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

hometruths

PropQueries wrote: »

It's a talking point, but that's about it in the vast majority of cases. If a regular person's house falls by 50%, do they really care if they still have their job?

If there is one thing we learnt from the last crash it’s that people really do care if their house drops in value by 50%. No matter how much people might say now it doesn’t matter, it’s my home it’s not an investment, if prices drop by 50% we will hear all about the hell of living with negative equity again.

PropQueries

Mic 1972 wrote: »

on the other hand the pandemic has collapsed every country the same, so why would anyone leave London to go to another collapsed country?

I think you're overestimating the impact on different countries.

Eastern EU countries are relatively fine compared to the west as they didn't start out with our debt levels or the artificially high cost of living.

Eastern EU countries are actually on the cusp of growing massively due the influx of highly educated and highly trained returning emigrants from the west IMO

PropQueries

schmittel wrote: »

If there is one thing we learnt from the last crash it’s that people really do care if their house drops in value by 50%. No matter how much people might say now it doesn’t matter, it’s my home it’s not an investment, if prices drop by 50% we will hear all about the hell of living with negative equity again.

Negative equity is a completely different kettle of fish But most who bought up to the year 2001 really didn't care about the property crash last time.

Of course, if they used that equity to invest in other properties or to pay for that holiday home in Bulgaria that's also different.

This time we really don't have that problem, so I think even less people would care if property prices fell by 50%+ IMO

Cyrus

schmittel wrote: »

If there is one thing we learnt from the last crash it’s that people really do care if their house drops in value by 50%. No matter how much people might say now it doesn’t matter, it’s my home it’s not an investment, if prices drop by 50% we will hear all about the hell of living with negative equity again.

The media promoted that drivel aswell it was such utter nonsense, trapped in a negative equity hell.

Cyrus

PropQueries wrote: »

Apparently c. 700,000 people have left London since the pandemic started.

Any ideas on how many have left Dublin as the Irish media seem to be very quite on that front here? It's actually a very big question given all the analysis on WFH, future of the city etc. IMO

Link to article in Irish Times on 700,000 leaving London here: https://www.irishtimes.com/news/world/uk/covid-19-london-s-population-fell-by-700-000-amid-exodus-of-foreign-born-residents-from-uk-1.4458762

Would it maybe make sense that 100s of thousands of hospitality workers and the like left London given the sector was closed and there wasn’t much point staying there paying London rents.

I’d imagine they will be back as soon as the world opens again.

PropQueries

Cyrus wrote: »

Would it maybe make sense that 100s of thousands of hospitality workers and the like left London given the sector was closed and there wasn’t much point staying there paying London rents.

I’d imagine they will be back as soon as the world opens again.

I agree. All I'm wondering is if a similar percentage left Dublin.

Timing belt

Cyrus wrote: »

Would it maybe make sense that 100s of thousands of hospitality workers and the like left London given the sector was closed and there wasn’t much point staying there paying London rents.

I’d imagine they will be back as soon as the world opens again.

The big question is have property prices collapsed with the 700k leaving If not then people must be expecting most of them to return once things open up.

PropQueries

Timing belt wrote: »

The big question is have property prices collapsed with the 700k leaving If not then people must be expecting most of them to return once things open up.

Back in 2018, The Guardian reported:

"Ghost towers: half of new-build luxury London flats fail to sell. Developers have 420 towers in pipeline despite up to 15,000 high-end flats still on the market"

Very very similar to Dublin pre-covid IMO. What will be different post-covid?

Link to article here: https://www.theguardian.com/business/2018/jan/26/ghost-towers-half-of-new-build-luxury-london-flats-fail-to-sell

cnocbui

PropQueries wrote: »

I think you're overestimating the impact on different countries.

Eastern EU countries are relatively fine compared to the west as they didn't start out with our debt levels or the artificially high cost of living.

Eastern EU countries are actually on the cusp of growing massively due the influx of highly educated and highly trained returning emigrants from the west IMO

What do yo base that on? Currently they are all basically static in net migration terms. The only outliers with any net immigration are Czechia and Ukraine.


https://www.indexmundi.com/map/?v=27&r=eu&l=en

PropQueries

cnocbui wrote: »

What do yo base that on? Currently they are all basically static in net migration terms. The only outliers with any net immigration are Czechia and Ukraine.


https://www.indexmundi.com/map/?v=27&r=eu&l=en

I'm basing my opinion on an article in The Economist on the 30th January 2021:

"How the pandemic reversed old migration patterns in Europe"

"In 2020 Europe saw a great reverse migration, as those who had sought work abroad returned home. Exact numbers are hard to come by. An estimated 1.3m Romanians went back to Romania—equivalent to three times the population of its second-biggest city. Perhaps 500,000 Bulgarians returned to Bulgaria—a huge number for a country of 7m. Lithuania has seen more citizens arriving than leaving for the first time in years. Other measures show the same. In Warsaw, dating apps brim with returning Poles looking for socially undistanced fun."

