With September 1st just around the corner, construction and housing news is starting to ramp up again after the summer lull. Here’s a quick round-up of the industry news you might have missed this week:
The Sunday Times
On the front page, Valerie Flynn writes that ‘Home buyers must top asking price’. Unfortunately, this is not news to current house hunters and investors; successful buyers in Dublin and along the commuter belt have been bidding up to 20% (average 7%) above the asking prices for the last 18 months at least. This should not be taken as an indication of value or quality or even market recovery, these price increases are driven solely by a prevailing lack of supply in the face of consistent demand. Certainly, if younger first-time buyers are ‘on the fence’ about buying or waiting, waiting will likely to be worth considering (provided you are happy to wait for at least two years). For current house hunters facing this decision, I recommend checking out the planning – and particularly commencement notices – on local authority websites in order to get a better sense of the volume and type of new housing likely to come on-stream locally over the next two to three years.
The same writer has a piece on page 4 ‘Landlords exploiting loopholes to break rent caps’. This article essentially confirms what many professionals would have expected and what many tenants are currently experiencing in the Dublin marketplace. Loopholes being used in the rent pressure zones to avoid the 4% annual increase cap include “unjustified use of exemptions”, imposition of additional charges on tenants and loose interpretation of what constitutes ‘substantial’ improvements to the property in question. Given the lack of enforceability in this area, it is difficult to see how this situation is likely to change. One might imagine that priority resources would/should go towards prosecuting long-term non-compliant leases rather than actively targeting new tenancies…
- In his comment piece today, John Walsh suggests that to solve the housing crisis, Irish people need to start paying like the Danes. According to the OECD, Ireland’s 2016 tax revenue as a percentage of GDP was 23.6%, the third lowest of all the 35 member countries, compared to Demark, which topped the table at 46.6%. Contributing to the problem are facts like our property taxes do not reflect current values and “water charges have been consigned to the dustbin”.
- Noel Smyth (Fitzwilliam Real Estate Properties) has sought planning for a nine-storey, 365-room, hotel on Abbey Street, Dublin 1.
- British insurer Aviva has delayed plans to enter the mortgage market in Ireland, citing Brexit uncertainty among other reasons.
- Brian Carey writes that “smaller developers looking to find money for residential schemes are rolling out the welcome mat for wealthy Chinese investors”. Again, this will not come as news to people within the construction industry, who watched from the sidelines as completing developers brought in Asian and Middle Eastern funds since 2012 onwards.
- In Commercial Property news, Grainne Rothery writes that ‘Facebook and its followers give Dublin the thumbs-up: Tech companies and banks are fuelling the demand for city centre office space’. Dublin has experienced an “exceptional” second quarter in the office sector, with transactions over the last three months almost doubling activity for the first three months of the year thanks to five big deals, the largest of which was Facebook taking 15,800sqm in Dublin 3. “Brexit-related moves are a small percentage of the overall. It’s not driving the market”.
- Atelier Property Asset Management, the company behind student accommodation brand Ziggurat led by Matthew McAdden, is on track to have 10,000 student beds under management by 2020.
- Nick Webb suggests that the prices of high-value (multi-million euro) homes in Dublin might well be “stalling or indeed wobbling” as transactions slow.
- There’s a new house-hunter in residence, Aran Brazil, bemoaning the fact that cash buyers are winning bids in the marketplace. This is not a new phenomenon and is not likely to change. I always point out that putting in an offer to buy a house is like a mini-business plan, buyers need to position themselves as the best buyers – this is not always about price.
- Lorcan Sirr is talking about the contentious issue of non-return of rental deposits. This is not a new problem, there is legislation in place to protect tenants but this legislation is simply not being enforced. Tenants affected are advised to speak to the Residential Tenant Board (RTB), irrespective of whether their tenancy was ever registered, as they can still avail of protection and redress if necessary. However, I feel the need to point out that some tenants are wholly unreasonable and there are many reasons why a deposit might be rightfully withheld.
