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

combat14

https://www.boards.ie/discussion/comment/120546088#Comment_120546088

most people don't have an extra 50k just lying about

banks are sure to up their stress testing of would be borrowers with another 3 rate rises on the way

affordability is dropping all the time in this current environment

Villa05

https://www.boards.ie/discussion/comment/120545959#Comment_120545959

So the queues at viewings and bidding wars for the last 6 to 7 years were imaginary and people were comfortable paying double in rent than they would be paying a mortgage.

There may be some element of truth during the early stages of Covid, but that quickly evaporated as it was quickly realised that the money printing done over covid was a potential disaster that had to be averted by raising rates and reversing QE

Guildenstern

It's also spring into summer, the normal time of the year for good solid activity in the sale market. It is no surprise that things have picked up in recent weeks, on top of other issues such as landlords selling up, the market having reached its peak a few months back. It's a good thing and a sign, however small, of a more functional sale market.

DownByTheGarden

https://www.boards.ie/discussion/comment/120546137#Comment_120546137

Ther were always queues. Even when people werent buying houses. But I dont belive at all that you can say that many people didnt hold off buying the last few years bcause they thought the property wasnt worth the price it was bid up to. Read the currently buying thread. Full of examples. So is this thread. There have been many tangents in this thread of people who are buying but poisted proerty details and said "Its not worth that, i am going to wait til things calm down."

Villa05

https://www.boards.ie/discussion/comment/120546699#Comment_120546699

The people you describe were the people blamed by enda kenny at Davos for the 08 crash. "we all went mad" if they followed your advise

Its not a crime to choose to live within your means. Bank of Mum & Dad has never been more active and many can't keep up with that. House buyers can't compete against entities that pay no tax, while extracting potential homebuyers taxes though long term leases, hap and other such schemes.

Homebuyers cant compete against the state with unlimited funds pursuing the most expensive social housing provision in the world

Your claims are way off the mark

theboringfox

Irish people love seeing their home values rise. They wont say that in public but they do. As such government does very little that might impact that. They left housing crisis get worse than needed to because they were too concerned too much supply would affect prices. Interest rate rises have cooled things in Cork in my limited experience this year. More houses also being relisted. But not seeing any big correction down either.

PommieBast

https://www.boards.ie/discussion/comment/120547652#Comment_120547652

Pretty much. Down to earth the priority was to reobtain the bubble prices people paid in the 2000s, and doing that required supply to be squished to virtually zero. Housing policy has amounted to a half-arsed attempt at alleviating the side-effeccts.

DataDude

https://www.boards.ie/discussion/comment/120547265#Comment_120547265

Some of this is definitely true and we will always look back at people who bought at ‘the peak’ and call them fools (but we should all admit the peak is very hard to call).

But there is a fundamental difference to people buying now and those in 2007.

Nobody buying a house today is buying a house they can’t afford because of lending rules. A lot of people buying in celtic tiger thought it was the negative equity that got them, but in reality many had loans they could never ever have serviced even if prices had kept going up. So in that sense people buying now are not ‘going mad’ in the same way as those described by Kenny.

Beigepaint

"We all went mad" is a bullshit post hoc over simplified narrative.

There's still empty brownfield sites in every city and town centre in the country - where there should be six story blocks of apartments.

There's still people commuting two hours every day - when sprawly ribbon developments don't benefit anyone - and cost everyone in air pollution, carbon taxes, car culture, obesity, time wastage, stress, road rage, isolation and loneliness in rural dwellers, destruction of public transport viability, increased water costs, increased electricity costs, increased fibre optic costs...

Irish culture and planning incompetence caused the 08 crash and the current perma-crisis.

Find the lie in this statement from german planning expert.

https://www.irishtimes.com/ireland/2023/05/02/galway-looks-like-a-mouth-full-of-broken-teeth-says-one-of-worlds-leading-planners/

Bakharwaldog

100%

OEP

https://www.boards.ie/discussion/comment/120547761#Comment_120547761

As someone who is buying a house now, I am definitely not going mad. What are else are we to do, there's literally nothing to rent in the town I'm buying. I can't start a family with my wife in the 1 bed flat I'm currently renting in Dublin for 1800 a month. And I'm not going to move in with my parents and start a family. I know I'm buying at what is probably, or very close to, the top of the market. As long as I stay employed, I'll be fine - I can't control anything else.

combat14

Mortgage holders could be hit with a bumper rate rise – the seventh increase since last summer

The European Central Bank (ECB) is expected to push up its lending rates by at least 0.25 percentage points tomorrow, with some economists now warning of a 0.5 percentage point rate hike.

https://m.independent.ie/business/personal-finance/mortgage-holders-could-be-hit-with-a-bumper-rate-rise-the-seventh-increase-since-last-summer/a1050118898.html

Villa05

https://www.boards.ie/discussion/comment/120547761#Comment_120547761

I don't think fools is appropriate, most people that purchased in noughties purchased for their families accomodation needs. They were victims not fools.