Link to article in The Economist here: https://www.economist.com/europe/2021/01/30/how-the-pandemic-reversed-old-migration-patterns-in-europe

Timing belt

PropQueries wrote: »

Back in 2018, The Guardian reported:

"Ghost towers: half of new-build luxury London flats fail to sell. Developers have 420 towers in pipeline despite up to 15,000 high-end flats still on the market"

Very very similar to Dublin pre-covid IMO. What will be different post-covid?

Link to article here: https://www.theguardian.com/business/2018/jan/26/ghost-towers-half-of-new-build-luxury-london-flats-fail-to-sell

very similar to Dublin as you would expect with similar affordability issues

https://www.mylondon.news/news/property/london-property-19-areas-london-19796990

PropQueries

Timing belt wrote: »

very similar to Dublin as you would expect with similar affordability issues

https://www.mylondon.news/news/property/london-property-19-areas-london-19796990

On the 12th February 2012, according to the Financial Times:

"City centre housing rents fall as tenants move to suburbs"

"Rents fell last year by 8.3 per cent in Greater London, the steepest annual fall since the financial crisis of 2008, according to a report published this week by property website Zoopla. Rents also fell in Manchester, Birmingham, Edinburgh and Aberdeen, albeit by smaller margins."

Lets see how quickly property values follow the rental income falls. How long can those investors in those pre-covid empty apartments prevail for?

Link to FT article here: https://www.ft.com/content/5b5e0c37-a14c-4044-86d7-7ed78474dbfb

Cyrus

PropQueries wrote: »

I agree. All I'm wondering is if a similar percentage left Dublin.

I’d assume so to be honest

Cyrus

PropQueries wrote: »

I'm basing my opinion on an article in The Economist on the 30th January 2021:

"How the pandemic reversed old migration patterns in Europe"

"In 2020 Europe saw a great reverse migration, as those who had sought work abroad returned home. Exact numbers are hard to come by. An estimated 1.3m Romanians went back to Romania—equivalent to three times the population of its second-biggest city. Perhaps 500,000 Bulgarians returned to Bulgaria—a huge number for a country of 7m. Lithuania has seen more citizens arriving than leaving for the first time in years. Other measures show the same. In Warsaw, dating apps brim with returning Poles looking for socially undistanced fun."

Link to article in The Economist here: https://www.economist.com/europe/2021/01/30/how-the-pandemic-reversed-old-migration-patterns-in-europe

Is there any reference to the fact that all of those that returned are highly trained and educated because I’d wager the majority of those held onto their jobs and probably stayed here and those in the services industries and construction went home.

Timing belt

PropQueries wrote: »

On the 12th February 2012, according to the Financial Times:

"City centre housing rents fall as tenants move to suburbs"

"Rents fell last year by 8.3 per cent in Greater London, the steepest annual fall since the financial crisis of 2008, according to a report published this week by property website Zoopla. Rents also fell in Manchester, Birmingham, Edinburgh and Aberdeen, albeit by smaller margins."

Lets see how quickly property values follow the rental income falls. How long can those investors in those empty apartments prevail for?

Link to FT article here: https://www.ft.com/content/5b5e0c37-a14c-4044-86d7-7ed78474dbfb

From the UK Data Flats have remained Static Year on year in London whilst other property types have risen... But no sign of a collapse yet.


Source: https://data.london.gov.uk/dataset/uk-house-price-index#:~:text=The%20UK%20House%20Price%20Index%20%28UK%20HPI%29%20captures,transactions%2C%20whether%20for%20cash%20or%20with%20a%20mortgage.

PropQueries

Cyrus wrote: »

Is there any reference to the fact that all of those that returned are highly trained and educated because I’d wager the majority of those held onto their jobs and probably stayed here and those in the services industries and construction went home.

Maybe. Even The Economist admits it's very hard to gather the data. Either way, they're bringing back the western way of doing things skills. It's nothing but good news for the eastern EU countries IMO

PropQueries

Timing belt wrote: »

From the UK Data Flats have remained Static Year on year in London whilst other property types have risen... But no sign of a collapse yet.


Source: https://data.london.gov.uk/dataset/uk-house-price-index#:~:text=The%20UK%20House%20Price%20Index%20%28UK%20HPI%29%20captures,transactions%2C%20whether%20for%20cash%20or%20with%20a%20mortgage.

Once again, you're very good with the data. And I really do appreciate that. But when did property prices really start falling significantly in Ireland after the last bust? 2, 3, 4 years?

It's been about 12 months since this pandemic started and obviously until investors get their heads around what's really happening they will hold out.

