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2021 Irish Property Market chat - *mod warnings post 1*
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Moderators, Education Moderators, Technology & Internet Moderators Posts: 35,076 Mod ✭✭✭✭
Join Date:Posts: 33517
https://www.businesspost.ie/houses/michael-brennan-a-plague-on-both-your-houses-mullen-park-is-a-warning-to-ff-and-fg-55d3ec5d
This is a good article by Michael Brennan. Does anyone know what the EU rules on capital spending actually are? Article refers to “ The government is still trying to avoid breaching EU financial rules, which limit how much the state can spend on capital projects such as housing.”
If this is the case would it mean other capital projects have to be dropped? What would they be?
It's the fiscal compact. It was brought in after the last crash. Short answer, a country needs to keep their deficit below 3% of GDP whilst keeping their debt to GDP ratio at 60%. If your debt to GDP ratio is over 60% you need to be reducing it. It has been temporarily suspended for Covid related spending.0 -
AlmightyCushion wrote: »It's the fiscal compact. It was brought in after the last crash. Short answer, a country needs to keep their deficit below 3% of GDP whilst keeping their debt to GDP ratio at 60%. If your debt to GDP ratio is over 60% you need to be reducing it. It has been temporarily suspended for Covid related spending.
Which would explain why the state are content to agree 25 year leases for housing because the costs accrue on a yearly basis rather than a big upfront lump sum for building their own housing.0 -
Bass Reeves wrote: »I think that those that think that a change in government is a magic bullet are in for a shock. I do not really blame public servants either. We have a simple problem we need 50k houses yesterday and 20-25k year for the next few years.
I think that the construction industry is limited to 20-25k houses per year labour wise. The industry has shrunk over the last 10 years. The financial's needed are more complex in bigger development's which has parked mid sized operations at present.
During the last building boom we were able to attract relatively cheap eastern European labour and we had a lot of skilled labour return from abroad in the early noughties. There is no valve this time that will satisfy this.
I coached GAA for the last 15 years. Of the young lads I knew from it. ( Somewhere in the 150+) I think about a half dozen did trades, however an older lad that was trained in a trade went away and did nursing. There are a good few lads trained as QS"s, Civils or in Construction site management. But none of them can wire or plumb houses or lay blocks.
If SF get into power and redirect labour to building social housing will the new house construction numbers shrink. Will labour transfer into extensions to existing houses. There is no magic bullet
Valid points.
I think a starting point is whatever new incoming stock comes is offered to retail first before institutions. You cant have a situation where 95% of apartments get sold off to funds to before they even come on the market.0 -
Moderators, Education Moderators, Technology & Internet Moderators Posts: 35,076 Mod ✭✭✭✭ Join Date:Posts: 33517
Which would explain why the state are content to agree 25 year leases for housing because the costs accrue on a yearly basis rather than a big upfront lump sum for building their own housing.
Pretty much. It would likely be cheaper in the long run for the state to buy the properties straight out (like the REITs are doing) but our ability to borrow is limited by the fiscal compact so they rent it instead. It's actually kind of similar to what is happening to people. It would be cheaper in the long run for people to buy a house/apartment with a mortgage but they can't borrow enough so they end up renting.0 -
AlmightyCushion wrote: »Pretty much. It would likely be cheaper in the long run for the state to buy the properties straight out (like the REITs are doing) but our ability to borrow is limited by the fiscal compact so they rent it instead. It's actually kind of similar to what is happening to people. It would be cheaper in the long run for people to buy a house/apartment with a mortgage but they can't borrow enough so they end up renting.
Surely the state can do some creative accounting to get around this too?
Get the fella who comes up with all the MNC tax loopholes to wrangle one for us too0 -
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Bass Reeves wrote: »I think that those that think that a change in government is a magic bullet are in for a shock. I do not really blame public servants either. We have a simple problem we need 50k houses yesterday and 20-25k year for the next few years.
