Irish Property Market 2020 Part 3

Timing belt

schmittel wrote: »

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?

Because it is subjective just the same as saying there was no housing shortage prior to 2016.

Marius34

Timing belt wrote: »

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.

Thanks! I see your point. Make sense.
Just looked at the population table by year/decade. It seems demands due to population growth, would not be distributed equal across years/decades for Dublin Co.
And the lead in population growth to be moving towards Mid-East, at least that's what it looks from the table in ESRI population projection.

Timing belt

Marius34 wrote: »

Thanks! I see your point. Make sense.
Just looked at the population table by year/decade. It seems demands due to population growth, would not be distributed equal across years/decades for Dublin Co.
And the lead in population growth to be moving towards Mid-East, at least that's what it looks from the table in ESRI population projection.

Correct the demand for housing from Dublin will continue to spill out to Mid-East.

Timing belt

Interesting article on HAP.

https://www.thejournal.ie/hap-tenants-committee-5300977-Dec2020/

hometruths

Timing belt wrote: »

Because it is subjective just the same as saying there was no housing shortage prior to 2016.

The census is not subjective. That is kind of the whole point of it!

But I'll try to work on some figures to avoid subjectivity. Before I spend time doing sums can we try to agree on what's acceptable assumptions and what's not? Not trying to be a smart ass, just trying to avoid a pointless waste of time.

Can we agree that it is reasonable to assume a large amount of properties are vacant at any given time due to sales, lettings, renovations, holiday homes, nursing home, hospital etc and this is normal? i.e what some posters call temporary vacancies

Can we assume that if properties are identified and can be counted that don't fall into the above categories represent additional supply that could potentially could come to the market? i.e what some posters call long term vacancies?

What do we assume would happen to these properties for the purposes of forecasting future housing need? 100% reenter the market, 75%, 50%, 25%, 0%? (I am not trying to have a debate about what the correct figure is. Just pick the figure that you're happy with, and I'll apply that to my calculations.)

And can we agree that CSO, ESRI and Geodirectory are credible sources to quote in terms of vacancies, housing stock, completions, population projections etc?

Mickey_James

Thoughts on buying apartment for potentially a few years, renting out a room to cover some of the mortgage?

Seems like that would offset the risk of dropping prices? I wouldn't be buying it for long term but I wouldn't be in a rush to sell either if prices tanked...

I've been doing calculations using an interest rate of 3% through the mortgage and with rent a room the rent would more than cover the interest..in fact the rent I think I could get, if not 50-100 more, would be 55% of the mortgage payment.

Even if prices dropped 12.5%, if the rent payment was the same I would break even after 5 years. (i.e if I sold the apartment I would end up with the same deposit I put in at the start)

Any thoughts?

I'm single

Timing belt

schmittel wrote: »

The census is not subjective. That is kind of the whole point of it!

But I'll try to work on some figures to avoid subjectivity. Before I spend time doing sums can we try to agree on what's acceptable assumptions and what's not? Not trying to be a smart ass, just trying to avoid a pointless waste of time.

Can we agree that it is reasonable to assume a large amount of properties are vacant at any given time due to sales, lettings, renovations, holiday homes, nursing home, hospital etc and this is normal? i.e what some posters call temporary vacancies

yes we can agree this and the central bank use a figure of 6% of housing stock.

schmittel wrote: »

Can we assume that if properties are identified and can be counted that don't fall into the above categories represent additional supply that could potentially could come to the market? i.e what some posters call long term vacancies?

No we can't assume this as there is a separate Category for Long Term Vacancies and this is where the subjectivity comes into play as 56%(in Dublin) of the vacant properties fall into the Other Category for which we don't know the reason for so don't know can they re-enter the housing stock.

As Quoted in National Vacant Housing Reuse Strategy there are myriad of reason why some of these properties are not recoverable.

"The level of residential vacancy recorded in Ireland at a time when so many people are in need of housing can be difficult to reconcile. Census 2016 figures indicated that there were approximately 183,000 vacant homes (down from 230,000 in 2011) but, in considering that headline figure, it must be borne in mind that those numbers were recorded at a single point in time and included houses for sale or for rent, as well as homes that are not recoverable for occupancy for a myriad of reasons."

hometruths

Timing belt wrote: »

yes we can agree this and the central bank use a figure of 6% of housing stock.



No we can't assume this as there is a separate Category for Long Term Vacancies and this is where the subjectivity comes into play as 56%(in Dublin) of the vacant properties fall into the Other Category for which we don't know the reason for so don't know can they re-enter the housing stock.

As Quoted in National Vacant Housing Reuse Strategy there are myriad of reason why some of these properties are not recoverable.

"The level of residential vacancy recorded in Ireland at a time when so many people are in need of housing can be difficult to reconcile. Census 2016 figures indicated that there were approximately 183,000 vacant homes (down from 230,000 in 2011) but, in considering that headline figure, it must be borne in mind that those numbers were recorded at a single point in time and included houses for sale or for rent, as well as homes that are not recoverable for occupancy for a myriad of reasons."

