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

mcsean2163

PropQueries wrote: »

According to the SBP today:

“A “significant number” of social housing projects will be delayed until next year due to the construction shutdown, Darragh O’Brien, the Minister for Housing, has said.”

Anyone got access to the online edition to see the “reasons” given as I generally only buy the actual paper on the Sunday.

I’ve a sneaking suspicion this has as much to do with cuts to the housing department’s budget than anything else, as I don’t see how his department will get a pass on the much flagged cuts that are coming IMO

Link to article here: https://www.businesspost.ie/houses/construction-shutdown-delays-significant-number-of-social-housing-projects-9623d449

Maybe...

New figures obtained by the Business Post show that builders were given the go-ahead to keep working on 4,466 nearly completed social homes.

But building work on around 4,000 other social homes in the early stages of construction had to be halted to comply with the general shutdown of the construction sector. And a further 9,085 social houses at various stages of the design and tender approval process were unable to go on site.

PropQueries

mcsean2163 wrote: »

Maybe...

New figures obtained by the Business Post show that builders were given the go-ahead to keep working on 4,466 nearly completed social homes.

But building work on around 4,000 other social homes in the early stages of construction had to be halted to comply with the general shutdown of the construction sector. And a further 9,085 social houses at various stages of the design and tender approval process were unable to go on site.

Thanks. My advice to any property owner hoping to either sell to the state or sign up to one of those long-term lease agreements would be to get that done and dusted by the end of next month.

After that, I would be of the belief the whole governments housing strategy will be flipped on its head with cuts, cuts, cuts. And they will be permanent cuts IMO

drunkmonkey

PropQueries wrote: »

Thanks. My advice to any property owner hoping to either sell to the state or sign up to one of those long-term lease agreements would be to get that done and dusted by the end of next month.

After that, I would be of the belief the whole governments housing strategy will be flipped on its head with cuts, cuts, cuts. And they will be permanent cuts IMO

What's the thinking there, drop rents to landlords to decrease rental returns and possibly encourage them to get out of the market?

Bass Reeves

drunkmonkey wrote: »

What's the thinking there, drop rents to landlords to decrease rental returns and possibly encourage them to get out of the market?

All that will happen is LL will expect any HAP tenant to make up any balance. If they do not they fall into arrears. If this happens he evicts them. More homeless more panic.

Rental demand is increasing. Outside Dublin you have demand as people are WFH and many single people who moved back home are not looking to move out again. As there is no new houses built outside of the cities to any great extent there would be huge demand.

Even in Dublin's n with parents and older children working from home this will create demand as younger working adults look for sperate accommodation to WFH if offices are only used 2-3 days a week

PropQueries

Bass Reeves wrote: »

All that will happen is LL will expect any HAP tenant to make up any balance. If they do not they fall into arrears. If this happens he evicts them. More homeless more panic.

Rental demand is increasing. Outside Dublin you have demand as people are WFH and many single people who moved back home are not looking to move out again. As there is no new houses built outside of the cities to any great extent there would be huge demand.

Even in Dublin's n with parents and older children working from home this will create demand as younger working adults look for sperate accommodation to WFH if offices are only used 2-3 days a week

Well, on one side you have the Minister for Housing who appears to believe that handing out billions of euro to existing land and property owners is the "solution" to the housing crisis.

On the other you have the Minister for Finance who needs to cut expenditure. And, maybe even much much more than he currently believes if the Global Tax Reforms go against us in a couple of months time.

One is FF and the other is FG. The public understands when a Minister for Finance cuts costs as they fully understand that's his job. If the Minister for Housing doesn't solve the housing crisis (even if his budget is reduced to zero), people will still blame him and FF. They won't blame Paschal or FG.

Does Paschal and FG want to be this generations Brian Cowen and FF? I don't think so.

