Irish Property Market chat II - *read mod note post #1 before posting*

Pussyhands

https://www.boards.ie/discussion/comment/118254770#Comment_118254770

No, it might seem like it's covid related but the actual reports would suggest the market would go up if it was just covid related.

What I think could be happening now is with the anecdotes and potential mildness of the new variant, is that it signals a final way out of the pandemic. This means the need for financial supports to stimulate the economies are no longer needed and interest rates can be raised, bond buying can be reduced.

"Growth" stocks, which are companies which essentially do not make a profit are getting hammered. Why would that be? Because if they're loss making, it means they need to borrow money. And if they're borrowing money that means rising interest rates will mean they have to pay a lot more money servicing the debt.

Have a look at the top gainers yesterday....what do they have in common? Mortgages...

https://finance.yahoo.com/gainers

Timing belt

https://www.boards.ie/discussion/comment/118255098#Comment_118255098

What they have in common is they are bonds/fixed income and their price increased because the yield dropped.

If the expectation is that interest rates were going higher then the price should fall and yield goes higher.

The market is pricing in the new variant and the slowdown in economic growth from lockdowns and travel bans etc

Pussyhands

https://www.boards.ie/discussion/comment/118255468#Comment_118255468

Bond prices don't increase because the yield drops. Yield is the % return you get from a bond. Why would demand go higher when the return is lowered? It goes the other way. Bond yield drops when prices increase.

People are flocking to bonds because when the US is buying so many bonds, this drives up demand and thus reduces the bond yield. When the US looks to be reducing its bond buying, that means others selling bonds will need to increase the interest rate on the bond to attract investors.

dubal

Interesting new development, Avant to CUT interest rates, presumably they dont see any medium term upward pressure?

https://www.rte.ie/news/business/2021/1202/1264376-avant-money-to-cut-mortgage-interest-rates/

Amadan Dubh

Only 3 years fixed at 2.2%? That's not great at all I think. It's suckering people in.

Timing belt

https://www.boards.ie/discussion/comment/118255633#Comment_118255633

Bond prices have an inverse relationship with yield.

When yield goes down price goes up…when yield goes up price goes down.

The big driver of yield on fixed income/non government bonds is the 10 year treasuries.

As the stock market falls investors leave equity and look for safety in government bonds which increases the price of the bond and reduces the yield. This is what is happening at the moment because of fears of lockdowns.

If the fed tapers as it has said it will do... then they buy less bonds and the yield goes up... The expectation of this happening should send yields higher but instead we are seeing yields drop because of the flight to safety. Your list of top movers yesterday is mainly fixed income whether it be a bond/preference share. As the yield on government debt drops there is more demand for this fixed income and hence why the price rises. If the market was pricing in rate hikes then price of this fixed income should drop because difference in the interest rate to the rate on the fixed income reduces... This is not what we are seeing in the market. Instead we are seeing fear of lockdowns driving the yield lower on government bonds even after the fed announcement to tapper.

L1011

Just another reminder that this thread is not for discussing refugees, immigration, welfare rates or welfare recipients.

dubal

https://www.boards.ie/discussion/comment/118255682#Comment_118255682

They have a range of rates and LTV etc, some currently as low as 1.95%, I guess the devil will be in the detail when they announce it next week.

fliball123

https://www.boards.ie/discussion/comment/118249096#Comment_118249096

So using your 2.5 person per household if you go back to 2011 we had 4,588,252 people living here fast forward to 2021 a decade later we have 5,011,5001. Which means in the last decade alone we needed to build in order to accommodate everyone an extra 47838 but we would also have to put in restrictions on people having kids (like China) and only let someone have a kid when someone dies and also we would have to close up shop and not allow anyone else come into live in the country that where not born here or living here in the last decade The stats show that only 33,436 new dwellings where built between 2011 and 2016. Another 14407 in 2017, 18072 in 2018, 21241 in 2019, 20676 in 2020 and up until the end of q3 in 2021 13630 have been built. Add them all up and we have 1214623 built since the start of 2011. This is where the country finds itself demand wise and of course we cannot tell people not to come live here or to stop having kids and with Covid and builing related skilled labour shortages in this country I cannot see the supply side ramping up to what is needed.

