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

MacronvFrugals

awec wrote: »

Do you have a link to this quote?

https://www.thejournal.ie/house-prices-increase-cso-5435218-May2021/

The Taoiseach said the government was intervening in several ways, citing social housing, the Shared Equity scheme and cost rental supports.

“Be in no doubt, right now the government is the biggest player in the housing market.”

PropQueries

awec wrote: »

Do you have a link to this quote?

He's quoted in this Irish Times article published on the 9th May 2021:

https://www.irishtimes.com/news/politics/housing-is-number-one-crisis-facing-young-people-taoiseach-1.4559764

He also said in the same article:

"The State actually through one scheme or another is the big actor now in housing provision"

PropQueries

MacronvFrugals wrote: »

https://www.thejournal.ie/house-prices-increase-cso-5435218-May2021/

I prefer your quote:

“Be in no doubt", "government", "biggest player in the housing market”.

yagan

timmyntc wrote: »

Outsourcing to India went into reverse, but still result in lost jobs here.

But I was thinking more along the lines of factories being moved from Ireland to cheaper cost countries.

That's also happened. We were once that outsourcing country when getting a job in the Fruit of the Loom factory was mortgageable.

And now China's first pharma plant outside China is nearing completion outside Dundalk.

enricoh

MacronvFrugals wrote: »

https://www.thejournal.ie/house-prices-increase-cso-5435218-May2021/

So the government basically is the housing market at the moment. Surely there's another 100k jobs in construction, builders suppliers, etc etc that solely exist due to government spending on housing. There's also almost 200k in the charity industry the majority of jobs exist with government money.
It's sit back n grab the popcorn time for this country i reckon, things are gonna get hairy fast. However house prices will probably jump even higher in reality before the music stops!

Ace2007

yagan wrote: »

That's also happened. We were once that outsourcing country when getting a job in the Fruit of the Loom factory was mortgageable.

And now China's first pharma plant outside China is nearing completion outside Dundalk.

Is China coming here because we are cheap or because we are experts?

Op rolls being outsourced to Asia don't need to be smart or think they just need ideally to speak English and be able to follow a process, and it saves the company a small fortune and may even see them make more profit from service fee agreements.

timmyntc

yagan wrote: »

That's also happened. We were once that outsourcing country when getting a job in the Fruit of the Loom factory was mortgageable.

And now China's first pharma plant outside China is nearing completion outside Dundalk.

Thats what I mean. It happened and it was devastating to this country. Most rural areas never recovered.

We've slowly built up again with FDI (largely due to our tax friendly nature) and position within the EU, but as our cost of living continues to climb and with the threat of tax harmonisation on the horizon - many of the perceived advantages of investing here may soon disappear.

It's hard enough for employers here to attract workers from continental Europe due to the cost of living - with remote working changes they may not need to, and can employ directly from Spain or Portugal. Plenty of Irish people would happily make the move there too if they could get away with it.

Institutional investors aside, it looks like Irish property may decline in the near future and might never recover to the current heights.

jill_valentine

Everyone *can't* buy on Bidx1, for the record, in practice it's essentially cash buyers only, so it favours investors and II's by design.

cnocbui

PropQueries wrote: »

I prefer your quote:

“Be in no doubt", "government", "biggest player in the housing market”.

I'd like to rephrase that in English, without the usual Irish cutery:

“Be in no doubt", "government", "biggest Troll in the housing market”

Hubertj

jill_valentine wrote: »

Everyone *can't* buy on Bidx1, for the record, in practice it's essentially cash buyers only, so it favours investors and II's by design.

Much riskier as well I believe. Would a bank even lend to allow someone bid?

Marius34

Villa05 wrote: »

A quick Google of the properties shows that one of these apartments went for auction through bidx1 wit a reserve of

50,000 In 2018

2 sales on the property price register for 2019 selling at
77,000, and 85,000

The asking price in 2021 from the asking price above with long term leasing effect

159,000 In 2021

Just a micro segment of how government is making these entities very wealthy at your expense with your money and they pay no tax

Would be interesting to know if this development was ever in the hands of Nama.

How do you know if it's same apartment? what you found on google?

L1011

Villa05 wrote: »

A quick Google of the properties shows that one of these apartments went for auction through bidx1 wit a reserve of

50,000 In 2018

If it was on BidX1, there was almost certainly something severely wrong with it - either physically or with the title. This would not reflect an open market selling price.

