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

MacronvFrugals

in 2008 it was easy credit, in 2021 the bubble lies in overleveraged funds!

Central Bank: Ireland could face property ‘fire sale’

"New report cites a need to explore possible policy interventions for indebted funds that hold €13.6 billion worth of real estate"

"The Irish real estate sector is susceptible to a “fire sale” of property due to international funds that control billions of euro worth of homes and offices carrying significant levels of debt that may not be paid on time.

A research paper published by the Central Bank said large property funds in Ireland with more than €13.6 billion in assets face narrow timeframes to start repaying borrowed cash, which could spark a “fire"

https://www.businesspost.ie/investing/central-bank-ireland-could-face-property-fire-sale-a9324b12

fliball123

https://www.boards.ie/discussion/comment/117641415#Comment_117641415

Having said that if property keeps going up in the manner we have seen over the last 18 months you will have a property worth as much if not more than in 2008 as well as having equity in your back pocket by paying off a mortgage instead of rent, put it this way you would be in a much better position financially having paid off 13/14 years of a mortgage than someone who did not buy in 2008 and decided tor rent. Your case proves that buying is probably the the safest option even in the face of a pandemic or property crash and as Ireland do not do family home repossessions its no longer a bet for the person buying they can be secure in the knowledge that the left leanings of our political class will keep you in your family home even if you don't bother paying

fliball123

https://www.boards.ie/discussion/comment/117645317#Comment_117645317

and if anything with our new time scales going from 8 years to 4 months to get undocumented refugees to documented status if anything we are going to see a swarm of emigration inwards and guess what folks add that to our left leaning political class the mantra of housing for all will mean an even tighter squeeze on the supply side.

Amadan Dubh

https://www.boards.ie/discussion/comment/117656340#Comment_117656340

I just don't think the supply/demand forces are being allowed to function as they would in a less-State/central bank influenced, more competitive market. For example, it's just not sustainable for the State to compete with individuals for rentals (with the State now supporting a third of all tenancies in Ireland - a third! That goes to show the staggering and severe problems with affordability in the market). Other examples are with RPZs putting a floor under rents, laws that go too far protecting non-paying tenants and mortgagors, uneven tax regime for landlords. Bigger factors include central bank money-printing the last 10 years which is lighting a fire under the demand side with institutionals hoovering up properties around the world, including Ireland, in direct competition to individuals - again it's important to say that, with QE, it should not be required at these phenomenal levels if the financial system was on solid footing. Not to be too overdramatic but large parts of the financial system (with the property market included) are based on foundations of sand with QE printers being the equivalent of pumping more and more sand under the structure as it begins to sink in the hope it stays upright.

All that being said, whilst being a part of the problem, QE is giving our government a fantastic, blank cheque to at least light a fire under the supply side with a proper, sustainable and long term housing strategy. Targeted outcome of significant increases in supply mixed with a gradual, but material correction in rents and house prices will go a long way to creating a more stable market.

Timing belt

https://www.boards.ie/discussion/comment/117662339#Comment_117662339

I don't agree with the policy of long term leases but even if the government built their own properties this would have an impact on the supply side as less properties would be built in the private sector due to a shortage of builders who were building for the government and no longer the private sector.

The Shortage in supply is down to 2 things in my eyes:

• Planning laws that take years and years
• Lack of government Planning/willingness to address the issues.

mcsean2163

https://www.boards.ie/discussion/comment/117661867#Comment_117661867

Really annoying, this is not in yesterday's newspaper. Can you give a general thrust?

Marius34

https://www.boards.ie/discussion/comment/117662339#Comment_117662339

QE printing is not a foundation of sand. As dollar is not just a paper. I was involved in "bye bye Dollar" discussions back in 2008. The "papers" are still there, with it's value.

You say state support third of rentals, and calling not sustainable. I'm not sure if you even looked at the expenses, what part it cost for Public, to evaluate that it's not sustainable.

Marius34

https://www.boards.ie/discussion/comment/117662708#Comment_117662708

Those are some of the reasons for supply constrains, but there much more than that for the constrains.

Workforce, building costs, price, etc.

If price goes let say 30% up from 2020. I'm fairly confident construction output would increase to 30K/annual, in matter of couple of years.

Amadan Dubh

https://www.boards.ie/discussion/comment/117662946#Comment_117662946

It's unsustainable as it is in a viscious upward spiral, creating higher rents despite apparently being a measure supposed to deal with people falling through the cracks due to high rents, which then leads to more people falling through the cracks due to the high rents and needing support. It requires the State to constantly raise cash to throw at the problem, which is already a billon annually on this measure alone and will need to keep rising unless significant supply and big drops in rents happen.

