housing Archives - P F Power & Co. Accountants

First-time buyers feel ‘pushed out’ by bulk investors

First-time buyers feel ‘pushed out’ by bulk investors

Fianna Fáil is calling on the Government to restrict tax incentives for institutional investors in the Irish property market.

The party said so-called “cuckoo funds” have given rise to entire housing developments being snapped up, locking out first-time buyers.

A review by the Department of Finance into the amount of tax paid by these investors is due to be completed next month.

However, the department said institutional investors make up a very small proportion of the residential market.

Figures from Savills Estate Agents show that almost 3,000 properties were block-purchased by investors last year.

The agency said 234 properties were sold in bulk to investors in the first quarter of this year.

However, some prospective home buyers argue that large investment funds, which purchase properties in bulk, could be making it harder for families to get a house or apartment.

Nicola McCann, from Donabate in Dublin, and her partner are first-time buyers and are struggling to get onto the property ladder.

The couple and their young son moved in with Ms McCann’s partner’s family two years ago in order to save a deposit.

“It has been pull your hair out stressful, like our eight-year-old son is sleeping on a bean bag in his Nana’s room at the end of her bed.

“In Donabate there are so many new houses and then you go and look online and they’re all after being sold to private investors,” she said.

Ms McCann said they are saving nearly €2,000 every month to try to secure a deposit.

“It’s people like us and our friends that are now stuck and are being pushed out of where they want to live because we can’t afford it.”

New regulations being proposed by Fianna Fáil would give local authorities the power to restrict the number of properties being sold for rent.

The party is also calling for a full review of the tax treatment for institutional investors.

Fianna Fáil’s Housing spokesperson Darragh O’Brien said the 2013 Finance Act brought in by the Fine Gael and Labour government makes Ireland an attractive country for funds to do business in.

He said: “They don’t pay capital gains tax, they don’t pay tax on their profits and they don’t pay tax on their rents so why wouldn’t you invest”.

In a statement, the Department of Finance said many collective investment structures are designed so that the tax is payable by the investor or shareholder, rather than within the collective investment vehicle itself.

It said this is the case with Real Estate Investment Trust companies and with funds invested in real estate assets.

The department said that in both cases a withholding tax is applied to ensure tax is collected.
Chief Economist with the Sherry Fitzgerald Group Marian Finnegan said investment funds are an essential ingredient to the property market.

“I think they are a great new addition to the property market.

“We have seen over the last five or six years an emerging trend of Private Residential Investment funds coming into the marketplace.

“They are a very small percentage of the market and represent a very tiny percentage of overall transactions, but they are beginning to provide much needed rental accommodation and that is good news”.

Asked if there was a risk the funds would push first time buyers out of the market, she said: “Absolutely not if you look at the figures for the first quarter they bought in the hundreds and not the thousands in terms of property numbers.

“They are really just a very small proportion of the market overall. ”

Mr O’Brien said the State is also buying properties in bulk, which he said is having an impact on first-time buyers.

“It’s impossible for a potential first time buyer right now to compete against large pension funds on one side and the State on the other because the State is also buying up about 3,000 properties a year where first time buyers would want to buy.

Figures show the Government bought an estimated 2,600 properties from the open market last year.

474 properties were bought by the State in the first quarter of this year.

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Housing commencements rose by over 31% in Q1

Housing commencements rose by over 31% in Q1

New figures today show that the number of housing commencements rose by 31.6% in the first quarter of the year compared with the same time last year.

The latest Housing Market Monitor, published today by Banking & Payments Federation Ireland, showed that 5,8000 housing commencements were registered in the first thee months of the year.

The Housing Market Monitor also showed that mortgage approvals and drawdowns both grew strongly in the first quarter, increasing by 9.2% and 8.9% respectively.

It noted that the volume of purchase mortgage drawdowns rose to its highest first quarter level since 2008.

The BPFI figures also revealed that cash sales accounted for an estimated 27.1% of sales on an annualised basis in the first quarter of this year, down from 31.2% a year earlier.

Meanwhile, residential property prices increased by 3.9% year-on-year in March – the lowest rate of annual growth in average prices since August 2013.

The BPFI said its latest Housing Market Monitor points to the need for a range of solutions and stakeholders to meet current housing needs.

Its economist Ali Uğur said that in recent years the private rented sector has been dominated by residential individual investors.

“BPFI mortgage drawdown data show that these individual investors accounted for around 20% of the value of drawdowns in 2006 during the peak of activity. However, since 2008, along with the decline in activity until 2013, the share of mortgages accounted for by residential individual investors declined significantly,” the economist said.

He said the market is seeing increased activity by the non-household sector – which includes companies such as pension funds, specialist private rental firms and Real Estate Investment Trusts (REITs) in the domestic residential property market.