https://www.cso.ie/en/releasesandpublications/ep/p-syi/psyi2018/bus/bcon/#:~:text=The%20number%20of%20new%20dwellings,%2C%20an%20increase%20of%2016.6%25.

https://www.cso.ie/en/media/csoie/census/documents/census2011pdr/Tables_and_Appendices.pdf

cso.ie/en/releasesandpublications/ep/p-pme/populationandmigrationestimatesapril2021/mainresults/

iColdFusion

https://www.boards.ie/discussion/comment/118255671#Comment_118255671

Avant only really want to lend in the major cities and their suburbs is what my mortgage broker told me, worth mentioning for anyone hoping to go with them for a rural house.

hometruths

https://www.boards.ie/discussion/comment/118257039#Comment_118257039

Of course we're not going to tell people to stop having kids.

When you say "this is where the country finds itself demand wise", do you mean that because we did not build enough to accommodate (average household size x population growth) over the last decade we have a massive bottle neck and thus have to build significantly in excess of (average household size x population growth) over the next decade just to catch up? Hence difficulty in the supply getting to where it needs to be?

dubal

https://www.boards.ie/discussion/comment/118257354#Comment_118257354

I am currently planning on using them, but I am in an urban centre. They are pretty risk averse in my experience.

Ultimately, I want a low fixed rate. They were the lowest but I think they've been matched now, so hopefully they will go lower next week to compete.

Dubal

fliball123

https://www.boards.ie/discussion/comment/118257387#Comment_118257387

That is what I am seeing, I am seeing an ever increasing housing list and homeless list and the term housing crisis is used infinitum. Throw in the record low number of houses for sale and rent over the last 2 years or so. There definitely seems to be an issue in this country with regards to housing

hometruths

https://www.boards.ie/discussion/comment/118257416#Comment_118257416

Sure, I see the ever increasing housing list and housing crisis cries too.

The logic of calculating future supply and demand requirements by (average household size x population growth) only makes sense if you also accept that the present demand and supply situation is accurately represented by the (average household size x current total population).

Would you accept that?

fliball123

https://www.boards.ie/discussion/comment/118257556#Comment_118257556

Well I have calculated the population change over the last decade and divided it by the the 2.5 average dwellers across all households and then taken away the new builds that have been built in that time and it leaves us needing housing for nearly 50k people and it does not take into account housing that have been demolished or dwellings built in areas that are more or less inhabitable as in no or poor infrastructure and no amenities close to the dwelling in that time either.

hometruths

https://www.boards.ie/discussion/comment/118257608#Comment_118257608

I understand the calculation you have done, and how you arrived at the conclusion "it leaves us needing housing for nearly 50k people".

I am just saying that the claims you are making based on your calculation would only have any validity if the current total stock of habitable housing x current average household size also showed a deficit of housing for nearly 50k people.

Which oddly enough it doesn't. It in fact shows we have a fairly significant surplus.

Hence by your calculations there should actually be very little difficulty in getting supply where it supposedly needs to be.

It doesn't make a lot of sense to say future housing demand is very simple, its average household size and population growth, you can't argue with the figures and simultaneously say, pfft ignore the figures, I don't care what average household size and current population is, you can't argue with the headlines.

fliball123

https://www.boards.ie/discussion/comment/118257712#Comment_118257712

Have you anything to back that up and does it take into account housing demolished or inhabitable and that are built in areas that have little or no infrastructure?? If not then your facts are skewed and I would take the current housing list, homeless list and the absolute clammer from people saying that they cant buy or rent a property in this country over a stat that includes a large amount of dwellings that are not fit for purpose in this country

rob316

I see Allianz are pulling out of the investment property market. We are in real danger of becoming a bad place to do business. Like it or not we need institutional money to build housing. The reality is, the small landlords are leaving the market in their droves, we need rental properties so who else is going to meet the demand.

