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

PropQueries

A quick round up of the main stories in the past week that may impact the property market this year:

1. We did indeed build over 20k new build residential units in 2020.

2. Councillors are investigating the premium price being paid by DCC for building residential units on their own land.

3. The LDA may be able to take land off councils to start building if latest proposals are passed.

4. A developer apparently is seeking up to c. €1m per apartment from DCC for social housing in the docklands.

5. A story for the rural posters. 47 vacant apartments were sold in Ballybofey.

6. For the bulls. TicTok is apparently looking at several office buildings in Dublin and has shortlisted 5 buildings including the sorting office that google pulled out of last year.

What caught my eye was: “The two other locations under consideration are currently occupied, but those tenants are preparing to leave, the person said.”.

So, which companies are preparing to leave enough office space in the city to accommodate up to twice the number of employees that TicTok is seeking office space for? Not giving the bulls everything

The last one is in the Irish Independent today (link below).

Link to Irish independent here: https://m.independent.ie/business/commercial-property/tiktok-shortlists-five-dublin-sites-for-new-headquarters-40057880.html

Hubertj

schmittel wrote: »

I am clearly the guiltiest culprit on this, and understand it's tedious to wade through pages of tit for tat. Apologies.

There are a number of posters. two or three in particular, on here who, for whatever reason, try and contradict posts based on sound reasoning using spurious arguments. This was a perfect example claiming a mathematically impossible scenario as an alternative valid explanation.

I just find it incredibly frustrating, and whilst it would obviously be simpler just to move on and let it pass, if you do so, these same posters then use it against you in the future to say:

"Oh you only see what you want to see in the data, you misrepresent that, you are spinning the numbers, you have no proof of that, we've called you out on this before, you have a history of this, you're a conspiracy theorist etc."

It's a no win situation. But I get that it clogs up the thread, apologies.

February 29th. Simple.

TheSheriff

PropQueries wrote: »

A quick round up of the main stories in the past week that may impact the property market this year:

1. We did indeed build over 20k new build residential units in 2020.

2. Councillors are investigating the premium price being paid by DCC for building residential units on their own land.

3. The LDA may be able to take land off councils to start building if latest proposals are passed.

4. A developer apparently is seeking up to c. €1m per apartment from DCC for social housing in the docklands.

5. A story for the rural posters. 47 vacant apartments were sold in Ballybofey.

6. For the bulls. TicTok is apparently looking at several office buildings in Dublin and has shortlisted 5 buildings including the sorting office that google pulled out of last year.

What caught my eye was: “The two other locations under consideration are currently occupied, but those tenants are preparing to leave, the person said.”.

So, which companies are preparing to leave enough office space in the city to accommodate up to twice the number of employees that TicTok is seeking office space for? Not giving the bulls everything

The last one is in the Irish Independent today (link below).

Link to Irish independent here: https://m.independent.ie/business/commercial-property/tiktok-shortlists-five-dublin-sites-for-new-headquarters-40057880.html

Nice selective choice of headlines there. No bias at all.

You forgot at least two mentioning new job creation in MNCs, in, shock horror, Dublin.

PommieBast

Smiley11 wrote: »

Why did you pull out of your Sale Agreed if you don't mind my asking? I'm not asking for a lot of detail but genuinely interested as I've seen a few houses come back on the market in the last couple of weeks in Cork, not the house I want of course but c'est la vie!

Due to an interesting turn of events I ended up renting a temporary flat that was in the same apartment block, which meant I became aware of certain issues. Not killers in themselves but then the attitude of the seller made me decide that I did not want to do business with them.


In hindsight it quite likley would have been an outright bad deal, but that is based on things that have happened since.

Villa05

Hubertj wrote:

I believe he operates it under licence but the state own the building. Is that ok?

Thanks

MacronvFrugals wrote:

The below in bold about land hoarding I hadn't realized this was the consensus?

Truly amazing that a government would implement policy that is so much stacked against the citizens of that country

Would an invading enemy think of it?

MacronvFrugals wrote:

UN says Ireland applies 'preferential tax laws' to vultures funds and it 'cannot continue'

Timing belt wrote:

I calculated some data to see what affordability looked like at a county level.