I would be of the strong belief that come July/August, carrots will be out and big big big sticks (yes, three bigs ) will be in regarding solutions to the so-called housing crisis IMO

MacronvFrugals

The former Minsister for Housing who had council staff clear homeless people away his from constituency(using a JCB) because it didn't look good and subsequently paralyzing the guy

Arguably the most useless we've ever had -

Former housing minister Eoghan Murphy resigns as TD for Dublin Bay South


https://www.thejournal.ie/eoghan-murphy-resigns-5420967-Apr2021/

DataDude

A long time coming since it was announced in the budget, but the Commission on Taxation and Welfare was established last week. Wide ranging remit and not due to report back until next year, but one fairly specific reference to property in the TOR given to them by Paschal:

"Consider the appropriate role for the taxation and welfare system, to include an examination of the merits of a Site Value Tax, in achieving housing policy objectives. This consideration should include reviewing the sustainability of such a role. It should also have regard to the experience of previous interventions in the housing and construction market and the current significant State supports for housing provision."

You'd hope a group of experts might be able to come to the conclusion that continually stimulating demand in a supply constrained market is poor policy...but who knows!

https://www.gov.ie/en/press-release/121b6-minister-donohoe-announces-establishment-of-commission-on-taxation-and-welfare/

Amadan Dubh

The Currency, "Your new neighbour is JP Morgan: why global capital is piling into Irish social housing"

thecurrency.news/articles/44909/your-new-neighbour-is-jp-morgan-why-global-capital-is-piling-into-irish-social-housing/

Extracts;

They are attracted by the government’s social housing leasing scheme. This scheme is a 25 year commitment, by the government, to rent social housing from the owners.

Goldman Sachs could buy a 20 year Irish government bond yielding 0.39 per cent. The social housing lease, by contrast, can be put together at a yield of about 3.5 per cent.

The difference between 0.39 per cent and 3.5 per cent is the reason global capital is taking a keen interest in two bed houses in Dolphin’s Barn and apartments in Dundrum. You’ll recognise some of the names: Goldman Sachs, JP Morgan, AXA, Aviva. Another is GIC, which is Singapore’s $488 billion sovereign wealth fund.

Thanks to institutional backing, a lot more houses have been built here than otherwise would have been. That pushes down house prices for the rest of us.

But until houses are built, it means the rest of us are bidding against very patient and deep-pocketed investors for a fixed stock of homes. That pushes up house prices for the rest of us. At the end of 2021, with construction frozen and house prices shooting up, we’re seeing it in action.

Right now, the leasing of social housing is still a relatively small part of the overall residential property market. But it’s growing quickly. And industry players agree, a wave of money is on its way. “Things have changed,” said Dublin City Council’s deputy chief executive Brendan Kenny. “Since Covid, we have 800 units at negotiations various phases with developers.” One senior lawyer is expecting “an explosion of deals later this year”.

Under multiple governments, and more housing ministers, the programmes pushed by the Department of Housing have a striking consistency. The housing assistance payment (subsidy for private tenants), turnkey purchases (state purchase of privately built homes), and long term leasing all basically throw resources at the demand side of the housing market. Whether through subsidies, or capex, or encouraging foreign capital, they help gobble up supply and help particular people to get homes. In doing so they help the most needy, and take pressure off housing lists. What they don’t do is help more people get homes, or – if this is your thing – put more homes in the hands of the state.

Ignoring the destitute state of the Irish property market for a moment (and without going into detail as to why there is a bubble once again) which has lead to this situation where big money is piling into social housing as it is so lucrative, how is this going to be paid for except by local councils raising property taxes for homeowners? To date, the government has been funneling the exchequer cash to institutionals via local councils by using these social housing leases, but that has been fine as the finances have been in good shape the last few years. But I don't see how the current levels of spending are sustainable post-covid except by new funding models, including an increase in property taxes for homeowners. At the same time, FF and FG voter base is dependent on these homeowners, not faceless institutionals who cannot vote. It's like they want to lose the next election so that they can blame SF for this slow motion car crash.

woejus

Amadan Dubh wrote: »

The Currency, "Your new neighbour is JP Morgan: why global capital is piling into Irish social housing"

thecurrency.news/articles/44909/your-new-neighbour-is-jp-morgan-why-global-capital-is-piling-into-irish-social-housing/

I would highly recommend signing up for this site if you're in business in Ireland. They are doing a great job. It's only €25/30 or so a month and you're supporting great Irish journalists who are not beholden to any major press interests.