It's like using a bucket to empty the water from a boat with a hole in it, with the water seeping in the equivalent of demand for social housing and the bucket the State supports for the rental market. If the hole (ie high rents) was smaller, then maybe we would be okay and could empty the water faster than it fills, but right now the water is filling up quicker than the State can empty the boat while the State decides to just use a bigger bucket as the hole gets bigger rather than fixing the cause of the leak.

timmyntc

https://www.boards.ie/discussion/comment/117662957#Comment_117662957

Where would the extra output come from?

There's already a massive shortage of construction workers/tradies, and there is far from a shortage of money in the sector. Also for the foreseeable, price rises due to materials will outstrip price rises due to increasing demand - if anything we may hit a point where prices are too low for new builds to be affordable from construction POV, but any higher and most buyers could not get finance to purchase!

Ireland's construction sector will soon be in crisis if materials keep rising - we need a quick solution for the forestry/lumber backlog first of all, and then proper trade schools that can train up larger numbers of new carpenters/plumbers/electricians/plasterers etc etc. Current apprenticeship approach doesnt have the capacity for large volume of new tradies needed in this country going forward. We need to copy the European model for teaching these things

Marius34

https://www.boards.ie/discussion/comment/117663484#Comment_117663484

Some people are fairly flexible with their jobs/location. There are people if they see financial benefits by changing location/work, they are willing to change it.

timmyntc

https://www.boards.ie/discussion/comment/117663572#Comment_117663572

There is already a large premium charged for construction labour - at what price point will we see more people relocate to Ireland? It can't get much higher really, because if labour costs increase too much then the houses are unaffordable and wont sell - so they wont build them in the first place.

Whatever happens with short term fluctuations, reading all the climate news over the weekend (most notably the fires in the US that are now staggering in their scale and duration) makes me think that Ireland will become a destination of choice for many. Seems like one of the best places to see out what is happening in the world. We have a massive diaspora and all those west and mid-west Americans, and British Columbias and Australians etc etc with an Irish grandparent will be looking for somewhere to go.

long term, Irish real estate will benefit from climate related migration IMO, so no reason to hesitate buying now. Pressures will only be upward due to migration as Ireland becomes the place to be

timmyntc

https://www.boards.ie/discussion/comment/117663705#Comment_117663705

It's just as likely that Ireland becomes frozen over and inhospitable than it becomes some kind of tropical island paradise - climate change could change anything - if the gulf stream were no longer warming us we would be frozen over. Not to mention being an island, and the prospect of rising sea levels. We are far from a climate safe haven

Marius34

https://www.boards.ie/discussion/comment/117663692#Comment_117663692

there is no specific price point, the more benefits, the higher the wage growth in construction, comparing to other sectors/locations, the more people you can expect to move in.

Seeds2098

New home prices in US dropped 5 percent from $380,700 to $361,800 median in the last month.

This is a massive drop and interesting to see if other Countries start to follow.

Hold on tight.

flintash

nothing to see here.

the price of timber droped drastically, its just a blip.

Amadan Dubh

https://www.boards.ie/discussion/comment/117663705#Comment_117663705

That's so mad you posted this as I had the exact same thought last week, that longer term when Africa becomes uninhabitable and Southern Europe unbearable in summer, they'll be flocking up north, possibly skipping even Central European countries who may also be prone to extreme temperatures and ending up at us. But as you say, they could also come from the likes of the US or Australia. The so called "locked out" generation of the present might find that when they eventually get their mortgage, when the time comes to sell in a few decades, they will achieve a great appreciation in the value of their home like the older generations now who have done so well.

https://www.boards.ie/discussion/comment/117665813#Comment_117665813

What prompted me was actually comments under a recent NY times article about the heat dome in the USA and Canada in which people said they were looking at moving to Ireland. True or not, I think is perceived as a relative safe haven from what is going on in the world and I think that that will manifest in increasing inward immigration and wealth transfer over the next decade or two. There’ll be more pressure on supply of housing stock for sure

just thinking about the long game, rather than whether there’ll be an imminent price fall

tigger123

https://www.boards.ie/discussion/comment/117665979#Comment_117665979

I've been thinking something similar for a while. I remember 10 to 15 years ago there was a massive heatwave in France, and a whole load of French people came to Ireland on their holidays as the climate was much more bearable.

I can very easily see people relocating to more moderate climates in the coming years.

Timing belt

https://www.boards.ie/discussion/comment/117664630#Comment_117664630

No real surprise here seeing as Mortgage applications in the US dropped 25% year on year in June and no of building permits is way down on prior periods as the cost of building has gone up and if consumers reject the new high prices then new properties won't be built and you will end up in a situation where you have a long period with nothing being built and all the problems that come with it...

