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

Easier said than done you go and tell Jenny there with the 3 kids from 3 different daddies that she cant live beside mumsy and see what she says. The truth is there is a sense of entitlement and the lefties pander to this. There were some of the reasons listed in the below article for people not accepting social accommodation. I mean imagine turning a house down as the garden is not big enough or they need a second toilet or that it is not close enough to a town or a school or hospitals. Yet those on the ladder or trying will have to accept what they they can afford. The vested interests are those who are supposedly poor and there will not be one government party who will turn the tap off as they will be obliterated in the elections. As I said before imagine a party saying no more HAP no more FTB they would last about as long as an ice cube in a volcano. You said that it may take decades to shift this paradigm I would say it would need a couple of centuries. This is the crux of the issue that people are looking at in this country we have the poorest competing with FTBs via the government then throw in the REITS and vultures and anyone trying to stand on their own 2 feet to get a property are priced out of it. Also we need at least 100k houses (weather they are built or bringing stock back on stream that were not habitable) to begin as in right now to be able to house our population with just to stand still and if our population does not increase going forward. How long would this take to achieve, how much would it cost and how is it paid for. That is the question that Mary Lou should be asked but as of yet no one has asked it the shinners are all smoke and mirror and the magic act is going to fail horrendously but what are a political party to do they simply cant tell the truth as it is unpopular.

https://www.thejournal.ie/social-housing-refusals-ireland-4607803-May2019/#:~:text=These%20categories%20included%3A%20housing%20being,%3B%20and%20'other'%20reasons.

The funny thing is the same shortage of property and property related issues are been seen in Northern Ireland and guess who is in power up there I cant see the shinners being the next great white hope people are making them out to be. As a voter its depressing as the current shower are useless as well

https://www.irishtimes.com/business/economy/house-prices-in-northern-ireland-rise-by-almost-10-1.4649292

If there is little capacity to increase new property due to a shortage of labour it will not result in more housing being built as the constraint is still in place.

Over the long term a increase in social or private houses being built will attract more labourers but it will make no difference in the short term.

Scrapping HTB would be madness and it's effect on the housing market is vastly overstated, 2nd hand prices have been sky rocketing without any HTB interference for some time now.

I honestly think SF's housing policy is to force as many people as possible into social housing and I haven't seen any clear plan on how exactly they will magic up all the extra houses they are promising if elected, pretty sure they don't know themselves and their entire plan is to just blame FF/FG, its the only thing SF are experts at!

For anyone interested the CSO released its new Dwelling completions for Q4 2021 today and can be found here

So the Govt throwing 'billions' at buying homes is justification for them also distorting the market? Personally the less the Govt interferes with the demand side the better. I want people to be able to buy homes at affordable prices rather than pretending to help home buyers by artificially inflating prices by subsidies. But this means lower houses prices and this is not palatable to our politicians seeking re-election.

Re: building regulations - this is often wheeled out as a cause of increased costs but these are in direct response to the expectations of society. We expect our houses to be much better than they were even 20 years ago. That comes at a cost. Also Building regs are in effect a minimum standard, not the gold standard as is often purported. When you look at total life cycle costs to build and operate a house over 40 years, then the economics demonstrate which is cheaper. Essentially you are front loading capital costs upfront to offset operating costs, which also have the added benefits of more comfortable, healthier, safer and environmentally friendly houses - which is essentially what building regulations are.

This is not going to go down well especially when yesterday they were reporting delays in processing visas for 27000 construction workers. They have the staff to create an action plan though to sort it out

Too many officers no soldiers. Nothing done

146,300 people are now working in the construction sector. There is also growing interest for employment permits from abroad, with 27,000 applications in 2021.

Sure, two main reasons;

1. State Actions To Prop Up The Market

2. The Everything Bubble.

1.

Again I have to point out that the costs of housing have been inflated by State actions. Policies to drive tens of thousands of small landlords out of the market, putting a floor on rents with RPZs, paying hundreds of millions in rental supports, HelpTheBrickie, tax breaks for institutionals and a very friendly approach to the needs of institutionals who only care about maximising profit. At the same time there is a refusal to take meaningful action to dramatically increase supply which shows that the government is manufacturing this situation. The rationale for acting as a whale in the housing market was perhaps noble ten years ago in order to try to help mortgage holders to get out of negative equity, but it was come at a cost to certain sections of society. Therefore, I question the medium to long term sustainability of the State's actions to inflate the housing market when we see that in 2016 an estimated 80% of 25-34 year olds did not own their home (which is likely a similar percentage of a wider age group 5 years later) - how will these people be taken care of if they are long term renters, with little cash put aside for pensions and no house of their own to ensure financial security on retirement? Quite simply, the government's actions are unsustainable and may have appeased voters of the past but I only see it going one way in the future as there is quite clearly an a demographic divide in the housing debate.

2.

I can see you obviously have a banking regulatory background but there is also the wider economic picture where property fits in as well and what is being referred to as the everything bubble for a reason. Rather like 1. this everything bubble comes from the actions of central banks like the Fed and ECB who are literally propping up their respective financial systems, even buying the debt of what are effectively zombie corporations that ordinarily would be allowed to fall. My own area is the funds are and while it is regulatory as opposed to being at the coal face of investments, it is pretty easy to see how the asset bubble grew and I don't believe it is sustainable, there is a lot of cheap money, high risk and fraud in the system which now sits off the balance sheets of banks and instead flows around the less regulated funds area.

