# Are we facing a rental crash?



## Panzraam

Looking at the latest graphs on http://daftwatch.atspace.com/ it is obvious that there has been a rapid increase in supply of rental properties (from approx 6,000 in Oct to >10,500 now).​ 
It would seem logical that such an increase in supply would be exerting some downward pressure on rents. Are people noticing rents dropping or longer vacant periods on properties, or is there another dynamic at work in the rental market? What does this increase in supply mean for it mean for investment in residential property in Ireland? Are we facing a crash in rents?​


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## DeeFox

I have an involvement in the letting of a number of apartments and yes I have noticed that they have become harder to let in the past month or so.  I have had to drop rents significantly on two currently available apartments and I have still not let them.  I've noticed that people viewing have become "fussier" and won't settle for apartments that would have been snapped up earlier in the year.  I advertise on daft and by putting up an ad in the local shop close to the apartments - up to recently a property would normally be taken within two days or so.  However, I've now also put an ad in the local paper - something that would have been totally unnecessary up to, say, Feb of this year.  The rent will just have to be dropped even further if they are not let soon.


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## mercman

It depends on the location of the property as to comment if there will be a crash or not. Rents certainly overall have softened. As many developers are renting out apartments if they are unable to sell. And bear in mimd that there are many persons returning 'Home' as the employment requirement is rapidly declining.


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## Ravima

yes


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## Ravima

no


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## renter

Yes. We are facing a rental crash. Details of rental price drops are here.

[broken link removed]

We have recently secured a 20% drop in rent by moving from a brand new large detached house to an even bigger brand new detached house with a huge garden in a Section 23 tax incentive area where there are so many new houses that can't be sold at current prices that vendors including developers have given up and decided to rent.

Our former landlord was the devloper of the estate we lived in and the new landlady even openly admitted that she regretted buying the house given what has happened in the market in the last year or so. The rental yield is less than 3%, so more money could be made on deposit in a bank.
We got an extra 10% off the asking rent in our new house even after it was blankly refused at the viewing. Landlady changed her mind a few days later when she realised that there were few tenants available to absorb the massive rental oversupply. The CSO 2006 Census estimated that there are over 200,000 empty habitable houses in Ireland, so it is not suprising that the rental market is following the sales market trend.


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## television

Depends on where your renting. There will continue to be a high demand for quality rental housing/appartments in certain areas. I double there is too many empty habitable houses in Dublin 1-14 for example.


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## mercman

Maybe, but the void periods are longer and the achieved rents are far less than six months ago.


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## bugler

I've been keeping an eye on a certain type of property in Dublin 1/7/9 and there's definitely a downward trend. I'm actually looking to move, but I'm in no rush and I'm waiting for rents to come down further, and also for the right place of course. 

Aside from prices being dropped I'm also seeing ads staying up for far longer, viewings being cancelled or rearranged etc. Last time I was looking for a place some ads were being taken down after minutes due to the volume of interest.


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## Camry

Just one real world anecdote:

From August 2007, regarding a phase launch in South Dublin:

[broken link removed]



> with some letting agents estimating that a two-bedroom property in the scheme could rent for between *€2,000 and €2,200* per month.


 
A quick Daft search reveals that these haven't been coming of the site until monthly asking rental drops to €1,500-€1,600.


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## Mrs.B

.... a 2.8% gross yield and people think the UK BTL brigade have problems. Madness.


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## MrKeane

Over 11000 properties now available on daft for rent.


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## badabing

http://daftwatch.atspace.com/daftcounty_1.html

Supply for sale and rent seems to have levelled out in Dublin, although it looks to early to say if unrented properties has actually topped out.

It is not correct to say people are going home as the labour market is weak. As long as official figures indicate economic expansion, there will be expansion in the labour market, since our expansion is not coming from productivity gains. GDP expansion is down, but not in negative territory. Therefore real demand for property is still increasing. One offset to this would be children prolonging flying the parents nest.

As the slowdown in building continues, there will come a second upward wave in rent prices as suppply of total property (to let and owner occupy) lags demand. Constant expansion of GDP will necessitate this. I would imagine however, we are some way from this in Dublin, nevermind other areas. One annecdotal note I would make is being involved in selling to the construction industry, that it has slowed down to a trickle


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## Camry

badabing said:


> http://daftwatch.atspace.com/daftcounty_1.html
> 
> Supply for sale and rent seems to have levelled out in Dublin, although it looks to early to say if unrented properties has actually topped out.
> 
> It is not correct to say people are going home as the labour market is weak. As long as official figures indicate economic expansion, there will be expansion in the labour market, since our expansion is not coming from productivity gains. *GDP expansion is down, but not in negative territory*. Therefore real demand for property is still increasing. One offset to this would be children prolonging flying the parents nest.
> 
> As the slowdown in building continues, there will come a second upward wave in rent prices as suppply of total property (to let and owner occupy) lags demand. Constant expansion of GDP will necessitate this. I would imagine however, we are some way from this in Dublin, nevermind other areas. One annecdotal note I would make is being involved in selling to the construction industry, that it has slowed down to a trickle


 
Unfortunately that is incorrect. In the most recently released data it fell in Q4 2007 (-1.3% GDP, -2.2% GNP). We need to wait and see if this was a blip or if it extended into the first quater of 2008 and represents the start of a recession. The information we have about industrial output and activity in the service sector in January and February does not augur well.

[broken link removed]


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## JohnBoy

Not to mention that unemployment has increased from 4.5% in September to 5.2% in February - the March figures are due on Friday. To echo what Camry has said there is already enough statistical evidence around to suggest that the Irish economy is already in recession.


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## Thomas22

Interesting new figures published by http://www.irishpropertywatch.com/ on changes in rental prices.

1 in 20 properties for rent dropped the asking price in the last week!


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## JohnBoy

JohnBoy said:


> Not to mention that unemployment has increased from 4.5% in September to 5.2% in February - the March figures are due on Friday. To echo what Camry has said there is already enough statistical evidence around to suggest that the Irish economy is already in recession.


 
Just to update you - the unemployment rate hit 5.5% in March.


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## Sunny

JohnBoy said:


> To echo what Camry has said there is already enough statistical evidence around to suggest that the Irish economy is already in recession.


 
There is no statistical evidence that suggests Ireland is anywhere near a recession. A recession is two or more successive quarters of negative GDP growth. Irelands economy is still growing albeit slowing down.