Seeds2098

https://www.boards.ie/discussion/comment/117667809#Comment_117667809

Its not quite a simple as that. Investors are also showing much less interest in the US.

I am wondering what portion of properties in Ireland are investor properties. Just over the last month or so I know two people with investment properties who are looking to sell up( small time landlords who own an additional property).

I wonder if we could see a lot of institutional investors jump ship on Ireland at some point. At some point government may be forced to make things much more difficult for them, and the higher prices go the more pressure there is.

Timing belt

https://www.boards.ie/discussion/comment/117667887#Comment_117667887

Where did you see that the investors are loosing interest in the US housing market? Do you have a link as I haven't seen any articles on it.

Non-Occupiers which would would include mainly Investors & Government accounted for 14% of all transactions from June 2020 to May 2021.

Institutional investors will jump ship at some point in time when they can get a better return on other assets.... But until interest rate rise significantly this is not going to happen unless they are forced into a fire sale due to something like a liquidity crisis.

Timing belt

There is a lot of talk about new supply coming online but if you look at the planning permission that has been granted for Houses (I have excluded apartments) then you can see that these are still at historical lows which would suggest that we won't see much of an increase in houses in the coming years.

yagan

https://www.boards.ie/discussion/comment/117668030#Comment_117668030

I was chatting with a developer yesterday about this and an estate they're building at the moment is booked as one planning permission application.

During the Bertie bubble it felt like everyone with a field was getting planning permission for one offs that they'd try to flip later. The credit tap is turned off now for that kind of frenzy.

Marius34

https://www.boards.ie/discussion/comment/117668030#Comment_117668030

It's a good point, backed by data.

I agree, we won't see major increase of supply of houses in next 2 years. But there could be different case with apartments. If there is good conditions for developers, there could be a fairly good increase of supplies of apartments (although maybe not for open sale).

cnocbui

https://www.boards.ie/discussion/comment/117664630#Comment_117664630

I think that is just a reversal of the recent price increase in construction materials costs due to the supply chain getting unstuck and so prices falling back to their more usual levels.

cnocbui

https://www.boards.ie/discussion/comment/117663728#Comment_117663728

Actually, the Gulf stream probably started slowing at least 150 years ago and has slowed a further 15% since the 1950's. The Earth's temperature usually rises very rapidly just prior to the onset of an ice age and that's what I think is happening now. Of course all the previous ice ages were caused by anthropogenic CO2, so keep buying those EV's and paying those carbon taxes.

Of course this all good news for house prices in Cork and coastal house prices as sea levels will fall considerably and the Maldives will be saved.

L1011

Conspiracy Theories forum is the one below this one thanks.

Sierra Oscar

https://www.boards.ie/discussion/comment/117664630#Comment_117664630

https://abcnews.go.com/US/wireStory/us-home-prices-surge-17-fastest-17-years-79087343

WASHINGTON -- Prices for U.S. homes rose faster in May than they have in 17 years as surging demand for housing outstripped the supply.

Some huge increases in recent months. Sounds familiar, doesn't it? I'd imagine we are starting to see affordability ceilings kicking in.

Aguce

Does anyone thinks that Irelands property prices could go by 18 property cycle trajectory? I'm feeling sad that I could be waiting for 9 years to buy a house.

timmyntc

https://www.boards.ie/discussion/comment/117672055#Comment_117672055

Why would you wait for 9 years?

According to that graph, prices are going to continue to rise for the next 6/7 years, and even when they crash, will still be more expensive than they are right now.

Timing belt

https://www.boards.ie/discussion/comment/117668111#Comment_117668111

This is the breakdown of planning permission granted (for houses only) which shows the total floor area which would take into account one planning permission being for multiple houses. (source CSO BHQ05 - Planning Permissions Granted for New Houses and Apartments)

Based on this there will be no major supply of new houses coming online anytime soon.

DataDude

https://www.boards.ie/discussion/comment/117672220#Comment_117672220

That's interesting. Just wondering if you're at all familiar with the BCMS commencement data and how you might reconcile the two? gov.ie - Construction Activity Statistics (www.gov.ie)

It shows that there was nearly 5k residential units started each MONTH in April and May. Both April and May are nearly double the next highest month in the previous 10 years. Obviously there's an element of catch up going on. But even with essentially a shutdown in February and March, 2021 YTD commencements are 20% above 2019 at the same time which was the previous post crash peak? Will be interesting to see if June is another massive month or will it very quickly fall back to normal levels of activity.

Timing belt

https://www.boards.ie/discussion/comment/117672339#Comment_117672339

I was just looking at planning for new houses which excludes apartments.