Excellent work again, would it be possible to post a spreadsheet

decreds

With the news of talks beginning on extending the PUP and then introduce a tax contributed based social welfare system thereafter, one does have to wonder how long this can will be kicked down the road.

The cynic in me see's 2021 being a total write off and further lockdowns into mid 2022 at least, with new builds slowly coming to surface while the country is locked down coupled with a large cohort of people reluctant to advertise their property due to the virus. It may not be an out there prediction to see an abundance of property hit the market when we eventually kiss lockdowns goodbye, whenever this happens is anyone guess but for me the main concern is will there be as much demand for said properties once the knock on economic effects impact the population.

Full disclosure, i plan to buy in around 18 months time so i have vested interest. While i don't think i will get burned if i bought then, i'm simply contemplating how the market could shift within the next couple of years.

hometruths

Not a David McWilliams fan but he hits the nail on the head with his observations, contrasting Germany where housing is regarded as a cost, and Ireland where it is regarded as an asset. When you think of housing as a cost it fosters an attitude in the majority that prices should be fair and reasonable. If you think of it as an asset it leads people to believe that capital appreciation is the goal:

The Germans start with income – people’s wages – as the foundational price in the economy and work backwards from there.

Contrast this with Ireland. Here, we start with the price of houses as the foundational price and work around that.

We construct all sorts of wheezes to maintain this lunacy, irrespective of the reality of people’s incomes. We engineer help-to-buy schemes, shared-equity arrangements, first-time buyers’ grants, various interest rate products, 30-year mortgages, and buy-now-pay-later options.

All of these are designed to put people into long-term debt and short-term penury, in order to validate already inflated house prices. The implicit message is: “Don’t worry we’ll keep prices up, so you can eventually sell on to a greater fool and trouser the capital gain.”

The problem is that the greater fool is your children and their children.

https://www.irishtimes.com/opinion/david-mcwilliams-a-solution-to-irish-house-price-silliness-1.4476967?localLinksEnabled=false

Timing belt

Villa05 wrote: »

Excellent work again, would it be possible to post a spreadsheet

There you go

Idbatterim

decreds wrote: »

With the news of talks beginning on extending the PUP and then introduce a tax contributed based social welfare system thereafter, one does have to wonder how long this can will be kicked down the road.

The cynic in me see's 2021 being a total write off and further lockdowns into mid 2022 at least, with new builds slowly coming to surface while the country is locked down coupled with a large cohort of people reluctant to advertise their property due to the virus. It may not be an out there prediction to see an abundance of property hit the market when we eventually kiss lockdowns goodbye, whenever this happens is anyone guess but for me the main concern is will there be as much demand for said properties once the knock on economic effects impact the population.

Full disclosure, i plan to buy in around 18 months time so i have vested interest. While i don't think i will get burned if i bought then, i'm simply contemplating how the market could shift within the next couple of years.

Given there was the option of borrowing tens of billions to stave off reality, itwas probably delusional to expect an immediate economic collapse. Will that be the case in a year or two ? We know supply will be very low. Last time there was the emigration valve, which may be open again if **** hits the fan. Depends on what kind of spend you are looking at... are you current being ripped off paying marjetcrebt in dublin. Big difference between a ten percent drop on 200k and one million.

decreds

Idbatterim wrote: »

Given there was the option of borrowing tens of billions to stave off reality, itwas probably delusional to expect an immediate economic collapse. Will that be the case in a year or two ? We know supply will be very low. Last time there was the emigration valve, which may be open again if **** hits the fan. Depends on what kind of spend you are looking at... are you current being ripped off paying marjetcrebt in dublin. Big difference between a ten percent drop on 200k and one million.

Will supply be very low once we eventually come out successive lockdowns once and for all though? That's what my post was getting at.

Given properties are still being built and the vast majority of sellers have put off placing their property on the market (due to virus fears), if this lasts for another 2 years we could well have a slow drip feed of new houses to the market coupled with a sudden release of 2nd hand properties after the virus subsides. Supply may not be that low as we think when this is all said on done (provided it lasts longer than 2021).