Marius34

MacronvFrugals wrote: »

It's worrying that this even needs to be explained!

The explanation is ones side bias view to the problem.
The real case may be total different.

PropQueries

Marius34 wrote: »

The explanation is ones side bias view to the problem.
The real case may be total different.

To me, it's possibly just further evidence of the prediction of David McWilliams back in 2014 now coming true in 2021.

Back in 2014 he stated:

"Most vulture funds have a rule called the three-thirty rule. This means they buy and hold for a maximum of three years and once they make 30 per cent they are out."

"Who will buy these assets from the three-thirty vulture funds? We will, of course. We will sell Ireland to foreigners at a discount and buy Ireland back at a premium!"

Link to David McWilliams article here: http://www.davidmcwilliams.ie/paddy-is-easy-pickings-for-the-foreign-vultures/

L1011

PropQueries wrote: »

To me, it's possibly just further evidence of the prediction of David McWilliams back in 2014 now coming true in 2021.

Back in 2014 he stated:

"Most vulture funds have a rule called the three-thirty rule. This means they buy and hold for a maximum of three years and once they make 30 per cent they are out."

"Who will buy these assets from the three-thirty vulture funds? We will, of course. We will sell Ireland to foreigners at a discount and buy Ireland back at a premium!"

Link to David McWilliams article here: http://www.davidmcwilliams.ie/paddy-is-easy-pickings-for-the-foreign-vultures/

A prediction of three years from 2014 would have had to come true in 2017. He was writing about funds buying then when prices were still down on now.

fliball123

PropQueries wrote: »

To me, it's possibly just further evidence of the prediction of David McWilliams back in 2014 now coming true in 2021.

Back in 2014 he stated:

"Most vulture funds have a rule called the three-thirty rule. This means they buy and hold for a maximum of three years and once they make 30 per cent they are out."

"Who will buy these assets from the three-thirty vulture funds? We will, of course. We will sell Ireland to foreigners at a discount and buy Ireland back at a premium!"

Link to David McWilliams article here: http://www.davidmcwilliams.ie/paddy-is-easy-pickings-for-the-foreign-vultures/

I think we can all agree Mcwilliams does not know his a$$ from his elbow. One look at his fab show back from 2017 would show you he left the economist world a long time ago and went full screen star mode

javaboy

fliball123 wrote: »

I think we can all agree Mcwilliams does not know his a$$ from his elbow. One look at his fab show back from 2017 would show you he left the economist world a long time ago and went full screen star mode

Yeah, he went from economist to acronymist years ago.

cruizer101

Marius34 wrote: »

How do you know if it's same apartment? what you found on google?

PPR Link for 2018 An Sean Mhuileann

37 properties sold majority at 72500, some kind of job lot obviously.
Other apartments in same block for similar money, you can check parklands in Kerry for same years and again similar prices.

10.75M for 69 apartments is 155k per apartment, they may well have been refurbished but that is still a doubling in price.

awec

cruizer101 wrote: »

PPR Link for 2018 An Sean Mhuileann

37 properties sold majority at 72500, some kind of job lot obviously.
Other apartments in same block for similar money, you can check parklands in Kerry for same years and again similar prices.

10.75M for 69 apartments is 155k per apartment, they may well have been refurbished but that is still a doubling in price.

You would need to know what the issue with them was in 2018.

PropQueries

awec wrote: »

You would need to know what the issue with them was in 2018.

That's not the real issue though. As a poster previously put it perfectly:

"Tralee is a town that thrives on tourism. The price of these apartments were in the range of a couple working in the tourism/catering sector. Government intervention through long term leasing and tax breaks for wealthy institutions has doubled the price of the housing thereby putting it out of reach of workers that keep the town sustainable."

The state (through an AHB), has now entered into a 20 year lease on these 69 apartments in a prime location in the town. These could have and in my opinion should have been offered to local people looking to get their step on the housing ladder. It's wrong on many levels.

The other real question is how many other small towns like Tralee is this happening in at the moment as the only reason we know about this is that they are selling them. I would assume many other investors might just sit back and collect the guaranteed rent for the next 20 years without the local layman being any wiser and wondering why they are being sold for so much.

Marius34

cruizer101 wrote: »

PPR Link for 2018 An Sean Mhuileann

37 properties sold majority at 72500, some kind of job lot obviously.
Other apartments in same block for similar money, you can check parklands in Kerry for same years and again similar prices.

