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

Cal4567

Since the Rebuilding Ireland initiative was launched in the summer of 2016, the State’s centre, the Department of Housing, has been under the cosh from government to get things moving. They in turn did all they could do, and that was to approach each local authority, to whip up some action. Most of the latter had been almost dormant since the Crash – some of us would say, that’s not much different to how they’ve always been – but they started to ramp things up. New housing strategies, employed a few new faces, have a good look at what land they have that they can build on, put adverts out to local developers for any sites they own which the Council may be keen to acquire. At the same time the existing Approved Housing Bodies, such as Cluid, Tuath, Respond and a host of others, they too are given funds to develop new housing. Their preferred option is to buy turnkey from the developer although they have also been turning the sod themselves.

A point made in the SBP this weekend was that the existing funding process to access State funds remains cumbersome, a process that involves detailed scrutiny by the local authority and the Department of Housing. Some would say this is overlapping. On top of that there is a ‘private finance’ element as not 100% costs are met by State funds. This usually involves another arm of the State, the Housing Finance Agency, although sometimes it can be a private lender such as a bank. What you would think would take 2/3 months involving these entities drags on for much more than double that, and sometimes a lot longer. (I have a family member who is a small developer and has regular experience of this). His view is if they tell me it is 6 months, I diarise 9 at least. We’ve always reveled in an intense level of bureaucracy, why should this business be any different.

The varying abilities of each Council combined with the resources of the AHBs on their own are not enough to meet the increasing demand. The entire design, planning, build and funding process can take as much as 3 years for even the most modest of units. Property investment vehicles could see this and have been lobbying government hard that they could provide a solution and one that involves low initial cost to the State. Plus, we’re the private sector, we can do it quickly. What’s not to like about that?

The trick was to show the State that private investment companies could just jet in, buy the lot off the developer, who at that point may have been aiming to sell on houses and apartments to FTBs. Of course, leasing was more attractive to the investor, but also had a minimal initial outlay to the State and meant good numbers being delivered, and fairly sharply. Music to the ear of a politician who is only interested in as afar as the next election.

SF’s O’Broin has been getting out his calculator on this issue for quite awhile. Yes, other Left parties have been slow to come to the party. The 10/15/20 year costs to Ireland Inc are abhorrent compared to building ourselves.

The usual newspaper opinion types were either asleep at the wheel at this time, cheering along with the rest of the Chattering Classes re abortion and same sex marriages, to take any notice of this. Who knows, perhaps they thought it was a good idea. It has reduced numbers in need of housing, that cannot be denied.

We have though had more interest from the media on all of this in recent months. Most likely hearing the noises coming out of the middle classes who suddenly find their own adult kids, in relatively well paid employment, being unable to access reasonably priced homes to buy. That plus the Feb 2020 election when middle Ireland realised an SF led government was soon as more likely as ever.

The other glaring problem apart from paying silly amounts leasing over a 20 year period, is the increasing issue of the costs pertaining to Part V, particularly in high cost areas. I’ll come back to that tomorrow. It is another problem of the State’s own making and should have been foreseen.

Villa05

Robert short rte has a piece titled
The game is up on corporate tax

If this is the case, surely the next option that we could compete on is cost of living through housing

We probably have an oversupply of commercial property after the boom in that sector over the last 5 years so office space should be more competitively priced together with the WFH impact.

For future, use corpo tax and 0% finance to develop affordable yet profitable housing for transient and permanent workers needed for the excess workers required.

Look at Limerick for the effect of having competitively priced housing and how that city has recovered from a huge body blow of loosing one of the biggest employers in the state to having a heavily diversified range of service and manafacturing industry providing more jobs than the city ever had.

Admittedly the property disease we have become accustomed to in this country is seeding here now and we are having shortages and spiralling rents.
All can be cured with a small dose of competent management of resources

awec

Interesting piece: https://www.rte.ie/news/business/2021/0408/1208596-european-house-prices/

Irish house prices have risen in line with the EU average since 2010, but rental increases are vastly higher.

hometruths

awec wrote: »

Interesting piece: https://www.rte.ie/news/business/2021/0408/1208596-european-house-prices/

Irish house prices have risen in line with the EU average since 2010, but rental increases are vastly higher.