Smiley11

PommieBast wrote: »

Due to an interesting turn of events I ended up renting a temporary flat that was in the same apartment block, which meant I became aware of certain issues. Not killers in themselves but then the attitude of the seller made me decide that I did not want to do business with them.


In hindsight it quite likley would have been an outright bad deal, but that is based on things that have happened since.

Sounds like you had a lucky escape! Its interesting to see properties re-emerge having been sale agreed over 6 months but I guess you never know whats going on in the background. I think its going to be an interesting couple of years in the property market but I definitely feel we're in the weaker position where we want to buy at the moment.

Good luck with your search & hope it goes really well for you!

Smiley11

decreds wrote: »

Will supply be very low once we eventually come out successive lockdowns once and for all though? That's what my post was getting at.

Given properties are still being built and the vast majority of sellers have put off placing their property on the market (due to virus fears), if this lasts for another 2 years we could well have a slow drip feed of new houses to the market coupled with a sudden release of 2nd hand properties after the virus subsides. Supply may not be that low as we think when this is all said on done (provided it lasts longer than 2021).

Very difficult to know what direction we're heading this year really. I know myself that I started off positive in January but the tediously slow roll out of vaccines seems to be a huge problem for the foreseeable. Retail & tourism are scuppered for the time being & I'm wondering what effect all of this will have in the long term. I'm hearing opinions that we could effectively be in lockdown until late summer which is so depressing & I really hope is untrue.

We're just at an age where we don't have the luxury of being able to wait a couple of years to buy & we certainly can't impose on our parents for much longer.

If the property market remains as stagnant as it is presently, the outlook is very bleak for 2021. I'd give anything for a surge in second hand homes coming onto the market but I can't see it happening any time soon. Hopefully things will pick up after March because there are so many people who need homes & the current situation has to be unsustainable for myriad reasons.

Idbatterim

decreds wrote: »

Will supply be very low once we eventually come out successive lockdowns once and for all though? That's what my post was getting at.

Given properties are still being built and the vast majority of sellers have put off placing their property on the market (due to virus fears), if this lasts for another 2 years we could well have a slow drip feed of new houses to the market coupled with a sudden release of 2nd hand properties after the virus subsides. Supply may not be that low as we think when this is all said on done (provided it lasts longer than 2021).

Nobody knows. You may have a bit of pent up supply, but they wont sell at big discounts, why would they. They dont do foreclosures here and nobody will be kicked out of their PPP... Everything to do with property is glacial. For example, a mate bought just a month of two after this virus hit, he got 2-3% off the asking , million euro ish house in south dublin. Many of the lads were saying, offer 15-20% less, it was delusional. Take a huge chunk off, something that might come to pass... we were dealing with the then and now, the here and now. Will there be large drops in the future, possibly, but like I say, it is now abundantly clear, how glacial things move in general.

I think you can take several factors in and make a good guess at what the best option is, but nobody can tell exactly the best option without a crystal ball...

No way can I see a 2008 like collapse again, when we saw eventually how strong the bounce back was. The government snakes, well lets just say, they wont politically get away with giving away apartment blocks and then buying them back for ten times the price a few years later...

the question is, will we get away with grazing the iceberg or are we going to hit it head on... Nobody knows and the latter option COULD lead to a decent drop, but you would be looking at troika etc state of bad to see those kind of falls in my opinion. Because in dublin, there are simply so many high paid private and government secure jobs, that if cuts are inflicted, will be mickey mouse token gesture cuts most likely...

so it really depends where and what budget you are looking at IMO...

decreds

Idbatterim wrote: »

Nobody knows. You may have a bit of pent up supply, but they wont sell at big discounts, why would they. They dont do foreclosures here and nobody will be kicked out of their PPP... Everything to do with property is glacial. For example, a mate bought just a month of two after this virus hit, he got 2-3% off the asking , million euro ish house in south dublin. Many of the lads were saying, offer 15-20% less, it was delusional. Take a huge chunk off, something that might come to pass... we were dealing with the then and now, the here and now. Will there be large drops in the future, possibly, but like I say, it is now abundantly clear, how glacial things move in general.

I think you can take several factors in and make a good guess at what the best option is, but nobody can tell exactly the best option without a crystal ball...

