to the Greystar bid for the Griffith Avenue units in the Irish Times is here: https://www.irishtimes.com/business/commercial-property/greystar-in-180m-bid-for-griffith-avenue-apartment-portfolio-1.4418085

I know of one apartment complex in swords where a REIT have contacted all owners and offered to buy them all. Once they get a whole block or near enough they go ahead with the purchase. One block already has been closed as it was all landlords who owned the properties in that block and they wanted out. They got a 10% premium on the prices.

Ive a friend with one apartment in that block thats already sold and an apartment in another block where the negotiations are ongoing.
I assume this will be going on in other places.
Huge profit in rentals when you dont have to pay tax.

Marius34

Browney7 wrote: »

https://www.bpfi.ie/publications/bpfi-mortgage-drawdowns/ as I said - the BPFI are noting that new build mortgage sales are making up a very large portion of drawdowns in the latest quarter so could partially explain the observed jump in the median

ok that's right, but in this case median price increase is not due to the new build larger portion. Price increase seen similarly for both, new builds and second hand homes.
As well the BPFI report is from 2020 Q3, as you can see median price did not increase in Q3.

Cyrus

Another optimistically priced house, just down the road clonlost house, a full retrofitted circa 5,000 sq foot, A3 rated period house with a semblance of a garden and sea views from all of the front rooms sold for €2.2m 3 years ago, prices at this level have probably gone down 3-5% id guess.

https://www.irishtimes.com/life-and-style/homes-and-property/new-to-market/dalkey-period-home-updated-for-21st-century-living-for-2-4m-1.3051684

How in gods name do they expect to get close to 2m for this house when they have used all of the ground to do another development and its nearly 2000 sq feet smaller?

https://www.myhome.ie/residential/brochure/mount-prospect-killiney-hill-road-killiney-co-dublin-a96-v09h/4468912

It might be somewhat interesting at say 1.5m where you trade the lack of space for the style of house. But itll never get 2m. Has been for sale for quite some time on and off.

Smouse156

Cyrus wrote: »

Another optimistically priced house, just down the road clonlost house, a full retrofitted circa 5,000 sq foot, A3 rated period house with a semblance of a garden and sea views from all of the front rooms sold for €2.2m 3 years ago, prices at this level have probably gone down 3-5% id guess.

https://www.irishtimes.com/life-and-style/homes-and-property/new-to-market/dalkey-period-home-updated-for-21st-century-living-for-2-4m-1.3051684

How in gods name do they expect to get close to 2m for this house when they have used all of the ground to do another development and its nearly 2000 sq feet smaller?

https://www.myhome.ie/residential/brochure/mount-prospect-killiney-hill-road-killiney-co-dublin-a96-v09h/4468912

It might be somewhat interesting at say 1.5m where you trade the lack of space for the style of house. But itll never get 2m. Has been for sale for quite some time on and off.

Houses in this price bracket are nearly always overpriced and usually sell for below asking. I suspect they know this and are going high with asking to get offers above the 2m mark. Be interesting to see what it sells for

Qwerty2018

Going to hold off until next year to start applying for my mortgage.
Would need a mortgage exemption as I am looking to purchase a house for around 250,000.
I am a single teacher currently on 45,000 per year with a deposit saved of 50,000.
Was told here before that I had little chance with the current situation. Would this be anymore likely next year?

tigger123

Qwerty2018 wrote: »

Going to hold off until next year to start applying for my mortgage.
Would need a mortgage exemption as I am looking to purchase a house for around 250,000.
I am a single teacher currently on 45,000 per year with a deposit saved of 50,000.
Was told here before that I had little chance with the current situation. Would this be anymore likely next year?

Little chance of what happening with the current situation? The mortgage exception, or the mortgage approval?

woejus

Cyrus wrote: »

How in gods name do they expect to get close to 2m for this house when they have used all of the ground to do another development and its nearly 2000 sq feet smaller?

Madness. Considering the current owner made about €5.5m off the 4 houses. They had it up for €1.95m in 2015. It always seems dark, it's kind of in the middle of nowhere, no view (plenty of nearby properties with cracking views), boxed in on all sides by either roads, lanes or other gaffs.


https://www.independent.ie/life/home-garden/homes/on-the-market-in-killiney-five-bedroom-dublin-home-can-be-yours-for-135m-34220548.html

Qwerty2018

tigger123 wrote: »

Little chance of what happening with the current situation? The mortgage exception, or the mortgage approval?