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## Camry

Sunny said:


> There is no statistical evidence that suggests Ireland is anywhere near a recession. A recession is two or more successive quarters of negative GDP growth. Irelands economy is still growing albeit slowing down.


 
*Statistical evidence:*

Fact: GDP (and GNP) fell in Q4 2007
Fact: monthly indicators of activity in: manufacturing, services and construction sectors unambiguously show falling activity January-March (i.e. flaling output in Q1 2008).

What other conclusion can one reach? Q1 2008 will show falling GDP/GNP again.


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## mercman

And as or if not more important is that sentiment is been eroded. Without placing a Political angle on the matter, the opposition who are jockying for position have managed to blast through negativity after negativity after negativity, so much so that it is now sticking. First it was residential property, then commercial property and now consumer demand. This is now causing rents to decline. If any of these half witted Politicians could shut up and declare their own policies, the entire economic base would not be as effected as it is.


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## Sunny

Camry said:


> *Statistical evidence:*
> 
> Fact: GDP (and GNP) fell in Q4 2007
> Fact: monthly indicators of activity in: manufacturing, services and construction sectors unambiguously show falling activity January-March (i.e. flaling output in Q1 2008).
> 
> What other conclusion can one reach? Q1 2008 will show falling GDP/GNP again.


 

What are you talking about? Falling GDP growth does not mean a recession. It means the economy is slowing. You cannot be in a recession with positive growth and GDP growth in Q4 2007 was 3.5%. If that means a recession, happy days! That is still one of the strongest growth figures of any country


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## Camry

Sunny said:


> What are you talking about? Falling GDP growth does not mean a recession. You cannot be in a recession with positive growth and GDP growth in Q4 2007 was 3.5%. If that means a recession, happy days!


 
You aren't supposed to be measuring it relative to a year ealier.  You sem to have read somewhere that two consecutive quarter of falling output (i.e. negative GDP growth) is a common definition for a recession. But when people say this they mean _*from quarter to quarter*_, not annual growth rates.

Lord, give me patience.


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## mercman

In simpler terms, two consecutive quarters each with falling growth represents a recession.


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## Sunny

Camry said:


> You aren't supposed to be measuring it relative to a year ealier.  You sem to have read somewhere that two consecutive quarter of falling output (i.e. negative GDP growth) is a common definition for a recession. But when people say this they mean _*from quarter to quarter*_, not annual growth rates.
> 
> Lord, give me patience.


 
Sorry you are right. I wasn't very clear. My point I badly made was that even if Q1 figures confirm Q4 and we enter a technical recession (and I don't think we will), all we are likely to see going forward are periods of below average growth but still growth. I think if you are to give any country the option to have a technical recession where the economy is expected to grow 2-3% year on year, they will take it. Seem to remember that German GDP growth halved in the last quarter 2007 and nobody is claiming they are in or near recession. Its way to early to say Ireland is in or anywhere near a recession.


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## Camry

Sunny said:


> Sorry you are right. I wasn't very clear. My point I badly made was that even if Q1 figures confirm Q4 and we enter a technical recession (and I don't think we will), all we are likely to see going forward are periods of below average growth but still growth. I think if you are to give any country the option to have a technical recession where the economy is expected to grow 2-3% year on year, they will take it. Seem to remember that German GDP growth halved in the last quarter 2007 and nobody is claiming they are in or near recession. Its way to early to say Ireland is in or anywhere near a recession.


 
You can hope I suppose. I can;t think of any credible person who still believes Ireland will experience an increase in GDP this year as a whole.

If you want to talk year-on-year, I reckon GDP will be around -5 or -6% in Ireland by Q4 2008.

Feel free to file a link to this post and remind me of it at a later date.


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## MrKeane

Todays unemployement figures are yet another indicator that we are staring recession in the face, anybody who does not see it now and who increases their exposure to anythins associated with the construction sector will deservedly get burnt badly.

Where is the rental market going to come from? Property for rent (and for sale) is rising every day, unemployment keeps rising, this will lead to a ripple effect, less overtime in service industries, less commission, less tips etc., so less money for rent etc.


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## Irishchappie

I've been renting in Dublin for a number of years, couldnt afford to purchase at the time when I first moved here and now I just prefer to rent, keeps my options open and renting in a shared house is so much more appealing than having a place on my own, gets lonely living on your own.. and its cheaper too..

I'm moving house soon and my landlord is upping the rent by a huge amount in the place im moving out of, €500 a month, which is nuts but he is convinced he is gonna get it. Apparently there are 3 other houses on the street renting at this price and everyone is being snapped up as soon as they are available for rent. All these are 3 bed townhouses by the way in the Dublin 6w area..

So apparently in some areas, rental properties are in great demand and prices are increasing..

I.C


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## Shark Trager

I let an apt in Dublin about 5 weeks ago,2 bed E1350 pm,phone rang off the hook,let it in record time,are we facing a crash?Short answer No.


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## mercman

Shark, 5 weeks ago Bertie Ahern stated that he wouldn't retire until the next election !!! 5 weeks is a long time in property and politics.


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## Shark Trager

Mercman,the question was "Do you thinl we are facing a rental crash?"I provided anecdotal evidence we were not,how are you comparing political life with the rental market?


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## mercman

mercman said:


> And as or if not more important is that sentiment is been eroded. Without placing a Political angle on the matter, the opposition who are jockying for position have managed to blast through negativity after negativity after negativity, so much so that it is now sticking. First it was residential property, then commercial property and now consumer demand. This is now causing rents to decline. If any of these half witted Politicians could shut up and declare their own policies, the entire economic base would not be as effected as it is.



This was my comment of yesterday. As soon as Consumer demand is affected all other matters follow suit. Just check www.daft.ie and you will see the rental market. Properties that were achieving €2,000 last year are now fetching €1700 now. Properties that were fetching €1,400 in January '08 are now down to €1250 now. These are my own instances. It's down to affordability, confidence and sentiment.


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## Shark Trager

Mercman,when I let the apt 5 weeks ago,there were roughly 4k worth of rentals according to daftwatch,this is still the case,ergo I would expect the same volume of callers.
Sentiment-confidence,while I am sure it plays a part in decisions relating to luxury purchases ie cars,holidays etc providing a roof over your head?I would have thought notI am open to correction.
I think what is happening is prices are returning to normal after last years 20% increases in rent,which was unsustainable.


