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

hometruths

https://www.boards.ie/discussion/comment/122768530#Comment_122768530

I think in that scenario most people would simply only pay half the mortgage rather than try to sell the house for 20% less.

They're be unlikely to be forced to sell the house, hence my wonder what the big worry is?

Sure it is possible to end badly for the taxpayer, but it seems unlikely to be that big a deal for individual mortgage holder.

https://www.boards.ie/discussion/comment/122768588#Comment_122768588

New Job Seekers benefit for six months and a few grand of savings you should be okay ideally.

Hardly going to be out of work that long. Wouldn't be too worried about it especially if both parents are working.

Last thing the banks want to do is reposes the house, could just pay the interest till your back on your feet.

spockety

I think the most interesting/significant thing about the current property prices is the opportunity cost elsewhere in the economy. Imagine if the real economy was flooded with this kind of spending, instead of the property market. It could have been great for the local economy, indigenous businesses etc.

Instead we have restaurants going out of business, etc.

herbalplants

https://www.boards.ie/discussion/comment/122768690#Comment_122768690

Very well said. There is plenty of afluent areas where restaurants are closed and some only open until 5 pm.

Yet the neighbourhood houses cost over 1 million. Wouldn't you think they would want to spend some time dining out? So it is a strange vibe going.

In other countries, where property cost a million plus, people are out and about, you see a lot of activity.

I also notice the increase in tradesmen advertising their services to death, like very frequent. From plumbers, carpenter, paving, painters. Just shows they are out of work and not getting enough jobs. You wouldn't have seen it 2 years ago.

combat14

https://www.boards.ie/discussion/comment/122768588#Comment_122768588

the whole property market here is starting to look like a giang ponzi scheme where price doesnt matter at all

other posters are correct imagine how innovative and productive our economy could be if our focus was elsewhere other than never ending rent/property price increases - its a bad sign when more and more international companies have to offer significant supports to induce and attract potential workers to come here

PommieBast

https://www.boards.ie/discussion/comment/122768557#Comment_122768557

Sounds like me back in 2019 although I was targeting 300k rather than 250k. Worst part is how much EAs dick you around.

hometruths

https://www.boards.ie/discussion/comment/122769275#Comment_122769275

The fact price that doesn't matter is sort of the point I was making.

Of course it matters in terms of max amount an individual can actually access to pay, but beyond that it doesn't really matter.

And as long as prices keep increasing the government will find ways to increase the amounts buyers can access.

combat14

https://www.boards.ie/discussion/comment/122769553#Comment_122769553

a bit like the HTB and First Home schemes ultimately it will be the tax payer ridden again

hometruths

https://www.boards.ie/discussion/comment/122769692#Comment_122769692

indeed, that's why I was confused at why the mortgage broker was so concerned that it would end badly for mortgage holders!

extra-ordinary_

https://www.boards.ie/discussion/comment/122769722#Comment_122769722

It's just a complete 'create content' fluff piece - the first line according to the 'leading mortgage broker' is "Double-digit growth in property prices could "end badly" for mortgage applicants who "overstretch themselves"". Overstretched means just that, it's hardly meant to mean things are going well. Then they go on to imagine what if one of two borrowers lose their job. Like what is this, water is wet?

RichardAnd

https://www.boards.ie/discussion/comment/122770136#Comment_122770136

As if "overstretching" is an option these days :/

felonious_Gru

https://www.boards.ie/discussion/comment/122768335#Comment_122768335

A 20% fall would only take us back to the state of 2022

Blut2

https://www.boards.ie/discussion/comment/122776252#Comment_122776252

And given the minimum deposit is 10%, and people would have paid off some level of the principle in that time, and plenty of buyers are cash buyers or at least have larger than 10% deposits, it wouldn't even just only be people who've bought in the last 18 months. It would only be an even smaller subset of that group who would be in any level of negative equity from a 20% fall.

Very very few people would find it "catastrophic" in real life. The vast majority of home owners would see absolutely no negative difference to their lives. They would just see positives - easier for schools/hospitals/garda stations to get local staff, easier for local businesses to get staff, lower wage requirements meaning lower costs for things etc. Lower LPT. And importantly the rather big perk of seeing your younger friends or family finding it easier to buy property.

Padre_Pio

https://www.boards.ie/discussion/comment/122776312#Comment_122776312

Unfortunately, there's no such thing as house prices falling 20% in isolation.

The only way the price will fall is when demand dries up. That means that buyers either lose their savings or lose access to credit. There's simply too much demand to see a price drop soon.

There were very few ordinary people who were picking up bargain houses back in 2009. Banks simply weren't lending and too many people lost their jobs and savings.