Here is the article in full, I will remove this link in a bit.

https://i.imgur.com/ILrOOfh.png

hometruths

Amadan Dubh wrote: »

The Currency, "Your new neighbour is JP Morgan: why global capital is piling into Irish social housing"

thecurrency.news/articles/44909/your-new-neighbour-is-jp-morgan-why-global-capital-is-piling-into-irish-social-housing/

.

Right now, the leasing of social housing is still a relatively small part of the overall residential property market. But it’s growing quickly. And industry players agree, a wave of money is on its way. “Things have changed,” said Dublin City Council’s deputy chief executive Brendan Kenny. “Since Covid, we have 800 units at negotiations various phases with developers.” One senior lawyer is expecting “an explosion of deals later this year”.

This is definitely getting a lot more attention now which will led to better public awareness and understanding of it.

Once again, kudos to Props, he was pointing this out this six months ago and was roundly dismissed at the time.

hometruths

woejus wrote: »

Amadan Dubh wrote: »

The Currency, "Your new neighbour is JP Morgan: why global capital is piling into Irish social housing"

thecurrency.news/articles/44909/your-new-neighbour-is-jp-morgan-why-global-capital-is-piling-into-irish-social-housing/

I would highly recommend signing up for this site if you're in business in Ireland. They are doing a great job. It's only €25/30 or so a month and you're supporting great Irish journalists who are not beholden to any major press interests.

Here is the article in full, I will remove this link in a bit.

https://i.imgur.com/ILrOOfh.png

That's the article about Irish companies repoing Spanish properties. Which is very interesting in itself!

I agree it's a super site.

woejus

https://i.imgur.com/q8AHF6c.png

Apologies, got into the hash a bit too early this morning



The TL:DR of both those articles is that your "forever home" opportunity has become financialised and the worst bastards in the world are behind it.

I would highly recommend signing up for this site if you're in business in Ireland. They are doing a great job. It's only €25/30 or so a month and you're supporting great Irish journalists who are not beholden to any major press interests.

Both these will be deleted shortly.

Villa05

Amadan Dubh wrote:

The Currency, "Your new neighbour is JP Morgan: why global capital is piling into Irish social housing"

The European super league and Irish social housing. High finance really know where to get fools with money

Browney7

Amadan Dubh wrote: »

The Currency, "Your new neighbour is JP Morgan: why global capital is piling into Irish social housing"

thecurrency.news/articles/44909/your-new-neighbour-is-jp-morgan-why-global-capital-is-piling-into-irish-social-housing/

Extracts;



Ignoring the destitute state of the Irish property market for a moment (and without going into detail as to why there is a bubble once again) which has lead to this situation where big money is piling into social housing as it is so lucrative, how is this going to be paid for except by local councils raising property taxes for homeowners? To date, the government has been funneling the exchequer cash to institutionals via local councils by using these social housing leases, but that has been fine as the finances have been in good shape the last few years. But I don't see how the current levels of spending are sustainable post-covid except by new funding models, including an increase in property taxes for homeowners. At the same time, FF and FG voter base is dependent on these homeowners, not faceless institutionals who cannot vote. It's like they want to lose the next election so that they can blame SF for this slow motion car crash.

https://www.boards.ie/vbulletin/showthread.php?p=115558785 - there was a bit of discussion on this a few months ago. Creative off balance sheet accounting to go along with the AHBs and other quasi entities.

Sometimes I feel like DCC have done so many questionable deals "value for money wise" that they nearly have to keep doing them so they don't show themselves up. Each time a HAP tenancy is agreed, the state should have to set ten years of rent aside and book that cost instead of what they are doing at present. Creating so many problems long term

Hubertj

schmittel wrote: »

This is definitely getting a lot more attention now which will led to better public awareness and understanding of it.

Once again, kudos to Props, he was pointing this out this six months ago and was roundly dismissed at the time.

