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

Bass Reeves

https://www.boards.ie/discussion/comment/118532705#Comment_118532705

That is stupid advice. With an AVC you are getting tax relief. You could lose a years investment tax relief. WL the stock exchange fall 40%. As well an employer may be matching your investment

It one thing to advise moving more of the fund to cash or to lower risk and investment but advising cancelling an AVC shows how much you understand investment.

Villa05

https://www.boards.ie/discussion/comment/118532504#Comment_118532504

Cash is used to bet against the market also. Nasdaq shares are getting hammered. Its starting to spread into the Fangs. Our economy is heavily tech exposed

Bass Reeves

https://www.boards.ie/discussion/comment/118534812#Comment_118534812

So the tax benefit of an AVC is 40% at the higher rate. Employers often match or even got 1.5tomrz contribution. An employee might be putting 60 net of tax , revenue are contributing 40euro. If an employer is contributing it's another 100-150 euro.

If you switch to cash or low investment a pension fund cannot risk that money. You have not got a clue about pension/investment and your advice is idiotic

Pussyhands

https://www.boards.ie/discussion/comment/118532485#Comment_118532485

Supply and Demand needs a supply of money too.

Lots of people might demand a property but if they don't have the cash the seller wants, it's not going to be sold is it?

Villa05

https://www.boards.ie/discussion/comment/118533760#Comment_118533760

I would cancel now and load up for the end of the year. Also take a look at your pension plan I was a bit shocked at how exposed they are to the USA. Time to diversify

They've also backed off non renewable energy stocks since October due to environmental policies. Since then energy has boomed

while renewable is in a bubble ready to pop

redmgar

So is the 5% national price increase this year still likely?

Pussyhands

The residential REITs in the US down 13% since the start of January.

Villa05

https://www.boards.ie/discussion/comment/118533947#Comment_118533947

Read the quote

Cancel now resume later in the year at better price points. Read in full please

Villa05

Pension funds are charged for holding cash. Revenue will do it for free.

HBC08

https://www.boards.ie/discussion/comment/118534878#Comment_118534878

Thats not the case in this situation.Demand isn't just a bit off supply,there's a huge chasm and it's only getting bigger.

People with approved mortgages,cash buyers,investment companies,councils and more are all going for the same very limited properties. After that you have other cohorts who are demanding houses but in reality have no means to make this happen.None of this can be solved in the medium to long term.

Houses prices will rise steadily for the next 5 years and I'd nearly say more than that.There simply is no other outcome.

Timing belt

https://www.boards.ie/discussion/comment/118533923#Comment_118533923

According to SF alternative budget their answer to the issue is to increase tax on REITS so they are paying as much as landlords. Don't see how that addresses small landlords leaving the market.

Villa05

https://www.boards.ie/discussion/comment/118533887#Comment_118533887

How do they publish such rubbish, do they not have any proof readers

Inflation at 2.4% for 2021

How can you have any confidence in them forecasting the future if they can't get the past right.

If inflation went over 5% in 2021 with the country in semi lockdown. Its really going to take off with all those people left out at the same time with significant savings. Think of it like going on a holiday when the schools are open v when they are closed.

Folks please give serious consideration to fixing your mortgage for as long as possible. I think they could be the tracker mortgages of the next decade.

The age of cheap money is coming to an end.

Note I'm not a financial adviser

Timing belt

https://www.boards.ie/discussion/comment/118534812#Comment_118534812

To bet against the market you need to short the stock which involves borrowing it at x price, selling on the market for x (which is more or less cash neutral) and then hoping to buy at a cheaper price in the future to return the stock to individual that you borrowed from and that way turn a profit. My point is that you don't need cash to bet against the market, you just need it if your bet goes sideways or if you need to post a margin call due to your bet not looking like it was working.

Timing belt

https://www.boards.ie/discussion/comment/118533887#Comment_118533887

My reading of it is that there is a risk that the economy will overheat and workers looking for higher wages which in turn will create inflation. A way of preventing this inflation is to reduce spending but that if the do this it will create further issues such as the ability to find a place to live hence why it needs to be managed carefully.

Villa05

https://www.boards.ie/discussion/comment/118535238#Comment_118535238

Does that mean a fixed tax on rental income or just raising the tax on REITS to match private LL. A fixed rate does sound fair however how will they justify taxing renters and not putting a similar tax on homeowners

hometruths

https://www.boards.ie/discussion/comment/118535245#Comment_118535245

Folks please give serious consideration to fixing your mortgage for as long as possible. I think they could be the tracker mortgages of the next decade.

Totally agree with this, going to be a lot of wailing "But people told me interest rates would never rise again" over the next ten years.

