2021 Irish Property Market chat - *mod warnings post 1*

hometruths

Marius34 wrote: »

Looking at this thread it seems it happened the opposite.

15 years ago, average price were around or over 10 times the wage, nationally, and appears it was normal, people didn't see it as a boom.
Today nationally it's less than 10 times the wage, and so many here see it as a boom.

There are those on here claiming property is currently affordable which is bonkers. That is who I am referring to.

Yes there some 15 years ago saying property at over 10 times the national wage was perfectly normal, and that people should stop cribbing and moaning from the sidelines. Look how well that turned out.

Marius34

PropQueries wrote: »

It’s not “cash rich investors”. It’s the state. Back in July 2020, the housing minister said:

“The Airbnb properties that are now not being used – is there an opportunity for the state to buy more of them? It’s something that I’m looking at, absolutely. It is something that I want to do frankly,” said O’Brien.”

Dublin City Council also said recently they’re in negotiations to buy or rent c. 4,000 properties in the city.

Basically, if you’re one of the few people actually bidding for properties these days, your counter bidder is more than likely the state.

Good luck with your bidding, but if you do win, you’re also more than likely paying c. 50% more than you would have paid if the state wasn’t also involved the bidding process and driving up the price IMO

Link to his interview in TheJournal.ie here: https://www.thejournal.ie/darragh-o-brien-housing-minister-5146915-Jul2020/

To get to this logic you need to have a rough figure how many second hand properties state is buying a year.
I'm not sure you have knowledge on how many second hand properties state has bought?

Timing belt

PropQueries wrote: »

It’s not cash rich investors or other buyers. It’s the state. Back in July 2020, the housing minister said:

“The Airbnb properties that are now not being used – is there an opportunity for the state to buy more of them? It’s something that I’m looking at, absolutely. It is something that I want to do frankly,” said O’Brien.”

Dublin City Council also said recently they’re in negotiations to buy or rent c. 4,000 properties in the city.

Basically, if you’re one of the few people actually bidding for properties these days, your counter bidder is more than likely the state.

Good luck with your bidding, but if you do win, you’re also more than likely paying c. 50% more than you would have paid if the state wasn’t also involved in the bidding process and driving up the price IMO

Link to his interview in TheJournal.ie here: https://www.thejournal.ie/darragh-o-brien-housing-minister-5146915-Jul2020/

No doubt the DCC buying is having an impact but don't think it is to the extent that you are alluding to:

For 2020 their were 15,254 properties sold in Dublin at market value per the CSO
Row Labels Existing New
Volume of Sales
Household Buyer - First-Time Buyer Owner-Occupier 3017 1087
Household Buyer - Former Owner-Occupier 4584 935
Household Buyer - Non-Occupier 817 69
Non-Household Buyer 2633 2112
Grand Total 11051 4203


50% of new builds were bought by the state or institutional investors whilst only 24% of second hand homes were bought by non household buyers

Would the situation have changed that much for the first 2 months of 2021?

PropQueries

Marius34 wrote: »

To get to this logic you need to have a rough figure how many second hand properties state is buying a year.
I'm not sure you have knowledge on how many second hand properties state has bought?

No idea of how many they bought last year but I’m sure someone here can find the figures.

But what I do know is that DCC said explicitly a few weeks ago that they’re currently in active negotiations to rent or buy c. 4,000 properties in the city.

Dublin City is not that big (it’s not London), so 4,000 properties is a very very big proportion of the sales market.

That’s also backed up by the Minister for Housing stating back in July that he’s looking at buying up all those empty AirBnB properties.

Also, given that 4 in 10 new builds are being bought by either the funds or the state and another 3 are one-off builds, that leaves about 3 in 10 new build units available for the private market.

I’ve seen very little media coverage over the past three years of people queuing to buy these new built homes which leads me to believe there’s very little private demand (at the asking prices anyway) and that the only thing holding up the market is the state renting or buying any property that comes on the market.

Given the budget concerns, once the state inevitably pulls back from this current spending spree, it will be shown that there’s little to no private demand.