I think that the construction industry is limited to 20-25k houses per year labour wise. The industry has shrunk over the last 10 years. The financial's needed are more complex in bigger development's which has parked mid sized operations at present.
During the last building boom we were able to attract relatively cheap eastern European labour and we had a lot of skilled labour return from abroad in the early noughties. There is no valve this time that will satisfy this.
I coached GAA for the last 15 years. Of the young lads I knew from it. ( Somewhere in the 150+) I think about a half dozen did trades, however an older lad that was trained in a trade went away and did nursing. There are a good few lads trained as QS"s, Civils or in Construction site management. But none of them can wire or plumb houses or lay blocks.
If SF get into power and redirect labour to building social housing will the new house construction numbers shrink. Will labour transfer into extensions to existing houses. There is no magic bullet
I think there is a magic bullet. Copenhagen has c. 600k people living in a similar footprint and in similar low rise buildings as Dublin City has c. 100k people living between the canals.
That’s the solution right there and it’s enough existing, already built space to supply all housing needs in Ireland for the next 20 to 30 years without building one new house/apartment (assuming we do need the projected figures amount).
It’s not a supply problem. It’s a mismanagement of existing supply problem.
They’re going to re-enter the market at some stage (sooner rather than later IMO) given how many of these properties are owned (I assume) by the funds so we might as well get/force them into supply now IMO
Good for people. Good for society. Good for the taxpayer. Good for the environment.0 -
people should be wary of those who promise solutions , Professor Rory Hearne was being cheered as a saviour of all the problems of the housing market by the twittersphere last week
this same fella is an open borders advocate and no matter what he says can be done in terms of granting the state more powers , it wont meet the demand from overseas , you could build a hundred thousand houses per year and it would not fix things if an endless stream of people arrive from overseas
the whole thing is riddled with ideologues0 -
PropQueries wrote: »I think there is a magic bullet. Copenhagen has c. 600k people living in a similar footprint and in similar low rise buildings as Dublin City has c. 100k people living between the canals.
That’s the solution right there and it’s enough existing, already built space to supply all housing needs in Ireland for the next 20 to 30 years without building one new house/apartment (assuming we do need the projected figures amount).
It’s not a supply problem. It’s a mismanagement of existing supply problem.
They’re going to re-enter the market at some stage (sooner rather than later IMO) given how many of these properties are owned (I assume) by the funds so we might as well get/force them into supply now IMO
Good for people. Good for society. Good for the taxpayer. Good for the environment.
You're back!0 -
Moderators, Education Moderators, Technology & Internet Moderators Posts: 35,076 Mod ✭✭✭✭ Join Date:Posts: 33517
Surely the state can do some creative accounting to get around this too?
Get the fella who comes up with all the MNC tax loopholes to wrangle one for us too
They tried that with all those housing trusts building social housing whilst trying to keep their borrowings off the state's books. It didn't work. That was because all the income for these housing trusts would be coming from the state. if they created a new entity that was renting or selling to non social tenants and thus not using state money, it is possible that would work. They might think that the optics of that are bad. State using money to build houses for people with good jobs when the social housing list is so long. Personally I think that the potential negative press from it this is over stated.0 -
Sweet.Science wrote: »
Do they have more than one property ? Makes little sense holding out for higher prices if you have to buy another yourself
Trying to tell baby boomers something to do with their finances as a younger person is tough at the best of times. Sense was lacking in their position!0 -
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RichardAnd wrote: »Whilst I'd happily see the back of the current political parties, I do wonder what would really change. Let's say, for example, there is an election this year and the existing paradigm is utterly wiped out. Will things change? Consider that behind those in the Dail, there is an army of civil servants who are full of ideologies, many NGOs, interest groups and "think tanks" who will push an agenda and let's not forget banks. Given that these cohorts never change, would a radical change in the Dail really do much?
This is a genuine question that I often ask myself. I don't have an answer.
