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

BlueSkyDreams

https://www.boards.ie/discussion/comment/122850609#Comment_122850609

Fair points, but I dont buy this "inflate prices at all costs" theory.

HTB enables thousands of folks to get on the ladder, young couples who wouldnt be able to buy a home otherwise in many cases.

It may have a moderatley inflating effect on prices, but if it means FTBs can buy their first home, rather than that home being snapped up by an investor to leave it empty or by a council to reclassify it as social housing, I am ok with that.

More homes being built is what will slow and stabilise the price growth, and the current govt have a better strategy to deliver homes than SF do; not a perfect strategy of course, but the best of 2 options and 2 options is all we have.

RichardAnd

https://www.boards.ie/discussion/comment/122850429#Comment_122850429

The 100k NET increase to the population should be the most salient matter whenever the housing crisis is discussed. There will be no reversal of rents or property prices until immigration is addressed. Indeed, I would consider it to be the single greatest matter of our time, for its effects go well beyond housing.

Without staying from the topic of discussion, however, I will simply say that building enough housing to accommodate such an influx is not going to be possible. Even if it were, the environmental impact would be enormous.

Villa05

https://www.boards.ie/discussion/comment/122851179#Comment_122851179

Every new build is a council home prior to being sold when you factor in the subsidies es to developers and grants to FTB. When it is sold it becomes a private speculative asset

There is 0 return for the taxpayer and the system becomes much more costly for the next person/taxpayer. Council housing is no longer for the bottom 50% but for the top 50%.

Consider a person on median salary paying taxes so that there manager supervisor or business owner can buy a highly speculative asset and in doing so locking themselves out of housing permanently.
current system requires this outcome until it becomes unsustainable and collapses, at which point everybody looses

Villa05

https://www.boards.ie/discussion/comment/122851074#Comment_122851074

why would a bank need further bailouts if good/performing loans were left on there books?

CatInABox

https://www.boards.ie/discussion/comment/122851179#Comment_122851179

Yes, this is a very important point that I think a lot of people don't take on board. Most of the actions that will actually solve the problem will only really have an impact over the long term, and telling prospective buyers that they're on their own until that kicks in is political suicide.

From a political point of view, the help to buy scheme, despite being inflationary, is good politics.

hometruths

https://www.boards.ie/discussion/comment/122851571#Comment_122851571

Even if a loan was performing in terms of payments, the security had fallen so much in value, banks needed to compensate by holding increased capital.

Peopel forget that this was why the government was so keen to on widescale forbearance on mortgage arrears. It wasn't motivated by empathy for the mortgage holder, but rather a fear that a large volume of repossessions would drive prices down even more and thus impair the banks balance sheets even further.

hometruths

https://www.boards.ie/discussion/comment/122851626#Comment_122851626

Unfortunately it's just a latest in a series of decisions and policies in which the political value was prioritised above everything else.

If our politicians had paid more attention to avoiding or solving problems early rather than thinking what would make for good politics, we wouldn't be in this mess now.

dashdoll

Apt I viewed on Sat with an asking price of 365k is now at 395k and the bidding is only getting going. Honestly, I feel kind of hopeless.

Villa05

https://www.boards.ie/discussion/comment/122851754#Comment_122851754

Peopel forget that this was why the government was so keen to on widescale forbearance on mortgage arrears

Is it too much to ask that said government be aware and act on the risks when prices are going up as well as down.

hometruths

https://www.boards.ie/discussion/comment/122851882#Comment_122851882

As noted above, that would be bad politics.

You could also take the view that the electorate gets the government it deserves.

Is it too much to ask that the electorate would take a dim view of government throwing fuel on the fire of rising house prices instead of cheerleading it?

BlueSkyDreams

https://www.boards.ie/discussion/comment/122851351#Comment_122851351

Indeed, and thats why I included it in my post.

We wont see price declines in rents or sales, as long as we standover a 2% population increase each year that we are simply unable to house - unless there is an economic crash.

HTB and other minor impactors on price and availability are strawman arguments and detract from the real issue.

I am pro-immigration, but to state the obvious, it does have to be managed.

I wonder how many of those 100k arrive into employment. That would be an interesting stat.

BlueSkyDreams

https://www.boards.ie/discussion/comment/122851764#Comment_122851764

If, If, If. We are where we are and must react to the situation we are faced with.

BlueSkyDreams

https://www.boards.ie/discussion/comment/122851537#Comment_122851537

The buyer own the property outright, regardless of subsidies to help them get there. It is not a council house and never was; it is a subsidised build and a subsidised purchase, resulting in 100% ownership.

You pay your taxes, you get something back.