Not at anywhere near current asking prices anyway IMO

hometruths

Timing belt wrote: »

No doubt the DCC buying is having an impact but don't think it is to the extent that you are alluding to:

For 2020 their were 15,254 properties sold in Dublin at market value per the CSO
Row Labels Existing New
Volume of Sales
Household Buyer - First-Time Buyer Owner-Occupier 3017 1087
Household Buyer - Former Owner-Occupier 4584 935
Household Buyer - Non-Occupier 817 69
Non-Household Buyer 2633 2112
Grand Total 11051 4203


50% of new builds were bought by the state or institutional investors whilst only 24% of second hand homes were bought by non household buyers

Would the situation have changed that much for the first 2 months of 2021?

You need to look beyond the numbers bought. The fact that the state is prepared to enter into long term leases with landlords and developers means is having a significant impact.

This is both keeping rents and purchase prices high by removing supply from both the private sales and rental market. Despite what some on here believe rents and purchase prices are inextricably linked.

The government is essentially underpinning the entire market, either by accident or design.

Marius34

PropQueries wrote: »

No idea of how many they bought last year but I’m sure someone here can find the figures.

But what I do know is that DCC said explicitly a few weeks ago that they’re currently in active negotiations to rent or buy c. 4,000 properties in the city.

Dublin City is not that big (it’s not London), so 4,000 properties is a very very big proportion of the sales market.

That’s also backed up by the Minister for Housing stating back in July that he’s looking at buying up all those empty AirBnB properties.

Also, given that 4 in 10 new builds are being bought by either the funds or the state and another 3 are one-off builds, that leaves about 3 in 10 new build units available for the private market.

I’ve seen very little media coverage over the past three years of people queuing to buy these new built homes which leads me to believe there’s very little private demand (at the asking prices anyway) and that the only thing holding up the market is the state renting or buying any property that comes on the market.

Given the budget concerns, once the state inevitably pulls back from this current spending spree, it will be shown that there’s little to no private demand.

Not at anywhere near current asking prices anyway IMO

It doesn't mean that all 4000 will be on the market for sale, to make it as significant counter-bidder as you think.

Graham

PropQueries wrote: »

Also, given that 4 in 10 new builds are being bought by either the funds or the state and another 3 are one-off builds, that leaves about 3 in 10 new build units available for the private market.

So assuming your figures are accurate.

40% rental
60% private market

Hubertj

schmittel wrote: »

You need to look beyond the numbers bought. The fact that the state is prepared to enter into long term leases with landlords and developers means is having a significant impact.

This is both keeping rents and purchase prices high by removing supply from both the private sales and rental market. Despite what some on here believe rents and purchase prices are inextricably linked.

The government is essentially underpinning the entire market, either by accident or design.

You also need to consider by how much the state outbid random punters by and how many? Are they going in over the top quickly to close a sale? I wouldn’t be surprised as they aren’t particularly competent, are not accountable and it’s not their money. Actually they just got a pay rise so must be doing a great job.

Or is the state outbidding punters by a small margin. I’d be interested to know how many people can afford in the current market but are blocked by the state.

Timing belt

schmittel wrote: »

You need to look beyond the numbers bought. The fact that the state is prepared to enter into long term leases with landlords and developers means is having a significant impact.

This is both keeping rents and purchase prices high by removing supply from both the private sales and rental market. Despite what some on here believe rents and purchase prices are inextricably linked.

The government is essentially underpinning the entire market, either by accident or design.

I am not arguing that government actions are not impacting the housing market that is obvious to every man and their dog.

All I am saying is that it is not to the scale that Props is alluding to whereby every time someone is outbid it is due to the state being on the other end.....Way back last year I said that there would be increases in property prices because institutional investors would pile in and outbid anyone as they will not get a return like that from any other asset class. It is a risk free with a good yield as long as the state keeping the money flowing which they will have to unless they develop there own properties which doesn't look like will happen anytime soon.

Instead we will follow a lot of US cities where similar has happened whereby institutional investors will pile in create demand and build more till there is a surplus of properties and rents start to fall by which time the institutional investors will have tried to flip the properties to another investor or retail buyer. There is even a research paper on the FED website that even talks about this dynamic.

Mic 1972

PropQueries wrote: »

No idea of how many they bought last year but I’m sure someone here can find the figures.

But what I do know is that DCC said explicitly a few weeks ago that they’re currently in active negotiations to rent or buy c. 4,000 properties in the city.

