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

DataDude

https://www.boards.ie/discussion/comment/122712457#Comment_122712457

I’ve chatted with so many people about this article. It’s without a doubt, and by a country mile, the worst journalistic piece I have ever read.

I would have initially assumed the writer (and editor?) is just an utter moron, but I don’t think any journalist could actually be that stupid. So it must have a dodgy underlying political motive which is shocking in a ‘fact check’ article. You’d hope 99% of the population would be able to see through it for the drivel it is, but the replies on the writers feed would suggest it hooked in a few at least.

Such a shame to deliberately mislead people on arguably THE most important topic in the country. If it was the Irish Times or anything more serious than ‘The Journal’ I’d have gone through the process of making a formal complaint.

‘Addicted to doommongering’ - so so true.

Rooks

"Crucially, this comparison was done on a per capita basis – which favours Ireland as the least-populated country in the group – rather than looking at outright figures."

This isn't misleading. It's actually more accurate and less misleading to report it on a per capita basis.

hometruths

https://www.boards.ie/discussion/comment/122712489#Comment_122712489

I'd say it is inarguable that housing is the most important topic in the country. This is grossly irresponsible.

It's definitely deliberate, it's not stupidity. But I do think the motive is as simple as feeding the public appetite for bad news on the subject.

I feckin' hate fact checkers. More often than not they're disingenuous. And the bottom of the piece they stress:

It is vital that we surface facts from noise. Articles like this one brings you clarity, transparency and balance so you can make well-informed decisions.

Pompous nonsense.

Villa05

https://www.boards.ie/discussion/comment/122712351#Comment_122712351

We have effectively 0 unemployment, the highest wage inflation in many decades along with what looks like a rapidly falling interest rate environment

For context, we built 50,000 homes in 2000 (long before 100% mortgages), those homes contributed significant tax revenue to the state in stamp duty, development levies and service connection fees

Today development levies, water connection fees and stamp duty have been removed. Grants of up to 130k are available to developers for apartments with ftb grants and first home schemes covering up to 35% of the purchase price. To be doing this in an employment environment detailed above is extremely high risk with terrible output

To stay on the football analogy it's like finishing mid table with the resources of Man City, hardly Amazing

Villa05

https://www.boards.ie/discussion/comment/122712457#Comment_122712457

His claim was based on figures by a group called Euroconstruct, which compared Ireland’s projected level of housing construction this year and in 2025 with 18 other countries

Both of you should know better than relying on projected figures for housing construction. The projected cost of the children's hospital was circa 600m

Those projected figures were highly distorted by the rush to get commencement notices in before a deadline to qualify for a waiver on development fees and water connection charges. (Could someone be playing politics massaging the figures) This of course increases the book value of the unbuilt sites.

The actual housing completion figures for 2024 have been abysmal

Quarter 1 was down over 12% on the corresponding 2023 quarter

Quarter 2 was down 5% on the corresponding 2023 quarter

Its worth remembering that qtr1 and 2 output for 2023 was considered very poor, yet the narrative has changed with intelligent data driven posters describing government performance as amazing

Its all about the narrative and FFG skill in conning the electorate

https://www.breakingnews.ie/ireland/new-home-completions-down-on-last-year-putting-housing-targets-at-risk-1654106.html

According to the Central Statistics Office (CSO), there were 6,884 new dwelling completions between April and June this year, a fall of 5.4 per cent on the same period last year. It meant the half-year total of 12,730 completions was down 8.6 per cent on the corresponding period last Year

https://archive.ph/2024.08.21-081317/https%3A//www.businesspost.ie/news/government-says-theres-a-record-breaking-building-boom-underway-new-data-suggests-thats-overplaye/

O’Brien said in May that the commencement figures “are truly record breaking”, but they are not really a measure of whether construction on a home is started.The state isn’t tracking when the first bricks on a new home are laid, it’s tracking what developers say they intend to do........

The spike was “very likely” due to developers lodging commencement notices ahead of an April 24 deadline to avail of a development levy waiver and water connection charge rebate.

