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

The 2013 price was unnatural. It was below the cost price, never mind the reasonably market price in stable conditions. Once demand caught up on supply it was always likely it would be worth far more.

You mention increase in wages/mortgage lending, but neglected to consider another important driver in the property market, cash/savings. A significant proportion of sales in the last five yrs were completed without the need for finance and we’re not contingent on income. And I am not talking about investment funds, more about Irish property buyers with cash on deposit.

So let’s recap on the the reasons why a property may have risen in price since 2013, the list is not exhaustive.

• In 2013 the country was less than a yr after the low point of the last recession, property prices were at the bottom of a downward cycle that began in 2008.

• There was unemployment, banks were not lending, confidence in jobs/economy/property market was low. There was a surplus of houses, but people did not want to buy, so they saved.

• Skip forward to 2020, full employment, large savings on deposit, CB rules mean credit is curtailed to ensure responsible lending, but buyers are sitting on large cash deposits.

• Investors have entered the market buying huge swathes of developments, there is now a dearth of properties to buy, record low levels of listings on daft, but with rents so high, people see buying as a better alternative.

• Add in the pandemic, those most affected employment wise are the low paid who would not necessarily be the buyers interested in that apartment. Employees on MNCs etc are now looking for a place to live/work from, close to the action in Dublin, possibly renting a room out for a tidy sum.

• Building has been stifled by bureaucracy, lack of investment, cost of building, pandemic etc, so it will be yrs before supply catches up to demand. In a typical market, production ramps up to meet demand as producers strive to earn profits, but that does not happen in the property market here, so there is a funnelling effect, lots of buyers condensed into bidding on a few properties.

You say the prices are not sustainable, high prices rarely are, hence why history has shown that has always been cycles of highs and lows in the property market.

All these factors contribute to a price increase from the lows of 2013 to the highs of 2021, you have been around long enough, God knows you link enough long articles/ad listings, to surely have a grasp on why prices rose to the level they are at today.

I know a good percentage of homes are/were being bought up by large organisations (Investments/Pension Funds/REIT etc), but do we have any reports on their occupancy rates?

Just want to see if there are any figures out there if they are just holding property as assets or do they have tenants and are being actively rented out.

You can look at the companies annual reports. They provide rates, and where their incomes flowing from.

Overall Occupancy rate is around 90%-98%. Lower for the objects in Dublin city center, but higher outside city center.

Very good article on property by Fintan O'Toole in Irish Times today, 24/07/21 (Weekend Review section.)

Maybe someone could post a link? Article is titled "From aristocrats to fat cats - the story of an Irish building site."

Article is paywalled for me! Does anyone know if those apartments on Griffith Avenue that were sold to a fund were always intended to be build to rent or where they originally for sale on the open market? Very disappointing if it's the latter.

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

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.

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.

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

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.

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

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.