RE " the vast majority of homeowners would see absolutely no negative difference to their lives" There's a good chance people's mortgage rates would increase as LTV% increase, so some would be under more pressure to meet repayments.

felonious_Gru

https://www.boards.ie/discussion/comment/122776312#Comment_122776312

Both Australia and New Zealand saw pullbacks not far off 20% in the past ten years and then took off again, it looks like we are now following those markets

Every pullback gets aggressively bought

timmyntc

https://www.boards.ie/discussion/comment/122776491#Comment_122776491

Institutional buyers and AHBs are a huge portion of buyers now. They could easily be curtailed without destroying the economy, and house prices would fall as a result of reduced demand.

As it stands non owner occupiers made up over 40% of new build purchases last year

Blut2

https://www.boards.ie/discussion/comment/122777174#Comment_122777174

Something akin to Singapore's stamp duty rates would do that very easily. While also raising large amouts of revenue for the state.

We could use the additional revenue to also reduce stamp duty to 0% for your PPR while we're at it, on houses under €1mn at least. That would save most Irish buyers of property thousands of euros.

RichardAnd

https://www.boards.ie/discussion/comment/122777195#Comment_122777195

In China, non Chinese citizens may only buy a single property, and it's subject to all sorts of restrictions. One must be resident there and one may not rent it out.

https://wise.com/us/blog/buying-property-in-china

China also wisely does NOT recognise dual citizenship.

We, however, allow Chinese investors to hoover up property over here and rent it out.

All of the above aside, we may suggest any number of things that the state could do to arrest house prices rises, but it's all moot. The powers that be have made it abundantly clear that their intention is perpetual growth, damn the consequences.

j62

China also has 90-100 million empty apartments and are in a middle of a property bubble which makes our own one look lame, I wouldn’t use them as an example of anything related to property

RichardAnd

https://www.boards.ie/discussion/comment/122797286#Comment_122797286

Strawman. I wasn't commenting on their property situation, but merely their approach to handling dual citizenship and the matter of non-nationals owning property in their country.

getoutadodge

https://www.boards.ie/discussion/comment/122797403#Comment_122797403

Many Asian countries (Thailand, Vietnam, Phillippines, Indonesia etc) severely restrict foreign ownership of property to curtail foreign capital inflating the market. The housing market here could be restricted to EU citizens easy enough.

kippy

https://www.boards.ie/discussion/comment/122776491#Comment_122776491

They just wouldn't pay the full repayment....

If the last recession taught us anything it's that banks will rarely repossess and indeed can rarely repossess. The state won't let it happen generally as those people then become the states problem. The borrower will renegotiate their repayments etc

It's a matter of having a thick neck in reality.

Padre_Pio

https://www.boards.ie/discussion/comment/122799855#Comment_122799855

True to some extent, but I wouldn't want my mortgage sold to Pepper or other b*starts like them

RichardAnd

https://www.boards.ie/discussion/comment/122799825#Comment_122799825

Indeed! A lot of things could easily be done, but anything that in any manner restricts property price growth is, as the last decade will adduce, not going to happen. Ireland is not a functional nation; it's an investment fund with a welfare state and a football team.

danfrancisco83

https://www.boards.ie/discussion/comment/122800269#Comment_122800269

This kind of hyperbole is helping nobody. There is zero evidence that Ireland has a football team.

Blut2

https://www.boards.ie/discussion/comment/122799825#Comment_122799825

We wouldn't even need to fully restrict foreign ownership like that. Just bring in high stamp duty rates (of up to 65% like in the Singapore example I posted) as a start - that should curtail most of the demand, and raise some revenue for the state while we're at it.

There are no losers from bringing in high stamp duty for foreign purchasers you'd think - extra revenue for the state, less demand for houses, good optics for politicians, and it won't impact a single Irish voter. And we have ample evidence of it working in other jurisdictions, its very quick and easy to implement.

But there are no political parties calling for it (not even the opposition ones) as far as I know - why I wonder?

timmyntc

The best way to boost supply and drop prices is to put a higher rate of CGT on land.

It would instantly open up huge amounts of land for development from hoarders because there is no longer benefit to sitting on development land and waiting for it to appreciate in value.

It also means rezoning will no longer result is a big payday for lucky speculators. Lower land prices = cheaper homes.

But their are snouts at the trough who do not want this gravy train of bumper land prices to end. A development site as pension is a common enough occurrence in this country

DataDude

https://www.boards.ie/discussion/comment/122800420#Comment_122800420

Surely higher annual recurring taxes on zoned land is far more effective?

If I hypothetically owned development land and was sitting on a notional profit which I was watching grow. If CGT was increased massively, I definitely wouldn’t sell at a higher tax. I’d be even more inclined to sit on it until the political winds changed in the future.

Your idea seems to run on the assumption that the majority of land is currently owned with base cost = current market value and any potential growth is all in the future? Very unlikely to be true.

DataDude

https://www.boards.ie/discussion/comment/122800269#Comment_122800269

“Ireland is not a functional nation” - yikes.

Get all the countries in the world in a hat excluding Ireland. Pick a country out at random, buy a one way ticket and enjoy.

RichardAnd

https://www.boards.ie/discussion/comment/122800314#Comment_122800314

Post of the day :)