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

Cyrus

schmittel wrote: »

No doubt that to encourage downsizing in significant numbers new developments would be helpful, but why not start off with the bridging loans immediately?

I am not buying the idea that people cannot downsize because the properties they need to downsize to have not been built yet. They have been built, it's just that the entire market is clogged up in a giant negative feedback loop.

Introducing the finance to will turn that loop on its head. Early adopter downsizers will generate a positive feedback loop.

Plenty of empty nesters living in big family homes would be very happy to move to some of the newer apartments. Plenty of young couples in the newer apartments would be happy to move to the big family homes.

Both types of property currently exist, they are just occupied by the wrong people. This is what we need to change.

It could be started almost immediately and it would take very little to get that ball rolling.

It’s a good idea for sure but bridging loans have a bad rep from the last crash. They were a product once but Banks appear reluctant now and if a bank feels it too risky I don’t think the state has any business doing it.

Hubertj

schmittel wrote: »

No doubt that to encourage downsizing in significant numbers new developments would be helpful, but why not start off with the bridging loans immediately?

I am not buying the idea that people cannot downsize because the properties they need to downsize to have not been built yet. They have been built, it's just that the entire market is clogged up in a giant negative feedback loop.

Introducing the finance to will turn that loop on its head. Early adopter downsizers will generate a positive feedback loop.

Plenty of empty nesters living in big family homes would be very happy to move to some of the newer apartments. Plenty of young couples in the newer apartments would be happy to move to the big family homes.

Both types of property currently exist, they are just occupied by the wrong people. This is what we need to change.

It could be started almost immediately and it would take very little to get that ball rolling.

True to a point but I’m thinking more about entire developments aimed at downsizes / older people. Supporting facilities, different types - apartments, bungalows (gardens) etc. They do this very well in the US and other places.

hometruths

Cyrus wrote: »

It’s a good idea for sure but bridging loans have a bad rep from the last crash. They were a product once but Banks appear reluctant now and if a bank feels it too risky I don’t think the state has any business doing it.

Sure in the last crash banks were probably bridging 110% on properties that had 10% equity or some other madness.

I am talking about implementing lending limits off for example max 70% of the equity in your house. And it could be minimum loan size of eg 250k. So to qualify you'd have to have about 350k in equity in your house.

Whatever the figures are the point is this is not a difficult product to control for risk.

And if the state is thinking no way to something like this because they are risk averse, what on earth are they doing proposing stumping up 30% of equity for first time buyers.

I always used to think the reason the state wouldn't do it is because, politically, they wanted to stay away from the idea of taking a charge on equity in peoples houses. That i could understand, but the shared equity scheme blows that theory out of the water.

Cyrus

schmittel wrote: »

Sure in the last crash banks were probably bridging 110% on properties that had 10% equity or some other madness.

I am talking about implementing lending limits off for example max 70% of the equity in your house. And it could be minimum loan size of eg 250k. So to qualify you'd have to have about 350k in equity in your house.

Whatever the figures are the point is this is not a difficult product to control for risk.

And if the state is thinking no way to something like this because they are risk averse, what on earth are they doing proposing stumping up 30% of equity for first time buyers.

I always used to think the reason the state wouldn't do it is because, politically, they wanted to stay away from the idea of taking a charge on equity in peoples houses. That i could understand, but the shared equity scheme blows that theory out of the water.

Fair enough, I suppose worst case scenario the market turns in the middle of transactions and the downsizer has paid top dollar for the new home and isn’t prepared to take a bath on the one for sale. Thus prolonging the process and leaving them with an expensive loan that they hadn’t counted on.

But you are right we need to give people an alternative to staying in unsuitable accommodation and freeing it up .

hometruths

Hubertj wrote: »

True to a point but I’m thinking more about entire developments aimed at downsizes / older people. Supporting facilities, different types - apartments, bungalows (gardens) etc. They do this very well in the US and other places.

I know of two developments in my area that were not built specifically for older people but have become popular with them. First ones moved in, created a like minded buzz etc, more followed. There seems to be a nice mix now, and they work very well.

I'm just a but frustrated that the answer to everything seems to we cannot do anything but wait until we can build more stuff. It's nonsense IMO.

Out of interest what sort of place did your in laws ultimately end up in?

hometruths

Cyrus wrote: »

Fair enough, I suppose worst case scenario the market turns in the middle of transactions and the downsizer has paid top dollar for the new home and isn’t prepared to take a bath on the one for sale. Thus prolonging the process and leaving them with an expensive loan that they hadn’t counted on.

