Irish Property Market 2020 Part 3

Timing belt

schmittel wrote: »

No but it does back up a number of PropQueries's claims.

What specific claims does it back up?

hometruths

Timing belt wrote: »

It's not unreasonable to rely on the ESRI report but nowhere does it mention the housing needs of Dublin specifically so it's not unreasonable to try and work this out. If I change the figures for obselence to 0.01% and the no of people per property to 2.84 then that means we are taking about a shortage of 4.6k over the past 5 years in the Dublin market. So at a very min we need 3.9k house to be built each year over the next 5 years....and that is taking into account the 4.6k of vacancies.

Ok fair enough but my point remains - this is not a crisis in Dublin.

If at the very minimum we need to build 3.9k properties a year and have been pretty comfortably exceeding that for the last 3 years, this is a housing need that is manageable.

For months I have been saying the shortage of physical stock is not as bad as it appears, and if we listen to the scaremongerers and developers we are in danger of building too many houses in the wrong places, most specifically Dublin.

Whether the assumptions are that obsoletes are 0.01 or 0.02 or people per property is 2.84 or 3, the ESRI report suggests my view has some merit.

hometruths

Timing belt wrote: »

What specific claims does it back up?

The one that stood out strongest to me is that it is madness to be basing population growth forecasts on net increases pre 2020.

As Graham so eloquently put it earlier:

Graham wrote: »

You can't think of anything happening at the moment that might possibly stand a chance of changing todays trends, never mind the trends of 5 years ago?

Timing belt

schmittel wrote: »

Ok fair enough but my point remains - this is not a crisis in Dublin.

If at the very minimum we need to build 3.9k properties a year and have been pretty comfortably exceeding that for the last 3 years, this is a housing need that is manageable.

For months I have been saying the shortage of physical stock is not as bad as it appears, and if we listen to the scaremongerers and developers we are in danger of building too many houses in the wrong places, most specifically Dublin.

Whether the assumptions are that obsoletes are 0.01 or 0.02 or people per property is 2.84 or 3, the ESRI report suggests my view has some merit.

It has merit based on the downside assumptions if you take there base case or the top end it tells a different story. The 3.9k is all based on the downside.

Yes you are right about building in the wrong places. As all the building in the commuter belt tells us demand for Dublin is higher and people are priced out from an affordability point

Timing belt

schmittel wrote: »

The one that stood out strongest to me is that it is madness to be basing population growth forecasts on net increases pre 2020.

As Graham so eloquently put it earlier:

The only figure that changes on the population growth forecasts is the level of immigration due to Covid.

No where does the report predict that net population growth will turn negative as prop suggested.

Hubertj

schmittel wrote: »

The one that stood out strongest to me is that it is madness to be basing population growth forecasts on net increases pre 2020.

As Graham so eloquently put it earlier:

Clearly immigration would be impacted. Not sure anyone disputed that. I would more have an issue with someone making up facts and lying to support an opinion.

hometruths

Hubertj wrote: »

Clearly immigration would be impacted. Not sure anyone disputed that. I would more have an issue with someone making up facts and lying to support an opinion.

Remind me again what facts he made up, I never really grasped that?

Out of interest do you think I make up facts and lie to support my opinion? Serious question, I'm curious.

hometruths

Timing belt wrote: »

It has merit based on the downside assumptions if you take there base case or the top end it tells a different story. The 3.9k is all based on the downside.

Yes you are right about building in the wrong places. As all the building in the commuter belt tells us demand for Dublin is higher and people are priced out from an affordability point

And they say, at least in the short term, the downside is more likely. But even if despite the headwinds, the top end scenario takes place, then the construction need in Dublin is a little over 5k a year.

In 2016 we built 4.6k a year, 2017 4.7k a year. It is not a stretch to lift that to a little over 5k a year - i.e it is a manageable problem not a crisis.

The scaremongers and developers would have you believe we need to double or triple the output.

Timing belt

schmittel wrote: »

And they say, at least in the short term, the downside is more likely. But even if despite the headwinds, the top end scenario takes place, then the construction need in Dublin is a little over 5k a year.

In 2016 we built 4.6k a year, 2017 4.7k a year. It is not a stretch to lift that to a little over 5k a year - i.e it is a manageable problem not a crisis.

The scaremongers and developers would have you believe we need to double or triple the output.

It all depends on what shortage you think exists at present.

Timing belt

schmittel wrote: »

Remind me again what facts he made up, I never really grasped that?

Out of interest do you think I make up facts and lie to support my opinion? Serious question, I'm curious.

No you rely on data and facts... you may interpret them differently but at least they can be substantiated etc...And it leads to a healthy debate.

