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

The Student

https://www.boards.ie/discussion/comment/118957065#Comment_118957065

Serious question. Who exactly is going to pay for all the borrowing the State is doing or you want the State to borrow.

If bonds are rolled over and the interest rates increase what happens.

Ireland owes a fortune already for previous borrowings. At what point do we say we can't afford to keep borrowing.

Wanderer78

https://www.boards.ie/discussion/comment/118957264#Comment_118957264

jesus this crap again!

yes it is common for public debt to be continually rolled over until fully serviced, this can be as long as a century, as was the case with the uks first world war debts. this tends to work very successfully for developed economies such as ours, as the debts can be used for providing an economies needs, increasing economic activities, thus providing that country with the means of servicing these debts.

once again, central banks are currently stuck in a low rate environment, largely due to the amount of debt in circulation, in particular private debt in developed nations, increasing rates would simply mean a large proportion of these debts would become unserviceable, leading to a significant increase in defaults and non performing loans etc..... central banks know this, hence why the ecb in particular is currently sitting on the fence in regards increasing rates, i.e. theyre stuck, and they know it!

once again, debt is our money supply, i.e. no debt means no money supply, means economic collapse! but this is a difficult balancing act, too much debt, particularly in the private domain, simply means more and more income goes towards debt servicing, means less money available for the purchase of goods and services, again in the private domain. this is why increasing public debt was critical during covid, as there was a significant fall in the demand for private debt, i.e. credit, without which, our economies would have simply collapsed, and it worked. i.e. we cannot afford not to increase public debt right now, as its looking very likely theres going to be significant problems ahead!

J_1980

https://propertypriceregisterireland.com/?action=search&county=0&property_type=0&date_from=2010-01-01&date_to=2022-04-21&price_from=0&price_to=0&address=Limekiln+Manor

No5 and 2 sold 795k and then 850k

below was originally listed 850k (last sold price in development), today cut to 750k.

Demand is still big but I think we are kind of near a price ceiling. London almost looks cheap vs Dublin in some pockets of the market

https://www.daft.ie/for-sale/detached-house-7-limekiln-manor/3771579

J_1980

https://www.boards.ie/discussion/comment/118957363#Comment_118957363

Not sure if you following what’s going on but bonds arr absolutely roasted today. Bond market moves historically ALWAYS lead the central banks not the other way around…

The Student

https://www.boards.ie/discussion/comment/118957363#Comment_118957363

I will ask the question again. What happens if the interest rate increases on a roll over. Who pays for the interest?

I am not asking about any capital repayment just the increased costs due to a bond rate increase.

https://www.boards.ie/discussion/comment/118957363#Comment_118957363

We are 240bn in debt already. When do we see the positive outcomes of your theory from that 240bn on the housing market?

Is 240bn of debt not enough according to your theory? How much should it be? What are the calculations behind the value you come up with?

iColdFusion

https://www.boards.ie/discussion/comment/118957616#Comment_118957616

A debt of around 95k per worker and approx 4 billion a year to service at current super low rates, mad to keep borrowing and makes you stop and think what have we gotten for the current 240billion?

combat14

https://www.boards.ie/discussion/comment/118955811#Comment_118955811

of course they should covid is over, employers cant get enough workers and our glorious always never ending upwards property market is absolutely exploding at present ...

what could go wrong..

Jonnyc135

https://www.boards.ie/discussion/comment/118957532#Comment_118957532

Bonds are getting absolutely hammered this last 2 months, It has been the worst bond preformance since 1964 according to Paul Somerville on the last stand and that was 2 weeks ago drastically worse sense that. This is quite sobering when bonds preformed well and we're used as a safe haven during the 08 crash.

I would be very fearful of Deutsche bank, they have been on a fine line since 2016, and with bing money being pulled by Hedge funds I can only imagine they are getting hammered in bonds, Sri Lanka default comming and if there stock portfolios start to fall they could be in huge bother.

Timing belt

https://www.boards.ie/discussion/comment/118958301#Comment_118958301

Why are you so concerned about Deutsche bank?

