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

Deleted User wrote: »

People like you have been saying this for a century, at least. Any day now, lads.

look around the world, and see whats happening, the political and economic ideologies of the last few decades are starting to collapse, we re experiencing this here in ireland in the slow collapse of ffg and the rise of sf, the ffg era of governance is coming to an end, so be ready for it

Graham wrote: »

Mod Note

Wanderer78, threadbanned for a week.

yippee!

Deleted User wrote: »

Except it's not so much driven by consumer credit this time. It's harder to know how this one plays out.

It's clear that there is something at play in the market which feels artifical and which is begging for a significant correction to rents and prices.

I would like to say that the taxpayer is insulated this time but unfortunately that is unlikely to be the case, for example, with the State via councils taking on 20/25 year leases at 85/90% market rents while being fully responsible for maintaining the properties the taxpayer (income taxpayer or property tax payer) will need to fund these leases. Although, what might happen in that scenario is that the State will just sub-let the properties to private renters but I'd imagine they will still have to take a hit on the rent they have committed to.

As you say it's hard to see how it will play out. Steady and gradual declines to house prices but significant and quicker rent drops, with significantly increased supply over the next 10 years would be the best outcome. The level of QE being flooded into the world's financial system is astronomical though and it seems like the whole economic system would crash if this was halted so I don't know if it is possible to avoid anything other than a hard crash as the economy is on life support, demanding significant QE.

Deleted User wrote: »

I'm not going to engage in politics type conversation after the above warning.

I only rejoined the conversation now so have missed whatever that warning is about.

But I'm sure we're on safe ground to discuss vectors like international funds being let bid on the national housing stock. They can only do as they're let.

NZ in 2018 intervened to restrict buying to legal residents so government housing policy is very much tangible to the discussion. But for the reasons I've stated above I don't see this government seriously challenging offshore buyers anytime soon.

Amadan Dubh wrote: »

It's clear that there is something at play in the market which feels artifical and which is begging for a significant correction to rents and prices.

I would like to say that the taxpayer is insulated this time but unfortunately that is unlikely to be the case, for example, with the State via councils taking on 20/25 year leases at 85/90% market rents while being fully responsible for maintaining the properties the taxpayer (income taxpayer or property tax payer) will need to fund these leases. Although, what might happen in that scenario is that the State will just sub-let the properties to private renters but I'd imagine they will still have to take a hit on the rent they have committed to.

As you say it's hard to see how it will play out. Steady and gradual declines to house prices but significant and quicker rent drops, with significantly increased supply over the next 10 years would be the best outcome. The level of QE being flooded into the world's financial system is astronomical though and it seems like the whole economic system would crash if this was halted so I don't know if it is possible to avoid anything other than a hard crash as the economy is on life support, demanding significant QE.

The taxpayer will not be insulated this time around. Instead of the banks lending to public to buy houses they are lending to Funds to buy houses... If property goes bang like before the banks are still exposed. .. In the UK Retail banks are not allowed to lend to Funds under the bank ringfencing legislation. No such legislation exists in Ireland so the banks are free to lend. The big question is which banks are undertaking this lending? I am sure that the likes of BOI and AIB will have exposure but the question is how much and has the regulator his finger on the pulse this time.

Add on top of this the fact that a large portion of the worlds securitization is undertaken via SPV's in Ireland. It would indicate that if something does go bang it will be felt heavily in this market.


It's very hard to know how it will play out... We do know that investors are taking more risks in order to get a return. The last time the trigger was a lack of liquidity in the market this time there is to much liquidity that it is causing issues for the banks.

The big questions will be where do rates go? Personally I don't see them going up for quite a while until there is strong economic growth.

A rate rise or tapering QE has historically been the tool that has been used to combat inflation. But will central banks do something new that would enable them to keep rates low that would allow them to undertake more QE and at the same time manage inflation (e.g. pull excess liquidity out of the system).

Deleted User wrote: »

Wouldn't that have an inflationary impact on cost, since each build is bespoke?

I doubt it, it hasn't in the past. It's the developer mass build, land banking big finance, big deal model that I believe is inflationary.

Fed already hinted that they intent to raise rates sooner than expected. Markets responded positive to that. US benchmark mortgage rates for fixed 15 and 30 years are already up to 3.2%

am_zarathustra wrote: »

One off housing is a disaster environmentally, it doesn't really work for utilities and cost effectiveness. it's basically on the way to being banned here as a result. If you removed institutional buyers (who are renting to HAP) by the government building social housing itself the heat would come out and the price would stabilise to what's in actual peoples bank accounts.

One thing won't fix this but as above, I'd love to know the main banks exposure.

I live in a one off house. I didn't build it, because that's a priveledge reserved for the land owning classes in Ireland, and only locals at that, but I bought it semi-finished.

How is it an environmental diaster? There were electricity and phone lines running down the road for half a century before it was built. There is no wtaer main along the road. So the impact of this house to society is nill. I paid for a phone connection to line that was already there. I paid for a well to be drilled, the builder paid for the electricity to be connected to lines already there.

What I have done is help amortize the cost of provisioning utilities to the farms that are along the road and for which the utilities were originally provided for.

Deleted User wrote: »

I see varadkar is calling for the mortgage lending rules to be "reviewed" asap.

That'll fix price inflation. My assumption is that the CBI will loosen them. The question is how and by how much?

How does one begin to argue that it is a good idea in current market regime?

Deleted User wrote: »

It's just logically, when I think about it, what costs more? Ten copies of something or ten individual bespoke items?

Just on a cost basis. Labour, materials, etc.

schmittel wrote: »

Or logically remove the developers margin and compare.

But I take your point on economies of scale.

Any benefits to economies of scale, which I believe are very marginal with housing - are eaten as profit by the developer, not passed on to the buyer out of the goodness of their blcak rotten hearts.

My son knows someone in Japan who bought a factory made house built by Toyota. These are built in a factory, the finished components are shipped to the site and the house is erected and complete inside two days.

Economies of scale should make such a thing cheap; It wasn't, it was incredibly expensive.

I have been looking into another factory built modular home system here in Europe. Latest pricing I got on request turned out to be €2677 per square metre, before vat. Then there's the transport costs and crane hire on top of that, etc.

schmittel wrote: »

I was looking at that just this morning, thinking exactly the same thing.

Then I suddenly found myself checking out schools in Youghal!

Unfortunately I think Youghal is a bit of a kip.

Both my children had their schooling in a smallish semi-rural village. No complaints from a parent's perspective, quite the reverse - highly recommended!. The schools were great and both kids did very well in the LC.

Would you be looking to camp out on the streets of Youghal or would you be spending 99% of your time in your non-kip nicely renovated house?

It's the far sighted individulas who pioneer the gentrification of places who gain the most.