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

The central bank rules limit the damage in Ireland..... I can't see them being lifted as that would just add fuel to the fire. Yes they are preventing people from getting housing and keeping them in the rental market but removing them would not benefit anyone as all that would happen is prices would become more unaffordable. The government needs to deliver on affordable housing.

yup, but the only issue is, as you mentioned, rules are only relevant to irish borrowers from irish banks, nothing stopping foreign entities borrowing from external banks........

yup, this is an extremely serious problem, theyre just completely wrecking our property markets, the longer we play this game, the worse its gonna keep becoming

Its not just the property market that is impacted which makes it a lot more serious than '08.

In relation to property the CBI is showing a growth rate of less than 1% for the household mortgage lending and has no correlation to price increases we are seeing. I know the no of transactions is lower but still... Back in 06-07 the growth rate of the mortgage books was 20-30%

Ok there is an element of savings and cash buyers using funds to buy property but we are not seeing a significant drop in overall savings to account for the price increases.

This is a basic question but I'm not well read on the subject of economics: how do the investment funds increase the money supply by issuing debt like banks do?

I know banks can create supply by loans based on fractional reserve.

Are funds permitted to create money along the same lines?

Or is it sort of like a pyramid scheme whereby they issue debt to new investors joining and plow the new investors' money into assets forcing appreciation/inflation to service this new money supply creation (or interest return on new investor investments)?

Was that so hard? Hopefully we see a lot more of this.

Just to highlight two NIMBYs protesting the development, if you needed more evidence as to why the government will not increase supply significantly and reduce housing costs; Dublin South West TDs John Lahart TD (FF) and Francis Noel Duffy (Green) lodged submissions in support of residents’ objections. National politicians only protecting their back gardens.

Holland (and Mitterand before) were on the left side of the conventional left. French presidential election (like US) makes small party victories impossible.

Both promised everything (70% top tax, wealth tax, government ownership, free stuff for everyone) and both made a U-turn 1 year in. Yes, they stayed the full term but mostly doing austerity stuff…

Sinn Fein will be the same.

Significant jump in the property price index for August (released today). These are likely sales negotiated from May to July closing in August.

Dublin August number of 136.1 which is a 10.1% annual increase or 1.95% monthly increase vs July.

Nationwide number is 149.1 which is a 10.9% annual increase or 2.2% monthly increase vs July.

Never listen to “experts”….

Anyone browsing listings in comparable cities (Edinburgh, Manchester, Amsterdam, Barcelona, Hamburg, Munich) will realise that Irish property is still relatively fair prized and sometimes almost cheap.

I agree with those objections because I used to rent in that area roughly 6 or 7 years ago... there is only ONE round about to leave this massive web of newly built estates. Single lane. If you going to work you can be stuck for over 40min at this round about just to get onto m50, anytime between 7:30 - 10. We need to supplement new builds with improved infrastructure.

The main reason that Banks restrict lending in a downturn is because they don't have the capital to lend because the distressed debt eat's up the capital. By the banks being adequately capitalised before a downturn this should mean that they won't need to restrict lending like they did in '08.

On top of this the big banks have an Countercyclical Capital Buffer whereby the capital requirement is higher during a growth period and then reduced during a recession in order to release capital to encourage lending.

All this was implemented following the 08 crash so that mistakes in the past would not be replicated in the future.

The reality of the situation is that banks want to lend as this is where they make money and all the banks have capital and liquidity to do so but they don't have enough people to lend to that are within their risk appetite.

In a recession banks struggle to lend not because of their ability to do so but because peoples financial situations change which put them outside the risk appetite of the bank.

I know you refer to banks as a 1 trick pony and that is exactly what a retail bank should be. They are a utility company the same as a gas, water company.

I struggle to see how the rental market is exposing the housing market as whole to a property crash.

If the assumption is that a crisis forced investors to sell the rental properties because they needed cash it is highly unlikely to happen because the majority of funds have redemption clause in them that would not allow investors to redeem their investment in a crisis. This happened in early 2020 when the lockdown's kicked in and the majority of property funds added additional clauses and secured revolving credit facilities from the banks to ensure that they were not forced into a fire sale of property.

In reality if there was a crisis funds would first use more liquid assets such as bonds/shares to generate cash before they looked at property which on average takes at least 6 months to sell (even if discounted). You would need a crisis that was at least 6 months long and the central banks would need to sit on there hands and do noting for it to turn into a fire sale of properties.

That fact should be scary for bulls as well as bears. I think we can safely say it's now out of control and the likelihood of a happy ending is over

The property would be cheaper to buy and the standard LTV would apply..

Banks don't reduce the deposit requirement in a housing market with prices increasing so why would a bank require a higher deposit if property prices were falling.

The deposit requirement is set by the central bank specifically to ensure that in an event of house prices falling people would not fall into negative equity (or in a major crash would have limited negative equity)