We really need to build at all costs, sure we'd love the state to build us all a house but its not remotely realistic.

wassie

https://www.boards.ie/discussion/comment/118257411#Comment_118257411

Avant's lending criteria is such that they are only lending to the top prime borrowers. Essentially they are only picking the low hanging fruit in the Irish mortgage market which is not exactly great for competition given the majority of borrowers dont meet their criteria.

hometruths

https://www.boards.ie/discussion/comment/118257946#Comment_118257946

Have you anything to back that up and does it take into account housing demolished or inhabitable and that are built in areas that have little or no infrastructure??

Sure. It's pretty simple.

According to the most recent calculation, the total stock of habitable residential dwellings in Ireland was 2,052,429.

Not sure where the average household size of 2.5 you mentioned came from, all official sources I have seen say it is 2.75 (eg the Housing Agency)

Total housing capacity = 2.75 x 2,052,429 = 5,644,180 people

Total current population = 5,011,500 (your figures which I'd broadly agree with)

Capacity for 5,644,180 people minus 5,011,500 total people = 632,680 spare capacity or 230,065 spare houses (632,680/2.75). Some way off a 50k deficit as you suggested.

Using your 2.5 figure you get housing capacity of 5,131,073 and 119,573 spare capacity or 47,289 spare houses. Still some way off a 50k deficit.

If I made a mistake in the above, let me know? How are you coming up with the claim we are 50k houses short based on population figures and average household sizes?

Timing belt

https://www.boards.ie/discussion/comment/118258266#Comment_118258266

and the conversation slowly moves into the topic that has been banned as it has been done to death…lol

hometruths

https://www.boards.ie/discussion/comment/118258388#Comment_118258388

Lol indeed. 🙄 🙄

M_Murphy57

https://www.boards.ie/discussion/comment/118257354#Comment_118257354

What is the reasoning for that?

L1011

https://www.boards.ie/discussion/comment/118258615#Comment_118258615

An assumption that urban/suburban will hold value better. There's arguments for and against that.

Houses without fibre are going to be less and less attractive; in future there will probably be significantly heavier taxation on having your own car, having a septic tank/domestic WWT system, etc.

M_Murphy57

https://www.boards.ie/discussion/comment/118258661#Comment_118258661

I suppose, but the vast majority of people pay their mortgage ie repossessions are rare. Seems overly cautious, but what do I know I'm not a number cruncher.

Timing belt

https://www.boards.ie/discussion/comment/118258531#Comment_118258531

It’s funny because once you account for the 90k vacant properties (which has been pretty consistent for some time and are vacant for a variety of reasons which can’t be discussed here). and 40k holiday homes your surplus of 47k becomes a deficit of 83k properties based on 2.5 people per property.

L1011

https://www.boards.ie/discussion/comment/118258796#Comment_118258796

Repossessions are still exceptionally difficult to obtain.

Amadan Dubh

The problem with traditional metrics used by our established regulators and government is found in stories like this and their being wedded to the likes of debt:GDP, household wealth etc as barometers of economic prosperity is directly correlating to a rise in populism and economic uncertainty. If things are so hunky dory then why are FF and FG, being responsible for the current situation, doing atrociously in the polls? Why is it so difficult to raise new taxes (i.e. taxes on this booming household wealth)? It really seems like there is a complacency and a mood of "this time it's different".

https://www.irishtimes.com/business/economy/irish-families-wealth-is-surging-helped-by-house-prices-1.4744937

If Irish household wealth keeps increasing at current rates, it will exceed €1 trillion in 2022. In the middle of this year, thelatest Central Bank figures showed that net wealth – households’ assets minus borrowings – stood at €935 million, exactly €100 million higher than one year previously and more than €125 million above pre-pandemic levels. This equates to €186,589 per capita, though as the Central Bank points out, this says nothing about the distribution between households.