Investors are generally optimists by nature. But they turn very pessimistic, very quickly when the data starts rolling in IMO

Cyrus

PropQueries wrote: »

Maybe. Even The Economist admits it's very hard to gather the data. Either way, they're bringing back the western way of doing things skills. It's nothing but good news for the eastern EU countries IMO

Either that or they will all come back when things return to normal.

The eastern countries will be a force but they are a generation or two behind us.

Villa05

Does anyone know why apartments are suddenly far more expensive to build than houses, when the opposite was the case up to very recently? You would need some serious specific inflation turn that on its head

Is this another con job by the industry knowing that the main shortage of accomodation is 1 and 2 bed units and that the state and reits who pay no tax are the main customers?

Timing belt

PropQueries wrote: »

Once again, you're very good with the data. And I really do appreciate that. But when did property prices really start falling significantly in Ireland after the last bust? 2, 3, 4 years?

It's been about 12 months since this pandemic started and obviously until investors get their heads around what's really happening they will hold out.

Investors are generally optimists by nature. But they turn very pessimistic, very quickly when the data starts rolling in IMO

Yes it can take time after a recession for everything to flow through the pipes but the difference this time around is that the governments stepped in to fill the void created by the event. Will it enough to prevent a massive crash we don't know as it is to early to say so. With the US passing the stimulus on Saturday it ensures that the can is kicked down the road for another few months till the market starts screaming for more funds to boost it's already inflated prices.

At some stage the house of cards will crash but whether we are at that stage or not is unknow but the market doesn't look as if it is turning as you say it is.

PropQueries

Cyrus wrote: »

Either that or they will all come back when things return to normal.

The eastern countries will be a force but they are a generation or two behind us.

How was the Irish economy referenced to in the 1980's? The eastern EU countries are starting from a much better base IMO.

They have less debt, lower costs of living, a truly excellent education system (it's why we hire them) and they're only a 4 hour €99 flight away maximum.

I truly believe they're going to leverage this pandemic for all it's worth to gain ground a lot quicker than many realise and they'll take everything (economy wise) that's not bolted down in the process if we're not careful.

From everything I was reading pre-covid, Germany was increasingly looking east and not west when looking to their economic future.

Timing belt

Villa05 wrote: »

Does anyone know why apartments are suddenly far more expensive to build than houses, when the opposite was the case up to very recently? You would need some serious specific inflation turn that on its head

Is this another con job by the industry knowing that the main shortage of accomodation is 1 and 2 bed units and that the state and reits who pay no tax are the main customers?

When Rents started to rise so did the value of the underlying properties.... Most of these were flats (or apartments to make them sound nicer).

You have a bee in your bonnet about Reits and Tax.... The reason they are not taxed is to stop investors from being taxed twice on the investment. Would you be happier if the Reit's paid the tax and the investors didn't pay tax.

The investor is paying the same tax as a normal landlord. It is just that he/she has chosen to invest in a REIT so that his investment is not tied up in one single property that could devalue massively depending on who moved in next door.

PropQueries

Timing belt wrote: »

Yes it can take time after a recession for everything to flow through the pipes but the difference this time around is that the governments stepped in to fill the void created by the event. Will it enough to prevent a massive crash we don't know as it is to early to say so. With the US passing the stimulus on Saturday it ensures that the can is kicked down the road for another few months till the market starts screaming for more funds to boost it's already inflated prices.

At some stage the house of cards will crash but whether we are at that stage or not is unknow but the market doesn't look as if it is turning as you say it is.

I don't know. The political narrative in the bigger world economies appears to be taking a turn. They may have finally accepted that we have reached the end of that road with the can and there's no more room for kicking.

Basically burst that bubble now before it gets totally out of control.

"Times they are a changin'" as they say IMO

One example is, according to The Times today:

"Rishi Sunak has enlisted America’s support to launch an international campaign to raise taxes on online companies such as Amazon that have cashed in on the coronavirus pandemic.

The chancellor plans to use the G7 summit, which Britain is hosting in June, to push for changes to global laws so he can increase taxes on internet firms. Sunak revealed he had already had talks with Janet Yellen, the US Treasury secretary.

One of my priorities in the G7 this year, which I’ve already started work on, is to try and get international agreement on a new way to tax these companies,” the chancellor said. “I spend a lot of time talking to my finance minister colleagues around the world about this issue."

Link to The Times article here: https://www.thetimes.co.uk/article/rishi-sunak-recruits-us-to-raise-taxes-on-internet-giants-z9qtstdln

Hubertj

Villa05 wrote: »

Does anyone know why apartments are suddenly far more expensive to build than houses, when the opposite was the case up to very recently? You would need some serious specific inflation turn that on its head

Is this another con job by the industry knowing that the main shortage of accomodation is 1 and 2 bed units and that the state and reits who pay no tax are the main customers?

https://mk0societyofchag3d3v.kinstacdn.com/wp-content/uploads/2021/01/SCSI_RealCostofNewApartmentDelivery_final.pdf

This is a pretty detailed analysis but according to some the SCSI is in on the whole things so this breakdown should be rejected.

