2021 Irish Property Market chat - *mod warnings post 1*

schmittel wrote: »

Agreed, but I think there is a danger of the question moving quite quickly from how do we make it happen to how we do we stop it?

If inflation starts rising, it could rise quite rapidly when things open up. At that stage CBs may be in a bit of a bind, as raising interest rates will cause a lot of problems.

I agree this is bullish for property.

There were two economists who published a book before Christmas called “The Great Demographic Reversal”, who are predicting a big rise in inflation from this year.

They stated that “Deflationary headwinds over the last three decades have been primarily due to an enormous surge in the world’s available labour supply, owing to very favourable demographic trends and the entry of China and Eastern Europe into the world’s trading system.”

They’ve being doing the interview rounds and you can watch their interviews on YouTube about their book and there have been a couple of articles in the FT etc. stating their analysis is something to seriously watch.

They readily admit their thinking is in the minority (at the moment) but has been gaining more and more attention over the past couple of months as they’re very respected economists.

Mic 1972 wrote: »

All the money that is being printed to sustain the economy is going to create huge inflation. The same happened after the war in countries like italy and germany

I think the proof on why central banks shouldn’t be allowed to fund government spending is the big pay hike being considered for Robert Watt as the new Department of Health secretary general.

He definitely deserves it (and much more IMO) as he’s one of few truly decent civil servants in the state but it just goes to show that wherever a government gets its extra money e.g. borrowing, taxation etc. they just waste it on everything and anything (social housing build costs being another one) that doesn’t add much value to our economy/society and leads to the easily predictable disaster eventually,

PropQueries wrote: »

The distressed mortgage sales are back:

“AIB plans ethical sale of up to 650 distressed mortgages”

“ The sale of AIB’s Project Iris portfolio comes in advance of the much bigger and more controversial Project Oak portfolio sale. The latter will see the bank sell off up to 6,000 distressed loans, with an original book value of €1.3 billion, on the open market. The bank decided last March to postpone the Project Oak sale indefinitely – its first sale of non-performing private residential mortgages.”

Link to Irish times article here: https://www.irishtimes.com/business/financial-services/aib-plans-ethical-sale-of-up-to-650-distressed-mortgages-1.4459601?mode=amp

6,000 distressed mortgages wow this must be the last batch surely - hopefully mortgage interest rates fall or remain steady here or we will be in serious trouble again

PommieBast wrote:

I would like to know how much this bundle actually gets bought for. 50% markdown would not surprise me.

These in theory will be social housing. I'd be very surprised if there was 50% markdown

Mic 1972 wrote: »

All the money that is being printed to sustain the economy is going to create huge inflation. The same happened after the war in countries like italy and germany

PropQueries wrote: »

Isn’t that where many of the experts get it wrong. Without supply side constraints, no amount of money printing will lead to inflation (as defined by the official measurement).

Plus, there’s no point encouraging banks to lend into the real economy when there’s no real new business ideas to lend into (in the EU anyway).

Even if no one is borrowing the QE still keeps rates low and asset prices high.

PropQueries wrote: »

Also yesterday, Bloomberg had an article that the Ford motor plant in Germany is closing for a month due to semi conductor shortages.

So, it looks like the few economists who predicted that this is where inflation will originate sooner than many expected may be right.

These shortages are because of Covid supply issues and are not structural so will not lead to long term inflation. A structural change would be an end to the 40 year Bear market for Bonds (or to rephrase it another way a end to 40 years of a bull market in equities)

PropQueries wrote: »

That’s the thing. AIB (basically state owned) will most likely sell them to an “ethical” investment fund who will then rent them back to the state. Why doesn’t the state just cut out the middle man and save everyone money, time and most importantly stress?

There was a good article in Irish Times last week:

“The State’s mortgage-to-rent scheme has been irrevocably undermined by the entry of a commercial player, which is outbidding the not-for-profit agencies for the properties involved, according to mortgage campaigner David Hall.”

Link to Irish Times article here: https://www.irishtimes.com/business/economy/mortgage-to-rent-scheme-undermined-by-commercial-entity-claims-david-hall-1.4455789?mode=amp

Presumably to keep the borrowing off the state balance and engage in some balance sheet gymnastics.

ICare is David Hall's not for profit agency. It gets funding from AIB (majority state owned) and the department of housing (state). The people living in the houses have "unsustainable" mortgages and have low incomes (need to be entitled to social housing). ICare buy the loan/house off the bank and presumably the state pays a HAP style payment to ICare and the debtor surrenders ownership and pays a local authority rent to ICare or the local authority.