Back before the financial crash, Irish households held gross housing assets valued, at the price peak in late 2007, at around €610 billion. Total wealth at the time was just over €700 billion. It was all about property. Total household borrowings, most of it mortgage driven, was around €200 billion.

The problem, of course, was the value placed on property at the time was unrealistic. By 2013, the value of housing wealth had dropped to less than €300 billion.

Now housing wealth, at €587 billion, is approaching the Celtic Tiger highs. With significant economic growth in the meantime and a rising population, economists in the ESRI have estimated that while house prices were overvalued in 2007, they are more in line with economic fundamentals now.

hometruths

https://www.boards.ie/discussion/comment/118258804#Comment_118258804

That entire subject has been banned. Not just the reasons. So probably best to steer clear of it.

Sure based on average household size of 2.5 people, it's not too difficult to talk your way into a deficit, based on a few ifs, buts and maybes. I only included the 2.5 household size figure because that is what fliball said he used to calculate.

The most credible figure, as per the CSO, and as such most often quoted is 2.75.

So how does it look on 2.75 as average household size? Probably not so funny.

Timing belt

https://www.boards.ie/discussion/comment/118258900#Comment_118258900

we will wait till we get the census data next year to see average household size as projections are that they are falling and the 2.75 figure is from 5 years ago. you repeatedly try to talk about it without stating it. Having said last year that you don’t believe there is a housing crisis says everything. So yes it is funny 😆

hometruths

https://www.boards.ie/discussion/comment/118259166#Comment_118259166

we will wait till we get the census data next year to see average household size as projections are that they are falling and the 2.75 figure is from 5 years ago. you repeatedly try to talk about it without stating it.

Wait and see if the average household size decreases? In a rapidly increasing population with a chronic shortage of houses? I guess we can just chalk that up to another one of these odd anomalies of the Irish housing crisis! LOL indeed. 🙄

I'm not repeatedly trying to talk about something without stating it, I was simply commenting on the flaw in fliballs logic re calculating demand using average household size and population growth.

Timing belt

https://www.boards.ie/discussion/comment/118259415#Comment_118259415

More apartments being built rather than houses is an odd anomaly 🙄

hometruths

https://www.boards.ie/discussion/comment/118259447#Comment_118259447

You got a source for that?

Marius34

https://www.boards.ie/discussion/comment/118259166#Comment_118259166

If the method will not change to calculate household size, I would be willing to bet that household size has increased since 2016.

ittakestwo

https://www.boards.ie/discussion/comment/118257039#Comment_118257039

Hmm. Do you mean the population increased by 47k each year between 2011 and 2021? If it is an average of 2.5 per household that would mean we should have been building 18k units a year presuming no houses lost to dereliction etc and that in 2011 supply had met supply. Obviously 18k is not enough given we lose houses to dereliction and that household size should will slightly further. But 30k units would be enough a year to take into account Ireland's natural population increase and a net immigration of between 25-30k per year.

Timing belt

https://www.boards.ie/discussion/comment/118259574#Comment_118259574

L1011

https://www.boards.ie/discussion/comment/118260201#Comment_118260201

Apartment goes briefly over one-off houses, but never comes close to estate houses ("scheme") there.

hometruths

https://www.boards.ie/discussion/comment/118260201#Comment_118260201

LOL indeed. That’s pretty funny.

Timing belt

https://www.boards.ie/discussion/comment/118260214#Comment_118260214

OK I may have worded it incorrectly by saying more apartments than houses were built.... what I was trying to say is that more apartments as a % of housing stock were built after the 2016 census which should drive down the no of people per housing unit.

hometruths

https://www.boards.ie/discussion/comment/118260408#Comment_118260408

Worded it incorrectly putting it mildly I would think.

so approximately 1000 new apartments built in 2016 rising to approximately 4000 in 2020 versus approx 8500 houses in 2016 rising to approx 16,500 houses in 2020.

so that is a relative outperformance of apartments as a % of new build stock going from 12% to 17%.

and you think this 5% difference in new build stock is going to cause the average household size, calculated over the entire housing stock and population, to drop from 2.75 to 2.5?!