10.75M for 69 apartments is 155k per apartment, they may well have been refurbished but that is still a doubling in price.

There may be substantial works involved to bring them to 155K mark.

timmyntc

awec wrote: »

You would need to know what the issue with them was in 2018.

Maybe there was nothing wrong with them in 2018, they were just cheaper then and now much more expensive due to inflationary effect of certain government interventions in the market?

Honestly what could have been "wrong" with the apartments that would cost 75k or less per apartment to fix, but cause an increase of that much in value in a few years?

cruizer101

In that same year there are 5 sales outside the job lot at 50,60,73,73 and 87.5 so I don't think there is any issue as such, just that it was a job lot sale.

There may be substantial works involved to bring them to 155K mark

They are apartments, there is a limit to the work that can be done to increase the value, its not like you can extend them

Ace2007

timmyntc wrote: »

Honestly what could have been "wrong" with the apartments that would cost 75k or less per apartment to fix, but cause an increase of that much in value in a few years?

There are literally anything that could be wrong - off top of my head:

Asbestos
Mica
Dry rot
Roofing defects

Villa05

Marius34 wrote:

How do you know if it's same apartment? what you found on google?

L1011 wrote:

If it was on BidX1, there was almost certainly something severely wrong with it - either physically or with the title. This would not reflect an open market selling price.

2018 apt 306 parkands (2 bed) bidx1 asking 50k
Photo on BidX1 brochure matches photo of Irish Times article


And from the ppr

2018 march apt 305 sold price 50k

2018 Sept apt 305 sold price 65k

2019 july apt 314 sold price 77k

2019 may apt 307 sold price 84.5k

Anyone know how these ahb"s work, I thought there sole function was to obtain and manage property

Seems like a major money spinner for what is apparently a charitable entity

timmyntc

Ace2007 wrote: »

There are literally anything that could be wrong - off top of my head:

Asbestos
Mica
Dry rot
Roofing defects

Not MICA or the whole block would need rebuilt to replace the outer leaf.
Block is too modern for asbestos.
Roofing defects would affect the entire block, but only a subset have seen this price jump.

It's student accomodation and is leased during summer months from what I can see - up until recently units would sell for around 80k each vacant possession.

The long term leases are the only reason to explain the price jump - theres no evidence of the units being "undervalued" in the past or having massive flaws across the whole development. The 20 year lease on all these units makes a nice package to resell to investors looking for guaranteed yield.

Expect to see more of this happening in future - its the new packaging up of subprime mortgages. Buy some apartments, lease them to council and sell them on with leases in situ.

Villa05

Ace2007 wrote:

There are literally anything that could be wrong - off top of my head:

The parklands apartment on BidX1 was being sold with a sitting tennant so unlikely to have any major issues of a structural nature

awec

PropQueries wrote: »

That's not the real issue though. As a poster previously put it perfectly:

"Tralee is a town that thrives on tourism. The price of these apartments were in the range of a couple working in the tourism/catering sector. Government intervention through long term leasing and tax breaks for wealthy institutions has doubled the price of the housing thereby putting it out of reach of workers that keep the town sustainable."

The state (through an AHB), has now entered into a 20 year lease on these 69 apartments in a prime location in the town. These could have and in my opinion should have been offered to local people looking to get their step on the housing ladder. It's wrong on many levels.

The other real question is how many other small towns like Tralee is this happening in at the moment as the only reason we know about this is that they are selling them. I would assume many other investors might just sit back and collect the guaranteed rent for the next 20 years without the local layman being any wiser and wondering why they are being sold for so much.

Of course it's part of the issue. The premise was that these apartments used to be just 155k and now they're twice that because of the government.

Without understanding why they were sold at auction as a job lot we have no idea if that 155k was actually their "true" value, or if it was a severely discounted rate due to underlying issues.

JimmyVik

awec wrote: »

Of course it's part of the issue. The premise was that these apartments used to be just 155k and now they're twice that because of the government.

Without understanding why they were sold at auction as a job lot we have no idea if that 155k was actually their "true" value, or if it was a severely discounted rate due to underlying issues.

Is the government also buying apartments at these auctions?

awec

JimmyVik wrote: »

Is the government also buying apartments at these auctions?

Does the state buy properties that have underlying issues? I'm not sure to be honest.

Usually something is at these auctions cause a bank won't touch it for a mortgage.

Villa05

L1011 wrote:

A prediction of three years from 2014 would have had to come true in 2017. He was writing about funds buying then when prices were still down on now.