But you are right we need to give people an alternative to staying in unsuitable accommodation and freeing it up .

Exactly, if they are not prepared to take the hit the interest will roll up and the state will get in the end. They will have a charge on both properties.

And stats show very clearly loans with low LTVs tend not to be the problematic ones.

From a risk profile it is complete opposite end of spectrum to FTB shared equity.

Taylor365

schmittel wrote: »

The solutions to get this ball rolling are so maddeningly obvious I just cant understand why govt don't implement them.

500 million in bonds yielding a -0.9% or in empty apartments gaining 5-8% YoY.


Its the only game in town, gotta keep pumping!

Hubertj

schmittel wrote: »

I know of two developments in my area that were not built specifically for older people but have become popular with them. First ones moved in, created a like minded buzz etc, more followed. There seems to be a nice mix now, and they work very well.

I'm just a but frustrated that the answer to everything seems to we cannot do anything but wait until we can build more stuff. It's nonsense IMO.

Out of interest what sort of place did your in laws ultimately end up in?

They love gardening so an apartment was a non runner. They wanted a bungalow so stairs weren’t going to be an issue in the future (they are mid 70s but fit and active at present). They found a bungalow in monkstown eventually.

hometruths

And I'm not just talking about pensioners looking to move to gated communities with panic alarms.

There was an ask the finance expert thing on newstalk today, and a couple had sent in a what are our options query on this subject.

Mid 50s or so, 100k in savings, 500k fully paid off empty nest house in Dublin. They own a plot of land in the country, have planning, want to move from Dublin build in country, leave Dublin, live the quiet life etc.

They cannot get a mortgage to cover build cost for new house but they do not want to sell current house and rent if they can avoid it. Expert said basically they didn't have many other options since bridging no longer available. The idea that this is a risky profile is nuts.

I suspect there is a huge number of people in a similiar boat: irrespective of age or location, they'd quite like to move out of a house that could be put to more efficient use, and this is where government should be putting their resources.

hometruths

Hubertj wrote: »

They love gardening so an apartment was a non runner. They wanted a bungalow so stairs weren’t going to be an issue in the future (they are mid 70s but fit and active at present). They found a bungalow in monkstown eventually.

And if we unclogged the market I suspect they'd have found that bungalow a lot sooner.

I imagine the demand to move to a purpose build development for old people is pretty low, most are just looking for a more suitable property that they can future proof. Certainly that's my experience of my parents and those of my friends.

Cyrus

schmittel wrote: »

And if we unclogged the market I suspect they'd have found that bungalow a lot sooner.

I imagine the demand to move to a purpose build development for old people is pretty low, most are just looking for a more suitable property that they can future proof. Certainly that's my experience of my parents and those of my friends.

If they were available I think they would be popular they certainly appear to work well in the US and Canada, my brothers in laws have moved into one now and love it. Also removes the who will look after Mum / Dad issue.

hometruths

Cyrus wrote: »

If they were available I think they would be popular they certainly appear to work well in the US and Canada, my brothers in laws have moved into one now and love it. Also removes the who will look after Mum / Dad issue.

I kind of agree if, as Hubert says, its done well, and doesn't feel like a proxy for an old peoples home.

I guess my main point on this is we don't need to wait until we have purpose built developments for downsizers to encourage downsizing. There are plenty who will happily move into existing apartments/bungalows/mews etc if we could get the market moving.

standardg60

schmittel wrote: »

And I'm not just talking about pensioners looking to move to gated communities with panic alarms.

There was an ask the finance expert thing on newstalk today, and a couple had sent in a what are our options query on this subject.

Mid 50s or so, 100k in savings, 500k fully paid off empty nest house in Dublin. They own a plot of land in the country, have planning, want to move from Dublin build in country, leave Dublin, live the quiet life etc.

They cannot get a mortgage to cover build cost for new house but they do not want to sell current house and rent if they can avoid it. Expert said basically they didn't have many other options since bridging no longer available. The idea that this is a risky profile is nuts.

I suspect there is a huge number of people in a similiar boat: irrespective of age or location, they'd quite like to move out of a house that could be put to more efficient use, and this is where government should be putting their resources.

Upon what would the bridging loan be secured. The asset being sold or the asset yet to be acquired?

L1011

standardg60 wrote: »

Upon what would the bridging loan be secured. The asset being sold or the asset yet to be acquired?

