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

Villa05

https://www.boards.ie/discussion/comment/122155999#Comment_122155999

The extent of the failure of current housing policy set out in fairly stark terms. At a minimum output needs to double.

Pandering to vested interests is not the solution

http://www.rte.ie/news/ireland/2024/0521/1450318-housing-commission/

spillit67

Honestly, I think this is a bananas estimate.

I am extremely dubious about these high side estimates and have been since I started to dig into Lyons et al work.

They involve assumptions around migration, housing obsolescence and household sizes which imo are very challenging to forecast. Housing obsolescence in particular is one where Lyons overshoots imo and doesn’t appreciate the impact of retrofitting and private investment.

In terms of household size. Can someone tell me why we have both one of the highest household sizes in Europe but also one of the most underlived homes stats in Europe? There is an contradiction to these two data sets. This would imply we have two massive extremes. Whilst I know we have too few apartments, I don’t accept that this would lead to such opposing indicators. Europe data suggests 2 out of 3 homes are “under lived” in Ireland which huge capacity to absorb the existing shortfall.

To be clear, I accept we have a massive undersupply of the right kinds of units. But I would content that this is in the order of closer to 100,000. And it is 1 and 2 bed apartments. This would unlock the underlived in homes.

This is basically the lost units post crash. If you take 20k as a minimum, that is basically the shortfall less any catch up in the last couple of years.

66,000 homes would be the equivalent to nearly 13 per 1,000 in the population. This would blow through other countries with the existing high side in Europe being around 7.5 per 1,000. Ireland is currently on 6.4 and one the highest in Europe, despite the popular narrative. I get that having a couple of years of this kind of supply would be amazing to clear a backlog, but it isn’t the reference point here.

DataDude

https://www.boards.ie/discussion/comment/122164666#Comment_122164666

Pandering to vested interests is one way of putting it.

Another is ‘working with the organisations who build the thing we desperately need in the hopes they might produce more’.

Of course you need to critically examine what they ask to avoid unreasonable requests but all they’ve said in the quoted article is

‘If you reduce our profitability and destabilise the environment we’ll produce less’.

Thats just common sense and no doubt we’ll see it in the figures pretty quickly if SF press ahead with populist rhetoric on housing.

The narrative around developers is akin to saying we need to fix health crisis by taxing doctors more and ignoring their requests because they are merely ‘vested interests’

spillit67

EOB had a ridiculous comment on developers and profits in response to some concerns on their “policies” at the weekend. Goes to show how unserious it all is. He is just gaslighting people who devoured the narrative on developers being evil post crash. Developers should be viewed with healthy suspicion like any grouping but the narrative has been twisted to a ridiculous degree.

I wonder has Eoin gone to any building sites recently and asked why when the developer has substantially completed their work that it is taking months more for these homes to reach the market. It wouldn’t be anything to do with state owned utility companies, would it?

State building company though, that’ll solve everything.

Blut2

https://www.boards.ie/discussion/comment/122147335#Comment_122147335

So thats a "I have no evidence" for your claim so? You've provided zero sources for exactly what % of the "sigificant amount" you're claiming was paid for by religious orders. Talking about general increases in state education funding is not evidence of religious funding in any way, its peak whataboutery.

For the yearly cost of HAP I gave you a reliable source link to an exact figure for state spending on rent subsidies, over €1.22bn in 2021 and climbing since. Thats billions of euros of tax payers money being wasted, providing a bad return for our money nad driving up rents in the private sector unneccessarily while we're at it.

Villa05

https://www.boards.ie/discussion/comment/122165052#Comment_122165052

You mentioned 2 developers/home builders in an earlier post. This is a big part of the problem, the small builder has been pushed out to one off housing/sub contracting.

We have effectively monopolised supply and its in there interests to have a supply demand imbalance thereby continually pushing up prices

We need to create an environment where those capable of delivering more supply can do so rather than stacking everything in favour of a small number of developers

Dav010

https://www.boards.ie/discussion/comment/122165140#Comment_122165140

Were “smaller builders” who now do one off housing ever involved in large scale development?

Villa05

https://www.boards.ie/discussion/comment/122164981#Comment_122164981

In terms of household size. Can someone tell me why we have both one of the highest household sizes in Europe but also one of the most underlived homes stats in Europe

Would it have a thing to do with lack of smart effective taxation on property and particularly under used/empty property and 3 month a year air bnbs

DataDude

https://www.boards.ie/discussion/comment/122165140#Comment_122165140

I read the exact opposite to this the other day. Our ‘big builders’ are not big enough compared to most other countries. Top 10 home builders here produce 20% of homes vs 40%+ in UK.