In addition to sale or rent, the myriad of other reasons includes renovations, nursing homes, hospital, etc all of which are accounted for as normal temporary vacancies.

There be may be a myriad of further unaccounted for reasons but the buildings still exist, they are part of the housing stock.

All I was asking was could we agree that they represent additional supply that could potentially could come to the market

I struggle to see why if we agree they exist, we cannot agree that they might potentially reenter the market!

Timing belt

schmittel wrote: »

In addition to sale or rent, the myriad of other reasons includes renovations, nursing homes, hospital, etc all of which are accounted for as normal temporary vacancies.

Yes and these are accounted for in their relevant categories but there is still 56% of the vacants that are classified in category 'Other' which means we do not know the reason

schmittel wrote: »

There be may be a myriad of reasons but the buildings still exist, they are part of the housing stock.

I never said they didn't exist I have just said it subjective as to how many are recoverable. You have one view based on the data someone else could have a different view. The data is not conclusive hence why it is subjective.

BryanMartin21

schmittel wrote: »

The market has been incredibly resilient given the circumstances, and if Ireland was an outlier in this, I'd be rather more worried, but it does seem other markets appear to be holding up as well.

My assessment in March/April was to a large extent based on an expectation (hope) that a new government would use the cover of covid to take some tough decisions on approach to the housing crisis. At this stage it is clear that is not going to happen!

Whilst this offends whatever remnants of societal idealism I retain, on a personal level I am much less gloomy, as I have more confidence that I'll be able to sell a property strongly in Spring 2021. Fingers crossed.

I certainly have come around to the idea that the impact of covid economic damage on the market seems to be much more uncertain than the idea rising unemployment = falling prices. As you say nobody could have foreseen actions by multiple governments and central banks.

At the risk of triggering your conspiracy theory radar I think this uncertainty is currently having two contradictory impacts on the market.

At the lower end prices are holding up because people are desperate, getting in before the lock, before the banks pull up the mortgage drawbridge, they lose their job etc. This demand is greater than the tight supply at this level.

At the higher end €1m supply is better because this market had stalled pre covid and some big price properties were backing up on the market. But there are reports that this sector is moving and I think that might be driven by inflation worries by the wealthy looking to preserve that wealth.

So we have a situation were both the dumb money and the smart money are panic buying!

And before someone like Marius gets on my back for making stuff up, yes I made that up. As in formed an opinion based on what I see. That should be ok on a discussion forum.

Medium long term I still remain bearish because of economic/work/lifestyle impacts of covid, demographic issues, reversions to mean etc but in the short term I am hopeful it will be business as usual.

We are at the euphoria stage with market sentiment I feel. Slight anxiety thrown in but generally people feel they are thriving.

https://www.thejournal.ie/hap-tenants-committee-5300977-Dec2020/

I saw this this evening in the Journal. In particular, a pretty alarming stat that 1/3 of all tenancies in the State are HAP tenancies. This has serious echoes of a rental market bubble as the State is propping up the market. Certainly not an investment for the faint hearted I have to say!

hometruths

Timing belt wrote: »

Yes and these are accounted for in their relevant categories but there is still 56% of the vacants that are classified in category 'Other' which means we do not know the reason



I never said they didn't exist I have just said it subjective as to how many are recoverable. You have one view based on the data someone else could have a different view. The data is not conclusive hence why it is subjective.

Which is exactly why my third question was how many do you think is a reasonable % that are recoverable?

I get it is subjective and am happy to work with your view, whatever that might be.

Timing belt

BryanMartin21 wrote: »

We are at the euphoria stage with market sentiment I feel. Slight anxiety thrown in but generally people feel they are thriving.

https://www.thejournal.ie/hap-tenants-committee-5300977-Dec2020/

I saw this this evening in the Journal. In particular, a pretty alarming stat that 1/3 of all tenancies in the State are HAP tenancies. This has serious echoes of a rental market bubble as the State is propping up the market. Certainly not an investment for the faint hearted I have to say!

Considering the breakdown of HAP tenancies by income breakdown as published by the CSO yes I would agree the state is propping up the rental market.

Timing belt

schmittel wrote: »

Which is exactly why my third question was how many do you think is a reasonable % that are recoverable?

I get it is subjective and am happy to work with your view, whatever that might be.

I genuinely don't know what % I think is recoverable It's like asking how many houses do you think will be built in 2021.

but I do think that there is a massive undersupply of affordable homes.

hometruths

Timing belt wrote: »

I genuinely don't know what % I think is recoverable It's like asking how many houses do you think will be built in 2021.

but I do think that there is a massive undersupply of affordable homes.

We can agree on something - this. There is currently a massive undersupply of affordable homes.

That's a very different statement to a massive undersupply of homes.