Hedge funds deposits leaving would be welcomed as they cost the bank as they attract 100% outflows.

They successfully issued AT1 bonds during the week which means that investors in these bonds are not concerned as they would loose all their investment if the bank went bust.

Sri Lanka default is very unlikely to cause major issues for European banks unless they have issued cds for Sir Lanka bonds. Deutsche Bank has a private bank out there so will have some exposure to a devalued currency but it should limited and won’t be something that I could see materially impacting the bank.

None of the Irish banks will have material exposure to sir Lanka so it won’t impact on mortgage lending or Irish house prices.

All banks will have market risk and interest rate risk limits so will have hedged risk to the bond market by purchasing IRD’s or asset swaps so I don’t see that impacting irish banks ability to issue mortgages so won’t directly impact the Irish housing market.

Where a risk does exist is in less regulated entities such as funds that are exposed to longer rates chasing yield and that will be a hit and miss depending on how the fund manger has invested and risk models they have in place. But yet again it is unlikely to impact on the Irish housing market as its debt and not real estate.

mcsean2163

https://www.boards.ie/discussion/comment/118957596#Comment_118957596

Look to Greece as an example of an EU country whose line of credit ended before the bank bail in was enacted. Look to Cyprus after that for bank problems.

Our problem is government debt, if we don't get a write off like Greece did and we get booted out of EU for breaking fiscal rules, look at what's happening in Sri Lanka as an example of a country that cannot repay its government debt.

https://www.bbc.com/news/business-61102495

Never mind the chap who read a book on American national debt. We're not the USA. We're just a part of the EU.

amacca

https://www.boards.ie/discussion/comment/118959031#Comment_118959031

If they don't mind the EU disintegrating fairly sharpish then yeah we could get booted out ....but with the Italy are in, France then maybe there's a period of relative safety ahead?

Villa05

https://www.boards.ie/discussion/comment/118956355#Comment_118956355

Would that imply a degree of spare capacity within the sector

The Student

https://www.boards.ie/discussion/comment/118959031#Comment_118959031

We can't afford a write off from bond holders. Our repayments may decrease but our reputation will be destroyed.

We are a small open economy who need external investment. What message would a write off send to international investors?

Our credit rating would lower and future bond rates would increase.

As was said in the past we as a state are living beyond our means and in my view some tough decisions need to be made.

To bring this post back on topic the State needs to stay out of the housing sector and let it operate exactly as it should as a "market".

mcsean2163

https://www.boards.ie/discussion/comment/118959046#Comment_118959046

Yes, may never happen and hopefully a long way off. Worst case stuff.

mcsean2163

https://www.boards.ie/discussion/comment/118959253#Comment_118959253

EU wrote off a large chunk of Greek debt and paid off their bondholders.

We're a basketcase, 240 billion completely unsustainable and we'll be squashed whenever it is decided we should be squashed. We could proactively prevent such a decision being made during a recession by campaigning now to the EU but we will not. It'll be kicked down to road until recession hits. Then the PIIGS will be back in the headlights.

Maybe the euro will break up. Who knows.

Jesus Christ this thread is absolutely incredible.

Amadan Dubh

https://www.boards.ie/discussion/comment/118959666#Comment_118959666

It's an extreme housing crisis, what do you expect?

https://www.boards.ie/discussion/comment/118959682#Comment_118959682

A thread about housing, not creative reasons as to why the country is (not) going to implode. Comparisons to Sri Lanka are so laughable its beyond belief.

JimmyVik

https://www.boards.ie/discussion/comment/118959701#Comment_118959701

Read all the posts on Europe/ The Euro/ Ireland / The world / China etc imploding for the last 15 years. Some people move from one theory of why the economy will tank to the next without even blinking. There has been only one person who was right all along though. The person who said that all those theories are just hogwash.

