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

wassie

https://www.boards.ie/discussion/comment/118410363#Comment_118410363

I recall the biggest concerns regarding the global economy pre-pandemic was about the mountain of corporate debt, in particular junk bonds, that were due to be refinanced over the next couple of years. I assume that none of these issues have gone away.

Reading Marketwatch last month, it seems in the US that a lot of the obvious risks of inflation, China woes etc seem to be priced into the junk bond market, but the unmanaged risks seem to be if Central Banks over-tighten or an unexpected covid shock. Any tightening of global credit markets would hit us hard and swiftly I would have thought.

U.S. junk-bond supply [Source: Deutsche Bank]

CorkRed93

https://www.boards.ie/discussion/comment/118410539#Comment_118410539

Wealthy Asian investors, who have snapped up more than a thousand Irish homes in recent years, have started to divest from the Irish housing market amid fears of a property crash in China.

The new trend comes as part of a wider move by Chinese investors worldwide to divest from property after debt concerns were identified at Evergrande, the embattled real estate giant.

Data has shown real estate accounts for up to 70 per cent of household wealth in China, with large amounts of savings wrapped up in property worldwide.

Vanke, a Chinese property agency based in Ireland, has brokered property deals for many high-net worth individuals in recent years. For the first time, it has started to sell off Irish homes and investment properties on behalf of Asian investors.

The trend of new listings by Vanke was first identified by Ciarán Mulqueen, who runs the Instagram account CrazyHousePrices.

Vanke, which was set up in 2016 by Tony Yu, has been pitching Irish property to Chinese investors for several years.

In December, several properties have been advertised for sale by Vanke on Daft.ie, the property listings website. The agency previously only used Irish property websites to advertise lettings.

One home being sold by Vanke is based in Auburn Green in Glenageary, a new small housing development in south Dublin.

At the beginning of this month, Vanke brokered a deal for the home on behalf of its client for €670,000. The day after the deal was done, the new-build home was put back on the market for €700,000 by Vanke.

A penthouse apartment in Moland House on Talbot Street in Dublin has also been put on sale for €469,000 by Vanke. It was acquired by the current owner in 2018 for €440,000.

Two other Dublin city centre one-bed apartments have also been brought to the market by Vanke, including a property on Parnell Street for €230,000. The advertisement for the home, which was acquired previously in 2019 for €221,000, states it has a tenant in situ and a yield of 7 per cent based on current rent of €1,350.

An apartment in Trinity Plaza, Dublin 2 has been advertised for €330,000. If a sale is completed, it will be the third time the home has been sold in four years. It was initially acquired for €300,000 in 2017 before being sold the following year for €280,000.

Vanke has already completed the sale of one property on behalf of a Chinese investor who owned a unit in Gandon House, on Custom House Square in Dublin 1. The property was sold in September for €610,000 – it was purchased for €585,000 in 2018.

Vanke did not respond to requests for comment from the Business Post.

Real estate industry sources said Vanke has been a consistent bidder on homes in the Dublin market for several years, but the firm has been “quiet on the buying front” in recent months. They added Chinese buyers are typically paying in cash.

Two real estate agents who have brokered deals with Asian investors estimated that they have acquired at least a thousand homes in Ireland in recent years, for both personal use and as investment assets.

One real estate agent who reviewed the listings for the Business Post said the sales of the properties on Daft.ie are unlikely to create large returns for the foreign investors when solicitors’ fees, agent fees and stamp duty are factored in.

Vanke was the first registered Chinese property broker in Ireland. Its website states that the main reason to invest in Irish property is because of “Ireland’s housing crisis”.

“The population is growing fast and the new land available for development are also very limited. Properties prices in Ireland set to continue rising, investment property in Ireland is certainly an attractive option.”

Sales material also states Irish properties are “offering the best rental yields” and “earning gross yield of 7-10 per cent”.

“Another factor that makes Ireland an attractive investment option is its moderate capital gains taxes, and moderate taxes on rental income. Capital gains tax is charged at a flat rate of 33 per cent.”

