Irish Property Market 2020 Part 2

Mic 1972

TheSheriff wrote: »

Really shocked by the figure of a net rental margin of 80% in that article.

Wow. They are making an absolute fortune.

80% margin can't be right. Tax alone is over 40%, plus maintenance expenses.

PropQueries

tigger123 wrote: »

Didnt realise is was that low.

Even that build cost may be considered high as it was among all developers, big and small. The big developers build them for less than €150,000. 3 Bed semi-detached new builds are being advertised in Donabate for €305,000: https://www.daft.ie/dublin/new-homes-for-sale/taylor-hill-off-clonard-road-balbriggan-dublin-102986/

JJJackal

Mic 1972 wrote: »

80% margin can't be right. Tax alone is over 40%, plus maintenance expenses.

They dont have an 80% margin - the article says the margin is 42,671 out of a cost of 371,311 to build a house in the Greater Dublin Area

PropQueries

PropQueries wrote: »

Even that build cost may be considered high as it was among all developers, big and small. The big developers build them for less than €150,000. 3 Bed semi-detached new builds are being advertised in Donabate for €305,000: https://www.daft.ie/dublin/new-homes-for-sale/taylor-hill-off-clonard-road-balbriggan-dublin-102986/

Sorry, Balbriggan

JJJackal

PropQueries wrote: »

Even that build cost may be considered high as it was among all developers, big and small. The big developers build them for less than €150,000. 3 Bed semi-detached new builds are being advertised in Donabate for €305,000: https://www.daft.ie/dublin/new-homes-for-sale/taylor-hill-off-clonard-road-balbriggan-dublin-102986/

That house is almost in Louth!

PropQueries

JJJackal wrote: »

That house is almost in Louth!

Still Dublin though and Co. Dublin isn't that big.

JJJackal

PropQueries wrote: »

Still Dublin though and Co. Dublin isn't that big.

If you worked in city centre it would be a long commute even now

PropQueries

JJJackal wrote: »

If you worked in city centre it would be a long commute even now

very true, but it goes to show the true cost of building a house. Are construction wages that much higher closer to the city. If they were, I would assume construction workers would drive the extra 15 to 25 minutes if they were.

Lolle06

I am living in a western county, near the coast. Houses here are selling like hotcakes since the lockdown, quite often after a bidding war. Atm there are not enough properties, but a long list of buyers.
Even empty sites in housing estates that weren’t completed during the Tiger years and that were for sale over the last decade, are now finally sold and getting build on. Unfinished houses, that lay idle for 13 years, are getting finished as well. It really is mental.

PropQueries

Lolle06 wrote: »

I am living in a western county, near the coast. Houses here are selling like hotcakes since the lockdown, quite often after a bidding war. Atm there are not enough properties, but a long list of buyers.
Even empty sites in housing estates that weren’t completed during the Tiger years and that were for sale over the last decade, are now finally sold and getting build on. Unfinished houses, that lay idle for 13 years, are getting finished as well. It really is mental.

Very well could be. I suppose we'll know come December when the property price register reflects these sales.

PropQueries

PropQueries wrote: »

Very well could be. I suppose we'll know come December when the property price register reflects these sales.

And if the property price register doesn't reflect these sales, it will be worse, because then the public will become very suspicious, very quickly, of what the estate agents have been saying since the lockdown ended and may make people delay in purchasing a house until they understand what's going on.

Lolle06

PropQueries wrote: »

And if the property price register doesn't reflect these sales, it will be worse, because then the public will become very suspicious, very quickly, of what the estate agents have been saying since the lockdown ended and may make people delay in purchasing a house until they understand what's going on.

It will be interesting to see, how much the properties have gone for. During the recession, prices around here fell by up to 30% and never regained that level.

PropQueries

Lolle06 wrote: »

It will be interesting to see, how much the properties have gone for. During the recession, prices around here fell by up to 30% and never regained that level.

We'll have to wait and see unfortunately. But, if the estate agents are correct regarding the closing of sales, how many would have been sale agreed up until the lockdown and then finally completed once the lockdown ended. If someone has gone sale agreed before the lockdown, it would take something very serious to make them back out as they've probably already imagined themselves living in the property. If what they are saying is true, it could be a short-term blip as my understanding was that sales had been very slow in the 18 or so months up until the lockdown.

