Irish Property Market 2020 Part 2

Cyrus

Graham wrote: »

I assume the point is, a number of people won't be willing to pay the Dublin premium in the face of other less expensive alternatives.

this could be a factor but do you think employers will continue to pay city wages when people dont have to pay city prices for housing?

hometruths

Cyrus wrote: »

well that depends on who is the arbiter of value,

up to now people obviously saw value as they are buying the houses

The would be buyer/seller will be the arbiter of value obviously.

Of course up to now buyers saw value. Skehan's point is about the future.

You yourself have acknowledged we have already hit affordability limits in the plus 500k market.

hometruths

Cyrus wrote: »

this could be a factor but do you think employers will continue to pay city wages when people dont have to pay city prices for housing?

Employers will pay the market rate for wages. To suggest otherwise is daft.

Cyrus

schmittel wrote: »

Employers will pay the market rate for wages. To suggest otherwise is daft.

yes and market rate will be lower, or the houses down the country will get more expensive, the arbitrage opportunity will only exist for so long, its daft to think people will continue to get paid loads of money working for a company notionally HQ'd in dublin and buy a cheap house in wexford with a tiny mortgage.

someone might get in on it but everyone wont.

Cyrus

schmittel wrote: »

The would be buyer/seller will be the arbiter of value obviously.

Of course up to now buyers saw value. Skehan's point is about the future.

You yourself have acknowledged we have already hit affordability limits in the plus 500k market.

yes and we saw prices at that level stay at the same level for the last 2-3 years, exactly as expected with the CB rules.

awec

schmittel wrote: »

I must have misunderstood you. What was the foresight you were suggesting in the post below:

I suggested ages ago that any movement of people out of Dublin to rural properties would drive up prices of properties in rural areas, as areas with traditional low demand see increased demand. Pretty much a carbon copy of what happened in the Dublin commuter belt the past 8 or 9 years, but not to the same scale.

Of course, this idea was rubbished and we were told it couldn't possibly happen, prices would totally collapse everywhere. There was no way increased demand in rural areas could have a positive affect on prices there. Anyone who suggested such a thing was a lunatic property bull or an EA.

awec

schmittel wrote: »

Employers will pay the market rate for wages. To suggest otherwise is daft.

Of course remote work will drive down wages, are you suggesting it wouldn't?

Facebook as an example pretty much confirmed that this is exactly what they'd do.

Graham

awec wrote: »

Of course remote work will drive down wages, are you suggesting it wouldn't?

I guess much depends on the type of work.

I say that as someone who has worked remotely for a large part of the last 10 years,

awec

awec wrote: »

I suggested ages ago that any movement of people out of Dublin to rural properties would drive up prices of properties in rural areas, as areas with traditional low demand see increased demand. Pretty much a carbon copy of what happened in the Dublin commuter belt the past 8 or 9 years, but not to the same scale.

Of course, this idea was rubbished and we were told it couldn't possibly happen, prices would totally collapse everywhere. There was no way increased demand in rural areas could have a positive affect on prices there. Anyone who suggested such a thing was a lunatic property bull or an EA.

i mean its just obvious, right?

a lot depends on how willing govt policy on broadband and commute options supports or otherwise in the next year, id say a lot of ppl arent making any big decisions while covid rumbles on

hometruths

Cyrus wrote: »

yes and market rate will be lower, or the houses down the country will get more expensive, the arbitrage opportunity will only exist for so long, its daft to think people will continue to get paid loads of money working for a company notionally HQ'd in dublin and buy a cheap house in wexford with a tiny mortgage.

someone might get in on it but everyone wont.

Ok so, by that logic...

WFH will drive wages down thus demand for credit down at a time when we have already reached peak affordability for Dublin semi ds.

Good luck to whoever is paying a 750k mortgage on a semi d in Dublin if employers are going to start slashing wages because their colleagues have chosen to live in Wexford.

awec

schmittel wrote: »

Ok so, by that logic...

WFH will drive wages down thus demand for credit down at a time when we have already reached peak affordability for Dublin semi ds.

Good luck to whoever is paying a 750k mortgage on a semi d in Dublin if employers are going to start slashing wages because their colleagues have chosen to live in Wexford.

Huh?

That's not what is being suggested. The person in Wexford will get paid less than the person in Dublin.

