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

schmittel wrote: »

According to the Indo the cuckoo funds owned 15,500 properties in Ireland as of Jan 21:



So on the face of it that is 15,500 homebuyers that have been crowded out by institutional money. However it is important to remember that a proportion of those 15,500 are units that were financed by the funds before a sod was even turned, meaning that they would not have been built otherwise:



There are almost 85,000 PDHs in arrears greater than 2 years.

So whilst the funds are crowding out home buyers at least they are paying their way, which has some economic benefits, and they provide some turnover in the market and much needed rental supply.

By contrast the 85,000 mortgagees in default are an economic drain on all of us, paying nothing for a scarce resource.

There are over 5 times as many defaulters crowding out home buyers than institutional money.

This is also an absolute mess that needs untangling. Both problems need solving.

good post, one of these things is getting huge media focus and air time, the other gets none.

yagan wrote: »

There's different levels of default, not all are write-offs.

Imagine you're KBC and you've approved a mortgage for someone in Maynooth and now you find that their applicant has been priced out by their own government and rent farmers then you can see why it's pointless hanging around such a disfunctional market.

Oh, but by all means blame those swamped by debt accrued during Fianna Fail's last administration.

Fianna Fail took over managing a pandemic, made it worse with "meaningful christmas" while at the same time crowding out FTBers and their lenders.

The problem is the landlord parties, always was. They view houses as primarily tradable assets and not human habitation.

This was my point about that article everyone was wetting themselves the other day.

That this is a big masterplan by the government to profit the banks.

It has the opposite affect.

But people lapped it up.

schmittel wrote: »

I'd be fairly sure KBC's problems were with the customers who stopped paying their mortgages rather than those customers who did not get the chance to start!

AIB, PSTB and BofI are all going to have the same problem, but they've got the government as a shareholder whereas KBC didn't.

The entire financing of housing in Ireland is gummed up entirely due to government participation, first through the bank guarantee, and now outbidding those meeting the mortgage criteria.

Fianna Fail and Fine Gael will be foreclosed upon by the voter.

Browney7 wrote: »

You keep spouting about the 23 billion despite it being pointed out to you several times that the majority of social welfare spend is the old age pension

https://www.thejournal.ie/pensions-explainer-4975280-Jan2020/

We paid out a little over 8 billion for OAP in 2020 so where is the other 15 billion odd going? So its not the majority its about 1/3rd

Amadan Dubh wrote: »

I mean, I am specifying that it would help the housing crisis, not necessarily that it would be of benefit to the country as a whole. But apparently things have been booming in Ireland the past few years but I don't understand how this can be said to be the case. Why? Little wage growth, no housing, infrastructure, health investment, no promised income tax/USC reforms, no incentive to save money, insurance and childcare costs sky rocketing. If the last few years are to be seen as "growth" then I sort of think this like the doublespeak used in Orwell's 1984.

This is the thing it will only help those who have money ready to go. Banks dont do crashes as can be seen in the aftermath of 08. Banks lending went through the floor. So like I say unless you have a hefty deposit or the full amount your still not going to get the property you desire and worse still after 08 you had 2 extra banks to be refused by, you wont be able to ask Ulster or KBC for a mortgage

Jinglejangle69 wrote: »

Yes.

OK cool yeah I am all for that. Do you think the anti social behavior will get better or worse?

timmyntc wrote: »

I and other posters have made clear why they should be incentivised to give it up. Not forced.

They have the right to stay in it of course, but it should be made attractive to downsize and maybe use some of the extra equity to enjoy the rest of their life.
Old houses in prime central locations will have to be redeveloped into something denser going forward. Instead of waiting till death & probate to buy the house - there should be clear incentives for pensioners to downsize instead.

OK so the in a world where there is no moral hazard or unforeseen consequences. How does this work. If you have ever sold and bought a house you will understand there is a lot of costs, uncertainty as well as stress. Now where do you draw the line when it comes to how old, what are the incentives and will Billy who is 10 years younger not feel put upon that Barry who paid less for the same property is now also been subsidized to downsize via his taxes. This idea that you can effectively do this without impacting on someone else is barmy.

Browney7 wrote: »

http://budget.gov.ie/Budgets/2020/Documents/Budget/Part%20II%20-%20Expenditure%20Allocations%202020-22%20(A).pdf

Knock yourself out. 23bn is not being paid to layabouts and dossers as much as you may want it paint it as so.

