Current public sentiment towards the housing market?

[whathome]

This article in today's Sunday Independent asks the question - did Davy management buy the company from Bank of Ireland because they were concerned that the bank is very heavily exposed to the property market which now looks turbulent?

http://www.unison.ie/irish_independent/stories.php3?ca=35&si=1718742&issue_id=14855

Somehow I can't help feeling that this transaction tells us more about Bank of Ireland than it does about Davy. With 55 per cent of its loan book tied up in bricks and mortar, Bank of Ireland is increasingly coming to resemble a leveraged bet on the Irish and UK property markets.

With property values on both sides of the Irish Sea looking very toppy, Bank of Ireland could be facing into some turbulence in the near future.

Did the Davy team decide they needed to take control of their destiny back into their own hands, even if it meant paying top dollar?

 

[Remix]

I like this question by ajpale, radical thinking says I.



Alot people who did not buy want prices to come down so that they can afford to buy one. Thats vested interest.

In a strict sense of the phrase that could be said, but phrases are more properly used in terms of their common and accepted usage.

Trying to conveniently redefine the term 'vested interest' is somewhat futile as it is widely used in Ireland and abroad to denote the likes of lenders, EAs, property developers etc.

 

[Guest111]

You've already said that if the property is vacant, they're unlikely to attract revenue attention. That was the original point

I think the risk here is negligible...even if the situation did attract Revenue attention I know I'd fancy my chances of arguing the case.
Realistically, if your partner has moved in with you but kept his/her home as a vacant investment where is the problem going to arise?

One couple I know even stay in the "other PPR" if they're out in that part of town...so even if the Revenue break in and check the fridge there's probably something in there!
I agree though as the days of spectacular capital appreciation come to an end, this phenomenon will become increasingly rare.

 

[zac]

This article in today's Sunday Independent asks the question - did Davy management buy the company from Bank of Ireland because they were concerned that the bank is very heavily exposed to the property market which now looks turbulent?

http://www.unison.ie/irish_independent/stories.php3?ca=35&si=1718742&issue_id=14855

Whathome what you think of this part of the article:

[FONT=Verdana, Arial] So what are guys with street smarts like that doing buying a stockbroking firm at what looks very like the top of the market? At over 8,500 at the end of the week the ISEQ index is close to an all-time high.[/FONT]

 

[whathome]

Whathome what you think of this part of the article:

[FONT=Verdana, Arial]So what are guys with street smarts like that doing buying a stockbroking firm at what looks very like the top of the market? At over 8,500 at the end of the week the ISEQ index is close to an all-time high.[/FONT]

Why do you ask - that question in the article doesn't relate directly to the housing market?

 

[zac]

Why do you ask - that question in the article doesn't relate directly to the housing market?

just wondering he dint state why it looks like ISEQ top to him, is he implying that its at all time high so it must be a top.

 

[whathome]

just wondering he dint state why it looks like ISEQ top to him, is he implying that its at all time high so it must be a top.

I can't answer for the author but maybe it's because many of the larger companies in the ISEQ are exposed to the property market so while the ISEQ is at an all time high and the property market has started to weaken, this could be the top?

I don't pay much attention to the ISEQ index to be honest.

 

[Maine]

Bank of Ireland/AIB have covered their asses with Irish property. The maximum loan you can get from either is 92%, also neither bank offers interest only options on their mortgages. Ask anyone who has gotten a mortgage with either bank, it's not easy unlike some of they're competitors.

As well as the 55% direct exposure my guess would be there is further exposure to the property market indirectly.