The planning Granted for apartments may explain the difference

80sDiesel

https://www.boards.ie/discussion/comment/117665979#Comment_117665979

Was talking to my brother in California and he was telling me the Irish there are starting to express an interest in relocating back to Ireland because of the recent heatwaves there.

Marius34

looking at BPFI mortgage approval report, it's out for the month of June. I have aggregated over first half of a year data. Not only volumes of approvals were growing strong, but mortgage amount as well.

FTB Volume:

2019 H1 - 12,252 

2020 H1 - 8,371

2021 H1 - 13,796

FTB average Value:

2019 H1 - 230K

2020 H1 - 239K

2021 H1 - 249K

mcsean2163

Thoroughly depressed by the market now. Our dream home went to a cash buyer despite our higher bid. The most expensive country in the EU in which to buy a house 🤯🤯😣😣😨😨. Might be better to give up house hunting, stop saving and live life.

fliball123

https://www.boards.ie/discussion/comment/117678265#Comment_117678265

Actually we are about mid table when it comes to affordability within the OCED. Price increases are happening all over the globe

https://data.oecd.org/price/housing-prices.htm

MacronvFrugals

House-building bounces back with completions at pre-Covid levels

https://www.irishtimes.com/business/economy/house-building-bounces-back-with-completions-at-pre-covid-levels-1.4633888

RINO87

Hi, long time lurker first time poster in this thread.

So question for you guys... Do you see help to buy being curtailed or extended in the "housing for all" scheme/next budget, and what that might mean to the market. Can anyone see it ever being extended to 2nd hand homes (at maybe 5%, and keep new builds at 10%)

Personally we're looking at waiting it out until the housing for all plan/next budget are known....

Timing belt

https://www.boards.ie/discussion/comment/117680872#Comment_117680872

I see the Help to buy being extended but don't see it applying to 2nd hand homes as it will not help increase supply.

Marius34

https://www.boards.ie/discussion/comment/117680872#Comment_117680872

I believe the main focus will be to increase new build supply output, in particular for social/affordable housing. Current Help 2 Buy likely extended or somehow integrated with Housing for all. But don't think it will apply for 2nd hand homes.

cruizer101

Help to Buy is a misnomer.

It should really be called Help increase developers profits scheme, as any increase in purchasing power just got added to the price.

I understand the motivation behind it was to encourage developers to build but I just wish they had of been more honest about it.

Instead of giving money to ftb's to give to the developer why not just use funds to provide direct incentives to developers.

Can't see it ever applying to second hand homes, and if it does expect to see a jump in prices that will eat most of it anyway.

Timing belt

The economic assumptions on property that Ulster Bank have used in their half year results are as follows:

(source: natwest-group-h1-company-announcement.pdf (natwestgroup.com) page 20)

Looks like they expect house price growth to slow from 2022/23 onwards.

Marius34

https://www.boards.ie/discussion/comment/117681821#Comment_117681821

In their base case scenario it look that they expect stable increase 3.3-3.6% a year over next 4 years. But looking at the current situation, probably we are on Upside scenario already.

Eclectic Econometrics

I have a question for you guys.

One of the constant themes I read on here, this thread and others, is the difficulty lenders face in repossessing a home. I read this article (Fcuk me I can't post links again) Google "Start Mortgages gets possession order for family home over €60,000 debt" and was wondering if every repossession is this lengthy?

Even after all this time the judge has stated some form of reconciliation may be possible and it will probably take another 2 years to get possession of the home! Am I reading any of this wrong?

In the UK you will lose your home in a year, and in most cases likelier quicker than that.

For my school work experience I spent 2 weeks at a branch of Bradford and Bingley. Literally the first job they had me do was to put repossession threat letters into envelopes. Welcome to banking!

cnocbui

Home reposessions in Ireland are essentialy not allowed. This has the effect of making banks terrified to lend, causing them to be slow and super cautious. Great Irish government policy aimed at reducing economic activity and clogging up the works and having costs passed on from dead beats to good people.

fine_12345

A lot of what I hear on the topic of repossession tends to be your typical conservative welfare queens hate mongering.

If you go into arrears frankly it’s good if we have laws that force banks into making something work over just taking your house and basically destroying you financially. Frankly that would probably be cheaper for taxpayers in the long run also if you’re really worried about such things.

There seems to be this ridiculous perception that reposing homes will free them up for good hard working people, and that it will also lower interest rates. The former is imo an abhorrent classist point of view, that ignores the reality of poverty and blames victims in general (do you think everyone in arrears just decided they plain old didn’t feel like working anymore?). I’ve yet to see any compelling evidence for the latter.

timmyntc

https://www.boards.ie/discussion/comment/117683693#Comment_117683693

Most people who get repossessed in this country are not poor.

Poor people cant afford mortgages for the most part.