Villa05

https://www.boards.ie/discussion/comment/118535272#Comment_118535272

Thanks for the correction, I'm glad I did not fully understand that

Timing belt

https://www.boards.ie/discussion/comment/118535245#Comment_118535245

The figure they quote and always use is the annual average inflation for CPI in 2021 which was 2.4% according to the CSO

Annual average inflation for CPI in 2021 was +2.4%

The annual average rate of inflation in 2021 was +2.4%. This compares to a fall of 0.3% for 2020 and an increase of 0.9% for 2019. 

The largest year-on-year price increase was recorded in December 2021 when prices rose by 5.5% compared to the previous December.

Timing belt

https://www.boards.ie/discussion/comment/118535387#Comment_118535387

My reading of it is that they plan to just raise REIT's tax's to match private LL. The devil is in the detail with SF policy as the soundbites normally don't match up with the detail. SF are not alone in this all political parties use smoke and mirrors.

Pussyhands

Inflation isn't stopping and it's not going to end well. It never does.

I'd advise anyone looking to go on holiday this summer to book their flights now. Airlines are the next sector to see rapid price increases.

Villa05

https://www.boards.ie/discussion/comment/118535411#Comment_118535411

I read recently that if inflation was calculated the same way as it was in the late 80/90's it would be 15% in the USA. Frightening.

Timing belt

https://www.boards.ie/discussion/comment/118535393#Comment_118535393

Rates won't be higher than 2% max in 5 years as once they start to rise they will choke growth and push the economy into recession and as a result they will need to cut them again to stimulate growth. This has been the pattern for 40 years with rates going lower overtime.

Have a read of the CBI Quarterly bulletin it is very clear on the driver of inflation

timmyntc

https://www.boards.ie/discussion/comment/118535245#Comment_118535245

Those savings will soon evaporate, any inflation from savings during lockdown will be transitory - its inflation from other causes thats the issue here.

hometruths

https://www.boards.ie/discussion/comment/118535515#Comment_118535515

When you say 2% I presume you mean ECB rate rather than domestic mortgage rates?

Quarterly bulletin basically puts inflation down to:

Disruption to global supply chains, surging demand and the rise in energy prices remain key factors in explaining the higher rates of consumer price inflation in Ireland and the euro area.

Energy prices are not going to fall anytime soon. Nor is demand as long as interest rates remain where they are.

And in my opinion supply chains are unlikely to revert to prepandemic norms sufficiently enough to cool prices.

wassie

https://www.boards.ie/discussion/comment/118535339#Comment_118535339

Unfortunately we will have an election within this time frame that is a potential risk to this being 'managed carefully'.

timmyntc

https://www.boards.ie/discussion/comment/118535810#Comment_118535810

In fairness the current crop would hardly inspire confidence that they would manage it carefully either.

In particular regarding property price inflation, thats been going on for almost a decade with 2 of the 3 current government parties overseeing such rises.

Beigepaint

Can we close this and start a 2022 thread?

Villa05

https://www.boards.ie/discussion/comment/118535515#Comment_118535515

Wall Street has gone way ahead of main street. Interest rates are the root cause. It needs to be rebalanced. It should have started 5 years ago

Timing belt

https://www.boards.ie/discussion/comment/118535805#Comment_118535805

Yes I am talking about then ECB rate so it would be the equivalent of adding 3% to todays mortgage rates.

The surge in demand was orginally driven by covid savings and deferred spending but as wage have increased this has leads to further demand and more than likely will continue to push inflation higher. I agree that without the economy cooling or rates rising this demand will continue. however it is important to note that a rate increase of 0.25% when rates are low/negative is the equivalent of a 1% rise if rates were up at 5%. So the ECB would not need to raise rates by much to cool the economy.

I also agree that energy prices are not going to fall anytime soon. But likewise we will not see the level of growth in energy prices as we have done in the past year. To put in context in the last year oil rose by 67% to have this same level of growth from todays oil prices it would mean 150$ a barrel which is unlikely to happen. This will mean that energy inflation will be substantially lower this year which will drive the overall CPI down from the levels they are at today.

Who knows what will happen with supply chains but the one area of the supply chain that has caused large increases in inflation is with regards chip manufacturing (especially with the impact on second hand car prices). Factories are currently being built so this particular bottleneck should resolve itself this year or next.

timmyntc

https://www.boards.ie/discussion/comment/118536256#Comment_118536256

Correct me if I'm wrong, but aren't most of the energy price rises due to supply issues with gas rather than crude? That and carbon taxes, countries shutting down nuclear plants etc

Crude wont go that high, but gas can and probably will go much higher, especially are more countries' grids attempt to decarbonise and add renewables - almost all reserve for renewables is built on gas. Regardless of what happens in Ukraine/Russia, gas prices are only going one way