Are house prices really up just 28.6% since 2010? Feels like a lot more.

awec

schmittel wrote: »

Are house prices really up just 28.6% since 2010? Feels like a lot more.

I don't know to be honest, it does sound a bit low and there may be some strange corner case data involved. But it's from EuroStat, so their data must be at least valid and presumably unbiased.

RichardAnd

schmittel wrote: »

Are house prices really up just 28.6% since 2010? Feels like a lot more.

It's an average across the whole country, I would say. My parents house was valued at 250k about about decade ago, but it would sell for well over 500k today. Ignoring the current nonsense with "bid to view", that's still a huge increase.

hometruths

awec wrote: »

I don't know to be honest, it does sound a bit low and there may be some strange corner case data involved. But it's from EuroStat, so their data must be at least valid and presumably unbiased.

I guess they were still falling 2010 through 2013 so maybe 30 odd percent rise is plausible since 2010.

DataDude

schmittel wrote: »

I guess they were still falling 2010 through 2013 so maybe 30 odd percent rise is plausible since 2010.

Yeah you're right, CSO has it that it fell a further 28% from 2010 to 2012. So a 77% rise from the bottom but only up 27% from 2010...oh take me back to 2012, would have been great fun!

Villa05

schmittel wrote:

I guess they were still falling 2010 through 2013 so maybe 30 odd percent rise is plausible since 2010.

They were significant double digit falls. Limerick and Waterford did not hit bottom untill Mid 2014

The rental inflation is terrifying, we are creating a huge divide. You can see why FF are pushing shared ownership, despite all the advise against. Imagine if income taxes rose by that much because that is the scale we are talking about for those workers caught in the rental trap

Shows also how incredibly dumb long term leasing is as a policy, maybe we will see income tax rises of that proportion to cover the cost in the future

Browney7

schmittel wrote: »

Are house prices really up just 28.6% since 2010? Feels like a lot more.

https://www.daft.ie/for-sale/terraced-house-67-richmond-road-drumcondra-dublin-3/3150250 This house is listed at 650k (very aspirational) and sold for just over 200k in late 2013 (spent money on it presumably in that time also) so high demand areas are likely up a lot more. Didn't the market hit the trough in 2012?

awec

DataDude wrote: »

Yeah you're right, CSO has it that it fell a further 28% from 2010 to 2012. So a 77% rise from the bottom but only up 27% from 2010...oh take me back to 2012, would have been great fun!

Yes.

It is often said on here that Ireland's housing market (buying, not renting) is crazy, yet the stats suggest that we are in line with Europe. We also know that the current market is still significantly below 2008 levels.

So, putting the supply issues to the side (a big issue to put aside, I agree), would it be a really bad read to think that the market here is actually not as crazy as has been made out?

Ush1

Browney7 wrote: »

https://www.daft.ie/for-sale/terraced-house-67-richmond-road-drumcondra-dublin-3/3150250 This house is listed at 650k (very aspirational) and sold for just over 200k in late 2013 (spent money on it presumably in that time also) so high demand areas are likely up a lot more. Didn't the market hit the trough in 2012?

Yeah not sure it's worth that but lovely house now in fairness.

just_nosy

Ush1 wrote: »

Yeah not sure it's worth that but lovely house now in fairness.

It's a lovely house but not sure about the area? Right next to the Shelbourne FC stadium as well?

DataDude

awec wrote: »

Yes.

It is often said on here that Ireland's housing market (buying, not renting) is crazy, yet the stats suggest that we are in line with Europe. We also know that the current market is still significantly below 2008 levels.

So, putting the supply issues to the side (a big issue to put aside, I agree), would it be a really bad read to think that the market here is actually not as crazy as has been made out?

I'm not sure comparing current prices with 2008 levels is the best way of determining if prices are too high or low though? I know every country had a property bubble, but I feel like our one was particularly mental? I can't remember exact figures but saw some mental stats on LTI levels in that year in Ireland.

Looking at percentage growth rates from one period to the next and comparing countries assumes we all started from the same point.

And even with our other counterparts, just cause we are in line with them, maybe they are just as unaffordable as we are. It's an interesting comparison but don't think it should be a case of saying "sure it's awful elsewhere too so it's grand". We should aspire to be better.