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## mercman

In case you think I am imagining any of this, the comments are from www.irishpropertywatch.com. Worth your while having a look.

This is the first rental report from IPW.
_  The number of properties for rent in Ireland was just under 11k and around 1 in 20 properties reduced the asking rent
 Over the period 27th March to the 2nd of April 2008 there were 574 rental price reductions. The average reduction was just under €100 per month or 6.5% of the asking rent.
 In the future we intend to publish longer rental trends and movements to keep you up to date on developments in the rental market._


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## Shark Trager

This 1 in 20 is prob a seller trned reluctant LL,sitting out the downturn,offering a property to let at a discount to a tennant who does not mind EAs showing it to buyers,I would think.


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## Shark Trager

These type of reluctant LLs will not last long though and will quickly flush out of the market,when the realisation of what being a ll entails,and that house prices are not going north any time soon.


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## Mrs.B

..... & what do you think will happen to house & rental prices once these amateur / reluctant LLs flush out of the market?? 
& how do they flush out? 
how many reluctant / amateur landlords do you think there are in Ireland? 50k / 100k / 250k? /More?


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## Shark Trager

Mrs.B said:


> ..... & what do you think will happen to house & rental prices once these amateur / reluctant LLs flush out of the market??
> & how do they flush out?
> how many reluctant / amateur landlords do you think there are in Ireland? 50k / 100k / 250k? /More?


When they realise they will have to discount price to achieve a sale,prices are going nowhere north in the next no of years,and property will sell if its priced well.
How many LLs ??well you sound like you know all the answers,so I am sure you will tell me.


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## television

What I want to know being an amateur Landlord is if I am going to rent my three bedroom house in Drimnagh for 1400 a month. it will be on the market in 2 months. People have to live somewhere and so if they are not buying then they will have to rent. So heres the way _I _see it. Those who would have bought will now continue to rent in the medium term. Those people who cannot sell houses will begin to rent them out. Those new people into the rental market who may have decided to buy will rent the new houses on the market. IN the medium term as house prices bottom out (over the next year) and begin to rise by maybe 2-3 percent (over the following years) those renters who will begin to see a slight price rises in houses will begin to say I better buy before prices rise any more. To conclude a moderate fall in rental prices in the medium term but not a rental crash. I am talking Dublin here and the closer you are to good transport and the city centre the better. Also in the log term the population of Dublin is set to rise dramaticlly in the next ten years. So _I say _If do have property rent now dont sell even if you do get a good price over the net few years. House prices will skyrocket in the next ten to fifteen years. I'm buying another property in 6 months time somewhere close to the Luas within a 3 mile radius of the city centre.


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## mercman

Television -- That is a very well thought out, constructive and sincere post. I just wish I had the ability to look into the future like you. Tell me would you have the Lotto numbers for next Wednesday and next Friday.

As job losses increase  it will have further damage to sentiment. Coupled with the state of the Financial Markets, the Banks reducing their lending and general downturn, the short term looks somewhat bleak. House prices to Skyrocket in 10/15 years. Maybe / Maybe not, but don't hold your breath. Saying all that and joking aside, the manner in which you are building your portfolio seems quite credible.


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## Shark Trager

Rents were never monitored before in any organised fashion,LLs,well half smart ones,will put a  number of ads in starting at what even he knows is above what he will get,and working down the price,til he gets a tenant,all it will have cost him is a few ads in the Herald,or on daft,that is what is been captured by these sites,and now been passed off as rental drops.


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## mercman

And the longer a property remains empty means longer void periods which effects the Yield. And what about the costs of the advertising ?  The only answer is to wait and see and I would have a good gamble that rents are heading South. And I only bet on certainties.


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## Shark Trager

Cost of ads?? 29e in the Herald a tenner or so on Daft,hardly expensive,when you could be gettin an extra 100e pm over a year lease.Daft watch show 4k properties to rent in Dublin,which has at a conservative guess 1.04mil people,hardly evidence of a " crash"


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## mercman

You forgot about the Void periods. Each 3 month period represents one quartre of the total annual income. I'm no expert, only that I have been operating (on an individual basis) in The Irish and UK property markets for the last 20 years. If you are saying no 'crash', why have prices dropped 25% on some properties in the market; and why has the doll of the Irish economy become the major victim of the economic slowdown, with dozens of developers/property owners entering liquidation / administration. Wake up and smell the coffee !


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## Shark Trager

Keep up will you,I am talking about  no crash in the rental market,which is what this thread is about,A semi blind half wit would tell you the property market is crashing,why dont you wake up and smell the coffee.


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## Mrs.B

Chill out girls.

ST - are you not somewhat concerned (as a long time LL) that these new LLs who entered the fold in the last 4 - 5 years for cap app purposes will be unable to sell up (without taking a bath) and will instead take whatever rent is on offer sending rentals lower?


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## Shark Trager

The Market is fine,those new LLs who in the last few months reluctantly parked property in the rental market are on bridging finance,and are heavily subsidising their tenants rent,they will take a beating and leave selling at a discount,Developers also will have to sell apt blocks they put into rental market as Banks will make them sell at a discount or repossess.I have outlined in previous posts reasons why rents appear to be dropping,the monitoring and capturing of data relating to price drops is nothing more than a LL pitching rent high and dropping it til he gets a a tenant,this was never recorded before.

Another reason A reluctant LL offering reduced rent to a tenant who will not complain about viewers traipsing through the apt while he tries to get the best of both worlds,selling and renting it.Take it from me this may have workrd it the boom times,but a ftb will not be impressed,especially with the choice open to them.

There is an awful lot of "oh no the sky is falling" sentiment driven by an organised property website,who delight in this negative bs,but My experience recently,the Dublin market is fine.


