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

I was being sarcastic with the other potential causes, but not about whether the covid news caused the panic selling within a day. I have read some more news about it and it seems to be taken more seriously than I thought in the last 2 days when I first dismissed it, but I still don't think it should've caused such dramatic drops - even bitcoin fell which, despite its general instability, seemed to fall yesterday for the same reason as the markets.

I just think there is little room to grow for assets without constant State and central bank support. The whole thing is just not being allowed even a slight correction, but it defies sense to think assets can keep rocketing while wages barely go up and even go down as inflation eats into them. A correction feels inevitable and I don't necessarily link a correction to a crash. Artificial conditions keep these valuations high and can't last forever.

If there is a fall in the stock market investors will move to government bonds as it is safer than cash. As the price of the bonds goes higher the yield goes lower which makes any investment in property more valuable as you can still get 3-4% yield from them.

Hedge funds are not material players in the property market... It is insurance and pension companies who are looking for a steady cash flow that allow them to pay out on policies/pensions. Normally these insurance and pension companies would hold government bonds but as the price of these bonds have shot up in value because of central banks buying them they can't generate enough cash to pay out on policies and pensions so they have looked elsewhere and property with it's strong yield has replaced what they would have invested in government bonds.

Until you see the yield on government debt climb higher you will not see a slow down on investments in properties and new builds.

Your doomsday scenario outlined above where you see stock market crash = fire sale in property would only happen if you had mass unemployment as a result of a stock market crash.

Personally I think markets will open 2-3% down Monday followed buy a rebound Tuesday as investors buy the dip as greed is still much stronger than fear. The strong economic data that is expected to coming out of the US next week will also give investors comfort to pile right back in. The only thing that would change this is if it is proven that the vacaines do not work on the new covid variant and as a result the world is looking at another year of lockdowns. I think you will see property increase in price until at least 2023/24

Would you think that the more unaffordable rents become the greater likelihood of a significant crash.

Where is the pressure release valve, I'm not seeing one so this continues until it explodes

Something I have noticed since covid started.

Bad news about the virus. Stocks fall a lot.

After a few days people realize that this is just the same sh!te we have been living with for the last while. Stocks go back up even higher than they were before.

Thats the cycle. Watch them go back up over the next few weeks.

Then at the end of that you can only have good news when its all over.

People are used to this virus now, and will be fine living like they are now for a bit yet. Then when its all over well its time to party for the whole world.

And you know what, this doesnt effect property prices unless there is a lock down that halts construction activity or the process of house selling.

It wont effect rents because the government influence on rents via ill thought out rent controls is the major manipulator of that market, viruse or no virus. And all those controls are doing is raising rents and reducing supply. Its definitely reducing the supply of reasonably priced rentals.

I think the demand is already significantly impacted; WFH and migration are two significant factors in demand as a result of the pandemic that have not baked into asking rents yet. The government is ensuring the market is propped up but we don't live in a socialist country so the government does not have the power to support it indefinitely. Long-term social housing leases set a floor at 85-90% of current market rents as if that is somehow sustainable when looked at against salaries. There is nothing which would indicate those rents are even sustainable when looking at the median salary in this country, particularly with the cost of living already shooting up and groceries expected to rise next year in cost. There is a dam holding off a significant pressure release but it doesn't seem like it can hold forever and I sense something is going to give - call it a correction or a crash of some sort. There's so many red flags everywhere and fraud and high risk is prevalent in mainstream companies and economic transactions which are symptoms of excess. The latest ESMA risk report (European-level markets and securities regulator) has the level of risk across markets and securities at its highest level.

https://www.esma.europa.eu/sites/default/files/library/esma50-165-1891_risk_dashboard_no_2_2021.pdf

On the undervalued/overvalued rents, it reminds me of the EC report the other week claiming, based on certain assumptions, that Irish housing was undervalued. The IT published an opinion piece over the weekend arguing against the assumptions and models used by the EC to come to this conclusion.

https://www.irishtimes.com/business/economy/irish-house-prices-undervalued-shows-how-misleading-stats-can-be-1.4740982

"WFH and migration are two significant factors in demand as a result of the pandemic that have not baked into asking rents yet"

WFH did have impacted the rents price, the rents outside cities increased in double digits:

"This has led to rental prices in Dublin increasing 2.7% on a year-on-year basis.

The increases were even steeper across other cities with a year-on-year jump of 6.9% recorded in Cork, 8.3% in Galway, 8.9% in Limerick and 10% in Waterford.

The average rent nationally now stands at €1,516 per month. This is a spike of 6.8% and marks the 36th consecutive quarter where rents are higher than they were in the previous twelve months.

Excluding the cities, the average rent across the country stands at €1,153, an increase of 11.9% on last year. In Mayo, Roscommon and Leitrim rents rose by over 20% on a year-on-year basis."

We don't know the future, but we see that pandemic/wfh already had made impact in asking price outside cities, with double digit increase.

so why do you think rental prices went up much more outside Dublin? than in the City?

"even people who had their heads in the sand, that it is financial suicide not to put up the rent to the max you can"

people try to put rent price to the max regardless if it's in the city. In Dublin landlords equally try to the max what they can get. If in Dublin lower end properties would leave the market, the average would have gone up as well.

There are many actors here, and WFH is a very minor one, if at all.

It could well happen, but that's would be a gradual phenomenon, and I don't believe it's isolated to the city and to particular year, it's rather a national gradual problem.

As well based on the logic from previous comment's that would mean that rents in past year outside city stayed mostly stable, it just that the quality of homes for rent outside cities on the market are better than in previous years. Which I don't think that it's the case.

The results from the delayed census should make interesting reading, as it will reveal how many people are still officially in Ireland but are actually working remotely from overseas. I think it will be a lot as noises I hear is of people still leaving rather than coming back.

I also wonder how many landlords have decided to try and chalk up the two years needed for RPZ caps to expire. March 2022 is not that far away...

Does the new rental legislation fix the landlord issue raised yesterday?

Can they now raise to market rents where they were caught by rent pressure zones in the past?