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

landofthetree

https://www.boards.ie/discussion/comment/119683960#Comment_119683960

Other countries have much bigger capital projects on the go. For example the Brits did Crossrail during the last recession.

They already have 25,000 working on HS2.

"2022 is shaping up to be a huge year for HS2.  There are now almost 25,000 jobs supported by the programme and thousands of UK businesses directly helping to build the railway."

Also companies in Australia are already hiring irish workers.

https://www.constructionjobs.ie/construction_site_engineering/australia.JOB546187.html

Ireland will continue to lose a lot of its construction workers due to the lack of any real infrastructural investment.

fliball123

https://www.boards.ie/discussion/comment/119684393#Comment_119684393

Your talking about construction companies closing down or the makers of the raw materials closing down. So in effect those workers would lose jobs would they not?

fliball123

https://www.boards.ie/discussion/comment/119684400#Comment_119684400

I dont think so. people cannot afford the prices that are being quoted during any recession its the big ticket items that go first, the car upgrade, the house extension, etc

landofthetree

https://www.boards.ie/discussion/comment/119684400#Comment_119684400

Where are the property developers getting their funds from?

They can't afford to let projects go on an extra 6 to 12 months.

Their loans were generally 4.5% upwards pre the inflation crisis.

What will they be next year? 8% 10% 12%?

The people they owe money to won't hang around.

Timing belt

https://www.boards.ie/discussion/comment/119684451#Comment_119684451

That is if someone has no other option to sell. If they do have an option they will hold off selling. It’s not like in 08 when people rushed to sell investment properties as it was going to cost them to hold onto.

https://www.boards.ie/discussion/comment/119684726#Comment_119684726

Developers building new housing estates will have to sell regardless of price fall. Holding onto them would not make sense. Second hand house owners on the other hand will hold for as long as needs be.

Bass Reeves

https://www.boards.ie/discussion/comment/119684655#Comment_119684655

Concrete block manufacturer's are on a three day week and cannot sell the product they have manufactured. Yes they will lay production workers off. Most people working in construction are either subbies or working for subbies. Very few directly employed. Most will now be reducing there output by slowing down the volume of work they have

Most in the game came through the 2008-16 period. One thing they learned from that period is not to keep going full tilt and finish projects there is no demand for/ that you cannot sell.

https://www.boards.ie/discussion/comment/119684694#Comment_119684694

Yes they can they can slow projects down by leaving projects at the foundations stage or bare ground stage. They cannot afford to build at a loss better hunker down. Houses are seldom build without contracts being in place. This is the one thing developers learned from 2007-2010. Do not build unless there is demand.

Unlikely they are paying above 4%. Banks have not put there business variable rates up yet. The general concensus is the EU interest rates will max out at between 2-3%. Developers may be on fixed rate borrowing or financed by investment funds. Building at a loss solves nothing.

Yes if labour and materials reduce in price builders can reduce there prices however they will complete anything that is sold before doing that.

Expect completions to slow down between now and year end

landofthetree

https://www.boards.ie/discussion/comment/119684967#Comment_119684967

More like 7%

https://initiativeireland.ie/development-loan/

fliball123

https://www.boards.ie/discussion/comment/119684967#Comment_119684967

If they cant shift the product then there will be a cost to store the products that they have just created. This is like a race now I cannot see wages coming up to meet the current very high prices so high that even those producing them are cutting back on making them. So what is the end game for them, wait for inflation to come down or wait for wages to come up, as most companies in this country will be lucky to avoid hitting the wall let alone pay pay rises so it may be a stalemate for a year or 2 it will all depend on the outcomes of the War, Covid supply issues and the energy issues we are seeing and if there is a supply from somewhere else. Commodities that would go into construction are starting to come down. I was quoted by a builder a ridiculous quote back in May and started spouting about lumber and how it has doubled and it did back then but now look at where Lumber is now.

https://tradingeconomics.com/commodity/lumber

Timing belt

https://www.boards.ie/discussion/comment/119684780#Comment_119684780

agreed new builds will be sold But watch the government buy the new builds for social housing and New Apartments will be bought by funds