“This in a way shows that, to a significant extent, buy to let sector investors which have been traditionally individual investors have been replaced by institutional investors in the Irish housing market over the last 10 years, particularly in the new apartment sector,” Mr Uğu said.

He said that while the latest figures shows signs of progress on housing supply, significant challenges remain.

“Given different segments that make up the housing market from a demand perspective and the needs of these different segments, it is important to recognise that we need a number of stakeholders, both from the private and public sector, to play a role in addressing the nation’s housing needs with perhaps a different product mix varying according to needs, from houses to apartments and purchase to rental,” the economist added.

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Housing commencements rose by over 31% in Q1

Housing commencements rose by over 31% in Q1

New figures today show that the number of housing commencements rose by 31.6% in the first quarter of the year compared with the same time last year.

The latest Housing Market Monitor, published today by Banking & Payments Federation Ireland, showed that 5,8000 housing commencements were registered in the first thee months of the year.

The Housing Market Monitor also showed that mortgage approvals and drawdowns both grew strongly in the first quarter, increasing by 9.2% and 8.9% respectively.

It noted that the volume of purchase mortgage drawdowns rose to its highest first quarter level since 2008.

The BPFI figures also revealed that cash sales accounted for an estimated 27.1% of sales on an annualised basis in the first quarter of this year, down from 31.2% a year earlier.

Meanwhile, residential property prices increased by 3.9% year-on-year in March – the lowest rate of annual growth in average prices since August 2013.

The BPFI said its latest Housing Market Monitor points to the need for a range of solutions and stakeholders to meet current housing needs.

Its economist Ali Uğur said that in recent years the private rented sector has been dominated by residential individual investors.

“BPFI mortgage drawdown data show that these individual investors accounted for around 20% of the value of drawdowns in 2006 during the peak of activity. However, since 2008, along with the decline in activity until 2013, the share of mortgages accounted for by residential individual investors declined significantly,” the economist said.

He said the market is seeing increased activity by the non-household sector – which includes companies such as pension funds, specialist private rental firms and Real Estate Investment Trusts (REITs) in the domestic residential property market.

“This in a way shows that, to a significant extent, buy to let sector investors which have been traditionally individual investors have been replaced by institutional investors in the Irish housing market over the last 10 years, particularly in the new apartment sector,” Mr Uğu said.

He said that while the latest figures shows signs of progress on housing supply, significant challenges remain.

“Given different segments that make up the housing market from a demand perspective and the needs of these different segments, it is important to recognise that we need a number of stakeholders, both from the private and public sector, to play a role in addressing the nation’s housing needs with perhaps a different product mix varying according to needs, from houses to apartments and purchase to rental,” the economist added.

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High housing costs key driver of wage demands, conference told

High housing costs key driver of wage demands, conference told

HIGH rents and housing costs are driving wage demands that have become the biggest single challenge facing businesses, according to Kevin Sheridan, managing director of Sheridan Cheesemongers.

“Rising wages puts pressure on staff numbers and has a ripple effect through the business – I think this comes from the housing crisis,” Mr Sheridan said..

“We need it fixed and fixed sustainability,” he added.

Mr Sheridan set up the cheese business with his brother in 1995.

He said that at the time there were “no jobs – rents were low so people were setting up small businesses”.

He was speaking at the ‘Family Business Values’ conference at Dublin City University yesterday, which focused on the unique experience of family-owned firms. The legacy of the late Feargal Quinn, who died last week, was remembered by a number of speakers at the event.

Speaking at the event, Keeling Fruit’s Caroline Keeling said the group was now having to deal with issues which were not a factor 15 years ago, such as sustainability and the environment.

She said the preference in choosing a leader for a family-owned business would always be for family members, but “the biggest thing is to protect the business”

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Housing completions up by over a fifth in first three months

Housing completions up by over a fifth in first three months

Housing completions were up by over a fifth in the first three months of 2019, according to Goodbody’s Housebuilding Tracker.

It uses Building Energy Regulation (BER) data to compile its figures.

The official data tracks electricity connection figures.

According to Goodbody’s figures, 4,255 residential units were completed in the first quarter, an increase of 22% over the same period last year.

It says under 2,500 of these were accounted for by housing schemes.

Apartment completions grew by almost two thirds in the first three months, the data shows.

“As we noted in our Q4 Tracker, planning permissions data was pointing to a large increase in apartment output, although the timing is quite uncertain. At 18% of the total, the proportion of output coming from apartments remains quite small,” Goodbody chief economist Dermot O’Leary said.

Dublin and the surrounding counties accounted for over half of the total completions in the period.

Mr O’Leary said the figures for Q1 were in line with its forecasts of 22,000 housing completions for the full year.

Goodbody’s figures pointed to housing supply reaching a nine year high in 2018, but still remains at half of the country’s estimated demand.

It said 18,855 new dwellings were completed in Ireland last year.