The firm has offered a range of services to foreign investors, including assistance with applications to the Immigrant Investor Programme (IIP). The IIP scheme permits individuals from outside the European Economic Area who have a minimum net worth of €2 million and invest €1 million in Irish enterprise, property or equity to secure residency.

Vanke’s website states it has helped Chinese investors secure Irish passports.

“Irish passport = British passport + EU passport + US work permit”, according to the Vanke website. The firm also advertises it can help investors get involved in the leasing of housing to the Irish state for social housing.

The IIP scheme has been particularly popular with Chinese investors, who have made up roughly 90 per cent of the applicants. At the beginning of the year, 1,088 of the 1,166 people who received Irish residency through the scheme were Chinese citizens.

Wanderer78

https://www.boards.ie/discussion/comment/118410651#Comment_118410651

yup, this problem hasnt gone away, the truth is, we dont actually know whats gonna happen next, but i think you d be naïve to think, nothing will happen, theres a possibility we re all deeply exposed here, only, nobody knows for sure. corporate debt has also risen substantially throughout covid, but a significant amount of that debt has been used for financialised activities such as share buy backs etc, and not for productive means, furthering wealth inequality, this will also probably further compound these issues, post covid. we can all see the potential problems of central banks raising rates post covid, and they probably will, i suspect we ll see some serious problems then...... a serious rocky road ahead....

Timing belt

https://www.boards.ie/discussion/comment/118410712#Comment_118410712

you need to remember that the debt is someone investment. Unlike 08 where the banks issues the debt this time around it is in the capital markets where the debt has been bought by investors.

if the debt turns bad investors loose their investment and it doesn’t bring down banks

Marius34

https://www.boards.ie/discussion/comment/118410363#Comment_118410363

I would say the main problem was household debts rather than private(&corporate) debts. Corporate debts it's difficult to estimate, and to understand when there is any issue with it.

I cannot see but a general cataclysm in economies shortly ahead. How it will affect property prices and rents is difficult to imagine.

Ozark707

https://www.boards.ie/discussion/comment/118410706#Comment_118410706

Hardly stellar returns for those investors based on the examples cited in that article.

Timing belt

https://www.boards.ie/discussion/comment/118412525#Comment_118412525

They may not be bothered by the returns because the investment will get them an Irish passport.

Taylor365

Its a hedge, out of CCP control.

Ozark707

https://www.boards.ie/discussion/comment/118412743#Comment_118412743

I get the part to buy foreign property as a means to take it away from CCP control but it seems that some are heading for the hills with little or no profit. So I am wondering if the cash is required to stem losses from investments at home.

mcsean2163

https://www.boards.ie/discussion/comment/118413551#Comment_118413551

Bitcoin not doing so well. Possibly redemptions there too...

fliball123

https://www.boards.ie/discussion/comment/118389622#Comment_118389622

https://www.boards.ie/discussion/comment/118389622#Comment_118389622

https://www.boards.ie/discussion/comment/118300405#Comment_118300405

I cant see emigration being a minus over the next 5 years. When the skys open up in a post covid world (or at least one where we have to just get on and live with it) migration inwards will be huge. I have stated it here the decision to decrease the time for an undocumented foreign national to go from this status to one who can legally work and live here from 8 years to 4 months will have us overloaded our welfare system is way too generous and our left leaning nature means that we are a soft touch. There will be way more people coming in than leaving. Also just had a look on myhome I hadnt been looking at the number of available properties for sale in the country for a while but it is down under 11k now. I thought it had steadied for a while at about the 12/12.5k mark. So even less properties available than this time last year.

Villa05

https://www.boards.ie/discussion/comment/118410866#Comment_118410866

Does the domino affect not apply?

