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

cnocbui

Idbatterim wrote: »

The cost of vat on building materials and house price purchase is a joke. If there was a proper lpt and appropriate rents for social housing, you wouldn't need to rob one cohort of society... at the moment, huge amounts are benefitting colossal and immoral, at our expense...

But they wont touch lpt etc, they are totally screwed, they have made their own bed, cant wait for the fallout and political carnage now over the next few years...

There's the activities of REITS and the tax breaks offered to them and the revenue greed of the government and councils and their on-costs, but you see the problem as people who currently own homes?

RichardAnd

yer man! wrote: »

So this is just flat out inflation then no?

Well I don't doubt that demand is certainly playing a part, but there is a awful lot of cash floating around now. Apparently, about nine trillion dollars was printed in 2020 alone.

In relation to houses here in Ireland, lockdowns have robbed people of the opportunity to spend their wages, thus cash has piled up. Add to this the large amount of very well paying jobs to be had in certain industries and the state's handing out of "free money", and it becomes a case that the country is rolling in cash.

I have heard talk of a "post-covid boom", but I see this as being nothing more than a stimulus fueled, runaway train. States around the world are clocking up national debts that haven't been seen since the World War II. I'm not an economist, and I don't know where this is going to end, but one need only look at what's happening in the property market to see that something is very, very wrong.

Personally, I'm unmarried, childless, and I have no family to care for. At 34, that may sound like a sad story, but I feel genuine sympathy for anyone trying to care for a family in the world that may be coming.

Villa05

cnocbui wrote:

People taking themselves out of the current market because they think it is too extreme, hoping for it to calm down and become more affordable, are making a mistake.

I think the issue is that people are involuntarily being removed from the market. When this increases further a collapse is inevitable

Idbatterim wrote:

But they wont touch lpt etc, they are totally screwed, they have made their own bed, cant wait for the fallout and political carnage now over the next few years...

I can see it being increased through current valuations being imposed rather than 2013 valuations as is currently the practice

Hubertj

Villa05 wrote: »

I think the issue is that people are involuntarily being removed from the market. When this increases further a collapse is inevitable




I can see it being increased through current valuations being imposed rather than 2013 valuations as is currently the practice

I could see prices level off and fall in some areas if funds and REITs are prevented from competing against FTBers. Prices had levelled off from the end of 2018 based on what others have said. Then we would see where there are affordability issues. I don’t see a crash short to medium term due to economic projections in eurozone and elsewhere.

Hopefully they will address the LPT valuations and begin moves to a site value tax medium term. Was that in the terms on the commission on taxation which is due to report next year?

Villa05

We now know that Pat Farrell (former FF General secretary) a lobbyist for the investment funds lobbied heavily for the shared ownership/equity scheme.

Now one would have to ask why a business with the implied intention of buying/building to rent would be lobbying for scheme that supposedly helps people escape the rental trap (reducing customers) and drives up the price of property (increasing price of there raw materials) thus potentially reducing the businesses future profits business viability

Could it be that these funds are buying up property en masse, lobbying for inflationary policies and make a quick killing once these inflationary polices have taken hold, hence the reason the long term funds in Germany and Switzerland are avoiding

DataDude

Interesting piece in the Sunday Independent titled ‘Bank of mum and dad is propping up South Dublin’. Pretty much as expected but nice to see it confirmed by an EA.

Owen O’Reilly saying in the properties he’s selling it’s routine for parents to be gifting €400k-€1m for their kids to live nearby and that prices would be considerably lower without this.

Same article has a mortgage broker saying 7 out of 10 applications they process have considerable gifts attached. Finding now that the vast majority of applicants who don’t have sizeable gifts are not renewing their applications when approval lapses and that, although they have lots of applications, very few are being drawn down and most just sit in the cabinet unused.