Getting an exemption for over 3.5 times my salary

Cyrus

woejus wrote: »

Madness. Considering the current owner made about €5.5m off the 4 houses. They had it up for €1.95m in 2015. It always seems dark, it's kind of in the middle of nowhere, no view (plenty of nearby properties with cracking views), boxed in on all sides by either roads, lanes or other gaffs.


https://www.independent.ie/life/home-garden/homes/on-the-market-in-killiney-five-bedroom-dublin-home-can-be-yours-for-135m-34220548.html

yeah i run past it a lot, its a nice looking house, but as you say youd feel very boxed in, the site is a mismatch to the property, hence the price needs serious trimming.

brisan

Qwerty2018 wrote: »

Getting an exemption for over 3.5 times my salary

Never say never but exemptions are rare
Check with a broker and see what he says
January is normally a good month to get an exemption if they are being given out

Villa05

JimmyVik wrote:

I know of one apartment complex in swords where a REIT have contacted all owners and offered to buy them all. Once they get a whole block or near enough they go ahead with the purchase.

Huge profit in rentals when you dont have to pay tax.

It looks like we are taking the most expensive option to "solve/exacerbate" the housing issue. Of course buying existing stock does not help the issue it just makes it more difficult for those paying for their own housing

This must be what the government means when they say they are pro business.
Take taxpayers money and hand it over to business on incredibly poor value for money terms for the tax payer and the business pays no tax on their profits. These same business are one of the greatest beneficiaries of public infrastructure investment in transport and housing ancillary services

It seems lunacy when Europe is poking Governments to spend 0% money to stimulate growth and the government is operating in this manner

It is sickening to see a government use a homelessness problem as a conduit to enrich the already wealthy

Surely thi is economic treason

Hubertj

Villa05 wrote: »

It looks like we are taking the most expensive option to "solve/exacerbate" the housing issue. Of course buying existing stock does not help the issue it just makes it more difficult for those paying for their own housing

This must be what the government means when they say they are pro business.
Take taxpayers money and hand it over to business on incredibly poor value for money terms for the tax payer and the business pays no tax on their profits. These same business are one of the greatest beneficiaries of public infrastructure investment in transport and housing ancillary services

It seems lunacy when Europe is poking Governments to spend 0% money to stimulate growth and the government is operating in this manner

It is sickening to see a government use a homelessness problem as a conduit to enrich the already wealthy

Surely thi is economic treason

you keep piping on about it - i have asked you a number of times, what additional Opex costs does the government incur to manage and maintain these propoerties over 25-30 years? How many additional public / civil servants will be required? What salaries, what pension liabilities?
"Economic treason" to suggest building houses is the only cost. Its spouted by SF and the gullible swallow it.
More public houses need to be built but the true cost of building at scale has to be determined.

tigger123

Qwerty2018 wrote: »

Getting an exemption for over 3.5 times my salary

Check with your bank I'd say. I haven't seen or heard anything saying that exemptions are not being given out.

My understanding is that each bank has a finite number of them to distribute each year, as per Central Bank Rules. Can't see how Covid 19 would effect that.

Ulster bank have said they are opening exception considerations again. https://www.independent.ie/business/personal-finance/property-mortgages/ulster-bank-cuts-fixed-rates-as-mortgage-price-war-intensifies-39783300.html

Other banks haven’t ruled them out either if you have a strong application.

shreko

Qwerty2018 wrote: »

Getting an exemption for over 3.5 times my salary

We just got approved for an exemption from PTSB.
It was for a 10% deposit instead of 20% for 2nd time buyers rather than the 3.5 times salary but still, they are giving them.

Pelezico

Why would anyone seek exemption from a rule which has been put in place to afford them protection?

They will come running back for a bailout when the transaction goes wrong. This does taxpayers little benefit.

In fact, an exemption represents a contingent liability for taxpayers and should be given only in the most exceptional circumstances.

fliball123

Pelezico wrote: »

Why would anyone seek exemption from a rule which has been put in place to afford them protection?

They will come running back for a bailout when the transaction goes wrong. This does taxpayers little benefit.

In fact, an exemption represents a contingent liability for taxpayers and should be given only in the most exceptional circumstances.