A median earner is the forgotten demographic, I agree with you.

We need more cost rental and affordable. Any govt new build scheme should be 33% affordable, 33% cost rental and 33% social.

Same percentage split for Part 5 allocation in private developments.

Again, the way out of the mess is to increase supply and FFG have the quickest route to housing delivery on offer.

DataDude

https://www.boards.ie/discussion/comment/122852039#Comment_122852039

The focus on HTB and FHS are the biggest red herring. You have swarms of people who seem to be convinced the market would collapse without them…they’re absolutely tiny in the scheme of things. If removed tomorrow there’d be a barely noticeable dip/slow down for a month or two and then prices would carry on upwards.

Totally understand being ideologically opposed to them but it’s an academic rather than practical position. Crazy how much air time they get.

Lending limits are far more impactful. I’m also not exactly sure of the figures but I think HAP is a fairly big factor.

hometruths

https://www.boards.ie/discussion/comment/122852172#Comment_122852172

Re lending limits, they're currently 4 times for FTBers. When you say far more impactful, if central bank raised them to 6 times do you think that would be meaningfully inflationary - or at least not absolutely tiny in the grand scheme?

Totally agree HAP is a giant factor!

DataDude

https://www.boards.ie/discussion/comment/122852323#Comment_122852323

Yeah to be more specific, I was addressing the ‘demand side’ factors which are within the control of someone and can be altered in the short term. Lending limits are really all you have in the purchase sector (short of other extreme things like banning foreign buyers etc.). HTB and FHS are tiny. A good example of how immaterial they are - between 2020-2022, the HTB was, in effect, removed in the entirety of south Dublin and north Wicklow as no new builds met the criteria. Did prices fall? Nope.

Naturally the lending limits aren’t within the government control but a reversion back to 3x LTI across the board would have an immediate and tangible impact (for clarity I think this would be a bad idea overall though).

Increasing to 6x would be interesting. I think impact could be limited because domestic Irish banks are extremely conservative following 08 so I think they’re own internal affordability limits are now overwriting the lending limits in many cases.

Blut2

https://www.boards.ie/discussion/comment/122849192#Comment_122849192

These are the measures Denmark implemented. They're all completely reasonable, easy to implement, and obviously if Denmark has them Ireland could no problem (with regard to the much mentioned "international obligations"), and they worked to reduce numbers of asylum seekers arriving by 90%:

https://en.wikipedia.org/wiki/Immigration_to_Denmark#Features_of_the_present_Danish_asylum_system_(2023)

That by itself would have a huge impact on the housing market - approx 25,000 fewer humans needing to be housed this year, or the equivalent of about 10,000 extra housing units built. It would also save the government very large amounts of money (we're on track to spend €1bn this year housing asylum seekers, nevermind the additional costs on top). And would be hugely popular with voters. But its not being done by our current government due to either incompetence or malice, take your pick.

HAP only came into existence because there was a shortage of social housing being built. Theres a need for a few thousand households to be on some sort of temporary rent assisstance, but nowhere near the 60,000 that are on HAP at present. About 50,000 of those households should be in social housing instead of being on HAP, inflating the private rental market hugely.

This is a very deliberate result of primarily FG's opposition to building social housing. They bear full responsibility for it.

RichardAnd

https://www.boards.ie/discussion/comment/122852484#Comment_122852484

The thing is, asylum seekers make up only a small proportion of all immigrants. Taking the UK as an example, much is made of "stopping the boats", but even if every illegal that crosses the channel were to be stopped, the UK would still see NET immigration north of 500k per year, if not more.

The sad reality is that after years of reckless policy regarding immigration, there is no long an easy way to resolve the problem. I am genuinely worried about where this will take us.

hometruths

https://www.boards.ie/discussion/comment/122852438#Comment_122852438

The reason I asked about lending limits is because FHS effectively increases the lending limits for any FTBer who qualifies for a mortgage.

It gives them more money to bid with just as effectively as if the lending limits were increased for all FTBers or if all FTBers suddenly got a significant wage increase.

I think most people would assume that if either lending limits or salaries increased significantly for some of the most active buyers in the market prices would be expected to rise.

Interestingly mortgage lending for FTBers is at pretty much the same level as it was in 07, prices would appear to be at a comparable level, yet transaction volumes are significantly lower.

DataDude

https://www.boards.ie/discussion/comment/122852555#Comment_122852555

There were 62,000 properties sold in Ireland in 2023. 41,629 mortgages were taken out (subject to lending limits). There were 1,118 purchased with the FHS. It’s not even close to a like with like comparison.

