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 Post subject: A look at cash buyers in Ireland
PostPosted: Tue Sep 19, 2017 10:13 am 
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Cash buyers: Who are they and how come there’s so many of them?
Central Bank chief Philip Lane says cash buyers limit ability to control house prices
https://www.irishtimes.com/business/per ... -1.3224402
Quote:
If they only accounted for about a fifth of the market or so, as was typically the case, it may not be so much of an issue, but figures show that more than five in every 10 purchases in the residential property market is by a cash buyer.
It’s a startling figure when considered in an international context. In the UK for example, cash buyers account for around 35 per cent of all transactions, up from 20 per cent in 2005-2006, according to Nationwide, while in London, cash buyers now represent just 19 per cent of the market...
...Before the crash, cash buyers appeared to be in more scarce supply. Figures from the Central Bank show that at the pinnacle of the boom in 2006, cash buyers accounted for about 25 per cent of the 151,000 or so annual transactions. Back in 2000, there were about 28,000 cash sales out of a total of about 102,000 or about 27 per cent.
But, as transaction levels plummeted, the proportion of cash buyers soared, reaching a peak of about 63 per cent in 2013...
...“It’s a bit bouncy from quarter to quarter, but on a four-quarter moving average basis, you can see that it is gradually tapering, very very slowly,” says John McCartney, director of research at Savills.
From that high of 63 per cent in 2013, the proportion has most recently dropped to about 53 per cent.
Image
...Last year, some 89 per cent of investors bought entirely with cash according to Savills figures, “and if you went outside Dublin it would probably be even higher”, McCartney says.
...But what about all the investors who we hear are leaving the market due to the stringent costs of running a rental property?
McCartney doesn’t beat about the bush on this. “It’s a load of crap,” he says, adding that such a line was “self-serving” and was put out there to “effectively lobby the government against rent caps” – which didn’t work.
...Savills figures show that, in the second quarter of 2017, some 11 per cent of cash buyers were first-time purchasers.
Lowe has observed that more parents buy properties for their children to live in while they attend college in towns and cities around the State, while others may be cash-rich returning emigrants.

An interesting article on the cash buyer phenomena in Ireland. Some stats to backup the previously largely anecdotal evidence though this is mainly from just 1 EA.
But one things for sure, there's still an awful lot of cash out there despite the record crash this country went through.


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 Post subject: Re: A look at cash buyers in Ireland
PostPosted: Tue Sep 19, 2017 10:41 am 
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Interesting... Cash buyers buying investment properties seems bizarre given the taxation regime on rental income unless of course they're cash rich but income poor and would not be taxed at the marginal rate, i.e. retired or semi retired.

Could also be a trend amongst wealthier families to buy properties for children for college years given the current rental mess.

The big question I'd have is whether institutional investors would be considered cash buyers and if this is accounted for in the data?


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 Post subject: Re: A look at cash buyers in Ireland
PostPosted: Tue Sep 19, 2017 10:54 am 
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Would like to see the foreign, non-REIT element of this. Chinese flooded Oz, NZ & Canada to get money out of government reach. UK was also a target. To get a visa in the UK, they had to invest something like a million which was then doubled.

http://www.google.ie/amp/s/amp.theguard ... ld-hits-2m

Quote:
The number of UK visa applications by wealthy foreigners has collapsed after the government doubled the required investment threshold from £1m to £2m late last year.

In the first nine months of 2015, there were just 136 applications for “tier one” investor visas, for which residents from outside the European Economic Area and Switzerland can apply provided they have access to at least £2m in investment funds. This compares with 780 applications over the same period last year, an 83% decrease"


Ireland was the next target as it was cheaper and in the EU. We also upped the amount but it's small fry compared to UK.

https://amp.independent.ie/business/iri ... 87614.html

Quote:
Ireland's Immigrant Investor Scheme saw a massive 500pc spike in applications last year, driven by a surge in demand from Chinese nationals.

A total of 329 individuals from 16 different countries applied in 2016 to secure Irish residency in exchange for investing in Irish assets. Of this figure, 313 were from China..........
......
In order to be considered investors have a choice of investment options: €1m in an Immigrant Investor Bond, at 0pc interest rate; €500,000 in an Irish enterprise for three years; €500,000 in an approved fund; a minimum investment of €2m in an Irish Real Estate Investment Trust; investment in a residential property of a minimum value of €450,000 and a straight investment of €500,000 into the immigrant investor bond - or a €500,000 philanthropic donation or endowment."

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The pigeon just knocks all the pieces over.
Then shits all over the board.
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 Post subject: Re: A look at cash buyers in Ireland
PostPosted: Tue Sep 19, 2017 10:57 am 
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BuMble wrote:
Interesting... Cash buyers buying investment properties seems bizarre given the taxation regime on rental income unless of course they're cash rich but income poor and would not be taxed at the marginal rate, i.e. retired or semi retired.