Dublin City is not that big (it’s not London), so 4,000 properties is a very very big proportion of the sales market.

That’s also backed up by the Minister for Housing stating back in July that he’s looking at buying up all those empty AirBnB properties.

Also, given that 4 in 10 new builds are being bought by either the funds or the state and another 3 are one-off builds, that leaves about 3 in 10 new build units available for the private market.

I’ve seen very little media coverage over the past three years of people queuing to buy these new built homes which leads me to believe there’s very little private demand (at the asking prices anyway) and that the only thing holding up the market is the state renting or buying any property that comes on the market.

Given the budget concerns, once the state inevitably pulls back from this current spending spree, it will be shown that there’s little to no private demand.

Not at anywhere near current asking prices anyway IMO

I met only private buyers at the viewings I attended in the last few months. To say that there is little to no private demand sounds like an exaggeration

PropQueries

Timing belt wrote: »

I am not arguing that government actions are not impacting the housing market that is obvious to every man and their dog.

All I am saying is that it is not to the scale that Props is alluding to whereby every time someone is outbid it is due to the state being on the other end.....Way back last year I said that there would be increases in property prices because institutional investors would pile in and outbid anyone as they will not get a return like that from any other asset class. It is a risk free with a good yield as long as the state keeping the money flowing which they will have to unless they develop there own properties which doesn't look like will happen anytime soon.

Instead we will follow a lot of US cities where similar has happened whereby institutional investors will pile in create demand and build more till there is a surplus of properties and rents start to fall by which time the institutional investors will have tried to flip the properties to another investor or retail buyer. There is even a research paper on the FED website that even talks about this dynamic.

But I don’t think the institutional investors are interested in buying that one three bed semi that comes up for sale in the middle of an estate in e.g. Stillorgan.

The problem now is that there’s a good chance the state is now directly competing with that family looking to buy that three bed in Stillorgan IMO

hometruths

Timing belt wrote: »

I am not arguing that government actions are not impacting the housing market that is obvious to every man and their dog.

All I am saying is that it is not to the scale that Props is alluding to whereby every time someone is outbid it is due to the state being on the other end...

I don't think Prop's is saying (I'm sure he'll correct me if I am wrong) is that the state is bidding on every property, outbidding each and every buyer. That's ridiculous.

But in the market as a whole, where prices are set at the margin, the state is the marginal buyer, which you appear to agree with:

Timing belt wrote: »

Way back last year I said that there would be increases in property prices because institutional investors would pile in and outbid anyone as they will not get a return like that from any other asset class. It is a risk free with a good yield as long as the state keeping the money flowing which they will have to unless they develop there own properties which doesn't look like will happen anytime soon.

If investors are piling in for yield because the state is to all intents and purposes setting a floor for rents, then the state is essentially setting the price at the margin. The Redrock deal I posted yesterday is a perfect example.

If the state is driving prices upwards by their activity in the market, then Props is bang on the money. Once again.

hometruths

PropQueries wrote: »

But I don’t think the institutional investors are interested in buying that one three bed semi that comes up for sale in the middle of an estate in e.g. Stillorgan.

The problem now is that there’s a good chance the state is now directly competing with that family looking to buy that three bed in Stillorgan IMO

Yes and that 3 bed in Stillorgan has a value directly linked to its rental yield. If the state is setting a floor for rental values they are driving the price of that property up whether they are bidding on it or not.

Cyrus

schmittel wrote: »

Yes and that 3 bed in Stillorgan has a value directly linked to its rental yield. If the state is setting a floor for rental values they are driving the price of that property up whether they are bidding on it or not.

Are 3 bed semis in desirable suburbs valued at rental yield given the majority are bought by families to live in ?

I’d argue the desirability of the location is the determining factor.

hometruths

Cyrus wrote: »

Are 3 bed semis in desirable suburbs valued at rental yield given the majority are bought by families to live in ?

I’d argue the desirability of the location is the determining factor.

Yes, the rental yield is very relevant.

Hubertj

schmittel wrote: »

I don't think Prop's is saying (I'm sure he'll correct me if I am wrong) is that the state is bidding on every property, outbidding each and every buyer. That's ridiculous.