- In her market watch column, property editor Linda Daly notes that students are priced out of town – as my own student daughter gets ready to start in UCD over the next few weeks, I am calling in every property favour earned over the past decade! Although, with a price range of €720 to €800 per month for a room, and a reply hit-rate of about 10%, it has not been a fun week. In fact, after a decade of house-hunting, I am going to say that she is my most difficult (non-paying) house-hunter , making unhelpful comments like “why is the fridge beside the bed?”. As a side note, any leads on a house share on the south-side with female students will be greatly appreciated…
The lead story on the front page by Fearghal O’Connor and Philip Ryan reads ‘Housing crisis: cheap loans plan sunk by politics’. Apparently Sparkasse, the biggest mortgage lender in Germany, has experienced political resistance to its plan to enter the Irish market “because the Government wants to protect AIB and Bank of Ireland”. The lending giant claims that its lending model , which underwrites 50% of all mortgage lending in Germany, would help the housing crisis in Ireland.
- Brendan O’Connor writes about ‘The goldmine called home’, which is a pod/bedsit/garden shed in Kimmage for €1,200 per month.
- Ronald Quinlan writes ‘Planners to rule on 500-home scheme’. Farrell Grant Sparks has sought a pre-planning consultation for the development of 482 apartments on the site of Cork developer John Fleming’s Rockbrook scheme in Sandyford using the fast-track planning process.
- ‘With no Brexit boost, is Dublin office boom over?’ This article takes a very different position on the Dublin office sector to that taken by the Sunday Times above. Dan White writes that “Flat rents and a 10% supply increase could spell trouble ahead for the Dublin office market”. Well, at least we know only one of the stated opinions can be right…
- Apparently Johnny Ronan intends to return to building in London, despite Brexit uncertainty.
- Page 10 of the Business section is dedicated to learning how to save a fortune on a home by settling down in rural Ireland. This article by John Cradden makes a lot of sense of those who work remotely or who are looking for a different pace of life. One word of caution, learn the difference between cheap and good value; value can help you build for the future and gives you options, ‘cheap’ might well keep you unemployed and stuck.
Sunday Business Post
The front page of the Money Plus section has an in-depth feature comparing buy-to-let investments against REITS ‘The Investor’s Choice’ by Michael Murray. “Investors often prefer buy-to-let over other forms of property investment. It’s time to think again… Many aspects of buy-to-let investment can be overlooked by a novice – usually the cumulative annual expenses involved in the investment. And these expenses can substantially dilute the gross rental yield from the property”. This article breaks down the comparative liquidity, exposure to risk and investment management and is definitely worth a read.
- Central Bank deputy governor says lending to approved housing bodies(AHB’s) for social housing will not be a “silver bullet” to save credit unions.
- Tenants at the Ice Rink apartments at Dolphin’s Barn in Dublin had their rents almost doubled just days before the recent rental measures came into effect, from €750 per month to €1,425 (and from €900 to €1,625).
- Novelist Roddy Doyle has spoken out that the student accommodation crisis will be sorted out relatively quickly simply because it is a middle-class issue, whereas homelessness, in his opinion, is not being addressed. This particular sentiment shows a complete lack of understanding of the underlying situation; this is not a policy stance but rather a market-led effect or consequence of student accommodation being the single most profitable type of residential development.
- Susan Mitchell writes about the #mynameis campaign, which aims to highlight child homelessness. If you are on social media today, please show your support.
- Half of housing development sites sold by Nama are ‘unviable’ according to internal agency documents obtained by The Sunday Business Post.
- Sw3 (backed by UK fund Tristan Capital) is close to buying the Exo building (not yet completed) in Dublin’s Docklands for €120 million.
- Eoin O’Broin, Sinn Fein TD gives his comment that ‘Public housing is the only solution to the crisis’. He takes the view that incentivising the private sector is “pointless” as they will never provide enough housing. Honestly, this is such nonsense that I could think of a diplomatic way to summarise it – it epitomises the lack of joined up thinking around housing policy-making and highlights the danger of such ‘us versus them’ thinking.
Finally, just a quick reminder that the Irish Property Buyers’ Handbook is being updated for 2018 and I would love to hear about any experiences in the market or new services, technology and trends for buyers. As always, you are welcome to email me with any industry news and updates at Carol@CarolTallon.com.