Nothing. Which is why they have (well, had - as I don't think they've been available for years) punitive interest rates, albeit as they were generally paid back within weeks it didn't cost that much.

hometruths

standardg60 wrote: »

Upon what would the bridging loan be secured. The asset being sold or the asset yet to be acquired?

The idea I'm suggesting is that it is specifically secured on the asset being sold, loan cleared on sale. If needs be, to reduce risk, could be secured on both until cleared.

L1011 wrote: »

Nothing. Which is why they have (well, had - as I don't think they've been available for years) punitive interest rates, albeit as they were generally paid back within weeks it didn't cost that much.

I don't see why a sightly different approach of lower interest rates and expected repayment timeframe of say a year could not be implemented. The high interest finance for a few weeks model is a very different buyer/transaction profile than what I am suggesting.

A key point would be that it is only available to people trading down in value, as the scheme would be designed to help free up more desirable stock in terms of size or location.

It would not be a mechanism to trade up from 3 bed semi in SCD to 4 bed detached in SCD, for example.

Hubertj

schmittel wrote: »

I kind of agree if, as Hubert says, its done well, and doesn't feel like a proxy for an old peoples home.

I guess my main point on this is we don't need to wait until we have purpose built developments for downsizers to encourage downsizing. There are plenty who will happily move into existing apartments/bungalows/mews etc if we could get the market moving.

I think It’s about providing people with more options and flexibility around where they might like to live. That will also help to speed up the process of trading down.

mcsean2163

Bridging loan has been a big headache for us so sounds like a great idea.

For me, the most obvious solution is vacant property charge on third house for private individuals and all property for business institutions.

If a property is vacant for over a year the owner must pay 1% per year to keep it vacant. All REITS would have to lower rents and actually rent, right now there are huge numbers if vacant apartments in rent protection zones.

Such a scheme costs very little and would not impact people who've saved for a holiday home.

yagan

mcsean2163 wrote: »

Bridging loan has been a big headache for us so sounds like a great idea.

For me, the most obvious solution is vacant property charge on third house for private individuals and all property for business institutions.

If a property is vacant for over a year the owner must pay 1% per year to keep it vacant. All REITS would have to lower rents and actually rent, right now there are huge numbers if vacant apartments in rent protection zones.

Such a scheme costs very little and would not impact people who've saved for a holiday home.

Even with a 1% vacancy charge as long as the annual house price is greater than 1% then they'll book that vacant property as an appreciating asset.

McWilliams piece from last weekend reminded me of standing in an empty fully finished estate in 2006 which was being withheld from the market while the credit was flowing. The result of course was us ending with with a surplus of housing, but in many places where there was little employment beyond building houses.

On this swing it's the international pension funds driving the frenzy, but as we've seen Marlot are now having to find buyers where previously their developments were being bought unfinished. We are probably going to end up with a surplus of shoebox apartment developments designed expressly for maximizing developer return.

Marius34

mcsean2163 wrote: »

Bridging loan has been a big headache for us so sounds like a great idea.

For me, the most obvious solution is vacant property charge on third house for private individuals and all property for business institutions.

If a property is vacant for over a year the owner must pay 1% per year to keep it vacant. All REITS would have to lower rents and actually rent, right now there are huge numbers if vacant apartments in rent protection zones.

Such a scheme costs very little and would not impact people who've saved for a holiday home.

I don't think those numbers are huge, if it's only around 1000, it wouldn't make much difference, and from August/September those numbers likely to go down fast even without vacancy charge.

PropQueries

The Irish Times have published their view on Biden’s tax reforms. Their last paragraph is telling IMO:

“Investment in future will locate where the best workforce can be found – and where the best education, research and innovation infrastructures are evident. Building these areas is the challenge for the future.”

Can anyone really state with a straight face that we tick all these three boxes in relation to other countries at the moment? Especially when most of their R&D is already done in other countries i.e. the evidence is that the multinationals, in the main, don’t believe we tick any of these boxes at the moment.

Of course, it all depends on the end agreement, but demand for housing in Ireland is highly linked to continued FDI (and their jobs) into Ireland and multinationals will be making their future FDI decisions from now on with this in mind IMO

Will existing housing developers need to go back to the drawing board on the type of houses they will build once they’re allowed back building this year? Luxury may be out and affordable and actual very low cost housing units may be in IMO

Link to Irish Times viewpoint article here: https://www.irishtimes.com/opinion/editorial/the-irish-times-view-on-corporate-tax-the-ripple-effects-of-us-policy-shifts-1.4526391

PropQueries

PropQueries wrote: »

The Irish Times have published their view on Biden’s tax reforms. Their last paragraph is telling IMO:

“Investment in future will locate where the best workforce can be found – and where the best education, research and innovation infrastructures are evident. Building these areas is the challenge for the future.”

