Greece & The Property Market

handlemaster

If greece leaves the euro, what affect will this have on the property market here over time ? Assuming people fear that Ireland may follow if the euro broke down people might invest in bricks and Morter. Who knows but just wondering what could happen

Barely Hedged

handlemaster wrote: »

If greece leaves the euro, what affect will this have on the property market here over time ? Assuming people fear that Ireland may follow if the euro broke down people might invest in bricks and Morter. Who knows but just wondering what could happen

People would do that if the impact of it is looking to be pronounced, long and painful.

At this stage, Greece has lumbered from one crisis to another for the past 5 years. There is nothing to suggest that it will take the markets by surprise => it will be nothing but an intial shock and then business as usual a week or two later.

Nobody will be looking to shift their money into an assest with a return period of > 10y

gaius c

Barely Hedged wrote: »

People would do that if the impact of it is looking to be pronounced, long and painful.

At this stage, Greece has lumbered from one crisis to another for the past 5 years. There is nothing to suggest that it will take the markets by surprise => it will be nothing but an intial shock and then business as usual a week or two later.

Nobody will be looking to shift their money into an assest with a return period of > 10y

That's the optimistic reading. Alternatively, this could cause a barrage of credit events that knock out the Eurozone.

Truth is that nobody really knows what Grexit will cause so we'll just have to hang on and hope for the best.

Barely Hedged

gaius c wrote: »

That's the optimistic reading. Alternatively, this could cause a barrage of credit events that knock out the Eurozone.

Truth is that nobody really knows what Grexit will cause so we'll just have to hang on and hope for the best.

What exactly are these credit events you talk of?

The fact of the matter is that this has been on the cards for the past 5 years. We had the initial crisis in 2011/12 where any of the weaker Eurozone countries could have dropped out in days. Since then, a lot has changed and a significant distance has been put between the weaker countries and Greece. Greece has been the only one not to enact many internal market reforms, and has stumbled from failed milestone to another failed milestone.

You intepret it as if nobody had an idea this was coming. That's the entirely wrong interpretation. The weaker countries have shown their ability to move on, Greece hasn't. This is a shock to nobody and will thus not impact the Irish property market

gaius c

Barely Hedged wrote: »

What exactly are these credit events you talk of?

The fact of the matter is that this has been on the cards for the past 5 years. We had the initial crisis in 2011/12 where any of the weaker Eurozone countries could have dropped out in days. Since then, a lot has changed and a significant distance has been put between the weaker countries and Greece. Greece has been the only one not to enact many internal market reforms, and has stumbled from failed milestone to another failed milestone.

You intepret it as if nobody had an idea this was coming. That's the entirely wrong interpretation. The weaker countries have shown their ability to move on, Greece hasn't. This is a shock to nobody and will thus not impact the Irish property market

They will all be home by Christmas?

Greece's creditors are on the hook for billions. Ireland alone will lose a billion at least. Not for the first time, you've misread one of my posts. Everybody might have known a credit unwinding was coming but that doesn't mean it's outcome can be predicted with any certainty.

And what "lazy Mediterranean" country will be next in the firing line? Portugal perhaps?

GrnRm

Has anyone seen anymore clarification on the whether your home changes status from Private Principle Residence to Investment Property if renting a room?

lunatic_dancer

handlemaster wrote: »

If greece leaves the euro, what affect will this have on the property market here over time ? Assuming people fear that Ireland may follow if the euro broke down people might invest in bricks and Morter. Who knows but just wondering what could happen

people often decide to invest in hard assets at times like this , doubt it has any major negative effect

desertcircus

Barely Hedged wrote: »

What exactly are these credit events you talk of?

The fact of the matter is that this has been on the cards for the past 5 years. We had the initial crisis in 2011/12 where any of the weaker Eurozone countries could have dropped out in days. Since then, a lot has changed and a significant distance has been put between the weaker countries and Greece. Greece has been the only one not to enact many internal market reforms, and has stumbled from failed milestone to another failed milestone.