I think this has been in the public domain for some time - plenty of coverage of “funds” and “vulture funds” going on for years. What a lot of people don’t understand, and what articles like this illustrate, is what this actually means in the property market. It gives context to “funds”. It is important that the public is educated.

RichardAnd

schmittel wrote: »

This is definitely getting a lot more attention now which will led to better public awareness and understanding of it.

Once again, kudos to Props, he was pointing this out this six months ago and was roundly dismissed at the time.

It needs serious attention. This is, I believe, at least partly why the state wants to offer social housing to refugees who some here after just 4 months. what better way to generate demand for social housing?

However, the question really is whether it can be stopped or not?

Hubertj

woejus wrote: »

https://i.imgur.com/q8AHF6c.png

Apologies, got into the hash a bit too early this morning



The TL:DR of both those articles is that your "forever home" opportunity has become financialised and the worst bastards in the world are behind it.

I would highly recommend signing up for this site if you're in business in Ireland. They are doing a great job. It's only €25/30 or so a month and you're supporting great Irish journalists who are not beholden to any major press interests.

Both these will be deleted shortly.

This is an excellent article. Thank you. Very detailed analysis. A real eye opener.

hometruths

Hubertj wrote: »

I think this has been in the public domain for some time - plenty of coverage of “funds” and “vulture funds” going on for years. What a lot of people don’t understand, and what articles like this illustrate, is what this actually means in the property market. It gives context to “funds”. It is important that the public is educated.

Completely agree, that is what Props was pointing out 6 months ago, and many on here didn't understand it, the scale of it and the likely direction.

hometruths

woejus wrote: »

https://i.imgur.com/q8AHF6c.png

Apologies, got into the hash a bit too early this morning



The TL:DR of both those articles is that your "forever home" opportunity has become financialised and the worst bastards in the world are behind it.

I would highly recommend signing up for this site if you're in business in Ireland. They are doing a great job. It's only €25/30 or so a month and you're supporting great Irish journalists who are not beholden to any major press interests.

Both these will be deleted shortly.

Thanks for posting, excellent article.

they make a very good point about the lower yields that the big funds are happy with - 3.5% - compared to your average small time BTL landlord - 6-7%.

A house generating 24,000 of rent at. seven per cent yield is worth 342,000; at a 3.5 per cent yield it's worth 685,000

Property prices may have some distance to run yet!

awec

Interesting looking piece in the IT today, I don't have a sub so it won't let me read the whole thing, can someone with a sub summarise?

https://www.irishtimes.com/business/construction/builders-facing-double-figure-raw-material-price-hikes-1.4548339

"Builders facing double-figure raw material price hikes
Suppliers warn customers of price increases ranging from 5% to as much as 20%"

Pelezico

Major shortages in building materials so significant inflation in costs.

Villa05

awec wrote:

Interesting looking piece in the IT today, I don't have a sub so it won't let me read the whole thing, can someone with a sub summarise?

Speculators again piling into the inflation gamble buying into resources and raw materials they expect to be in high demand following lockdown easing. This was reported on radio this morning I'm sure there both linked

Zenify

Loads of top companies are sounding the inflation warning horn at the moment.

First 3 users to click get a free read of this ft article.

US companies plan price rises as inflation pressure builds - https://on.ft.com/3nvFbgf via @FT

Prices rising everywhere, I suspect we will see 3% inflation next year (not mentioned in article).

I wonder what will have a bigger effect on property, extra costs for raw materials or rising interst rates to combat inflation?

Hubertj

awec wrote: »

Interesting looking piece in the IT today, I don't have a sub so it won't let me read the whole thing, can someone with a sub summarise?

https://www.irishtimes.com/business/construction/builders-facing-double-figure-raw-material-price-hikes-1.4548339

"Builders facing double-figure raw material price hikes
Suppliers warn customers of price increases ranging from 5% to as much as 20%"

My brother is a plumber and he lives in Boston. He is reporting the same thing - price inflation but also shortages of raw materials.

