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

How will the rental bubble pop as demand is red hot and supply is more or less non existent. The only thing way that I could see more supply coming on line would be if there was large scale social housing built and hap renters moved to these. Saying that I don’t think we will see large scale social housing built in the short term because even if a decision was made today to do it would take 3-5 yrs min for them to come online. And that would be an optimistic time line because any large scale social housing projects would result in challenge after challenge in planning objections would be valid because the infrastructure would need to be put in place first.

interest rate rises wouldn’t hurt the people who were given a LTI exemption in the short term because the majority will have fixed rate mortgages for 5+ years. What would hurt is if rates continued to climb for 3-5 years but that seems highly unlikely unless oil and gas prices keep increasing at the rate we have seen because of Russia starting a war. We have already seen oil fall back in price because of the expectation of recession. And if we have a deep recession no central bank will continue to raise rates.

If interest rates climb for 3-5 years it means we have inflation. It unlikely that wages will remain static in that situation. Rising wages make repayment more affordable.

The labour market is still hot in the US so they will keep raising till it cools and it will cool. We won’t see year on year inflation like we have this year unless the price of oil and gas has a similar increase next year to this year. Which I can’t see happening unless there is another war. Because of this the cpi will drop or remain flat and the fed will claim victory over inflation and stop raising rates despite the secondary round of inflation in food and commodities being very high. The other scenario is that there will be wage inflation which will sustain high inflation and rates will rise but I think this has a lower probability due to the rate rises that are happening now and the cooling that will come to the labour market. If this did happen then it would mean more house price inflation and anyone that bought in the past few years would be in a very good position as there debt gets eroded by inflation.

The ECB would have no option to raise rates if the USA continued to raise rates over the mid term because if they didn’t the euro would loose value and make imports more expensive and as all oil is in USD it mean more inflation.

For Irish house prices I can see them increasing over the next year despite any interest rate rises as it appears that wage increases are expected and that will get worse once the budget take the lead and increase social welfare which will mean that minimum wage jobs will need to pay more to keep workers and so and so up the chain. Just to be clear people will not be financially better off but the amount they can borrow for housing will increase as the LTI limit is on gross pay. And this will mean house price inflation.

Congrats, out of interest does it remove that urge to buy (if it existed) now that you have security of tenure and affordable rent

Regardless of wage increases being bellow inflation and people having a less disposable income the fact remains that they will be able to borrow more because LTI rules don’t look at disposable income and is based on gross income. That means more money available to buy at a time where there is a shortage of supply which equals an increase in house prices.

It's why I am voting SF as I am opting to burn it all to the ground. For a long time i wondered how the likes of brexit / trump happened but not anymore.

Once you disenfranchise enough people who have nothing to lose this will be the inevitable result.

If you remember I said we wouldn’t see inflation as high from feb/march onwards unless oil hit a 100usd a barrel which it did thanks to war in Ukraine and I also said that the longer inflation was persistent that worse it would get as we would see wage inflation.

The constraint for most people is the LTI limit and not the affordability test. This is evident from the fact that they can pay high rent and a mortgage would be cheaper.

Don’t know where you are getting your international competition in the retail banking market as their are only a hand full of small players and AIb & BOI are the only 2 big players. I assume you also realise that negative interest rates cost the banks millions and prevented them from making any meaningful profit as they were unable to pass the cost onto all customers

How can he answer that the current inflation has been caused by supply blockages from Covid and a war in the Ukraine, does anyone know when they are going to go away? But when they do go away we will see a period of Deflation IMO as in a lot of cases wages are not rising at the same levels of inflation and in some cases there are no pay rises at all. If we hit a recession and we have a lot of job loses this will also feed into a disinflation and then deflation trajectory .

If a wallop of a bang comes, don't expect deflation in food or gas/ electricity. Oil petrol and diesel will fall but the era of cheap food is over. Food produce yeilds with droughts throughout the world and reduced fertiliser usage due to its price sky rocketing will mean substantialy lower yeilds this year and possibly for the future.

Yet fertilizer is at a premium due to the energy needed to create it so when gas and oil prices fall so will fertilizers as will food. There is a knock on effect for food with regards to energy which is why food prices are heading to the sky and once those costs come down food will follow suit. It may be a while before it happens