No way can I see a 2008 like collapse again, when we saw eventually how strong the bounce back was. The government snakes, well lets just say, they wont politically get away with giving away apartment blocks and then buying them back for ten times the price a few years later...

the question is, will we get away with grazing the iceberg or are we going to hit it head on... Nobody knows and the latter option COULD lead to a decent drop, but you would be looking at troika etc state of bad to see those kind of falls in my opinion. Because in dublin, there are simply so many high paid private and government secure jobs, that if cuts are inflicted, will be mickey mouse token gesture cuts most likely...

so it really depends where and what budget you are looking at IMO...

Valid points. I agree that it's unlikely we will see a massive crash, i would be shocked with a 20% drop but i can easily see a healthy 10-12% pullback within the next 5 years. Which, shouldn't really discourage most from buying as if it's a house you will be living in long term it shouldn't make much of a difference and there's no point worrying too much about it.

decreds

Smiley11 wrote: »

Very difficult to know what direction we're heading this year really. I know myself that I started off positive in January but the tediously slow roll out of vaccines seems to be a huge problem for the foreseeable. Retail & tourism are scuppered for the time being & I'm wondering what effect all of this will have in the long term. I'm hearing opinions that we could effectively be in lockdown until late summer which is so depressing & I really hope is untrue.

We're just at an age where we don't have the luxury of being able to wait a couple of years to buy & we certainly can't impose on our parents for much longer.

If the property market remains as stagnant as it is presently, the outlook is very bleak for 2021. I'd give anything for a surge in second hand homes coming onto the market but I can't see it happening any time soon. Hopefully things will pick up after March because there are so many people who need homes & the current situation has to be unsustainable for myriad reasons.

Not to be negative but I think we will be in and out of lockdowns for the whole year and if these vaccines don't produce decent results we could be in successive lockdowns for years worst case scenario.


It is disheartening to think about but people can only put life on hold for so long and there is a huge amount of people in the same boat as yourself so it will be interesting to see how this all materializes especially if we are in lockdowns for a couple of years.

Timing belt

decreds wrote: »

Valid points. I agree that it's unlikely we will see a massive crash, i would be shocked with a 20% drop but i can easily see a healthy 10-12% pullback within the next 5 years. Which, shouldn't really discourage most from buying as if it's a house you will be living in long term it shouldn't make much of a difference and there's no point worrying too much about it.

A 10% pullback over the next 5 years would be very healthy for the market as long as it is driven by more supply becoming available and not due to a change in economic circumstances that would impact employment.

Idbatterim

Timing belt wrote: »

A 10% pullback over the next 5 years would be very healthy for the market as long as it is driven by more supply becoming available and not due to a change in economic circumstances that would impact employment.

if it was ten percent max , at some unknown future point,absolutely no point in waiting IMO. certainly if you are paying market rent now...

Villa05

decreds wrote:

Valid points. I agree that it's unlikely we will see a massive crash, i would be shocked with a 20% drop but i can easily see a healthy 10-12% pullback within the next 5 years. Which, shouldn't really discourage most from buying as if it's a house you will be living in long term it shouldn't make much of a difference and there's no point worrying too much about it.

Current government policy will guarantee a crash. It is pure boom bust policy, when it happens is anyone's guess crystal ball stuff

The policies pursued are inflationary in an already very expensive market, so we are very much in how big can blow the bubble before it bursts phase.

Remember the entity driving it is up to its eyes in debt.

hometruths

Villa05 wrote: »

Current government policy will guarantee a crash. It is pure boom bust policy, when it happens is anyone's guess crystal ball stuff

The policies pursued are inflationary in an already very expensive market, so we are very much in how big can blow the bubble before it bursts phase.

Remember the entity driving it is up to its eyes in debt.

My latest guess is summer 2023 into 2024. Thinking being we will see significant pent up supply come on to the market as next election looms, and it will snowball as people start to worry about risk of SF winning election and forming a government with PBP.

Whether that is a crash or not depends on if pent up demand keeps up with pent up supply in the meantime.