JJJackal

PropQueries wrote: »

very true, but it goes to show the true cost of building a house. Are construction wages that much higher closer to the city. If they were, I would assume construction workers would drive the extra 15 to 25 minutes if they were.

Associated costs are higher - land (especially) professional fees, council fees, etc etc. I suspect even the hours you can work and the need to clean roads if building near old estates is extra

Pelezico

PropQueries wrote: »

We'll have to wait and see unfortunately. But, if the estate agents are correct regarding the closing of sales, how many would have been sale agreed up until the lockdown and then finally completed once the lockdown ended. If someone has gone sale agreed before the lockdown, it would take something very serious to make them back out as they've probably already imagined themselves living in the property. If what they are saying is true, it could be a short-term blip as my understanding was that sales had been very slow in the 18 or so months up until the lockdown.

The banks will have less capital to lend as people take advantage of payment break. This impacts Tier1 capital of lending institutions.

Expect a lot of sale agreed to fall through because of this.

Lolle06

PropQueries wrote: »

We'll have to wait and see unfortunately. But, if the estate agents are correct regarding the closing of sales, how many would have been sale agreed up until the lockdown and then finally completed once the lockdown ended. If someone has gone sale agreed before the lockdown, it would take something very serious to make them back out as they've probably already imagined themselves living in the property. If what they are saying is true, it could be a short-term blip as my understanding was that sales had been very slow in the 18 or so months up until the lockdown.

The sales before lockdown were steady over the last few years, but mostly from local ppl. There now is an influx of ppl on holiday, that want to purchase a property here. We will see if many of them are planning to relocate, or just buying a holiday home.

PropQueries

JJJackal wrote: »

Associated costs are higher - land (especially) professional fees, council fees, etc etc. I suspect even the hours you can work and the need to clean roads if building near old estates is extra

That's a good point. But it then draws the question regarding the Government thinking on asking for c. €320k for an 'affordable' house that is built on state lands with no development levies etc. within the city.

PropQueries

Lolle06 wrote: »

The sales before lockdown were steady over the last few years, but mostly from local ppl. There now is an influx of ppl on holiday, that want to purchase a property here. We will see if many of them are planning to relocate, or just buying a holiday home.

True but if it is about people relocating, surely that would then create less demand in Dublin which would drive down Dublin prices. If Dublin prices fall, shouldn't rural houses also fall in tandem as the cost advantage of a lower price house in a rural area would be then be less. A city still does have significant advantages over a rural setting regarding services, reliable broadband, 4G instead of 3G, proximity to friends, public transport, different options for restaurants, pubs, shops etc.

Smouse156

PropQueries wrote: »

According the latest the real cost of building a home from the SCSI, it costs c. €180,000 to build a 114 sq.m. house in Dublin, including all site development costs: https://www.scsi.ie/documents/get_lob?id=1551&field=file

The land prices are absolutely nuts! We have the least densely populated country in Western Europe and the most overpriced land. It’s only possible as vested interests have made sure there is no land taxes (remember the promised land referendum) so they can sit on useless land which contributes nothing to society until they get their ridiculous prices. Their hoardings are inflated by tax payers which build up the areas near the land. It really grinds my gears. Land prices need to come down 70-80% at least excluding agricultural land if there is to be any progress to affordable housing.

Lolle06

PropQueries wrote: »

True but if it is about people relocating, surely that would then create less demand in Dublin which would drive down Dublin prices. If Dublin prices fall, shouldn't rural houses also fall in tandem as the cost advantage of a lower price house in a rural area would be then be less. A city still does have significant advantages over a rural setting regarding services, reliable broadband, 4G instead of 3G, proximity to friends, public transport, different options for restaurants, pubs, shops etc.

Yes, that might go for rural properties around Dublin, but the prices here are not bound to Dublin prices. People generally move here b/c they appreciate other things in life.