When we turn housing (a basic need) into a highly speculative market on speed, your playing russian roulette, it's only natural that there will be blood on the streets.

We are seeing the same behaviour now. New builds used to be the ftb market, now less than a third make it to ftb's. We then create a shared ownership where up to 30% + 10% ftb grant is covered by the state. What happens when all ftb are soaked up at these terms. Does the state go to 60% ownership with the occupant @40suppleat 40%.

Who does the buyer sell to, should the need arise, when the next buyer has to come up with 90% of the value?

The balloon is being stretched, it may not pop tomorrow, but, it will. That's guaranteed on current policies

hometruths

https://www.boards.ie/discussion/comment/120549479#Comment_120549479

No matter, the government has their back.

This year’s budget could include measures to help people who have had increased mortgage costs due to interest rate rises, Minister for Housing Darragh O’Brien has said.

His remarks come ahead of an expected further increase in interest rates after a meeting of the European Central Bank (ECB) on Thursday.

In recent weeks Sinn Féin has been putting pressure on the Government to bring back mortgage interest relief to aid households with the increased costs.

Mr O’Brien did not say what measures the Government is looking at introducing, but he signalled that help for mortgage holders could be forthcoming in October’s budget. He said the Minister for Finance Michael McGrath set out the Government’s view on the ECB last week suggesting it would “have to take into account the effect that the interest rate increases are having on normal people out there.

Presumably any support to cushion the impact of rate rises will also be offered to people who do not already have mortgages.

So anybody who wondered how rising mortgage interest rate rises might impact house prices has their answer.

Prices will rise.

Because you know, demand exceeds supply. Economics 101 innit?

https://www.irishtimes.com/politics/2023/05/03/obrien-says-budget-could-include-measures-to-help-mortgage-holders-hit-by-rising-interest-rates/

timmyntc

https://www.boards.ie/discussion/comment/120552354#Comment_120552354

Are all TDs economically illiterate or what?

hometruths

https://www.boards.ie/discussion/comment/120553073#Comment_120553073

Some definitely are! But the idea that consecutive cabinets as well as all entire body policy wonks in the dept of housing/finance are economically illiterate is a stretch I think.

The most likely explanation is they are politically literate, and the logic behind the never ending measures to turbo charge demand is down to votes.

It's a clear strategy that treats the property owning vote preferentially.

The trouble with that is if another party enters government who decides to treat this demographic less preferentially, there is potential for total carnage.

And yet people still wonder why SF are surging in the polls at FF/FG's expense.

Beigepaint

It’s really interesting from a game theory perspective. Currently, the voting majority are FF/FG voters, but our demographics will flip in the next few years as the younger population become adults and a critical mass of under forties see how unachievable it is to buy their own home. So at some point in the next decade or so FF/FG will have to perform a complete 180 on elderly enrichment house value inflation policies. But not yet.

hometruths

https://www.boards.ie/discussion/comment/120553275#Comment_120553275

Totally agree. Inevitably at some stage the voting demographics favours the exact opposite strategy.

But the more that government juice demand in the meantime the more difficult it will be for a future government to turn the ship.

quokula

https://www.boards.ie/discussion/comment/120553189#Comment_120553189

"And yet people still wonder why SF are surging in the polls at FF/FG's expense."

This economically illiterate policy is literally what SF were pushing for? They consistently push for ill-conceived poorly thought out policies, then when polling show these are popular FF have a tendency to leer towards the same brand of populism, pick some of them up and then get torn apart for how poor they are.

