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House Prices
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14-04-2022 5:42pm#1
https://www.rte.ie/news/business/2022/0414/1292324-cso-residential-property-prices/
"Nationally, property prices are now just 2.5% off their 2007 peak. In Dublin, prices are just over 10% off their February 2007 peak while outside Dublin they are just 4% off their May 2007 peak."
So people that purchased at the very top in 2007 are now finally breakeven from house value perspective (on average - give or take a few percent). It took 15 years to get to this point.
I was just thinking though: according to CPI calculator in that 15 year timeframe we've had inflation of 12.9%. Wouldn't this mean that those folks are still technically down since 200k then does not equate to 200k now (its now 225k according to CPI).
CPI site:
The % change in the CPI from May 2007 to Mar 2022 is 12.9 %. A basket of goods and services that cost €200000 in May 2007 would have cost €225730.99 in Mar 2022.
Nothing in the rte article mentions high price value including the offset of inflation. I think it should.
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Comments
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For years it has always annoyed me that RTE have felt the need to use the Celtic Tiger as the yardstick to measure house prices by - the single most dysfunctional period in recent history and here we have someone saying "Well actually, I don't think they went far enough"
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All we ever hear about regarding housing is 'supply' 'supply' 'supply'
What we do not hear is the other side of economics, demand!
The root cause of the increase in property prices and rents is demand based price inflation, the question we must now ask is this, what is causing this excess demand in the market? Since real estate is a demand driven market we must take into consideration the demographic factors, these include birth rates, deaths, immigration etc.
Birth rates are not exceptionally high. Deaths are generally stable. Immigration is the only factor that is not stable and not predictable, we have no idea how many people will arrive into Ireland from one year to the next as such it is impossible to adequately plan for housing supply. The Irish government know this, the Central Bank know this and the real estate investment trusts know this.
The only people who appear ignorant of this are the Irish people who have to suffer the negative consequences of this ongoing, compounding issue.
It's long past the time to start having a mature discussion about these factors without the typical attempts to shout down genuine debate with screeches of 'racist' 'nazi' that approach does nothing to address the problems.
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Join Date:Posts: 13620
The government often talk about demand. The ESRI typically says we need x thousand new properties per year over the next few years. The problem seems to be that they arent being built fast enough in areas where they are wanted.
The housing crisis is part of an ongoing thread in A&P, so it is talked about maturely.
What is your proposed solution? If you want to discuss the issue with an open mind, I dont see how you could be called racist etc. If you are starting with the premise that this is a way to convince other people that we should kick non white people out of their homes, or out of the country, then yeah I can see why you might be accused of such things.
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Falling house prices are a problem because people borrow to buy houses, and they find themselves in negative equity.
But loans don't increase with inflation - if you borrowed €500,000 to buy a house, and inflation since then has been 15%, your loan doesn't "hold its value" for the bank by rising to €575,000 - you still only owe €500,000 and, so long as your house is worth at least €500,000, you're not in negative equity.
Sure, viewed as an investment your house hasn't held its real value. But that's a risk attendant on any investment. The failure of your house to appreciate in value in the way you hoped it would, or even to hold its real value, is of course disappointing for you. It hasn't proved a great investment. But, not to be brutal about this, that's a bigger problem for you than it is for the rest of us. We are not in the business of underwriting, or caring very much about, your investment return. The failure of houses to appreciate in value doesn't create the same kind of societal problems that large-scale negative equity does. So, from a public policy point of view, the return of house values to their nominal 2007 level is significant.
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The current housing problem has always been there. There have never been affordable houses for everybody to purchase, or even nearly everybody. There has always been a residual number who cannot, and never could, hope to buy their own home. However, the 'Corpo' was always there to provide a council house for these people to be housed, and there was a list. Of course getting on the list was the ambition then. Studies suggest that 30% of people require public provided housing at subsidised rent.
In the 1950s and 1960s huge housing estate were built by the Corpo in Ballymun and Ballyfermot that made huge inroads into the problem. People were delighted to be moved from bad housing in the inner city out to the country in those two rural areas. These were very well built houses and apartments and were an excellent solution. There was a downside - social problems.
