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

enricoh

https://www.boards.ie/discussion/comment/120534174#Comment_120534174

Often see his opinion piece's in the journal, rarely agree with any of it. An academic that never spent a day in the real world.

BlueSkyDreams

https://www.boards.ie/discussion/comment/120533200#Comment_120533200

Rhyming is repeating itself.

Just over a longer cycle.

hometruths

https://www.boards.ie/discussion/comment/120534476#Comment_120534476

The vast majority will be second home/vacant investment/probate etc but as mentioned that sort of stock usage accounted for in the 6% of spare capacity you'd expect to find in a functioning housing market.

The point I am making that is if you look at the best available data we have on existing housing capacity in Ireland, you would not expect to see a shortage of supply on the market. In that context I think Skehan's warnings about oversupply are not as crazy as they sound.

I think we're so fixated on the solution of ramping up new build supply, that we're totally ignoring the other biggest cause and thus potential solution which is turnover of existing stock - i,e people buying and selling existing 2nd hand stock.

The turnover of existing stock facilitates a big game of musical chairs within the housing market. A healthy turnover rate ensures the most efficient allocation of both the stock and the capital in the market.

In a healthy market people buy and sell when they want to, need to, or when they have to. Everybody's wants/needs/finances are different but in the whole they are all moving up/down/sideways and there is something for everyone. This is enabled largely by a proportion of existing property owners selling and buying.

For 15 years or so existing property owners have not been selling in anything like the numbers you'd expect. I think the root cause of this goes back to negative equity/bank issues but thats had a knock on effect that has been getting worse every year, and thus the housing market turnover rate has been extremely low by historical standards.

These sort of things tend to revert to the mean over time, but in order to do so it means at some stage the turnover rate will exceed the historic average for a period of time. It's just a release of pent up supply, built over 15 years. An increase in turnover will have the same knock on effects in reverse as the decrease has had. It could feel like we're in an oversupplied market very quickly.

In all the talk about the housing market you never hear anything about the low turnover of existing stock, it's quite odd.

enricoh

Interesting article below, hard to argue with any of it. Can't see house prices increasing once new corporation tax rules are in tbh.

https://foreignpolicy.com/2023/04/27/ireland-economy-taxes-jobs-apple-us-tech-companies-eu/

Mr Hindley

https://www.boards.ie/discussion/comment/120534666#Comment_120534666

Yeah, I’m pretty much abandoning buying a house for now, and am expecting to settle for an apartment. I’m at a stage in my life where I’d love a house but the market for houses is going nuts again. Maybe things will be more sane in five years, or maybe I’ll have missed my last chance and will be in an apartment forever. But I’m just tired of the market being all over the shop the last few years. Every time common sense seems to dictate one thing, the market does the other.

BlueSkyDreams

https://www.boards.ie/discussion/comment/120534783#Comment_120534783

All good points, but i think there are other variables.

An obvious one being location, location, location.

From the 2016 census, there were 1.3% vacant dwellings in South Dublin per 1000 of population, excluding holiday homes.

1.7% in Fingal.

2% in Kildare.

Nationally, we averaged at 3.8%.

But a massive 11.2% in Leitrim.

Donegal, Mayo, Roscommon all above 7%.

All of Greater Dublin below the national average of 3.8%.

So there is clearly housing stock available in rural areas, but do people want to live there and if so, why is so much of it vacant?

Granted figures are from 2016, but the principal is clear and will likley be echoed when the 2022 data is out shortly.

kippy

https://www.boards.ie/discussion/comment/120533148#Comment_120533148

You've said it. It is desperation. People see prices continue to rise, rents continue to rise, population continue to rise, and completed units remain static at best.

While people can access the finance to bid higher, in this market, prices will continue to rise given the desperate state of supply and cost to build.

If you don't own your own home you are at the whim of the rental market. At least if you own a home with a mortgage you have some level of security and so long as you can maintain your repayments it is a far better option than renting. If they day comes when you cannot maintain your repayments you have many options available to you and at worst a very very long repossession process.