In any market there is always a balance to be struck between having an Oligopoly vs having too many participants and thus not achieving economies of scale to deliver efficiently. I’m not an expert in the area but it is the view of Goodbody that we are in the latter camp.

https://www.rte.ie/news/business/2024/0221/1433429-lack-of-scale-in-homebuilding-remains-major-issue/

Villa05

https://www.boards.ie/discussion/comment/122165178#Comment_122165178

Would a builder building 2 or 3 one off homes a year be capable of delivering 4 to 6 smaller identical homes in the village or town close to these one off homes

Better efficient development, planning, provision of resources and doubling of output in an area that's currently delivering 20% of total output

spillit67

https://www.boards.ie/discussion/comment/122165193#Comment_122165193

Ah jeez, waffling on about Air BnB now. This was proven to be of minor significance during Covid but here we are with people still bringing it up.

Tell me why we need to “at least double our output.” That’s what I was referring to.

Dav010

https://www.boards.ie/discussion/comment/122165248#Comment_122165248

That isn’t what I asked.

You said they were pushed out into one off house contracting. Building 4-6 houses is property speculation whereas building a one off home on contract with the home owner is not. Two very different business models.

So I’ll ask again, do you know many builders of one off houses who have been pushed out of property development by the bigger developers?

CorkRed93

https://www.boards.ie/discussion/comment/122165296#Comment_122165296

airbnb is not a minor significance ffs.

timmyntc

https://www.boards.ie/discussion/comment/122165314#Comment_122165314

It is very difficult for a small builder to finance a group scheme or full estate. That is undoubtedly a reason why they do what they do.

Pre crash many small builders built small estates, now same outfits are relegated to almost exclusively working on self builds. Banks won't take the risk anymore

dontmindme

Deleted

Gary_dunne

https://www.boards.ie/discussion/comment/122165296#Comment_122165296

Why do we need to double our output? Look at the massive demand there is in relation to available supply leading to bidding wars with most house going on average 50k over asking prices.

The rental market is a disaster as well with massive demand and very little supply.

We don't have the supply to keep the market steady or provide sufficient rental properties for those not looking to buy.

Dav010

https://www.boards.ie/discussion/comment/122165593#Comment_122165593

That would be my thoughts on it as well, small builders may not have access to finance and would be less able to absorb rising costs when developing/building multiple units with their own/the banks money. There is less risk involved with payment for one off builds then there is for land development. That I suspect is the reason

spillit67

https://www.boards.ie/discussion/comment/122165547#Comment_122165547

It is. It’s a couple of months of supply at best.

Villa05

https://www.boards.ie/discussion/comment/122165314#Comment_122165314

They were pushed out by the system, cost of capital being the deterrent. The state need housing and are paying top dollar for it.

Some of those dollars could be diverted to build central housing in towns and villages across the country in a more efficient manner engaging these builders to build them

No speculation

spillit67

https://www.boards.ie/discussion/comment/122165686#Comment_122165686

That’s not an answer though.

We know there is a huge shortfall. The question is to what degree there is. The key variable between the estimates is household size. There is conflicting data around this.

My personal guess is about 100,000. This is informed by looking at European average output and fairly crude population assessments. At 20,000 per annum, we’d have been at about 4 per 1,000 for the 2010-2018 period which is decent compared to European average and catered to about a 1% population increase per annum. Instead we were on about 1.5 per 1,000. My shortfall based on this estimates about 85,000 short for this decade. Add onto that about 15,000 for other factors.

I think we have been at par since 2019, noting the once off Ukranian refugee shock.

100,000 is a massive number. But it isn’t 250,000.

What I don’t find reasonable is a long term average of something like 66,000 per annum. That’s a mental number and implies double digit output per 1,000.

Gary_dunne

https://www.boards.ie/discussion/comment/122166035#Comment_122166035

The case for building double is that we have been in massive under development for the past decade post the crash, we need to make up on essentially the stock that should have been built that wasn't.

I'm assuming that you own a house, it's always the people who own their houses stating that we don't really need much more or that the market isn't too bad.

