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

PropQueries

Timing belt wrote: »

Different Councils/Corporations have different priorities and the system is so rigid it can take 8+ years to rezone. If it is not in a city development plan it won't happen for the next 6+ years.

The last plan for Dublin would have been written 2014/2015 when housing would not have been as hot a topic as now and it would appear that the city planners under estimated the housing needs.

So it’s a good (probably primary) argument for establishing the LDA?

Timing belt

PropQueries wrote: »

So it’s a good (probably primary) argument for establishing the LDA?

Well when you consider that there is a fully serviced site, just outside the M50, that could deliver 3500+ affordable housing units and it was purchased in 2018 by the REIT from the IRFU. The Government could easily have purchased this site and delivered 3,500+ homes if there was political will and co-operation by all of the political parties.

Another prime example is Clonburris (a massive land bank between Clondalkin and Lucan) that has the potential to deliver 8,400 homes. This has been fast tracked and designated a Strategic Development Zone (SDZ). Despite this being rezone in 2008 the fact that the they were not implemented within the 6 year development plan timeline meant that they need to go back to the start and do a new plan which meant another 3/4 years of the political parties rejecting each others plans. (And anyone that thinks SF being in power would make a difference should have a look at this case as they were as bad as all the other political parties in rejecting plans) The first houses (274 homes) only got approved by SCD in may 2020.

https://www.newsgroup.ie/first-new-housing-development-in-clonburris/

Timing belt

Link to Dublin City Development Plan 2016-2022

https://www.dublincity.ie/sites/default/files/2020-08/dublin-city-development-plan-2016-2022-volume-2.pdf

(Note this is DCC and does not include Fingal, DLR, SCD etc)

Some interesting points:

Population growth
- The Development Plan estimated a increase of 50k in population over the 6 years.
- If I use the CSO estimated population growth rates it would mean that the actual increase was 22k for the first 4 years

no of Housing Units
- The development plan estimated that 4,217 units were needed each year (They use a occupancy of 2 people per unit)
- The total actual no of units delivered for the first 4 years as per the CSO was 7,464 (This is a shortfall of 9k)
- Will we see 4,217 units delivered each year for 2021 & 2022 (Probably not)

The following is there projection of Affordable housing


The Following is their projection of Disposable household Income

Interested Observer

awec wrote: »

Land is expensive in Dublin because it's the most sought after land in the country. Not all land is equal. Even in Dublin, or around it, not all land is equal.

It's the Midleton Very Rare of land.

If you have land in Dublin zoned for housing you'd have no bother getting rid of it. I have no source to back this up so please forgive me, but I believe a significant chunk of the land around Dublin is not zoned for housing but rather is agricultural.

North Dublin is basically a great big farm. North of say Malahide/Swords you've a few towns on the coast and then a whole lot of agriculture.

IAmTheReign

PropQueries wrote: »

If the pre-covid regularly media reported figures of c. 5,000 AirBnB homes in Dublin was correct and the Minister for Housing said back in July that:

“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. If there are opportunities for the state to buy, at reasonable prices, so we can house people and then they can rent them on a secure basis from the state, then we should.”

Wouldn't that number of former AirBnB houses and apartments fit in nicely with the c. 4,000 homes figure DCC stated they had currently earmarked for purchase or rental? It is 8 months later at this stage.

Link to Minister for Housing interview in July 2020 here: https://www.thejournal.ie/darragh-o-brien-housing-minister-5146915-Jul2020/

No it wouldn't fit nicely. DCC reported back in November that 70% of those 5,000 properties are already back in the long term rental market. They now reckon there is only 900 properties breaking the Airbnb rules in Dublin.

https://www.breakingnews.ie/ireland/70-of-airbnbs-back-on-long-term-rental-market-says-dublin-city-council-1044141.html

johnnyskeleton

Timing belt wrote: »

The following is there projection of Affordable housing


The Following is their projection of Disposable household Income

Am I reading that right? The average wage of say the 3rd percentile is around 35k and they think that the affordability threshold for them is around 240k i.e. 6 times their income? Those in the 8th decile earn on average 92k and should be able to afford 640k i.e. nearly 7 times their income?

