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

fliball123

timmyntc wrote: »

The equity your children have is irrelevant because it will be eroded by the house price increase. The equity they have, same as the equity you have right now - is only useful if you decide to sell up and move out of the country. Otherwise that equity is tied up in property and is of no value to you.

The same thing applies to the inheritance given that the increase in inheritance is totally eroded by the increase in property prices.

How does it erode as house prices increase so are you saying now that we should only look after people for a short time so half property prices now and let those in their 20s and 30s get on the ladder and then its ok for prices to go up? Kind of sounds like your in your 20s/30s and looking to buy currently Timmy I could be wrong but your post sounds very self serving

If prices go up in situation 1 they still have 50k more equity. How exactly is it eroded? They will also have been able to afford a better home and they will have had more choice and less competition as is the way of our property market the higher the property the less competition and less chance of bidding wars pushing the price up higher.

timmyntc

Wanderer78 wrote: »

mainly because we have allowed the fire sectors to dictate our economies, we are not the only country experiencing these problems, most western countries have engaged in this approach, hence why we re all experiencing similar outcomes

as explained previously, this would worsen the situation dramatically, as we do not have the systems and processes required to do so, ultimately costing you the tax payer even more

As explained previously?
You havent explained anything. You just make vague statements about the fire sectors running the world.

Most western countries have seen asset inflation in property due to record low interest rates and QE. But none have seen anything close to the rise Irish property has because it is not the same situation.

yagan wrote: »

Eviction to where?

Passing the parcel does not tackle anti social behaviour. Is it any different to the RCC moving sex offenders around?

Fianna Fail thought they were lining their own landlord pockets by turning a housing list into long yielding rental bonds but they were gazumped at their own game!

Its not passing the parcel - its putting a deterrent in place for bad behaviour.
Would you consider prison sentences for criminals to be a case of "pass the parcel" too?

bubblypop wrote: »

20 years of past experience then, does that sound better to you?
My last experience has shown me that the majority of neighbour issues are not involving social tenants.
So why the issue with social housing?

Your 20 years of past experience is worth as much as mine, or Joe down the road's etc. Its all anecdotal.

fliball123

yagan wrote: »

90% of the apartments sold last year in Dublin bypassed the market and went straight to rent farming funds. It was government planning policy that is destroying home ownership and the security of tenure that comes with it in favour of a quick buck profit.

If these policies are allowed to continue you may find yourself mostly chatting with grandkids via zoom.

True it was the government who implemented these policies so why should existing home owners be told they should be happy now to see their nett worth halved to pay to solve this problem, they didnt create it. I never said I was in favor of the current policies I contend that on here no one has come up with a proposal that sorts out the mess without any moral hazard or other consequences.

Amadan Dubh

Ozark707 wrote: »

This is a tough one for the REIT's. If you are that young professional paying top dollar and then HAP is used to fill the rest you might consider moving on when your lease it up. On the other hand as you can see most of the new builds are priced out of the reach of these young professionals so the vacancy level is very high. The question boils down to how long they can sit on the vacant ones. Either way if HAP was not the renter of last resort at such high prices we would have considerably cheaper rents.

I might throw my own personal hat into the ring here; we rent in Marina Village, Greystones and pay those high rents but if that German investment fund has entered into social housing leases with the council we will be giving our notice and moving on.

timmyntc

fliball123 wrote: »

How does it erode as house prices increase so are you saying now that we should only look after people for a short time so half property prices now and let those in their 20s and 30s get on the ladder and then its ok for prices to go up? Kind of sounds like your in your 20s/30s and looking to buy currently Timmy I could be wrong but your post sounds very self serving

If prices go up in situation 1 they still have 50k more equity. How exactly is it eroded? They will also have been able to afford a better home and they will have had more choice and less competition as is the way of our property market the higher the property the less competition and less chance of bidding wars pushing the price up higher.

What good is it having twice the equity when you try to buy your first house, when the price is twice as high? In absolute terms yes you will have more equity, but relative to the price of the house the equity is the same.

Amadan Dubh

Evil_g wrote: »

Are we just calling everything a vulture fund now?