Following Thatcher's sell off of the state owned housing at knock down prices, and the political decision to cease building anymore, house prices started rising at above cost of living. This was a gift that kept on giving for the Tories, as those that benefitted were grateful and those that suffered did not matter. That policy of no longer providing public housing continues in the UK, and prices of houses continues to rise to be unaffordable to all but the very wealthy, as do private rents which have become unaffordable.
In Ireland, a similar policy* of abandoning public provision of housing has also been followed since the 1980s. The result is a continued under supply. The only solution to that is a major campaign of building by local authorities of public housing. Unfortunately, the Gov has refused to tackle the problem, outsourcing it to private developers. The Gov has refused to fix rents, stop bogus evictions, and develop its own stock of suitable land with public housing.
The current housing market is non-functioning, with those looking for a house priced out of the market, and then forced into the private rental market. Rents are not regulated properly. If a model tenant pays the rent, they are not guaranteed to be left alone. Many long=term tenants are being turfed out by landlords who are supposedly refurbishing or selling the property (whether they do or not is never checked). It reappears on the market at a much increased rent.
Building lots of houses is the only way of breaking the cycle, and also house the homeless as a by-product.
*The Irish Gov of the day often aped UK policies as it gave them cover if it did not work.
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The problem with a major campaign of building by local authorities is that it's now too late to do this without having a detrimental effect on private buyers.
There is a maximum number of houses that Ireland can output in a year, this is not really driven by a limit of finance to pay for it, but rather by more practical factors, e.g. the availability of labour. The talk from some parties of building way more houses than we currently do is just pie in the sky waffle, to be blunt about it.
Were the government to announce a load of building by local authorities they'd need the labour to actually build it. This means even more competition for a finite labour pool that has no shortage of work right now, and ultimately increased costs. Add this on top of ever increasing material costs and you can see what happens to prices.
And at the end of the day, the overall output is going to be pretty much the same, just with the numbers in each column different. Building more social and affordable state financed housing will mean building less private houses. This is why the government are reluctant to dive into this head first, the reality that nobody wants to talk about is that there is no easy solution that will fix the market for everyone, someone is going to get screwed, and FF and FG are trying to avoid screwing the people that actually vote for them.
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Join Date:Posts: 19012
@awec You are quite right. If the LA gets into the building business, it will impact the builders who do the building.
However, if the push is to build simpler (but good) houses, then the number of homes will increase and more people will be housed. If LA houses are mainly for social housing, then that will reduce the amount of HAP assistance, plus reduce the number of homeless families. So far, that will help.
If LA are doing the developer job, then the margin taken by developers will reduce the cost by, say, 10% so allow 10% more houses. However, that is only theory, as LA have not been involved in such projects on the scale needed for over 50 years.
It is now not policy to repeat the Ballymun, Ballyfermot solution as a single type of occupier is deemed to generate social issues, so mixed development is the current view.
More houses is the only solution, because there are more people seeking homes than there are homes - whether for sale or rent.
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Some quarters would claim that immigration is the elephant in the room. But it's not. The reason it's not talked about it is very simple - if you shut it down, you shut down the economy.
It would work great at dropping house prices. And also at sticking everyone on the dole queue.
People don't immigrate in a vacuum. There's a reason we had basically zero immigration in the 80s. There's a reason why nobody talks about emigrating to Venzuela.
Immigrants are attracted by the promise of work. Ireland has a lot more work open than we have people available to fill it, therefore we need and attract immigrants.
Shut down immigration, and we have nobody to fill the work available. What happens then? It goes away. Take one recent example; Workday and their 1,000 jobs. We tell Workday that they can't fill that with immigrants, and very quickly they will realise they can't fill them in Ireland. So they move the 1,000 jobs elsewhere. Which means they put on hold their plans for a new HQ. And they pause all hiring in Ireland. So within a short space of time, we have lost not only 1,000 potential jobs, but 500 actual jobs between construction and support services.
Immigrants, realising that they can't bring their families in, and will have trouble switching jobs, start to leave, taking their jobs and their income tax with them. Companies see their workers fleeing, and the companies go with them.
Before you know it, yes we've got loads of empty houses, but we've also lost 500,000 direct and indirect jobs supplied by multinationals, €20bn in income tax and €10bn in corporate tax.
@Sam Russell wrote:
The only solution to that is a major campaign of building by local authorities of public housing. Unfortunately, the Gov has refused to tackle the problem, outsourcing it to private developers. The Gov has refused to fix rents, stop bogus evictions, and develop its own stock of suitable land with public housing.