People are only seeing the access to property getting more difficult and are making decisions accordingly.

And who would blame them?

combat14

https://www.boards.ie/discussion/comment/120534617#Comment_120534617

very interesting article, sounds like repeated rising interest rates are starting to wreak havoc on valuations as market for "bulk sales of residential property – has become very soft, especially in recent months"

"Property advisers JLL Ireland said large-scale residential prices were down 3.7pc in the first three months of 2023 and had fallen 7.1pc in the last 12 months."

https://m.independent.ie/irish-news/reduced-price-for-marker-apartments-suggests-market-is-on-the-down-slope-for-investors/a1441550705.html

Villa05

https://www.boards.ie/discussion/comment/120534617#Comment_120534617

It would appear that, in the short term at least, investment fund activity will be predominantly confined to purchasing existing stock.

Gov really need to look at that tax free status and apply it to brand new supply only

Blut2

https://www.boards.ie/discussion/comment/120534437#Comment_120534437

How exactly does your 6% spare capacity figure (127,445) cover vacant homes (185,000) and airbnbs (15,000) when they add up to significantly almost double that said figure?

And where does that leave the also required spare capacity for turnover every month - people moving homes, places available to rent etc?

You can't count long term vacant homes towards the spare capacity figure because they're not used as such.

"Are there really a ton of people in Ireland living in 3 bed houses who are yearning to live in small apartments? It seems unlikely."

With the declining household size the issue isn't that there are far more people who prefer small apartments given the choice, its that there are far more single person and smaller family households now. Fewer people are getting married, and even fewer are having lots of kids. Its not practical for a single 50 year old to be living in a 3bed semi-detached house. Or even for a couple with one kid to be living in a 5 bed house. That couple needs the smaller house, and the single person needs the apartment.

The days of the vast majority of people getting married and having 3-4 kids are over in Ireland, but that isn't reflected yet in our housing stock.

hometruths

https://www.boards.ie/discussion/comment/120534817#Comment_120534817

Sure a high number of holiday homes and higher vacancies in Donegal, Mayo, Roscommon etc compared to Dublin would be entirely expected.

The CSO has released vacancy data from 2022 - https://www.cso.ie/en/releasesandpublications/ep/p-cpr/censusofpopulation2022-preliminaryresults/housing/

Dublin as a whole running at 5.5% of stock. The interesting thing is how skewed the rates are by individual areas. If you look at the LEA map you'll see the highest values areas of Dublin have the highest vacancy rates - many in excess of 10%. The cheapest areas - Ballymun etc - have rates under 3%.

So at a national level it's location, location, location - high vacancy rates are expected in lowest value/demand areas. They're vacant because nobody wants to live there.

Whereas in Dublin, where the housing crisis is most acutely felt, it's the total opposite - the highest vacancies are in the highest value/demand areas.

Another interesting about Dublin is that pre-Covid, about 2016-19, it was the only county in which the number of holiday homes increased year on year. Again that might be unexpected.

You can do the same housing stock/avg house size/population calculations for Dublin:

Total housing stock 571280 x Average household size 2.73 = 1,559,594 total housing person capacity.

And the population is 1,450,701

So on the face of it based on average household size we have "spare" capacity for 108,893 people. Or to put it another way - 108893 / avg household size 2.73 = 39,887 spare housing units.

Obviously it is not that simple because in order to facilitate a healthy turnover of stock in a functioning market you need some vacant spare capacity at all times - this is in the region of 6% of housing stock equating to 34,277 units.

39,887 spare housing stock - 34,277 base rate vacancies = 5,610 oversupply

So not quite as damning. Oversupply is only about 1%, a rounding error in such matters.

But bear in mind it is oversupply nonetheless. The 6% base rate spare capacity is what you would expect in an efficiently functioning market with a healthy turnover leading to a healthy supply of sales and rental stock.

hometruths

https://www.boards.ie/discussion/comment/120534938#Comment_120534938

How exactly does your 6% spare capacity figure (127,445) cover vacant homes (185,000) and airbnbs (15,000) when they add up to significantly almost double that said figure?