To my mind, the only way to determine if property is affordable/sustainable is to compare it to household incomes (theoretically net, but since lending is based on gross, use that). Particularly in Dublin (and probably Cork/Galway), the data seems pretty clear to me that house prices in those areas cannot be supported by the income of the people in those areas, and is therefore above it's fundamental value. Don't think it's crazy. 2012 prices today would clearly be ridiculous. Maybe somewhere in the region of 10-15% below current levels would appear sustainable in the long term.

JimmyVik

awec wrote: »

Interesting piece: https://www.rte.ie/news/business/2021/0408/1208596-european-house-prices/

Irish house prices have risen in line with the EU average since 2010, but rental increases are vastly higher.

I wonder whats different.

Browney7

Ush1 wrote: »

Yeah not sure it's worth that but lovely house now in fairness.

Considering what you can get up on Iona road and other better, nicer and quieter roads in Drumcondra I couldn't fathom the price myself. Still, best of luck to them if they can get it.

awec

DataDude wrote: »

I'm not sure comparing current prices with 2008 levels is the best way of determining if prices are too high or low though? I know every country had a property bubble, but I feel like our one was particularly mental? I can't remember exact figures but saw some mental stats on LTI levels in that year in Ireland.

Looking at percentage growth rates from one period to the next and comparing countries assumes we all started from the same point.

And even with our other counterparts, just cause we are in line with them, maybe they are just as unaffordable as we are. It's an interesting comparison but don't think it should be a case of saying "sure it's awful elsewhere too so it's grand". We should aspire to be better.

To my mind, the only way to determine if property is affordable/sustainable is to compare it to household incomes (theoretically net, but since lending is based on gross, use that). Particularly in Dublin (and probably Cork/Galway), the data seems pretty clear to me that house prices in those areas cannot be supported by the income of the people in those areas, and is therefore above it's fundamental value. Don't think it's crazy. 2012 prices today would clearly be ridiculous. Maybe somewhere in the region of 10-15% below current levels would appear sustainable in the long term.

Yes, that's a good point on 2008. It was so bad that it can't be used as any sort of baseline.

Timing belt

Still no signs of meaningful inflation in Ireland's CPI.

https://www.cso.ie/en/releasesandpublications/er/cpi/consumerpriceindexmarch2021/

The CPI is equal to what it was a year ago and if you take into account the vat rate moving from 21% to 23% in March it would indicate that Year on Year we are still seeing deflation in the CPI while asset prices continue to rise.

amacca

Timing belt wrote: »

Still no signs of meaningful inflation in Ireland's CPI.

https://www.cso.ie/en/releasesandpublications/er/cpi/consumerpriceindexmarch2021/

The CPI is equal to what it was a year ago and if you take into account the vat rate moving from 21% to 23% in March it would indicate that Year on Year we are still seeing deflation in the CPI while asset prices continue to rise.

Does it take raw materials for building into account ...anecdotally at least steel, timber etc have risen

Hubertj

DataDude wrote: »

I'm not sure comparing current prices with 2008 levels is the best way of determining if prices are too high or low though? I know every country had a property bubble, but I feel like our one was particularly mental? I can't remember exact figures but saw some mental stats on LTI levels in that year in Ireland.

Looking at percentage growth rates from one period to the next and comparing countries assumes we all started from the same point.

And even with our other counterparts, just cause we are in line with them, maybe they are just as unaffordable as we are. It's an interesting comparison but don't think it should be a case of saying "sure it's awful elsewhere too so it's grand". We should aspire to be better.

To my mind, the only way to determine if property is affordable/sustainable is to compare it to household incomes (theoretically net, but since lending is based on gross, use that). Particularly in Dublin (and probably Cork/Galway), the data seems pretty clear to me that house prices in those areas cannot be supported by the income of the people in those areas, and is therefore above it's fundamental value. Don't think it's crazy. 2012 prices today would clearly be ridiculous. Maybe somewhere in the region of 10-15% below current levels would appear sustainable in the long term.

Very good point here - what is sustainable to bring prices to a range which is affordable to a greater number of people. Home owenstship % has fallen if I’ve read correctly elsewhere? At what prices(s) does that trend reverse.