But in the market as a whole, where prices are set at the margin, the state is the marginal buyer, which you appear to agree with:



If investors are piling in for yield because the state is to all intents and purposes setting a floor for rents, then the state is essentially setting the price at the margin. The Redrock deal I posted yesterday is a perfect example.

If the state is driving prices upwards by their activity in the market, then Props is bang on the money. Once again.

I thought prices have been pretty much flat or decreased sloughtly since end of 2018? We did see some increase in prices 2nd half of last year but was that not due to reduced supply and “pent up demand”?

Cyrus

schmittel wrote: »

Yes, the rental yield is very relevant.

If I am buying a house to live in the theoretical rental yield isn’t a factor in my decision making process, is it in a location that I want to live, does it have desirable amenities, does it meet my space requirements and can I afford it are what matters.

PropQueries

Cyrus wrote: »

Are 3 bed semis in desirable suburbs valued at rental yield given the majority are bought by families to live in ?

I’d argue the desirability of the location is the determining factor.

Well, unless the EU, ECB or the bond market puts some manners on the states current spending spree, there will be very few “desirable” locations left in Dublin IMO

Just ask the residents of Ailesbury Road in Ballsbridge (second most expensive street on the monopoly board I believe):

https://independent.ie/irish-news/dermot-desmonds-ballymun-towers-south-dublin-tag-for-plan-on-ex-rte-land-branded-incredible-39510797.html

hometruths

Hubertj wrote: »

I thought prices have been pretty much flat or decreased sloughtly since end of 2018? We did see some increase in prices 2nd half of last year but was that not due to reduced supply and “pent up demand”?

Fair point, I should have said if the state is "putting upward pressure on prices" rather than "driving prices upward". The marginal buyer can be putting upward pressure on prices even in a falling market.

The state has pent up demand too. Because they have massive waiting lists for social housing. Oddly enough because rents are so high. And round and round we go.

hometruths

Cyrus wrote: »

If I am buying a house to live in the theoretical rental yield isn’t a factor in my decision making process, is it in a location that I want to live, does it have desirable amenities, does it meet my space requirements and can I afford it are what matters.

Sure, but just because you're not planning on renting it out and thus don't consider the rental yield relevant, it's still a factor in the market price that you end up paying for the things that are important to you.

PropQueries

schmittel wrote: »

Sure, but just because you're not planning on renting it out and thus don't consider the rental yield relevant, it's still a factor in the market price that you end up paying for the things that are important to you.

I would think it’s definitely a factor in “desirable” locations.

Many desirable locations have relatively older populations and when the time comes for the children / grandchildren to decide whether to rent or sell their inherited property, the expected rental income would definitely be a factor in their decision to either sell or keep it IMO

hometruths

PropQueries wrote: »

I would think it’s definitely a factor in “desirable” locations.

Many desirable locations have relatively older populations and when the time comes for the children / grandchildren to decide whether to rent or sell their inherited property, the expected rental income would definitely be a factor in their decision to either sell or keep it IMO

Its a factor in all locations!

PropQueries

Interesting article in the Irish Times: “LDA chief executive John Coleman believes he can improve on local authorities’ six-year process and bring a raw piece of land to the stage of having housing on it in four years.”

It’s a subscriber article but you can get the gist from the first paragraph.

But it does draw up comparisons with Charlie Haughey and how he got the Beaumont Hospital built:

“Haughey established the Beaumont Hospital Board in 1977, to build and equip an acute general hospital in his constituency. Rather than engage more architects to design a new hospital, which would involve a considerable amount of time and expense, Mr. Haughey decided to utilise the existing plans used for the construction of the Cork University Hospital (Wilton) in the early 70's. This inspired decision ensured that the hospital was built without any undue delay at a cost of €52.7 million.”

He basically said that they already built a hospital in Cork, just take those plans and build it in Beaumont. A field is a field whether it’s in Cork, Mayo or Dublin. It’s not brain surgery.

It just shows that with the right person in charge, the housing issue could be resolved quickly and relatively cheaply IMO

Link to Irish Times article here: https://www.irishtimes.com/news/social-affairs/affordable-housing-can-land-development-agency-succeed-where-others-have-failed-1.4502279

Link to Beaumont Hospital and Charlie Haughey article here: https://www.charlesjhaughey.ie/articles/beaumont-hospital

Timing belt

PropQueries wrote: »

Interesting article in the Irish Times: “LDA chief executive John Coleman believes he can improve on local authorities’ six-year process and bring a raw piece of land to the stage of having housing on it in four years.”

