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

Donald Trump

https://www.boards.ie/discussion/comment/121568854#Comment_121568854

Well by his metric, people with phds today can't be moaning if they have no house by 40 because they spent so long in college ...................you also have to explain what you mean by "equivalent". In terms of percentage of people who have them, maybe it would be close enough. That doesn't make them "equivalent" though.

Going on about clothes and foreign holidays in the 1980's vs today is complete nonsense...........you could fly to Paris next weekend for less return than your buddy will spend on pints in the local on Saturday night. Clothes are dirt cheap now in comparison.

growleaves

https://www.boards.ie/discussion/comment/121568777#Comment_121568777

Your post has descended into the worst kind of folk gibberish.

Having single-pane windows and having to light the fire is not hardship. I know because my childhood was in just such a house. I also never went anywhere foreign until much later in life.

Foreign holidays were unheard of because they were expensive. Clothes were expensive prior to the late 1990s. They are not expensive now. They aren't expensive now because in the global economy we have, there is a huge deflation of certain consumer items and services (airplane flights, phone calls, clothes etc.) which are unfixed costs. While also there is inflation of fixed costs (like housing).

The former deflated costs have been arbitraged via off-shoring of manufacturing (e.g. moving textile factories from Derry to Bangledesh, in the case of clothes), out-sourcing, in-sourcing, and immigration of cheap labour.

Deflation of consumer costs has nothing to do with real wealth. If 1kg of caviar costs €500 then I start a corporation which creates 5000 new caviar farms and then I sell caviar on the market for €5 per 1kg, and you walk into a shop and buy it, have you now become rich? You can afford a 'luxury', right? You're eating caviar. No it doesn't mean you're now rich. It means the price has been deliberately pushed down. Deflation.

Now repeat for several unfixed costs, while hiking the prices of fixed costs simultaneously.

Look at a phone bill from 1986 and compare it to a phone plan for today. (You'll have to change currency from punt to Euro.) Compare it even in real terms before adjusting for 38 years of inflation.

Now use logic. If bananas, airline tickets, jeans and tshirts haven't maintained their real value since 1982 - and here we're using housing as the measuring stick for real monetary inflation, since that's what we're talking about anyway - then will subtracting bananas, airline tickets, jeans and tshirts from your budget today add up to extra savings which will pay for a house? No.

As for your mam getting a good job in the bank...that is much harder since the bank strike of 1992. Starting salary can be well below median for new employees (with college degrees). The thing of a 'good job at the bank' is very old-fashioned. It's evaporated really.

Similarly the poster above @SharkMX talking about people he knows who got good jobs without a college degree...use your noggin mate, how many good non-college jobs do you think there are in this country? Construction niches, mechanics, drivers and a few other jobs have won a mini-lottery with the wage booms they've seen in recent years, but it doesn't have a more general application. Many non-college jobs are an entry to a hard life with poor pay and no way out.

House price-to-income ratio give a good overview of the real situation imo. I'm not one for privileging statistics over anecdotes as such, but people don't even understand their own anecdotes because there are too many aggravating factors operating simultaneously.

Padre_Pio

https://www.boards.ie/discussion/comment/121568868#Comment_121568868

All you're doing is agreeing with the sentiment of my post. Standards 40 or even 20 years ago are nonsense, so why are people putting out some statistic from 2004 like it's relevant? Population is different. Demographics are different. Housing stock is different. People's needs are different. Job market is different.

House price to income is different? Sure it is. Builders and trades demand good wages, and you're paying for it. Construction regulations are more strict, and you're paying for it. Materials are expensive because of COVID, inflation and energy costs. It's like you're comparing the cost of a Corolla in 1990 to a 2022 and complaining the new model is more expensive. How lucky those people in 1990 were to buy a car so cheap.

growleaves

https://www.boards.ie/discussion/comment/121568876#Comment_121568876

Because ultimately having somewhere to live is so fundamental that it can be used as a real measure of monetary inflation. (Obviously food prices matter too.)

All sorts of (cost-deflated) luxuries disguise a more general fall in the standard of living imo. Cheap baubles become just become a kind of compensation package.

growleaves

https://www.boards.ie/discussion/comment/121568855#Comment_121568855

Clothes could not be a better example since for centuries and centuries they were expensive.