If you live in Dublin, you get a Dublin salary. If you live in Wexford you get a Wexford salary.

hometruths

awec wrote: »

Of course remote work will drive down wages, are you suggesting it wouldn't?

Facebook as an example pretty much confirmed that this is exactly what they'd do.

If it is hugely widespread, yes I suspect it will, but it will still be the market rate.

Assetbacked

Interesting discussion on WFH the last few pages. It won't be taken up en masse in a way that crashes housing in Dublin, as it will only apply to people into their 30s looking to settle down who don't already have a house in Dublin. Those in their 20s, particularly from abroad, only want to be in Dublin close to friends, pubs etc. They will want to rent.

Something which I thought of before but I see was in the papers recently, is a high speed train link between Cork, Galway and Dublin. It would be a great service to be able to get a train in an hour or so from Cork and Galway to Dublin. This would have the benefit of taking some of the heat out of the Dublin Market, which is desperately needed and for me is likely to have more of a longer term impact on housing in Dublin if it is built (although the link below discusses Belfast, Cork and Limerick).

https://www.irishtimes.com/news/ireland/irish-news/review-of-15bn-high-speed-rail-line-linking-dublin-belfast-cork-1.4321928

Upon reflection, considering the significantly cheaper housing in Belfast compared to Dublin, maybe this could be a game changer as it will actually result in people earning good salaries in the Republic and living in the North.

hometruths

awec wrote: »

Huh?

That's not what is being suggested. The person in Wexford will get paid less than the person in Dublin.

Really? I cannot see that happening. i.e as a general rule I cannot see an employee being paid depending on where they choose to live.

there might be some exceptions - public servants who have to live close to work and receive Dublin allowance for instance - but a jobbing accountant?

He's going to say to HR, it's not fair, I should be paid more than Paddy because he lives in Wexford and his mortgage is smaller?!

Unless he is indispensable to the company HR is going to tell him to sling his hook.

awec

Assetbacked wrote: »

Interesting discussion on WFH the last few pages. It won't be taken up en masse in a way that crashes housing in Dublin, as it will only apply to people into their 30s looking to settle down who don't already have a house in Dublin. Those in their 20s, particularly from abroad, only want to be in Dublin close to friends, pubs etc. They will want to rent.

Something which I thought of before but I see was in the papers recently, is a high speed train link between Cork, Galway and Dublin. It would be a great service to be able to get a train in an hour or so from Cork and Galway to Dublin. This would have the benefit of taking some of the heat out of the Dublin Market, which is desperately needed and for me is likely to have more of a longer term impact on housing in Dublin if it is built (although the link below discusses Belfast, Cork and Limerick).

https://www.irishtimes.com/news/ireland/irish-news/review-of-15bn-high-speed-rail-line-linking-dublin-belfast-cork-1.4321928

Yea that'll be a great option for your future grandchildren to use when they start working.

awec

schmittel wrote: »

Really? I cannot see that happening. i.e as a general rule I cannot see an employee being paid depending on where they choose to live.

there might be some exceptions - public servants who have to live close to work and receive Dublin allowance for instance - but a jobbing accountant?

He's going to say to HR, it's not fair, I should be paid more than Paddy because he lives in Wexford and his mortgage is smaller.

Unless he is indispensable to the company HR is going to tell him to sling his hook.

This is how remote working works.

In any company with remote workers salaries will vary depending on where the person is based. Someone living in Dublin will get paid less than the guy living in Silicon Valley, someone working in Donegal will get paid less than the guy working in Dublin.

You will get a lower salary, but you can still be financially better off with a lower salary given there'll be a lower cost of living.

Mic 1972

I feel the expectations on WFH are a little overrated.
Lots of people - including me - would rather work in an office environment. I like the idea of having the option to work from home from time to time, but I don't see people been too excited about being home based on a permanent basis.
I've been 100% home based since January, it's very tiring after a while.
if anything i would imagine people wanting to live in city centre specifically because they work from home and need some distraction.
Especially young people, or people on entry level jobs will most likely prefer to have colleagues around them as opposite to be stuck in their own bedrooms all day long with a headset on having chats and phone as only options to interact with others.

PropQueries

I think current house prices are based on an economy that existed for the 50 or so year period up to March 2020 i.e. people were generally forced to buy a home near where they worked, if they didn't want to commute long distances every day.