Well in this circumstance still staying in the 3.5 times salary limit and they are still giving 10% so it would be a safe enough bet it doesnt look like we will be seeing a 10% price drop anytime soon

Pelezico

Pelezico wrote: »

Why would anyone seek exemption from a rule which has been put in place to afford them protection?

They will come running back for a bailout when the transaction goes wrong. This does taxpayers little benefit.

In fact, an exemption represents a contingent liability for taxpayers and should be given only in the most exceptional circumstances.

The bank only give them in exceptional circumstances
Three and a half times salary is not the same as affordability.
3.5 times my salary does not take into account shift allowances, weekend and unsocial hours allowances, overtime.
I can afford a lot more than 3.5 times my salary and I won't be looking for any bailout, ever.
So there is nothing wrong with exemptions in certain circumstances. It's not the Celtic Tiger days, they are not handed out to everyone

It’s only available to a max of 20% of the banks mortgage loans in a year so it’s only available to the strongest applications. Applicants with secure well paid jobs, good savings history, unblemished credit history. The mortgage repayments are stress tested so you’d want to have a few thousand spare on top of the monthly mortgage payment. Usually a two earner application but they do consider single applicants.

Much different from the sub prime lending before the last crash.

Villa05

Hubertj wrote:

you keep piping on about it - i have asked you a number of times, what additional Opex costs does the government incur to manage and maintain these propoerties over 25-30 years? How many additional public / civil servants will be required? What salaries, what pension liabilities? "Economic treason" to suggest building houses is the only cost. Its spouted by SF and the gullible swallow it. More public houses need to be built but the true cost of building at scale has to be determined.

Sorry for piping on about it but singly it is the most important with regard to the future direction of property prices.

When staff were less educated and less paid, this was done efficiently enough

If we are incapable of doing it, have it outsourced. What do estate agents charge. Could a discount be negotiated on volume. Could renters contributions be collected through payroll, social welfare

Expand through affordable housing where the rent covers costs. Housing in Dublin, Galway and Cork appears to be unaffordable to those on the median wage or below, that's 50% of the working population. Massive opportunities here to set up a semi state to develop cost + rental model that can generate revenue for the state

Current policy does little to help the housing issue.
In most cases it is making it worse by dragging more people into difficulty through rising rents /prices.

The state has so many criteria in their favour to resolve this, manly land labour and capital availability
Inabilty to tackle this is either massive incompetence or pandering to vested interests. Both are reasons to step aside and let someone else have a go

fliball123

Villa05 wrote: »

Sorry for piping on about it but singly it is the most important with regard to the future direction of property prices.

When staff were less educated and less paid, this was done efficiently enough

If we are incapable of doing it, have it outsourced. What do estate agents charge. Could a discount be negotiated on volume. Could renters contributions be collected through payroll, social welfare

Expand through affordable housing where the rent covers costs. Housing in Dublin, Galway and Cork appears to be unaffordable to those on the median wage or below, that's 50% of the working population. Massive opportunities here to set up a semi state to develop cost + rental model that can generate revenue for the state

Current policy does little to help the housing issue.
In most cases it is making it worse by dragging more people into difficulty through rising rents /prices.

The state has so many criteria in their favour to resolve this, manly land labour and capital availability
Inabilty to tackle this is either massive incompetence or pandering to vested interests. Both are reasons to step aside and let someone else have a go

Listen I wouldnt let the public sector or semi state do what your suggesting. It would cost way to much for something like what you are looking for to be created. In the past the equation of public sector + A chance to get some gravy from the gravy train = disaster for the tax payer and usually the tax payer has no choice but to pay. Sorry but this is how it has always been cant see it changing as its in our DNA

combat14

looks like restaurants reopening here in doubt now (all restaurants just closed also in croatia)

going to be a lot of vacant premises next year if we dont get back up and running shortly

will be interesting to see if commercial rents fall further next year

Reins

Qwerty2018 wrote: »

Going to hold off until next year to start applying for my mortgage.
Would need a mortgage exemption as I am looking to purchase a house for around 250,000.
I am a single teacher currently on 45,000 per year with a deposit saved of 50,000.
Was told here before that I had little chance with the current situation. Would this be anymore likely next year?

https://www.independent.ie/news/central-bank-wont-bow-to-pressure-to-alter-mortgage-limits-39794682.html