It’s a subscriber article but you can get the gist from the first paragraph.

But it does draw up comparisons with Charlie Haughey and how he got the Beaumont Hospital built:

“Haughey established the Beaumont Hospital Board in 1977, to build and equip an acute general hospital in his constituency. Rather than engage more architects to design a new hospital, which would involve a considerable amount of time and expense, Mr. Haughey decided to utilise the existing plans used for the construction of the Cork University Hospital (Wilton) in the early 70's. This inspired decision ensured that the hospital was built without any undue delay at a cost of €52.7 million.”

He basically said that they already built a hospital in Cork, just take those plans and build it in Beaumont. A field is a field whether it’s in Cork, Mayo or Dublin. It’s not brain surgery.

It just show that with the right person in charge, the housing issue could be resolved quickly and relatively cheaply IMO

Link to Irish Times article here: https://www.irishtimes.com/news/social-affairs/affordable-housing-can-land-development-agency-succeed-where-others-have-failed-1.4502279

Link to Beaumont Hospital and Charlie Haughey article here: https://www.charlesjhaughey.ie/articles/beaumont-hospital

There were a lot of houses built in Cork thanks to the building of CUH back then and it wasn't from the extra employment more the raw materials that went missing....

PropQueries

Timing belt wrote: »

There were a lot of houses built in Cork thanks to the building of CUH back then and it wasn't from the extra employment more the raw materials that went missing....

But it does take quite a certain level of incompetence for the current people in charge of housing to make everyone angry, quite literally, everyone from the billionaires living on Ailesbury Road right down to the people living on the street IMO

Cyrus

schmittel wrote: »

Sure, but just because you're not planning on renting it out and thus don't consider the rental yield relevant, it's still a factor in the market price that you end up paying for the things that are important to you.

The more relevant factor is the people who also have the same needs and wants and what their spending power is imo .

In areas where the majority are owner occupiers that’s the biggest factor and rental yield is less so.

Cyrus

PropQueries wrote: »

Well, unless the EU, ECB or the bond market puts some manners on the states current spending spree, there will be very few “desirable” locations left in Dublin IMO

Just ask the residents of Ailesbury Road in Ballsbridge (second most expensive street on the monopoly board I believe):

https://independent.ie/irish-news/dermot-desmonds-ballymun-towers-south-dublin-tag-for-plan-on-ex-rte-land-branded-incredible-39510797.html

Desmond didn’t want apartments of that scale built in Donnybrook , that doesn’t mean it’s not desirable ? And it doesn’t really impact ailsbury road anyway.

hometruths

Cyrus wrote: »

The more relevant factor is the people who also have the same needs and wants and what their spending power is imo .

In areas where the majority are owner occupiers that’s the biggest factor and rental yield is less so.

Yes, but it remains a factor that affects the price.

PropQueries

Cyrus wrote: »

Desmond didn’t want apartments of that scale built in Donnybrook , that doesn’t mean it’s not desirable ? And it doesn’t really impact ailsbury road anyway.

While I don’t know the full reasons for any of the objections, I think some objections may have being at least partially to do with DCC agreeing to buy 61 of those c. 600+ apartments. Those 61 apartments are also all to be located in one block in the scheme from my understanding.

It wouldn’t have taken the residents of nearby areas (IMO) long to then realise that the other 500+ apartments would also be most likely social housing in all but name (long-term leasing, HAP etc.), as nobody (with the means to buy them at the proposed asking prices) would then buy any of the remaining apartments due to this plan.

People buy in such areas to live near their own class (in general) so it will definitely end up being primarily social housing, which is also apparently against current government policy of grouping social housing all in one area IMO

Marius34

schmittel wrote: »

If investors are piling in for yield because the state is to all intents and purposes setting a floor for rents, then the state is essentially setting the price at the margin. The Redrock deal I posted yesterday is a perfect example.

If the state is driving prices upwards by their activity in the market, then Props is bang on the money. Once again.

Props was wrong here. He was the one on opposite side over half year ago, saying the Government won't be able to push prices this time. And now it appears they are, and will be a competitors on the demand side.