Because in a normal functioning market you would would expect vacant houses/probate etc to be within the order of 6%.

If you have more than that it the market is oversupplied.

If you have less the market is undersupplied.

The fact that we appear to have more in an undersupplied market is the point I am making.

Something doesn't add up, what is it?

ApeEvolved

Property prices are going down at least 20 percent. But you know what, property will still be expensive, at least for anyone taking out a big mortgage. They may well be much more expensive then ever before.

People dont understand what's coming, the low interest rate cycle is done for some time. Expect central banks to bail out institutions to get out of trouble, rather then cut rates. The tax payer will foot the bill, while paying higher then ever rates on their debt and trying to manage crazy energy and food prices.

Its always the same, the poor saps buying now are those trying to get a family home.

PommieBast

https://www.boards.ie/discussion/comment/120533265#Comment_120533265

Isn't Extra.ie basically the Irish Daily Mail? Selective use of stats at best..

herbalplants

However, the Marker deal may not be representative of the market in general.

https://m.independent.ie/irish-news/reduced-price-for-marker-apartments-suggests-market-is-on-the-down-slope-for-investors/a1441550705.html

BlueSkyDreams

https://www.boards.ie/discussion/comment/120534970#Comment_120534970

Good observations, but i think its still somewhat of a macro level view and doesnt really take into account the micro level scenarios at play.

For instance, the average household size is a fixed measure.

There will be parts of the country where above average numbers of single people live and these people can take up a dwelling each.

In Dublin, you get a lot of Multinational workers on high salaries and many live alone.

Also, there are possibly more vacant properties in rich areas of Dublin because people are holding assets there, as prices are highest.

Therefore, the owner has no intention of renting the property, they just sit on asset appreciation. So that dwelling doesnt really exist as far as occupation is concerned.

So perhaps that slight oversupply in Dublin at the Macro level still constitutes an undersupply, when all nuance is considered.

combat14

https://www.boards.ie/discussion/comment/120538099#Comment_120538099

"Nonetheless, if it closes at the price level currently being discussed, it could force a write-down across all the Ires Reit assets within months, which could have a domino effect across the entire market."

timmyntc

https://www.boards.ie/discussion/comment/120538139#Comment_120538139

In my experience most well paid MNC workers do not live alone - most are in flat shares or else living with a partner.

Even a well paid MNC employee would find it prohibitively expensive to live alone in Dublin - not to mention the shortage of supply in the first place for both rent and sale.

Across all sectors hiring is a big struggle for MNCs now in Ireland. The #1 reason is lack of available/affordable housing. Positions on 70/80k are going unfilled because the people with that skillset do not want to move to Ireland unless they can get somewhere to live - being put up in a hotel by your employer for a month or 2 is not ideal, especially since there's no guarantee you'll find anything.

With that in mind I just cant see how we are not currently in a big shortage of housing - if there really is enough stock in this country already then how is it so hard for new arrivals to find a place? (This applies to Galway and Cork also, I havent heard anything about Limerick)

hometruths

https://www.boards.ie/discussion/comment/120538139#Comment_120538139

Sure if you're trying to buy a house right now, the fact that people are holding houses for capital appreciation, those houses might as well not exist for all practical purposes as far as supply today is concerned.

But at some stage in the future the owners will decide to cash in on the capital appreciation, and will decide to sell. At which stage they go from being essentially non existent, to live supply on the market overnight.

And if these owners, driven by market sentiment, make the decision to sell at similiar time, its possible to move from undersupply to oversupply very quickly. And this is the point I'm making that Skehan's warnings we should be careful we don't find ourselves in a position of huge oversupply are not as mad as they sound.

In trying to estimate future housing demand we count people who don't yet exist - i.e they haven't been born yet or they have not moved to the country yet.

But in trying to estimate future housing supply we don't count houses that already exist.

That seems counterintuitive.