Timing belt

Idbatterim wrote: »

if it was ten percent max , at some unknown future point,absolutely no point in waiting IMO. certainly if you are paying market rent now...

100% agree as a 10% drop on a FTB home is equivalent to 2 years rent.

seenn00J

Villa05 wrote: »

Current government policy will guarantee a crash. It is pure boom bust policy, when it happens is anyone's guess crystal ball stuff

The policies pursued are inflationary in an already very expensive market, so we are very much in how big can blow the bubble before it bursts phase.

Remember the entity driving it is up to its eyes in debt.

While money continues to be relentlessly devalued by the ECB, federal reserve, etc through "Stimulus" (money printing in other words) programs, interest rates will remain low and money will remain cheap - I really can't see tangible assets, especially the likes of property suffering from a crash in prices. Far more likely to see the dollar or euro crash than the property market. Especially considering this is the preferred approach of a lot of countries in dealing with any post-covid recession recovery.

Smiley11

Timing belt wrote: »

100% agree as a 10% drop on a FTB home is equivalent to 2 years rent.

A potential 10% drop wouldn't deter us from buying now in the slightest. We will never be selling again so its irrelevant to us. What worries me at the moment is the volumes of cash & savings hovering & the pent up bidding aggression!

Supply is chronic. I'm really worried that it won't improve significantly this year which means more rabid bidding wars. The CB rules are containing the potential for huge price hikes to a degree but I'm in awe at the money out there. We have a good deposit & low outgoings thanks to our families. We have AIP til August. We're extremely fortunate & I never imagined being in this position but...our prospects of buying this year are actually pretty slim in the grand scheme of things. There are a hell of a lot of people in Cork with a hell of a lot more money than us. I just find the whole situation so worrying but I really hope something gives as the year goes on.

PommieBast

Smiley11 wrote: »

Sounds like you had a lucky escape! Its interesting to see properties re-emerge having been sale agreed over 6 months but I guess you never know whats going on in the background

It was the 2nd Sale Agreed I pulled out of. With the first one the solicitor uncovered the full-house of legal issues (pun intended). Based on my experience I'm guessing that something like 30-50% of Sale Agreed's are aborted.

Timing belt

Smiley11 wrote: »

A potential 10% drop wouldn't deter us from buying now in the slightest. We will never be selling again so its irrelevant to us. What worries me at the moment is the volumes of cash & savings hovering & the pent up bidding aggression!

Supply is chronic. I'm really worried that it won't improve significantly this year which means more rabid bidding wars. The CB rules are containing the potential for huge price hikes to a degree but I'm in awe at the money out there. We have a good deposit & low outgoings thanks to our families. We have AIP til August. We're extremely fortunate & I never imagined being in this position but...our prospects of buying this year are actually pretty slim in the grand scheme of things. There are a hell of a lot of people in Cork with a hell of a lot more money than us. I just find the whole situation so worrying but I really hope something gives as the year goes on.

There does seem to be more activity with planning applications and sites lately in Cork when your out and about but most of that won't come on line for year or two or have already been sold off the plans so won't help much with your situation.

I think there are a lot of people who may have been renting in Dublin that may look to WFH in cork which won't be helping with the supply add on top that they will probably be able to pay more which will drive up prices.

I know there are big plans for the docklands all the way down to Páirc Uí Chaoimh but that will be long time coming and when it does I would imagine will be snapped up by REIT's and rented out.

Anyway hopefully supply improves and you find your perfect house

The Spider

Smiley11 wrote: »

Very difficult to know what direction we're heading this year really. I know myself that I started off positive in January but the tediously slow roll out of vaccines seems to be a huge problem for the foreseeable. Retail & tourism are scuppered for the time being & I'm wondering what effect all of this will have in the long term. I'm hearing opinions that we could effectively be in lockdown until late summer which is so depressing & I really hope is untrue.

We're just at an age where we don't have the luxury of being able to wait a couple of years to buy & we certainly can't impose on our parents for much longer.

If the property market remains as stagnant as it is presently, the outlook is very bleak for 2021. I'd give anything for a surge in second hand homes coming onto the market but I can't see it happening any time soon. Hopefully things will pick up after March because there are so many people who need homes & the current situation has to be unsustainable for myriad reasons.

