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

And how do they build 40k houses a years a simple question that couldn’t be answered clearly. All that will happen is a reduction in private homes being built as all resources pulled into building social housing.

As for affordability how can he say he will deliver social housing at 150k a house if his answer to dealing with institutional investors is for the government to buy the properties. That was a brain fart during the debate and not thought through but shows that SF policy lacks substance and reality.

Where was the value of money in his answer? So they are happy to buy properties at market price to stop them falling into the hands of institutional investors but are opposed to building social houses that are way cheaper to build on grounds of value for money just because a different political party is building them.

Well there more likely to enter leases when doing business with investment funds who were buying these portfolios

Widely reported that sales were falling through as the bank had pulled them from the market, a family member had personal experience of such with 2 sales falling with this reason given

Banks sold there bad loans for cents on the euro. Bad loans would be spread all over country. Rural mcmansions were a symptom of the celtic tiger and value wise were amongst the biggest fallers in the crash

Practically no repossions in comparison to the arrears, so if a loan is long term delinquent and the occupants remain in the house, the State usually picks up the tab in the form of rent which is probably higher than the mortgage payments. The greater fool theory.

If the banks didn’t sell their bad books for cents on the Euro they would have had to hold more capital and the only way of getting more capital at the time was for the government to inject more cash in the form of billions. It would also mean that banks would have to increase mortgage rates meaning more bad loans and people who were not in arrears paying much more on their mortgages.

We had nama for developers, could we not do the same for private households.

These properties are warehoused and effectively become social homes. I suspect that paying down the mortgage with a 50% haircut would be far cheaper than paying current market rents to external investment funds

I know there is a moral hazard issue here but it's a choice between the least cost and the most cost for the taxpayer.

Im not comfortable with the max cost approach when using taxpayer funds. This was also around the time corpo taxes started increasing rapidly so the money was there

"There 40k figure is made up of 25% unused units been brought back into use, with FF constantly interrupting we missed the opportunity to push SF on how they would achieve that."

They will not achieve that.

The poster was speaking about the private debt problem: "once again, it is in fact our over reliance on private debt/credit in order run our economies"

But as Timing Belt told, the problem of Irish Private Debt is overstated. Current Irish private debt is fairly healthy.

Debt per capita is not a good measure as it doesn’t take into account the ability to repay.

e.g

a country with debt of 5million and a population of 1 million that have a high wage and as a result has a higher revenue of tax is much better able to repay the debt than a country with 5 million debt and a population of 2m on a low wage with a small tax revenue.

plus a lot of the debt to capita looks at total private and public debt. And we know the private debt is massively overstated due to the structure of multinationals.

It comes from institutional investors on the bond market. The NTMA raise funds on behalf of the State but its the private market that funds the Bonds. Ireland inc has a good credit rating which is why we can issue Bonds at 0% interest rates as we are seen as almost risk free to institutional investors.

Public debt comes from the private market, the only difference between public and private debt is the status of the borrower. The funding comes from the private sector.

We need to reduce our costs to increase employment and attract foreign investment. One of our highest cost is our welfare system. Everything is connected and if we make welfare more attractive than working then people will logically choose the most beneficial to them.

If this happens the income tax generating revenue disappears and people become net beneficiary of state spending. Again I ask how to fund this?

To bring this back on topic the above is one of the reasons the housing sector is in the mess it is. Its not the only reason but it is one of the main reasons.

The main buyers of Irish gov debt are mainly financial institutions that are required to hold liquid assets due to ECB regulatory requirements.

e.g.

if there is an increase in deposits in the European banking system there will be an increase in demand for Irish government debt as the banks are required to hold HQLA of which gov bonds will account for a large portion. 9 times out of 10 they are not buying the gov bonds for returns but because they have to keep their banking licence.

For the past 10 years the ECB have been buying Irish debt and as a result providing cheap finance. This will fall away and go in reverse as the European economy grows and as a result the yield will go higher as the financial institutions regulatory requirements will not be enough to buy all the debt so they will need to increase yield to attract investors. In reality what will happen is that as yields go higher to attract investors this will increase the cost of credit reduce the money supply and cool the economy and if there is not genuine growth in the economy that increases the money supply to counteract the impact of the increase in the cost of credit the ECB will be forced to slow down QT, cut rates or even step back in with more QE.

Bringing this back to housing the Government would be crazy not to borrow to resolve the housing crisis if it meant reduced rent and lower houses prices in real terms (i.e. taking cpi inflation into account) as this would increase the disposable income, reduce the cost of living and make Ireland more competitive on the job front. At the very least not have housing as the reason why companies would not invest in Ireland.

The real issue is that no matter how much money you throw at the issue it will not get resolved immediately as there are constraints to the number of houses that can be built and supply will take the best part of 5 years to meet demand (assuming no massive unemployment or changes to emigration/immigration). Also if the government are throwing money at the housing market to fix it needs to be value for money as any investment like this needs to have a tangible benefit (e.g. x saved in HAP payments, reduced rents, increased disposable income etc)

There is noting wrong in borrowing to improve a situation and reduce further borrowing down the road. Where it becomes an issue is when you are constantly borrowing to pay day to day running costs as that is not sustainable over the long term.

The tough decisions were made back in 2020 when government stepped in with expenditure to stop the economy going into recession and leaving a trail of destruction that would take ten years to fix.

If they had followed previous governments responses with austerity they would have cut all expenditure and increased taxes which would have made a bad recession even worse.

yes and before the pandemic the government debt to government revenue was falling. On the Bond market Ireland had similar yields to the stronger economies in Europe (with the exception of Germany) which was unthinkable 5 years prior to that.

The issues with housing all derived from the fact house building more or less stopped after ‘08 and when supply need to pick up it didn’t because it takes time to get the engine running again. In an ideal world the government would have stepped in an built social housing to keep the engine ticking over but it didn’t have that luxury as the IMF and Europe were shoving austerity down our throats.

The RPZ legislation is a double edged sword... without it we would be seeing rent increasing in double digits the past few years and with it we see a reluctance to cut rent because once they do they will be stuck with it for years to come.

Even if the RPZ was not in place I believe that we would still see the same level of vacancy in the rental market because the institutional landlords have deep pockets and can sit it out till someone rents the properties as they have no alternative in this housing market. The only time you will see them reducing rent is when there is a over supply of rental properties and the pendulum swings back in favour of the tenant.

The rumours on the BER rating is global.... you just need to look at the UK where they are looking at setting a minimum efficiency rating for office blocks in order to meet their green goals. The same no doubt will happen here and will extend into the residential market. It is the no different to the green tax on fossil fuels as the governments try and change peoples behaviour. just like the price of diesel or petrol going up hurts peoples pockets no doubt this will also do the same.

Are you also capturing rentals in the data?

I had a back of a fag packet attempt at a calculation a few months back when there were around 1000 ads for rentals that in fact when you remove grossly unaffordable and student places, in reality there was closer to 600 actual ads for rentals available in the whole city. A city where a company like Facebook could say it wants to add 600 jobs in a year. Wfh is a good cover for the collision course our housing situation is due to have with our attractiveness for companies to call people back to Dublin to their offices, but it is pretty obvious that there won't be meaningful immigration to Ireland for a while with the ongoing rental situation.