DataDude

https://www.boards.ie/discussion/comment/122713777#Comment_122713777

Even based on actual completions in 2023 of 33,000. We are the highest in Europe and over double the European average.

Similar to the Journal article - disingenuous misinformation to hide a truth that doesn’t suit the narrative.

Ireland is doing a phenomenal job building homes - the best in Europe….but easier to complain about ‘the guberment’

Villa05

https://www.boards.ie/discussion/comment/122714165#Comment_122714165

Was Europe suppressing supply for a decade prior to 2023

Would it have been better to have been building consistently close to demand over the prior decade (or at least the prior 7 years while corpo taxes were rising) while labour, materials and finance were considerably cheaper

33k is nowhere near enough to cover indegenious demand, nevermind the migration

How come we could build 50k in 2000 with much lower population and less people working in construction. What are the barriers to efficiency and who put them there

DataDude

https://www.boards.ie/discussion/comment/122714205#Comment_122714205

Changing the goldposts again when the facts don’t suit the narrative.

Pretty much all countries across Europe have housing shortages to varying degrees. Pretty much all would love to increase their housing output. There is one incredible success story on this front. Building more than anyone. Growing fast than anyone - Ireland.

But once that becomes fact let’s instead focus on 10 years ago with full hindsight benefit, instead of focusing on the success and progress of today.

It would have been great had we kept building through the downturn. There was two keys problems. Houses were too cheap so the private sector couldn’t build them. The government was smashed broke and couldn’t either.

Just imagine a politician in 2013, implementing the Haddington Road agreement saying ‘we actually need to cut public pay even more than thought…and we need to increase the pension levy…and take on even more debt….so we can build loads of houses and keep you all in negative equity for longer. There’s not enough ghost estates as is’

You might actually have been murdered.

Donald Trump

https://www.boards.ie/discussion/comment/122714324#Comment_122714324

I think this notion of houses being too cheap/expensive to build is a little simplistic.

In any process, you can consider what price you can achieve for the final product, you can look at what it will take to create that final product and then you look at the inputs. Some of the inputs are completely beyond your control, whereas some of them are based simply on who is willing to pay the most for them. A field at the edge of a village that might have made 50k now makes 3m because that is what developers bid each other up to.

This thing about inability to make profit on housing will not wash for me while developers are bidding the prices of sites and land up constantly higher and higher.

DataDude

https://www.boards.ie/discussion/comment/122714339#Comment_122714339

I’m not making that argument now. I’m making that argument back in 2013.

There simply was no demand for houses at a price that those building them required. There were too many empty houses everywhere. Financing was also an issue no doubt, but if demand was there, capital would have found its way to produce the product. Hindsight is easy to apply here but if you said to someone in Ireland in 2011 that your great business plan was to start building houses, you’d have been sectioned.

House building only became viable again from 2016/17 onwards in many parts of the country. The government often takes a beating for that ‘house prices need to rise a bit further’ quote - but it was an inconvenient truth. It’s not sustainable for houses to be as cheap as they were. We are now suffering the consequences of houses being too cheap for too long.

You undoubtedly have a point now in some of the more expensive parts of the country. However I’d imagine there are still plenty of parts of the country where house building may not be viable even if the land is free. That is a difficult problem to solve.

hometruths

https://www.boards.ie/discussion/comment/122713777#Comment_122713777

Complaining about posters trying to shift the narrative here is a bit of a stretch.

My input on this point in quoting the journal was highlighting a particularly egregious example of how media deliberately ignore or spin facts and data in order to perpetuate the narrative that the housing problems are way worse than they actually are.

Whether it is 35k units or 40k units a year, two facts are undeniable - that is a significant improvement on five or six years ago, and puts us at the top or near the top in Europe on a per capita basis.

To dispute that is simply disingenuous spin.

It is no different to enthusiastically lapping up and presenting as gospel up the Housing Commission's estimate of a 250k deficit without asking who the 500k+ currently displaced people are.

Or totally ignoring the Census findings of a vacancy rate of almost 8% and peddling the myth that we have a low vacancy rate.