We're an angry mob with pitchforks and firelit torches!

fliball123

timmyntc wrote: »

What good is it having twice the equity when you try to buy your first house, when the price is twice as high? In absolute terms yes you will have more equity, but relative to the price of the house the equity is the same.

READ paragraph 2 again when it comes to buying a property in the Irish property market and its not the same 50k in equity in a house is 50k regardless of if the house is worth 100k or 500k.

Wanderer78

timmyntc wrote: »

As explained previously?
You havent explained anything. You just make vague statements about the fire sectors running the world.

Most western countries have seen asset inflation in property due to record low interest rates and QE. But none have seen anything close to the rise Irish property has because it is not the same situation.

there is an enormous amount of research going into this now, from respected commentators and institutions

asset prices have been rapidly rising over the last few decades due to whats called the 'financialisation' of our economies, the primary drivers being, the fire sectors.

yes, central banks have also played a significant role in this form of inflation, as you have explained, but prices have largely risen due to the availability of credit , which is created by private sector financial institutions, which lead us straight into 08, as can be seen from the graph

Wanderer78

fliball123 wrote: »

Look the mod has asked us not to continue with this. Just to say it was her own choice to have kid 2 and 3 knowing she could not afford them That decision has tax payers picking up a tab they should not be picking up.

complex social problems, are just that! we shall park this one

timmyntc

fliball123 wrote: »

READ paragraph 2 again and its not the same 50k in equity in a house is 50k regardlesss of if the house is worth 100k or 500k.

We're going in circles here so this is the last I'll say on it.

That equity you have in the house is only realised once you sell.
If you sell and buy another house, any equity gains from increased prices are lost due to prices across the board increasing.
When you talk about increased prices giving your children a bigger inheritance and more equity to buy a home - the house price increases in that scenario will mean that in % terms, your children's inheritance will get them the same equity as they would have had prices decreased instead.

Relative equity is what matters when you go to buy a house - 20k in equity isnt much good when the house is worth 400k, but is enough for a deposit at 200k

yagan

timmyntc wrote: »

Its not passing the parcel - its putting a deterrent in place for bad behaviour.
Would you consider prison sentences for criminals to be a case of "pass the parcel" too?

Has one Irish bishop gone to jail for protecting pedophiles from the law?

Nor has one developer ever been fined for not meeting the social housing quota of their planning permission.

Perpetuating poverty traps is a planning failure.

timmyntc

Wanderer78 wrote: »

there is an enormous amount of research going into this now, from respected commentators and institutions

asset prices have been rapidly rising over the last few decades due to whats called the 'financialisation' of our economies, the primary drivers being, the fire sectors.

yes, central banks have also played a significant role in this form of inflation, as you have explained, but prices have largely risen due to the availability of credit , which is created by private sector financial institutions, which lead us straight into 08, as can be seen from the graph

I'm not getting into this with you again - just know that the private debt in that graph is greatly distorted by corporations domiciled in Ireland and loaded with debt.

And we already have restrictions on banks lending to stop runaway asset inflation from residential buyers (2008). What you have there is correlation != causation, even then from that graph its tenuous at best to suggest private debt alone causes rising house prices.

timmyntc

yagan wrote: »

Has one Irish bishop gone to jail for protecting pedophiles from the law?

Nor has one developer ever been fined for not meeting the social housing quota of their planning permission.

Perpetuating poverty traps is a planning failure.

Whataboutery - I'll ask you again.

Would you consider prison sentences for criminals to be a case of "pass the parcel" too?

yagan

timmyntc wrote: »

Whataboutery - I'll ask you again.

Would you consider prison sentences for criminals to be a case of "pass the parcel" too?

I'm on for white collar crime going to jail too. But taking white collar crime serious is only a recent Irish event.

But by all means don't let distract you from blaming the marginalised of all backgrounds for the failures of government.

Wanderer78

timmyntc wrote: »

I'm not getting into this with you again - just know that the private debt in that graph is greatly distorted by corporations domiciled in Ireland and loaded with debt.