While I'd agree the parties of government shouldn't be doing it they're in kind of a lose lose situation where SF propose pie in the sky stuff and the government is either criticised for not doing it, or criticised for doing it which proves how bad an idea it was. See also: eviction freeze.

manniot2

No politician wants house prices to fall. It impacts general mood around wealth and economy. That will always remain the case even if SF get in.

akelly02

anyone know when this increase will take effect?

only got loan offer the other day , hoping to get everything sorted in the next 6 weeks

RichardAnd

https://www.boards.ie/discussion/comment/120553303#Comment_120553303

I would say that a majority of people in Ireland don't want to see house prices fall. If you bought a house in the 80s, paid the mortgage in the 90s and now sit on an asset that's worth twenty times that you paid for it, you probably do not with to see it devalue. Furthermore, quite a number of people in the general population are doing well out of the current situation. Indeed, my own uncle is making a nice bit every month as a slum king...

We need to avoid thinking that this crisis is here because of politicians alone or that voting in another set of neo-liberal sock puppets would make an iota of difference.

StevenToast

https://www.boards.ie/discussion/comment/120553480#Comment_120553480

Its funny because the minority of people that want house prices to fall will suddenly change their tune as soon as they actually get a house!

timmyntc

https://www.boards.ie/discussion/comment/120553495#Comment_120553495

People at risk of negative equity maybe - most do not fall into that category.

I own a house. I still want house prices to fall. If I ever want to trade up, its better that prices fall than rise, because when trading up all that matters are property prices relative to mine own.

If my house was worth 500k, and the house I want to trade up to worth 1m, a 10% rise in prices across the board means I can sell for 550, but the house I want is now 1.1m. I am out for another 50k extra if I want to trade up.

RichardAnd

https://www.boards.ie/discussion/comment/120553550#Comment_120553550

Recent buyers would probably fear negative equity far more than established home-owners. Someone who bought a house in Dublin for 100k over the asking price in the last two years is likely very worried about falling prices as they'll be saddled with a pile of debt that cannot clear at a time of rising interest rates.

I bought a house last year, but I would still like to see prices fall. I would lose out, but it's better in the long term.

hometruths

I wasn't aware that this policy was SFs idea, that surprises me. Do you have a link?

hometruths

https://www.boards.ie/discussion/comment/120553550#Comment_120553550

It often appears that surprisingly few people realise this.

fliball123

https://www.boards.ie/discussion/comment/120553661#Comment_120553661

https://www.boards.ie/discussion/comment/120553550#Comment_120553550

Property prices are hardly linear with respect to % increases and decreases you will find those on the lower end of the price scale go up higher and quicker when going up and go down slower and lower when coming down so in reality the home for 1 million will probably drop by 10% and the one for 550k will drop by a lower %.

Blut2

https://www.boards.ie/discussion/comment/120553275#Comment_120553275

The really interesting figure to watch for in this is the home ownership rate, which is declining rapidly. A quick google is only giving me figures up to 2016, but even it is illustrative:

"the last census showed the percentage of households that owned their home outright or with a mortgage fell from 75% in 2006 to 67.6% in 2016".

That trend has only accelerated since 2016 too, I'd presume its under 60% now. Not all of those remaining 60% of home owning households support price increases either - lots would have kids in their 20s/30s living at home unable to move out now.

Once the home ownership rate drops below a certain point then the political pendulum will swing rapidly to measures to reduce house prices, because its what the majority of voters will want. Its going to be very interesting to watch things unfold when that happens.

Ironically its essentially the exact opposite political trend that Thatcher pushed in the 1980s - the idea then was to help working/lower middle class people to become homeowners because they would then vote for the Conservatives. But FG&FF's property policies over the last two decades have done essentially the opposite - they've deprived an entire generation (or two) of the opportunity to become homeowners, so instead those people are turning to left-wing political parties (SF).

Villa05

https://www.boards.ie/discussion/comment/120553299#Comment_120553299

When it comes to housing, it would appear to most that FFG have kind of a monopoly on policies that destroy the housing market > economy. Recent history should show us that.

I see FF continually attacking SF by saying they are an anti homeownership party. Affordable purchase is the ultimate populist policy.

It's not the purpose of taxation to be used to give the few homeownership at the expense of the many. Any state built/funded/subsidised housing should remain in state ownership so that 1 home can help multiple families transition between renting and ownership and not be a gift to 1 family and end up on Airbnb as I have seen

This 1 simple change in direction would be positive for supply, dampen house price inflation and build costs

FF are the ultimate populists in measures they know make the situation worse