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## Dinny

Rented our house at the weekend. Got what we asked for and had 3 couples looking to give us a deposit on saturday evening. I cant see any rental crash as yet but can understand why people may think one is comming


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## murphaph

Shark Trager said:


> The Market is fine,those new LLs who in the last few months reluctantly parked property in the rental market are on bridging finance,and are heavily subsidising their tenants rent,they will take a beating and leave selling at a discount,Developers also will have to sell apt blocks they put into rental market as Banks will make them sell at a discount or repossess.I have outlined in previous posts reasons why rents appear to be dropping,the monitoring and capturing of data relating to price drops is nothing more than a LL pitching rent high and dropping it til he gets a a tenant,this was never recorded before.
> 
> Another reason A reluctant LL offering reduced rent to a tenant who will not complain about viewers traipsing through the apt while he tries to get the best of both worlds,selling and renting it.Take it from me this may have workrd it the boom times,but a ftb will not be impressed,especially with the choice open to them.
> 
> There is an awful lot of "oh no the sky is falling" sentiment driven by an organised property website,who delight in this negative bs,but My experience recently,the Dublin market is fine.


With all this property being sold at a discount, yet with credit getting hard to come by, is there not a risk that cash rich investors will buy it at rent it out as opposed to ftb'ers etc?


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## bankrupt

Shark Trager said:


> the monitoring and capturing of data relating to price drops is nothing more than a LL pitching rent high and dropping it til he gets a a tenant,this was never recorded before.



I doubt it.  Surely rental property was being snapped up so fast in '07 and late '06 that there was no chance that rents were below the asking price?  It is clear that it is now taking longer for properties to rent and asking rents are also dropping, this is a new phenomenon in my opinion.


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## Shark Trager

bankrupt said:


> I doubt it. Surely rental property was being snapped up so fast in '07 and late '06 that there was no chance that rents were below the asking price? It is clear that it is now taking longer for properties to rent and asking rents are also dropping, this is a new phenomenon in my opinion.


 

No as I said this capturing of data by propetywatch only started in sep 07,you really should read and understand what I have posted,before replying to it.What I said was LLs will start a classified ad for an apt at above what he thinks the market will support,if he attracts a tenant,happy days,if not the next ad will be reduced by whatever 50e - 80e,this is very common,this is also what you are now seeing beig captured for the first time,and been called laughably a " crash"
I am starting to feel like Brer rabbitt in the story where he meets the tar baby!


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## bankrupt

Shark Trager said:


> No as I said this capturing of data by propetywatch only started in sep 07,you really should read and understand what I have posted,before replying to it.What I said was LLs will start a classified ad for an apt at above what he thinks the market will support,if he attracts a tenant,happy days,if not the next ad will be reduced by whatever 50e - 80e,this is very common,this is also what you are now seeing beig captured for the first time,and been called laughably a " crash"
> I am starting to feel like Brer rabbitt in the story where he meets the tar baby!



Cheers Brer, I'll try and read your missives more carefully.

Do you mean to infer that it was common for rental properties to have long empty periods in '06 and '07 as appears to be happening regularly now?  You also seem to believe that landlords would routinely drop their asking prices during this period?   I can't say that I find this credible and it's certainly not what the media was reporting nor was it my experience during the time.

Calling a rental "crash" is perhaps overstating things but it does seem that there is a slowdown of some sort.  What % drop in rents would you consider a crash? 10? 20? 50?


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## Shark Trager

Bankrupt I am def not calling it a crash at all,
I will give you ab exxample,tenant leaves mon,I place ad in paper for 2 bed apt at e1500,a price I know to be too high,but I will chance it, no replies after 3 days,no problem,new ad at E 1350,lots of interest,rented.A few days void is nothing.
Look I do not have a crystal ball,just giving reasons for the supposed drops in rents.


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## Shark Trager

murphaph said:


> With all this property being sold at a discount, yet with credit getting hard to come by, is there not a risk that cash rich investors will buy it at rent it out as opposed to ftb'ers etc?


 
The Investor for the main,is not really in the market in huge numbers,there are a good few experienced investors haggling at the moment in Dublin,some buying distressed gaffs others waiting in the wings,long term LLs will be keeping an eye out for bargains,I know I am,bought in D8 recently,very good price.
For the main though it really is ftbs who are buying.


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## mercman

For the purpose of this thread, what % decline in rental prices would define a crash. 10%, 20%, 30% or some other figure ???


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## Afuera

SharkTrager and Dinny, would you care to mention the areas you managed to rent so quickly in? Thanks.


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## Shark Trager

Inchicore,its an area I have some property in,always rents fine.


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## Afuera

Thanks Shark Trager. It is the right side of the M50 for Dublin, so I guess it should hold up for rental demand.


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## Pope John 11

Hands up.....
I agree with Sharktiger....I recently rented a property in the city centre....for the same rental price I took in 8mths ago....I have also tested out the water by advertising it at a greater rent. It just makes common sense...to get the best returns


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## Dinny

2 bed killiney


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## cjh

This website 

http://www.irishpropertywatch.com/

is tracking rental trends in Ireland.


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## mercman

Shark -- Eh Have a look at www.irishpropertywatch.com. Doesn't appear to be that rentals will be holding up for much longer.


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## damson

I see Edel Morgan (_Irish Times_) has been keeping an eye on this thread: It's mentioned in [broken link removed], where she describes it as "a heated debate - verging on a spat" and gives a few quotations.


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## Shark Trager

Merxman,there a lot of people putting rentals on a at riduculous prices,not surprised they are not renting,also big drops are because the E/As using repeated shortcode daft ads for 2beds and studios,huge difference in price.


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## Bronte

One thing that strikes me as riduculous in the article in the Irish times is the example of the landlord in Bally... renting for 1600 6 months ago and getting a tenant who took it for 2100 and the landlord is now quoting 1800.  The landlord took the 2100 but his tenant only lasted 6 months that tells me that the rent was too high and the landlord was probably more realistic with the 1600 rent in the first place.  This does not prove that that rents have crashed more like reality has set in.  The increase in rents was unsustainable.  As always location is key.
Another point is that there is a quote that Daft have a lot more properties to rent than last October, so what, this only shows that Daft have more of a market share.  10 years ago when they didn't exist there were zero properties on Daft to rent what does that tell us about the rental market crashing - nothing.  If Daft had existed for a long time I would take more notice of the increases/decreases.  In any case the population of Dublin has dramatically increased as has housing stock so of course the volume of properties to rent has increased.


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## Afuera

Bronte said:


> Another point is that there is a quote that Daft have a lot more properties to rent than last October, so what, this only shows that Daft have more of a market share.


In fairness, Daft has been around for a fair while and is well recognised as the leader in Property rentals online. I doubt that they have doubled their market share in the last 6 months. Something is amiss if the stock on their books is spiking so quickly.