IMO the fact that no foreign bank has taken over any Irish banks to date probably means the likelihood of takeover may be receding. This means their share prices going forward will reflect performance and if the property markets weakens they could tighten in loans etc very quickly to protect their share prices. This tightening would drive liquidity out of the market just when it needs more of it i.e. they could drop the multiples and might want say 30% equity etc

 

[asterix]

So once more into the bear pit for a mauling
First of all in relation to the most recent discussion in relation to vacant properties. It quickly morphed into fact that there are 300k vacant properties in the country being sat on by investors looking for a return from capital appreciation. This was backed up by a census finding and anecdotes from posters who know "lots of couples" doing this kind of thing. Stunning. This totally ignores the fact that:
1. The properties could be holiday homes or made look vacant because the inhabitants weren't interested in answering the door to the census enumerator. At the very least, I'd say there's a very large margin of error in relation to the census finding. The enumerators were paid buttons and only called back to "vacant" houses a few times so I'd take the figure with a grain of salt.
2. It still doesn't make sense to me not to earn rent from a property when you can, even with the high levels of cap. appreciation in recent years. Arguments relating to problems getting rid of tenants and...redecorating...dont' have a lot of cogency for me.
3. There are high levels of risk associated with the course of action a lot of the posters believe has been adopted and I do not accept that anything more than a small minority of people would live in the hope that they "fly below the radar" of the Revenue.
4. There is no evidence of a marked increase in the supply of homes for sale or rent. Surely investors sitting on these vacant properties would be very sensitive to the beginning of a crash which began, oh, 6 months ago now?
Back to more general points. A good starting point is Dan McL on Radio One this afternoon. "VI!"I hear you cry, but hold your whisht. On my understanding, his argument went something as follows:
People have been predicting a crash at regular intervals for the last ten years. No one guessed that demand would rise much above 50K new units a year, yet there were 80k completions in 2005 and there will be close to 100k units completed this year and the demand is still there. There has been a 14-15% increase in house prices this year. Unemployment is the key factor in precipitating a property crash. This is not an issue in the Irish economy at present. However, there are, undoubtedly, issues with affordability brought about by interest rate rises and this is what will slow the market down here. At present mortgage repayments account for 33% of a person's income, rising to a predicted 37% next year. This is not sustainable and will result in a slowdown in the growth of house prices next year to a rate of 3%.
So an argument that there will be a soft landing if ever there was one. And despite the fact that it comes from the mouth of a VI, I think it has a lot to commend it. And now for the onslaught!

 

[StoppedClock]

So once more into the bear pit for a mauling
etc, etc........

I have reread your post a number of times but I can't see any argument that there will be a soft landing? Am I missing something?

 

[beattie]

Dan McL on Radio One this afternoon. At present mortgage repayments account for 33% of a person's income, rising to a predicted 37% next year. This is not sustainable and will result in a slowdown in the growth of house prices next year to a rate of 3%.
!

So where did Dr Dan say that ECB rates would peak at? Is the growth of 3% next year predicated on them peaking at 3.5%?

 

[gearoidmm]

There is no evidence of a marked increase in the supply of homes for sale or rent.

I'm sorry but this is just not true. The number of houses for sale on Daft has increased from 14,000 to 23,000 since July and equally the number of houses for sale in Dublin on myhome.ie has increased from 3000 to more than 5000 in the same period. There has been a definite increase in inventory.

However, you are correct that there has not been an increase in properties for rent. In fact, there has been a large fall in the number of rentals available on Daft in the past 6-9 months. Now, one might say that this is due to increased demand but it isn't too much of a stretch to think that it might be related to the increase in houses/apartments for sale as investors try to cash in.

 

[SherryTrifle]

[broken link removed]=

for 300k you too can have a small property with a road going through the middle of it. What madness.

 

[Sarsfield]

€100m worth of apartments sell within hours

From the SBP:

More than €100 million-worth of apartments in a new development in Sandyford, south Dublin, were sold within a few hours of going onto the market last Thursday.

[broken link removed]

So there's still demand, including for one-beds starting at €355K!

You'll be delighted to know that Dan the Man gets quoted in this article too.