Amadan Dubh

https://www.boards.ie/discussion/comment/118959701#Comment_118959701

People post constantly saying that the housing crisis is not just an Irish phenomenon and they are correct, which means it is important to look beyond our shores (which some people need to do as they often think that the likes of Dublin can be compared with Zurich, London, Paris etc), to understand the bigger picture in order to understand fully our housing market problems.

wassie

https://www.boards.ie/discussion/comment/118955268#Comment_118955268

The expression 'laissez-faire' reminds me of a Ronan Lyons article earlier this year on what caused Ireland's property buble to burst. In it he descibes his view on a number of myths that have propogated in the years following and how policy has a signifigant role then, now and going foward.

Myth #1: Ireland built too many homes

Myth #2: Ireland’s bubble was a case study in laissez-faire

Myth #3: Ireland’s experience refutes the laws of supply and demand

https://www.worksinprogress.co/issue/why-irelands-housing-bubble-burst/

Villa05

https://www.boards.ie/discussion/comment/118960226#Comment_118960226

Excellent report, thanks for posting.

Never realised how completely warped section 23 scheme was.

The Student

https://www.boards.ie/discussion/comment/118959628#Comment_118959628

Greece is not Ireland. The main reason with Greece was a lack of Tax revenue (black economy). We are not Greece, despite what people think our tax system does have a lot of safegaurds built in to catch those who avoid tax. (its not perfect by any stretch but its good).

I for one don't want to go through what Greece went through. Austerity was crippling for them as it would be for us. I would prefer if our tax revenues were better used and our welfare system was overhauled certainly in terms of housing allocations and its impact on the property market.

Amadan Dubh

Housing crisis, what housing crisis?

https://m.independent.ie/irish-news/news/households-that-take-in-refugees-will-be-paid-up-to-400-a-month-41575970.html

L1011

I could card multiple people for ignoring the fiftieth or so warning that this is not an economics/macroeconomics/theoretical economics thread but it'd take too long. But next time I will.

Just because someone else has ignored this doesn't give you free reign to reply to their posts either.

Do not reply to this post.

timmyntc

https://www.boards.ie/discussion/comment/118960550#Comment_118960550

Will no doubt put some extra strain on housing - good news for investors though, all this extra demand is bound to keep prices high

Villa05

https://www.boards.ie/discussion/comment/118960680#Comment_118960680

Its some contrast with the upto 200 per night for the hotel sector and of course the hotel sector will be filled up first.

We discussed at the start of the war that there would be some out to exploit the situation and lo and behold fresh out of the blocks.

https://www.newstalk.com/podcasts/highlights-from-the-hard-shoulder/they-want-to-work-senator-suggests-government-should-subsidise-half-of-ukrainian-wages

I heard a certain indigenous fast food chain owner complaining of the lack of labour earlier in the year. Now he's filling up his rural hotel in Limerick

It's quite an opportunity for some, it would be some bonanza where the taxpayer to subsidise wages of profitable companies

The Poles have said the Ukrainians work twice as hard as they do and have been trying to lure them in for years to replace their people that have left for places like Ireland

combat14

https://www.boards.ie/discussion/comment/118960226#Comment_118960226

great article - thanks for sharing! highlights again how the cost of everything here is now unsustainably bonkers !!

 the persistently high costs – especially once tax reliefs on those costs expired – made it unviable to build new homes for years after the end of the bubble.

Put another way, nobody worried about the cost of building a home rising from €125,000 to €225,000 when credit had pushed prices up from €150,000 to €350,000. But when prices crashed back down to €175,000, the system had a real problem on its hands – one that policymakers have been loath to touch. Put simply, the case of Ireland shows that where housing becomes unviable to produce, due to higher costs, then we as a society are missing out on the benefit that additional housing would bring.

markodaly

https://www.boards.ie/discussion/comment/118957483#Comment_118957483

Good find.

I remember during the last crash that the PropertyPin had a list of houses whose asking prices fell.

Does such a website/list still exist somewhere? Will be interesting to see if/when the market tops out and prices reach a ceiling of such.

Does anyone think that the hot new covid money will run dry this summer, hence having an impact on house prices?