Villa05

Timing belt wrote:

When Rents started to rise so did the value of the underlying properties.... Most of these were flats (or apartments to make them sound nicer).

Sorry, I phrased my question badly
Rents rising should not effect the cost of construction. Less land required for apartments so land appreciation would imply houses should be more expensive

I'm trying to figure out what input has made apartments more expensive to build than houses

Timing belt

PropQueries wrote: »

I don't know. The political narrative in the bigger world economies appears to be taking a turn. They may have finally accepted that we have reached the end of that road with the can and there's no more room for kicking.

Basically burst that bubble now before it gets totally out of control.

"Times they are a changin'" as they say IMO

One example is, according to The Times today:

"Rishi Sunak has enlisted America’s support to launch an international campaign to raise taxes on online companies such as Amazon that have cashed in on the coronavirus pandemic.

The chancellor plans to use the G7 summit, which Britain is hosting in June, to push for changes to global laws so he can increase taxes on internet firms. Sunak revealed he had already had talks with Janet Yellen, the US Treasury secretary.

One of my priorities in the G7 this year, which I’ve already started work on, is to try and get international agreement on a new way to tax these companies,” the chancellor said. “I spend a lot of time talking to my finance minister colleagues around the world about this issue."

Link to The Times article here: https://www.thetimes.co.uk/article/rishi-sunak-recruits-us-to-raise-taxes-on-internet-giants-z9qtstdln

The bubble is already totally out of control and it's not just in the property market.... Interest rates have been falling for 45 years and every-time rates are reduced the market reprices assets by increasing the asset cost to reflect the new yield. It is the main reason why the stock market always gives a return and why people say in the long term you are better investing in the stock market. Every time rates rise or when a central bank tappers its QE the market crashes just look at the market last week they were expecting the fed to announce new QE with a Twist to manage the yield curve and it didn't happen and prices started heading south. Will the central banks continue to step in and try and pump the markets and keep them going... yes until they have used every last thing in there arsenal and they still have a bit of dry powder left so I wouldn't be surprised if rates went lower to keep the boat afloat.

You make a big deal of the Tax issue and I understand where you are coming from but the US and the UK have to many vested interests to allow any meaningful change. If they were serious about that they would close loopholes first but that hasn't happened and won't so it is just a smoke screen to make people think that they are doing something.

Eric Cartman

Hubertj wrote: »

https://mk0societyofchag3d3v.kinstacdn.com/wp-content/uploads/2021/01/SCSI_RealCostofNewApartmentDelivery_final.pdf

This is a pretty detailed analysis but according to some the SCSI is in on the whole things so this breakdown should be rejected.

that entire thing is scare reading. its basic summary is "building anything except low rise apartments is a risk and couples earning 100-130k combined are the sweet spot for least risk"

so more land wasted on low rise blocks that only high paid workers can afford it is so....

PropQueries

Villa05 wrote: »

Sorry, I phrased my question badly
Rents rising should not effect the cost of construction. Less land required for apartments so land appreciation would imply houses should be more expensive

I'm trying to figure out what input has made apartments more expensive to build than houses

Basically when developers copped on that the council was willing to lease 3 bed apartments at c. €3k per month (€36k per annum) on 25 year leases (e.g. Herbert Hill, Dundrum) which they could then sell onto pension funds.

It's basically the state's leasing policy that has driven up the "cost" of building apartments i.e. which is primarily the value of the land underneath.

They will say it's lifts etc. but that's absolute nonsense as they're fitting in ten times the amount of residential units per site than if it was granted planning permission for e.g. 3 bed semis.

It's land costs and the land costs are now based upon what DCC will eventually lease the end apartments for IMO

And who bought much of the development land in Dublin between 2012 and today?

Timing belt

Villa05 wrote: »

Sorry, I phrased my question badly
Rents rising should not effect the cost of construction. Less land required for apartments so land appreciation would imply houses should be more expensive

I'm trying to figure out what input has made apartments more expensive to build than houses

It might have something to do with complying with fire regulations and not just throwing up any type of building like they did previously. It would be interesting to see how Dublin compares with London in costs of building mid to high rise apartments.

PropQueries

Timing belt wrote: »

It might have something to do with complying with fire regulations and not just throwing up any type of building like they did previously. It would be interesting to see how Dublin compares with London in costs of building mid to high rise apartments.

You're joking right? Fire regulations have added e.g. c. €300k to the cost of building each and every apartment in a block of say 100 apartments?

I wouldn't be looking at London. I would be looking at the UK's provincial towns to arrive at more realistic costs to building apartments IMO