Can anyone really state with a straight face that we tick all these three boxes in relation to other countries at the moment? Especially when most of their R&D is already done in other countries i.e. the evidence is that the multinationals, in the main, don’t believe we tick any of these boxes at the moment.

Of course, it all depends on the end agreement, but demand for housing in Ireland is highly linked to continued FDI (and their jobs) into Ireland and multinationals will be making their future FDI decisions from now on with this in mind IMO

Will existing housing developers need to go back to the drawing board on the type of houses they will build once they’re allowed back building this year? Luxury may be out and affordable and actual very low cost housing units may be in IMO

Link to Irish Times viewpoint article here: https://www.irishtimes.com/opinion/editorial/the-irish-times-view-on-corporate-tax-the-ripple-effects-of-us-policy-shifts-1.4526391

I believe that we do tick the education and research boxes. It’s the infrastructure box that we do not.....whether that’s innovation infrastructure, housing, broadband etc.

thefridge2006

Deleted User wrote: »

Yeah, those incoming credits probably stood out

Woody by name, woody by nature

timmyntc

Deleted User wrote: »

I believe that we do tick the education and research boxes. It’s the infrastructure box that we do not.....whether that’s innovation infrastructure, housing, broadband etc.

Broadband is Ireland is pretty good to be honest - its one of the things done well.
Transport infrastructure is seriously lacking - public transport in particular.
And housing goes without saying.. housing & transport lead to poorer quality of life for workers and is a big disincentive to move here.

And as for Education, Irish education system is good at teaching you how to learn by rote, but not great at developing skills for critical thinking and innovating that MNCs would be after.
Most of workers in MNCs here are European, not Irish

thefridge2006

Deleted User wrote: »

Today property market reminds me pub at 5AM were is about 20 drunk guys fighting for 1 bottle of whiskey left on shelve.

Actually this is the best type of analogy I've heard.....you can add a few more things too

Added to that is the beer goggles....... The people at the bar haven't have sex in a long time and will literally settle for anything with a heartbeat and take them home.....

Wake up the next day with a really bad hang over and a lot of regret...

thefridge2006

PropQueries wrote: »

The Irish Times have published their view on Biden’s tax reforms. Their last paragraph is telling IMO:

“Investment in future will locate where the best workforce can be found – and where the best education, research and innovation infrastructures are evident. Building these areas is the challenge for the future.”

Can anyone really state with a straight face that we tick all these three boxes in relation to other countries at the moment? Especially when most of their R&D is already done in other countries i.e. the evidence is that the multinationals, in the main, don’t believe we tick any of these boxes at the moment.

Of course, it all depends on the end agreement, but demand for housing in Ireland is highly linked to continued FDI (and their jobs) into Ireland and multinationals will be making their future FDI decisions from now on with this in mind IMO

Will existing housing developers need to go back to the drawing board on the type of houses they will build once they’re allowed back building this year? Luxury may be out and affordable and actual very low cost housing units may be in IMO

Link to Irish Times viewpoint article here: https://www.irishtimes.com/opinion/editorial/the-irish-times-view-on-corporate-tax-the-ripple-effects-of-us-policy-shifts-1.4526391

Also if MNC's expand elsewhere ( don't necessarily have to fully leave Ireland) surely they will be pulling some of the non- native workers etc to the new countries. You could see the outbound numbers grow and reduced demand/ more supply

awec

PropQueries wrote: »

The Irish Times have published their view on Biden’s tax reforms. Their last paragraph is telling IMO:

“Investment in future will locate where the best workforce can be found – and where the best education, research and innovation infrastructures are evident. Building these areas is the challenge for the future.”

Can anyone really state with a straight face that we tick all these three boxes in relation to other countries at the moment? Especially when most of their R&D is already done in other countries i.e. the evidence is that the multinationals, in the main, don’t believe we tick any of these boxes at the moment.