I wonder how, in practical terms DCC think that those on 92k should be able to buy the 640k house. Do they save up a deposit of 272k while also renting etc?

The whole thing is madness!

Cyrus

johnnyskeleton wrote: »

Am I reading that right? The average wage of say the 3rd percentile is around 35k and they think that the affordability threshold for them is around 240k i.e. 6 times their income? Those in the 8th decile earn on average 92k and should be able to afford 640k i.e. nearly 7 times their income?

I wonder how, in practical terms DCC think that those on 92k should be able to buy the 640k house. Do they save up a deposit of 272k while also renting etc?

The whole thing is madness!

basis what you are saying it would appear they are referring to couples?

2*35k = 70k * 3.5 = 245k + deposit.

edit/ looking at the post it appears not, although it refers to net income not gross

HansKroenke

https://www.irishtimes.com/business/personal-finance/why-controls-are-preventing-rents-from-falling-faster-1.4505727?mode=amp

This is the first article I've seen in the main Irish media which makes claims about the RPZs stopping rents from falling and explaining how the declines in rents from the recorded metrics might not tell the whole story about the actual state of the rental market due to the covid restrictions. The anecdotal accounts in the other thread in the Significant Falls in Rent (or whatever it is titled) did get at the rental market being in the process of crashing but the media did not seem to match these anecdotal accounts until now.

Extracts;

Why controls are preventing rents from falling faster

Landlords getting imaginative when it comes to reductions – but at no small cost to tenants

Indeed back in January, Minister for Housing Darragh O’Brien said that the issue with rent pressure zones was that “4 per cent nearly became a target for landlords”.

But since the advent of the pandemic a further issue has arisen.

Not only have rent controls failed to rein in rental growth, now they’re also stopping rents from falling.

With hundreds of thousands on wage subsidies, a switch to working from home, more short-term lets back on the long-term market, not to mention significant uncertainty as the economy starts to unwind from the pandemic, and there’s no doubt that the market has softened.

Official statistics do not show the scale, however. According to the latest index of rents from the Residential Tenancies Board (RTB), rents are still increasing, up by 1.4 per cent in the third quarter of 2020, with an average rent in Dublin of €1,758 a month, up by 1 per cent on the year. More recent figures from Daft.ie show a drop of 3.3 per cent in the capital, but there are several reasons why the real rate of decline may be even greater.

Rather than drop rents in line with market demand, landlords are trying to find other ways of offering discounts to tenants without touching the “formal” rental rate.

As reported earlier this month, US property investment company Greystaris offering up to six weeks free rent on its Dublin Landings development, where rents are about €3,800 for a two-bed. And it’s not the only one.

Another option, for tenants who run into financial difficulties during the pandemic is to offer a deferred payment plan, rather than a rent reduction. This is the approach favoured by some of the larger institutional landlords, including Ires Reit.

Another option is to simply leave the unit vacant. A recent RTÉ report found that two of landlord Kennedy Wilson’s developments – Capital Dock on the docklands where rents start at about €2,970 and Clancy Quay in Dublin 8 – are only about half full, while another, from Goodbody Stockbrokers, found a vacancy level of about 30 per cent in newly built luxury developments.

Why not cut rents?

If a landlord was to formally recognise a cut in rents, by notifying the RTB of the new rent, then they would be bound by the aforementioned [RPZ] rules, which limit their ability to raise them again. It’s understood, however, that informal reductions do not carry this same weight.

This is complicated further by the Government’s mooted proposals come next December. Time is running out on rent-pressure zones and the Government must come up with a replacement by year-end.

Mr O’Brien said the Government is looking at “broader market protections”, which include linking rents to the consumer price index (CPI). Given the outlook for inflation this could be good news for tenants and is supported by organisations such as Threshold, which supports tenant rights.

If a landlord could only increase rents in line with the CPI then a €200 reduction last year would mean that by 2023 rent could only have increased to €2,046.

Landlords are trying to hold tight to the headline rents, until (if and when) the economy recovers, even if they must incentivise new and existing tenants in other ways.

Of course how long they can manage to do this will depend on market forces, which in turn will likely depend on the ultimate fall-out from the pandemic.

