Irish Property Market chat II - *read mod note post #1 before posting*

Villa05

https://www.boards.ie/discussion/comment/117993977#Comment_117993977

Understand your points hence the mass exodus from the cities to more rural locations.

Repeating the mistakes of the last bubble, building where people may afford but not necessarily where they wish to live.

Of course all this will make the crash worse when it arrives. Prices that are held up by so much government spending will fall off a cliff when gov can no longer pay billions supplementing rents and house prices.

Housing was boosting the coffers of the state in the last bubble. This time it's a massive cost plus embedding huge liabilities through inflation linked long term leasing. Building infrastructure further and further away from where it is needed adding further costs in health, environment, infrastructure and education .

The keyword in your post is "captive ". No sector should be allowed to hold the economy to ransom and that is exactly what is happening right now with housing as described in your post. Failure to deal with it will destroy the economy.

Putting in measures (all available to government at the stroke of a pen) that reduces the markets powers would give us a first mover advantage on the majority of our competitors in the same way that corporation taxes did all those years ago.

The country's prosperity or destruction is available to government . Which will they choose?

Security for generations to come through reasonably priced housing close to people's work

Or

Short term gains at great cost to the state for very wealthy international investors.

It seems such an easy choice for citizens but incredibly difficult for their representatives in power. How odd in a democracy?

J_1980

https://www.boards.ie/discussion/comment/117997178#Comment_117997178

International investors only own a very small share of irish property, this isn’t London.

also land costs only make up max 20% of new house prices outside of some dublin 2/4/6 and coastal locations.

the average person simply can’t afford the pure construction costs of the average home anymore. Full retrofit refurbishments of existing homes are quoted 200,000+

alle the government spending and required QE/zirp have impoverished the middle class. And oddly people want more of the same. There’s hope though that $200 oil in the near future will finish that entire big government/qe/ ecb money printing off.

Marius34

https://www.boards.ie/discussion/comment/117997312#Comment_117997312

I would agree, that international investors has a small portion of Irish properties, but residential land for house cost over 20%, for most parts of Dublin City.

Villa05

https://www.boards.ie/discussion/comment/117997312#Comment_117997312

The market as I understand it is what's available for sale/rent. I don't think the market is total stock if that stock is not available for sale/rent. Under recent successive governments, the state combined with investment funds have been the utterly dominant player and specifically so in high demand areas.

Im not sure how house costs are accounted for but the fire sale of land and subsequent hoarding may have contributed to the site value being quoted at 20k. It sounds very low do you have a link to that figure.

Ref construction costs, if China's bubble is being deflated by the authorities we can expect a reversal of raw material costs in the near future. How come we had some low cost affordable home developments over the last few years in various counties. The build cost was not being subsidised, rather the services, land costs.

Full retrofit is a very moveable goal post. We can't all have room to improve grade refurbishments.

Amadan Dubh

But the institutional investors take around 90% of new build apartments over the past few years (I can't find a link to it right now as I'm out walking) so while they make up a small proportion of the overall market they are hoovering up all the newly built apartments which is a problem.

The oil comment above is an important one from what I understand, it could be the inflation straw that breaks the QE/low interest rate camel's back, depending how it goes over the coming months.

Timing belt

https://www.boards.ie/discussion/comment/117997608#Comment_117997608

i wouldn’t worry about oil prices because once in reaches 90 dollars a barrel it will be profitable to start fracking again and supply will come online as a result.

I would be more concerned about exchange rates because once rates rises in some countries we will see a flow of funds to those countries and Europe appears to be behind some countries in its economic recovery which will result in imported inflation and housing/assets being cheaper for foreign investors.

J_1980

https://www.boards.ie/discussion/comment/117997608#Comment_117997608

Because most irish people can’t afford the construction costs of a new build apartment even if the land was free.