2021’s a write off I agree we’re in lockdown until at least after the summer, we’ll actually be more locked down this year than last year for the simple reason we know there’s a vaccine and it’s being rolled out. Last year there was no vaccine so in the summer it was all about living with covid so some things were opened tentatively, restaurants, food pubs etc, and it was possible to have a decent enough staycation. Don5 think we’ll see that this year until at least 70% of the population are vaccinated, last year the vaccin3 wasn’t an option this year they’ll keep everyone locked in to prevent variants multiplying

Smiley11

PommieBast wrote: »

It was the 2nd Sale Agreed I pulled out of. With the first one the solicitor uncovered the full-house of legal issues (pun intended). Based on my experience I'm guessing that something like 30-50% of Sale Agreed's are aborted.

I'd never have thought it could be that high a percentage but I'd say the majority of us have no idea whats going on behind the scenes. I presume if a sale falls through, they contact the last bidders & hope they'll snap the property up. If they don't, they probably have other avenues to explore before they go to the extreme of re-listing. I call it extreme only because it reflects somewhat negatively on the market & agents hate that!

PropQueries

Looks like the Government has finally accepted what most regular people have noticed over the past few years i.e. the large number of vacant apartments.

“Darragh O’Brien, the Minister for Housing, is scoping out measures that would tax landlords who hoard vacant apartments, the Business Post can reveal.”

Link to SBP article here: https://www.businesspost.ie/houses/landlords-hoarding-homes-may-face-new-tax-505a28d5

Villa05

PropQueries wrote:

Looks like the Government has finally accepted what most regular people have noticed over the past few years i.e. the large number of vacant apartments.

How long have we been talking about a vacant site tax
Past actions by government would suggest that they are more likely buy or offer a long term lease for social housing

paulcorkgolf

Prices forecast predicted to rise by 4% as supply struggles to meet demand in 2021.

Zenify

paulcorkgolf wrote: »

Prices forecast predicted to rise by 4% as supply struggles to meet demand in 2021.

Can you include a link?

PropQueries

Villa05 wrote: »

How long have we been talking about a vacant site tax
Past actions by government would suggest that they are more likely buy or offer a long term lease for social housing

I think it’s obvious to most that the government has no real intention of solving the housing “shortage” for whatever their reasons are.

But a lot of the leg work has been done, so when someone comes in and actually genuinely wants to resolve it, they should be able to do it very quickly IMO.

But, I’m still of the opinion that the market will eventually solve it given how concentrated the ownership of most of the vacant properties are in Ireland and once they decide to move, there’s not much the state can do to stop them IMO

Villa05

PropQueries wrote:

But a lot of the leg work has been done, so when someone comes in and actually genuinely wants to resolve it, they should be able to do it very quickly IMO.

How much damage will be done in the meantime is the question
We can't just undo those long term leases and anyone coming in who wishes to resolve the issues will be severely handicapped by current policies that commit us to longterm outgoings

Hubertj

Villa05 wrote: »

How much damage will be done in the meantime is the question
We can't just undo those long term leases and anyone coming in who wishes to resolve the issues will be severely handicapped by current policies that commit us to longterm outgoings

Would our public and civil servants be stupid enough not to include review clauses in long term contracts? I’d say they are stupid enough. I’m sure you have a different view?

markodaly

Strong mutterings that we will have some sort of tax-based claw back this year in the budget, given that we are spending way above what was forecast last year.

To put simply, Ireland and Europe and a lot of the world to be fair are floating in money, to keep the show on the road during the pandemic. If we get out of it by the end of the year, the waterfall of new money will dry up and the bills will have to be paid, which means tax rises, unemployment and longer-term issues of debt.

No one really knows how all this is going to play out. But we could be in for a bit of a contraction over the next year or two.

Ozark707

PropQueries wrote: »

Looks like the Government has finally accepted what most regular people have noticed over the past few years i.e. the large number of vacant apartments.

“Darragh O’Brien, the Minister for Housing, is scoping out measures that would tax landlords who hoard vacant apartments, the Business Post can reveal.”

