Seems that the property pin has become less interested in property and has moved to a breeding ground for conspiracy theories and the encouragement of Trump/Farage/Putin style populism - but maybe that’s just the bots talking.
Anyway there used to be a tradition of looking at the past year and forward to the new year in the property market. I think the market is getting very interesting at the moment. The dogmatic refusal of the government to ‘interfere in the market’ has made said market ever more dysfunctional.
So last year for Dublin it looks like -
- The number of sales in the PPR is slightly down on last year (although there were some big ‘straight to rent’ sales that appear as one transaction - it’s difficult to compare these back over the years but during the summer I counted over 1000 units in a handful of sales)
- The sales of new homes in the PPR decreased over last year 3631 vs 4713 in 2018. Again this might be because of multiple sales in the PPR being reported as one
- Supply stayed pretty high over the year - seldom declining below 4500
- Dublin prices achieved were pretty much constant over the year with a slight upward blip in the summer and the Daft report suggests a fall in Dublin prices over the year. Median asking prices through the year remained persistently higher at 395k vs prices achieved of around 340 to 350k.
On the anecdotal side -
- Talking to an EA they said that a huge number of sales have gone through in December although a lot will appear in the January PPR figures. He said he thought this was the banks using up their ‘exceptional’ approvals - I don’t think this is the case as talking to people who work in the banks they work out the exceptions on a quarterly basis to smooth things out but I suppose there must be a few left in the last quarter as sales have probably been stronger in that quarter. He also believed that a lot of the properties coming on the market were ‘accidental’ landlords getting out of the market.
- Younger people that I know that are looking for houses are taking their time - there seem to be enough places at the right prices to see to keep their interest. I hear of EAs calling them back after sales fall through. It does feel as if they feel they are operating in a market where taking their time is to their advantage rather than the sense of panic that we saw in the past. Affordability seems to be increasing - a combination of static/falling prices and a feeling that at last pay is rising. But this is in the IT sector.
- Younger people that don’t have salaries that will allow them to enter the market have simply given up looking. They take the view that they’re never going to own a house in Ireland and that rents are bleeding them dry. Foreign nationals are looking to move home/to other countries. Irish people are looking at Europe - not the UK, not the US - a lot of them are saying that Ireland will probably leave Europe, they feel the swing to the right happening, they despise Varadkar ( to be honest I don’t think the situation in other European countries is any better) and feel that the older generation have f**ked them over.
So what is the coming year going to be like -
- Property prices in Dublin will probably stabilise - possibly falling in real terms, wages are definitely going up but if that becomes a European phenomenom then interest rates will rise and that will dampen prices - but there will probably be some years lag.
- Supply has the potential to increase but it will depend on legislation. It’s unlikely that the Government will start house building - they will not admit they were wrong - but they might make a move to stop subsidising office development, and to discourge the hoarding of residential develpment land and planning permission (sensible) or subsidising development of residential housing (really stupid).
- Sales will increase if prices stabilise
- Rents achieved will decrease - asking rents will have to remain high for the REITs to maintain their valuations but this can only last so long until investors see through it. Some REITs will fail in time but I don’t think it will be next year.
- The decline in commercial development will become obvious - i.e. the crane count will start to decline by the end of next summer. If the capital/labour involved in this moves into residential then this could have a significant impact on future years - this is where you will see the CIF sticking out it’s begging bowl to the taxpayer. If it doesn’t move to residential then that will mean a huge number of construction workers will be laid off. Very of few of the migrant workers that came for this boom have put down roots - they were either part of the previous boom workforce or they saw what happened to them. This will have an effect on rents if it happens. There are about 150k construction workers in Ireland - mainly in Dublin - even a 10% decline in that workforce would have a significant impact - my guess would be that the decline will be steeper than that.
- Brexit is now going to happen, it’s going to be a hard Brexit, it’s going to be rushed and it’s going to be a disaster for Ireland and the UK. The only thing Ireland has going for it is that the EU will protect Ireland, the quid pro quo being the proper taxation of the MNCs. The UK will think that Trump will protect them - he won’t - he has a long history of infidelity in his political as well as his personal dealings.
- When there is an election then the result will probably be a 3-3-3-1 split between FF-FG-Left(ish)-Independents. That will mean either FF and FG have to combine with each other or with the Left. If the Left come out with a coherent and co-ordinated approach they could possibly be the biggest bloc - but we all know they won’t. The election will be about housing, Eoghan Murphy will lose his seat (DBS and it’s predecessor DSE have a history of kicking out failures (e.g. Creighton, McDowell, Gormley)). FG seem determined to buy the election with tax cuts and pension boosts (for the rich and the old folks) and blow some hot air about Climate change (for the younger voters). FF and SF are going to try and buy the election with empty promises about housing (for the young folks) and tax cuts and pension boosts for the old folks. The other left will fail to create any coherent strategy on reducing wealth inequality but will talk about it a lot. No matter what the old and the wealthy will be grinning all the way to the bank and the young won’t turn out to vote - then they’ll emigrate - it’s the 80s all over again.
- The significant MNCs in this country will take a triple whammy - Taxation - the EU are going to come down on hard on this, absolutely no doubt about it; Regulation - Advertising platforms (facebook, Google) are going to get hit by requirements to take responsibility for content - i.e. closer to publication, Uber and AirBnb will face similar issues; Forced splits - Businesses with multiple facets (retail, cloud, advertising) etc. (e.g. Google, Apple, Amazon) are likely to be forced to be split up by US regulation; Declining markets - for businesses that rely on expansion to succeed (e.g. Facebook, Twitter) they will run out of markets, fashion will also start to kill them off.