And we already have restrictions on banks lending to stop runaway asset inflation from residential buyers (2008). What you have there is correlation != causation, even then from that graph its tenuous at best to suggest private debt alone causes rising house prices.

the graph shown is old data, from around the time of 08, most of that debt was in the property markets, i.e. private debt. yes a large proportion of our private debts currently are now in the corporate sector, which believe it or not, also includes major property investors, and whos currently one of the main property investors in the country, and what are they buying????

yes, current banking restrictions are preventing individuals from exceeding lending rules, but have a guess who can, hint above!

yes, its been well documented, particularly since 08, before it actually, credit has been in fact one of the main reasons for the rise in asset prices, particularly in relation to property

yagan

Wanderer78 wrote: »

yes, its been well documented, particularly since 08, before it actually, credit has been in fact one of the main reasons for the rise in asset prices, particularly in relation to property

From what I've seen it's actually yield seeking pension funds with cash outbidding those with mortgage approval.

So even credit isn't good enough for this market.

Wanderer78

yagan wrote: »

From what I've seen it's actually yield seeking pension funds with cash outbidding those with mortgage approval.

So even credit isn't good enough for this market.

i suspect these pension fund investors are actually using credit for the process, i.e. theyre borrowing the money, as rates are so low, but i could be wrong there

Amadan Dubh

https://www.irishtimes.com/business/commercial-property/pwc-dublin-docklands-hq-being-readied-for-265m-sale-1.4555201

PwC Dublin docklands HQ being readied for €265m sale
Middle Eastern investors paid record €242m to acquire One Spencer Dock offices in 2016

It seems like this is being rushed to market despite covid because of this important point which will definitely impact the value once PWC's recently announced long-term WFH policy takes hold;

One Spencer Dock is let to PwC under a 25-year lease with upward-only rent reviews every five years. The lease has just under 11 years left to run.

Arthur Daley

Wanderer78 wrote: »

i suspect these pension fund investors are actually using credit for the process, i.e. theyre borrowing the money, as rates are so low, but i could be wrong there

Could you walk us through this. Just genuinely curious what the deal is.

So I invest in a pension, and I'm desperate for yield because interest rates are on the floor.

So my answer is to leverage by borrowing, paying interest. Why do I need the middle man here?

timmyntc

Arthur Daley wrote: »

Could you walk us through this. Just genuinely curious what the deal is.

So I invest in a pension, and I'm desperate for yield because interest rates are on the floor.

So my answer is to leverage by borrowing, paying interest. Why do I need the middle man here?

Pension funds are not living on credit - they are an investment fund of sorts, they take your contributions and invest them in a diverse mix of assets of varying risk & return.

They already have the capital to invest because you pay them to do it. Thats what a pension fund is.
That poster is just desperate to link property prices to credit so will make baseless claims like that to support their viewpoint.

yagan

Wanderer78 wrote: »

i suspect these pension fund investors are actually using credit for the process, i.e. theyre borrowing the money, as rates are so low, but i could be wrong there

I linked a story from the Financial Times earlier in thread about how some pension funds went from being 20% exposed to illiquid assets like property a decade ago to about 50% now.

Pension fund managers don't give a toss if the fund goes bust in the end, as long as they're squirreled all the bonus money they can. The pensioners themselves expect returns so if rental property yields more than government bonds and stock dividends they'll happily throw their life savings at an increasingly crowded trade.

Call it karma for the intergenerational transfer of wealth that was the bailouts.

Wanderer78

Arthur Daley wrote: »

Could you walk us through this. Just genuinely curious what the deal is.

So I invest in a pension, and I'm desperate for yield because interest rates are on the floor.

So my answer is to leverage by borrowing, paying interest. Why do I need the middle man here?

it would make sense to me for such a fund to borrow, as rates are at record low levels, credit is known to inflate markets, so the actual act of borrowing, and using the credit to invest, would in fact cause the overall value to rise, therefore covering the loaned amounts easily, i.e. using the capability of money making money effectively. of course there is a risk in borrowing, but it wouldnt really be as much as you think, particularly if all goes to plan

MacronvFrugals

Do pension funds now heavily rely on sucking generation rent dry to make up the necessary yields?

Wanderer78

MacronvFrugals wrote: »

Do pension funds now heavily rely on sucking generation rent dry to make up the necessary yields?

pension funds are known to invest in property markets, so yes

timmyntc

MacronvFrugals wrote: »

Do pension funds now heavily rely on sucking generation rent dry to make up the necessary yields?