The issue with some of Prop posts is that if there was a newspaper article with a headline property prices have risen more that 500% and 99% of the article talked about this he would quote the one line in the article that was not related to it and spin it so you would think that is what the article is about.

I will be honest and say that he has a different view to many on here and that is good as people question data etc but a lot of the time his claims can not be backed up such as the 180k properties that vulture funds secretly own.

hometruths

Timing belt wrote: »

It all depends on what shortage you think exists at present.

Of course it does, that's the whole point.

Lots of people think a chronic crisis level shortage exists at the moment and they are crying out for more building.

I don't think there is a chronic shortage, based on lots of sources that I have referenced repeatedly, the latest being a report published by the ESRI entitled Regional demographics and structural housing demand at a county level

I get that plenty of posters on here don't agree with me, but the idea it is some sort of wacky conspiracy theory or driven by some disingenuous agenda is maddening!

Hubertj

schmittel wrote: »

Remind me again what facts he made up, I never really grasped that?

Out of interest do you think I make up facts and lie to support my opinion? Serious question, I'm curious.

Let me see. Government will use proposed changes to direct provision as a way to keep property prices “inflated”. I’m not going to waste my time reminding myself how much time I wasted engaging with it.
Far more interesting to discuss actual facts and analysis based on actual data.
Your opinions are valid as based on your assessment of available data. I don’t think you make stuff up to support them.

L1011

Hubertj wrote: »

Clearly immigration would be impacted. Not sure anyone disputed that. I would more have an issue with someone making up facts and lying to support an opinion.

Hubertj wrote: »

Let me see. Government will use proposed changes to direct provision as a way to keep property prices “inflated”. I’m not going to waste my time reminding myself how much time I wasted engaging with it.
Far more interesting to discuss actual facts and analysis based on actual data.
Your opinions are valid as based on your assessment of available data. I don’t think you make stuff up to support them.

You were told to stop interacting with PropQueries, and then specifically told to stop the bear-poking like this. You were recommended to put PropQueries on ignore, but clearly didn't

You have one last chance before you are thread-banned. Place PropQueries on ignore and do not interact, refer or infer to them in your posting - if you do this you will be banned from this thread and any future versions (parts, 2021, whatever) thereof

hometruths

Timing belt wrote: »

No you rely on data and facts... you may interpret them differently but at least they can be substantiated etc...And it leads to a healthy debate.

Well I'm glad you don't think so, but there are plenty of posters who do. I have been called Trumpian, the Comical Ali of boards, accused outright of making stuff up etc. Gets irritating after a while.

Timing belt wrote: »

The issue with some of Prop posts is that if there was a newspaper article with a headline property prices have risen more that 500% and 99% of the article talked about this he would quote the one line in the article that was not related to it and spin it so you would think that is what the article is about.

I will be honest and say that he has a different view to many on here and that is good as people question data etc but a lot of the time his claims can not be backed up such as the 180k properties that vulture funds secretly own.

Re Prop and his vulture funds, has he actually ever claimed that the vulture funds own the 180k vacant properties (i presume that is what the 180k is). I have always been of the impression that he has claimed he thinks they own most of them, and has quoted various figures like the amount of loans they have bought etc to show why he thinks that, but I am pretty sure I have never seen him outright state something he is linking to claims it is evidence that funds own 180k properties. Happy to be corrected if you can recall an instance.

The issue I have with Prop bashing is that he is most often criticised, as you have done above, for spinning some article, misrepresenting some fact in an article etc etc but I don't think I've seen anything actually deliberately misleading, often if there is some error it is in his enthusiasm for point.

It is certainly no more misleading than for example Bass Reeves' claim yesterday that "Daft property report is say that this year property prices rose by 3.5%."

This is completely false, Daft said nothing of the sort. I don't share Bass bullish views but I think he is an intelligent poster who makes rational points, and I don't believe for a minute that he was deliberately misrepresenting daft, or engaged in some sort of bad faith spin.

I think it was a simple case of being about the point that market has been stronger than expected, saw a stat in the ball park, and didn't pause to think it actually stack up. I think we have all done it before.

But nobody (apart from me!) pulled him up on it. And this happens multiple times daily from lots of different posters. Whereas Props gets attacked all the time for this, and is viewed as some sort of bad faith poster.

And a good few times when he's been pulled up on this sort of thing, I've noticed that what he is focussing on in the article that people are getting their knickers in a twist about is actually the more revealing information.