Regarding build costs

https://www.daft.ie/new-home-for-sale/19-22-millmount-terrace-windy-arbour-dundrum-rd-dublin-14/3174315

these houses are guided “in their 700’s”. While on a road the location could be described as fairly desirable

https://www.myhome.ie/residential/brochure/19-20-millmount-terrace-dundrum-dublin-14/4441036

the site with full pp was sold for 750k (you can click affordability and it still show old ask). 19&20 are for combined 760k in land registry

so it’s 750k for a plot for 4 houses in their 700’s. Ie land costs are indeed 25% (this will be above average for dunlin and well above irish average)

you can add in, that work hasn’t even started there as it’s probably too expensive for the builder to break even now.

Marius34

https://www.boards.ie/discussion/comment/117997975#Comment_117997975

"these houses are guided “in their 700’s"

where did you get this? It sounds to high price for me.

Villa05

https://www.boards.ie/discussion/comment/117997975#Comment_117997975

I love the property description that lists off all the taxpayer funded amenities on the door stop of those advertised properties. We really need to be capturing more of the value when land is zoned to residential.

A good starting point would be recouping the cost of services such as water, power connections provision of roads and street lighting.

If this was financed by the jump in value from rezoning it would go along way to making housing affordable.

J_1980

https://www.boards.ie/discussion/comment/117998970#Comment_117998970

Called

in windy arbour newbuild. No way these are in 600s.

the churchtown ones (churchview) on main road all sold >>>725k

Marius34

https://www.boards.ie/discussion/comment/117999089#Comment_117999089

but it appears millmount terrace, doesn't even have front garden/parking

J_1980

https://www.boards.ie/discussion/comment/117999217#Comment_117999217

I’m not saying these are great value. But location is very convenient (luas). And you hardly get any A rated house in Dublin below 700k anyway (unless a massive location sacrifice).

J_1980

https://www.boards.ie/discussion/comment/117997585#Comment_117997585

Construction costs can go both ways.

what about Biden’s trillion dollar infrastructure? not a single shovel has been moved yet.

and the entire EU recovery fund…. Don’t italy want to redo their entire rail system to go green? Can you imagine the amount of EE labourers going that way? Guaranteed 5y employment, possibly much lower cost of living and tax rates than ireland etc. The multi year demand of cement, steel etc.

Theoretically we should have enough workers without EE immigration, but a lot of the current arrivals are in the front queue when it comes to asking for free housing & social justice and the entire Eoin O’Broin bandwagon but are oddly at the back of the queue when it comes to putting on the work boots every day on a building site…

MacronvFrugals

Mot sure many will disagree with him

Dermot Desmond tells O’Brien investment funds are ‘having a laugh’ at Ireland

In letters to the Minister for Housing, the billionaire financier warned that buying and leasing social homes from private developers and investment funds was a “criminal waste of money”, and that the “misguided strategy” had “left housing in Ireland prey to greedy developers and international…

https://www.businesspost.ie/houses/dermot-desmond-tells-obrien-investment-funds-are-having-a-laugh-at-ireland-bf28e19e

Villa05

https://www.boards.ie/discussion/comment/117999956#Comment_117999956

Biden is expected to be a lame duck president very soon due to the dynamics of American politics.

Italy has significant financial and economic issues. It's interesting that they can invest in such projects and we can't build enough houses for our people where the vast majority would pay for the cost through affordable rent or outright purchase.

Where are you getting your data on migrants. I thought most were coming here for work and most are covering their housing costs. Many high skilled jobs here are filled internationally.

lossless

https://www.boards.ie/discussion/comment/118000150#Comment_118000150

This, from the CSO 2016, gives a peek at the immigration situation here.

Note that the majority of net immigration over the last near decade has been from outside Europe. And I don't use the word "majority" lightly, more than 50% every year, and some years 100%.

I would really like to see a breakdown of salaries per nationality too, I'd bet the farm that a sizeable majority is below the industrial average. The point being that it can't be classed as "essential/unavailable skills".

This mythology that these people, Norwegian or Nigerian, are essential, needs to be dispelled. It is simply not true. The politicians and their buddies are getting paid per head, not on quality.