I never said it was, but we are not paying nearly all our 23 Billion paid out on welfare on OAP as referenced by this poster far from it.

timmyntc wrote: »

I and other posters have made clear why they should be incentivised to give it up. Not forced.

They have the right to stay in it of course, but it should be made attractive to downsize and maybe use some of the extra equity to enjoy the rest of their life.
Old houses in prime central locations will have to be redeveloped into something denser going forward. Instead of waiting till death & probate to buy the house - there should be clear incentives for pensioners to downsize instead.

As a potential victim of this incentivisation, I'm curious. Is it like the 'green' incentives to use less fossil fuels, tax the **** out of it. like the vaunted 'bedroom tax'. I'm already paying property tax.... which I would have no problem with - if it was applied to ALL homes.

EddieN75 wrote: »

Wouldn't hap be also pushing up rental prices?

Government pumping free cash (taxpayer) directly into landlord pockets

As of 6 months ago when I read it, 1/3 of all tenancies were getting some form of support from the State. Yes, the State has itself inflated rental prices due to the scale of its involvement in the market, in direct competition with individual renters and buyers.

C14N wrote: »

Hardly. The Land Value Tax would be a great way to do this, and it's something Milton Friedman endorsed as one of the best possible taxes that can be used by government. Calling the father of neoliberalism or his economic proposals Marxist is absurd. Its also currently practised in highly capitalist Taiwan.

Nobody is talking about expropriating assets here, it's about setting up incentives so that instead of what we currently have, which is inefficient land use is the financially rational choice for individuals to me, you set up incentives so efficient land use is the financially rational choice. Sunk costs aren't a great reason for bad policy that negatively impacts the economy and future generations overall.

If you want to analogise it to cars, many people may have put a lot of money into diesel vehicles, but those are going to end up being phased out over the coming years too, because of the negative externalities they cause, and we already have taxes that specifically incentivise fuel-efficient vehicles and disincentivises keeping older ones, which drivers all have to pay on an annual basis, but nobody in their right mind would claim this is Marxism. Maybe some people paid a lot of money for those older cars, or have very fond memories of their old vintage car, or whatever else, but they can still keep them and drive them if they really want to, it would just be cheaper to get something more efficient.

Have you ever bought and sold a house in this country? The analogy to cars is not really apt. As it does not address
The stress of buying or selling
or solitiors and their fees
Or paying Stamp duty
Or surveyors
Or having to get documentation for things like bill though the years where things like NPPR was an issue and you have to prove you were living there.
Go and sort out any certs for anything added or taken away from the property over the years

In your post outlined below you targeted those who are old and living in a house that is too big for them and living in areas that are highly desirable. You seem to think that buying a house 30/40 years ago was cheap as I outlined to another poster check what the interest rates and stamp duty rates where back then.

How do we do this with out any moral hazard impacting on tax payers - You say incentives so let me ask you why should the tax payers pay this old geezer more to downsize when they get zero benefit. Also why should another guy who has the same house in the same neighbourhood who is a bit younger and who has a property worth the same but has paid more for his property and with a couple of kids in tow? Do you not think he will be looking for the same deal and is right to deny him the same deal? Do we really want more state involvement in property? Have we not learned our lesson yet?

Your original post was in bold below,

Originally Posted by C14N View Post
I actually don't agree. Might sound cold but I think elderly people living in large family homes (many of which are not up to modern-day building codes) with gardens in high-demand areas that they happened to buy on the cheap 30 or 40 years ago is an inefficent use of land and should generally be discouraged by public policy instead of protected. At the same time, it should be made easy to move out and find new smaller places within their community, but both push and pull effects are important. Maybe not as big a deal in small towns or the countryside, but more in city centers and surrounding areas.



Just as an aside
The Land Value Tax how would this work? So we tax someone who has already paid out of after tax salary money to buy the land/house along with stamp duty and property tax and other fees related to buying to pay out more how is that fair? Now if your talking about Land that has not been built on yet and held by developers I have no issue with that but you can be damn sure that the builders will pass that cost on so FTBs and people who have not got a house and looking to buy will be asked to pay more.

WhiteWalls wrote: »

And would it be hugely controversial or even possible if they were removed?

This mess will not get a quick fix.

The government has waded in as a player in the market which has sent the like KBC out the door.

At this stage it will take years, if not decades to unwind their direct role in the market and their remaining stake in the three banks.