It's more complex than that really though. Ultimately there is only so much construction you can do in an economy. At the moment we're relying on private companies to build our public housing stock. It's not really possible to click fingers and decide the state is going to build 10,000 homes this year, without impacting the rest of the market. The nature of a public contract is that the sector will clamour for those contracts, leaving private building starts floundering. It is also likely to increase the cost of private building by squeezing the availability of resources. Even if the state decided to spin up its own construction department, it's going to suck up workers from the rest of the sector and monopolise access to building materials.
The current situation where all public housing stock is provided by private construction is obviously not perfect but it does find a balance, provided that it is stuck to and has no escape routes or loopholes.
It's really a hard one to say, and it's not something we can really do much to fix short-term. We've already tried rent control measure and protections against bogus evictions. But in a market like this, they can be easily worked around because landlords don't really have to care; there's a queue of new tenants no matter what they do. Perhaps absolute rent fixing may work - that is, within each rent pressure zone you have a fixed rent based on the property type, square footage and no. of bedrooms. This would certainly help with the affordability issue, but not the supply issue. For every landlord who decides to exit the market due to fixed rents, someone buys the apartment, and you're not actually adding any supply to the market - you're just making it even harder for renters to find somewhere to rent.
Even measures aimed at tackling property speculation are of limited use - how many liveable properties in the country are actually sitting empty at the moment?
Ultimately IMHO, short of tanking the economy, there is very little that any government can do to tackle the property problem that doesn't involve just waiting for supply to catch up. We were on our way towards supply meeting demand by 2023, but Covid scuppered all that. And it hasn't just been set back by two years, it's created all sorts of supply chain issues that are still causing havoc. If it was just us, we could ramp up resources, we could ship in workers by the container load. But it's not just us. The entire western world is experiencing the same problems.
Realistically - assuming no major external factors - we should settle in for at least 3 more years of this before we see any path towards a "normal" property market emerging.
Do we throw €10bn at construction, remove VAT on materials, incentivise visa for foreign construction workers? Will this actually improve things, or will we remain stuck in the same problem while developers just pocket the €10bn? Because this has generally been our experience when meddling in the market; no more supply, no reduction in prices, but huge profits for developers.
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If a model tenant pays the rent, they are not guaranteed to be left alone. Many long=term tenants are being turfed out by landlords who are supposedly refurbishing or selling the property (whether they do or not is never checked). It reappears on the market at a much increased rent.This is not true. A tenant has a right to remain after after six months, there are set circumstances where they can be removed. A new tenant is entitled to know the previous rent paid in a property and the new rent can't exceed the amount determined by a set formula. There are set criteriafor increasing the rent beyond the formula and are very difficult to achieve. It's not a perfect system but the RBT administer it. It's a myth that you can say you are selling the property to kick out tenants and then just set a new rent at whatever level you want.
Much of the problem is that no proper discussion of the housing market and how to improve it can take place because people just make up crap rather than discussing the actual system - this is true at all levels from chatting to a mate to national parliament debate.
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The real racists are people like you who consistently go out of your way to crow bar race into every discussion surrounding immigration. The vast majority of immigrants to Ireland are white. We need to pause all immigration regardless of race until such a time as the housing shortage is rectified. How you went from that to 'kick all non whites out' is frankly insane and exactly the type of hyperbole I was referring to.
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Your premise regarding immigration and the economy is inaccurate. The vast majority of immigrant dependent jobs are in low paid, low skilled industries. Jobs Irish teenagers and college students traditionally done. The Irish economy is not based on immigration, in fact immigration is a tool used by big business to stagnate wages. If the natural population growth of the country can not sustain the needs of the current economy then perhaps the businesses that are overly dependent upon immigration are not competitive enough and probably should not exist in an open economy. What you are proposing is endless pursuit of economic growth, like a pyramid scheme without any regard for the native population or society.
As you alluded to, housing and land is finite, the time it takes to build one house is several months. Since 1 house is on average sufficient for 3 people that means at the current rates of immigration per year we would need an additional 10,000 to 20,000 houses just to house the immigrants that arrive every year. We would need approximately another 65,000 houses just to house the Ukrainians. That is without taking into consideration the needs of the native population and the demand they put on the market.