Again FHS is subject to price ceilings and new builds only at this stage. If it’s expanded to second hand homes and price ceiling significantly increased then it could become a factor in future.

I’m not sure what the last paragraph means.

BlueSkyDreams

https://www.boards.ie/discussion/comment/122852172#Comment_122852172

Indeed, but what would you replace HAP with?

It all comes down, again, to supply.

If the tenants arent receiving HAP, they are either on the street or living in hotels.

I an quite sure we would all want the people living in homes of their own, given the other grim options.

Until we have enough homes to house the growing population, we would still need HAP, or at least a version of it.

I do think tenants on subsidised housing should house share, in order to maximise the housing stock.

The professional private market does it, why not the subsidised market.

DataDude

https://www.boards.ie/discussion/comment/122852632#Comment_122852632

Agreed. It’s a very complicated problem.

In ideal world you would replace it with a bucket load of social housing but that cannot be done quickly.

Ideologically, if there is insufficient rental supply for everyone who wants it, I would prefer to see all available supply used up by fully paying private sector renters rather than using public sector money to ‘bid it up’ and displace full rate payers with subsidised renters. So you’d end up with the same number of people renting, but at lower prices and all paying in full.

Those current subsidies who would lose out have to stay at home with family like those ineligible for HAP are currently doing.

But that’s an ideology and not practical in its extreme sense. If you went with my approach you’d have 20 something year old private sector workers currently staying at home taking the spots of 30 year old single mothers of 2 for whom living at home is patently more difficult. I lean towards ‘tough’ on such matters and this would not be politically palatable on any level.

Blut2

https://www.boards.ie/discussion/comment/122852522#Comment_122852522

The UK has entirely different immigration patterns to Ireland.

Asylum seekers are the only immigrant group that are a huge net drain on public finances here, that are growing far more rapidly in number than any other demographic, that are the government's responsibility to house, and most importantly that are within our power to restrict tomorrow if we decide to do so.

EU migration isn't restrictable, and non-EU work visa based legal immigration could be reduced somewhat but is for the most part neccessary for the economy or for critical services like nurses in the health sector these days.

So "there is no longer an easy way to resolve the problem" just isn't true. We have a directly comparable country to us in Denmark, which successfully reduced the numbers of asylum seekers arriving by 90%, by using a number of very easy to implement policies. We could do the exact same tomorrow if we had a competent government. And it would have an immediate very significant impact on both the housing market and government finances.

There isn't a single other government policy that would effectively result in 10,000 new homes being built in Ireland this year, while saving the state money instead of costing a cent. At this stage its now probably the biggest single policy change the government could make to reduce pressure on the housing market immediately.

hometruths

https://www.boards.ie/discussion/comment/122852617#Comment_122852617

I think we've down this road before and where we differ is that I think any specific inflationary impact can only be judged in the market of new builds sold to FTBers.

There were 5,333 new builds sold to FTBers last year.

So whilst 1,118 out of 62,000 total properties sold might not seem like much - 1,118 out of 5,333 is a lot.

Blut2

https://www.boards.ie/discussion/comment/122852632#Comment_122852632

HAP didn't exist historically, because the state built social housing. The people on HAP wouldn't be on the street or living in hotels, they would, and should, be living in social housing instead.

The only reason we have 60,000 households on HAP, costing the state €500mn and climbing per year, while also inflating the rental market for tax payers, is because of FG's policy of not building social housing over the last decade+. Which we can now see has been an absolutely huge mistake.

markodaly

https://www.boards.ie/discussion/comment/122820083#Comment_122820083

It depends.
I know some who bought at the height, who are still in negative equity.

hometruths

https://www.boards.ie/discussion/comment/122852847#Comment_122852847

Even after paying a mortgage for 17 or 18 years?

I would have thought was impossible. What sort of house and where is still so massively behind Celtic Tiger prices?

markodaly

https://www.boards.ie/discussion/comment/122852885#Comment_122852885

They bought a big period house with some land outside a major Irish city. Paid top money for it. Still not worth as much today as when they bought it. True, they kept on repaying the mortgage anyway. I am not sure of the LTV, but for them, they are still not even breaking even.

Rooks

https://www.boards.ie/discussion/comment/122851871#Comment_122851871

That's how things are unfortunately. Maybe adjust your budget down a little?

BlueSkyDreams

https://www.boards.ie/discussion/comment/122852756#Comment_122852756

Agreed that we need to build more govt housing schemes. Not social housing exclusivley, but include cost rental and affordable to avoid social housing ghettos.

Yet until we ramp up this delivery to meet demand, we have to have HAP.

We should also introduce house shares for those on HAP and other govt benefits.