This, combined with wholesale vulture funds, is the fuel behind the housing crisis. All the information backs it up.

There is no supply problem in this tiny country. There is a demand problem.

Even skipping the obvious conclusions of collusion and conspiracy to rob the country blind, the simple facts of the matter dictate one thing; this housing crisis is artificial.

Amadan Dubh

https://www.boards.ie/discussion/comment/117999984#Comment_117999984

I agree with his comments. Especially;

“Allowing the private market to dictate the price of social housing is a shocking mismanagement of public funds – you might as well hand out blank cheques,” he wrote.

“It is astounding that Government cannot see this and persists in pursuing what is clearly a deeply flawed national housing model to the detriment of all.”

I'm not entirely sure what the reference to a requirement for "off balance sheet accounting" means in relation to social housing leases. Essentially; for some reason there is a requirement to not have assets/liabilities on the books of the local councils which they can do by by being tenants rather than landlords?

In a follow-up meeting between Mr Desmond and Mr O’Brien on April 1st, the businessman repeated his arguments and told the minister that the Part V legislation was “unwieldy and complicated” and that foreign investors get the benefit of guaranteed lease returns when it would be preferable if the properties belonged to local authorities.

According to a minute of that meeting, Kevin Dillon, one of Mr O’Brien’s advisers, “accepted the point that the State was losing out somewhat”.

He explained that this had arisen “due to the requirement for off-balance sheet accounting, the temporary lifting of which was due to Covid”.

Graham

Mod Note

lossless, please read the mod note in the opening post before posting again.

Do not reply to this post.

Timing belt

https://www.boards.ie/discussion/comment/118002655#Comment_118002655

If it is a lease then the asset (house) and the debt are not recorded.

If the gov purchase houses it would be recorded and debt level would breach EU rules. (Which were relaxed for Covid)

it’s a crazy!!!

AlmightyCushion

https://www.boards.ie/discussion/comment/118002803#Comment_118002803

I actually think the fiscal compact is a good idea in principle. It stops governments getting into unsustainable debt. It is leading to crazy shít like this were it would be far better to borrow the money and purchase/build that do this. The rules should really be eased for capital spending like housing/public transport/green energy.

J_1980

https://www.boards.ie/discussion/comment/118002803#Comment_118002803

Well it’s not crazy from a German/Dutch etc perspective. These people don’t want to bail the irish out again. Most social housing is a permanent loss maker anyway (rents won’t even cover fraction of maintenance costs), hence the dilapidated status of most existing social housing stock.

if you can’t live within your means you have to cut entitlements instead of burdening other countries.

Amadan Dubh

https://www.boards.ie/discussion/comment/118002803#Comment_118002803

So our official national debt figure of approximately €240bn (up from around €140bn in 2010) does not take into account these lease obligations?!

Wow! Is our economy in any way sustainable or self-sustaining or is it just entirely fueled by debt? Were the post-2008 years just a sham and a trick to make us think we had addressed the problems leading to the 2008 crash? It would appear to be the case of can kicking, for me anyway.

Villa05

https://www.boards.ie/discussion/comment/118002902#Comment_118002902

Capital infrastructure was the greatest cut in the budgets to bail out the financial sector.

It shows why we need to fight this sector when that very same sector that was bailed out is now swooping in to exploit the capital under spend that helped save it

Villa05

https://www.boards.ie/discussion/comment/118001364#Comment_118001364

Your claims on the proportion of migrants coming from outside the eu is false according to the CSO. Table 3 in link

We are getting our nurses from Philippines, food processors from Brazil, fruit pickers from Bulgaria. We have completely neglected apprenticeships for some strange reason, possibly our boom bust relationship with property has led to young people avoiding this as a career choice

https://www.cso.ie/en/releasesandpublications/er/pme/populationandmigrationestimatesapril2020/

mcsean2163

https://www.boards.ie/discussion/comment/118003179#Comment_118003179

Yes. Another recession would be very bad with no scope for further large scale borrowing.