You intepret it as if nobody had an idea this was coming. That's the entirely wrong interpretation. The weaker countries have shown their ability to move on, Greece hasn't. This is a shock to nobody and will thus not impact the Irish property market

Given that Greece's creditors have sunk additional billions upon billions into the country in the past couple of years, what makes you think default is completely unsurprising?

At any rate, a Greek exit isn't a threat purely in and of itself; it's a threat because of the knock-on effects. If Greece defaults now, and in a year's time is recovering speedily, then the Portuguese and Spanish people will start looking long and hard at exit as a strategy. Not to mention the fact that a Greek default would see European countries lose billions which were loaned to Greece - Portugal had to borrow their contribution, at a higher interest rate than Greece. Leaving the euro has for the past few years been unthinkable, because the consequences have been unknown, but a Greek exit would worsen the consequences of staying while possibly showing that default is less ugly than assumed.

The_Conductor

desertcircus wrote: »

Given that Greece's creditors have sunk additional billions upon billions into the country in the past couple of years, what makes you think default is completely unsurprising?

They had already sought an additional bailout to fund their needs through to 2020 (a further 70 billion apparently- this would also cover repayments necessary in the intervening period of time).

desertcircus wrote: »

At any rate, a Greek exit isn't a threat purely in and of itself; it's a threat because of the knock-on effects.

I don't think so. None of the either recipients of aid have steadfastly refused to reform in the manner that Greece has done. Greece is renowned for its tax evasion- and yet- what was the Greek proposal here- don't reform pensions, don't reform their public sector, reverse many of the agreed disposals, reopen the national TV network- and instead imagine that heaping new taxes on the wealthiest of Greeks would miraculously make the books balance- without any reform of their economy- its full speed ahead, everything as usual.

The Greeks have been quite unique in their pigheadedness.

Also- they cooked the books in the first instance- hiding much of their government borrowings in unusual vehicles, so it didn't feature in their national statistics- so they'd qualify to join the Euro. They failed the qualifying criteria (in quite a remarkable way) at the outset- and yet somehow imagined they could hold the rest of the Eurozone to ransom (and indeed they successfully held the rest to ransom- they've had two bailouts- and are actively seeking a third- and a writedown on all their debts to other EU countries (they've already written down private debts).

desertcircus wrote: »

If Greece defaults now, and in a year's time is recovering speedily, then the Portuguese and Spanish people will start looking long and hard at exit as a strategy.

Portugal and Spain are recovering right here, right now. Spain- was the fasted growing economy in the EU in Q1 of this year- Portugal is looking good too (though its managing its unemployment rate by mass emigration a la the Irish solution of the 70s and 80s). There really is no other country quite like Greece- it is a remarkable basket case- and yet, it has doggedly refused under any circumstance, to countenance reforms- as have the other bailout recipients (with varying degrees of social unrest).

desertcircus wrote: »

Not to mention the fact that a Greek default would see European countries lose billions which were loaned to Greece - Portugal had to borrow their contribution, at a higher interest rate than Greece.

Ireland had to borrow its contribution too- Department of Finance briefings from 2010 state the Irish cost to the Greek bailout would eventually total 1.3 billion all told. I've seen lower figures in the media recently- around the 400 million mark- aka the same as the budget we have from selling our National Lottery- to pay for building our new National Children's Hospital........ It really is that scale at very least- we handed over the same amount of dosh to Athens- as we managed to liberate from selling our National Lottery- to pay for our own children's care and ultimately the future of our own country.

Far from any apparent gratitude towards Ireland and the Irish people- Athens would rather we wrote it off, and sure why wouldn't we- other than a bit of minor inconvenience over Irish Water- the Irish people have been mute almost uniquely over the banking bailout and the implosion in government finances.

desertcircus wrote: »

Leaving the euro has for the past few years been unthinkable, because the consequences have been unknown, but a Greek exit would worsen the consequences of staying while possibly showing that default is less ugly than assumed.