 

[bankrupt]

This totally ignores the fact that:
1. The properties could be holiday homes or made look vacant because the inhabitants weren't interested in answering the door to the census enumerator. At the very least, I'd say there's a very large margin of error in relation to the census finding. The enumerators were paid buttons and only called back to "vacant" houses a few times so I'd take the figure with a grain of salt.

I recall hearing the chap in charge of the census saying that enumerators also had to check with neighbours to determine if a property was genuinely empty. If the margin of error is %20 for example (I would hope that it is lower than this!) then the figure for vacant houses is still enormous.

 

[whathome]

Re: €100m worth of apartments sell within hours

So there's still demand, including for one-beds starting at €355K!

What do you expect to hear from Hooke & MacDonald - the new homes agent!!!

Also from that article:

By contrast, vendors of auction properties in Dublin have had another difficult week, with a large number of homes failing to find buyers.

Many agents are now conceding that the market is unlikely to pick up significantly before next spring, especially as the European Central Bank (ECB) is set to raise interest rates by a further 0.25 per cent next month. The ECB held interest rates at 3.25 per cent at its meeting on Thursday.

 

[whathome]

for 300k you too can have a small property with a road going through the middle of it. What madness.

I've noticed some price drops in Tyrrelstown recently. Here's an example...

Originally was €360,000 as you can see from the text. Then reduced to €350,000


Now reduced to €340,000
www.daft.ie/135373

 

[beattie]

Re: €100m worth of apartments sell within hours

From the SBP:



[broken link removed]

So there's still demand, including for one-beds starting at €355K!

You'll be delighted to know that Dan the Man gets quoted in this article too.

Are these cheaper than other ones in this area released recently? Its good to see that Dr Dan wants earnings to outstrip HP increases to increase affordability.....

 

[zac]

As well as the 55% direct exposure my guess would be there is further exposure to the property market indirectly.

IMO the fact that no foreign bank has taken over any Irish banks to date probably means the likelihood of takeover may be receding. This means their share prices going forward will reflect performance and if the property markets weakens they could tighten in loans etc very quickly to protect their share prices. This tightening would drive liquidity out of the market just when it needs more of it i.e. they could drop the multiples and might want say 30% equity etc

are you sure?

Is NIB not irish, is Danske bank not foreign. is first active not irish, is bank of scotland not foreigh?

RBS considered buying AIB or BOI, RBS CEO once said, he also said such a deal would run into problems with competition authority hence they dint proceed.

Since the 'fact' on which rest of the argument(speculation) is based isnt true, the conclusions can be disregarded.

 

[bo se]

First of all in relation to the most recent discussion in relation to vacant properties. It quickly morphed into fact that there are 300k vacant properties in the country being sat on by investors looking for a return from capital appreciation.

In fairness 2 additional components of the 300k empty houses have been highlighted though we're little closer to understanding how the 300k breaks down. In addition to the 3 stated earlier:

1 Those on the shannon (and similar) built for tax breaks;
2 Those full of immigrants who are shy of forms;
3 Genuine holiday homes for people who enjoy and can afford a second home.

We can now add:

4 Investors who couldn't be bothered collecting rent because ther're making so much on capital appreciation;
5 Couples evading or avoiding various taxes and stamp duty clawbacks.

I would suggest another:

6 Houses nearly complete or recently completed which from a census enumerator's perspective look finished but convencing is on going or the power isn't connected or they're being kitted out.

This last one is relatively small but I'd hazard about 3 months worth of building i.e. about 20k houses last year. I suspect 2,4 and 5 are also relatively small - for argument sake another 20k each. Difficult to back up but I imagine the bulk of the 300k are holiday homes - built with or without tax breaks. (NCB have estimated demand for holiday homes at 10,000 per year.) If this works out higher per capita than in the UK then I imagine they don't have much tax breaks for holiday home building in the UK. While it's clearly a waste of resources to encourage building holiday homes during a time of shrtage of supply (pre 2006) it's hard to see this 300k as a major over hang on the market!