It's all the same as far as I'm concerned - deliberately ignoring or manipulating data that doesn't support the popular narrative.

GalwayBmw

https://www.boards.ie/discussion/comment/122695635#Comment_122695635

Could you elaborate a bit more on the luas or possible share the map?

GalwayBmw

https://www.boards.ie/discussion/comment/122705238#Comment_122705238

Total recklessness. We've gone through that once and we know who's gonna take the hit /Hint: not people taking those high risk mortgages/.

Cyrus

https://www.boards.ie/discussion/comment/122716424#Comment_122716424

why is that a high risk mortgage?

Since when is a 3x LTI a high risk mortgage?

hometruths

https://www.boards.ie/discussion/comment/122716424#Comment_122716424

The taxpayer is much more likely to take a hit from giving an extra €150k to people earning €70k so they can borrow 6 or 7 times income to buy an "affordable" house for the guts of €500k than from people on €240k borrowing 3 times income to buy a house for €1m.

GalwayBmw

https://www.boards.ie/discussion/comment/122716829#Comment_122716829

Cos it's ~4K to pay monthly… It's very risky specially these days. Cheap foreign labor + AI will change the job market layout beyond recognition (never mind black swans), not understanding this is a risk on its own. Effectively those risks are shifted from the borrowers to a much wider community of "taxpayers".

GalwayBmw

https://www.boards.ie/discussion/comment/122716975#Comment_122716975

One doesn't bother another. I concur your point though. I bough my first house without any help. An I think it'd fair to compensation those "help to buy" payments to people who didn't avail of them at the time when they bought. Just to be fair.

GalwayBmw

https://www.boards.ie/discussion/comment/122716922#Comment_122716922

I think the whole system is based on a rather risky assumption. The higher the mortgage the more stress tests it should go through. This hopefully represents a niche case, but many industries in Ireland saw massive drops in salaries, such as IT (anything between X2-X3), banking/finance. More to come. People getting high wages should be additionally assessed for the period of time within which they got that money - Shorter than 3 years income should be taken at 60% as there's a great chance they aren't sustainable. A new cohort of rich people is forming and the equity "shift" will hit poorest borrowers the most.

kippy

https://www.boards.ie/discussion/comment/122708212#Comment_122708212

I think anyone on middle incomes with a couple of kids want to see house pricing fall to levels that will allow their kids manage to purchase a house in a decent location in the future.

At the time of the Noonan comments the Irish state and as such it's citizens were invested heavily via NAMA and the bank stakes it held in the Irish property market. I appreciate that the Irish state and it's citizens are invested in many ways in property but the above caused the links to strengthen even moreso.

As such there was a time when property prices needed to increase to cover some of the states exposure to it.

All of that said. It was and still is a farce.

DataDude

https://www.boards.ie/discussion/comment/122717182#Comment_122717182

It’s an interesting point, there’s so much going on underneath and a fairly simplistic ‘4x gross salary’ is applied to all. I think I’d agree that higher income earners have much more potential volatility, and certainly most high income earners I know have a bit of ‘pay down debt while times are good’ mindset.

Even using gross salary is somewhat silly given how progressive our tax system is. It also takes no allowance of the fact that two €50k earners bring home a lot more than one €100k earner…but more sophistication must be balanced against consumer understanding

The bank also applies their own stress tests to supplement the simple rules. They don’t have to lend 4x

However, there are some counter points as to why high income mortgages are safer

• In good times high income earners are more likely to get significant pay increases.
• Higher base income usually means higher variable pay. Banks lend pretty conservatively on variable pay, particularly deferred stock.
• There is a baseline level of living that doesn’t really vary. If you make €3k a month, and have 33% mortgage (€1k). Even a fairly small change in circumstances can derail you. If you’re making €10k a month and have a 33% mortgage (€3k)…you already have a significant buffer in place even though the proportions are the same.
• Other external shocks like energy inflation, food inflation etc. have far less impact on higher earners.

