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

PropQueries

The_Conductor wrote: »

We have a bond sale tomorrow- lets see what is happening in an Irish context.
I think its inevitable that the price we pay- is going to have to rise, which in turn, over time, will prove a drag on equities and other asset prices.

We are in the beginning of pulling the brakes..........

I would say tomorrow may be fine. ECB is still there. The issue in my mind is how long will they be there for?

Was it today?

From the Irish Times today:

"The National Treasury Management Agency (NTMA) raised a further €1.5 billion on Thursday with a bond auction, taking the total value of benchmark bonds issued in the year to date to €7 billion.

The auction was the first to not feature Davy after the NTMA last week withdrew the stockbroker’s mandate to act as a primary dealer of Government bonds, due to a bond-trading scandal dating back to 2014.

The latest auction consisted of the sale of two different Irish Government bonds. These were a 0 per cent treasury bond maturing in October 2031, and a 1.5 per cent bond maturing in May 2050."

Link here: https://www.irishtimes.com/business/markets/ntma-sells-1-5bn-of-bonds-in-first-auction-without-davy-1.4507525

Timing belt

PropQueries wrote: »

This partly explains to me the lack of media coverage of people queuing for either rental of buying over the past 3 years.
.

Do you consider it normal for people to have to Queue up in a line outside somewhere to buy or rent? People are buying houses online now

Mic 1972

johnnyskeleton wrote: »

My point more generally is that there are a variety of different reasons for funds to decide whether to sell or hold on to Irish property. But more specifically, on those funds, the point is that the business model was to buy and hold for 7 years, and then decide whether to sell or not. While some probably decided to sell, others decided to hold on. But their dynamic is very different to the pension fund who are looking at a 20, 30 or 40 year etc investment and are less prone to making decisions based on the immediate market forces.



Well Dublin peak seems to be October, 2018, and the scheme was introduced in December, 2011, so yeah, a lot of those funds who had a 7 year cycle in mind would have sold during this period.

I'm not sure that this was the reason why prices starting falling. Prices seemed to have hit a ceiling and didn't drop dramatically. The drops since then have been modest, with an equally modest increase at the end of last year. All points to property being overvalued and stagnating or dropping, rather than a catastrophic crash which would be caused by funds dumping their property. Other funds have been buying more property during that period, so it isn't a case of a dramatic net reduction in investment properties.

Also, doesn't the quoted stated that you think they have been disposing of them quietly since 2018 undermine your main point that you think a big crash is on the way due to them suddenly all exiting at once? How can they all suddenly exit if they are already exiting?

Prices haven't peaked in 2018, and very clearly aren't decreasing, this narrative is incorrect

Timing belt

PropQueries wrote: »

Some interesting comments on Bloomberg about today's ECB meeting and the possible impact of interest rate movements on house prices this year.

While I think since interest rates are at rock bottom and current property prices fully reflect this, some may think that ever lower interest rates may indeed boost property prices or at least keep them stable going forward.

According to Bloomberg:

"Most European Central Bank policy makers have no intention of expanding their 1.85 trillion-euro ($2.2 trillion) emergency stimulus program despite their pledge on Thursday to step up the pace of bond buying to keep yields in check, according to officials familiar with the matter."

They said "Policy makers will spend more now but plan to pull back later"

But, more importantly (IMO):

"Policy makers agreed that there had been some tightening of financial conditions as a consequence of higher yields in recent weeks, though a majority of those who expressed their views also said they weren’t too concerned, according to the officials."

In my opinion, and I fully realise many disagree, there are far more countries in the eurozone who don't have a debt problem compared to the few countries who do (relatively speaking) and they appear to be increasingly making their voices heard at the table IMO

Link to Bloomberg article here: https://www.bloomberg.com/news/articles/2021-03-11/ecb-doesn-t-intend-faster-bond-buying-to-lead-to-more-stimulus?srnd=premium-europe

The ECB can do QE to keep rates low without the governments needing to increase borrowing.

The_Conductor

Timing belt wrote: »

The ECB can do QE to keep rates low without the governments needing to increase borrowing.

They can do it- however, increasingly, as individuals, the council members are expressing a reluctance to continue to do so. They are continuing to make nice fuzzy sounding noises to the media- but talk is cheap, and the perception is, if it comes to it, the ECB doesn't have the willpower to continue down the expansionary path. I'm not sure how much they've spent- seem to remember the figure 2.7 Trillion from somewhere......... Its a lot of money.