Wingman2010

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.

Did you buy in the end? If I recall you were looking at buying a few months back after holding off for a number of years!

brisan

Mickey_James wrote: »

Thoughts on buying apartment for potentially a few years, renting out a room to cover some of the mortgage?

Seems like that would offset the risk of dropping prices? I wouldn't be buying it for long term but I wouldn't be in a rush to sell either if prices tanked...

I've been doing calculations using an interest rate of 3% through the mortgage and with rent a room the rent would more than cover the interest..in fact the rent I think I could get, if not 50-100 more, would be 55% of the mortgage payment.

Even if prices dropped 12.5%, if the rent payment was the same I would break even after 5 years. (i.e if I sold the apartment I would end up with the same deposit I put in at the start)

Any thoughts?

I'm single

It seems like a good plan
Make sure you buy an apartment that will have an appeal to rent a room tenants .
Close to shops ,public transport and the City Centre (assuming you are in Dublin )
Banks will not allow for this in a stress test on a mortgage payment ,but you seem to have it worked out properly
3.5 LTI will put a limit on what you can buy as a single purchaser ,but you seem to have a good handle on it
Best of luck with the hunt

Villa05

Timing belt wrote:

Considering the breakdown of HAP tenancies by income breakdown as published by the CSO yes I would agree the state is propping up the rental market.

Would it be logical to assume that the 1/3 figure is much greater in Dublin

Timing belt

Villa05 wrote: »

Would it be logical to assume that the 1/3 figure is much greater in Dublin

There is data on the cso that shows the % of rentals that are HAP. From memory Dundalk was the highest and areas outside Dublin but that is probably due to the lack of rental properties resulting in a higher %

https://www.cso.ie/en/releasesandpublications/ep/p-hhwl/socialhousinginireland2019-analysisofhousingassistancepaymenthapscheme/happroperties/

naturalgems18

What are people's experiences of bidding times at the moment? We're finding it quite slow - only one other bidder who is taking ages to counter and increasing by smallish amounts (1k).

Ozark707

naturalgems18 wrote: »

What are people's experiences of bidding times at the moment? We're finding it quite slow - only one other bidder who is taking ages to counter and increasing by smallish amounts (1k).

What area of country and price range is this?

naturalgems18

Ozark707 wrote: »

What area of country and price range is this?

North Wicklow and ~550k - 600k

brisan

naturalgems18 wrote: »

North Wicklow and ~550k - 600k

Tat would be out of the majority of FTBs price range and at the top of a lot of peoples price range
I would say other bidders are getting near their max bid or hoping you are and do not want to waste 10k trying to blow you out of the water when 1k might have the same effect

Mickey_James

Anyone know if there's any migration stats for the last 6 months or so?

Would be interested to see if there's still the large number of net immigrants.

JimmyVik

Wingman2010 wrote: »

Did you buy in the end? If I recall you were looking at buying a few months back after holding off for a number of years!

I did indeed.
Decided I was too long in the tooth and it was time to buy a house for myself.
Bought for over asking but im happy with it.
At this point im not too bothered if prices go up or down. Im not very good at predicting them anyway

awec

naturalgems18 wrote: »

What are people's experiences of bidding times at the moment? We're finding it quite slow - only one other bidder who is taking ages to counter and increasing by smallish amounts (1k).

They are running out of money.

JimmyVik

Mickey_James wrote: »

Anyone know if there's any migration stats for the last 6 months or so?

Would be interested to see if there's still the large number of net immigrants.

I doubt very much there has been much immigration in the last 6 months.

Mickey_James

JimmyVik wrote: »

I doubt very much there has been much immigration in the last 6 months.

We have a net inward migration of about 35k per year in a normal year.

If they are not coming, why aren't prices dropping even for rent? That'd be equal to what...12k units in a year if they didn't come?

naturalgems18

awec wrote: »

They are running out of money.

I had been wondering that - how long is reasonable to allow for a counter offer though? I'm not keen to put a time frame on our offer because we really like the house but at the same time, it's frustrating being strung along at snails pace.

awec

naturalgems18 wrote: »

I had been wondering that - how long is reasonable to allow for a counter offer though? I'm not keen to put a time frame on our offer because we really like the house but at the same time, it's frustrating being strung along at snails pace.

You could try put in a bigger counter offer to see if that scares them off.

Slow, small increments is a sure sign of someone running out of money though. They are probably sitting each time wondering if they can stretch to just 1k more, so I suspect you're near the end either way.

Timing belt

Mickey_James wrote: »

Anyone know if there's any migration stats for the last 6 months or so?

Would be interested to see if there's still the large number of net immigrants.

You probably won't see any data till August 2021 when the CSO will publish the population estimates for the year ended April 2021.

I would expect that there is a uptick in Irish Nationals returning due to covid and a reduction in the foreign nationals numbers.

Overall it should be down quite a bit.