Villa05

https://www.boards.ie/discussion/comment/122714324#Comment_122714324

https://www.boards.ie/discussion/comment/122714510#Comment_122714510

I'm not speaking in support of the Journal article. It's just plain weird and spin as you describe it.

I do however think it's I'mportant to recognise spin on both sides of the argument. In the first 6 months of 2024 our housing output is significantly down on 2023. These are based on results not distorted forecasts. In that time raw materials and energy have significantly reduced in price

Is comparing ireland to the EU in terms of housing output a fair comparator.

The main economies of the EU have been drifting in and out of recession over the last 12months, while our government were bragging about a sovereign wealth fund on disputed taxes to the world (not very smart) .

Last year I identified this as an opportunity to substantially increase our output as we could take advantage of reduced demand for labour and raw materials elsewhere. A reduction of 8% in housing output in the first 6 month of 2024 over what was poor output in the first 6 months of 2023 is not what I was expecting, it is yet another missed opportunity.

enricoh

Good article in the Sunday times yesterday from Cormac lucey- basically Irelands economy is as reliant on multinationals as Irish people were on the potato for food before the famine! Hope it ends better!

https://cormaclucey.blogspot.com/2024/10/relying-on-multinational-potato-will-be.html?m=1

GalwayBmw

https://www.boards.ie/discussion/comment/122717441#Comment_122717441

That is my point. Unfortunately as we know banks aren't going to take the hit, there's much higher chance of us paying USC2 etc. A few recent posts in that topic touch on "responsible" selling (i.e. not selling to investors) why not applying the same pattern to borrowing? We all saw those taxi drivers owning 2-3 properties pre-crush time while you lost 10 on renting purely over their greed… Many times people realize the risk but they say "now or never", this risk is covered by other taxpayers. Two snr. managers getting 300K combined today may earn 0 this time next year, that is already happening. There's a simple way to mitigate it - just take higher incomes (> 100K p/p) as 30, 40, 50, 75%, 100% for each of the years it's been earned, how can it go wrong? Otherwise it's just borrowing at other people's expense.

timmyntc

https://www.boards.ie/discussion/comment/122717441#Comment_122717441

I agree that higher earners are generally a safer bet, however there are a number of cases of high earners willingly defaulting on mortgages as a tactic for wealth acquisition.

When you owe the bank 100k it's your problem, 1m and it's the banks problem. Non payment of large mortgages and subsequently getting large payment write downs and keeping the home is a disgusting but effective tactic - but one only available to higher earners.

Still I'm sure it's less than 5% of cases but given the sums involved is still significant risk for bank balance sheet

Cyrus

https://www.boards.ie/discussion/comment/122717126#Comment_122717126

cheap foreign labour is going to affect the earning potential of the top 0.5%?

as for your predictions on AI i cant see how a bank can be expected to apply that logic in any coherent way.

hometruths

https://www.boards.ie/discussion/comment/122717575#Comment_122717575

I don't think defaulting and keeping the house is something that's only available to higher earners, as far as I can see it's available to all.

It just seems more disgusting when it is a jumbo mortgage on a trophy home, rather than low earners in cheaper houses.

But if as a society we wish see huge forbearance for low income mortgage defaulters, we kind of have to accept it for all mortgage defaulters.

GalwayBmw

https://www.boards.ie/discussion/comment/122717576#Comment_122717576

It already is sadly. I don't think 240K is within top 0.5, but I'll leave it to you.

GalwayBmw

https://www.boards.ie/discussion/comment/122717575#Comment_122717575

If I'd be a risk manager I'd pay particular attention to people taking on the highest LTVs available while having high salaries only for a year or two. The practical impossibility to repossess acts as a decision factor for some people rest assured.

BlueSkyDreams

https://www.boards.ie/discussion/comment/122717200#Comment_122717200

I understand your points but as long as the economy continues to grow and wages continue to increase, house prices in economic centres will also increase, unless there is a considerable uplift in housing output.

Thr number of households in the state earning 6 figure salaries has doubled in the last 6 years. If 1 in 4 Dublin households is earning 100k+, its difficult to see a situation where a family home costs less than 400k.