Irish Property Market 2020 Part 3

PropQueries

Graham wrote: »

So what's going to change in the very near term that the above is going to impact the property market?

A lot of the media and expert analysis this year has been that we need to build between 35k and 47k new residential units each year to meet demand.

A big part of this demand included meeting the apparent pent-up demand from the past 10 years due to an apparent lack of building.

Timing Belts spreadsheet made a very good attempt to include additional sources of supply that have re-entered the market over the past 10 years that appears to have been missed or not generally reported on by the housing experts in the media.

This impacts both sellers and buyers today if the demand isn’t as big as they both believe and the supply shortage isn’t as big as both believe.

People had already noticed the increasing number of unsold housing stock over the past 2 years and this will begin to impact on the mindset of potential purchasers and sellers in the very near future IMO.

Graham

Marius34 wrote: »

Fine we can agree to disagree on the opinion, but don't bring up what GeoDirectory tells us, as it doesn't tells anything about oversupply in Urban areas.

It actually suggests to me there is no oversupply in areas showing most demand.

From the report:

Vacancy Rates

The national average vacancy rate was 4.5% in June 2020, falling slightly by 0.3ppts relative to June 2019. Vacancy rates declined in 25 out of 26 counties in the State, with Dublin posting a slight increase of 0.1ppt. However, Dublin remains the county with the lowest residential vacancy rate in the country at 1.3%, followed by Kildare (2.0%) and Wicklow (2.9%).

In contrast to the low vacancy rates of the Greater Dublin Area, there is a different picture in the west of the country, with the three highest vacancy rates all found in Connacht. Despite recording a 0.6ppt drop, Leitrim has the highest vacancy rate in the country at 14.6%, followed by Roscommon (12.6%) and Mayo (12.5%).

hometruths

Graham wrote: »

It actually suggests to me there is no oversupply in areas showing most demand.

From the report:

GeoDirectory don't count all vacancies - they strip out properties that they claim are for sale or for rent.

When in reality they are not on the market. If they were there would be no supply problem.

This can be demonstrated by comparing the numbers of properties that GeoDirectory claim to be for rent with the numbers of properties actually for rent at the same time. The GeoDirectory figure in Dublin is something like 5 times higher.

These figures can all be checked and I posted on them before at length in the other thread. GeoDirectory are saying that in real terms their vacancy figure for June 2017 is approximately 15% higher than that of the census in April 2016.

hometruths

Marius34 wrote: »

Fine we can agree to disagree on the opinion, but don't bring up what GeoDirectory tells us, as it doesn't tells anything about oversupply in Urban areas.

I believe it does, so that's exactly what we'll have to agree to disagree on!

Ursabear

Is there a property market thread not restricted to years? Like a long term property market one, as I am looking to buy and I find everyone's viewpoints interesting, but as another poster suggested as a buyer I want to consider what my purchase will mean to me in the long term

Graham

Geodirectory state vacancy rates have dropped.

That's not an assumption, or an interpretation on my part, it's what the report you keep referring to actually concludes.

hometruths

Graham wrote: »

Geodirectory state vacancy rates have dropped.

That's not an assumption, or an interpretation on my part, it's what the report you keep referring to actually concludes.

If we are talking about where it matters I am not so sure about that. Ignore Leitrim and Roscommon etc and look at Dublin, Kildare and Wicklow.

From Geodirectory report Q2 2017



Dublin vacancy rate: 0.89%
Kildare vacancy rate: 1.99%
Wicklow vacancy rate: 2.65%

From latest Geodirectory report - Q2 2020



Dublin vacancy rate: 1.3%
Kildare vacancy rate: 2%
Wicklow vacancy rate: 2.9%

Geodirectory's vacancy rate increased slightly in Dublin, Wicklow and Kildare from 2017 to 2020.

Now just looking at the pictures you might think so what, these are the kind of low vacancy rates that you would expect given that we have a chronic housing shortage, and small fluctuations/rises don't change that.

I agree that is a reasonable conclusion if you just look at the pictures. But if you look at how GeoDirectory calculates that vacancy rate it clearly indicates oversupply.

a 6% base rate is the vacancy rate used by various experts, eg Justin Gleeson, Lorcan Sirr etc. This is widely accepted both here and abroad to reflect the vacancy rate that reflects the normal turnover of housing stock due to sales, rentals, deaths, renovations etc.

Anything over 6% represents oversupply, anything under represents undersupply.