Browney7

awec wrote: »

Interesting looking piece in the IT today, I don't have a sub so it won't let me read the whole thing, can someone with a sub summarise?

https://www.irishtimes.com/business/construction/builders-facing-double-figure-raw-material-price-hikes-1.4548339

"Builders facing double-figure raw material price hikes
Suppliers warn customers of price increases ranging from 5% to as much as 20%"

Global Lumber prices are at all time highs too - near 50% increase in the price since last March (random length lumber futures: LBS ticker symbol)

hometruths

Ah but look at the CPI figures. Nothing to see here!

Hubertj

Villa05 wrote: »

Speculators again piling into the inflation gamble buying into resources and raw materials they expect to be in high demand following lockdown easing. This was reported on radio this morning I'm sure there both linked

It’s not just speculation but supply chain issues and breakdown in manufacturing processes due to Covid. Ask consider Suez canal cluster fcuk the other week.

PropQueries

schmittel wrote: »

Thanks for posting, excellent article.

they make a very good point about the lower yields that the big funds are happy with - 3.5% - compared to your average small time BTL landlord - 6-7%.



Property prices may have some distance to run yet!

So, do we now have it in black and white? Is DCC responsible (at least partly) for almost doubling the price of some family homes in some areas of Dublin, even in the second-hand market?

If DCC wasn't involved in the market, is it now safe to assume that a regular private buyer looking to buy a home in the c. €350k range for his family, would he/she now need to potentially pay more than c. €685k instead of c. €342k in order to outbid DCC if they were both interested in the same property?

In other words, if a private buyer decides to get into a bidding war with DCC on a particular property that they are both interesting in purchasing, is a private buyer potentially paying c. €350k more than he/she would have because of DCC's involvement in the market in order to secure that property?

As the article says:

"However, you run the calculation again at a 3.5 per cent yield, you'll get a very different number. A house generating €24,000 in rent at a seven per cent yield is €342,000, at a 3.5 per cent yield it's worth €685,000. But since the standard lease applies to old as well as new houses, it applies there too."

And as Brendan Kenny (Deputy Chief of DCC) says:

"We're kind of of the view we'll take anything anwhere... Now that might impact prices. But we're in the middle of this, and we need houses."

Or, am I reading the article wrong?

And, more importantly, what happens the value of these homes when the Government pulls back from the property market?

hometruths

Hubertj wrote: »

It’s not just speculation but supply chain issues and breakdown in manufacturing processes due to Covid. Ask consider Suez canal cluster fcuk the other week.

Yep, IT article basically reporting a perfect storm to push up prices on both supply and demand sides - covid playing havoc with supply chains at same time as reovation/diy demand booming, throw in Brexit, suez etc etc.

hometruths

PropQueries wrote: »

So, do we now have it in black and white. Is DCC responsible (at least partly) for almost doubling the price of some family homes in some areas of Dublin, even in the second-hand market?

If DCC wasn't involved in the market, is it now safe to assume that a regular private buyer looking to buy a home in the c. €350k range for his family, would he/she now need to potentially pay more than c. €685k instead of c. €342k in order to outbid DCC if they were both interested in the same property?

In other words, if a private buyer decides to get into a bidding war with DCC on a particular property that they are both interesting in purchasing, is a private buyer potentially paying c. €350k more than he/she would have because of DCC's involvement in the market in order to secure that property?

As the article says:

"However, you run the calculation again at a 3.5 per cent yield, you'll get a very different number. A house generating €24,000 in rent at a seven per cent yield is €342,000, at a 3.5 per cent yield it's worth €685,000. But since the standard lease applies to old as well as new houses, it applies there too."

And as Brendan Kenny (Deputy Chief of DCC) says:

"We're kind of of the view we'll take anything anwhere... Now that might impact prices. But we're in the middle of this, and we need houses."

Or, am I reading the article wrong?

I think councils have not yet inadvertently doubled the prices of houses but ultimately if this continues unabated that is the likely outcome.

In reality before things get that bad I suspect some factor, or combination of factors, will pull the plug on the whole model.