If you were trying to purchase a house you'd be screaming for the number to be doubled or tripled for the next decade. It's not triple indefinitely but we certainly need to make up for lost time and massively increase the supply.

Villa05

https://www.boards.ie/discussion/comment/122165296#Comment_122165296

I attempted to answer one specific aspect of your quote. I'll quote it again for your benefit

In terms of household size. Can someone tell me why we have both one of the highest household sizes in Europe but also one of the most underlived homes stats in Europe

In relation to short term lets

https://www.thetimes.co.uk/travel/destinations/europe-travel/ireland/airbnbs-outstrip-long-term-rental-homes-in-every-county-mm5blpnz7

https://www.ontheditch.com/illegal-airbnbs/

timmyntc

https://www.boards.ie/discussion/comment/122166035#Comment_122166035

Why do you think you know more than the housing commission? Do you have evidence that disproves their numbers on pent up demand (up to 250,000).

They have also modelled changing household sizes and different rates of population growth, but the current deficit of housing is at a mid range estimate, 235,000. That's before accounting for new growth every year, so annual completions need to be growth + some portion of deficit.

Around 56k houses per year for the next decade.

https://www.rte.ie/news/ireland/2024/0521/1450318-housing-commission/

PommieBast

https://www.boards.ie/discussion/comment/122166074#Comment_122166074

Problem is not just under-supply. Most new-builds are bought up in bulk so never see the open-market, and the way EAs are allowed to operate is basically a crook's paradise. The whole system needs an overhaul. Won't happen though.

Timing belt

https://www.boards.ie/discussion/comment/122165821#Comment_122165821

totally different business model as you say no small builder will get finance from a bank to build 6+ houses. Neither will any large developer and hence why there is a big dependency on funds to provide finance for developments. Small builders generally don’t have access to this funding or would be able to afford it and still make a profit as they wouldn’t have economies of scale.

And before all the posters talk about funds buying house on the open market that is a different situation. Without the investment from the funds (mainly in the form of debt) the houses would not be built and what the government spends on housing at present would be a drop in the ocean when compared to the finance provided by funds. That’s the reality of the situation and if these funds get spoked by a dramatic change in policy and stop investing then housing will grind to halt.

Yes government could provide funding and build there own which would help if done in addition to same output from the private sector) but be under no illusion the only way government could provide finance to replace funds would be by increasing national debt to crazy levels that would make the bank bailouts look like loose change and significantly impact the credit rating of the country which would mean more expensive finance to run the country which means an increase in taxes and cuts in services.

herbalplants

https://www.boards.ie/discussion/comment/122166781#Comment_122166781

Propertybridges provide funding from normal investors for small projects but they pay high interest.

Bass Reeves

https://www.boards.ie/discussion/comment/122165095#Comment_122165095

You are blubbering. You stated that HAP costs 1.2 billion which is totally incorrect. HAP cost about 760 million in 2023. The other rental supports are for emergency rental supports. some goes on people renting who get seriously ill and need support for a while. While more is for women who are sufferers domestic violence. Neither of these are longterm support and will always exist. Neither are appropriate to HAP or to social housing. Neither are limited support like HAP.

During 2023 approximately according to a Dail question the average HAP payment was 972 of which 754 was state funded

https://www.oireachtas.ie/en/debates/question/2024-05-09/199/

I cannot get exact figure for number of households but its about 60-70k we will average at 65k. On that case overall HAP cost is about 760 million before tenant contribution or 586 million to the state. It not the cost many assume. Its about 9k per tenancy.

It would hardly cover the maintenance cost of a council house not to mind the capital costs

Villa05

https://www.boards.ie/discussion/comment/122166781#Comment_122166781

Does your post assume every home built by a small builder needs to be funded by the state?

would it not be the case that the first development gets funded and sales generate the capital for the next project

Also small builders and investment funds operate in totally different markets therefore should not impact each other

Dav010

https://www.boards.ie/discussion/comment/122167125#Comment_122167125

Again, different business models. One off builders are paid by home owner, in phased payments, , development involves finance and risk for the builder. A lot of small builders got burned in the last recession due to engaging in development.

Timing belt

https://www.boards.ie/discussion/comment/122167125#Comment_122167125

no it’s just stating the fact that small builders don’t have access to finance and most would be unwilling to take the risk as it would mean putting everything they own on the line for a 10-20% return if all went to plan and no hiccups. They would be better off going to vegas and putting 20k on red or black and operating as they are today….it would involve less risk