So far so simple, and I think broadly accepted.

But Geodirectory's methodology don't count these properties that would normally be included in the 6% as vacant. They say:

Some of these categories could be construed as dwellings which might not normally be classified as vacant in the context of vacant long term, but would represent more of a transition or temporary vacancy rate, i.e. while properties are waiting to be sold or rented out.

As Geodirectory have decide these categories are "more of a transition or temporary vacancy rate" and not counted in their vacancy rate, it means that the 1.3% vacancy rate in Dublin represents 1.3% over the 6% base rate.

or to put it another way - 1.3% oversupply in Dublin, 2% oversupply in Kildare and 2.9% oversupply in Wicklow.

Which begs the question why as a housing crisis worsens from 2017 to 2020 are vacancy rates in Dublin, Kildare and Wicklow above the expected base rate and rising?

Marius34

schmittel wrote: »

If we are talking about where it matters I am not so sure about that. Ignore Leitrim and Roscommon etc and look at Dublin, Kildare and Wicklow.

From Geodirectory report Q2 2017

https://i.ibb.co/jLnFWjm/Screenshot-2020-12-11-at-10-11-56.png

Dublin vacancy rate: 0.89%
Kildare vacancy rate: 1.99%
Wicklow vacancy rate: 2.65%

From latest Geodirectory report - Q2 2020

https://i.ibb.co/ggctwXf/Screenshot-2020-12-11-at-10-12-19.png

Dublin vacancy rate: 1.3%
Kildare vacancy rate: 2%
Wicklow vacancy rate: 2.9%

Geodirectory's vacancy rate increased slightly in Dublin, Wicklow and Kildare from 2017 to 2020.

Now just looking at the pictures you might think so what, these are the kind of low vacancy rates that you would expect given that we have a chronic housing shortage, and small fluctuations/rises don't change that.

I agree that is a reasonable conclusion if you just look at the pictures. But if you look at how GeoDirectory calculates that vacancy rate it clearly indicates oversupply.

a 6% base rate is the vacancy rate used by various experts, eg Justin Gleeson, Lorcan Sirr etc. This is widely accepted both here and abroad to reflect the vacancy rate that reflects the normal turnover of housing stock due to sales, rentals, deaths, renovations etc.

Anything over 6% represents oversupply, anything under represents undersupply.

So far so simple, and I think broadly accepted.

But Geodirectory's methodology don't count these properties that would normally be included in the 6% as vacant. They say:



As Geodirectory have decide these categories are "more of a transition or temporary vacancy rate" and not counted in their vacancy rate, it means that the 1.3% vacancy rate in Dublin represents 1.3% over the 6% base rate.

or to put it another way - 1.3% oversupply in Dublin, 2% oversupply in Kildare and 2.9% oversupply in Wicklow.

Which begs the question why as a housing crisis worsens from 2017 to 2020 are vacancy rates in Dublin, Kildare and Wicklow above the expected base rate and rising?

Due to high demands, and low supplies.
For those counties supplies, and long term vacancy below 3%, are not a 2020 problem only, but it's an issue for the last few years. Other counties reducing the gap.
Just because you made up your own way of calculation, it doesn't mean that it is about expected base rate.

hometruths

Marius34 wrote: »

Due to high demands, and low supplies.
For those counties supplies, and long term vacancy below 3%, are not a 2020 problem only, but it's an issue for the last few years. Other counties reducing the gap.

Yes and supply is low because the properties are being held vacant not because they don't exist.

That has always been my point.

hometruths

Marius34 wrote: »

Just because you made up your own way of calculation, it doesn't mean that it is about expected base rate.

How did I make up my own calculation? That's ridiculous.

Marius34

schmittel wrote: »

How did I make up my own calculation? That's ridiculous.

This is purely your own:

"As Geodirectory have decide these categories are "more of a transition or temporary vacancy rate" and not counted in their vacancy rate, it means that the 1.3% vacancy rate in Dublin represents 1.3% over the 6% base rate.

or to put it another way - 1.3% oversupply in Dublin, 2% oversupply in Kildare and 2.9% oversupply in Wicklow."

Villa05

Graham wrote:

Even if that is accurate (and I don't agree that it is). Rising prices tell us demand is not being met.

Rising prices are a result of incredibly naieve Govt intervention

30k subsidy to new builds.
Long term leases at peak rental prices.
State buying up new housing
Investment funds buying up new builds with tax free income from assets giving them a far superior competitive advantage over local buyers.