JimmyVik

johnnyskeleton wrote: »

Am I reading that right? The average wage of say the 3rd percentile is around 35k and they think that the affordability threshold for them is around 240k i.e. 6 times their income? Those in the 8th decile earn on average 92k and should be able to afford 640k i.e. nearly 7 times their income?

I wonder how, in practical terms DCC think that those on 92k should be able to buy the 640k house. Do they save up a deposit of 272k while also renting etc?

The whole thing is madness!

And being taxed up to their balls to provide the grants and social houses for everyone else.

DataDude

Cyrus wrote: »

basis what you are saying it would appear they are referring to couples?

2*35k = 70k * 3.5 = 245k + deposit.

edit/ looking at the post it appears not, although it refers to net income not gross

I thought this too but it does seem to very clearly state "annual Household income" in the table header so it would be weird to present it as half the total income.
Also think it's unlikely for the 5th decile household income to be (51*2 = 102k), for example.

JimmyVik

HansKroenke wrote: »

https://www.irishtimes.com/business/personal-finance/why-controls-are-preventing-rents-from-falling-faster-1.4505727?mode=amp

This is the first article I've seen in the main Irish media which makes claims about the RPZs stopping rents from falling and explaining how the declines in rents from the recorded metrics might not tell the whole story about the actual state of the rental market due to the covid restrictions. The anecdotal accounts in the other thread in the Significant Falls in Rent (or whatever it is titled) did get at the rental market being in the process of crashing but the media did not seem to match these anecdotal accounts until now.

Extracts;

Maybe if they didnt fcuk over the landlords who were actually charging below market rent last time then more would do so this time. They had so long to fix that and make it right, but they refused and let the the good guys suffer.
Once bitten ...

And of course everyone saw this and now nobody is going to want to let that happen to them.

Also, I dont see rents dropping from €3,800 to €3000pm in high end apartments, helping out ordinary renters much.

yagan

Interesting piece about oncoming supply to the market by the Marlet group.

With demand for Dublin’s private rented sector (PRS) market undimmed by the Covid-19 pandemic, developer Pat Crean’s Marlet Property Group will be hoping to take advantage of the continuing appetite of institutional investors for prime opportunities in the capital by bringing Ireland’s largest-ever PRS portfolio to the market. The forward sale, which is being handled by sole adviser Cantor Fitzgerald, is expected to attract offers in excess of €1 billion.

A little bird tells me that there's a good few Marlet sites around Dublin that never restarted after the first lockdown as they probably knew the WFH option had become part of business cost savings, so now they're focusing on getting what good residential developments finished and to market ASAP.

International pension funds who had being buying developments off Marlet before the cement mixers were churning are not snapping. It's entirely likely that the Dublin bust has already happened but as in 2006 only those at building site level can see that.

HansKroenke

yagan wrote: »

Interesting piece about oncoming supply to the market by the Marlet group.


A little bird tells me that there's a good few Marlet sites around Dublin that never restarted after the first lockdown as they probably knew the WFH option had become part of business cost savings, so now they're focusing on getting what good residential developments finished and to market ASAP.

International pension funds who had being buying developments off Marlet before the cement mixers were churning are not snapping. It's entirely likely that the Dublin bust has already happened but as in 2006 only those at building site level can see that.

Long term leases the councils are entering into with the institutionals are similar to the bank bailouts after 2008. The Irish taxpayer is being put on the hook for the speculators again.

yagan

More portents of high tide waning.

Housing completions in Dublin hit a 10-year high in the final quarter of last year despite the pandemic causing widespread disruption across the construction sector.
However, the report highlighted a fall-off in housing commencement notices, an indicator of future supply, which were down 25 per cent in the final quarter.

yagan

HansKroenke wrote: »

Long term leases the councils are entering into with the institutionals are similar to the bank bailouts after 2008. The Irish taxpayer is being put on the hook for the speculators again.

At least we'd have housing where there's work. In 2008/9 we were left with hundreds of ghost estates in places where the only employment was building houses.

However it would be highly ironic if the WFH switch finally benefits the ghost estates of the last boom while the new Dublin surplus become under subscribed.