National governments are going to have to do the heavy lifting as soon as Covid is no longer the financial drain that it currently is. In the context of heavily indebted nations- that is going to mean a whole lot of pain. Even with historically low interest rates- Ireland still paid over 7 billion in interest payments on its sovereign debt in 2020.

Ireland is living on borrowed time- both literally and figuratively.

Hubertj

The_Conductor wrote: »

They can do it- however, increasingly, as individuals, the council members are expressing a reluctance to continue to do so. They are continuing to make nice fuzzy sounding noises to the media- but talk is cheap, and the perception is, if it comes to it, the ECB doesn't have the willpower to continue down the expansionary path. I'm not sure how much they've spent- seem to remember the figure 2.7 Trillion from somewhere......... Its a lot of money.

National governments are going to have to do the heavy lifting as soon as Covid is no longer the financial drain that it currently is. In the context of heavily indebted nations- that is going to mean a whole lot of pain. Even with historically low interest rates- Ireland still paid over 7 billion in interest payments on its sovereign debt in 2020.

Ireland is living on borrowed time- both literally and figuratively.

They (council members ) are somewhat stuck between a rock and a hard place. You are correct in what you say but on the other hand if the taps are turned off too quickly it will be counter productive due to the destabilising impact it will have. I think when the dust settles there will be a longer term plan to allow countries, such as Ireland, get ready for the heavy lifting.

Timing belt

The_Conductor wrote: »

They can do it- however, increasingly, as individuals, the council members are expressing a reluctance to continue to do so. They are continuing to make nice fuzzy sounding noises to the media- but talk is cheap, and the perception is, if it comes to it, the ECB doesn't have the willpower to continue down the expansionary path. I'm not sure how much they've spent- seem to remember the figure 2.7 Trillion from somewhere......... Its a lot of money.

National governments are going to have to do the heavy lifting as soon as Covid is no longer the financial drain that it currently is. In the context of heavily indebted nations- that is going to mean a whole lot of pain. Even with historically low interest rates- Ireland still paid over 7 billion in interest payments on its sovereign debt in 2020.

Ireland is living on borrowed time- both literally and figuratively.

You are mixing two things into one... QE has been undertaken since 2015 without countries increasing their Debt or without countries increasing there fiscal spending..... All that happens is the ECB Balance sheet expands and rates are kept low.

It just so happens that the QE is financing the fiscal spending but it can be undertaken with no fiscal spending and has limited impact on inflation as most of the money stays within the financial system and does not get out into the real world to generate CPI inflation. The majority of the inflation comes from a weaker Euro and the price increase on imported goods.

Inflation is the worry because if we do see significant inflation then the ECB will need to put brakes on the economy and their main way of doing this will be to reduce QE and possibly accelerate Quantitative tightening QT.

woejus

@Cyrus

I see Mount Prospect on Killiney Hill Road is back on the market again

https://www.myhome.ie/residential/brochure/mount-prospect-killiney-hill-road-killiney-co-dublin-a96-v09h/4468912

johnnyskeleton

Mic 1972 wrote: »

Prices haven't peaked in 2018, and very clearly aren't decreasing, this narrative is incorrect

Interesting argument. Im basing my view on the CSOs published data:

https://www.cso.ie/en/releasesandpublications/ep/p-rppi/residentialpropertypriceindexdecember2020/

However Id be interested to see where youre coming from. Is it because there was a modest increase at the end of last year? Cos I mentioned that in my post, in case thats why you consider my narrative to be incorrect.

Zenify

johnnyskeleton wrote: »

Interesting argument. Im basing my view on the CSOs published data:

https://www.cso.ie/en/releasesandpublications/ep/p-rppi/residentialpropertypriceindexdecember2020/

However Id be interested to see where youre coming from. Is it because there was a modest increase at the end of last year? Cos I mentioned that in my post, in case thats why you consider my narrative to be incorrect.

Maybe I'm wrong but as long as that graph is above the 0 line it would indicate the market has not peaked...? That line indicates the growth percentage, it doesn't actually represent growth.