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## z104

It depends on the property and location.


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## contractor

Bronte said:


> One thing that strikes me as riduculous in the article in the Irish times is the example of the landlord in Bally... renting for 1600 6 months ago and getting a tenant who took it for 2100 and the landlord is now quoting 1800.  The landlord took the 2100 but his tenant only lasted 6 months that tells me that the rent was too high and the landlord was probably more realistic with the 1600 rent in the first place.  This does not prove that that rents have crashed more like reality has set in.  The increase in rents was unsustainable.  As always location is key.



I totally agree. The 2100 was above the odds.  Landlord is now back down to 1800 which is still 200 above the going rate of 1600.

People are trying to rent out properties which simply have no renting potential.  i.e miles away from anything and completely impractical compared with the ones "in the town".  It's not a rental crash because they're not getting rented out in the first place.  If you want to call it a crash then it goes under the category of the property crash.  People can't sell so they try to rent only to find they can't rent.  It's a delayed reaction, they'll be back to where they started only this time they'll have to face reality that their property is not worth as much as their green eyed monster says it is.


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## bugler

> In any case the population of Dublin has dramatically increased as has housing stock so of course the volume of properties to rent has increased.



Are you implying that the increases seen in the number of properties for rent on Daft over the past year is broadly (or otherwise) in line with Dublin's population growth?


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## landlord

bugler said:


> Are you implying that the increases seen in the number of properties for rent on Daft over the past year is broadly (or otherwise) in line with Dublin's population growth?


 
This is a very good point. Everybody knows that on average the supply of rental properties has increased over the last year. But has the demand kept up with this pace? The fact that the trend shows reduced rents must mean the demand is not as strong. But why??? Is there any hard facts from the government perhaps to show that foreign nationals are packing up and heading home? Maybe those who have left college and are unable to buy are living at home for longer before renting etc....


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## contractor

Crash or no crash people have to live somewhere.  They're going to rent or they're going to buy, nobody can seriously suggest that we are going to have a generation of late twenty and thirty somethings living at home with mumsy and dadsy.  Foregin nationals leaving the country would be a concern but where's the evidence that foreign nationals are flocking from the country?

When people stop renting and start buying again then the thousands of temporary landlords who are only in the business to ride the storm will be able to sell, and hence leave the rental market.

Doom and gloom all you like but I see nothing to be worried about.  Obviously there will be longer vacancy periods as renters have more choice (although in reality the choice is not as great as you think as I mentioned before a lot of properties simply have no rental potential at all).  This is part of the business, its not a "crash", its simply business.  There are ups and downs.

Me tuppence.


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## cjh

There are ups and downs in a cycle.
Bubbles crash.

Crucial difference.


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## contractor

cjh said:


> There are ups and downs in a cycle.
> Bubbles crash.
> 
> Crucial difference.



All I see is the same bubble and thats the property bubble.  The property crash is affecting a lot more than just the landlord business.  It is of course the most obvious and I can see why everyone is latching on and scaremongering about more bubbles.  If everything is a bubble then we have a concrete supply bubble, timber supply bubble, electrical goods bubble, furniture bubble, solicitors bubble, civil engineer bubble etc etc etc.


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## Shark Trager

contractor said:


> Crash or no crash people have to live somewhere. They're going to rent or they're going to buy, nobody can seriously suggest that we are going to have a generation of late twenty and thirty somethings living at home with mumsy and dadsy. Foregin nationals leaving the country would be a concern but where's the evidence that foreign nationals are flocking from the country?
> 
> When people stop renting and start buying again then the thousands of temporary landlords who are only in the business to ride the storm will be able to sell, and hence leave the rental market.
> 
> Doom and gloom all you like but I see nothing to be worried about. Obviously there will be longer vacancy periods as renters have more choice (although in reality the choice is not as great as you think as I mentioned before a lot of properties simply have no rental potential at all). This is part of the business, its not a "crash", its simply bus
> iness. There are ups and downs.
> 
> Me tuppence.


Correct,choice is not as great as you might think,take a breakdown on Dublin.

2 bed apt up to max rent of 1400e pm

South Dublin 171
North Dublin 253
West Dublin 231
City Centre 30
Total 685.

I picked a 2 bed apt at that price,because I feel its not far off what a typical 2 bed can command,and no sorry just because your mortage is 2300e,this does not mean it can command that rent,I feel a lot of rental parkers ie sitting out the crash, are in for a major shock,and will leave the rental market tres vitement,as the monthly cost of subsidising their tenants rent really hits home hard,there is a lot of unrentable overpriced stock stagnating about the country,giving the appearance all rentals are in trouble...not true.


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## JohnBoy

contractor said:


> Crash or no crash people have to live somewhere. They're going to rent or they're going to buy, nobody can seriously suggest that we are going to have a generation of late twenty and thirty somethings living at home with mumsy and dadsy. Foregin nationals leaving the country would be a concern but where's the evidence that foreign nationals are flocking from the country?
> 
> When people stop renting and start buying again then the thousands of temporary landlords who are only in the business to ride the storm will be able to sell, and hence leave the rental market.
> 
> Doom and gloom all you like but I see nothing to be worried about. Obviously there will be longer vacancy periods as renters have more choice (although in reality the choice is not as great as you think as I mentioned before a lot of properties simply have no rental potential at all). This is part of the business, its not a "crash", its simply business. There are ups and downs.
> 
> Me tuppence.


 

http://www.fas.ie/en/About+Us/News/labourmarket2007q3.htm

FAS predicts that net migration will halve in 2008. They also predict a 5.3% unemployment rate for 2008. Given that we are now at 5.5% we need a net increase in employment to take the 2008 average back down to 5.3%. 

There is certainly an over-supply of rental accomodation in certain parts of Ireland. But the Daftwatch graphs may only tell half of the story. The increase supply (in some areas) in now meeting reduced demand.


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## mercman

Shark, A true representation of the Dublin market can only be assessed when the full figure / amount of property available to rent can be analysed. A selection cannot be accepted as a true analysis. But then you think it's honky dory don't you !!


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## JohnBoy

Not to be forgotten that cheaper rents would be great news for all the renters out there. We cheer cheaper TVs, flights and cars. Why not cheaper accommodation too?