Hubertj

yagan wrote: »

More portents of high tide waning.

I think the 2 are linked - focus resources on finishing out existing projects in q4, hence the drop off on commencement notices. I think what will be more telling are the commencement notices as this year progresses along with the number of construction workers that remain unemployed / PUP...

Cyrus

DataDude wrote: »

I thought this too but it does seem to very clearly state "annual Household income" in the table header so it would be weird to present it as half the total income.
Also think it's unlikely for the 5th decile household income to be (51*2 = 102k), for example.

yes i agree although it refers to disposable income so will be after tax, the exact definition would be useful though.

DataDude

Cyrus wrote: »

yes i agree although it refers to disposable income so will be after tax, the exact definition would be useful though.

Yep, good point. Would be reasonably easy to gross up I guess but a proper definition should be provided.

Without going through the hassle of doing so, I suspect effective tax rates on two income households are fairly small up until the 7th or 8th decile (€70/80k). e.g. effective tax rate on someone earning €40k is only 21%. Unlikely to be enough to rationalize the "affordable housing figures"

Browney7

PropQueries wrote: »

New data (released today), shows that more than 80,000 households are in state-supported private rented accommodation and that the Hap scheme payments to landlords will rise from €436 million last year to in excess of €1 billion by the end of 2021 (this year).

So, it's HAP alone is going to rise from €436m last year to over €1billion this year, and that's from the department of housing very own figures.

So, is the state expecting the number of households receiving HAP to double from 80,000 households to 160,000 households this year or are they expecting rents to double or something in between?

Link to article in Sunday Business Post here:https://www.businesspost.ie/houses/more-than-80000-households-are-in-state-supported-private-rented-accommodation-af10bd9b

1 billion a year in 2021 and likely to keep on increasing after that. Another fine and large ongoing liability that will be classified as current expenditure which realistically the state will have to pay for the next 20 years. If they actually had to set aside the money today that will be paid in HAP it would be easily north of 15 billion unless the plan is to stop HAP come hell or high water in a few years time.

This is another piece of can kicking to go with our pensions timebomb which is ticking away nicely in a cupboard in the department of finance.

yagan

Browney7 wrote: »

This is another piece of can kicking to go with our pensions timebomb which is ticking away nicely in a cupboard in the department of finance.

On top of which will be those who were depending on property for their retirement who can't cash out in a saturated market, not to mention the collapse rent farming private pension funds who've been a major player in driving the Dublin bubble.

The "your rent is my pension" won't get much sympathy amongst the working who can't afford to buy.

Villa05

yagan wrote:

However it would be highly ironic if the WFH switch finally benefits the ghost estates of the last boom while the new Dublin surplus become under subscribed.

Hubertj wrote:

I think the 2 are linked - focus resources on finishing out existing projects in q4, hence the drop off on commencement notices. I think what will be more telling are the commencement notices as this year progresses along with the number of construction workers that remain unemployed / PUP...

There may well be a realisation by the industry that the governmentd housing policy is unsustainable given the states increased debt. Paying up to 3/4 of a million for 2 bed units for social/affordable housing can't last. Private ppr buyers won't be buying 2 bed units at that price and they definitely won't be paying anything like that if there is social housing element to the development

Would make sense for developers to baten down the hatches. Get out while your ahead and see how things pan out

Browney7 wrote:

1 billion a year in 2021 and likely to keep on increasing after that. Another fine and large ongoing liability that will be classified as current expenditure which realistically the state will have to pay for the next 20 years. If they actually had to set aside the money today that will be paid in HAP it would be easily north of 15 billion unless the plan is to stop HAP come hell or high water in a few years time.

The emergency housing budget also doubled from the previous year to 275million with 220m budgeted for this year


There were 6300 FTB in 2019. Let's assume they got an average grant of 15,000. That's another 100million with the grant being increased to 30k by this gov. This will obviously double in the coming years.

Reits and investment funds pay little or no tax so this is more money lost through reduced tax revenue

Shared equity will be triple the cost of the FTB buyer grant, now this is supposed to be repaid, but also this will be the riskiest 30% of the price of the house so in a downturn you can kiss alot of this money goodbye

What are the other supports to the industry?

