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

SmokyMo

Marius34 wrote: »

I have shared my thoughts in November of last year, it haven't changed since than.
I expect prices to go up this year.
In long term there may be ups and downs, but won't go below 2020 level, due to long term inflation factor.
There won't be crash anytime soon due to high saving, relatively low private sector debts, and low number of construction in past decade.

I dont disagree with above.

if inflation is a factor what would happen to savings? What population % have savings and how long would they last?

Maybe this is a discussion for a different thread.

cnocbui

yagan wrote: »

It's an odd situation where essential workers need 10x annul wage to buy a house where they're needed, so maybe the issue is the boom and bust nature of the unregulated Irish property market.

When activity picks up the short termist profit driven speculator market becomes a feeding frenzy and costs become driven up.

The leading hot money is in the international funds and as long as they're not deterred from yield farming by the government or falling yields I can't see costs falling. The stamp duty hike excluded apartments as I reckon the government are happy to keep the cement mixers turning, even if it means we end up with vertical ghosts estates.

We had 15% employed in construction before the last bust, and another 7-8% in ancillary services. I believe the long term average in a mature market is only 7-8% are engaged in the construction sector.

I think the two things that have driven up the cost of housing is governments allowing it to become a playground for large scale investors. The other is the astonishing rise in the cost of labour. When a plumber can earn more than a doctor or a university lecturer, the world is trully f'd up.

timmyntc

Prices will go up slowly until the next election - investors might get spooked if SF get in and prices might fall a little bit then, but theres no reason to believe a crash like 08 will ever happen again.

Marius34

SmokyMo wrote: »

I dont disagree with above.

if inflation is a factor what would happen to savings? What population % have savings and how long would they last?

Maybe this is a discussion for a different thread.

I'm not talking about hyperinflation, so it will last quite for a while. I don't know what population has saving, but it's bigger than historical.

yagan

cnocbui wrote: »

I think the two things that have driven up the cost of housing is governments allowing it to become a playground for large scale investors. The other is the astonishing rise in the cost of labour. When a plumber can earn more than a doctor or a university lecturer, the world id trully f'd up.

I agree with the first point, but on the second point it was zero problem getting tradespeople to do jobs after the last slump. Not every tradie emigrated.

I remember being on site in 06 where half the crew were betting the weekly wage on the premiership or horses, and the other half were saving every cent to self build during the crash they could see approaching.

timmyntc

Marius34 wrote: »

I'm not talking about hyperinflation, so it will last quite for a while. I don't know what population has saving, but it's bigger than historical.

The impact of household savings will disappear after a year or so - those who saved over the pandemic will buy and push prices up, but once that is gone it will revert back to pre-pandemic demand. (from mortgage buyer POV)

The investor effect will still push prices higher, but thats a separate issue.

Villa05

Marius34 wrote:

I didn't think you need to be reminded for your comments, when property price were at the lowest point in the beginning of 2012, with not much of buyers, pretty much all comments pointing to the same direction:

Which is why I moved from predictions to posting potential solutions and calling out policies that make the situation worse

Apologies if I have left that posting policy slip a few times

I believe those comments you sourced where in relation to Michael noonan comments that the economy would take off like a rocket,

cnocbui

Pussyhands wrote: »

I have the cash to buy a property with a mortgage but the prices are disgusting.

The current bidding is currently 10% at least over what I'd be willing to pay.

Buy a piece of land and then get some plans for a house and have a builder build it for you.

C14N

cnocbui wrote: »

I think the two things that have driven up the cost of housing is governments allowing it to become a playground for large scale investors. The other is the astonishing rise in the cost of labour. When a plumber can earn more than a doctor or a university lecturer, the world is trully f'd up.

I'd want to see a source on plumbers earning more than doctors, but even if it was true I don't think that in itself is a problem. The world needs plumbers and other tradespeople. If salaries are going up, then that should at least encourage more people to go into that area and counteract the labour shortage.

Marius34

timmyntc wrote: »

The impact of household savings will disappear after a year or so - those who saved over the pandemic will buy and push prices up, but once that is gone it will revert back to pre-pandemic demand. (from mortgage buyer POV)

The investor effect will still push prices higher, but thats a separate issue.

Many may delay their purchase due to lack of supply. If everyone will jump in a year, it would dry up supply very quickly, there are no that much of supplies.

SmokyMo

cnocbui wrote: »

Buy a piece of land and then get some plans for a house and have a builder build it for you.

Unless you from county it is very hard. I have looked at building in wiklow couple years ago and was told unless you know someone on the council to forget about it.

SmokyMo

Marius34 wrote: »

I'm not talking about hyperinflation, so it will last quite for a while. I don't know what population has saving, but it's bigger than historical.

I wasnt talking about hyper either. but to your point on inflation, if you believe in inflation, then going by empirical evidence, previous inflation preceded by bubble popping.

timmyntc

Marius34 wrote: »

Many may delay their purchase due to lack of supply. If everyone will jump in a year, it would dry up supply very quickly, there are no that much of supplies.