Subprime were packaged up and sold as investment products or am I oversimplfiying

fliball123

https://www.boards.ie/discussion/comment/118415082#Comment_118415082

https://www.boards.ie/discussion/comment/118415082#Comment_118415082

There was all kinds of shenanigans going on back per 08 not just the issues of subprime for example you could get a mortgage based on the equity and only the equity in another property so they were giving loans on the back of other loans and that was just one of the completely outlandish lending practices that were going on or 110% mortgages it was madness. There was no one regulating it and it fell apart - Globally. Now fast forward 2022 in Ireland, we have a huge supply issue (this did not exist pre 2008) we also have a ramping up of demand with different events Brexit, then Covid stopping people in their tracks buying then add in vulture funds and the fact that the Irish housing market is been bought into by people all over the globe. The demand for housing in Ireland pre 08 was no where near the levels of what it is today. The subprime scandal that caught out a lot of people the same dynamics do not exist today. Anyone who has looked for a mortgage over the last 2/3 years will tell you the bank are only short of doing a colonoscopy on you and your finances before they give you a penny. People (and to use a phrase from the Anglo lads) have to have some skin in the game. Throw in our lefties where the family home cannot be touched meaning even if the roof caves in these properties are protected and will not flow into the supply side of the equation. It all points towards prices increasing for IMO then next 3/5 years.

AdamD

https://www.boards.ie/discussion/comment/118410363#Comment_118410363

Bit of a meaningless statement, isn't it? Private debts will probably be forever at an all time high in human history due to natural inflation and population growth

Marius34

https://www.boards.ie/discussion/comment/118414969#Comment_118414969

I don't see negative migration myself, but what I meant in case the migration stays in the level of pre-Covid, I would expect slowdown in rental price in Dublin in a year or two, due to fairly significant increase in rental supplies in Dublin.

In regards to the number of adds for sale, January is always the lowest month. In February the numbers start to go up, although I don't expect much for this year.

fliball123

https://www.boards.ie/discussion/comment/118416669#Comment_118416669

I was comparing the amount of property for sale on myhome in January of last year which had over 12k so its an apt comparison when it is now under 11k . So seasonality cannot be used as an excuse for there being about 1/10th less property up for sale 12 months on.

As for migration wait and see no point arguing about it we will see when covid is more manageable but as I say with that change we are going to see a huge increase in people trying to get to this country from other nations

Villa05

https://www.boards.ie/discussion/comment/118415174#Comment_118415174

And yet prices are set to hit the heights of that period this year with rents considerably higher.

Public sector are pretty much banging the drum of pay restoration which implies there pay has not reached the heights of the boom.

Shenanigans going on all the time

fliball123

https://www.boards.ie/discussion/comment/118416737#Comment_118416737

Not when it comes to people getting mortgages, there may be other things at play alright with regards to government interference with HAP and FTB etc but the nuts and bolts of getting a mortgage is a lot more scrutinized. We are also 14 years from the high prices of 2008 and the market IMO over corrected when most property fell between 40 to 70% of the price in 2008 and that is another factor that has added to prices rising over the last decade. The public sector on a separate have been banging that drum since they had pay cuts, yet we never hear of pay restoration for the tax payer with regards to the supposedly temporary USC tax.

Marius34

https://www.boards.ie/discussion/comment/118416701#Comment_118416701

ok, if you meant on annual levels, you are totally right, and probably will be hitting record lows next week.

And with an immigration, yes, I wouldn't be very surprised myself to see increase in immigration later on this year.

fliball123

https://www.boards.ie/discussion/comment/118416846#Comment_118416846

what way do you see prices going? someone should put up an opinion poll be interested to see what way people on here think the the wind is blowing.

CorkRed93

any new builds coming on market over next few months will have been built with supplies that have spiralled in cost due to shipping/supply chain issues, not a great deal of reasonably priced 2nd hand houses + HTB incentives still here and i only see things going up tbh. would have been thinking the opposite in mid 2020

Marius34

https://www.boards.ie/discussion/comment/118416880#Comment_118416880

For 2022, sale price as well as as rentals likely to go up. It just difficult to see any known fundamental reasons why could it go down at the moment. But as I said, I could see fundament reasons why Dublin rental market I expect to stabilize in 2023.