Unmanaged immigration is the root cause of the housing shortage, that is undeniable at this point.
Currently, 75% of all workers in Ireland earn less than €1000 per week, 50% earn less than €620 per week, what is the point in having a high GDP if the reality on the ground means 75% of individuals will never get approval for a mortgage even for a former council house in the worst ghetto's of any Irish city? GDP is not an accurate metric by which to assess an economy or society, it gives a misleading impression.
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How exactly would you go about stopping immigration give that:
- The EU has freedom of movement
- Our economy is massively reliant on young foreign workers. Some sectors would actually collapse without immigration (our healthcare system for one)
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You have listed several false claims.
EU freedom of movement is entirely within the remit of individual Nations. Each Nation has the final say on if they will have an open door policy on immigration. For non EU immigration the individual Nation has every right to limit it immediately.
Our economy is not, in any significant way dependent upon immigrant labour. A few low skill industries are, not out of necessity but out of pure opportunism. Our health care system is not dependent upon immigrant labour either, in fact immigrant labour is used to stagnate wages in the health service and restrict conditions of employment this has a knock on effect which pushes native Graduates out of the country in search of better conditions, which is also a net loss to taxpayers who fund their education.
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its more than immigration ..
its the vulture funds (and to a lesser extent county councils) buying up property en masse left right and centre often off the plans leaving virtually nothing for first time buyers ...
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Net migration for year ending April 2019, was 33,700 of which 2100 were Irish nationals.
Year ending April 2020, was 28,900 of which 500 were Irish nationals.
Those are not astronomical figures by any stretch. There are probably as many, if not more students or graduates leaving the family home to live elsewhere.
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Again, real estate is a demand driven market, not supply driven. The ONLY reason vulture funds have any interest in Irish property as an asset class is due to the excess demand in the market. Vulture funds are not creating the problem, they are capitalising on it, the property they acquire doesn't vanish, it still goes to market the only difference being the investment trusts take the profit rather than private landlords. Excess immigration is driving excess demand, this is the root cause.
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Irish nationals is such a vague term these days and could easily be immigrants who acquired Irish citizenship but even taking that at face value.
33,700 minus 2100 = 31,600. This would equate to an extra 10,533 houses needed just for that years immigration.
28,900 minus 500 = 28,400. This would equate to an extra 9,466 houses needed for 2020.
So based on the numbers you presented we needed 19,999 extra houses to accommodate immigrants just within a 2 year year period, are you beginning to understand the compounding effect of unmanaged immigration?
Now think about a 5 year period of immigration, then a 10 year period then consider the demand from natives who want to raise a family on the average industrial wage. It is a hopeless situation.
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yes because nobody dies in ireland, leaving empty houses. People don't move in together, thereby leaving one or two other properties empty. People don't leave for a few years, leaving empty properties.
And 'Irish nationals' is vague? It's not vague at all. What is the issue of they are immigrants who have Irish citizenship? Do you think they are somehow different to Irish born nationals? You do know Irish nationals can be born in other countries? Maybe we should ban them from coming to live here too?
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it seems more that irish nationals are the 1oth worst country in the world to manage the properties they have ...www.money.co.uk/mortgages/empty-homes so maybe you should suggest we hire foreigners that know how to manage it better ...
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It would help if every single attempt to build anything other than a nice semi-D house was not objected to by all and sundry. Every single moderate density housing attempt is plagued by objections and interference from politicians across the spectrum. They are desperately needed but there is little sign of the attitudes towards them changing.
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Yea the latest example of NIMBYism is in Dundrum. They planned a 16 story apartment block I think, replacing the old shopping centre I believe, and they are objecting.
This is literally the perfect place for such a development, it's right on the Luas.
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Each Nation has the final say on if they will have an open door policy on immigration
Have you any evidence of this or in particular of any EU country enforcing this?
Our economy is not, in any significant way dependent upon immigrant labour. A few low skill industries are,
Nonsense. One of our largest industries is the tech industry. It is entirely dependent on foreign workers. We simply are not producing enough graduates in this area to feed the demand of all of the companies here (hence the larger than average wages in this sector).
