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Property & Finance

There’s a lack of property supply to satisfy demand

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By Ted Healy of DNG TED HEALY


Estate Agents the length and breath of the country are this week reporting very strong demand for appointments for physical viewings from prospective buyers keen to view properties first hand.


The opening of retail and personal services by appointment last week has given a much-needed boost to businesses across all sectors, including property and construction.

WORK FROM HOME


While the COVID-19 pandemic has prompted many Irish living abroad to return home, one of the emerging trends is the move by people out of cities to smaller towns and villages due to the ability to work from home. Remote working, a temporary measure implemented during lockdowns, is here to stay.

We are now seeing those people who flocked to our main urban centres for employment, reassess life and work life balance. The pandemic has thought us to appreciate other things and as such many young professionals are now considering relocating to the regions.

TREND


The ‘work from home’ phenomenon has made it possible to conduct business from the remotest parts of Ireland provided good connectivity is available. This is a trend being experienced in the Killarney market.
Since physical viewings returned last week a high number of people looking to return to Killarney to work from home have viewed properties. We noticed the trend developing during lockdowns when we were able to facilitate virtual viewings. This trend has continued since physical viewings were again permitted last week. In the past week alone, we have sold three properties to buyers returning to Killarney to work from home.

LACK OF SUPPLY


The burning issue currently is a lack of supply of properties to satisfy the demand. With suppressed supply of both new and second-hand homes comes increased demand. Killarney is currently experiencing a severe shortage of available properties for sale.


We have a list of ready to go purchasers seeking to buy homes in the Killarney area at present and we would be delighted to speak to anyone interested in listing their property for sale.

Property & Finance

Guidance for reopening your business

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By John Healy of Healy Insurances

It is heartening to see so many businesses reopen in recent weeks. I hope that the progress can continue so that we see the remaining hospitality businesses back in action shortly.

While there is a raft of information from Government and HSE sources, this week I will briefly outline some items to remember from an insurance perspective.

Contact your insurance advisor before you reopen: You may have reduced cover on your property or liability cover over the closure period and it is important to update this prior to opening your doors. Remember you may have staff on site in advance of reopening so it is vital that your policy covers them.
Review your Health and Safety Statement. This should be a living document and be available to review as needs be. Your COVID-19 safety measures should be included and all employees should sign that they have read and understand the statement.

Obtain Return to Work forms: Before any of the team return to work they will need to complete a return to work form and partake in any necessary training. These documents can be found at www.hse.ie.

Outdoor seating: If you are planning outdoor seating on public owned areas you will need to obtain a permit from Kerry County Council and your insurance policy will need to issue a specific indemnity to the Council. The Council will also require a minimum limit of indemnity of €6.5 million, which is standard practice for all State bodies. If this is your first time undertaking outdoor hospitality then you should include this in your Health and Safety Statement and do a full risk assessment.

Water systems: Put in place control measures to avoid the potential for legionnaire’s disease before your premises reopens.

Inspect plant and equipment: This includes lifts, ventilation and kitchen duct systems and generators. Ensure that your inspection certificates are up to date for any lifting plant including passenger and goods lifts.
Identify and display appropriate warning and safety signage for your premises.

Cleaning: Arrange the appropriate cleaning of your buildings and contents. External cleaning contractors should provide you with a method statement, proof of insurance and when finished written confirmation that the cleaning has been completed to the agreed standard.

The above is not exhaustive but there is a wealth of information available on www.hse.ie and www.hsa.ie for reopening. Finally, the very best of luck to all the hospitality businesses getting back to what they do best. All we need now is that heatwave!

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Property & Finance

From November all homes will be revalued

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By Ted Healy of DNG TED HEALY

The property talk over the course of the past week has revolved around the recent announcements relating to property tax.

The Local Property Tax (LPT) is an annual self-assessed tax charged on the market value of all residential properties in Ireland. It came into effect on July 1, 2013 and is collected by the Revenue Commissioners.