I think we may see properties to go down in some of the countries, and there will be many on this boards showing as an example that same is likely to replicate into the Irish market, without understand the fundamental differences of demand/supply between Ireland and other country.

Timing belt

https://www.boards.ie/discussion/comment/118416880#Comment_118416880

this time last year I said prices will rise by 10-15% and was told by everyone that wasn’t going to happen and that the housing market was due a correction.

This year I see prices increasing 5-7.5% mainly down to people being able to get bigger mortgage (that is assuming pay increases that match CPI).

The first 6 months of the year will see prices rises in new builds that were sold last year but delivered this year. I wouldn’t be surprised to see prices increase by 10% on the new builds.

On the downsize risk I can see a lot of people that have invested in stock market and bitcoin taking a big hit due to a correction as companies don’t meet there sales targets at the same time the fed is tightening monetary policy. The biggest risk here is retail investors using derivatives without even knowing that they are doing so and as the market falls being hit with margin calls that they they won’t be able to make which will result in a sell off of shares to cover positions making the market correction more severe.

mcsean2163

Although fliball comes across as proudly racist he's not wrong that the population has been increasing significantly in the 21st century.

Having lived in the UK, it's hard to be surprised. Ireland is now a great little country. Times have changed. Houses that were ordinary are now priced out of reach for the majority. I'm not sure where it goes from here but Dublin has become very expensive with few interesting properties available for a reasonable price.

Let's not kid ourselves, by and large immigration has been great for Ireland but house prices have been affected. 21st century Dublin is expensive and a decent house is now probably priced around 1.5 million. No point complaining, time is better spent on discovering how to earn the extra money needed.

For us it's crap as we thought we were doing okay until we discovered that so are a LOT of other people and that our effort to get ahead has not rewarded as expected. Anyway, spilt milk. Review, re-evaluate and move on without racism.

Timing belt

https://www.boards.ie/discussion/comment/118419018#Comment_118419018

What do you classify as a descent house for 1.5m ?

is a regular 3/4 bed house in a sought after location similar to where you grew up? The reason for asking is that there is a limited supply and if the majority have similar thinking and you assume on average 3 kids per house then there are just not enough houses in those areas.

Timing belt

https://www.boards.ie/discussion/comment/118416880#Comment_118416880

https://www.boards.ie/discussion/2058225948/irish-house-prices-2022-predictions

mcsean2163

https://www.boards.ie/discussion/comment/118419113#Comment_118419113

Personally, hoping for 4 bed on half acre or more not beside a very busy road, within 40 minutes commute and ideally a path. Looking Wicklow/ Kildare. Very depressed after our most recent viewing. Our current max budget is about 1.2 and we're getting close to being to old for a mortgage. I was hoping we'd have a vegetable garden, chickens and a dog/ cat.

Those things didn't seem that far out of reach of normal people when i was growing up. Times have changed.

fliball123

https://www.boards.ie/discussion/comment/118419018#Comment_118419018

Where am I being racist, all I was stating was fact of how a process has changed? Can you show me where I was being racist? There is evidence of what is known as "Welfare Tourism" and "not going through the proper procedure" going on in both Ireland and the UK, you only have to look at the number of people who are in Ireland seeking asylum that there is no direct route from their country of origin to Ireland and under the rules they should be seeking asylum at the first port of call. Look I don't blame people in certain countries for wanting to move here and wanting a better life and I also think its better to have people who will be coming in and they are able to work after 4 months instead of 8 years and contribute and be tax givers instead of receivers. Having said that, it will be an extra burden on the state for the time they are here when they cant work or if they simply don't want to work (we already have a certain % of our indigenous population in that boat) as they will need to be housed and we do have a housing crisis currently over 100k on a housing list. We also have a very generous welfare system. So don't be getting your knickers in a twist and try and make allegations on someone who you don't know.

mcsean2163

https://www.boards.ie/discussion/comment/118420145#Comment_118420145

Welfare Tourism