Pelezico wrote:

Indeed I am talking about parts of Galway which are mid west. Tuam, Ballinasloe, Loughrea and Roscommon town are mid west culturally.

Pelezico wrote:

There is no way anyone living in dublin will decamp to midwest, Donegal rtc.

Different strokes for different folks. The great outdoors is significant attraction to a growing number of people. Donegal is one of the most scenic, unspoilt areas in the country

Graham wrote:

Unless we close the borders, I don't think that's a particularly likely outcome.

By making it unaffordable, you are creating borders, they don't have to be visible

Timing belt

Marius34 wrote: »

Due to high demands, and low supplies.
For those counties supplies, and long term vacancy below 3%, are not a 2020 problem only, but it's an issue for the last few years. Other counties reducing the gap.
Just because you made up your own way of calculation, it doesn't mean that it is about expected base rate.

You will always have vacancies for a range of reasons...legal disputes, developers waiting for a block to become vacant, people not wanting to be landlords etc, undesirable properties, people thinking their property is worth more than it actually is worth and waiting to get that price.

Just because there are vacant properties doesn’t mean that is a shortage does not exist. In a functioning market there will always be more property than required in the same way a shop has stock on it’s shelves. If it didn’t exist then it would be impossible for someone renting to buy.

When you take into account location this will mean that there will always be a shortage in desirable locations and a oversupply in less desirable locations which explains why prices are higher in one location than another. Likewise the same can be said for housing type... houses may be more desirable than apartments etc.

When you take into account affordability the demand from FTB’s will mean that you can see a shortage in properties in this price range and a oversupply of houses that are not affordable. I firmly believe that this is where the real shortage exists and that needs to be be addressed.

Pelezico

Villa05 wrote: »

Rising prices are a result of incredibly naieve Govt intervention

30k subsidy to new builds.
Long term leases at peak rental prices.
State buying up new housing
Investment funds buying up new builds with tax free income from assets giving them a far superior competitive advantage over local buyers.







Different strokes for different folks. The great outdoors is significant attraction to a growing number of people. Donegal is one of the most scenic, unspoilt areas in the country




By making it unaffordable, you are creating borders, they don't have to be visible

Yes...different strokewfor different folks and the scenery is fantastic. But there are no amenities and people arenot flocking to live there.

In fact, there has been a population in a lot of rural areas in the last couple of decades.

PropQueries

Pelezico wrote: »

Yes...different strokewfor different folks and the scenery is fantastic. But there are no amenities and people arenot flocking to live there.

In fact, there has been a population in a lot of rural areas in the last couple of decades.

That’s true. But I think you would admit Dublin hardly has as much a social scene as London. So, will London based professionals move to Dublin if the jobs move here? By your analysis, they won’t as Dublin is to London as Mullingar is to Dublin.

People generally live where the jobs are and WFH has opened the door to these type of jobs being available everywhere.

Next it comes down to the cost of living with accommodation being the biggest expense most young couples have.

Most people have only begun to see this as a realistic option over the past 6 months. Markets change very quickly once perceptions and options change.

hometruths

Marius34 wrote: »

This is purely your own:

"As Geodirectory have decide these categories are "more of a transition or temporary vacancy rate" and not counted in their vacancy rate, it means that the 1.3% vacancy rate in Dublin represents 1.3% over the 6% base rate.

or to put it another way - 1.3% oversupply in Dublin, 2% oversupply in Kildare and 2.9% oversupply in Wicklow."

It's Geodirectory's methodology and an industry accepted base rate. I have made nothing up.

To suggest I have made these calculations up is rather clutching at straws. Once again when facts and data are shown to make an argument that we have a vacancy problem posters are accused of misrepresenting data or making stuff up. Nobody has actually contradicted what I am saying.

It is kind of baffling.

Cyrus

schmittel wrote: »

It's Geodirectory's methodology and an industry accepted base rate. I have made nothing up.

To suggest I have made these calculations up is rather clutching at straws. Once again when facts and data are shown to make an argument that we have a vacancy problem posters are accused of misrepresenting data or making stuff up. Nobody has actually contradicted what I am saying.

It is kind of baffling.

regardless as to who is right or wrong, if this suggested glut of properties are vacant it means very little if they arent for sale does it?

Cyrus

PropQueries wrote: »

By your analysis, they won’t as Dublin is to London as Mullingar is to Dublin.

no one is saying that, and to suggest it is nonsensical.