Timing belt

https://www.boards.ie/discussion/comment/119684655#Comment_119684655

Not closing down but moving to the likes of 3 day week and producing a lot less construction material. This is already happening with Steel and concrete because the demand to buy at elevated prices isn’t there and it makes no sense to produce at a loss

fliball123

https://www.boards.ie/discussion/comment/119685688#Comment_119685688

So how are they going to save by doing 3 days then? Surely things like insurance, rents on premises, commercial rates, interest rates and storage cannot be paid on a 3 day a week basis, same goes with things like standing charges on electricity, I cant see that continuing it may well be in their thinking that the current paradigm is short term (maybe 6 months) .. I just hope they are not waiting for wages to increase to the point that they can afford the ridiculous prices that have shot up when we are heading into a recession and interest rates going up and up and up. So something will have to give.

Already property prices have stalled to zero increases in the last quater, I guess lets see what the the next 6 - 12 - 18 months hold. I can see property prices dropping in the next 18 months I was always of the thinking of supply and demand was too skewed for this to happen but too many factors are now pulling demand down, there is an uptick in property on the likes of daft and myhome over the last 9 months. The other factor will be emigration figures. It may be just my experience but the GAA team I play with have lost 6 lads in the last 4 months and the talk is of them staying abroad (not just the usual year away travelling) and not coming back until they have saved enough for a house something that has not happened for at least a decade. You may have had a lad heading off for a year or so every so often, its anecdotal but its my experience.

Timing belt

https://www.boards.ie/discussion/comment/119685768#Comment_119685768

because it’s cheaper not to produce than produce at a loss. Ffs is that really that hard to get your head around

Bass Reeves

https://www.boards.ie/discussion/comment/119685768#Comment_119685768

The largest costs in manufacturing concrete blocks is materials, energy and delivery costs. Most manufacturing companies have limited storage as well. Big companies like CRH probably self insure to a large extent.

These companies are well used to adjusting supply just like in the 2010-2016 period

fliball123

https://www.boards.ie/discussion/comment/119686135#Comment_119686135

Only if the company shuts down completely is it cheaper and then of course the business is not actually active, as I pointed out there are other on going costs to doing business that don't transfer to a 3 day a week as well as still having to use the likes of energy and raw materials to produce construction for the 3 days that your talking about. Its you thats not getting your head around it, a company cannot stay in that state for a long period of time and also there is reduced revenue coming in also.

https://www.boards.ie/discussion/comment/119686160#Comment_119686160

Self insure have you anything to back that up (not saying your wrong it would be interesting to see). As I say above - the norms have changed and we are no longer in a period of low inflation or low cost borrowing where a company could suffer losses for a period of time and borrow through it with a guarantee of a stream of customers waiting on the product. A company working 3 days a week still has to manage all fixed costs and the costs of things like energy, labour for working the 3 days a week, this also has a knock on effect of the employee getting a pain in their hole only doing 3 days and then they have to supply a product that globally is stalling - construction has stalled globally. I cannot see any company lasting like they did back in the years of 2010 to 2016 times have changed.

Timing belt

https://www.boards.ie/discussion/comment/119686250#Comment_119686250

We get the fixed costs that’s a no brainier but to totally wind down and start up again in the future costs more than the fixed costs

Bass Reeves

https://www.boards.ie/discussion/comment/119686250#Comment_119686250

Supermacs, self insure, An Post used to and probably still smdo, as did the ESB and Telecom Eireann. Some companies handle all claims under a certain value and higher value claims are insured and handed over to the insurance company. Most company insurance is related to your turnover.

Fixed costs are miniscule compared to variable costs in the building materials manufacturing business. The cost of cement is an energy dependent costs. Companies involved in it's production will reduce output sharply when production costs exceed market returns. Therefore companies manufacturing concrete products cannot. It cement below the cost of production.

50+% of the trucks that deliver ready-mix and concrete products are independent subcontractors. The delivery of product will be removed from these and redirected to there own trucks.

Remember all these products take up a large area I'd you try to store concrete blocks. You cannot keep production if you cannot store products anyway

As an aside giving a different example fertilizer production has stopped in the EU because of the price of gas. These companies have not reduced output they have completely shut down

Most concrete block manufacturing is automated. The labour element is miniscule it's the variable costs and sales price that matters most

Villa05

I wonder who is going to bail out this carry on when things go belly up

The €1.7m starter home: How investment funds are inflating prices in Dublin suburbs

Mass purchasing of standard starter homes in Swords by a property investment vehicle has caused prices in the north county Dublin estate to spiral.........

