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

AdamD

They could be pushing up prices but they aren't doubling the price of anything...

L1011

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

You may have missed my last warning as it wasn't in bold

Stop trying to use articles that you haven't read / can't read or that don't actually say what you think they say to support your positions. This is a vast, vast proportion of the articles you link to.

This is a moderation instruction and needs to be taken seriously or actions will have to be taken

L1011

MacronvFrugals wrote: »

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

That isn't what happened, and I'm fairly sure you know that.

PropQueries

AdamD wrote: »

They could be pushing up prices but they aren't doubling the price of anything...

Depends on where the property is and who you are bidding against? If it's an investor who wishes to lease to the council at a 3.5% yield? It makes sense for that investor to pay double what it would be if you were bidding against the old style landlord seeking a 6% to 7% yield.

awec

PropQueries wrote: »

Depends on where the property is and who you are bidding against? If it's an investor who wishes to lease to the council at a 3.5% yield? It makes sense for that investor to pay double what it would be if you were bidding against the old style landlord seeking a 6% to 7% yield.

But this still does not mean that DCC have doubled property prices.

PropQueries

awec wrote: »

But this still does not mean that DCC have doubled property prices.

I said "some family homes in some areas of Dublin, even in the second-hand market?"

Does that not matter an awful lot if you're the person on the other side of that bidding war and you don't know that you're potentially bidding against either DCC directly or an investor who intends to lease on the property to DCC at 3.5%?

As Brendan Kenny (Deputy Chief of DCC) says: "We're kind of of the view we'll take anything anywhere".

And if you do win that bidding war and decide to sell in e.g. 5 years time, what's the "market value" of the property at that time if DCC is no longer in the market for those type of houses? Is it worth 50% less?

timmyntc

awec wrote: »

But this still does not mean that DCC have doubled property prices.

They have not doubled prices, but their policies have stimulated demand where the upper price bound is twice what it was previously for BTLs.

Its not a doubling of every sale price, but over time it will lead to BTL property becoming 2x as expensive as it is now when that upper price bound is reached. (which it will unless rates rise or the council stop)


Its the same situation where grants for FTBs and equity schemes have the effect of just pushing up prices by the value of the grant in question.

MacronvFrugals

L1011 wrote: »

That isn't what happened, and I'm fairly sure you know that.

If I respond will I be banned?

awec

timmyntc wrote: »

They have not doubled prices, but their policies have stimulated demand where the upper price bound is twice what it was previously for BTLs.

Its not a doubling of every sale price, but over time it will lead to BTL property becoming 2x as expensive as it is now when that upper price bound is reached. (which it will unless rates rise or the council stop)


Its the same situation where grants for FTBs and equity schemes have the effect of just pushing up prices by the value of the grant in question.

But the premise that some buyers are paying double what they would otherwise pay is based on the idea that DCC is the only counter bidder willing to pay a higher price.

In other words, it's a fairly tenuous position to hold.

L1011

MacronvFrugals wrote: »

If I respond will I be banned?

No, that was not a moderation statement.

DCC were working under the direction of Waterways Ireland, a cross border body not controlled by Eoghan Murphy, at the time. The crux of your statement was based on something that didn't happen.

Waterways are under a different department (who don't fully control them anyway); and they were clearing tents along canals in the entire city not just Dublin Bay South.

Amadan Dubh

irishtimes.com/business/transport-and-tourism/covid-damage-to-dublin-s-hotels-to-be-offset-by-multinational-growth-1.4548118?mode=amp

Some fantastic hopeless optimism from CBRE which expects the top 10 MNCs to double headcount in the next few years which will then mean that the hotel bubble doesn't pop!

Hubertj

schmittel wrote: »

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.

It will be interesting to see what changes they make to the mix of buy/build/lease in housing requirements. Clearly money to be saved building but there is the time this takes vs the short term need to deliver housing. For example , the LDA project announced yesterday for the CMH in Dundrum sounds like a great plan but delivery timelines are 2023 through 2028. Legislative changes are required in in planning and procurement processes. Inevitably changes to procurement process will result in a race to the bottom resulting in the delivery of poorer quality units with little to no oversight. Mark my words

PropQueries

awec wrote: »

But the premise that some buyers are paying double what they would otherwise pay is based on the idea that DCC is the only counter bidder willing to pay a higher price.

In other words, it's a fairly tenuous position to hold.

Ok, for the sake of argument, if a house goes on sale on a particular street in Dublin tomorrow and there are only two bidders. One bidder wants to buy it to rent out on the private market and expects to generate a yield of 7%. The other bidder intends to buy it and lease it to the council at 3.5%.

As the article states:

"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."

Now, say 6 months later, I'm looking to buy a family home on the same street. I look at the PPR and see that the last house on that street sold for €685,000, so I bid that price. However, if DCC or the investor buying to lease to DCC wasn't involved and the original bidder won based on his expected 7% yield, the PPR would state that the last house that sold on that street 6 months ago sold was for €342k so I'm not going to bid €685k.