Timing belt

schmittel wrote: »

It's Geodirectory's methodology and an industry accepted base rate. I have made nothing up.

To suggest I have made these calculations up is rather clutching at straws. Once again when facts and data are shown to make an argument that we have a vacancy problem posters are accused of misrepresenting data or making stuff up. Nobody has actually contradicted what I am saying.

It is kind of baffling.

I think the key word you used is vacancy problem which is different to saying there is not a supply shortage.

Yes vacancy may make a difference to the supply shortage if in the correct location and price and comes to market.

Marius34

schmittel wrote: »

It's Geodirectory's methodology and an industry accepted base rate. I have made nothing up.

To suggest I have made these calculations up is rather clutching at straws. Once again when facts and data are shown to make an argument that we have a vacancy problem posters are accused of misrepresenting data or making stuff up. Nobody has actually contradicted what I am saying.

It is kind of baffling.

We have Geodirectory vacancy: 1.3% in Dublin, 2% in Kildare and 2.9% in Wicklow.
We have 6% base rate by some estimates.
That's a real things. They may be calculated different things, and not comparable.
All the rest around GeoDirectory is your made up calculation, that is not mentioned in any of the reports.

three putt

PropQueries wrote: »

Markets change very quickly once perceptions and options change.

Agreed.
So why have we not seen a large scale collapse in property prices? Given this huge over-supply and decreasing demand.
You previously posted that a couple on minimum wage could 'easily afford' a standard 3-bed semi-d, hardly the symptoms of a bubble in house prices?

PropQueries wrote:

A couple, both on the minimum wage in Ireland could very easily afford the monthly repayments on a 25 year mortgage for many standard three-bed semis outside the major cities

hometruths

Timing belt wrote: »

I think the key word you used is vacancy problem which is different to saying there is not a supply shortage.

Yes vacancy may make a difference to the supply shortage if in the correct location and price and comes to market.

I've have always said I think we have a current supply for sale and rent problem. I have never questioned that.

My point has always been that this is being exacerbated/caused by the vacancy problem.

The vacancy problem clearly indicates that right now we do not have a shortage of existing housing stock which we are being to led to believe.

hometruths

Cyrus wrote: »

regardless as to who is right or wrong, if this suggested glut of properties are vacant it means very little if they arent for sale does it?

It means an awful lot if you are currently trying to buy or rent a house or are worried about the housing crisis. In these cases one of the reasons you are struggling is because of the high vacancy rate.

I agree, in practice, it means very little to me and others who can think I am alright Jack.

Except for the fact that that our taxpayers money is being flushed down the loo because we are unable to see what is under our nose.

I think it is fine to acknowledge the high vacancy rate and say "So what, people are free to do what they wish with their properties, we are not going to incentivise property owners to make better use of them" if collectively we are happy to suck up the consequences.

What bothers me is the fact we seem hell bent on pretending it does not exist, and making public spending and policy issues based on a distorted view.

hometruths

Marius34 wrote: »

We have Geodirectory vacancy: 1.3% in Dublin, 2% in Kildare and 2.9% in Wicklow.
We have 6% base rate by some estimates.
That's a real things. They may be calculated different things, and not comparable.
All the rest around GeoDirectory is your made up calculation, that is not mentioned in any of the reports.

GeoDirectory Q2 2017

GeoDirectory report a vacant stock of 96,243 address points or units in June 2017, while the 2016 Census reported a vacant stock of 183,312 address points or units, as of April 2016. Thus the GeoDirectory figure is around half the Census figure, which is a substantial difference, of the order of 87,000 dwellings. The average vacancy rate across the State is 4.9 per cent, according to GeoDirectory (Figure 10), compared with 12.3 per cent, according to the Census of Population.

Drilling down further, however, it is possible to explain some of this substantial difference. The CSO has provided some data on the reasons why vacant dwellings
were vacant at the time of the Census of Population for a small sample of vacant buildings (i.e. around 57,000 dwellings or close to one-third of the total). For this
one-third of vacant dwellings, they include dwellings classified as for sale (10,948 dwellings), for rent (10,350), owner in nursing home (4,165), renovation work underway (3,678), owner in hospital (1,469), and owner with relatives (847).