Tax free status, and the gift of those leases would probably encourage them to ride this horse for a little bit longer

timmyntc wrote:

Maybe there was nothing wrong with them in 2018, they were just cheaper then and now much more expensive due to inflationary effect of certain government interventions in the market?

Really questions the quoted build cost for apartments that these were sold for 72k in 2018,
With tourism on fire and student lets in off season, these were a goldmine

Is it possible to ascertain if it was a nama sale

Cyrus

timmyntc wrote: »

Expect to see more of this happening in future - its the new packaging up of subprime mortgages. Buy some apartments, lease them to council and sell them on with leases in situ.

i am missing something, how is this the new packaging of sub prime mortgages?

Villa05

awec wrote:

Usually something is at these auctions cause a bank won't touch it for a mortgage.

We are only aware of 1 unit that went to auction.

awec

Villa05 wrote: »

We are only aware of 1 unit that went to auction.

Here's 3: https://bidx1.com/en/en-ie/auction/property/40060

Here's one on MyHome, interesting text in the description: "Excellent investment opportunity". Maybe that's genuine, or maybe it's typical EA speak for "mortgaged buyers need not apply".

https://www.myhome.ie/residential/brochure/113-an-sean-mhuileann-tralee-kerry/4300299

Edit: 4th apartment sold at auction according to http://traleetoday.ie/tralee-properties-among-five-kerry-lots-sold-at-auction/

Another one on myhome: https://www.myhome.ie/residential/brochure/405-an-sean-mhuileann-tralee-kerry/4243831

"This is an ideal opportunity for someone looking for investment property."


No smoking gun here obviously, but I would bet that these apartments had something wrong with them, be it physically or legally, that made them difficult to sell.

timmyntc

Cyrus wrote: »

i am missing something, how is this the new packaging of sub prime mortgages?

Buy cheap units, agree lease with the council, flip to an investor for up to 2x the price.

The investor is happy thinking they have a guaranteed 20year yield, after which they get the accrued rent AND the value of their asset - only problem is if the market changes significantly in that time the value of the assets could be greatly depreciated. The rent accrued wont make up for the loss of capital when your apartments depreciate.

The apartments wont be worth what the fund paid for them if the government no longer agree to these leases - the valuation is based on the projected yield. After 20 years when the lease expires, if theres no renewals possible then the yield vanishes and so does the property's valuation.

Villa05

awec wrote:

Here's one on MyHome, interesting text in the description: "Excellent investment opportunity". Maybe that's genuine, or maybe it's typical EA speak for "mortgaged buyers need not apply".

Would student accomodation qualify for a general mortgage

timmyntc

awec wrote: »

Here's 3: https://bidx1.com/en/en-ie/auction/property/40060

Here's one on MyHome, interesting text in the description: "Excellent investment opportunity". Maybe that's genuine, or maybe it's typical EA speak for "mortgaged buyers need not apply".

https://www.myhome.ie/residential/brochure/113-an-sean-mhuileann-tralee-kerry/4300299

Edit: 4th apartment sold at auction according to http://traleetoday.ie/tralee-properties-among-five-kerry-lots-sold-at-auction/

Another one on myhome: https://www.myhome.ie/residential/brochure/405-an-sean-mhuileann-tralee-kerry/4243831

"This is an ideal opportunity for someone looking for investment property."


No smoking gun here obviously, but I would bet that these apartments had something wrong with them, be it physically or legally, that made them difficult to sell.

If its all student/holiday lets, is it any surprise they target cash buyers/investors rather than mortgage applicants? Would a bank even lend for this type of property?

javaboy

timmyntc wrote: »

Buy cheap units, agree lease with the council, flip to an investor for up to 2x the price.

The investor is happy thinking they have a guaranteed 20year yield, after which they get the accrued rent AND the value of their asset - only problem is if the market changes significantly in that time the value of the assets could be greatly depreciated. The rent accrued wont make up for the loss of capital when your apartments depreciate.

But that's nothing like a sub prime mortgage. One is lending to a risky borrower. The other is selling an asset with a 20 year guaranteed income stream to an investor.

fliball123

javaboy wrote: »

But that's nothing like a sub prime mortgage. One is lending to a risky borrower. The other is selling an asset with a 20 year guaranteed income stream to an investor.