Could also be a trend amongst wealthier families to buy properties for children for college years given the current rental mess.

The big question I'd have is whether institutional investors would be considered cash buyers and if this is accounted for in the data?


Buy property in a pension.
Completely tax-free.


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 Post subject: Re: A look at cash buyers in Ireland
PostPosted: Tue Sep 19, 2017 11:18 am 
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Per mortgage lending falling off a cliff thread:

viewtopic.php?f=4&t=26451&p=912717&hilit=+Ixus#p912717

We went from 55% cash & 45% mortgages in 2013/14 to 37% cash & 63% mortgages Q4 2016. A function of rising prices and increased lending activity.

ixus wrote:
Let's take the lending figures against the volume of transactions as per Propertypriceregister to indicate the cash purchases.

Q2 2016: 6,314 - 11553 transactions - 2.73bln total - 54.5/45.5 mort/cash
Q3 2016: 7,593 - 12866 transactions - 3.19bln total - 59.1/40.9 mort/cash
Q4 2016: 8,423 - 13304 transactions - 3.39bln total - 63.3/36.6 mort/cash

Swing from 45/55 mort/cash in 2013/14:


ixus wrote:
Quote:
Mortgage Lending by Volume
Q3, 2013 4,089
Q4, 2014 4,804
Q1, 2014 3,160
Q2, 2014 4,396 (2,440 FTB + 1,709 Mover + 188 RIL + 108*50% Re-Mortgage)

Total in past 12 months 16,449


Total Transactions on ppr 36,259 (averaging 9K per Q) - Almost 20K (circa 55%) bought straight for cash.

.......
.



I still maintain they need to look at the CGT exemption. Bring it forward to the first & second year eligible now. We are building up to a lot of supply coming online in 2019 between the great land give away and CGT 7 year holders. There is no reward to government in holding on until 2019. Maybe, even offer to allow the 7 year holders liquidate now at 5/10% CGT.

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The pigeon just knocks all the pieces over.
Then shits all over the board.
Then struts around like it won.”


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 Post subject: Re: A look at cash buyers in Ireland
PostPosted: Tue Sep 19, 2017 11:38 am 
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Does anyone know, if someone borrows from abroad, does that get recorded here ?


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 Post subject: Re: A look at cash buyers in Ireland
PostPosted: Tue Sep 19, 2017 11:50 am 
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mr_anderson wrote:
Does anyone know, if someone borrows from abroad, does that get recorded here ?

I'd presume if the loan is secured on a particular property [i.e. a mortgage] it has to be done via a regulated financial entity and would be but if a fund/HNWI borrows abroad for general [company] funding it wouldn't be?

I have heard vaguely of private bankers arranging loans for property where the loan is secured on say shares [i.e. an individual doesn't want to dispose of the shares for various reasons]


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 Post subject: Re: A look at cash buyers in Ireland
PostPosted: Tue Sep 19, 2017 9:16 pm 
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Cash buyers have fallen from 52.3% in 2013 to 44.6% in 2016 - makes sense with rising prices


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 Post subject: Re: A look at cash buyers in Ireland
PostPosted: Mon Dec 04, 2017 2:46 pm 
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Some interesting stats out of Savills today in relation to landlords and their mortgages (or lack of)

https://www.irishtimes.com/business/eco ... -1.3314199
Quote:
The research shows about 61 per cent of privately-rented properties are owned outright by their landlords, up by almost 20 per cent since 2012. This means that just 39 per cent of rented properties have mortgages on them, down by 23,192 properties since 2012 – and 8,000 properties became mortgage-free in the last year alone.


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 Post subject: Re: A look at cash buyers in Ireland
PostPosted: Wed Nov 21, 2018 2:34 pm 
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https://www.independent.ie/business/per ... 50497.html
Quote:
Modest homes are seeing the biggest price rises, with cash buyers more likely to snap up cheaper properties than dearer ones.
This is mainly because cash buyers are more active in the lower-end of the housing market, pushing up prices of smaller homes in less desirable areas.
This means there is a limit on the ability of the Central Bank's lending rules to control property prices, a study by an economist has found.
Cash buyers can represent up to half of all purchases of residential properties.
These buyers include corporates and non-government agencies. They also include householders using equity from their home, or a bank deposit, to finance the purchase of a buy-to-let.
Mortgages fund six out of 10 purchases in Dublin, but just four out of 10 purchases are funded by a mortgage in other parts of the country...

...Central Bank economist Mr Gaffney found that the lending limits have less impact on modestly priced houses where cash buyers are prevalent.
However, the lending limits are acting to hold back prices at the higher ends of the property market, where people have to use mortgages to afford a home.
This means there is a "structural limit" to the impact of the Central Bank macroprudential rules on property prices


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