Our health care system is not dependent upon immigrant labour either, in fact immigrant labour is used to stagnate wages in the health service and restrict conditions of employment this has a knock on effect which pushes native Graduates out of the country in search of better conditions, which is also a net loss to taxpayers who fund their education.
If you stopped migration the healthcare industry would collapse within a few years (possibly even sooner). We don't even need to be hypothetical about this. The UK have completely restricted inward migration since Brexit. They have had to made a big exception for healthcare workers though. They even lowered the required salary for these workers from £25k to £20k in order for them to get visas. The Philippines is quickly becoming one of the largest country for immigrants due to this phenomena.
As for the graduate healthcare workers leaving the country. Junior Doctors have been treated appallingly in this country for a long long time. Long before migrants started to prop up the system. You've basically put it together backwards to suit your own theory here.
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One thing the government could, and should, be doing is to review the derelict and unused stock in public ownership. Within a 5 minute walk of my house there are roughly 20 unused houses on HSE land in the grounds of St Ita's Hospital. Some would require more work than others to bring back into use but at least half of them would appear from external examination at least to be fairly straight-forward to bring back into use (based on the fact the roofs, windows and doors are still sound so they're water-tight at least). A bit of insulation, new boilers and an internal remodel and you'd have them habitable in a matter of weeks with a decent work crew. Most are fairly small cottages so might not suit large families but there's plenty of elderly couples, single parents with one or two children and singles on the housing list in Fingal that would probably be delighted to be offered a property in an established community that's within walking distance of schools/shops etc. with a regular bus service that would literally pass by their front gate.
Even the units that more obviously require major work (e.g. the roof is in disrepair or almost totally gone) should, in theory, be faster to turn around than a new housing development as at the very least, there's a foundation to work from and there'd be no need for lengthy planning processes etc. I think some of them may have a limited protection status regarding the exterior as they're early 20th century but hardly an insurmountable issue if the local council were involved in the project (as they should be anyway as the administrative body tasked with the provision of social housing).
It's not a "silver bullet" solution but there's surely hundreds of other such unused housing units on public lands around the country that if brought back into use take hundreds of people or small families off the waiting lists. As with most major problems, the solution is rarely a single move, it's dozens of smaller initiatives.
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It's the same thing with public sector pay.
They all call for "pay restoration" as if 2008 is some magical benchmark where they were correctly paid. The pay now IS the level of pay, you're not in some reluctant pay cut since 2008.
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They're still way way way better off due to the prices rising.
- If you're living in it, you've got half your mortgage paid off at least now.
- If you're living in it, then prices don't matter so much
- If you're living in it and plan on selling, it doesn't matter because prices are all relative. Even if your house gained another 20%, any house you want to buy will rise the same.
- If you're renting it out, rental income will have far exceeded the drop in price.
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There’s people moving to Ireland there’s people move out of Ireland too.
immigration isn’t the big factor driving price up.
ireland and Almost a lot of other counties just don’t have enough house supply.
people in my parents generation live in much smaller house, or built their own house through several years, living in half built house, less entertainment, less holidays, less expenses.
our generation have way more to spend, expensive clothes handbags iPhone tesla, 2-3 abroad holidays annually, kids are spoilt w Xbox whatever.
then we all wanna big house… in good condition…of course our affordability on house is lower.
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This line of thinking has been debated to death by now - you are making the avocado toast and takeaway coffee argument all over again.
House prices are definitively more expensive relative to incomes now, than they were in the past. It doesnt matter how frugal a lifestyle you lead, housing is simply out of reach for the vast majority due to the expense and LTI limits (which are a good thing all in all). The avocado toast argument should be a bannable offense for stupidity
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in Shanghai, HK, Tokyo, London, it needs several generation’ savings together to be able afford a proper house.
becoz the supply/demand is so unbalanced. The population is so big in those cities and the density is unbelievable in HK.
in Ireland it’s not that bad yet. After all there is only 4m population.
but if they don’t build more houses it could turn to worse situation. But I don’t think it will ever get as bad as those big cities.
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This has the same problem though: labour and materials. We don't have enough labour to do the work that's currently out there, people are struggling to find builders for extensions etc.
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You brought it up. In your opening post seemingly about house prices you were at pains to say you didnt want to be called a racist. I was simply assuring you that you wouldnt be called a racist unless you said something racist. Sure after all, why would you be called racist in a discussion about house prices?
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