Under plans announced at Cabinet this week, homes built after 2013 will now face inclusion in the Local Property Tax.

Up until now the Local Property Tax was levied on property valuations from May 1, 2013. Homes that were built since that date have so far not been liable to the tax as they do not have a valuation dating from then.

This is now about to change which will bring approximately 100,000 homes into the Property Tax net. The new valuation date is to be November of this year with every home in the country liable for the tax by 2022.

It has been reported that 60% of home owners will not be paying any more than they already do, while 10% will see a decrease. It is estimated the change will raise €560 million annually.

Government have advised that from November of this year all homes will be revalued, but it would be done in such a way that it recognises the affordability challenges facing many families. Despite the fact that many properties would have significantly increased in value since 2013, a change in the calculation of band widths will ensure properties do not jump up any more than one value band.

There is also a change to the system that redistributes some of the property tax outside the local authority limits. Currently, 80% of the monies raised are retained in the area, with 20% sent to local authorities. From 2023 it is understood that one hundred percent will be retained in the local authority with central Government making up any shortfall.

There is no need for homeowners to do anything just yet as Revenue have advised they will contact homeowners directly once the changes have been passed into law.

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Property & Finance

Price and value are not the same thing

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By Michael O’Connor

To understand markets, you first have to realise that ‘Price’ and ‘Value’ are not the same thing.

The major indexes continued to trade relatively flat in recent days. The vast majority of Stocks struggled to eke out gains as a lack of clear market catalysts kept institutional investors on the sidelines, while retail traders fuelled the ongoing meme stocks rally. As social media hype pushes the likes of AMC, GameStop and Bed Bath & Beyond ‘to the moon,’ the crypto market continues to trade in the opposite direction, with all major crypto names recording double-digit losses early in the week.

The short squeeze is back

Earlier this year, GameStop saw its share price run from $19 to $483 as the Reddit retail traders banded together to punish the wall street speculators. In recent weeks, the short squeeze is back in fashion. The new king of meme stocks is AMC Entertainment. Recently on the brink of bankruptcy, the movie theatre chain’s stock is up more than 2,000% this year after another roller-coaster week.

While this phenomenon is hard to comprehend at times, in simple terms, the Internet has brought forth the age of virality, and the stock market is not immune.

Younger generations who grew up on the Internet are now having a significant impact on specific companies. Their risk tolerance seems to be much higher than previous generations, and their willingness to band together to support a viral trend knows no bounds.

While these short-term individual stock surges may not significantly impact markets over the longer term, the meme stock craze is here to stay as the gamification of investing becomes a powerful force in an era of social media dominance.

All this speculation raises a lot of questions from investors. Nervous onlookers wonder if markets are broken, worried about how such ‘mindless risk’ can undermine the validity of the market as the ‘meme stock vigilantes’ blatantly disregard traditional valuation metrics.

All this recent ‘mispricing’ has highlighted one of the most common investing misconceptions.

To understand markets, you first have to realise that ‘Price’ and ‘Value’ are not the same thing.

Value is driven by cash flows, growth and risk. Of course, you can disagree about what those cash flows look like or how they are calculated, but the fundamental drivers of value remain the same.

Price, on the other hand, is simple economics 101. Demand vs. Supply. What drives demand and supply is typically mood and momentum. As a result, stock prices do not have to make rational sense at any one moment in time as they are driven by a myriad of human emotions.

Mood and momentum

For me, the current market conditions are reflective of a pricing market being driven by mood and momentum. That isn’t to say that this is necessarily a bad thing. Markets will always reflect human behaviour in some form, and sometimes this behaviour will be more pronounced as price and value push in different directions.

This recent price volatility doesn’t mean you have to change to momentum and memes when selecting your next investment. While the FOMO can be unbearable at times. The truth is, the value factors of cash flows, growth and risk are what ultimately drive markets over the longer term.

For more investing insights visit www.theislandinvestor.com.

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