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## Howitzer

JohnBoy said:


> Not to be forgotten that cheaper rents would be great news for all the renters out there. We cheer cheaper TVs, flights and cars. Why not cheaper accommodation too?


Indeed. Like many of the other items that form the basket of goods used by the CSO to estimate inflation the Government, Unions, and society in general, should welcome lower rents as they would cheer lower fuel and food costs. Anyone not welcoming lower rents has an obvious vested interest with no concern for the wider economy. 

Rising rents add nothing positive to society.


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## Jethro Tull

JohnBoy said:


> Not to be forgotten that cheaper rents would be great news for all the renters out there. We cheer cheaper TVs, flights and cars. Why not cheaper accommodation too?


 


Howitzer said:


> Indeed. Like many of the other items that form the basket of goods used by the CSO to estimate inflation the Government, Unions, and society in general, should welcome lower rents as they would cheer lower fuel and food costs. Anyone not welcoming lower rents has an obvious vested interest with no concern for the wider economy.
> 
> Rising rents add nothing positive to society.


 
I agree with both these posts, didn't the times have a headline along the lines of 'How *bad* can the rental market get' or something along those lines last week? I for one fail to see how the decrease in price of a basic need is a bad thing except for those amateur landlords who were suckered in by FF and vested interest spin on the property market, and its obviously bad news as VIs will no longer be able to dupe any more unsuspecting amateur landlords into buying overpriced properties until sanity returns to the market. If the price of bread halved tomorrow would it be bad news despite the fact that bakers would be poorer?

Btw its good to see so many people using one example as proof that the entire market is going one way or another.


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## shanegl

> Anyone not welcoming lower rents has an obvious vested interest with no concern for the wider economy.



To be fair, this is the property investment section. You can't expect landlords to welcome lower rents anymore than PAYE workers would welcome lower wages (even though this would be good for competitiveness).


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## z106

Just to answer the origginal question..the answer is no.

A rental crash is HUGELY unlikely.

A  reduction ? Perhaps.

A crassh ? No. Definitely no.


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## Mrs.B

One man's crash is another man's correction.

A huge proportion of property purchased in the last 5 years was purchased for capital appreciation purposes alone. Most of these folks who are now unable to flip for profit will look to achieve a rental stream to offset a proportion of their mortgage obligations. They'll take the balance on the chin until? the sales market rebounds.

With supply increasing (now 11,000+ properties to rent on Daft) and demand at best remaining constant I believe that rental prices will have to suffer. 

I think we'll see a 20% or so drop off current rents.

Bear in mind that this would be very positive news for the vast majority of folks out there....


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## JohnBoy

I think that you are right in that assuming that demand remaining constant is an 'at best scenario'. For sure, there must be a large number of people who are now renting either because they cannot afford to buy or they believe that prices may fall further; but rental supply has still increased.


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## murphaph

Well, just to throw in some anecdotal 'evidence'....I know a couple who sold up recently and now rent in the expectation that prices may fall a bit and they can upgrade fom apartment to house. Interestingly however, the house they are renting is from a 'reluctant LL' who would like to sell the house "at the right price" but will rent it out until prices rise. Make of that what you will. Two sides of the same coin. Long term landlords are somewhat out of this equation as if rented houses like this sell, the supply of rental accomodation will fall, but so will the number of renters seeking accomodation-the question is...will the fall be linear?


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## IFT

Article on the front page of the NYtimes.



> But some worry that the housing meltdown could spoil Ireland’s recipe for success. Like Spain, it attracted lots of foreign workers, many of whom came for well-paying jobs in the construction industry. That fueled the Irish rental market, which has remained buoyant and been a source of income for Ireland’s many real estate speculators.
> “If the immigrants go back home, will this hurt the rental market?” asked Ronan O’Driscoll, a director in the Dublin office of Savills, a real estate firm. “If that happens, it would definitely cause foreclosures.”



http://www.nytimes.com/2008/04/14/b...real.html?_r=1&hp=&oref=slogin&pagewanted=all


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## contractor

IFT said:


> Article on the front page of the NYtimes.
> 
> 
> 
> http://www.nytimes.com/2008/04/14/b...real.html?_r=1&hp=&oref=slogin&pagewanted=all




Scaremongering!  Obviously if thousands of tenants leave the market then it could mean trouble.  But its not actually happening is it?  And whether you are affected or not all depends on your property.  Many LL's have never rented to foreign nationals.

I think this article is a bit behind the times.  Housing are starting to sell again, albeit at 7%-10% lower than 2006 prices.  This is not something I've read somewhere but something I'm seeing within my circle of friends, family and neighbours.


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## Howitzer

contractor said:


> Scaremongering!


It's an article written for a foreign newspaper, aimed at a foreign audience. By defintiion it's not scaremongering - it's schadenfreude.


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## groom

contractor said:


> Scaremongering!  Obviously if thousands of tenants leave the market then it could mean trouble.  But its not actually happening is it?  And whether you are affected or not all depends on your property.  Many LL's have never rented to foreign nationals.
> 
> I think this article is a bit behind the times.  Housing are starting to sell again, albeit at 7%-10% lower than 2006 prices.  This is not something I've read somewhere but something I'm seeing within my circle of friends, family and neighbours.



Scaremongering? By an estate agent?

If you're silly enough to want to buy now, chances are you won't get a mortgage


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## Thomas22

contractor said:


> Scaremongering!  Obviously if thousands of tenants leave the market then it could mean trouble.  But its not actually happening is it?  And whether you are affected or not all depends on your property.  Many LL's have never rented to foreign nationals.
> 
> I think this article is a bit behind the times.  Housing are starting to sell again, albeit at 7%-10% lower than 2006 prices.  This is not something I've read somewhere but something I'm seeing within my circle of friends, family and neighbours.



why would the New York Times be trying to scare Irish landlords?


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## contractor

Thomas22 said:


> why would the New York Times be trying to scare Irish landlords?





> Reporting was contributed by Victoria Burnett in Madrid, Eamon Quinn in Dublin, Heather Timmons in New Delhi and Julia Werdigier in London.



It's just a rehash of whats being said here, hence the fact that it has nothing new to contribute.  And it suits them to report it cause it makes their situation look better.


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## Welfarite

groom said:


> If you're silly enough to want to buy now, chances are you won't get a mortgage


 

Why would one be "silly" to buy now? On what basis would they not get a mortgage? 