Wonder will it ever lead to a conversation about inheritance taxes if property ownership becomes an inherited, rather than an earned right!

https://m.independent.ie/irish-news/bank-of-mum-and-dad-is-propping-up-south-dublin-housing-market-40403979.html

MacronvFrugals

I have no doubt all of our pensions are invested in REIT in some form or another but with the week this government is having the optics of this really are starting to light a flame


Housing Minister Darragh O’Brien was an early investor in so-called ‘cuckoo’ funds



https://extra.ie/2021/05/09/news/irish-news/housing-minister-darragh-obrien-was-an-early-investor-in-so-called-cuckoo-funds

yagan

DataDude wrote: »

Interesting piece in the Sunday Independent titled ‘Bank of mum and dad is propping up South Dublin’. Pretty much as expected but nice to see it confirmed by an EA.

Owen O’Reilly saying in the properties he’s selling it’s routine for parents to be gifting €400k-€1m for their kids to live nearby and that prices would be considerably lower without this.

Same article has a mortgage broker saying 7 out of 10 applications they process have considerable gifts attached. Finding now that the vast majority of applicants who don’t have sizeable gifts are not renewing their applications when approval lapses and that, although they have lots of applications, very few are being drawn down and most just sit in the cabinet unused.

Wonder will it ever lead to a conversation about inheritance taxes if property ownership becomes an inherited, rather than an earned right!

It was the same in 2006 when 70% of FTBs in Dublin had to have parents put up their own property as guarantee.

One thing that really strikes me is how different and similar this time is to 2006. It was the government's non regulation of the market that let predatory lenders run wild then, and now it's the government crowding out FTBers and lenders.

c.p.w.g.w

Been looking around at different listings in Limerick...

I bought a place a few years back for 105,000...

Nearby houses in a similar state to when I bought going for 170-205 now...and I put a good bit of work into it...so I'd imagine I'd at have a good chance of clearing 250,000 😂🀣😂🀣

Hubertj

DataDude wrote: »

Interesting piece in the Sunday Independent titled ‘Bank of mum and dad is propping up South Dublin’. Pretty much as expected but nice to see it confirmed by an EA.

Owen O’Reilly saying in the properties he’s selling it’s routine for parents to be gifting €400k-€1m for their kids to live nearby and that prices would be considerably lower without this.

Same article has a mortgage broker saying 7 out of 10 applications they process have considerable gifts attached. Finding now that the vast majority of applicants who don’t have sizeable gifts are not renewing their applications when approval lapses and that, although they have lots of applications, very few are being drawn down and most just sit in the cabinet unused.

Wonder will it ever lead to a conversation about inheritance taxes if property ownership becomes an inherited, rather than an earned right!

https://m.independent.ie/irish-news/bank-of-mum-and-dad-is-propping-up-south-dublin-housing-market-40403979.html

It’s such an emotive subject - inheritance which usually involves property/family home. I’ve never viewed my gaff as other than a place to live, not an asset or any of that bollo*. However, selling the family home in 2016 following my father’s passing was a very emotional experience. None of use needed to live there but it is a very different situation for some who have to sell the home they live in to settle taxes etc. As I understand it the section 86 exceptions are very narrow as they were taken advantage of in the past.

DataDude

Hubertj wrote: »

It’s such an emotive subject - inheritance which usually involves property/family home. I’ve never viewed my gaff as other than a place to live, not an asset or any of that bollo*. However, selling the family home in 2016 following my father’s passing was a very emotional experience. None of use needed to live there but it is a very different situation for some who have to sell the home they live in to settle taxes etc. As I understand it the section 86 exceptions are very narrow as they were taken advantage of in the past.

For sure. But I do think what’s stopped it ever being looked at, is that it’s poorly understood. People think ‘I’m going to inherit €200k. Therefore I don’t want higher inheritance taxes because I’ll pay it too’…but they don’t realise that everyone around them is inheriting multiples of that and therefore they are relatively worse off.

Generally, Irish people are fairly anti ‘rich-people’ and that’s why SF rhetoric around taxing high earners lands so well. But if you want to tackle inequality, it’s not the PAYE worker earning 100k who’s your enemy. It’s the guy inheriting a €5m home on Coliemore road.