For example you say that "a newspaper article with a headline property prices have risen more that 500% and 99% of the article talked about this he would quote the one line in the article that was not related to it"

By way of another example - the headline of the article that got Bass Reeves so excited was House prices increased by 3.5% in a year - Daft report

If he had looked a little closer at the article he would have noticed that daft report actually said something a little different:

Author of the Daft.ie Wealth Report Ronan Lyons said: "Overall housing wealth in Ireland is up about 3.5% on a year ago at €536.4bn, up almost €18bn on the figure in the 2019H2 report.

I get the strong sense that PropQueries is singled out for posting misdemeanours that are routinely acceptable if you have a more bullish point of view.

JimmyVik

At the end of every year there should be a summary of peoples predictions from the first few pages.
Just to see if anyone was right.
I would be bottom of the list I suppose. I really thought there might be a big drop

Sometimes I read the threads of predictions from 5 or so years ago for a bit of fun.

Marius34

Timing belt wrote: »

It's not unreasonable to rely on the ESRI report but nowhere does it mention the housing needs of Dublin specifically so it's not unreasonable to try and work this out. If I change the figures for obselence to 0.01% and the no of people per property to 2.84 then that means we are taking about a shortage of 4.6k over the past 5 years in the Dublin market. So at a very min we need 3.9k house to be built each year over the next 5 years....and that is taking into account the 4.6k of vacancies.

Sorry if you explained in your previous comments. How did you get 3.9k houses/year for Dublin Co.? Is this based on ESRI report?

brisan

Timing belt wrote: »

It has merit based on the downside assumptions if you take there base case or the top end it tells a different story. The 3.9k is all based on the downside.

Yes you are right about building in the wrong places. As all the building in the commuter belt tells us demand for Dublin is higher and people are priced out from an affordability point

Demand is Dublin is high ,its demand up to a certain price point though.
Once you hit a certain price point demand drops off sharply .
CB rules are the main cause of this
While the CB rules do throw up anomalies I believe they are a good thing as they put a ceiling at least if not downward pressure on house prices in Dublin
If CB rules allowed a LTI of 4.5 prices would shoot up to meet them

nerrad01

brisan wrote: »

Demand is Dublin is high ,its demand up to a certain price point though.
Once you hit a certain price point demand drops off sharply .
CB rules are the main cause of this
While the CB rules do throw up anomalies I believe they are a good thing as they put a ceiling at least if not downward pressure on house prices in Dublin
If CB rules allowed a LTI of 4.5 prices would shoot up to meet them

christ could only imagine the state we would be in without the CB rules holding the prices steady

brisan

JimmyVik wrote: »

At the end of every year there should be a summary of peoples predictions from the first few pages.
Just to see if anyone was right.
I would be bottom of the list I suppose. I really thought there might be a big drop

Sometimes I read the threads of predictions from 5 or so years ago for a bit of fun.

I read one report where it said if you asked 100 economists last March for their views on the Irish property market they all would have said it would drop and demand would drop.
And all would have been wrong
Covid brought a whole new set of circumstances and reactions that nobody foresaw
The same might happen with Brexit

Smouse156

brisan wrote: »

Demand is Dublin is high ,its demand up to a certain price point though.
Once you hit a certain price point demand drops off sharply .
CB rules are the main cause of this
While the CB rules do throw up anomalies I believe they are a good thing as they put a ceiling at least if not downward pressure on house prices in Dublin
If CB rules allowed a LTI of 4.5 prices would shoot up to meet them

Strongly agree! Dublin did not top out in 2018 because of sufficient supply. It topped out as it has reached maximum affordability.

Considering Dublin was considered 25% overpriced/overvalued then it would be a disaster to relax the CBI rules.

Check out this article: The ‘Economist’ says Dublin house prices are 25% overvalued - https://www.irishtimes.com/1.3608951

hometruths

Smouse156 wrote: »

Strongly agree! Dublin did not top out in 2018 because of sufficient supply. It topped out as it has reached maximum affordability.

Considering Dublin was considered 25% overpriced/overvalued then it would be a disaster to relax the CBI rules.

Check out this article: The ‘Economist’ says Dublin house prices are 25% overvalued - https://www.irishtimes.com/1.3608951

Great comment at the end of that article:

Speaking in Dublin in 2005, then economics editor Pam Woodall noted that some economies rely on “common fallacies” to convince themselves that everything was going to be all right.

And one of these fallacies? Believing that a fixed supply of land and rising population mean house prices will always rise.

Browney7

https://www.irishtimes.com/business/commercial-property/ires-reit-acquires-146-apartments-at-phoenix-park-racecourse-for-60m-1.4436223?mode=amp

Interesting news. Would IRES now have 130 odd votes on the management of the development thus potentially giving them an outsize influence relative to single property owners? Only 26 of these were newly built too which is interesting.

The developer built 2 blocks which were for individual sale which still aren't fully sold more than 2 years after launch but they were looking for than 400k for them.

