Housing Prices push up living wage

The Living Wage Technical Group, an organization that annually calculates the wage required to support an acceptable standard of living in Ireland, recently published it’s 2017 report, listing the living wage as €11.70 an hour. This new rate is €0.20 higher than the previous rate and €2.45 higher than the actual minimum wage in Ireland.

 

The Living Wage Group defines the living wage as a rate that “provides employees with sufficient income to achieve an agreed acceptable minimum standard of living”. It is calculated to account for the price of various necessities such as clothing, food, housing, healthcare, and education. Out of these factors, many experts have attributed rising housing prices as the main reasons behind the need for higher wages.

 

In its 2017 report, the Living Wage Group supported this reasoning and published that “the current housing crisis, and associated increases in rent levels, has been the main driver of the increased wage rate”. The average house price in Ireland has risen 11.2% over the past year, with areas such as Dublin seeing even greater increases in …

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Airbnb claims it is not affecting long-term letting

In reference to Airbnb cannot beat revenue from long-term letting, company says by Colin Gleeson on 28 June 2017 in the Irish Times.

On Wednesday, Airbnb spoke to the Oireachtas housing committee claiming that their service does not affect the long-term letting in Dublin. The reason- on average an Airbnb host has to rent out their place well over 120 nights a year to beat the money made from long-term letting. This means hosts would rather long-term let their place than short-term let, if the goal was profit.

Critics of the company are claiming that property owners are ditching the long-term letting and going exclusively to short-term lets. This would not be helping Dublin in this case due to the massive housing shortage.

Patrick Robinson, the Airbnb director of public policy for EMEA, came to the committee with vast amount of information on hosts, statistics, …

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Rents continue to increase over the year by substantial amount

In reference to Irish private sector rents grew by 7.37% from 1st quarter 2016 to 1st quarter 2017 by Robert McHugh on 15 June 2017 in Business World.

Over the course of only a year, the average rent increased by 7.37% from 1st quarter 2016 to 1st quarter 2017. The standardised average national rent being €987, Dublin is one of the highest amongst the other counties as well as Cork and Galway. Looking over the houses and apartments market the trend of rents are continuing to grow.

Outside the Dublin county, the houses and apartment rents at a overall growth rate of 1.3% in private sector rents. Annual growth increased by 7.6% in houses and apartments. The margin is shrinking between the peak of 2007 and the 2017 first quarter however, it is still 8% below.

So far the 19 Rent Pressure Zones (RBZ) are located in parts of the following counties: Dublin, Cork, Galway, Meath. No other parts of the country are currently able to become Rent Pressure Zones, according the to latest Rent Index.

Mr. Simon Coveney, …

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Analyzing rental yields – what this means for investors and renters

An article was published by Fiona Reddan on the Irish Times early this morning examining and evaluating property investment options in and around Dublin today. The article uses the measure of rental yields, how much rental income a property generates as a percentage of its market value, to compare the worthiness of investment options.

 

The major finding in the article was a negative correlation between housing prices and rental yields, meaning that, in Ireland, higher priced properties generate lower investment yields on average. The worst places to invest includes areas such as Dublin 6, Dublin 4, and Dublin 14, where average sale prices are well above €500,000. The best places to invest includes Dublin 10 and Dublin 2, where the average market value of property is much lower. In Dublin 6 for example, the average sale price is €706,741, while rental yields are only 3.6%. On the other hand, in Dublin 10, the average sale price is €173,478, but the annual rental yield is 10.4%.

 

These …

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Housing Prices are to Remain High in the Future

With reference to Housing Costs likely to remain elevated in Medium Term by Ali Uğur.

The housing costs look to remain elevated with no promise of decreasing throughout the rest of 2017. With increases in the average price of property at 10.7% from 2016 to February 2017 according to the CSO residential property price index.

Concerning rental properties, the rental inflation is 13.4% for the first quarter of 2017. This being the second highest level since 2002. This is in part from the supply and demand issue here in Ireland for rental property. The May 1st, 2017 there was fewer than 3,100 rental properties available to rent. This is the lowest on the record, according to the Daft.ie report.