If someone manages to run an educational campaign saying the reason Joe and Mary can’t afford a house despite having good jobs is largely because their parents were poorer than those they are competing for house with, I think they might get some support. I think it naturally runs counter to any sense of ‘fairness’

That said the anti-inheritance tax mantra and all it’s illogical ‘that money has already been taxed before’ type nonsense runs deep in Ireland. For my sake, I guess I hope it continues…but it really shouldn’t!

yagan

MacronvFrugals wrote: »

I have no doubt all of our pensions are invested in REIT in some form or another but with the week this government is having the optics of this really are starting to light a flame


Housing Minister Darragh O’Brien was an early investor in so-called ‘cuckoo’ funds



https://extra.ie/2021/05/09/news/irish-news/housing-minister-darragh-obrien-was-an-early-investor-in-so-called-cuckoo-funds

I love it. It al feels like it's coming full circle.

All it needs now is one major international pension to collapse because of failing rental returns and they'll all be trying to dump their illiquid property assets and then we'll be left with another Fianna Fail bill for property bought at prices which they themselves helped over inflate.

It's like the fire brigade trying to smother a fire with petrol.

Cal4567

Villa05 wrote: »

I see on the sindo today that Pat Farrel is the former General secretary of the Fianna Fail party

You have former ministers of ffg being the mouthpieces for the banking, construction and now this guy for investment funds

Quite a gravy train for our politicians

I was wondering when someone would make that link after his performance on Prime Time. The Irish version of Six Degrees of Separation could just be done and dusted in 2/3 links.

hmmm

DataDude wrote: »

Interesting piece in the Sunday Independent titled ‘Bank of mum and dad is propping up South Dublin’. Pretty much as expected but nice to see it confirmed by an EA.

Owen O’Reilly saying in the properties he’s selling it’s routine for parents to be gifting €400k-€1m for their kids to live nearby and that prices would be considerably lower without this.

I'm not sure that article is telling us all that much. That's an expensive area to live in, and I imagine many of those buying could have chosen to live elsewhere in Dublin using just their own funds.

If our expectation is that you will always be able to buy property (particularly a house) near where you grew up then I don't see how that is achievable - not without huge subsidies towards people who grew up in affluent areas which sounds a bit unfair. The focus has to be on people who can't afford to buy a property anywhere within reach of Dublin.

Cal4567

Villa05 wrote: »

We now know that Pat Farrell (former FF General secretary) a lobbyist for the investment funds lobbied heavily for the shared ownership/equity scheme.

Now one would have to ask why a business with the implied intention of buying/building to rent would be lobbying for scheme that supposedly helps people escape the rental trap (reducing customers) and drives up the price of property (increasing price of there raw materials) thus potentially reducing the businesses future profits business viability

Could it be that these funds are buying up property en masse, lobbying for inflationary policies and make a quick killing once these inflationary polices have taken hold, hence the reason the long term funds in Germany and Switzerland are avoiding

It's not unusual to see deals such as this being sold on to other investors after 2/3 years. Every investment vehicle is different, some are here for 4/5 years. Then they go away after the next big thing, in another industry/country. Those who leave tend to be replace by pension funds who take a more long term view of their portfolios.

DataDude

hmmm wrote: »

I'm not sure that article is telling us all that much. That's an expensive area to live in, and I imagine many of those buying could have chosen to live elsewhere in Dublin using just their own funds.

If our expectation is that you will always be able to buy property (particularly a house) near where you grew up then I don't see how that is achievable - not without huge subsidies towards people who grew up in affluent areas which sounds a bit unfair.

Interesting take - should someone who was born in Sandymount have an inherent right to own a home in Sandymount? To me that's an easy "no". Everyone should earn their own way. But would be interested to see if Society as a whole would support it. Not forgetting that if we want to give someone that right, we by definition, have to make someone born in a less affluent area suffer for it.

hmmm wrote: »

The focus has to be on people who can't afford to buy a property anywhere within reach of Dublin.

Two things. Firstly the article quotes a figure of 70% of applications countrywide having a gift attached. Not just in South Dublin. One example in the article is of a couple approved for a mortgage of €130k given a gift €220k. That's probably right at the lower end of what you can buy a house in Dublin for. There's very likely to have been a person with a budget of €345k on their own back who missed out because they didn't have a gift. Potentially pushing them out of Dublin. Is that fair? To me it's not.