I think this is a very good question. I don't think it will unless SF drive a sea change through the corridors of power, if they have the mandate by the electorate to do so. Just edging FG and having to be propped up by the Greens and the Soc Dems in a broad coalition, to many wouldn't be a mandate. I sense Mary Lou, Pearse Doherty & Eoin O'Broin etc will have a job on their hands. It's by no means impossible, just not easy.0 -
fliball123 wrote:The problem here is how much will that cost to build these houses your talking about. The public sector don't do cheap and really don't do cheap when it comes to things like procurement and building.
We had a spreadsheet of the various councils and many of them were delivering housing at significantly below market prices albeit in low volumes
We have a dedicated division of Sisk for delivering affordable housing.
We have o cualann housing and others that appear to be extremely successful in delivering affordable housing.
Commercial sector appears to be winding down freeing up labour
Finance available at 0% to the state with the EU anxious for states to assist in kick starting economies
The state is the largest landowner in the country and I'm sure their are costs in leaving it idle
Pool the competent sectors of the state and let them focus on the areas most affected by supply issues and let them take advantage of the many circumstances that are beneficial to the state in solving the issue. Focus on housing workers close to where they work. The additional supply will trickle up and down addressing issues there also
It really is not that complicated0 -
the Limerick market is up at least 7% since November of last year , im sale agreed on the purchase of a three bed terraced house for 161 k , lesser three beds in lesser areas are currently at bids of 170 K
the market is nuts , i reckon prices will go up 20% in some parts of the country in 20210 -
‘Compact’ growth key to future residential development
via The Irish Times
https://www.irishtimes.com/business/construction/compact-growth-key-to-future-residential-development-1.4558249
This is a very good article, which proposes viable solutions and isn’t just a rant about what is wrong. I can definitely agree with the points around planning regs etc for Georgian buildings having lived in a few over the years. So much potential north and south city centre0 -
AlmightyCushion wrote:They tried that with all those housing trusts building social housing whilst trying to keep their borrowings off the state's books. It didn't work. That was because all the income for these housing trusts would be coming from the state. if they created a new entity that was renting or selling to non social tenants and thus not using state money, it is possible that would work. They might think that the optics of that are bad. State using money to build houses for people with good jobs when the social housing list is so long. Personally I think that the potential negative press from it this is over stated.
Build to rent/buy for low middle income workers priced out of the market close to their place of work is the obvious solution self financing and scale able.
Price set at % of income and as housing is subsidised qualification for such housing requiring payment deducted from wages avoiding any unnecessary arrears. Sales price must cover replacement cost at a minimum0 -
PropQueries wrote: »I think there is a magic bullet. Copenhagen has c. 600k people living in a similar footprint and in similar low rise buildings as Dublin City has c. 100k people living between the canals.
That’s the solution right there and it’s enough existing, already built space to supply all housing needs in Ireland for the next 20 to 30 years without building one new house/apartment (assuming we do need the projected figures amount).
It’s not a supply problem. It’s a mismanagement of existing supply problem.
They’re going to re-enter the market at some stage (sooner rather than later IMO) given how many of these properties are owned (I assume) by the funds so we might as well get/force them into supply now IMO
Good for people. Good for society. Good for the taxpayer. Good for the environment.
People are looking for more room in their accommodation, not less. If you are advocating tearing down existing buildings to build anew, that is a very expensive non starter. Apartments are more expensive to provide, than houses and they are on the nose after covid lockdowns. I thought you were worried about this countries levels of debt?
https://www.thejournal.ie/first-time-buyers-apartment-dublin-5335798-Jan2021/The Real Costs of New Apartment Delivery 2020 was published by the Society of Chartered Surveyors Ireland (SCSI).
It found that the all-in cost of delivering medium-rise two-bedroom apartments in the Greater Dublin Area ranged from €411,000 for a low-spec unit in the suburbs, to €619,000 for a high-spec one in the city.
The costs of delivering a low-rise suburban apartment ranges from €359,000 for a low-spec unit – an increase of 8% since the SCSI’s last apartment report in 2017 – to €413,000 for a high-spec one, up 7%.
All these figures are cost prices and sales prices would need to exceed these for developments to be viable.