Of course, it all depends on the end agreement, but demand for housing in Ireland is highly linked to continued FDI (and their jobs) into Ireland and multinationals will be making their future FDI decisions from now on with this in mind IMO

Will existing housing developers need to go back to the drawing board on the type of houses they will build once they’re allowed back building this year? Luxury may be out and affordable and actual very low cost housing units may be in IMO

Link to Irish Times viewpoint article here: https://www.irishtimes.com/opinion/editorial/the-irish-times-view-on-corporate-tax-the-ripple-effects-of-us-policy-shifts-1.4526391

That one was yesterday, they actually have a good article today providing a good, balanced overview of the situation, highlighting areas of concern and also the lack of need to panic.

I'm guessing you must have missed this one?

https://www.irishtimes.com/business/economy/us-congress-will-determine-impact-of-biden-tax-plan-on-ireland-experts-say-1.4526762

"“The phone lines to Washington, DC, will be hopping as Ireland tries to mitigate the worst changes,” according to Mr O’Rourke. “The proposal is concerning and we will need to be actively involved in lobbying US lawmakers, but there is no need for panic at this point,” he said. Had it happened 20 years ago it may have had a big impact on the State’s efforts to attract FDI, he said, but today the Republic’s attractiveness for FDI is wider than tax."

awec

Another good IT article today.

https://www.irishtimes.com/business/commercial-property/office-demand-rebounds-as-employers-place-faith-in-vaccine-rollout-1.4520993

"Office demand rebounds as employers place faith in vaccine rollout"

Some interesting quotes:

"Active demand in March 2021 is being tracked at 3.3 million sq ft split across a total of 164 requirements. To put this active demand into context, the long-run average annual take-up is 2.2 million sq ft, making the existing active demand the equivalent of 1½ years of average annual take-up."

"Developers have also noted this shift in sentiment from last year and again, perhaps unexpectedly, have in at least three instances appointed contractors to begin work on speculative office schemes in the city centre to provide more than 500,000sq ft of offices."

"Some technology companies with offices in Dublin appear to be not only “pandemic-proof” in terms of their respective business models, but are ideally positioned to grow during a lockdown."

"Companies such as Wix, 2K games, TikTok, Udemy, Amazon, Workday, Huawei and Stripe have all expanded their headcounts or have announced new jobs over the last 12 months. In all of the above examples, the growth in headcount in 2020 has translated into active demand for office space in 2021."

"This trend is evidenced in the most recent figures from the Central Statistics Office which show that in the final quarter of 2020, the tech sector recorded an annual increase in employment figures of 9 per cent in Ireland. "

"However, a reduction in staff in the office on a day-to-day basis does not necessarily correlate with a reduction in the amount of space occupiers will need. This is due to a 5 per cent increase in office-based work projected over the next five years, the noted trend of increasing occupational ratios and potentially longer-term social distancing requirements in offices."

"We have seen a noticeable increase in demand from staff to have at least some access to an office environment, as evidenced by the growth in traffic volumes during the third lockdown compared to lockdown one. "


Now elements of this are certainly a bit fluffy, but I find it interesting as we've all been told that these things could not possibly happen.

awec

And more news, again this is stuff we were told was absolutely never going to happen.

https://www.seattletimes.com/business/amazon/amazon-expects-employees-back-in-their-offices-by-autumn/

Unlike many of its tech-sector peers, Amazon is eschewing a hybrid workplace.

The Seattle-based commerce giant told employees in a companywide announcement that it is planning a “return to an office-centric culture as our baseline.” The transition away from remote work is expected to wrap up by autumn, according to the announcement Tuesday. Working in offices, the note said, “enables us to invent, collaborate, and learn together most effectively.”

"Google announced Wednesday that its employees will begin trickling back to offices in April. The company, which employs nearly 6,000 Seattle-area workers, has said it will pilot a hybrid workplace model in which employees are expected to be in the office three days a week starting in September."

Hubertj

awec wrote: »

That one was yesterday, they actually have a good article today providing a good, balanced overview of the situation, highlighting areas of concern and also the lack of need to panic.

I'm guessing you must have missed this one?

https://www.irishtimes.com/business/economy/us-congress-will-determine-impact-of-biden-tax-plan-on-ireland-experts-say-1.4526762

"“The phone lines to Washington, DC, will be hopping as Ireland tries to mitigate the worst changes,” according to Mr O’Rourke. “The proposal is concerning and we will need to be actively involved in lobbying US lawmakers, but there is no need for panic at this point,” he said. Had it happened 20 years ago it may have had a big impact on the State’s efforts to attract FDI, he said, but today the Republic’s attractiveness for FDI is wider than tax."

That article probably doesn’t suit the narrative of some.

Pussyhands

For some roles it needs to be office but many roles don't and I think we'll see a mixture in future.