Wanderer78

https://www.boards.ie/discussion/comment/118002902#Comment_118002902

jesus christ, will we ever figure this one out! once again, we have become over reliant on the private sector money supply, i.e. the credit supply. history and the data to back it, shows that a primarily credit fueled economy generally leads to credit fueled asset bubbles, and credit fueled asset busts, this is exactly what occurred in 08! the only way to break this cycle is to become more reliant on the public money supply, this is done when governments run a deficit, and become more reliant on public the money creation abilities of public financial institutions, public banks, central banks etc etc etc.

the unsustainable debts are ultimately in the private domain, i.e. private debt, again, 08! governments have the ability to roll over debt indefinitely, until the debts are fully serviced, this is virtually impossible in the private domain, or at least, extremely difficult, compared to the public domain. the only way to build is by borrowing, period, as this is how money is created in the modern age, i.e. no borrowing, equals no money, equals no economic activities, equals crash!

we have got to move away from this thinking, public debt is always bad, but private debt is generally okay, its clearly not, and all the data in the world is showing this now, with exceptions of course,

as once again, presented!

Credit and Debt USA.png

Ireland Debt.jpg

mcsean2163

https://www.boards.ie/discussion/comment/118003530#Comment_118003530

Please stop this nonsense.

governments have the ability to roll over debt indefinitely

Things did not work out well for Greece when it pursued that strategy.

We're lucky in a sense because we're part of the EU. We don't control our currency but at least we'll be able to keep the lights on unlike Lebanon.

https://www.rte.ie/news/world/2021/1010/1252835-lebanon-energy/

Private sector debt is not great especially if a series of bankruptcies lead to contagion but it's the private sector. A public sector collapse can cause enormous problems, just ask Lebanon.

cnocbui

https://www.boards.ie/discussion/comment/117997571#Comment_117997571

The ICSI don't agree with you:

"‘The Real Cost of New Housing Delivery 2020’ – which is based on a detailed study of 30 live sites in the Greater Dublin Area – found that ‘hard costs’ came to €179K, which at 48% is less than half of the overall cost of providing a new house.

The report identifies a number of contributory factors for the increase in hard costs including the introduction of new building and compliance regulations as well as increased labour costs and general inflation.

 Land and acquisition costs of €61K (16%) VAT of €44K (12%) and a margin of €44K (12%) make up the main elements of the soft costs which total €192K or 52% of the total cost." https://scsi.ie/society-of-chartered-surveyors-ireland-publish-new-cost-of-housing-report/

Government/council taxes and charges cost as much as land - now there's a thought.

Wanderer78

https://www.boards.ie/discussion/comment/118003589#Comment_118003589

again, look at the facts, again, presented! the global crash of 08 was primarily due to excess credit creation, we ran our economies on this excess credit, and the rest is history.... there is now overwhelming evidence globally that supports this, again, presented! greece is a perfect example of this collapsing approach, i.e using public debt to effectively prop up these failures, these are the primary reasons why our current approach to housing is failing, i.e. primarily fire sector lead economies, again, all facts, all backed by data and respected research.

the euro has serious fundamental flaws, one being not having an effective surplus recycling mechanism such as america and australia, countries such as ireland cant use their central banks to adjust rates. again, the only way around this is by running deficits and creating our own public financial institutions etc etc

yes, public debt can of course cause serious crashes, but theres now overwhelming evidence globally to suggest, private debt causes far more frequent and far more serious crashes, data presented!

J_1980

https://www.boards.ie/discussion/comment/118003672#Comment_118003672

Public debt won’t cause crashes but hyperinflation and economic collapse.

if you’re theory is correct how come that Argentine is in depression since 2002????

i rather have the odd cleansing debt bubble than living in Argentina style economy.

Government debt creation and spending on unproductive things = inflation, hence I’m confident oil/commodities will go up until the ecb/fed caves in and government spending is slashed.

keynes theory only worked in America in 1930s as the US was the only free market capitalist country chasing middle class lifestyle for everyone back then. Now everyone does it and the resources are simply not there.