Surely one's circumstances would dictate their actions or the lender's reactions to mortgage applications


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## MichaelDes

Mrs.B said:


> They'll take the balance on the chin until the sales market rebounds.


Typically the property cycle of boom to bust and back lasts fourteen years. But the boom prior to 2006 lasted more than fourteen years on the upside alone! As only two years of the down cycle have so far emerged, then at the very least another five years of gloom should be expected. It is difficult to predict the extent of the bust and its affect on rents but let agree it's going to be bad, probably very bad. With the exception possibly of BTLers who bought in prior to 2004 in strong rental area's.




Mrs.B said:


> With supply increasing (now 11,000+ properties to rent on Daft) and demand at best remaining constant I believe that rental prices will have to suffer.


Immigration saved the property and labour market problems from 2003 onward. But it unfortunately led to many more to buy into the BTL dream. Now these migrant workers are leaving the false ceiling is exposed. 




Mrs.B said:


> I think we'll see a 20% or so drop off current rents.


According to IMF data, Ireland has the highest out of kilter property markets compared to salary. This figure could be on the conservative side.



JohnBoy said:


> I think that you are right in that assuming that demand remaining constant is an 'at best scenario'. For sure, there must be a large number of people who are now renting either because they cannot afford to buy or they believe that prices may fall further; but rental supply has still increased.


There are too many houses and not enough renters. Rents therefore IMO will follow house prices. This is an unusual vicious circle that will lead to negative cash flow on rent with a asset that is slow/non-existent to sell.



contractor said:


> Scaremongering! Obviously if thousands of tenants leave the market then it could mean trouble. But its not actually happening is it? And whether you are affected or not all depends on your property. Many LL's have never rented to foreign nationals.


Economic migrants typically prefer to rent than buy. But opportunities now available in Warsaw seem better from a disposable income and cost of living for many Poles located here presently. Many are returning home, more so in the UK due to lack of work and currency devaluation of sterling. However, had Poles/CEE etc not have come to Ireland from 2004 on, the property market would have hit the skids then, IMO. But this delaying of the problem and continuation of the hype until the end of 2006 will ultimately cause a bigger headache. 



contractor said:


> I think this article is a bit behind the times. Housing are starting to sell again, albeit at 7%-10% lower than 2006 prices.


What was peak average price in 2006 and what figure are you thinking about??



contractor said:


> It's just a rehash of whats being said here, hence the fact that it has nothing new to contribute. And it suits them to report it cause it makes their situation look better.


Probably true. But people’s disposable income is being eaten by higher costs. My disposable income and its purchasing power seems less in 2008 [anecdotally] compared to 2007, even though my salary increased 5%. Less income means less to spend on rent and other things, most notably curtailment of restaurant eat outs. With Ireland so closely tied to America and UK for business, unemployment is going to increase quickly. The euro strength to the dollar and sterling will also be a catalyst that will cause IMO major economic problems and rapid unemployment. How can the government balance the books based their projections without borrowing hugely. Consumers in Ireland do not have the same option of borrowing their way out of the problem. They have done this already in a reckless manner and many are now up to their eyeballs. With the credit crunch combined that is why the banks are saying no more! Delinquency may soon be a new word for the banks to add to their vocabulary.


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## contractor

MichaelDes said:
			
		

> Immigration saved the property and labour market problems from 2003 onward. It led to more persons to buy into the BTL dream. Now these migrant workers are leaving the false ceiling is exposed.


This obviously depends on your property and location.  I think there is a particular type of apartment suited to low income migrants.  This would suggest that there will not be a wide spread "crash" in the rental market.  Irish people need homes too and seeing as they are not buying homes then its safe to assume the majority are renting (you will not find many late 20s+ willing to live with their parents).



			
				MichaelDes said:
			
		

> There are too many houses and not enough renters. Rents therefore IMO will follow house prices. This is an unusual vicious circle that will lead to negative cash flow on rent with a asset that is slow/non-existent to sell.


You cannot ignore the fact that many homes have no rental potential at all.  People hit by the property crash may attempting to jump into the landlord business but will fail.  These of course are being added to the statistics and making it look like tough times in the landlord business when in reality they belong in the property crash category.




			
				MichaelDes said:
			
		

> Economic migrants typically rent than buy. Opportunities in Warsaw seem better from a disposable income and cost of living for many Poles located here presently. Had poles etc not have come to Ireland from 2003 on, then the property market would have hit the skids around that time,IMO. But by delaying the problem will ultimately cause a bigger headache.


The construction industry has addressed this by drastically cutting the supply of new homes.  There is a double lag effect.  A lag as existing new builds are snapped up and a loag in statistical data.



			
				MichaelDes said:
			
		

> What was peak average price in 2006 and what figure are you thinking about??


I don't know.  But in my experience houses are selling and people are moving.  It's a buyers market for sure and people who move now are not concerned with profit.  They consider a house a home and not an investment.  Speaking long term, now is the best time in years to buy.




			
				MichaelDes said:
			
		

> Probably true. But people’s disposable income is being eaten by higher costs. My disposable income and its purchasing power seems less in 2008 [anecdotally] compared to 2007, even though my salary increased 5%. Less income means less to spend on rent and other things, most notably curtailment of restaurant eat outs. With Ireland so closely tied to America and UK for business, unemployment is going to increase quickly. The euro strength to the dollar and sterling will also be a catalyst that will cause IMO major economic problems and rapid unemployment. How can the government balance the books based their projections without borrowing hugely. Consumers in Ireland do not have the same option of borrowing their way out of the problem. They have done this already in a reckless manner and many are now up to their eyeballs with the banks are saying no more. Delinquency may be a new word for the banks to add to their vocabulary.


No disagreement that we are in economical tough times.  But we're in it with the rest of the world so lets just get on with things.  There are industries booming at the moment, the IT industry for one.  Do you think you'll hear that on the news?  Of course not cause good news doesn't sell!


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## murphaph

Too many variables to predict which way it'll go IMO. 

Anecdotally I have seen no poles go home since early last year when 2 people I employed went back home to complete their studies. No other poles that I employed (retail sector) have gone home or even left work. I know a lot of them have plans to go home eventually but only when they are assured of finding a half decent job back home and have built the house in the country with their irish salaries. I'd say the bulk of poles heading home or elsewhere in the short term will be in the construction sector-maybe others can comment on what's happening there?