Villa05

https://www.boards.ie/discussion/comment/120538414#Comment_120538414

It's more advanced in Limerick as it had a low oversupply from the last crash, little or nothing built in the last decade, social housing demolished with very slow to no rebuilds. Rising student numbers

Profile of worker that lost there jobs in the crash often very different to the new jobs being created. Alot of work done to correct that, but an imbalance all the same

ingo1984

https://www.boards.ie/discussion/comment/120538643#Comment_120538643

Agreed. We had offered jobs to people living in Ireland but they had to turn them down as nowhere affordable to live. Company then resorted to transferring in employees from offshore offices, but they last six months before returning home citing cost of living as main driver.

Zenify

Is it now safe to say that house prices are falling and housing stock is increasing?

timmyntc

https://www.boards.ie/discussion/comment/120545010#Comment_120545010

No

Dav010

https://www.boards.ie/discussion/comment/120545010#Comment_120545010

You can say what you want, but it helps to have data to support what you say.

ittakestwo

Anybody notice prices for apartments in dublin going up alot atm despite interest rate rises.

https://www.auctioneera.ie/property/apartment-9-70-main-street-clongriffin-dublin-d13-kw84

Asking 265k, offer of 300k

https://www.auctioneera.ie/property/apartment-15-west-courtyard-tullyvale-cabinteely-dublin-d18-wr63

Asking €320k current offer of €370k.

The asking prices dont seem to be over priced compared with 2022 prices. But both have offers a good bit over asking and are in different parts of the city.

DownByTheGarden

https://www.boards.ie/discussion/comment/120534242#Comment_120534242

I think holiday homes are starting to get sold now too. Myself and my siblings have a holiday home between us for the last 10 years or so.

My family were just in it at the weekend. All of the other holiday homes are now occupied full time, even though this place was always never planned to allow people to live full time in it. It doesnt feel like a holiday going there anymore where everyone in the place is on their holidays. It feels like walking into any residential estate now. Might as well buy a normal house as a holiday home in an estate in Lucan or Santry. Was talking to my brother yesterday and he feels the same. We are going to all meet up next week and decide whether or not to just sell it.

DownByTheGarden

https://www.boards.ie/discussion/comment/120534666#Comment_120534666

3 houses near me gone sale agreed in the last couple of weeks. I heard a couple of the prices they were sale agreed at. Things are definitely heating up again.

DownByTheGarden

https://www.boards.ie/discussion/comment/120545276#Comment_120545276

many people realizing they will have to settle for an apartment.

I goes like this

! want a nice big detatched house with a garden near Dublin city center ... Prices rise as time goes on

I want a 3 bed house anywhere within an hours drive if Dublin ..... Prices rise as you wait for your dream home price to come down

I want any house at all .... And prices continue to rise

Ill settle for a nice 2 bed apartment in a nice area, but prices are a bit high. I'll wait for them to come down .... They dont come down

I better take that 1 bed apartment that was €150k 2 years ago and is now €220k before i end up priced out of the market. ....

Jesus, I cant even afford a bedsit, better keep renting.

DataDude

https://www.boards.ie/discussion/comment/120545276#Comment_120545276

Unfortunately same at higher end too.

Been keeping an eye for a work colleague who’s looking at similar houses we looked at over the last few years. I sometimes use the Hunters homepage as a quick barometer as they have high end houses and show live bids.

Just before Christmas there was pages of houses with absolutely no offers for weeks on end. Now it seems everything, including the houses previously languishing, have offers 10s or 100s of thousands over asking again.

If I had our house search back, I wish we didn’t assume every single slight lull in prices was the signal for an impending 40% crash in prices and instead capitalised on the lulls when they came. There were so many false dawns during 2021 and 2022 where it looked like bidding was cooling, only for prices to then jump another 5-10% in the subsequent few months.

timmyntc

https://www.boards.ie/discussion/comment/120545433#Comment_120545433

Could further interest rate hikes on the horizon be creating more urgency among would be homebuyers? Buy now or see your affordability drop further?