LOL indeed. I think that is the biggest straw I’ve seen you clutch at yet.

Pussyhands

Mentioning Avant and their rates makes it sound like it's great for the mortgage market in Ireland when it does nothing for the average mortgage holder/first time buyer.

Their good rates are only for those with 60% LTV, i.e those who have many years of their mortgage paid (essentially people who already have seen a huge increase in their property value and thus had lower capital cost than those buying today while still benefitting from increasing wages)

It's a bit like saying people will be able get cheaper car services in Ireland with a new provider yet it turns out it's only for those owning BMWs and Mercs who are doing great without the cheaper car service.

Timing belt

https://www.boards.ie/discussion/comment/118260526#Comment_118260526

I have held my hands up and said that I worded it incorrectly by saying more apartments are being built than houses.

You are putting words in my mouth....Where did I say that it fall from 2.75 to 2.5.... All I said is that it is projected to drop over time and the 2.75 figure was from 2016 and one of the factors is that more apartments are being built as a % of housing stock. Go back and read what I said...before you accuse me of clutching at straws for something I never said.

A simple calculation based on the figure of housing stock you shared earlier divided by the population gives you an average of 2.4 people per housing unit. If you excluded holiday homes and vacant the figure comes to 2.6 people per housing unit. As I said earlier on lets wait and see what the census tells us next year.

Villa05

https://www.boards.ie/discussion/comment/118258032#Comment_118258032

I hear newstalk pushing that commentary lately and finger pointing lefties as being responsible.

Where did the term cuckoo find come from only the Irish independent, a pony from the same stable as newstalk

No issue with investment funds rather with the principle that some entity can come in here make significant profits and contribute nothing in the form of taxation to fund essential infrastructure that help derive said profits.

One would have to question why many responsible funds are steering clear of housing in Ireland purely because of the boom bust market being far too risky

The issue of data centres was also raised to push this anti business mantra. Those companies pushing for data centres have so much money they don't know what to do with it. Building a renewable power source to power the data centres would be rather beneficial, protect them from energy inflation and enhance said companies green credentials. Win win solution for everyone and companies that do real work and employ thousands won't have to worry about the capacity on the national grid

Out and out bollo*ology from the media. One would have to question whether they are paid to spout the nonsense of vested interests rather than serious debate

Villa05

Do you think that high rents was mentioned in newstalk concern that Ireland was becoming anti business

No, not a squeak, lefties are the problem

These vested interests are using tried and tested methods of destroying a nation. Media and political capture a significant contributer to the last property bubble/bust

The spokesperson for the investment funds an ex politician as was the case (and continues to be) for the construction industry federation during the celtic tiger. Look at the banking and payments federation, another prominent former politician.

It's all too easy for some to pillage the country

https://www.independent.ie/business/irish/foot-locker-must-pay-1m-in-rent-despite-covid-closure-41112785.html

hometruths

https://www.boards.ie/discussion/comment/118260786#Comment_118260786

Out and out bollo*ology from the media. One would have to question whether they are paid to spout the nonsense of vested interests rather than serious debate

Posters here often like to say current situation is not a bubble because it is very different to 07/08, but one thing that is exactly the same is the total lack of serious debate. Media are guilty of this, and presumably fuelled by what they read in the media, so are majority of Joe Public.

For example, the brief exchange here about using projected population growth and average household size to forecast future demand. This is something I have seen in the media often as well. They will trot out similiar stats about building rates not keeping pace with population increases over the last ten years, and use that to prove the point that we have a chronic supply problem, and will continue to do so unless we ramp up supply over the next ten years.

But nobody ever factors in two important considerations - 1) we had serious oversupply 10 years ago for the population growth to mop up and b) if you run the same calculations on current population size and average household size it suggests we have significant spare capacity.

This is exactly the sort of indicator, (there are loads of others), that was totally ignored in 06/07. Nobody wants to even discuss them, and if somebody raises them it is dismissed with sort of nonsense such as @Timing belt suggestion that the figures are not worth discussing, because we have built a greater number of apartments than houses since 2016.