Secondly, the entire market is interconnected. A large amount of inheritance pushing prices up in the most expensive areas, pushes priced out buyers from the best areas out into the second best areas. That pushes prices up there and people leave the second best area for the third best etc etc.

You can't look at them as separate entities. Large inhertiances/gifts in Dalkey have a ripple effect which push people out of the affordability net in the poorest parts of Dublin.

Villa05

cnocbui wrote:

The only thing that could bring housing price declines in the next few years would be anothe GFC. With the US expecting something like 6.5% GDP increase, the UK 7.5, and proabably simmilar throught the OECD countries, the next financial market meltdown is likely years further out now.

What about interest rate rises to cool that reported 30% inflation in building materials, might be smart to take a fixed rate for as long as possible

Marius34

Cal4567 wrote: »

It's not unusual to see deals such as this being sold on to other investors after 2/3 years. Every investment vehicle is different, some are here for 4/5 years. Then they go away after the next big thing, in another industry/country. Those who leave tend to be replace by pension funds who take a more long term view of their portfolios.

I think this would be good for Ireland, if It's an Irish pension fund. As the profits would stay within country.
And in general since there are lots Cash/Saving accumulated in Ireland, I would say it would be an important focus, how to keep wealth within country. One of the way maybe building Irish housing associates, that Irish people can put in their saving for Built-to-Rent products, rather then International Funds.

yagan

Cal4567 wrote: »

Those who leave tend to be replace by pension funds who take a more long term view of their portfolios.

Pension funds chase yields and according to the IMF some pension funds have raised their exposure to property rental yields from 20% a decade ago to over 50% now.

As they'll all piling into the same market they're effectively crowding eachother out. Pension fund managers take their bonuses from booking returns, so even if their funds get sink by subprime underperforming crud they'll have already made their commission money and will be long gone before pensioners hear that their pension is now worth less than what they contributed.

I'm forever blowing bubbles,
Pretty bubbles in the air,
They fly so high, nearly reach the sky,
Then like my dreams they fade and die.

hmmm

DataDude wrote: »

There's very likely to have been a person with a budget of €345k on their own back who missed out because they didn't have a gift. Potentially pushing them out of Dublin. Is that fair? To me it's not.

Agreed, if you can't buy within the greater Dublin area then that's a failure. However 345k is enough to buy within the greater Dublin area - and even in South Dublin. It might be a house in a less desirable area, or an apartment in South Dublin.

I'm personally not all that concerned about people who can't afford to buy a house in South Dublin, yet could afford to buy somewhere else. What I am concerned about are people who are on better than entry-level jobs, are paying much more than a mortgage in rent, and who can't afford to buy anywhere in Dublin.

In the end it all comes back to supply. We have to build more, and particularly we have to build more apartments within the M50.

Reins

https://www.irishtimes.com/business/financial-services/changes-may-be-needed-to-make-banks-address-bad-loans-faster-mcguinness-1.4558558


Mairéad McGuinness suggesting tougher regulations may be needed to force banks into faster restructuring of loans that enter arrears due to the pandemic. What about the ones that haven't been restructured in years Mairead?

yagan

Reins wrote: »

https://www.irishtimes.com/business/financial-services/changes-may-be-needed-to-make-banks-address-bad-loans-faster-mcguinness-1.4558558


Mairéad McGuinness suggesting tougher regulations may be needed to force banks into faster restructuring of loans that enter arrears due to the pandemic. What about the ones that haven't been restructured in years Mairead?

I'm absolutely amazed by the whataboutery in some quarters on mortgages in arrears while the government competes with institutional funds in outbidding first time house buyers!

They don't seem to understand that it's their distorting of the market that has driven the likes of KBC and other mortgage lenders out of Ireland. Mortgage arrears over the last decade didn't send them packing before.

combat14

cnocbui wrote: »

I think any notions of housing price falls people were expecting, have well and truly been trumped by reality.

The only thing that could bring housing price declines in the next few years would be anothe GFC. With the US expecting something like 6.5% GDP increase, the UK 7.5, and proabably simmilar throught the OECD countries, the next financial market meltdown is likely years further out now.