Link to SBP article here: https://www.businesspost.ie/houses/landlords-hoarding-homes-may-face-new-tax-505a28d5

Well he has only been in the job for about 7 months and been their housing spokesman for years previously. You would hope it didn't take him this long to figure out there was a major issue here.

Timing belt

Ozark707 wrote: »

Well he has only been in the job for about 7 months and been their housing spokesman for years previously. You would hope it didn't take him this long to figure out there was a major issue here.

They have had over 6 years to figure what is happening.

Institutional investors came into the market looking for yield since QE was started and since then there has been a direct correlation between rent and house prices and the amount of QE undertaken.

What I don't understand is why these institutional investors manage to get twice the yield in Ireland circa 6% than they do in Germany circa 3%. For this to be possible it means one of two things:
- They are able to charge twice the rent that they would in Germany due to supply shortages (Whether real or managed via vacant units)
- Property prices are 50% cheaper than in Germany.

I will leave it up to your self to work which one you think it is.

The following graph shows the link between QE (dotted line) and Irish rent and property prices

Ozark707

Timing belt wrote: »

What I don't understand is why these institutional investors manage to get twice the yield in Ireland circa 6% than they do in Germany circa 3%. For this to be possible it means one of two things:
- They are able to charge twice the rent that they would in Germany due to supply shortages (Whether real or managed via vacant units)
- Property prices are 50% cheaper than in Germany.

I will leave it up to your self to work which one you think it is.
]

Is there any difference tax wise how they are handled in Germany to here?

Graham

markodaly wrote: »

Strong mutterings that we will have some sort of tax-based claw back this year in the budget

muttering from........

hometruths

Ozark707 wrote: »

Is there any difference tax wise how they are handled in Germany to here?

Not sure about the precise taxation position, but the article I linked yesterday highlights a notable difference.

In successful economies such as Germany, housing tends to be regarded as a cost rather than an asset. This means that the thrust of policy is towards fair housing costs, without an implicit bias towards upward house prices.

The difference in government attitude and thus policy is why investors can get twice the yield in Ireland as they do in Germany.

https://www.irishtimes.com/opinion/david-mcwilliams-a-solution-to-irish-house-price-silliness-1.4476967?localLinksEnabled=false

Timing belt

schmittel wrote: »

Not sure about the precise taxation position, but the article I linked yesterday highlights a notable difference.



The difference in government attitude and thus policy is why investors can get twice the yield in Ireland as they do in Germany.

https://www.irishtimes.com/opinion/david-mcwilliams-a-solution-to-irish-house-price-silliness-1.4476967?localLinksEnabled=false

Germany has seen similar increases in property values as Ireland with prices increasing since QE was introduced as institutional investors have also been buying property there.

The big difference between the two is the Rent......In Ireland it has been rising with the property prices and in Germany it has remained flat.

The higher the rent goes the higher the demand to purchase.

Albertie

The balance between the property demand and supply level will be very much related to the money parked in the banks or financial institutes, the move we can see when the money will start moving from there to both sides to sellers and buyers. With this, the interest rate will also make a good impact to the market and so to match the supply and demand to make it more flexible for both ways, let see what the future hold for us hope all will be fine and on track soon.

hometruths

Timing belt wrote: »

Germany has seen similar increases in property values as Ireland with prices increasing since QE was introduced as institutional investors have also been buying property there.

The big difference between the two is the Rent......In Ireland it has been rising with the property prices and in Germany it has remained flat.

The higher the rent goes the higher the demand to purchase.

And the reason the rents have remained flat in Germany is due to government policy.

Hence my comment:

The difference in government attitude and thus policy is why investors can get twice the yield in Ireland as they do in Germany.

Timing belt

Hubertj wrote: »

Would our public and civil servants be stupid enough not to include review clauses in long term contracts? I’d say they are stupid enough. I’m sure you have a different view?

I would not be surprised if they have included rent clauses to limit prices increase and ignored downward rents.

Timing belt

schmittel wrote: »

And the reason the rents have remained flat in Germany is due to government policy.

Hence my comment:

The difference in government attitude and thus policy is why investors can get twice the yield in Ireland as they do in Germany.