The latest report is based on data covering almost 10,000 apartments in four different categories in 49 schemes.
Last July, the SCSI’s “Real Cost of New Housing Delivery” found the cost of delivering a three-bed semi in the Dublin area was €371,000.0 -
Moderators, Education Moderators, Technology & Internet Moderators Posts: 35,076 Mod ✭✭✭✭ Join Date:Posts: 33517
Build to rent/buy for low middle income workers priced out of the market close to their place of work is the obvious solution self financing and scale able.
Price set at % of income and as housing is subsidised qualification for such housing requiring payment deducted from wages avoiding any unnecessary arrears. Sales price must cover replacement cost at a minimum
What counts as middle income here? 50k, 60k, 70k? Those people being eligible for this housing will cause opposition to scream and shout about how the most vulnerable will be priced out of it by the 'rich' and all that usual shíte. It shouldn't be the case but it is. It is part of what has got us into this mess. The councils are buying up and renting housing for social housing at huge cost and people not eligible for social housing are getting screwed.0 -
People are looking for more room in their accommodation, not less. If you are advocating tearing down existing buildings to build anew, that is a very expensive non starter. Apartments are more expensive to provide, than houses and they are on the nose after covid lockdowns. I thought you were worried about this countries levels of debt?
https://www.thejournal.ie/first-time-buyers-apartment-dublin-5335798-Jan2021/
Something seriously wrong if apartments are that expensive to build0 -
PropQueries wrote: »I think there is a magic bullet. Copenhagen has c. 600k people living in a similar footprint and in similar low rise buildings as Dublin City has c. 100k people living between the canals.
That’s the solution right there and it’s enough existing, already built space to supply all housing needs in Ireland for the next 20 to 30 years without building one new house/apartment (assuming we do need the projected figures amount).
It’s not a supply problem. It’s a mismanagement of existing supply problem.
They’re going to re-enter the market at some stage (sooner rather than later IMO) given how many of these properties are owned (I assume) by the funds so we might as well get/force them into supply now IMO
Good for people. Good for society. Good for the taxpayer. Good for the environment.
That is still not a solution that will produce 100 k hom s in the next three years. Yes we should be refurbishing as many existing houses as possible. It's not just in Dublin but in every large urban areas and even in rural Ireland. But refurbishment will take labour away from new building. It takes as much labour and costs nearly as much to refurbish as to build new estates. Inside the canals and in most large urban areas developers have been trying to accumulate sites. You even have lads involved in speculation trying to accumulate a number of derelict and semi derelict properties to put together a site to develop. In general they may rent existing houses that are good enough but if the run into disrepair they just let them that way. Often you will find 2-3 being in use and will be in use for the next twenty years.
A carrot and stick approach might bring these into play but you are back to where the labour cones from to go beyond 25k units a yearSlava Ukrainii
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AlmightyCushion wrote: »It's the fiscal compact. It was brought in after the last crash. Short answer, a country needs to keep their deficit below 3% of GDP whilst keeping their debt to GDP ratio at 60%. If your debt to GDP ratio is over 60% you need to be reducing it. It has been temporarily suspended for Covid related spending.
I got a great idea, lets give Public Sector workers a pay rise! Especially all those who haven't done a lick of work in the last 6-8 months, like those who haven't lifted a finger on my son's citizenship application since it was submitted in Oct 2019.0 -
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Something seriously wrong if apartments are that expensive to build
It's the foundations required, to some extent. Building up is cost inefficient and something normally only pursued in places where land is near non-existent, like Hong Kong, inner Sydney, New York. Ireland is not in that position and neither is Dublin, where there is a farm backing onto DCU, for instance.0 -
People are looking for more room in their accommodation, not less. If you are advocating tearing down existing buildings to build anew, that is a very expensive non starter. Apartments are more expensive to provide, than houses and they are on the nose after covid lockdowns. I thought you were worried about this countries levels of debt?
https://www.thejournal.ie/first-time-buyers-apartment-dublin-5335798-Jan2021/
Wouldn't cost the taxpayer anything. I believe (and it's only my belief) that the funds own many of these buildings in the city centre (Dublin, Limerick, Cork, Galway and many other small towns around the country).
