Emigration to impact housing demand

businessworld.ie/livenews.htm?a=2617093

Migration to and from Ireland according to the CSO is and has been mostly within the FTB age bracket (25-35) and just below, thus the present trend is reducing the current and subsequent cohort of potential FTB’s . (here)

So, we have the situation where there is an significant overhang of property completed but unsold and more that was purchased as a speculative buy and now vacant generating no income for its, presumably leveraged owner. We have developments being completed and more that will be completed by NAMA.

Then, factor in increased unemployment, lower wages as a result of public and private sector cut backs add higher taxation (both direct and indirect), which reduces the ability of potential future buyers to save significant amounts as a deposit and also to demonstrate ability to repay.

After that, there is the small matter of lower lending multiples from the banks, lower loan to value on the potential property and tougher lending criteria, resulting in fewer successful applicants.

Even if, everyone on the supply side did mange to collude to drip feed new builds to the market, there would still be a massive overhang, and unless we find a way to stop people dying, there will always be a steady stream of several thousand properties coming to market as estate sales.

Too many properties on the supply side, with more coming. Fewer individuals in the FTB cohort which is itself shrinking, and within that, those wanting to purchase having reduced net income and savings to show to the lenders, all the while, those same lenders making it more difficult for individuals to qualify for loans (not in itself a bad thing) and those that are successful in applying will have offers at a lower multiples of their already reduced income and at lower LTV’s on the property (again not a bad thing), possibly requiring more savings on their part.

Not, IMHO, the potential for a happy time for the property sector and emigration is only one of the ingredients in this particular brew.

Blue Horseshoe

"This demand is forecast to pick up from around 8,000 per annum in the years to April 2010 and 2011 to nearly 15,000 in 2012.”
I have long thought that ‘natural’ demand (barring migration and existing empties) was about 20k units. Imagine my surprise to find that I am a third too high. Surely a first for me!

From DoE statistics:
environ.ie/en/Publications/S … tatistics/
Which only goes up to mid-2009; there were over 14k houses built in the first six months of last year.
It’s not clear on what a ‘house’ is, but I presume it includes apartments since it is based on ESB connection data.

So, last year, we likely built twice as many houses as are required in a normal market… CIF, in June last year, were forcasting 10k completions for this year… 20% too many according to Mr. Beggs.

Do you smell that? That’s leatherette son, nothing else in the world smells like that. It smells like… oversupply.

And if you want to hear a good one, then look at the ESRI’s population projections for 2010 - 2026. They used two scenarios - one where there was nil net migration and another where there was 675,000 net inward migrants. During the period 1994 - 2008 when there was constant net inward migration we had 450,000 net inward migrants. That reversed in 2009 when there was a net outflow of 8,000.

So get this - NAMA is prevented from using any analysis produced after 10th Jan, 2010 (LEV regulation). So at the most pessimistic NAMA must assume no net outward migration in the next 16 years.

I have no idea what will happen with migration. I think the 8000 last year will increase this year and maybe next and I don’t know after that but I do know central eastern Europe is growing so we mightn’t see the Poles again. But overall I don’t know even though I think I can make an educated guess.

The ESRI on the other hand didn’t even CONSIDER a net outward migration. Wouldn’t it be gas if the 450,000 net inward migrants left?

+1

This should be printed out, laminated and stapled (with a proper industrial stapler) to the forehead of anybody who so much as utters a word about market bottom, never a better time to buy or some other rambling about peak comparisons.

Demand for housing, aka “Housing Demand” :wink: , that once inalienable dynamo of the Irish economy.

Outstanding

Does anyone know how do they compile these figures? I migrated in mid 2008 and wonder if I’m included in these figures and how. I didn’t tell anyone I was leaving.

I was somewhat hungover last Sunday morning but I think I heard an RTE news report which went something like the following…

“The RSA would like to remind people driving abroad to take care while doing so… the ersi predict 100k people will emigrate in the next year…”

Is that how RTE bury the details now ? Or is the fact the RSA is at the airport waving people off bigger news than the fact 100k people are leaving Ireland ?

I’m abroad for over a year too.