Looking on the bright side, we are seeing an 18% yearly increase in completed residential properties with 14,932 completed in 2016. This is in response to trying to meet the increase of demand in the housing market. A majority of these, however, are one-time builds and can’t predict any yearly continuous builds. The breaking of grounds for new residential homes has …

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Mortgage Market Update

The Financial Broker gives readers an overview on currently property prices and mortgage market conditions.

The Central Statistics Office published a report showing price inflation on property had increased 10.7% in the past year up to February. A similar report reveal how the number of newly build housing last year was 14,932 units when estimates denote a demand of up to 50,000 units. These numbers illustrate a problem in the current mortgage market, which this article pinpoints the causes of. The author laments about rising property prices, arguing that many potential home buyers have missed out on the prime time to purchase property, and are currently no long capable of affording the housing of their choice at an acceptable price.

The author attributes the current housing price and rent inflation in Ireland as consequences of a lack of supply in urban areas instead of lax macro-prudential regulations. In fact, she argues that current Central Bank regulations are too restrictive, and thus have prevented demanders from being able to locate and buy affordable housing. While the prudential regulations have lowered the …

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A response to: Housing for homes – a classic case of market failure

A recent blog post published by Tom Healy, director of the Nevin Economic Research Institute, suggested that the current housing market in Ireland is an example of a failed market. Healy believes that the issue of under supply of housing can only be solved if the government expands provisions of social housing and extends its jurisdictions over prices and supply in the housing market.

Healy based his argument upon the assumption that the current housing market has failed and is unable to recover without intervention. He cites a chronic under supply of housing and the inability of government programs to sufficiently meet demand. While there is indeed a under supply of housing and rising prices due to pent up demand, a series of government construction plans such as the 2013 Forfas Strategy, Capital Investment Plan, and Action Plan for Housing and the Homeless, in addition to private investments are expected to dramatically increase housing supply within the next few years. These projects directly address the supply issue by promising 47,000 additional units of social housing before 2021.

The blog post …

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Property Company Drops Landlords: What this means for Dublin’s rental market

Property agent Hooke & MacDonald announced Monday that it will no longer manage individual lettings because of the paperwork costs involved. The Residential Tenancies Act of 2004 has been recently amended by the Residential Tenancies Act of 2015 and the Planning and Development and Residential Tenancies Act of 2016, which extended rent pressure zones, made it harder to raise rents and increased the frequency of rent reviews and other bureaucratic procedures for private rented housing.

For a large property company like Hooke & MacDonald, the new regulations mean that managing single property lettings is no longer profitable. The company suffers from economies of scale, and only by managing entire apartment blocks and multiple lettings will it be cost efficient. For landlords renting a single property, this means not only being restricted by the regulations but also having to find a different company to represent them.

Hooke & MacDonald’s response reflects the consequences of the new regulations. In particular, regulation on rent pressure zones restrict the rise in rents …

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Where we are in the property cycle and what to expect next

Property cycles have always been a source of fascination for me (KD) and it’s worth briefly mentioning where we are now and where we are likely to go.

In the past I have always said that there are two broadly distinct phases, the first is a post-crash recovery where you see prices come back then rise fairly quickly before stalling.

The ‘stall’ is a mid cycle phenomenon where due to prices having risen you see a lot of buyers back off or take stock of the position, the memory of ‘we saw something like this before’ is still there to haunt them.

After that you get into the second phase where the upward momentum recommences but this time, having seen that the stall was somewhat ‘false’ (in the sense that it is perceived that way, it doesn’t actually have to be that), prices rise up even quicker.

This is unexpected (to some) and evidence that you have to ‘get in’ on the game. It brings us to the second phase which is the classic ‘boom-bust’. This eventuality is inevitable in …

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Newstalk ‘Talking point’ on housing with Sarah Carey

We rarely get to take part in a show that covers so many diverse and interesting points, but last Saturday was an exception.

‘Talking Point’ was about housing and Sarah Carey chaired the conversation excellently with a panel consisting of Ronan Lyons (Daft.ie, Trinity and Sunday Independent), Lorcan Sirr (DIT and Sunday Times), and Karl Deeter (Irish Mortgage Brokers, The Sun and The Sunday Business Post).

Topics ranged from false statistics to future crashes and current dilemmas, if you are into housing even in a tangential way this is a podcast well worth listening back to.

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