People taking themselves out of the current market because they think it is too extreme, hoping for it to calm down and become more affordable, are making a mistake.

where are people going to get the money to pay for these never ending increases in prices?

time for a round of massive pay rise requests from workers and their unions

ultimately this will collapse our economy

Mic 1972

combat14 wrote: »

where are people going to get the money to pay for these never ending increases in prices?

time for a round of massive pay rise requests from workers and their unions

ultimately this will collapse our economy

Inflation, it's where we are heading to

hometruths

yagan wrote: »

I'm absolutely amazed by the whataboutery in some quarters on mortgages in arrears while the government competes with institutional funds in outbidding first time house buyers!

They don't seem to understand that it's their distorting of the market that has driven the likes of KBC and other mortgage lenders out of Ireland. Mortgage arrears over the last decade didn't send them packing before.

You're correct in as far as I really don't understand how institutional investors buying properties has a greater adverse effect on the business of mortgage lenders than people not paying their mortgages.

Could you spell it out for me?

cnocbui

DataDude wrote: »

...
Two things. Firstly the article quotes a figure of 70% of applications countrywide having a gift attached. Not just in South Dublin.
...
You can't look at them as separate entities. Large inhertiances/gifts in Dalkey have a ripple effect which push people out of the affordability net in the poorest parts of Dublin.

So most people don't apply for a motgage to buy a house until their parents die? I somehow doubt that. Ireland already has amongst the highest inheritance taxes in the world, if not the highest.

I have never seen any suggestion inheritances are distorting the housing markets in Australia or NZ, and neither of them have any inheritance taxes.

I was on my third house when my parents died.

Parents allowing their children to stay in the family home and save a large deposit for a mortgage is also 'unfair' assistance. We need a tax to target that heinous and unfair distortion and tax it out of existence.

hometruths

MacronvFrugals wrote: »

I have no doubt all of our pensions are invested in REIT in some form or another but with the week this government is having the optics of this really are starting to light a flame


Housing Minister Darragh O’Brien was an early investor in so-called ‘cuckoo’ funds



https://extra.ie/2021/05/09/news/irish-news/housing-minister-darragh-obrien-was-an-early-investor-in-so-called-cuckoo-funds

I doubt there is anything untoward about the Ministers investments but this really does not look good under the circumstances.

Are his days numbered already?

Villa05

yagan wrote:

They don't seem to understand that it's their distorting of the market that has driven the likes of KBC and other mortgage lenders out of Ireland. Mortgage arrears over the last decade didn't send them packing before.

I think they understand alright, gov own most of the Irish banking sector. Getting rid of competitors is beneficial

The irony being that many of the policies pursued in housing post 08 crash were to reduce the exposure of Irish people/banks to property

What we have ended up with is a duopoly in banking.
Investment funds hovering up property, successfully lobbying government to implement inflationary policies so that they can offload it to the pent up demand at the top of the bubble. They benefit from paying no tax plus benefit from tax spent on ftb incentives plus long term leases on social housing

The ducks are lining up for the investment funds

DataDude

cnocbui wrote: »

So most people don't apply for a motgage to buy a house until their parents die? I somehow doubt that. Ireland already has amongst the highest inheritance taxes in the world, if not the highest.

I have never seen any suggestion inheritances are distorting the housing markets in Australia or NZ, and neither of them have any inheritance taxes.

I was on my third house when my parents died.

Parents allowing their children to stay in the family home and save a large deposit for a mortgage is also 'unfair' assistance. We need a tax to target that heinous and unfair distortion and tax it out of existence.

The article suggests mostly gifts rather than inheritance. I lumped in together as taxed under the same CAT rules.

I’m not the one making up the figures, I just quoted the article. It’s an estate agent and a mortgage broker talking about how they’ve seen it in up 70% of mortgage applications. So either family wealth is a major factor in the housing market, or they’re both liars.

combat14

combat14 wrote: »

where are people going to get the money to pay for these never ending increases in prices?

time for a round of massive pay rise requests from workers and their unions

ultimately this will collapse our economy

Nobody will bring wages up
They simply will bring cheap labor from South America and Brasil same as they did before bringing labor from Eastern Europe
And irish landlords will continue investing in property for rent giving job for builders as this was before
Nobody care and nobody will about anybody wages!