Therefore, won't I be bidding a price for a house on that particular street based upon DCC's involvement in the market at that time?

timmyntc

PropQueries wrote: »

Ok, for the sake of argument, if a house goes on sale on a particular street in Dublin tomorrow and there are only two bidders. One bidder wants to buy it to rent out on the private market and expects to generate a yield of 7%. The other bidder intends to buy it and lease it to the council at 3.5%.

As the article states:

"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."

Now, say 6 months later, I'm looking to buy a family home on the same street. I look at the PPR and see that the last house on that street sold for €685,000, so I bid that price. However, if DCC or the investor buying to lease to DCC wasn't involved and the original bidder won based on his expected 7% yield, the PPR would state that the last house that sold on that street 6 months ago sold was for €342k so I'm not going to bid €685k.

Therefore, won't I be bidding a price for a house on that particular street based upon DCC's involvement in the market at that time?

It will take quite a while to hit that upper value of 685k.
Likely the investor will outbid the family or the small landlord at a much lower level, but higher than the small landlords affordability.

Over time with investors bidding against each other you could hit that upper value of 685k, but it will be months or years before that happens.

awec

PropQueries wrote: »

Ok, for the sake of argument, if a house goes on sale on a particular street in Dublin tomorrow and there are only two bidders. One bidder wants to buy it to rent out on the private market and expects to generate a yield of 7%. The other bidder intends to buy it and lease it to the council at 3.5%.

As the article states:

"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."

Now, say 6 months later, I'm looking to buy a family home on the same street. I look at the PPR and see that the last house on that street sold for €685,000, so I bid that price. However, if DCC or the investor buying to lease to DCC wasn't involved and the original bidder won based on his expected 7% yield, the PPR would state that the last house that sold on that street 6 months ago sold was for €342k so I'm not going to bid €685k.

Therefore, won't I be bidding a price for a house on that particular street based upon DCC's involvement in the market at that time?

How do you think this works?

Vendor: asking price is 300k.
Family bidder: we bid 342k.
DCC: our counter bid is 685k, take it or leave it!

PropQueries

awec wrote: »

How do you think this works?

Family bidder: we bid 342k.
DCC: our counter bid is 685k!

You forgot the third potential bidder looking at leasing to DCC at 3.5%.

In your scenario, there are three potential bidders and two are linked to DCC.

Sunny Disposition

Amadan Dubh wrote: »

irishtimes.com/business/transport-and-tourism/covid-damage-to-dublin-s-hotels-to-be-offset-by-multinational-growth-1.4548118?mode=amp

Some fantastic hopeless optimism from CBRE which expects the top 10 MNCs to double headcount in the next few years which will then mean that the hotel bubble doesn't pop!

Very optimistic for sure. I'd fear for the Dublin hotel sector because so much of it is based on business travel, which is surely going to reduce dramatically in the long term.

hometruths

PropQueries wrote: »

You forgot the third potential bidder looking at leasing to DCC at 3.5%.

In your scenario, there are three potential bidders and two are linked to DCC.

Timmy's dead right - if you extrapolate this out, assuming all other variables remain the same, the logical conclusion is that the wave of fund money over time ultimately results in them outbidding each other up to the 3.5% yield valuation.

But we are no where near that point yet, and the chances of the variables remaining the same between now and then are zero.

There is no doubt you are right that the state is currently the elephant in the market, whether directly or indirectly, and driving prices up for Joe Average on every single property. It's just not quite double yet!

Claw Hammer

Sunny Disposition wrote: »

Very optimistic for sure. I'd fear for the Dublin hotel sector because so much of it is based on business travel, which is surely going to reduce dramatically in the long term.

There are going to be trade shows and conferences. Leisure travel has come from a low base to being a significant element. A lot will depend on cheap flights being available.

PropQueries

schmittel wrote: »

Timmy's dead right - if you extrapolate this out, assuming all other variables remain the same, the logical conclusion is that the wave of fund money over time ultimately results in them outbidding each other up to the 3.5% yield valuation.

But we are no where near that point yet, and the chances of the variables remaining the same between now and then are zero.

There is no doubt you are right that the state is currently the elephant in the market, whether directly or indirectly, and driving prices up for Joe Average on every single property. It's just not quite double yet!

It does show that if a prospective buyer is looking to buy a family home in Dublin, they should really do their research on why a particular price was paid on the PPR.

Once the state pulls back (either due to lack of funds or reaching their social housing targets), people will need to calculate what the market price will be in such a scenario IMO

awec

PropQueries wrote: »

It does show that if a prospective buyer is looking to buy a family home in Dublin, they should really do their research on why a particular price was paid on the PPR.

Once the state pulls back (either due to lack of funds or reaching their social housing targets), people will need to calculate what the market price will be in such a scenario IMO

This is impossible to do and you are mad if you think buyers look at this stuff.