PropQueries

Smouse156 wrote: »

The land prices are absolutely nuts! We have the least densely populated country in Western Europe and the most overpriced land. It’s only possible as vested interests have made sure there is no land taxes (remember the promised land referendum) so they can sit on useless land which contributes nothing to society until they get their ridiculous prices. Their hoardings are inflated by tax payers which build up the areas near the land. It really grinds my gears. Land prices need to come down 70-80% at least excluding agricultural land if there is to be any progress to affordable housing.

Also, the land prices stated in the report are based on if you bought that site today. Most of the bigger developers would have bought their landbanks at significantly less during the downturn. So, I think the report actually significantly overstates the cost of the bigger developers in bringing their current units to market.

PropQueries

Lolle06 wrote: »

Yes, that might go for rural properties around Dublin, but the prices here are not bound to Dublin prices. People generally move here b/c they appreciate other things in life.

You're probably right, but almost every county in Ireland is either by the sea, near lovely lakes or mountains. I still think for a rural property to have value it would still need to be within reasonable proximity to a big city.

JJJackal

PropQueries wrote: »

Also, the land prices stated in the report are based on if you bought that site today. Most of the bigger developers would have bought their landbanks at significantly less during the downturn. So, I think the report actually significantly overstates the cost of the bigger developers in bringing their current units to market.

The land is worth what its worth now in terms of estimating the cost of a build

If they werent making further profit on the land by building on it themselves, they would sell it to someone who would make a profit building on it

PropQueries

JJJackal wrote: »

The land is worth what its worth now in terms of estimating the cost of a build

If they werent making further profit on the land by building on it themselves, they would sell it to someone who would make a profit building on it

True, but it does give the bigger developers a lot of leeway in reducing prices if they do need to if a significant downturn does occur. They would then be able to sell their units while the more recent entrants would be left in a bind i.e. sell at a loss or holdout and hope for a recovery. Either way it's going to affect them as if new entrants don't continue building new units in a falling market, there's less need for construction workers who will then I assume emigrate to the UK etc. which will reduce demand further, which further reduces prices in a kind of downward spiral.

JJJackal

PropQueries wrote: »

True, but it does give the bigger developers a lot of leeway in reducing prices if they do need to if a significant downturn does occur. They would then be able to sell their units while the more recent entrants would be left in a bind i.e. sell at a loss or holdout and hope for a recovery. Either way it's going to affect them as if new entrants don't continue building new units in a falling market, there's less need for construction workers who will then I assume emigrate to the UK etc. which will reduce demand further, which further reduces prices in a kind of downward spiral.

I doubt there will be an excess of jobs in any country Irish people typically went to for construction.

Your point a such does not make sense. You are saying that less properties will be built ie decreased supply. Thus increased demand.

I accept that if people emigrate there will be decreased demand.

PropQueries

JJJackal wrote: »

I doubt there will be an excess of jobs in any country Irish people typically went to for construction.

Your point a such does not make sense. You are saying that less properties will be built ie decreased supply. Thus increased demand.

I accept that if people emigrate there will be decreased demand.

It's that tradesmen and construction workers are the most likely to emigrate quickly if the work does dry up or slow down as they can literally leave Ireland today and be ready to work on a site in London tomorrow morning. Professionals generally have to go through round after round of interviews to get a job so it's more difficult for them to leave quickly i.e. if construction does slow down considerably, the houses these construction workers rented will re-enter the market very quickly and increase supply considerably in a very short time frame.

JJJackal

PropQueries wrote: »

It's that tradesmen and construction workers are the most likely to emigrate quickly if the work does dry up or slow down as they can literally leave Ireland today and be ready to work on a site in London tomorrow morning. Professionals generally have to go through round after round of interviews to get a job so it's more difficult for them to leave quickly i.e. if construction does slow down considerably, the houses these construction workers rented will re-enter the market very quickly and increase supply considerably in a very short time frame.

In which country do you think construction is booming currently that needs irish workers?

Pelezico

JJJackal wrote: »

In which country do you think construction is booming currently that needs irish workers?

None...the industry has contracted severely.

JJJackal

Pelezico wrote: »

None...the industry has contracted severely.

So where are these Irish construction workers going to!

PropQueries

JJJackal wrote: »

In which country do you think construction is booming currently that needs irish workers?

Actually, there's still plenty of work in London at the moment and they're actually finding it difficult to find workers. Building never really stopped over there.