This has now all changed and the future economy will probably be much different. How long that takes for these changes to filter through to house prices is anyone's guess.

However, if someone is getting a mortgage today to be paid back over the next 30 years, would it now be a given to expect that that house will be worth significantly less in 2050 than in 2020?

hometruths

awec wrote: »

This is how remote working works.

In any company with remote workers salaries will vary depending on where the person is based. Someone living in Dublin will get paid less than the guy living in Silicon Valley, someone working in Donegal will get paid less than the guy working in Dublin.

You will get a lower salary, but you can still be financially better off with a lower salary given there'll be a lower cost of living.

Ok, fair enough. Let's assume that, a large number of companies currently located in Dublin, decide to move more mainstream to WFH where practical. (i.e I get not every company/role can do it, but plenty can.)

Presumable if they do this it will be to take advantage of the cost savings on offer.

Let's also assume that all these companies adopt this WFH pay structure - i.e market rate depending on location. The guy living in Wexford gets paid less than the guy living in Dublin.

You have two equal applicants for a job - one lives in Wexford, one lives in Dublin. (We can ignore Silicon Valley for the purposes of this example)

Who is the company more likely to employ and what is that likely to do to demand for housing in Dublin?

Mic 1972

schmittel wrote: »

Ok, fair enough. Let's assume that, a large number of companies currently located in Dublin, decide to move more mainstream to WFH where practical. (i.e I get not every company/role can do it, but plenty can.)

Presumable if they do this it will be to take advantage of the cost savings on offer.

Let's also assume that all these companies adopt this WFH pay structure - i.e market rate depending on location. The guy living in Wexford gets paid less than the guy living in Dublin.

You have two equal applicants for a job - one lives in Wexford, one lives in Dublin. (We can ignore Silicon Valley for the purposes of this example)

Who is the company more likely to employ and what is that likely to do to demand for housing in Dublin?

Work from Home doesn't work like that.
Salary is based on skills, experience and seniority. Any position being advertized at the moment taht is full home-based doesn't require to indicate your home address and nowhere during the interview process you are being informed that your salary will change depending on location.

If companies in Cork pay lower salaries than Dublin, that will apply to all Cork applicants working from home from anywhere in ireland. if i apply to a WFH Cork job and i live in Dublin i will still get the same salary as if i was living in Cork

awec

schmittel wrote: »

Ok, fair enough. Let's assume that, a large number of companies currently located in Dublin, decide to move more mainstream to WFH where practical. (i.e I get not every company/role can do it, but plenty can.)

Presumable if they do this it will be to take advantage of the cost savings on offer.

Let's also assume that all these companies adopt this WFH pay structure - i.e market rate depending on location. The guy living in Wexford gets paid less than the guy living in Dublin.

You have two equal applicants for a job - one lives in Wexford, one lives in Dublin. (We can ignore Silicon Valley for the purposes of this example)

Who is the company more likely to employ and what is that likely to do to demand for housing in Dublin?

The answer is it depends. It is not, as I think you suggest, as straightforward as thinking the cheaper person will get the job.

But it’s a really unlikely scenario, the reality is that you might have 20 applicants, 15 in Dublin and 5 not in Dublin.

awec

Mic 1972 wrote: »

Work from Home doesn't work like that.
Salary is based on skills, experience and seniority. Any position being advertized at the moment taht is full home-based doesn't require to indicate your home address and nowhere during the interview process you are being informed that your salary will change depending on location.

If companies in Cork pay lower salaries than Dublin, that will apply to all Cork applicants working from home from anywhere in ireland. if i apply to a WFH Cork job and i live in Dublin i will still get the same salary as if i was living in Cork

This is not true.

PropQueries

Mic 1972 wrote: »

Work from Home doesn't work like that.
Salary is based on skills, experience and seniority. Any position being advertized at the moment taht is full home-based doesn't require to indicate your home address and nowhere during the interview process you are being informed that your salary will change depending on locaation

Mark Zuckerberg has already said he expects to pay lower salaries to workers living in lower cost areas.

He said employees "should not expect to get Silicon Valley salary levels if they relocate to less-expensive areas.".