Why would you sell an asset giving 20 year state guaranteed rental income (with rents at an all time high) with an asset that has to be handed back in the same state as it was given. You still have an asset that could be worth a lot more. if it is worth less you would of at least covered the short fall for this with the rent. Its like a bet in the bookies where the person cannot lose.

yagan

javaboy wrote: »

But that's nothing like a sub prime mortgage. One is lending to a risky borrower. The other is selling an asset with a 20 year guaranteed income stream to an investor.

People thought mortgage backed securities couldn't fail, likewise with advertised rents.

In fact the more institutions pile into the same rental yield market the more they can flood the market and thereby undermine existing yields.

Villa05

timmyntc wrote:

If its all student/holiday lets, is it any surprise they target cash buyers/investors rather than mortgage applicants? Would a bank even lend for this type of property?

How did 69 of them end up with 20 year leases attached?

javaboy

fliball123 wrote: »

Why would you sell an asset giving 20 year state guaranteed rental income (with rents at an all time high) with an asset that has to be handed back in the same state as it was given. You still have an asset that could be worth a lot more. if it is worth less you would of at least covered the short fall for this with the rent. Its like a bet in the bookies where the person cannot lose.

Because 20 years is a long time. You might want to realise a large profit now rather than wait 20 years to realise a larger profit.

timmyntc

fliball123 wrote: »

Why would you sell an asset giving 20 year state guaranteed rental income (with rents at an all time high) with an asset that has to be handed back in the same state as it was given. You still have an asset that could be worth a lot more. if it is worth less you would of at least covered the short fall for this with the rent. Its like a bet in the bookies where the person cannot lose.

If it is worth less then the fund loses - they invested with a particular minimum yield in mind. If they fail to get that back, then they lose. Their entire modus operandi is to maximise their profits. If the value of the property drops after 20 years, it eats into their profits.

Villa05

fliball123 wrote:

Why would you sell an asset giving 20 year state guaranteed rental income (with rents at an all time high) with an asset that has to be handed back in the same state as it was given. You still have an asset that could be worth a lot more. if it is worth less you would of at least covered the short fall for this with the rent. Its like a bet in the bookies where the person cannot lose.

In this particular case its the approved housing body selling to the investment fund, maybe they have local knowledge of other properties they could double the value of by utilising the states property pump apparatus and need to free up capital to make another killing.

This is certainly a story that requires further digging

fliball123

javaboy wrote: »

Because 20 years is a long time. You might want to realise a large profit now rather than wait 20 years to realise a larger profit.

Well you wouldnt sell them now as prices are still rising and may well keep rising for the forseeable

Eclectic Econometrics

So this thread becomes a bit conspiratorial "great Reset" etc. but it is still a good read with great links.

https://twitter.com/APhilosophae/status/1402434266970140676

The problem of pension funds etc. chasing yield will come to a head at some point.

Ace2007

Eclectic Econometrics wrote: »

So this thread becomes a bit conspiratorial "great Reset" etc. but it is still a good read with great links.

https://twitter.com/APhilosophae/status/1402434266970140676

The problem of pension funds etc. chasing yield will come to a head at some point.

If you were selling your house and were offered 50% more than the asking price, and you found out it was a pension fund - would you pull out?

yagan

Eclectic Econometrics wrote: »

The problem of pension funds etc. chasing yield will come to a head at some point.

All it takes is one pension fund to go bust with property related losses and then savers in every other fund will stampede out of illiquid assets, further speeding up the bust.

If we thought Trump boomers were angry before then they'll be in full scale armed revolt when their pensions implode.

Ace2007

yagan wrote: »

All it takes is one pension fund to go bust with property related losses and then savers in every other fund will stampede out of illiquid assets, further speeding up the bust.

If we thought Trump boomers were angry before then they'll be in full scale armed revolt when their pensions implode.

They don't really go bust though - these funds don't have all their eggs in one basket, and they invest in a lot more than just residential property as i pointed out not so long ago. They are well diversified in terms of location of property and rental sector.

I think it was yourself who seem to think ILIM would have over 50% of their funds in property - but then i showed you it was like 3% - property makes up a very small allocation of pension funds assets.

yagan

Ace2007 wrote: »

If you were selling your house and were offered 50% more than the asking price, and you found out it was a pension fund - would you pull out?

I'd sell. In the end all that's going to happen is that we'll end up with another NAMA type entity that will rent out those long term lease units the government signed us up to even after yields collapse.

The current housing minister last private sector job was with a pension fund so I've no doubt that insiders already have any rental drops legally covered by government guarantee.