In the last boom construction was a massive revenue generator, it appears to be a major drain now

Would be good to get a full picture of what all this is costing the taxpayer

yagan

Villa05 wrote: »

In the last boom construction was a massive revenue generator, it appears to be a major drain now

Would be good to get a full picture of what all this is costing the taxpayer

Two years from now we could be on the other side of the equation with a surplus where the only housing activity is retrofitting for WFH.

International market forces were allowed to lead planning in Dublin in this boom and it's very likely that a lot of what's being completed now will be obsolete to requirement. Was it last summer that planning permission was sought for a 500 student apartment complex in the docks be switched to private rental?

Vertical ghost estates.

Hubertj

yagan wrote: »

Two years from now we could be on the other side of the equation with a surplus where the only housing activity is retrofitting for WFH.

International market forces were allowed to lead planning in Dublin in this boom and it's very likely that a lot of what's being completed now will be obsolete to requirement. Was it last summer that planning permission was sought for a 500 student apartment complex in the docks be switched to private rental?

Vertical ghost estates.

What do you mean by market forces in relation to planning? Only regarding student accommodation? If we ignore the ridiculous rents is purpose built student accommodation not common in most cities?

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.

Looks like the house price falls have started in London. According to Bloomberg today:

"House Prices Are Plummeting in London’s Financial Districts.

House prices in the City of London slumped 10.8% in the year through January, while Tower Hamlets, where rival financial district Canary Wharf is based, saw values drop 9.5%, according to a report by chartered surveyors e.surv.

The best bargains are to be found in City of Westminster, the heart of the nation’s government. Prices there tumbled 37% compared with a year earlier - the sharpest drop seen in the capital."

Link to article in Bloomberg here: https://www.bloomberg.com/news/articles/2021-03-10/house-prices-are-plummeting-in-london-s-financial-districts

fliball123

PropQueries wrote: »

Looks like the house price falls have started in London. According to Bloomberg today:

"House Prices Are Plummeting in London’s Financial Districts.

House prices in the City of London slumped 10.8% in the year through January, while Tower Hamlets, where rival financial district Canary Wharf is based, saw values drop 9.5%, according to a report by chartered surveyors e.surv.

The best bargains are to be found in City of Westminster, the heart of the nation’s government. Prices there tumbled 37% compared with a year earlier - the sharpest drop seen in the capital."

Link to article in Bloomberg here: https://www.bloomberg.com/news/articles/2021-03-10/house-prices-are-plummeting-in-london-s-financial-districts

AND what connection has your brain made to the Irish property market?

yagan

Hubertj wrote: »

What do you mean by market forces in relation to planning? Only regarding student accommodation? If we ignore the ridiculous rents is purpose built student accommodation not common in most cities?

I don't have a link for the numbers now but an awful lot of the apartment developments of the last few years were not for private marker sales, bypassing the domestic market for the international investors like pensions funds looking for yield.

For example the Marlot group which recently had I believe over 50 developments on the go at one time in Dublin alone is financed by London based M&G Investments, which in turn are a subsidiary of the global Prudential Insurance group.

Before Covid Marlot was selling developments to such funds before the foundations had even been dug.

Yes, other cities have student accommodations, but mostly it tends to be on campus. However in this Dublin bubble student accommodation was used a pretext for building as many rent yielding units to be sold to international suckers in as short a time as possible.

In the shakedown we're going to end up with loads of buildings not fit for long term rental.

hometruths

fliball123 wrote: »

AND what connection has your brain made to the Irish property market?

Odd how prices rising in London is held up as an example why prices rising in Dublin is perfectly normal, but if somebody points out prices are falling in London you come out with a comment like that.

Hubertj

schmittel wrote: »

Odd how prices rising in London is held up as an example why prices rising in Dublin is perfectly normal, but if somebody points out prices are falling in London you come out with a comment like that.

House prices increased in London during 2020.

hometruths

Hubertj wrote: »

House prices increased in London during 2020.

Whether house prices went up or down is not the point I was making.

Hubertj

schmittel wrote: »

Whether house prices went up or down is not the point I was making.

Sorry, I don’t follow.