I read a lot of old novels. In Pére Goriot the hero, a law student from the minor nobility, has to walk around Paris in rags. When he needs clothes for a social occasion he has to borrow money from his family in the countryside to pay for them.

Margaret Thatcher used to repair her clothes instead of buying new ones because she had been brought up in a nonconformist (Methodist) family, who 'only' owned a profitable tobacconists' and grocers' shop.

Then even in the 1980s my family had to get our relatives to give us second-hand clothes (we weren't poor but didn't have money for expensive things.)

Then in the 1990s textiles and clothes factories were moved from Europe and America to Asia and the cost just plummeted. Now they are as cheap as they could possibly be.

Padre_Pio

https://www.boards.ie/discussion/comment/121568887#Comment_121568887

Holidays were expensive in the 1980s so people didn't take them.

Holidays are cheap now so people take multiples a year.

Same with everything else. Clothes, cars, experiences you name it.

“You buy furniture. You tell yourself, this is the last sofa I will ever need in my life. Buy the sofa, then for a couple years you're satisfied that no matter what goes wrong, at least you've got your sofa issue handled. Then the right set of dishes. Then the perfect bed. The drapes. The rug. Then you're trapped in your lovely nest, and the things you used to own, now they own you.”

Except now people can't afford the nest

titan18

https://www.boards.ie/discussion/comment/121568876#Comment_121568876

Tbf though, a lot of that only applies to new builds. My parents bought their house for 42000 pound back in 92. If sold now, you're looking at around 370k euro. Salaries haven't gone up close to 9 times since then.

https://www.boards.ie/discussion/comment/121568983#Comment_121568983

Has the number of people who have access to finance and can afford to pay 370k gone up? Also, it’s possible your parents bought on a single salary, most buyers now I suspect, have two.

The property market is completely different to 1992.

timmyntc

https://www.boards.ie/discussion/comment/121568983#Comment_121568983

1992 had 14% mortgage rates though, so house prices were cheaper in real terms as the cost of finance was much higher.

What was the total cost of a mortgage in 92 to buy a £42k house? Including total loan interest? Then how does that compare to today's case?

https://www.boards.ie/discussion/comment/121568855#Comment_121568855

I mean, if anyone who did a PHD starts moaning to me, I'd be happy to point out they should have chosen a different path.

timmyntc

https://www.boards.ie/discussion/comment/121569167#Comment_121569167

One of the biggest mistakes in the UK and Ireland's housing markets was the sale of LA stock at discount prices.

And now they're making it even easier for tenants to buy? Beggars belief.

Policies like this actually make social housing make even less money for the state - as the types of tenants who would pay their rent are those most likely to buy their house from the state instead. So those left over are a higher % of people in rent arrears.

fartooreasonable

https://www.boards.ie/discussion/comment/121569049#Comment_121569049

You'd have to earn nearly 100k to get a mortgage of that amount. Considering our parents generation bought in their 20s and most people now are single in their 20s it's not realistic for a significant majority to earn 100k on a single income in their 20s. Anecdotally I did and still couldn't get a mortgage in my 20s (with a salary over the average) and am now mid 30s still trying to get a house. But I represent an edge case.

Padre_Pio

https://www.boards.ie/discussion/comment/121568983#Comment_121568983

42k pounds is 108k euro in 2022. If we took 7% inflation as a very rough average the total payback over 25 years is 220k euro.

Donald Trump

https://www.boards.ie/discussion/comment/121569283#Comment_121569283

Are you double counting the inflation there? 🙂

fartooreasonable

https://www.boards.ie/discussion/comment/121569300#Comment_121569300

With compound interest 42k @ 7% would be approximately 220k.

Donald Trump

https://www.boards.ie/discussion/comment/121569325#Comment_121569325

The 108k already counts the inflation - no? ...........you appear to have just plucked an alternate inflation rate out of the air.

Are you mixing up inflation and interest? You are talking about one and then the other. I mean you can talk about the inflation component of a nominal interest rate if you want, and strip that out to get a real interest rate, but I don't think that is what you are talking about

fartooreasonable

https://www.boards.ie/discussion/comment/121569345#Comment_121569345

Well if a house was 42k and it's now nearly 400k the price rate taking into account compounding would be multiple.times the rate of increase of wages. The long and the short of it there's a mismatch between house price increase and wage increase.