Bond yields are too low lately and interest rates are too low - pension funds need growth so instead the new lucrative growth market is buying Irish residential property, and agreeing a 20-25year lease with a local authority to use as social housing.

The returns are well above anything you would get in conventional markets.

Arthur Daley

Wanderer78 wrote: »

it would make sense to me for such a fund to borrow, as rates are at record low levels, credit is known to inflate markets, so the actual act of borrowing, and using the credit to invest, would in fact cause the overall value to rise, therefore covering the loaned amounts easily, i.e. using the capability of money making money effectively. of course there is a risk in borrowing, but it wouldnt really be as much as you think, particularly if all goes to plan

But the issue is low yield. Because of low interest rates.
All the borrowing is doing is eroding the yield with interest payments.

We could short circuit the deal and not bother with the borrowing. Pensioners get the yield gross without having to pay interest.

The pension funds have too much money, because someone decided lately that printing lots of money was the answer to all ills. The issue isn't a shortage of money, that borrowing would solve. The problem is too much money chasing yield that isn't there.

yagan

MacronvFrugals wrote: »

Do pension funds now heavily rely on sucking generation rent dry to make up the necessary yields?

This is well worth a read on that topic.

https://www.ft.com/content/c95deea4-03e2-11ea-9afa-d9e2401fa7ca

yagan

Wanderer78 wrote: »

it would make sense to me for such a fund to borrow, as rates are at record low levels, credit is known to inflate markets, so the actual act of borrowing, and using the credit to invest, would in fact cause the overall value to rise, therefore covering the loaned amounts easily, i.e. using the capability of money making money effectively. of course there is a risk in borrowing, but it wouldnt really be as much as you think, particularly if all goes to plan

Just as one example in the Dublin market the Marlet groups was formed I believed around 2014/15 to develop former NAMA properties. As the Irish banks were out of the picture they were backed by M&G Investments, a London based subsidiary of the massive multinational insurer Prudential.

Prudential essentially took insurance premium money and channelled it to Marlet to develop sites acquired cheaply from the Irish government and then flip them onto yield seeking pension funds.

As I understand it each site owned by Marlet is its own company, so if they don't sell they go bust without taking down the whole group, like as happened with so many players in the property bust.

The pin in the grenade is when the promised yields fail to materialise and pension funds pull back from the market. When that happens Marlet as a development vehicle designed to sell to those pension funds can be let go bust, and it will be bonuses all round at M&G Investments.

In the aftermath thanks to Fianna Fail we may end up long terms lease agreements to be honoured when prioritising social housing where it was needed should have been the policy from the start. It would have worked out cheaper for us.

DataDude

A couple of noteworthy comments from Michael Martin today after the Mullen Park debacle. Will be interesting to see if anything is actually done about it. If I was CEO of one of these funds, I think I'd be taking a breather from these deals for a few weeks in the hopes the fuss blows over!

"The purchase by institutional investors of completed housing estates is unacceptable and will be examined, Taoiseach Micheál Martin has insisted as the row intensified over the purchase by investment funds of the majority of homes in developments in north Dublin and Co Kildare.

“We do not want institutional investors competing with first-time buyers,” Mr Martin said. “Our priority is first-time buyers.”

He said that institutional investment was brought in “to add supply, not to displace supply, and that is the critical differential point”. They had to “distinguish between good capital and bad capital”.

Mr Martin also warned that local authorities should not be engaging in long-term leases with these investment funds.

https://www.irishtimes.com/news/politics/investors-buying-up-housing-estates-unacceptable-taoiseach-1.4556135

Cyrus

lovely location here but the fact they have taken half the site to build a nice new build and left this house with a rubbish garden would put me off on a point on principal!

https://www.myhome.ie/residential/brochure/17-burrow-road-sutton-dublin-13/4339419

the People here have done it twice btw!

this house is built in the garden of their old gaff and they are now building a new build at the entrance to this one

https://www.sherryfitz.ie/buy/house/dublin/dalkey/bartra-cove-harbour-road-dalkey-co-dublin-691229