Cyrus

woejus wrote: »

@Cyrus

I see Mount Prospect on Killiney Hill Road is back on the market again

https://www.myhome.ie/residential/brochure/mount-prospect-killiney-hill-road-killiney-co-dublin-a96-v09h/4468912

Yes I had noticed a few weeks back that the sale agreed sticker had been removed ! Been for sale a long time now. I wonder what It was sale agreed at ? 2m is too much for it anyway.

Hubertj

https://www.irishtimes.com/news/ireland/irish-news/british-recruitment-drive-for-builders-sparks-fear-of-exodus-1.4508053

This is unfortunate but to be expected. It will further delay the completion of existing projects, the start of new projects and the renovation of the 1 million + vacant units out there. All part of the conspiracy to further reduce / restrict supply?

My friends brother ended up driving machinery at a mine in Ghana after 2008.

PropQueries

Hubertj wrote: »

https://www.irishtimes.com/news/ireland/irish-news/british-recruitment-drive-for-builders-sparks-fear-of-exodus-1.4508053

This is unfortunate but to be expected. It will further delay the completion of existing projects, the start of new projects and the renovation of the 1 million + vacant units out there. All part of the conspiracy to further reduce / restrict supply?

My friends brother ended up driving machinery at a mine in Ghana after 2008.

While I understand you probably state that number in jest, that figure may be actually not too far off the mark of the number of already existing "potential" housing units in the Irish market at the moment

As David McWilliams stated back in 2018:

"How come there are only 100,000 people living between the canals in Dublin when at the same time in Copenhagen there are close to 600,000 living in more or less the same footprint? Copenhagen a not high-rise city, rather it is an intensively-used six-storey city. The main difference is usage. In Copenhagen buildings are used in their entirety; in Dublin and other Irish cities they have been allowed to go to ruin, and there is no penalty associated with dereliction."

So, that's a potential 500,000 bed spaces just between the canals in Dublin City. Throw in similar underused space throughout the rest of Co. Dublin and throughout all the other cities, towns and villages in Ireland, existing vacant units according to the GeoDirectory, Census etc. and it's entirely possible we actually do have that amount of potential space in Ireland at this very moment

One would think the Green Party would be jumping all over this method to reduce our "carbon footprint", especially with all the increases in carbon taxes that are being proposed to tackle that very issue.

Link to David McWIlliams 2018 article here: http://www.davidmcwilliams.ie/dereliction-is-legalised-vandalism-for-the-property-owning-classes/

PropQueries

Some more news on the WFH and it's potential impact on the demand for housing in our urban centres in Ireland, even if the covid thing passes in the next couple of months. According to the Irish Times today:

"Liberty Insurance has told its more than 400 Irish employees that they can work remotely even after the Covid-19 crisis is over. The insurer said all staff, including its senior leadership team, will continue to work from home once the pandemic has passed, with the option of spending up to two days per week in the office to carry out specific activities or hold face-to-face meetings."

They're definitely not considering the "hybrid" model.

Link to Irish Times article here: https://www.irishtimes.com/business/financial-services/liberty-insurance-in-for-the-long-term-on-remote-working-1.4507820

DataDude

PropQueries wrote: »

Some more news on the WFH and it's potential impact on the demand for housing in our urban centres in Ireland, even if the covid thing passes in the next couple of months. According to the Irish Times today:

"Liberty Insurance has told its more than 400 Irish employees that they can work remotely even after the Covid-19 crisis is over. The insurer said all staff, including its senior leadership team, will continue to work from home once the pandemic has passed, with the option of spending up to two days per week in the office to carry out specific activities or hold face-to-face meetings."

They're definitely not considering the "hybrid" model.

Link to Irish Times article here: https://www.irishtimes.com/business/financial-services/liberty-insurance-in-for-the-long-term-on-remote-working-1.4507820

Know a couple of people reasonably high up in Liberty. Interestingly the company actually wanted even less entitlement to office time. It was the staff representative group which fought to retain the right for up to two days in the office if they choose. Not sure how strictly it will be enforced but the entitlement ‘to spend up to two days in the office’ is going to be a contractual maximum.