Some of these categories could be construed as dwellings which might not normally be classified as vacant in the context of vacant long term, but would represent more of a transition or temporary vacancy rate, i.e. while properties are waiting to be sold or rented out. In the aggregate they represent a total of around 31,500 properties out of the 57,000, or 55 per cent, implying that 25,500 of this total would be deemed to be vacant. As these explanations were only provided for one-third of vacant dwellings, (if it is assumed that 55 per cent of the remaining two-thirds were similarly classified, leaving 45 per cent as representing the true vacant total) this would reduce the CSO figure for the number of vacant dwellings considerably to around 83,000, which would
be closer to the GeoDirectory figure of 96,243.

Marius34

schmittel wrote: »

GeoDirectory Q2 2017

I read this like 5 times.
GeoDirectory doesn't say anything about oversupply in Dublin Co, and commuting counties.

Timing belt

schmittel wrote: »

I've have always said I think we have a current supply for sale and rent problem. I have never questioned that.

My point has always been that this is being exacerbated/caused by the vacancy problem.

The vacancy problem clearly indicates that right now we do not have a shortage of existing housing stock which we are being to led to believe.

There is not enough data to validate that this case. There is no breakdown by price, location, ber rating etc. It’s no different to saying that there is no demand because the population has only grown by x amount. There are other factors such as adults living with parents previously but wanting there own place now and can afford it but can’t find properties in their price range and location that influence demand over and above population growth.

I agree that there is a large no of vacants but if these are not in demand for whatever reason they do not address the shortage.

Cyrus

schmittel wrote: »

It means an awful lot if you are currently trying to buy or rent a house or are worried about the housing crisis. In these cases one of the reasons you are struggling is because of the high vacancy rate.

is it a high vacancy rate? genuines question, do we know what the vacancy rate is in other western european countries?

hometruths

Timing belt wrote: »

There is not enough data to validate that this case. There is no breakdown by price, location, ber rating etc. It’s no different to saying that there is no demand because the population has only grown by x amount. There are other factors such as adults living with parents previously but wanting there own place now and can afford it but can’t find properties in their price range and location that influence demand over and above population growth.

I agree that there is a large no of vacants but if these are not in demand for whatever reason they do not address the shortage.

That's slight head in sand stuff I think. Yes there is no breakdown by price or BER, but you breakdown by location in every Electoral Division in the country - https://data.cso.ie/table/EP009

Eg the vacancy rate in Dublin City South is 10.9% - It seems likely that the majority of these will be in demand.

If what you are saying is true that these properties cannot address shortage because there is no demand for them, then presumably that is why they are vacant. Then discussions should be ad about knocking them and building units there is demand for are.

But do we really believe anything even close to 10.9% of properties in Dublin City South need to be knocked because there is no demand for them?

You could argue that 10.9% of properties in South Dublin City are vacant because they are cold and draughty and need a better BER. If so then discussions should be had about whether they need to be refurbed.

Whatever way you look at it, the point remains that we need to be examining why 10.9% of propertied are vacant in Dublin City South in the middle of a housing crisis instead of telling ourselves it is not true.

Hubertj

schmittel wrote: »

That's slight head in sand stuff I think. Yes there is no breakdown by price or BER, but you breakdown by location in every Electoral Division in the country - https://data.cso.ie/table/EP009

Eg the vacancy rate in Dublin City South is 10.9% - It seems likely that the majority of these will be in demand.

If what you are saying is true that these properties cannot address shortage because there is no demand for them, then presumably that is why they are vacant. Then discussions should be ad about knocking them and building units there is demand for are.

But do we really believe anything even close to 10.9% of properties in Dublin City South need to be knocked because there is no demand for them?

You could argue that 10.9% of properties in South Dublin City are vacant because they are cold and draughty and need a better BER. If so then discussions should be had about whether they need to be refurbed.

Whatever way you look at it, the point remains that we need to be examining why 10.9% of propertied are vacant in Dublin City South in the middle of a housing crisis instead of telling ourselves it is not true.

i have every confidence our highly paid and very very very very competent public servants will carry out a thorough investigation into the matter. After all, they have an impressive track record when it comes to planning and the provision of housing.

cnocbui

The Irish Pubic Service is apalling, and although that was a typo, I realised it was actually more accurately descriptive.

I discovered that a house I own was likely mistakenly included in a SAC, pretty much erasing it's market value, without compensation and making it illegal for me to do basically the most routine maintainance.

Well done the Irish Pubic Service. You f*** up but ensure you draft the legislation so as to disallow any avenue of appeal to correct your mistakes. :mad:

So much for my hope of putting a property on the market.