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

Do you see any issues with property being a hedge against inflation?

Daft report would suggest general inflation outpacing house price inflation in Dublin?

Rents are at record levels, at some point supply has to eat into inflation in rents.

For almost 30 years housing inflation has been near multiples of general inflation. At some point there has to be a re-balancing

It would appear that housing has swallowed up savings and improvements in other areas of our lives through rent and price increases. A period of sustained general inflation could be the trigger for re-balance this situation

I agree that had some point supply in rents will cause a drop in rents but that is a long way off as not enough properties are being built.

prices. A sustained period of general inflation will only lead to higher house prices because workers will be looking for cost of living increases which will increase salaries and wages which will mean the can borrow more and push up house

People think that if we have inflation it will lead to higher rates which will mean that people will struggle to repay their debt. But they forget about the fact that wages increase as a result of inflation and the repayments as a % of salary reduces which provides room for any increase in interest rates.

property is a good hedge against inflation because you can be guaranteed house prices will increase because wages and salaries increase which means that people will be able to borrow more which will lead to higher house prices.

A 5% increase in wages = 2.5% increase in take home pay after tax

Many people in the rental sector are middle to low income in sectors hardest hit by covid. Will those businesses survive and be able to pay inflation linked wages plus high rents

I'd agree historically property has been an inflation hedge, but 30 odd years of being way above general inflation has to have consequences

The government is already spending like there's no tomorrow, paying people to sit at home, businesses not to trade, hoisting cash onto renters and homebuyers in different forms of grants. Our national debt is rocketing and COVID lit a rocket under government spending to send it to the stratosphere. The government is now stuck in this high spending mode where winding it down will lead to a small or large collapse in the economy bit continuing with it will keep pushing inflation higher. A strong feeling of sunk cost fallacy and that they've gone this far so to turn back would be even worse than continuing on this path. There are so many pressure points and elevated risk areas in the economy I really wouldn't want to be the person charged with cooling some of the overheated, riskier parts of the economy.

With the rents they are charging it is hard to see who is going to rent them in many cases. Government through HAP (or similar type of scheme)? Corporates for their staff?

I think from REIT's largest share will be rented to private individuals. I would be surprised if HAP or Corporates would be the dominant.

I wouldn't be surprised at all, that number of Built-to-rent apartment would be leased to DCC.

As far as I know it takes 2 years normally to go through the legal system to evict a tenant who is no longer paying rent There may be delays in the court system due to the effects of the pandemic social distancing rules on cases being processed etc my friend is a landlord he would only take single people working for certain company's or nurses etc so he always got paid rent on time every week

You would find more private residents, than council housing residents in REITs. There are lots of professional foreigners.

Yes, I know as well a case where Corporate provide rental properties to employees/contractors. And they may fill those apartments. And even they may increase the share in REIT's to attract new employees, and bring more immigration. But it's a big chance that they won't be able to absorb that much of rentals coming online, nor the Council housing, thus the majority of REIT's likely fall to the hands of private tenants.

Who else is paying 2300-2600 on a 2 bed apartment?

Has to be corpo.

Was talking to a few foreign students there before Christmas, 8 of them are renting out a 2 bed apartment and paying €2100 per month in total.

A three bed house in our estate went for rent at €2400, 6 people are sharing the house to pay the rent.

I would say corporations will be in the minority, the rest are just turning into slum landlords to make as much money as possible from rents.

Gains will be eaten up by normal inflation…the pay rises just mean they can borrow more as the LTI is on gross salary. All it means is house prices will continue to rise for the next 6-12 months

Insane figures. Hard to see how we dont come across more stories like this one (https://www.businesspost.ie/houses/asian-investors-quit-irish-property-market-as-evergrande-crisis-deepens-f0aef21b ) in coming months. REITS investing in Ireland to take a hit possibly?

As article is behind a PW is anyone able to say whether these Asian investors were investing in the likes of REIT's (i.e. multi unit places) or individual houses? This would then infer that if they are disposing now of properties it should be either job lots or individual units coming on stream (or have already come on stream?).