They are definitely an early mover on this but it will be interesting to see if it has any contagion effect. It is on our senior management team agenda for next week...

hometruths

DataDude wrote: »

Know a couple of people reasonably high up in Liberty. Interestingly the company actually wanted even less entitlement to office time. It was the staff representative group which fought to retain the right for up to two days in the office if they choose. Not sure how strictly it will be enforced but the entitlement ‘to spend up to two days in the office’ is going to be a contractual maximum.

They are definitely an early mover on this but it will be interesting to see if it has any contagion effect. It is on our senior management team agenda for next week...

This backs up my belief that all the talk about WFH never catching on because employees can't wait to get back to the office is missing the point.

It is the employers that will set the WFH agenda, and for many industries - insurance a perfect example - full time WFH is a very attractive idea for employers.

JimmyVik

They would be better off building a new large town in the midlands somewhere.
Start off from scratch and put in roads, trains etc and all the houses you could ever dream of.
This trying to build more in Dublin is just a fools game.

PropQueries

DataDude wrote: »

Know a couple of people reasonably high up in Liberty. Interestingly the company actually wanted even less entitlement to office time. It was the staff representative group which fought to retain the right for up to two days in the office if they choose. Not sure how strictly it will be enforced but the entitlement ‘to spend up to two days in the office’ is going to be a contractual maximum.

They are definitely an early mover on this but it will be interesting to see if it has any contagion effect. It is on our senior management team agenda for next week...

I wonder will the revenue need to start keeping a better track of the number of days the senior executives in these companies spend in Ireland.

My understanding is that the only real requirement for considering Ireland as a base for taxation purposes is that the decisions are made here. Everyone else can be shipped abroad.

Open to correction on that one as some here appear more clued in on the current requirements.

yagan

JimmyVik wrote: »

They would be better off building a new large town in the midlands somewhere.
Start off from scratch and put in roads, trains etc and all the houses you could ever dream of.
This trying to build more in Dublin is just a fools game.

Ironically we may end up with a surplus between the canals, but far fewer will want to live there when WFH is an option. I wouldn't live down the stabby docks if you paid me.

Lia_lia

I work for a large multinational and they can’t wait to have us back in the office. I doubt there will be any option to work from home, at all.

My partner works for another multinational and they’ve always been a bit more flexible about wfm. They’ve been getting surveys asking people if they’d prefer to go back to the office full time, a few days a week or stay at home fully. Just to get an idea of what people want I guess.

fago

Mic 1972 wrote: »

Prices haven't peaked in 2018, and very clearly aren't decreasing, this narrative is incorrect

Per fig 1.3 from the CSO https://www.cso.ie/en/releasesandpublications/ep/p-rppi/residentialpropertypriceindexdecember2020/

I've picked Oct 2018 as it looks like the Dublin peak based on eyeballing that chart.

Dublin:
- Oct 2018: 127.7
- Dec 2018: 125.1
Change -2.03% (125.1/127.7-1)*100

Rest of IE:
- Oct 2018: 142.1
- Dec 2020: 150.4
Change +5.8%

- Dublin prices peaked in Oct 2018, but assuming all the anecdotal stories here play out, that -2% should become flat or positive in the next 2-3 months

Overall picture is a 1.7% increase for whole of Ireland between Oct 2018 and Dec 2020. I'm not sure how that reflects wage inflation or other drivers, but sure feels like we're bouncing off some limiting factors for the last 2 years.

(Some better stats head can correct my maths but think it holds up)

Hubertj

schmittel wrote: »

This backs up my belief that all the talk about WFH never catching on because employees can't wait to get back to the office is missing the point.

It is the employers that will set the WFH agenda, and for many industries - insurance a perfect example - full time WFH is a very attractive idea for employers.

Great for their Dublin employees. I’d pay not to have to go to blanchardstown every day.

JimmyVik

Lia_lia wrote: »

I work for a large multinational and they can’t wait to have us back in the office. I doubt there will be any option to work from home, at all.

My partner works for another multinational and they’ve always been a bit more flexible about wfm. They’ve been getting surveys asking people if they’d prefer to go back to the office full time, a few days a week or stay at home fully. Just to get an idea of what people want I guess.

We are hopeful that we will get 1 day a week working from home (multinational).
The other half has already been told, not a chance of it.

johnnyskeleton

Zenify wrote: »

Maybe I'm wrong but as long as that graph is above the 0 line it would indicate the market has not peaked...? That line indicates the growth percentage, it doesn't actually represent growth.