Ozark707

Browney7 wrote: »

https://www.irishtimes.com/business/commercial-property/ires-reit-acquires-146-apartments-at-phoenix-park-racecourse-for-60m-1.4436223?mode=amp

Interesting news. Would IRES now have 130 odd votes on the management of the development thus potentially giving them an outsize influence relative to single property owners? Only 26 of these were newly built too which is interesting.

The developer built 2 blocks which were for individual sale which still aren't fully sold more than 2 years after launch but they were looking for than 400k for them.

Rents at two-bed units in the development are currently on the market for between €1,850 and €2,025 a month, while Davy expects the newer units to be rented at higher rents and to achieve a lower yield.

Davy's predicting rents will rise there. That will be interesting to observe as they don't seem that cheap now.

hometruths

Ozark707 wrote: »

Davy's predicting rents will rise there. That will be interesting to observe as they don't seem that cheap now.

Presumably they cannot rise more than 4%?

Browney7

schmittel wrote: »

Presumably they cannot rise more than 4%?

There are a number of newly built properties that have not yet been rented out - vacant the past few months. Also, doesn't the wording of the 4% rule imply that if a property was new to the rental market after RPZs were introduced that they weren't subject to the 4% rules (although this may have changed)

hometruths

Browney7 wrote: »

There are a number of newly built properties that have not yet been rented out - vacant the past few months. Also, doesn't the wording of the 4% rule imply that if a property was new to the rental market after RPZs were introduced that they weren't subject to the 4% rules (although this may have changed)

Thanks, I didn’t pick up that the newer units were actually newly built, that were not yet rented.
Not 100% sure but I think as you say, if it has never been rented (or been vacant for along enough period) then LLs can charge what they like and are restricted to the 4% thereafter.
Hence all the ads for 1 months free rent!

Timing belt

Marius34 wrote: »

Sorry if you explained in your previous comments. How did you get 3.9k houses/year for Dublin Co.? Is this based on ESRI report?

This was calculated by the ESRI prediction that the Dublin's population would grow by 162k by 2040 and using there figure of 2.48 people per property which equates to 3.4k housing units required each year for the the next 19 years.

This was then adjusted for the low population scenario in the ESRI report which adjusted the figure to 3k housing units per year.

I then used the ESRI data to update the assumptions (obeisance & no of people per housing unit) for my calculation of the shortage in supply during the period 2016-2019. Which assumed that all vacant properties over 6% were released back into the market during this period and there was no housing shortage prior to 2016. This then gave a shortage of 4.7k over this period

I then assumed that this shortage would be closed out over the next 5 years which meant that we would need 3.9k housing each year to meet demand at a minimum.

Please note that this is all calculated using the lower assumptions of the ESRI and the assumption that there was no housing shortage prior to 2016 (Which is highly unlikely as rents were rising by 10% back then which indicated there was a large shortage)

If you excluded the vacant properties re-entering the market and took the high end assumptions of the ESRI report you would need to build 6.7k for the next five years to meet demand in Dublin. And a even higher rate if you think that a shortage existed in 2016.

The calculation was to show the absolute minimum no of housing units that would be required.

TheSheriff

Browney7 wrote: »

https://www.irishtimes.com/business/commercial-property/ires-reit-acquires-146-apartments-at-phoenix-park-racecourse-for-60m-1.4436223?mode=amp

Interesting news. Would IRES now have 130 odd votes on the management of the development thus potentially giving them an outsize influence relative to single property owners? Only 26 of these were newly built too which is interesting.

The developer built 2 blocks which were for individual sale which still aren't fully sold more than 2 years after launch but they were looking for than 400k for them.

Know this development well having viewed two apartments up for sale there last year.

Lovely apartments, thought they were over priced tough.

A short stroll down the road to Ashtown and you'll get a comparable apartment which is closer to the train for 50-80k cheaper.

Proximity to the Ashtown entrance of the park is what's selling these; wouldn't be surprised to hear a number are still for sale/rent. The last one we viewed was on the market several months.

Not much else around there.

There were two brand new apartment blocks built about 2 years ago. I saw a couple of show apartments myself. They were nice enough but most of them seemed to face north, away from the Phoenix Park.
They never sold one as far as I know.

hometruths

Timing belt wrote: »

If you excluded the vacant properties re-entering the market and took the high end assumptions of the ESRI report you would need to build 6.7k for the next five years to meet demand in Dublin. And a even higher rate if you think that a shortage existed in 2016.

What would the logic be behind excluding the vacant properties re-entering the market?

Surely the most likely scenario is they do re-enter the market at some point over the 9 year term you are talking about?