If someone is convinced that property is the price that it is right now solely because of the policies of the county councils then all they can do is wait until the policies change and see what happens. Nobody knows when that will be and nobody knows what the state of play will be at that time.

PropQueries

awec wrote: »

This is impossible to do and you are mad if you think buyers look at this stuff.

If someone is convinced that property is the price that it is right now solely because of the policies of the county councils then all they can do is wait until the policies change and see what happens. Nobody knows when that will be and nobody knows what the state of play will be at that time.

I'm already down for July/August

Amadan Dubh

Interesting developments in the commercial property sector, two separate matters in the IT and the Currency this evening.

In the IT, it concerns the flexible working arrangements (WeWork is one of the largest commercial tenants in the State and also operates a flexible working arrangement). While the article notes that the Land Development Agency is taking over the portfolio, it also notes that the Digital Hub development Agency was crying out for cash last year from the government.

irishtimes.com/business/technology/disappointment-and-regret-as-digital-hub-to-be-dissolved-1.4549069

The hub offers flexible office arrangements and business support services to growing tech companies and is also involved in providing digital-related learning and training opportunities geared to the local community.

thecurrency.news/articles/45138/deutsche-bank-is-set-to-square-off-with-uk-retail-magnate-ashley-in-the-irish-courts/

The Currency discusses High Court proceedings issued by Deutsche Bank for non-payment of commercial rent against Mike Ashley's Heatons. This goes to the point about high street retail being in terminal decline pre-covid and now covid restrictions have accelerated the destruction of bricks n' mortar retail in its current form. The Currency article also claims that at least 39 other sets of proceedings have been issued against retailers and restaurants since March last year, including against Boots and Easons.

Taylor365

Another predication to come and go by, without a peep of change I'm sure.

PropQueries

Goodbody stockbrokers are predicting c. 21k new housing units will be built this year.

Looks like the shortage this year won’t be a big as many had predicted.

Link to article in Irish Times here: https://www.irishtimes.com/business/construction/impact-of-lockdown-on-housing-output-less-than-initially-feared-says-goodbody-1.4548937

Hubertj

Amadan Dubh wrote: »

Interesting developments in the commercial property sector, two separate matters in the IT snf the Currency this evening.

In the IT, it concerns the flexible working arrangements (WeWork is one of the largest commercial tenants in the State and also operates a flexible working arrangement). While the article notes that the Land Development Agency is taking over the portfolio, it also notes that the Digital Hub development Agency was crying out for cash last year from the government.

irishtimes.com/business/technology/disappointment-and-regret-as-digital-hub-to-be-dissolved-1.4549069



thecurrency.news/articles/45138/deutsche-bank-is-set-to-square-off-with-uk-retail-magnate-ashley-in-the-irish-courts/

The Currency discusses High Court proceedings issued by Deutsche Bank for non-payment of commercial rent against Mike Ashley's Heatons. This goes to the point about high street retail being in terminal decline pre-covid and now covid restrictions have accelerated the destruction of bricks n' mortar retail in its current form. The Currency articles also claims that at least 39 other sets of proceedings have been issued against retailers and restaurants since March last year, including against Boots and Easons.

Unfortunate about the digital hub but there are a number of similar facilities around the country. Hopefully alternative services for the local community will be provided. I do know there was good engagement.

PropQueries

PropQueries wrote: »

Goodbody stockbrokers are predicting c. 21k new housing units will be built this year.

Looks like the shortage this year won’t be a big as many had predicted.

Link to article in Irish Times here: https://www.irishtimes.com/business/construction/impact-of-lockdown-on-housing-output-less-than-initially-feared-says-goodbody-1.4548937

Just to add. That’s potentially c. 60k new built units over 2019, 2020 and 2021.

Now add in, say, 15k units per annum in potential probate sales. So that’s over c. 100k new homes that may be available over 2019, 2020 and 2021 or enough to house c. 300k people based on an average of one couple and a child per unit.

Not bad supply over the period given our population is still less than 5 million people?

Hubertj

https://www.irishtimes.com/life-and-style/homes-and-property/new-to-market/detached-d%C3%BAn-laoghaire-georgian-with-room-to-improve-for-1-7m-1.4548083

I know this house needs modernising but I really like it. It has a lot of potential and there is so much space.

hometruths

Hubertj wrote: »

https://www.irishtimes.com/life-and-style/homes-and-property/new-to-market/detached-d%C3%BAn-laoghaire-georgian-with-room-to-improve-for-1-7m-1.4548083

I know this house needs modernising but I really like it. It has a lot of potential and there is so much space.

Love it.

Awkwardstroke

I would caution against posting ads of property you are interested here, as it might drive the price higher...unless you are the seller (pretending to be an interested buyer 😀)

Hubertj wrote: »

https://www.irishtimes.com/life-and-style/homes-and-property/new-to-market/detached-d%C3%BAn-laoghaire-georgian-with-room-to-improve-for-1-7m-1.4548083

I know this house needs modernising but I really like it. It has a lot of potential and there is so much space.