Slap a 10% derelict property tax (like Washington D.C.) on them and see how imaginative they would get in bringing them to market.
I would be of the belief that many have already or are in the process of being refurbished and many will be entering supply in the very near future. If I'm right that the funds do control many of these type of properties around Ireland, they can see which way the wind is blowing and will be looking to exit very shortly IMO
In relation to the cost of building a house. Why does the proposed affordable housing bill believe that developers in Co. Tipperary can build and sell new build a-rated homes for €225k, but in Dublin they need to sell them for c. €450k to make a profit?
Cairn Homes average selling price per unit in 2020 was c. €350k and Glenveagh's was less (if I'm remembering correctly), so the SCSI cost of building reports are nonsense and are meaningless for bigger developers who have massive economies of scale IMO. They've being spouting similar figures for the past several years and then Sisk Living comes along and designs and builds a-rated houses for South Dublin county council for c. €180k each back in 2018.
All houses and apartments are still what they were in previous decades. They're 4 walls and a roof and nothing has really changed outside the optics of additional USB ports, relatively cheap solar panels, a bit of additional insulation etc. etc. IMO0 -
We had a spreadsheet of the various councils and many of them were delivering housing at significantly below market prices albeit in low volumes
We have a dedicated division of Sisk for delivering affordable housing.
We have o cualann housing and others that appear to be extremely successful in delivering affordable housing.
Commercial sector appears to be winding down freeing up labour
Finance available at 0% to the state with the EU anxious for states to assist in kick starting economies
The state is the largest landowner in the country and I'm sure their are costs in leaving it idle
Pool the competent sectors of the state and let them focus on the areas most affected by supply issues and let them take advantage of the many circumstances that are beneficial to the state in solving the issue. Focus on housing workers close to where they work. The additional supply will trickle up and down addressing issues there also
It really is not that complicated
Unfortunately it is that complicated and prices for raw materials for building is rocketing up as well as a labour shortage for building. Also there are very few competent sectors in the state.
The o cualann model is based on them paying zero or very little for land. That will not be the case for the majority of developments and its not at 0% that we are borrowing its at near zero and at some point in the future it will have to be paid back and you can be sure as hell with the rollover nature of our debt it will be a lot more than zero % that we will be paying when that time comes.
A better way is to stop all state support FTB grants, welfare housing and tax REITs and vultures the same as an individual. Then see where rents and prices go. After they get rid of all subsidies we can then start looking at a fairer way to do this. Your effectively asking those who have paid through the nose for a house to pay again for others to be housed. The way you want to go at it is the system if fecked and we are paying a lot for a fecked up system so lets borrow more money put the debt on the tax payer and build more. I think the tax payer is on the hook for too much already, better to cut everything and start again and even the playing field between REITS/Vultures and those who have a home. I dont see why I or anyone else should be asked to pay more into this money pit. If they want more tax then the government need to go through the whole of our current spend and cut out the waste. Its gone like the HSE and like the HSE it should be scraped and something new and something that has more control and accountability put in its place. For housing I dont know what that is but you can be sure as hell our public sector do not I repeat do not do cheap when it comes to building or procurement.
What should be done after spend is gone through root and branch as well as all state support for the Rich and poor taken away is to tender out aournd around Europe and asking builders to come here on a yearly basis give them somewhere to rent for the short term and get the cheapest prices in with a track record of good quality builds and incentive the workers not the big companies to build and keep the public sector away from the finances. They are like a horny auld goat in a strip club with a bunch of one dollar bills making it rain when they want to. The Public sector have to have their little pay offs when it comes to the money being doled out.
But I do get your point its frustrating but its not as simplistic as you make it out.0 -
It's the foundations required, to some extent. Building up is cost inefficient and something normally only pursued in places where land is near non-existent, like Hong Kong, inner Sydney, New York. Ireland is not in that position and neither is Dublin, where there is a farm backing onto DCU, for instance.