I am not arguing with you and don't want another long tread... All I am doing is showing the data as I think it is relevant and interesting as it highlights the impact that institutional investors have had on the market so decided to share it.

Hubertj

schmittel wrote: »

And the reason the rents have remained flat in Germany is due to government policy.

Hence my comment:

The difference in government attitude and thus policy is why investors can get twice the yield in Ireland as they do in Germany.

I would presume tax and regulation (landlord and tenant rights) of rental property is stable and consistent in Germany. Compare that to Ireland.... people can go on about funds and REITs but when government keep interfering and introducing populist policies it will have an impact, generally negative impact. I would also suggest the strength of the German economy means they do not have to be as reliant on property / construction etc to support “growth” or “progresss”.

hometruths

Hubertj wrote: »

I would presume tax and regulation (landlord and tenant rights) of rental property is stable and consistent in Germany. Compare that to Ireland.... people can go on about funds and REITs but when government keep interfering and introducing populist policies it will have an impact, generally negative impact. I would also suggest the strength of the German economy means they do not have to be as reliant on property / construction etc to support “growth” or “progresss”.

Certainly true in my experience. I lived in Germany for a few years - hence the username.

Idbatterim

PropQueries wrote: »

Looks like the Government has finally accepted what most regular people have noticed over the past few years i.e. the large number of vacant apartments.

“Darragh O’Brien, the Minister for Housing, is scoping out measures that would tax landlords who hoard vacant apartments, the Business Post can reveal.”

Link to SBP article here: https://www.businesspost.ie/houses/landlords-hoarding-homes-may-face-new-tax-505a28d5

bloody ridiculous, all simple measures that couldnt have been implemented years ago I suppose. Now they know they are likely going to lose more seats and power due to their disgraceful attitude towards housing here. Or their lust for the rip off prices...

I reckon its too little too late now any way. Its a huge issue and they wont do anything but tinker around the issues. I reckon they would be prepared to lose power, before they would self harm and touch their golden goose of rip off property...

they could introduce schemes to encourage more development, tax incentives to sell existing houses on large sites or infill sites, or even develop just a single house on corner sites etc. To increase supply. They need to start diverting investment and resources from hotel and commercial to housing... Put these workers up in student accomodation, co living etc...

enricoh

Was reading cormac luceys article in the Sunday times today, it really pointed out how Ireland is a one trick pony n totally reliant on corporation tax. 40% of all tax generated comes from mnc's.

Corporation tax is either going to reduce a bit or a lot- not great options.theres going to be a lot of holes in the coffers n housing will be in the firing line imo. I can't see government levels of spending on housing continuing. Property tax won't be peanuts either as I don't think they can tax working much more. I don't think wages can rise much more either or competitiveness goes out the door. Better chance of price drops than price rises imo.

PropQueries

PropQueries wrote: »

Looks like the Government has finally accepted what most regular people have noticed over the past few years i.e. the large number of vacant apartments.

“Darragh O’Brien, the Minister for Housing, is scoping out measures that would tax landlords who hoard vacant apartments, the Business Post can reveal.”

Link to SBP article here:

Double tax for same thing ? Property and empty apartment ?

Villa05

Hubertj wrote:

I would presume tax and regulation (landlord and tenant rights) of rental property is stable and consistent in Germany. Compare that to Ireland.... people can go on about funds and REITs but when government keep interfering and introducing populist policies it will have an impact, generally negative impact. I would also suggest the strength of the German economy means they do not have to be as reliant on property / construction etc to support “growth†or “progresssâ€.

Tax is dodged by reits here, I'd doubt it very much if that is the case in Germany

What are the "populist" policies in the Irish housing market. I'm struggling to pinpoint one. Is it rent controls
Its quiet clear to most here that the private sector is dictating policy and their agenda is profit for them and risk to the state

No country should be any way reliant on construction. It is a sector that is byproduct of the economy not a driver of it

How difficult is it to plan for a supply demand balance when you have over 20 years notice of a person being born and at an age when they might have a housing need or 30 years when they might buy.
We know from income data that 50% of the population will struggle to buy/rent then we need to have alternatives to the private sector for that.

We are not trying to reinvent the wheel here