Less ugly for whom though?
It would force Athens to balance their books- without external assistance for the foreseeable future. This is something they have proven incapable of doing. Already their private sector are finding it impossible to trade internationally- and as of this morning- they're cut off from international clearing- and their bank holiday is 'indefinite, but until at least until the outcome of the Referendum on the 5th of July, and its consequences, are implemented by the Greek government'

Ugly for us- we gave them our National Lottery (and then some). We handed over a national asset- to the Ontario Teacher's Pension Fund- and allowed them borrow the money to pay for it- so their new asset would be perpetually loss making- so they'd never have any Irish corporation tax due on their shiny new play thing. Obviously the Pension Fund- let the Pension fund the money to buy the lottery- and get to charge them in or around 10% on the loan- to make the Irish company perpetually loss making...... Its kind of like the way Clery's was sold off to a Private equity group- who proceeded to hive off the major asset into a separate company- charge improbably high rates to the operating company to operate Clearys- and when it implodes- because its then obviously loss making- the major asset is ringfenced from the operational company- and can be disposed off legitimately as a wholly separate entity.

Its all smoke and mirrors- all entirely legal- and indeed legitimate- but is it morally acceptable? Most reasonable people would insist of course not.

Other countries made similar sacrifices towards their contributions to bailout Greece. However bad ours was- per capita the Germans paid 5 times more than Irish people did.

The proposal on the table- was to allow Greece restructure its debts over a far greater period of time.

The Irish debt per capita- is over twice the Greek debt per capita- however as a GDP ratio- we maxed our at just under 124% versus 140% for Greece (we'd be higher than Greece if their economy had fell by 15% as opposed to 25%)........

Some countries are hurting more than others. Some countries- who are highly indebted- but weren't bailed out- such as France and Italy- are arguably in a far worse state than Ireland- and thats ignoring Belgium, The Netherlands and Denmark........

Given the historic inability of Greece and its citizens to live up to their international obligations- and the manner in which the rest of Europe has paid dearly to whitewall Greece- I can't see anyone else using Greece as a template to get out of their debt, or other, obligations.

Its completely uncharted territory- and the rulebook has been tossed out of the bath, along with the baby- by the petulant actions of an academic whose first real post in the real world, unfortunately was as Prime Minister- forgetting entirely about his Finance Minister........

I don't see there being any great change in the Irish property market- its slowly drifting downwards in Dublin- and radiating outwards, slowly- it hasn't become an issue outside the Pale yet- though there are obvious price distortions in many submarkets (such as Galway- city and county for example).

It really is the case that God only knows whats going to happen- its not as bad a situation as it would have been in 2010- but the 5 years that could have made a difference have been wholly squandered.

Barely Hedged

gaius c wrote: »

They will all be home by Christmas?

Greece's creditors are on the hook for billions. Ireland alone will lose a billion at least. Not for the first time, you've misread one of my posts. Everybody might have known a credit unwinding was coming but that doesn't mean it's outcome can be predicted with any certainty.

And what "lazy Mediterranean" country will be next in the firing line? Portugal perhaps?

I havnt misread you, you've just failed to understand what Ive said. You point out that this could lead to credit events but when I explain the context around why a credit event wouldn't happen, I have misread your comment!

Greece will not unilaterally default on all its debts even if it leaves the Euro. Realistically, Ireland will not lose 1bn in total. Most likely a haircut on it.

To ignore the context of where we are now compared to 2011/12 with the Eurozone, as explained by The Conductor, is "lazy" analysis

The_Conductor

Why do you reckon that Greece will not unilaterally default on its debts?
Have a look at its history- its been defaulting on debts for well over 200 years.
The British deployed the Royal Navy at least twice to Athens to seize anything they could lay their hands on.
They have historical form in defaulting on their debts- and I don't see how/why this time will be any different.

Last nights, minute to midnight proposal- was a whole new bailout- sufficient to pay debts as they come due to the end of 2017 (aka the end of the natural current life of the government there).

There is no intention to reform- the only answer they keep coming back with is- tax, tax, tax- the wealthy will pay more and more. Perhaps they might- if they weren't getting shafted for bribes at every opportunity- and the Greek equivalent of the Revenue Commissioners actually had the resources and the balls to chase tax evasion properly.