Link to RTE article here: https://www.rte.ie/brainstorm/2020/0527/1142847-lower-wages-no-promotions-working-from-home/

hometruths

Mic 1972 wrote: »

Work from Home doesn't work like that.
Salary is based on skills, experience and seniority. Any position being advertized at the moment taht is full home-based doesn't require to indicate your home address and nowhere during the interview process you are being informed that your salary will change depending on locaation

I'm not talking about next week. I am talking about the medium/long term adoption of work from home.

But I agree with you - employers will offer a salary based on what they are prepared for to pay for the role, and won't give a stuff where you live.

My post was just asking awec what he thought might happen if location based pay became the norm, as he is suggesting.

cubatahavana

Browney7 wrote: »

Presumably the poster is implying some people will see living in a 2 bed apartment in Dublin with no access to greenspace isn't as attractive as it once was (cultural events, sports, concerts, pubs etc).

On the other side, living 5 to 10 miles outside an urban centre in the country side may now have some upsides - a garden to sit in, more space in a property etc - and the sacrifices of doing this aren't what they once were (as the activity that was keeping them in Dublin isn't what it was) and work from home being extended makes this a more viable prospect. Covid is continuing to wreak havoc with peoples lives (creches for instance) so a lot can and will happen over the next 12 months.

At no stage could it be interpreted that people were saying there would be tailbacks down the M7 and M4 to waterville, skibbereen, clifden and belmullet and widespread abandonment of Dublin

Ok, first of all, I just realized 5 miles out of Dublin the countryside starts. I’ve been living in the countryside all this time without knowing it!

Is Dublin accommodation comprised of only 2 bed apartments? Last time I checked there are plenty of houses with gardens to sit in from Crumlin to clongriffin

No green space in the city? Last time I checked, Phoenix park is the largest city park in Europe. Plenty of houses with fantastic gardens within 5-10 minutes from city center by car

What havoc are you talking about in crèches? AFAIK only one case happened recently

hometruths

PropQueries wrote: »

Mark Zuckerberg has already said he expects to pay lower salaries to workers living in lower cost areas.

He said employees "should not expect to get Silicon Valley salary levels if they relocate to less-expensive areas.".

Link to RTE article here: https://www.rte.ie/brainstorm/2020/0527/1142847-lower-wages-no-promotions-working-from-home/

For a start we're not talking about Facebook. We're talking about Irish SMEs making widgets or whatever.

Facebook is based in Silicon Valley, one of the highest cost of living places in the world. To date to attract the talent they have had to pay the Silicon Valley salaries.

This is a world away from the small insurance broker who has 5 employees taking calls in Wexford.

Mic 1972

schmittel wrote: »

I'm not talking about next week. I am talking about the medium/long term adoption of work from home.

But I agree with you - employers will offer a salary based on what they are prepared for to pay for the role, and won't give a stuff where you live.

My post was just asking awec what he thought might happen if location based pay became the norm, as he is suggesting.

Agree with you.
Salaries will be benchmarked to a lower grade and will be the same no matter where you work.
And that's another reason why WFH will make people more unhappy than before. Lower salaries, higher house bills, sense of isolation

Mic 1972

awec wrote: »

This is not true.

It's true for the company i work for.
I'm based in Dublin, company is based in Cork.
All irish employees in my role start with the same salary.

Mic 1972

PropQueries wrote: »

Mark Zuckerberg has already said he expects to pay lower salaries to workers living in lower cost areas.

He said employees "should not expect to get Silicon Valley salary levels if they relocate to less-expensive areas.".

Link to RTE article here: https://www.rte.ie/brainstorm/2020/0527/1142847-lower-wages-no-promotions-working-from-home/

Correct.
The bench-marking will set the salaries to a lower level and that will apply to everyone in US who work for FB from home.
FB wont' set different benchmark rates for people who live in NYC compared to small villages

awec

Mic 1972 wrote: »

Correct.
The bench-marking will set the salaries to a lower level and that will apply to everyone in US who work for FB from home.
FB wont' set different benchmark rates for people who live in NYC compared to small villages

Of course they will. This is exactly how it works.

Salary is set based on your skills and experience in the market local to where you live. There is no reason to pay someone living in a village a NYC salary.

Within Ireland, remote working hasn't yet been much of a thing. We don't have many Irish based companies that really do it.