People delay their purchase all the time due to lack of supply or being priced out which are two sides of the same coin. If there wasnt that demand in waiting then prices would plummet. It's not a new phenomenon and not something that would distort this market more than it already is

Marius34

SmokyMo wrote: »

I wasnt talking about hyper either. but to your point on inflation, if you believe in inflation, then going by empirical evidence, previous inflation preceded by bubble popping.

Inflation itself doesn't tell that it will create a bubble, there are many other conditions that form bubble, sometimes it results crash, sometimes not.
The conditions formed in previous crash, are very different from now. There might be similar situation evolving in a decade or so, but not in the coming years.
And I'm not expecting inflation as high as prior the credit crisis.

Marius34

timmyntc wrote: »

People delay their purchase all the time due to lack of supply or being priced out which are two sides of the same coin. If there wasnt that demand in waiting then prices would plummet. It's not a new phenomenon and not something that would distort this market more than it already is

Means household saving likely won't disappear as quick

timmyntc

Marius34 wrote: »

Means household saving likely won't disappear as quick

If they opt not to buy in the market then there will be no effect from the savings anyways

selassie

timmyntc wrote: »

Prices will go up slowly until the next election - investors might get spooked if SF get in and prices might fall a little bit then, but theres no reason to believe a crash like 08 will ever happen again.

08 happens again if the economy crashes again. The economy crashes if we lose the big tech and pharma FDI.

Sheeps

When Sinn Féin are in power, anyone who owns a house is going to see the value of their property rise, unless you're in one of the areas where they decide to lump in a load of 100% social housing developments.

JDD

Sheeps wrote: »

When Sinn Féin are in power, anyone who owns a house is going to see the value of their property rise, unless you're in one of the areas where they decide to lump in a load of 100% social housing developments.

Why do you think the prices of properties in general will rise in a SF scenario?

If SF do what they say they are going to do (which is debateable) I can see a general fall of prices across the board. They have said that:

- they'll tax land hoarding, which should mean that more land goes up for sale and land prices go down.

- they'll build social housing on state land. This should take a proportion of people out of HAP, which frees up apartments for non-HAP renters. Increasing the supply of rental properties should result in a reduction in rents.

- Rents reducing will decrease the attractiveness of property as an investment, and cash buyers (including funds) will look elsewhere to invest their cash.

- Taking cash buyers out of the market should reduce the demand, and therefore the price, of houses.

- Reducing the price of houses will, of course, make them less attractive to build. A reduction in land prices will offset that somewhat, but maybe not enough to keep construction firms interested. SF will need to get creative on that one, but given they are going to build their own social houses they should have a lot more transparency on whether it really is as expensive to build as the construction companies say it is.

Sheeps

JDD wrote: »

Why do you think the prices of properties in general will rise in a SF scenario?

If SF do what they say they are going to do (which is debateable) I can see a general fall of prices across the board. They have said that:

- they'll tax land hoarding, which should mean that more land goes up for sale and land prices go down.

- they'll build social housing on state land. This should take a proportion of people out of HAP, which frees up apartments for non-HAP renters. Increasing the supply of rental properties should result in a reduction in rents.

- Rents reducing will decrease the attractiveness of property as an investment, and cash buyers (including funds) will look elsewhere to invest their cash.

- Taking cash buyers out of the market should reduce the demand, and therefore the price, of houses.

- Reducing the price of houses will, of course, make them less attractive to build. A reduction in land prices will offset that somewhat, but maybe not enough to keep construction firms interested. SF will need to get creative on that one, but given they are going to build their own social houses they should have a lot more transparency on whether it really is as expensive to build as the construction companies say it is.

I think you're underestimating just how much private demand there is out there in the housing market (and not from investors). O'Broin and Sinn Féin have been objecting to every housing development under the sun over the last couple of years. The idea that there's a silver bullet to address the housing crisis is fantasy. There are so many different forms of housing needs, from apartments to family homes, to rental accommodation for transient workforce/stuents etc. Sinn Féin are tackling one of those (social housing) and they're hoping the changes they make to solve the perceived injustices in the housing industry today wont create a toxic development environment for the people they need to solve the other aspects of the housing situation. It'll become to impossible to get developers to actually come in and operate in this country.

The social housing the build will via the state will only go as far as addressing the current housing lists and people who qualify for them. The people who are on average incomes wont be included in that solution. They'll continue to have to rent long into the future. They'll be left with a bitter taste in their mouth after Sinn Féin. The lack of private supply is what will drive up the price of current homes.

I don't really have much hope for solutions from other parties either. I think the only answer is through de-regulation, cheapening building costs and getting as much supply in the market as possible. Building high density, tall buildings.

yagan

selassie wrote: »

08 happens again if the economy crashes again. The economy crashes if we lose the big tech and pharma FDI.

The property sector crashed, although I'm not sure if construction jobs now match the same level of 15% of the workforce like in the Bertie bubble.