Maybe there is a good reason to explain the figures pointing to spare capacity, but it sure as hell is not that average household size has decreased because we have built 15,000 odd apartments since 2016. That's totally ludicrous.

For whatever reason, people would rather try and argue black is white, rather than engage in serious debate. This head in the sand attitude is exactly what happened in 07/08, and if it all goes tits up people will wail "How on earth did we not see this coming?"

Timing belt

https://www.boards.ie/discussion/comment/118261394#Comment_118261394

Yet again putting words in my mouth where did I say figures were not worth talking about??? that’s twice you have tried to misrepresent me.

hometruths

https://www.boards.ie/discussion/comment/118261444#Comment_118261444

You claimed that the figures I posted could be interpreted to show a deficit rather than a surplus, by using an average household size of 2.5.

I replied saying that 2.75 was the accepted average household size as per CSO, Housing Agency etc and asked you what you thought of figures using 2.75.

You did not want to even comment on that figure, instead you replied:

we will wait till we get the census data next year to see average household size as projections are that they are falling and the 2.75 figure is from 5 years ago.

Wait and see. The 2.75 figure is out of date.

To me that was a suggestion the figures I quoted were not worth talking about. Terribly sorry if you feel misrepresented.

And your latest post is just proving my point. Rather than engage in serious debate you derail it with self righteous claims of affrontery.

If I continue to engage pointing out how ludicrous it is, we go round and round in circles, and sooner or later a mod will come along and ban any talk of average household size in a property market thread. A win for those against discussing the issues from all angles.

Totally pointless.

Cyrus

https://www.boards.ie/discussion/comment/118260531#Comment_118260531

how do you define the average mortgage holder, because the average LTV in ireland will be around 60% or lower.

Also, from the article linked - Avant Money is offering a 3-year fixed rate of 2.20% at 90% loan to value.

Seems pretty good.

Cyrus

https://www.boards.ie/discussion/comment/118255682#Comment_118255682

To what, the lowest rates in the market?

the fiends.

fliball123

https://www.boards.ie/discussion/comment/118258266#Comment_118258266

The 2.5 was taken from a different poster who was using it but I think it is more accurate than 2.75 as the average household size was 2.75 in 2016 and already as early as 2018 it had dropped to 2.6 and as has been pointed out birth rates are down, death rates are up and immigration has come down and building has gone up in the 3 years since 2018 so I can conservatively say 2.5 is a much more accurate measure for household size than 2.75. https://www.housing.eolasmagazine.ie/housing-affordability-in-ireland/

Also straight away on your report so 92135 are vacant is there any explanation why, could it be that they are inhabitable as I see a lot in Dublin are vacant why would someone not have it up for rent or sale if it was in condition to be used, your losing money? It could also be a case that the infrastructure is not there to support a dwelling? Your calculation also does not take into account holiday homes which will not be used by anyone for long term rent so that's another 38791 out of stock that can be used.

So lets do the calcs again. Total amount of properties are 2,052,429 then take away the amount of housing that is unavailable to buy or rent for different reasons (holiday homes, inhabitable or no infrastructure) 130,926 = The total stock of housing available to buy or rent = 1921503 now using 2.5 as this is more accurate giving the information at hand and the latest household size given in 2018 and how the factors determining household size would bring this lower than 2.6.

1921503 * 2.5 = 4803757 or if we were in a time warp and we were still living in 2016 and it was 2.6 household size then it would be 4,995,907

Current population = 5011500

So the blind spots that neither of us know the answer for are the 92k odd houses that are empty. I cant imagine that any owner would just leave these idle for no good reason. My theory that they are either inhabitable or no infrastructure would be the most likely reason. Also why would there not be a push to get these properties into circulation if they were in a decent condition to house people? If we had nearly 100k properties in decent condition and not being used for sale or rent with the current homeless and housing rates as well as the lack of supply it would be a scandal of epic proportions for the government.