Figure 1.2 shows prices going below 0% for Dublin.

Figure 1.3 shows the index for Dublin peaking in October, 2018 at 127.5 i.e. 27.5 points higher than the baseline prices at mid 2015. They are currently at 125.1 but haven't exceeded the October, 2018 index of 127.5.

Hence, Dublin prices peaked in October, 2018

EDIT: Just saw fago's post now, thanks

yagan

Lia_lia wrote: »

I work for a large multinational and they can’t wait to have us back in the office. I doubt there will be any option to work from home, at all.

My partner works for another multinational and they’ve always been a bit more flexible about wfm. They’ve been getting surveys asking people if they’d prefer to go back to the office full time, a few days a week or stay at home fully. Just to get an idea of what people want I guess.

The thing about a company not embracing WFH is that their staff can be lured away by the offer of WFH. When you factor in the money and time saved by not commuting people will jump ship for even a lower salary.

Where it's possible WHF will be part of the package from now on. Presenteeism only suits landlords and businesses will take advantage of any chance to cut office overheads.

The commercial property industry is going to peddle hard against WFH, expect to see lots paid pieces posing as journalism attacking it.

Villa05

Marius34 wrote:

There is no general consensus. But here is what likely to happen. Prices will go up this year. Wouldn't know direction after 3 years, but there will be ups and downs, but very likely we will never see prices of lows of 2020.

Is this prediction based on the inflation theory. How do you see the state using the long term leasing model over building working out in that scenario.
If inflation really takes off, how will the rise in interest rates to cool inflation affect the market

PropQueries wrote:

Some more news on the WFH and it's potential impact on the demand for housing in our urban centres in Ireland, even if the covid thing passes in the next couple of months. According to the Irish Times today:

Given Gov's demand side policies making the housing issue worse, would you be concerned that WFH could potentially spread the affordability problem rather than resolving it.


Kerry group have announced 150 administrative job losses which will be going to Mexico and Malaysia from Charleville and Naas. Many of the workers in Charleville affected have been with the company for decades

If people working in semi/rural indegenious industry have to compete with high paid workers in multinationals, this could inflict serious damage on those sectors

Cyrus

schmittel wrote: »

full time WFH is a very attractive idea for employers.

as a cost cutting exercise yes maybe, people should be careful what they wish for in that regard.

Also compare the response to libertys announcement here versus the David Solomon from Goldman sachs. Turkeys and christmas springs to mind.

Marius34

Villa05 wrote: »

Is this prediction based on the inflation theory. How do you see the state using the long term leasing model over building working out in that scenario.
If inflation really takes off, how will the rise in interest rates to cool inflation affect the market

Yes, this is based on inflation effect. I expect in medium/long term inflation to be over 1% in average. The higher the inflation the higher interest rates we can expect.

PropQueries

Villa05 wrote: »

Is this prediction based on the inflation theory. How do you see the state using the long term leasing model over building working out in that scenario.
If inflation really takes off, how will the rise in interest rates to cool inflation affect the market




Given Gov's demand side policies making the housing issue worse, would you be concerned that WFH could potentially spread the affordability problem rather than resolving it.


Kerry group have announced 150 administrative job losses which will be going to Mexico and Malaysia from Charleville and Naas. Many of the workers in Charleville affected have been with the company for decades

If people working in semi/rural indegenious industry have to compete with high paid workers in multinationals, this could inflict serious damage on those sectors

I wouldn't be too concerned, even with the narrative being spun by certain groups that the big demand for rural properties will increase prices.

While there's nothing but empty properties or potential housing space in all our major cities, there really is nothing but empty properties, many all ready to go, available outside our cities.

Even if they need to be "renovated", this can be done very cheaply and very quickly and all that excess supply outside our urban centres can/will re-enter the market very quickly if demand does indeed increase, so this will put a lid on any potential price jumps outside the cities fairly quickly IMO

The way I see it going is that prices in the cities will drop significantly to discourage people leaving and compete with rural areas and we'll see only a very small premium being paid for city homes vs rural homes in the not too distant future IMO

Cyrus

PropQueries wrote: »

Even if they need to be "renovated", this can be done very cheaply and very quickly

renovations are cheap and quick? i must tell that to the people spending 100s of thousands to renovate their houses at the moment :pac: