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

No.33 Brian Boru Avenue - 22/09/2014 €90,000.00

No. 37 Brian Boru Avenue - 28/01/2013 €148,200.00

No. 36 Brian Boru Avenue - XX/XX/2022 €475,000.00

My personal view is that, if that house is still worth €425,000.00 or more in the next 2 years (i.e. less than a 10% reduction) I'll admit I may not know what I'm talking about.

Well paid workers not coming to Ireland at the same numbers pre-covid at the same time as supply of BTRs picks up at long last and therefore paying €1k p.m. in rent for a room in the suburbs is shown up for the ludicrous, unsustainable practice it is; and this makes a tiny 1 bed apartment sized house in Clontarf not as attractive to rent and therefore struggles to justify it's €475,000 valuation.

Renting that house for 1800 p.m. would be a yield of 4% approx and paying a mortgage for someone who lives there would be (assuming 20% deposit) €1700 p.m. approx. for 25 years. It would be a struggle to rent that place for €1800 I think when the dust starts to settle next year post-pandemic and the economy inevitably slows down a little to a lot.

You could be right. But as far as I know things like the new retrofitting program will not only bring people to Ireland to get some of that cash, it will also shift the attention of some builders from new jobs to upgrades. Also our welfare rates will continue to attract lots of welfare tourist not to mention the time taken for our scheme of taking an undocumented worker and making them legal going from 8 years to 4 months will also be jumped upon. So I dont see any slow down of foreign people coming here they will just have to find other areas to rent outside of Dublin and other highly populated areas. So Clontarf (DART line, good bus service, by the sea with good pubs and restaurants and also ability to walk/cycle to town) you dont see this as an attractive area to rent ?? REALLY..

I am struggling to see how your point of view , but you could be right.

You will find we will have an overcrowding problem in the next decade with regards to bodies to house ratio. You forget that low paid workers get a lot of subsidies from our left leaning government to survive they will also have a higher standard of living here remember we have not had the ravages of war or famine so just having a chance to live for some of these people will draw them out of their country , our left leaning nature and money for all will draw them here. I cant see anything changing we will have more bodies and the likes of the new retrofitting scheme will take building workers away from new builds - meaning supply will suffer more and supply is the only thing that will make a difference.

Also 30 minutes walk is not that far in my book if it means you can get to work. Also there are bus stops that are literally a 2 minute walk from it that will bring you to the city center. You also have the seafront right beside you. The place is small but the location IMO is excellent.

They are fundamentally different business models, and they way in which they raise capital to purchase (or build) is different.

Rising interest rates will impact the viability of both however - if REIT yields are not sufficiently above bonds and other less riskier investments then theyre in trouble. And developers are far more exposed to the cost of finance, so interest rates hurt their ability to raise capital.

Yes but REIT funding is primarily through their own investors, developers must raise finance elsewhere (& pay it back).

Given that the only way REITs pay back their investors is through dividends, it is effectively 0% financing.

Thanks for posting timmy, seems to be alot of costs outside of land andconstruction

Anyone know why it would cost €9k to sell a property assuming you are selling multiples of the same type, location in an environment where demand far exceeds supply

Cost of Finance seems extortionate given interest rates and again the supply demand dynamics 30k

Contributions: is this exclusively water, sewage, and power connections. Seems excessive at 24k. Had the water charges been introduced would this be much lower

Vat 50k+ need to look at a system where this is a small recurring charge that actually covers local services and that doesn't result in the developer pocketing the savings

Professional fees: 15 to 20k what does this include. Is this the system that costs less than 1k in Northern Ireland and is performed by an independent body. Ie oversight that the housing complies with regulations and practices.

Profit/risk: 40 to 60k per unit

180k of costs that could be chipped away at with better practices and systems. There appears to be lots that could be done to bring down costs were the will to do so present

That might explain this nonsense so. Poor me with my €100k deposit and 2 x incomes from a tech firm...can only afford Portmarnock.

I know the Indo is a rag but this is scraping the barrel. And an insult to people who genuinely cannot afford to buy a house.

These “big investors” aren’t a bunch of wealthy guys. These are widely held pension funds etc.

if central banks push rates to 7% below inflation what do you expect pension funds to do? Not everyone has a gold plated public sector pension.

NEVER look at rising asset prices on its own. Always look at ratios.

for example:

london (house prices/ M4 money supply) are at the same level they were in mid 80’s yet you constantly hear how unaffordable these are. Total nonsense as evidently there is enough money out there to buy them (record volumes, record prices).

all the QE cash has to go somewhere. Been going to assets since 2008 and only recently circulated into the economy since covid. As soon as you do that you have “real inflation” on a massive cost of living crisis scale.

rising house prices frustrate maybe 20% of the population (private renters, up-sizers) who vote sinn fein now in addition to the core “republican vote”. The rest doesn’t care. Rising cost of living frustrate 70% of the population. All big revolutions (arab spring, fall of iron curtain, French Revolution) started because of the latter, not the former.

We are past the cusp here. Housing is not an area big business should be allowed to play in. The Germans have realised this, which may be why their funds are over here buying up all the assets of the naive Irish.

Even developers stick in my craw. I think the ideal, which is how things used to be in Oz, is for people wanting a house to find and buy a block of land and then engage a builder to build a house on it.

I think the rising house prices are frustrating more than 20% these days as we saw in the 2016 census that approximately 80% of 25-34 year olds were not home owners and I think the 2021 census will probably show us a similar proportion but probably you could extend that from 25-39 year olds. Five years later that becomes 80% of 25-44 year olds etc. What this means is that you have two very polarized groups in society; non-homeowners happy to see the whole property market crash and homeowners happy to see it remain in a growth trajectory as their house is their wealth, for now and into retirement. Unfortunately I don't see how the two competing groups can be united at this stage so it is really going to come down to who commands more voting power that will determine the course of our property market and of course the voting power appears to be shifting swiftly from one side to the other.