Pharma has decades deep capital infrastructure so if it were just about tax they'd have gone to Hungary's for its 9% CTR.

yagan

Sheeps wrote: »

I think you're underestimating just how much private demand there is out there in the housing market (and not from investors). O'Broin and Sinn Féin have been objecting to every housing development under the sun over the last couple of years. The idea that there's a silver bullet to address the housing crisis is fantasy. There are so many different forms of housing needs, from apartments to family homes, to rental accommodation for transient workforce/stuents etc. Sinn Féin are tackling one of those (social housing) and they're hoping the changes they make to solve the perceived injustices in the housing industry today wont create a toxic development environment for the people they need to solve the other aspects of the housing situation. It'll become to impossible to get developers to actually come in and operate in this country.

The social housing the build will via the state will only go as far as addressing the current housing lists and people who qualify for them. The people who are on average incomes wont be included in that solution. They'll continue to have to rent long into the future. They'll be left with a bitter taste in their mouth after Sinn Féin. The lack of private supply is what will drive up the price of current homes.

I don't really have much hope for solutions from other parties either. I think the only answer is through de-regulation, cheapening building costs and getting as much supply in the market as possible. Building high density, tall buildings.

From what I understand those objections have been over the lack of social housing elements. In truth we all know the social housing caveats never get fulfilled and when they do they're rarely not integrated with main developments, thus creating more social isolation.

cnocbui

SmokyMo wrote: »

Unless you from county it is very hard. I have looked at building in wiklow couple years ago and was told unless you know someone on the council to forget about it.

In more modern and advanced countries, this doesn't go on, but it's currently still 1763 in Ireland, near as I can tell.

TheSheriff

selassie wrote: »

08 happens again if the economy crashes again. The economy crashes if we lose the big tech and pharma FDI.

Unlikely to happen.

Ace2007

TheSheriff wrote: »

Unlikely to happen.

Especially as Pascal stated we are keeping the 12.5% Corporation tax rate.

Timing belt

The housing market like all markets is based on fear and greed. At the moment we see the greed from the funds and the fear from buyers that they will be stuck in rent land. Unless there is some major change this will continue. When I say major change the only things that I can see on impacting are an increase in supply or if there is major emigration. And I can’t see either of those materializing in the near term. Even if the economy tanks due to tax legislation I don’t see it impacting as people still need somewhere to live. As a previous poster said there is no magic bullet to fix this.

theboringfox

Timing belt wrote: »

The housing market like all markets is based on fear and greed. At the moment we see the greed from the funds and the fear from buyers that they will be stuck in rent land. Unless there is some major change this will continue. When I say major change the only things that I can see on impacting are an increase in supply or if there is major emigration. And I can’t see either of those materializing in the near term. Even if the economy tanks due to tax legislation I don’t see it impacting as people still need somewhere to live. As a previous poster said there is no magic bullet to fix this.

Only two things I can see reducing or stabilising prices and that is increased supply and rising interest rates. The latter has biggest impact on house prices imo. Even since I got mortgage in 2016 the rate Im paying has come down a lot. That gives lot more buying power and makes it feel much more comfortable going to 3.5x (or more).

Timing belt

theboringfox wrote: »

Only two things I can see reducing or stabilising prices and that is increased supply and rising interest rates. The latter has biggest impact on house prices imo. Even since I got mortgage in 2016 the rate Im paying has come down a lot. That gives lot more buying power and makes it feel much more comfortable going to 3.5x (or more).

Rising interest rates would ease the pressure as funds would not be as keen on property and normal house buyers but it is unlikely to lead to an increase in supply with people being forced to sell. I don’t see rates rising in the short term as we have yet to see sustained inflation.

Bass Reeves

selassie wrote: »

08 happens again if the economy crashes again. The economy crashes if we lose the big tech and pharma FDI.

I do not know why people keep harping on about the 08-12 property crash. We have had property slowdowns before that most effected property by 10-15%. 08 has particular problems, we had build up a huge housing excess, the banks has massive exposure to property not just in Ireland, a large cohort of investors had property not just in Ireland but right across Europe especially Poland and Spain. The vast amount of property was highly geared and those within the Construction industry were those most exposed. We had also build up a huge excess stock of unsold property owned by larger developers, solicitors, accountants, auctioneers, plasterers, plumbers , electricians etc that was borrowed from Irish banks

When the crash happened those investors lost a huge portion of there income and were unable to meet repayments. They were also exposed as banks had used personnel guarantees rather than good governance and looking at collateral and exposure when lending. The whole economy was exposed to the construction sector. When banks went looking for there money when payments stopped there was no buyer's. The economy literally floored as everything was being repossessed from cars to boats, every sort of construction machinery, houses, holiday homes etc. Banks found themselves with every sort of collateral that ended up being sold for anything from 20-60c in the euro. If you bought something today you could buy it cheaper tomorrow.

For those that are wanting for it to happen again.......be careful what you wish for

flexcon

cnocbui wrote: »

Buy a piece of land and then get some plans for a house and have a builder build it for you.

I was half way to doing this - and was told 18months before construction would start - they are so busy and lack of labour.