Donald Trump

https://www.boards.ie/discussion/comment/121569370#Comment_121569370

yes, definitely.

titan18

I'd also say you were buying a brand new house for 42k. Looking at houses for sale in the area currently, you're buying a 30 year old house for 375k and some of them look to have no real work done in that time period (I know the one next to me will be going for sale soon and it still has the original kitchen).

You were buying something a lot better for a lot less.

ittakestwo

The 30k units we are building is more than Ireland would need with no net migration. In 2022 Ireland's natural population increase was 20k and given how low are fertility rate has fallen to, 1.63 (well bellow the replacement rate of 2.1) the natural increase will turn negative within 20 years.

So this bullshit claim we need to be building anything like 50k units is ridiculous. It must be for FG immigration policy. If they do belive we need to build 50k units but are "only" building 30k units then they have to curtail their immigration policy.

L1011

https://www.boards.ie/discussion/comment/121569483#Comment_121569483

Read the note in post 1 before posting, as the thread title tells you to do.

Padre_Pio

https://www.boards.ie/discussion/comment/121569483#Comment_121569483

Plenty of jobs here, near full employment. Immigrants needed.

L1011

ittakestwo - do not post on this thread again

Padre_Pio

https://www.boards.ie/discussion/comment/121569300#Comment_121569300

I converted 42k 1992 pounds to 2023 euros using an inflation calculator to see the cash purchase price today. Then assumed a 7%interest over 25 years with no down payment.

As i said, it's very rough.

timmyntc

https://www.boards.ie/discussion/comment/121569597#Comment_121569597

Ah you mean you're working out the cost of the mortgage in 2023 money?

RichardAnd

https://www.boards.ie/discussion/comment/121569270#Comment_121569270

The market of the 80s and 90s isn't comparable to today. Houses back then cost a lot less relative to the average salary, and single income households were not yet functionally extinct. Case in point, my parents sold their Dublin 3 house for 75k pounds in 1997, and that same house is today worth about 600k. That's well above the rate of inflation, and I would add that they bought that house in 1988 when they were in their mid 20s when my mother only worked part-time. That simply isn't happening today.

If you are on an average salary in Dublin, you will struggle to find anything beyond a small apartment, and even that could be a stretch. Two people on an average salary could probably get something, but the semi-detached house in a nice area is now the purview of high earners, and I even know people like that who are constantly getting outbid.

In short, it's a s**t-show, and it is going to fundamentally affect the future of the country in a very negative way and few seem to care as long as they are comfortable in their own bubble.

fartooreasonable

https://www.boards.ie/discussion/comment/121569972#Comment_121569972

As someone on over 100k, with a substantial deposit it's still impossible and this is in the north west. It's not impossible to buy a house there's just no good investments out there. At present my options are 400k for a bungalow which is on a flood plain and has been flooded or 300k for a self d needing work in the bad part of town. I'm not going to nerf my future finances making a move out of desperation.

Padre_Pio

https://www.boards.ie/discussion/comment/121570371#Comment_121570371

"no good investments"

It's the people selling the houses who made good investments, not the ones buying!

RichardAnd

https://www.boards.ie/discussion/comment/121570407#Comment_121570407

Not necessarily. If one needs to move for whatever reason, the extra 100k that their house may be worth is of little consequence if they want or need to move to an area where houses have risen even more. I know of a few people who moved back to Dublin after a country move didn't work out (these things happen). Though I would never ask anyone about the sums involved, I think it's safe to say the rises in Dublin in the last few years have out-stripped other parts of the country.

What's needed is stability, but the modern economy is geared towards infinite GDP growth based on fiat currency, which is functionally unlimited. Until this changes, prices of everything will only go one way, so if you have a lot of savings and nothing to do with them, you're essentially letting the value of the money rot.

timmyntc

https://www.boards.ie/discussion/comment/121570371#Comment_121570371

The northwest is a unique case due to defective blocks - the shortage there is much worse than rest of the country because so many 2nd hand homes are just not viable to purchase. Then add in the construction labour tied up in repairs/rebuilds... Expect prices there to rise 10% or more per annum for the next few years.