Earlier this year, a three-bed, end-of-terrace house on the row went for sale.

It sold for €1.7 million.

Nearby, another three-bed home in a different section of the estate sold for €850,000.

https://www.businesspost.ie/news-focus/the-e1-7m-starter-home-how-investment-funds-are-inflating-prices-in-dublin-suburbs/

Galwayhurl

https://www.boards.ie/discussion/comment/119691242#Comment_119691242

What's the full story in this article?

I kooked up the ad for one of them and the asking was 340k. Houses there regularly sell for just 300k, even recently.

How on earth did a house sell for 850k never mind 1.7m? There's no way a bidding war created such high prices.

pinksoir

https://www.reddit.com/r/ireland/comments/xtinn2/the_17m_starter_home_how_investment_funds_are/?utm_medium=android_app&utm_source=share

There's a link to the full article in that thread.

Depressing reading, but this carry on has been well publicised of going on in the States and is unsurprising that it would be happening here. That it's seemingly government policy is the bleakest part.

A review by Fintan O'Toole of Rory Hearne's book Gaffs that goes into this stuff:

https://www.irishtimes.com/culture/books/review/2022/10/01/fintan-otoole-on-gaffs-by-rory-hearne-a-cogent-persuasive-account-of-housing-crisis/

Just so depressing that our society has been engineered to be like this.

Villa05

https://www.boards.ie/discussion/comment/119691516#Comment_119691516

It's in the article, government long term leases for social housing combined with 0 tax deliver close to 4% return

Housing for All really means housing for the chosen few on social that get it

Government policy screw up of epic proportions

The 1.7million price is a bit of a mystery

Villa05

Notable that Bank of Ireland would not take that part of Davy that's buying up these houses when they purchased it

There'll be fireworks here in the short to medium term. Who needs 110% mortgage's when you have government engineering this scam

Paul Sommerville is on the newspaper panel of the Brendan o Conor show today, his take on it would be very interesting

Villa05

If they were purchased late last year early this year, it would have been before the interest rate cycle changed drastically. The investors could suffer huge losses

MacronvFrugals

Latest poll, voting intention of non-homeowners:

https://twitter.com/NextIrishGE/status/1576325837984796672?s=20&t=w2mhyLieUD9c01_ACkujgA

Galwayhurl

https://www.boards.ie/discussion/comment/119691607#Comment_119691607

Even at top market rent for 25 years leasing to the council, it still doesnt make sense.

Something very strange going on.

Timing belt

https://www.boards.ie/discussion/comment/119691607#Comment_119691607

The 1.7m is someone filling out a form wrong

Elessar

https://www.boards.ie/discussion/comment/119691536#Comment_119691536

This, to me, is absolutely sickening. Dangling sweetheart tax free deals to investment funds to buy buy buy as many houses as they can and lease them back to the state for 30 years. After reading that article they will obviously pay upwards of several hundred thousand over the odds if they have to, as the returns are guaranteed. And outbidding ordinary families in the process, while fuelling runaway price inflation. This is treasonous stuff to me, and I'm normally pretty level headed. As one commenter pointed out, soon only the really rich, or the really poor will ever be able to get a house in Dublin.

The government is absolutely spitting in the face of the rest of us 🤬

Timing belt

https://www.boards.ie/discussion/comment/119691668#Comment_119691668

how can they suffer huge losses if they have a guaranteed lease for 25 years?

https://www.boards.ie/discussion/comment/119691777#Comment_119691777

I agree with you 100% this is pure treason. They don't give a damn about ordinary people anymore. Whenever the truth comes out about all these scunbag$ it'll rock the country i reckon, this is beyond a joke now.

IWW2900

https://www.boards.ie/discussion/comment/119691805#Comment_119691805

This is the way the system always works.

Then government then offer up schemes like HTB or rent subsidies to "help" people, which only makes things worse. Talk about ironic.

They have taken this run far though, I expect them to orchestrate a reversal. This has already begun.