If prices fall, houses will become more available (so long as credit is!) to ftb'ers who may be living at home or renting. If living at home it will have a +ve effect on rents as it will reduce the available rental stock, if living in rented accomodation it will have a -ve effect, UNLESS they buy a house from a recent reluctant LL who was just letting out while trying to sell, as this will also reduce the available rental stock and should push rents up or at least reduce the fall somewhat.

Remember that even in mature property markets with slow economies with massive amounts of rental stock decent rental yields are still available so as long as you bought a good while ago I'd say you'll be alright as you can afford to reduce your asking price and still cover costs whereas recent BTL'ers will have to sell up. 

Who knows. I'd say rents will fall myself but I don't think it'll be catastrophic. How do people think all this will affect commercial rents, if at all?


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## Afuera

murphaph said:


> Remember that even in mature property markets with slow economies with massive amounts of rental stock decent rental yields are still available so as long as you bought a good while ago I'd say you'll be alright as you can afford to reduce your asking price and still cover costs whereas recent BTL'ers will have to sell up.


This is a very valid point. BTLers who entered the game late definately have the largest risk of getting burnt if their is a softening in the rental market.

It's important to remember though that it's possible that a large number of recent BTLers may have been "reluctant" BTLers, which would be unfortunate. I.E. Those who needed to trade up from their own PPR, couldn't sell, but found a lender willing to fund the purchase of their new property and the payments of their old one as an investment. I think that until quite recently this was highly encouraged by banks.

I notice that nobody has made a mention yet of how the landlord-tenancy legislation could impact things if there is a softening in the rental market. Under the relevant act, rents can not be set at more than the market rate. It means that if a tenant notices that there are cheaper places being advertised on daft nearby them, they don't even have to move out to obtain a rent reduction. All they would need to do is request the landlord to set the rent to the market rate of X (they might have to wait until they have a Part IV tenancy first). If refused, it will cost them EUR 20 to send a complaint to the PRTB, whereby the landlord will be forced to reduce it. 

Does anyone else feel that this will become an important factor in determining the future of the Irish rental market?


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## MichaelDes

contractor said:


> This obviously depends on your property and location.


Few IMO are well located with strong rental demand but that does not desist in causing problems for others.



contractor said:


> You cannot ignore the fact that many homes have no rental potential at all. People hit by the property crash may attempting to jump into the landlord business but will fail. These of course are being added to the statistics and making it look like tough times in the landlord business when in reality they belong in the property crash category.


Many of these type of investor may stay in denial about the achievable value of their property and decide to wait out for a bounce, which may take a while. So these will be more than just short term distortions. This addition to rental stock will add considerably to the rental scene. Supply and demand ultimately dictates price of rents.



contractor said:


> The construction industry has addressed this by drastically cutting the supply of new homes.


Normally I would agree that with less supply, then demand would shore up. But the supply of new builds has been so great in the last number of years, the build up will take a long time to work through. The amount of property to let on daft IMO will increase significantly during 2008. In the past flippers were not concerned about the hassle of renting for £8k-10k per year preferring vacant dwellings, since capital appreciation was the only aim. Now rent, even if not covering the IO is vital as these builds do not sell. Nationwide - there are many of these types.

Admittedly again, although most are not well located for rental they still will unfortunately affect better located, prime stock within the catchment. People have cars, so what’s another five minutes extra drive for a big monthly saving etc.



contractor said:


> No disagreement that we are in economical tough times. But we're in it with the rest of the world so lets just get on with things. There are industries booming at the moment, the IT industry for one. Do you think you'll hear that on the news?


The winds of recession will hit Ireland the most. Mortgage equity withdrawal and consumer debt have added considerable fuel to the economy in the past. Now these props are gone, the fundamentals don't look sound. Financial companies/pundits/journalists expect Ireland to be affected more than most. Compare the Iseq to its rivals – it’s a pariah by international standards.



contractor said:


> Of course not cause good news doesn't sell!


True - although recessions work in cycles so it's no great calmity to have one. IMO this one though will be the most protracted since WWII, not just for Ireland but globally. High inflation or stagflation, unemployment and slowdown in global economics do not bode well for a country so reliant on exports to the States. Per capita though Ireland exports a hell of a lot more than China so long term it will bounce back.



Afuera said:


> Does anyone else feel that this will become an important factor in determining the future of the Irish rental market?


Extrememly important and thanks for the information. For once legislation may have got something right for a change.


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## badabing

Renting a house in D15 at the mo, no probs, decent yield, and if I had 15 more they would all be let by the end of the week.

Interesting anecdotal note
Most of the welfare recieving prospects are saying they are having alot difficulty securing accom as alot of landlords are not accepting the welfare cheque..presumably these landlords cannot find it in themselves to support our economy with rent tax for some reason, I can only presume they do not intend to stay in for the long haul..I'm not complaining, less competition for me, long may it last


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## landlord

badabing said:


> Renting a house in D15 at the mo, no probs, decent yield, and if I had 15 more they would all be let by the end of the week.
> 
> Interesting anecdotal note
> Most of the welfare recieving prospects are saying they are having alot difficulty securing accom as alot of landlords are not accepting the welfare cheque..presumably these landlords cannot find it in themselves to support our economy with rent tax for some reason, I can only presume they do not intend to stay in for the long haul..I'm not complaining, less competition for me, long may it last



The only reason why I havnt rented to social welfare tenants in the past is that before they can get all the paper work together which usually seems to be at least weeks, I have always managed to let it to someone who is "ready to go".  Perhaps this is the local councils fault...I dont know?


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## Welfarite

landlord said:


> The only reason why I havnt rented to social welfare tenants in the past is that before they can get all the paper work together which usually seems to be at least weeks, I have always managed to let it to someone who is "ready to go". Perhaps this is the local councils fault...I dont know?


 

Interestingly enough, "social welfare tenants" do not get their rent supplement from SW. It is paid by HSE via Community Welfare Officers in local Health Centres. There are plans afoot, AFAIK, to transfer this function to local councils/LA as every Rent Supplement recepient must be accepted on a council/LA housing list before RS application is processed.


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## Brendan Burgess

Folks

This has been done to death now and you are straying into the discussion of house prices. 

Brendan


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