To some extent.
As the SCSI report highlights construction costs are ~47% of the overall cost. Which is still a lot, but there is room to cut it. Land costs for example would have scope to decrease a lot particularly in cities, if we had some punitive taxes to stop land hoarding and speculation on land prices.
One of the areas it highlights is the Irish construction industry's resistance to using prefabricated parts/construction off-site for large parts of builds, which is the norm on the continent. We are far from world-leaders in construction techniques thats for sure.0 -
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AlmightyCushion wrote: »It's the fiscal compact. It was brought in after the last crash. Short answer, a country needs to keep their deficit below 3% of GDP whilst keeping their debt to GDP ratio at 60%. If your debt to GDP ratio is over 60% you need to be reducing it. It has been temporarily suspended for Covid related spending.
That's slightly worrying if we're in danger of breaching our debt limits relative to GDP given that our GDP per capita is one of the strongest in the EU thanks to our MNC friends.0 -
AlmightyCushion wrote:What counts as middle income here? 50k, 60k, 70k? Those people being eligible for this housing will cause opposition to scream and shout about how the most vulnerable will be priced out of it by the 'rich' and all that usual shÃte. It shouldn't be the case but it is. It is part of what has got us into this mess. The councils are buying up and renting housing for social housing at huge cost and people not eligible for social housing are getting screwed.
Would it matter if rent is set at % of income and do something similar for those who wish to buy. For those who buy the land stays in state ownership
Need an alternative to the private market, because its clearly not working0 -
PropQueries wrote: »Wouldn't cost the taxpayer anything. I believe (and it's only my belief) that the funds own many of these buildings in the city centre (Dublin, Limerick, Cork, Galway and many other small towns around the country).
Slap a 10% derelict property tax (like Washington D.C.) on them and see how imaginative they would get in bringing them to market.
I would be of the belief that many have already or are in the process of being refurbished and many will be entering supply in the very near future. If I'm right that the funds do control many of these type of properties around Ireland, they can see which way the wind is blowing and will be looking to exit very shortly IMO
In relation to the cost of building a house. Why does the proposed affordable housing bill believe that developers in Co. Tipperary can build and sell new build a-rated homes for €225k, but in Dublin they need to sell them for c. €450k to make a profit?
Cairn Homes average selling price per unit in 2020 was c. €350k and Glenveagh's was less (if I'm remembering correctly), so the SCSI cost of building reports are nonsense and are meaningless for bigger developers who have massive economies of scale IMO. They've being spouting similar figures for the past several years and then Sisk Living comes along and designs and builds a-rated houses for South Dublin county council for c. €180k each back in 2018.
All houses and apartments are still what they were in previous decades. They're 4 walls and a roof and nothing has really changed outside the optics of additional USB ports, relatively cheap solar panels, a bit of additional insulation etc. etc. IMO
I'll give you a hint, try to add value of land, and VAT on final price.0 -
PropQueries wrote: »In relation to the cost of building a house. Why does the proposed affordable housing bill believe that developers in Co. Tipperary can build and sell new build a-rated homes for €225k, but in Dublin they need to sell them for c. €450k to make a profit?
Land is more expensive in Dublin than Tipperary. labour is more expensive in Dublin. Access to sites is generally more difficult requiring more labour. Sites generally need more security in Dublin. It is far easier to build where vehicles of whatever size can come and turn about easily than situations in urban areas where traffic has to be stopped and vehicles can't turn. Anything which is awkward adds to the time and labour costs.0 -
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I'll give you a hint, try to add value of land, and VAT on final price.
And who owns or controls most of the large land banks in and around Dublin? I would guess (and, it's only a guess) that it's primarily the funds and the local councils/state.
And, Cairn Homes stated last year that the average cost of many of their sites was c. €15k so it's not land/site costs that are the problem IMO0
This discussion has been closed.
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