There are too many structural issues- wallpapering it over- as the Greeks have tried to do- simply doesn't work.

Its not accurate to say we (the Irish) or The Portuguese, were in similar situations. Both our little countries had serious issues- but at least we had functional states. I don't know if any of you have followed any of the cartoons in any of the Greek dailies- lampooning their health services for example- or indeed their educational sectors.........

Just because Greece is the cradle of democracy does not mean the form of democracy it practices today equates with a system any of us recognise. In any event- just because you have a democratic mandate from your people to attack another country- to shaft your creditors- to purloin water resources- to trample over internationally agreed norms- does not make it right- contrary to what the Greek government suggest.

Winston Churchill was onto something when he famously said "democracy is the worst form of government, except for all the others"......... One person's democracy- is another another person's gun barrel to an opponent's head.......

Barely Hedged

The_Conductor wrote: »

Why do you reckon that Greece will not unilaterally default on its debts?
Have a look at its history- its been defaulting on debts for well over 200 years.
The British deployed the Royal Navy at least twice to Athens to seize anything they could lay their hands on.
They have historical form in defaulting on their debts- and I don't see how/why this time will be any different.

Last nights, minute to midnight proposal- was a whole new bailout- sufficient to pay debts as they come due to the end of 2017 (aka the end of the natural current life of the government there).

There is no intention to reform- the only answer they keep coming back with is- tax, tax, tax- the wealthy will pay more and more. Perhaps they might- if they weren't getting shafted for bribes at every opportunity- and the Greek equivalent of the Revenue Commissioners actually had the resources and the balls to chase tax evasion properly.

There are too many structural issues- wallpapering it over- as the Greeks have tried to do- simply doesn't work.

Its not accurate to say we (the Irish) or The Portuguese, were in similar situations. Both our little countries had serious issues- but at least we had functional states. I don't know if any of you have followed any of the cartoons in any of the Greek dailies- lampooning their health services for example- or indeed their educational sectors.........

Just because Greece is the cradle of democracy does not mean the form of democracy it practices today equates with a system any of us recognise. In any event- just because you have a democratic mandate from your people to attack another country- to shaft your creditors- to purloin water resources- to trample over internationally agreed norms- does not make it right- contrary to what the Greek government suggest.

Winston Churchill was onto something when he famously said "democracy is the worst form of government, except for all the others"......... One person's democracy- is another another person's gun barrel to an opponent's head.......

I agree with what you say.

They'll default on the ECB assistance, which is their largest creditor. They'll be less likely to default on the IMF, or at least all of it. They'll still need to interact and borrow so my feeling is that they'll shaft the ECB, ECB prints more money to replace it (so business as usual) and we go on.

The weaker Eurozone countries, as viewed in 2011/12, have moved on significantly so the risks of contagion are much less reduced. They're so much noise around at the moment that some people are losing the run of themselves. I was reading the other day from a commentator that France would exit the Euro based on contagion - I mean for feck sake.

To get back to the original point - the impact on the Irish property market - absolutely nothing

handlemaster

Barely Hedged wrote: »

I agree with what you say.

They'll default on the ECB assistance, which is their largest creditor. They'll be less likely to default on the IMF, or at least all of it. They'll still need to interact and borrow so my feeling is that they'll shaft the ECB, ECB prints more money to replace it (so business as usual) and we go on.

The weaker Eurozone countries, as viewed in 2011/12, have moved on significantly so the risks of contagion are much less reduced. They're so much noise around at the moment that some people are losing the run of themselves. I was reading the other day from a commentator that France would exit the Euro based on contagion - I mean for feck sake.

To get back to the original point - the impact on the Irish property market - absolutely nothing

They have as of yesterday defaulted on the IMF. The greeks needed a strong government voted in to make the tough decisions for the betterment of all. Instead they have a left winged government with no imagination and like been on TV giving quote s that make no sence. No country gets or gives money without a cost the lefties have no understanding or just ignore this fact and rely on populist opinion and policy to rule.