Villa05

amacca wrote:

Does it take raw materials for building into account ...anecdotally at least steel, timber etc have risen

Seen an article yesterday that stated construction inflation is down to around 2%. Citing Labour availability amongst other factors

We bought property in 2007
In 2008 we got Minus 60 per cent of the value
In 13 years our property price went up to 30 per cent and we are still in minus 30 per cent of the value
I will never believe in any inflation,supply,demand and other things
Cash is the King inflation does not exist.
Today prices has nothing to do with real economy
As I said before Today property prices remind me the pub at 5AM were 20 drunnk lads fighting for last bottle of whiskey on shelve.

SheroP

Not sure if posting in the correct forum, but what are peoples views on selling a property privately, ie no estate agent involved?? Are there any pitfalls??

woejus

SheroP wrote: »

Not sure if posting in the correct forum, but what are peoples views on selling a property privately, ie no estate agent involved?? Are there any pitfalls??

You might miss out on a pool of buyers, but in this market, unlikely. You'll get a few tyre kickers wanting to see what hand soap you use etc.
You might not be able to suss out a timewaster as well as an EA can; specify any offer must close in x days, take a deposit via your solicitor if possible.

Stick a big sign outside your gaff and see what happens. List it on all the free-to-list sites you find.

Use a disposable phone, not your own one.

SheroP

woejus wrote: »

You might miss out on a pool of buyers, but in this market, unlikely. You'll get a few tyre kickers wanting to see what hand soap you use etc.
You might not be able to suss out a timewaster as well as an EA can; specify any offer must close in x days, take a deposit via your solicitor if possible.

Stick a big sign outside your gaff and see what happens. List it on all the free-to-list sites you find.

Use a disposable phone, not your own one

Thank you for your input
I have a buyer who approached me
I suggested a price and they snapped at it
Now hope to proceed between solicitors
Hope that I’m doing the right thing ?

johnnyskeleton

SheroP wrote: »

Not sure if posting in the correct forum, but what are peoples views on selling a property privately, ie no estate agent involved?? Are there any pitfalls??

The main pitfall is if you don't get as good a price for your property as the agent would. If the agent's fee is 5k and would potentially get you 10k more, it's worth it.

Also viewings with the owner are very awkward. Better to have a professional do it.

Finally, if you want a half way house, there are a few crowds like Moovingo who do some of the work for you but also let you do some, for a reduced price.

johnnyskeleton

SheroP wrote: »

woejus wrote: »

You might miss out on a pool of buyers, but in this market, unlikely. You'll get a few tyre kickers wanting to see what hand soap you use etc.
You might not be able to suss out a timewaster as well as an EA can; specify any offer must close in x days, take a deposit via your solicitor if possible.

Stick a big sign outside your gaff and see what happens. List it on all the free-to-list sites you find.

Use a disposable phone, not your own one

Thank you for your input
I have a buyer who approached me
I suggested a price and they snapped at it
Now hope to proceed between solicitors
Hope that I’m doing the right thing ?

If you're happy, and they're happy, what's the problem?

SheroP

johnnyskeleton wrote: »

If you're happy, and they're happy, what's the problem?

Fair enough
Auctioneers were advising doing work to improve the saleability of property, these purchasers are happy enough as is , just a little concerned I’m undervaluing property, but happy not to have tyre kickers trapsing thru house -quick sale, light profit so to speak !!

Balluba

Angela Keegan director Myhome.ie says that she expects transaction prices to be lower than asking prices and she also seems to suggest that supply is not as low as some say. I’m left wondering just what the truth is.

RichardAnd

Balluba wrote: »

Angela Keegan director Myhome.ie says that she expects transaction prices to be lower than asking prices and she also seems to suggest that supply is not as low as some say. I’m left wondering just what the truth is.

Here's the article:

https://www.irishtimes.com/business/economy/house-prices-rise-1-in-dublin-in-q1-but-fall-in-rest-of-country-1.4532382

Personally, I've only heard of houses going for well over the asking price, but this is of course anecdotal.

One thing to bear in mind is that the market at the moment is still disturbed due to lockdowns. Virtual viewings and "bid to view" are affecting prices in ways that would not happen in a normal market. Perhaps more properties will come on the market as restrictions ease. We shall see.