It's a repossession to save face for the debtor. if the bank actually kicked them out, there would be no where for them to go with the lack of social housing available so is a "clean solution" so to speak. ICare's concern now is likely that the haircut the bank takes on day one is lower (the non for profit pays more for the loan) but the state pays a large rent to a commercial entity that is probably outside the state.

serious concerns irish economy about to be brought to its needs very shortly with brexit tape resulting in many jobs losses here

https://www.google.com/amp/s/www.irishtimes.com/business/economy/brexit-red-tape-if-nothing-changes-ireland-will-be-closed-1.4458597%3fmode=amp

combat14 wrote: »

serious concerns irish economy about to be brought to its needs very shortly with brexit tape resulting in many jobs losses here

https://www.google.com/amp/s/www.irishtimes.com/business/economy/brexit-red-tape-if-nothing-changes-ireland-will-be-closed-1.4458597%3fmode=amp

According to the hauliers who are annoyed with how things are going at the port.

Some of these posts strike me that the poster is hoping the economy is brought to its knees (or further to its knees maybe lying down ). Strange outlook to have.

Cyrus wrote: »

According to the hauliers who are annoyed with how things are going at the port.

Some of these posts strike me that the poster is hoping the economy is brought to its knees (or further to its knees maybe lying down ). Strange outlook to have.

no just being pragmatic about the risk of would be mortgage holders over spending/ stretching themselves on over priced houses with the uncertainties that exist in an ongoing global covid pandemic & brexit world

schmittel wrote: »

combat14 may have substantial capital at his disposal, and would welcome a downturn in economy in order to invest that capital in assets at cheaper prices hoping to increase his net wealth. The suffering of others or society at large does not concern everybody.

If so, it would be a perfectly rational outlook for an individual to have.

No different to those who hope that property prices continue to rise hoping to increase their net wealth. They are not concerned whether rising prices causes the suffering of others or society at large.

The only people to benefit from rising property prices are landlords or someone that is planning on emigrating.

For the normal householder it makes no difference because if they sell they will get more but likewise will need more to buy another place. Likewise for the individual looking to buy a 'home' will have lost out if they have capital at their disposal and continue to pay rent. To be financially better off house prices would really need to collapse/
For example if they were waiting 5 years and paid an average rent of 2000 Euro a month (assume a 3 bed worth 350k today) then they would need property prices to drop by 35% to equal the amount they paid on rent. At the same time they lost out on 5 years of repayments and a opportunity to buy cheaper if property prices don't collapse.

The idea of wanting the economy to collapse so that prices fall would only benefit someone who was shielded from a loss in income and on a guaranteed job for life.

schmittel wrote: »

It's a discussion forum.

It’s become more like a crystal ball gazing forum .

schmittel wrote: »

Quote:
Originally Posted by Timing belt View Post
Most people waiting to get onto the property ladder will see this as very palatable but you need to remember that in Ireland 2/3 of people own their property so the idea of lower property prices is up their with large tax increases ("with no benefits for the tax paying population"). Why would anyone choose to reduce their net wealth?

That's the sort of attitude I am talking about.

That is a fact that I was calling it out as a reason why people would not have a discussion on lower prices. There is no attitude in that... You assume there is attitude just like you have assumed that I want higher prices.... I like many on here would greatly benefit from lower prices but I don't see the market pointing that way for the reason's I have been calling out.

schmittel wrote: »

Plenty people of sufficient means and security that they don't feel the effects of a downturn as much as the next man.

If people have sufficient means and security and have not bought a 'home' and rented instead in the hope that property prices fall then they have lost out financially and like a gambler trying to double down to try and recoup losses they will continue waiting....Who know's maybe the outsider comes in at 100 to 1 and they are financially better off.

Timing belt wrote: »

That is a fact that I was calling it out as a reason why people would not have a discussion on lower prices. There is no attitude in that... You assume there is attitude just like you have assumed that I want higher prices.... I like many on here would greatly benefit from lower prices but I don't see the market pointing that way for the reason's I have been calling out.



If people have sufficient means and security and have not bought a 'home' and rented instead in the hope that property prices fall then they have lost out financially and like a gambler trying to double down to try and recoup losses they will continue waiting....Who know's maybe the outsider comes in at 100 to 1 and they are financially better off.

guess they were better off waiting 2008-2012 but not anymore, very hard to impossible to foolish to time any market but need some restraint too