@Timing belt

Thanks for the detailed response. Why do the FED feel the need to raise rates by what now looks like 1.25%. Does QE stop when rates are increased?

ref inflation The US has been open for longer than than the EU so are further down the inflation effects of reopening? Are they the canary in the coal mine for inflation expectations for the EU in the coming years. The EU also has the Brexit effect plus strife in Ukraine to potentially add to rhe inflation effect.

For everyone saying HTB is bad, do you honestly think house prices would drop and supply would increase if it was removed?

Are you seriously in favour of locking FTBs out of housing to keep them renting or living with their parents well in their 30's to teh benefit of 2nd time buyers who already have a home but would like a fancy new one?

Seriously people look at the stats of how high rents are, how low home ownership is for 25-35 year olds, how high social housing lists are, how many billions the government plans on spending building houses for people and tell me again HTB isn't needed to help alleviate all that.

All I get is a "Let them eat cake" impression from people who clearly already have their own homes and can't see removing HTB will increase social housing requirements, reduce demand ,and as such supply, of new houses and will have a clear knock on effect for years to come with couples putting off having families which will come back to bite everyone come retirement, €30k is a very small amount of money to help working people get a home and start a life together.

HTB doesnt help anyone - the net effect is that property prices are inflated across all new builds, and the first time buyers end up just as badly off as they were before HTB came in. When you have a supply issue, schemes to give buyers more credit will only inflate prices.

I've been lurking here for a while now, and I thank the sageful posters here for their insights.

There was an interesting article in the Independent yesterday, postulating that Ireland is back in boom-land.

I've heard similar things said on other Irish media sites too, and it's the first time that I've heard of a post-Covid boom. What do people think of this?

My own two cents is that this may be an attempt to classify the post-Covid inflation as a boon (not a typo!). The state has unleashed billions into the economy in the last two years, and the country is simply awash with cash. Is this the source of the growth. With regard to housing, prices will obviously continue to rise.

It seems that the next few years will almost certain see the prices of just about everything rise, and we could be back to the days of the early 00s with rampant building of housing and massive levels of consumption. I suppose that's great for some people, but after the last boom came crashing down, many people were left with massive levels of debt, unemployment soared and the country was left covered with card-board quality houses. That may not happen again, but we'll see.

I personally think that we're charting a course that is going to lead to ruin. We constantly hear about sustainability, but what exactly is sustainable about the building of thousands of "houses" every year? Furthermore, what's the end-goal? All I see here in Dublin is the constant construction of utterly hideous, soulless buildings. I don't exactly feel warm and fuzzy inside when I think of the world that will be waiting in 20 years' time.

The state has always been a major player in the property 0market and this is not something new that has just happened after 2008. Pre 2008 the use of stamp duty was used to increase/reduce demand. Every-time there was been a housing crisis (and there have been quite a few in the past 100 years) it has been resolved by the state undertaking large scale social housing projects.

I don't understand how you can assume that it was government policy to increase house prices to get people out of negative equity... Yet again there is a difference between cause and correlation. Houses were not being built because the cost to build a house was higher than what you could sell it for which is the main reason we have a chronic undersupply today. This shortage in housing pushed up prices and once it hit a stage that you could sell a house for more than it cost to build, houses slowly started to be built. Ideally during this time the government should have stepped in and built social housing and in doing so kept the house building sector alive to prevent a housing shortage but lets not forget that the country had the IMF and EU pushing austerity down the countries throat so this could not happen.

In regards to home ownership ages yes this has fallen in the younger age group and one of the factors that has driven this is that a higher percentage are undertaking 3rd level education and as a result only get financial secure at an older age. If you went back 20 years a lot more people would have gone into trades at a younger age and as a result were established at a much younger age. I am not saying this is the only reason but it is one of a number of factors including the time it takes to save a deposit.

I can see whatever government is in place wanting to winding HAP up but they won't be able to do that until there is a sufficient supply of housing whether it be due to a surplus of private rental accommodation available driving rents lower or the delivery of social housing. HAP is not going to be taken away overnight by any political party. The only way I could see it being wound back is if the government gets into difficulty and is unable to service its debt which in the short - medium term is highly unlikely.

My background is in financial services and not specifically in banking regulation so I fully understand the wider picture and the risks that exist in the financial markets. It is worth noting that the areas that are less regulated is down to the fact that they have a significantly lower systematic risk to overall financial system and the wider economy. And this is the key point they are not systematically important and if they go tits up they will not bring down the financial system. Back in 2008 governments need to bail out banks because they were systematically important.

I would agree with you that there would appear to be a bubbles out there and some of them are in property markets but I don't see a bubble in the Irish property market as there are fundamentals that can explain the current prices. When these bubbles pop Share prices and investments may fall and it could turn into a blood bath and central banks will stand and watch and will only intervene if it spills over into the real economy creating unemployment or a risk of a recession. Likewise any major impact on the Irish housing market would only be felt if a market crash spilled over into the real economy and if it did central banks would act accordingly.

In regards to zombie companies and the FED/ECB bailing them out do you have an example of a specific company or are you just talking about the general fact that the low interest rate environment is bailing them out.0