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

His conclusion was apt and suggested here a week ago ish.

Let the crash happen and intervene after its happened, snap up the available labour and land and build affordable rentals. Never let housing be a choke on the economy again. Simple really

The billions paid out annually to private landlords reverts to potentially being income for the state offsetting a possible fall in taxes elsewhere like vat and corporation taxes

Massive opportunity for the state, but like many others over the last decade will be squandered by ffg bailing out there buddies and the greens watching on blindly

Did you even click through to that link or just read the headline?

2.55% is the highest it offers, with a bank in Portugal with complicated rules for non-residents; including withholding tax - and then having to declare your interest here too.

For normal savers, its what the Irish banks offer that matters. And 0.01 is about all you'll get, just like when ECB rates were 0.

Can finance Ireland and the other non bank lenders offer a savings product as they are funding their mortgages from the markets also revolut n26 etc

Because banks can deposit customer savings not lent out with the ECB and earn 1.5% - no brainer for them to attract deposits from customers by offering interest as long as its less than 1.5%.

Nobody knows if ECB will ever go back to negative interest rates, but ECB had them negative for close to a decade and Europe still had a very mediocre growth rate. Personally I think they should have gone positive with their interest rates years ago, when the economy was good. But that would have caused issues with some of the PIGS countries.

i think we have a generation that has gotten used to cheap credit and I think it might be hard for that cohort. No more impulse purchase of an iPhone or a MacBook Pro via 0% finance when they don’t have the money.

Well not true, I am sure nobody wants a recession. All they want is to reduce demand by increasing the cost of borrowing.

Inflation is caused by high demand and low supply, be it for housing, rental market, energy etc. That being said there has been cases of price gouging too, if maybe people want what you are selling and you only have limited supply. You can just hike up the price as people have no option but to pay it. Just look at profits of most energy companies.

I don’t think so. But as with anyone’s view this is all speculation. We have to wait and see how it plays out.

Heard they were even buying avocado on toast with credit...

Only thing thats special at the moment ios they took too long to raise rates and then didnt raise them near enough. Now they will have to overshoot. They now have for force a worse recession than we needed in the first place and its going to hurt even more.

Well just to reiterate the ECB isn’t forcing a recession, nobody will come out and tell you such. But I will agree it is going to be an interesting time, Europe has had extremely low growth rate with negative interest for the last decade, so raising interest rate won’t help. Not to add the other uncertainty that you mentioned.

In terms of housing locally, I always laugh when people blame the last recession on abundant housing and cheap credit. This far from the truth, I bought a house in 2008 and as I have said it before people were outbidding each by as much as 40k right up until March/April 2008. We only found out the abundant houses issues later and the cheap credit just made the crash worst. It was like we were playing musical chair, everything was hunky dory until the financial crash happened in the US.

Thankfully we in a much better position this time. But I would still be worried about a lot of the institutional landlords that have bought up huge properties based on the fact that they can milk high rents. Some have notoriously left apartments empty to keep rents high. People pay high rents during good time, not sure it will last during a downturn.

Then why bother raising them in the first place? If anything I think the ECB are playing down the amount that interest rates will go up by I can see it going above 4% even higher in the next 12/18 months

a 4% ECB rate could kill the euro.

The more indebted countries are at real risk from a high ECB rate. The ECB is stuck between a rock and a hard place at the minute, and it really just shows the mad nature of a single currency - some economies would be happy to see higher inflation (inflate away some of the debt, weaker currency better for exports) while others want the rate rise instead. Big divergence in opinions and economic stability in the eurozone, so the ECB have to tread a very fine line with their decisions.

Technically their mandate is to maintain euro inflation at 2%, but really the priority is not to rock the boat and risk countries leaving the euro entirely.

I think that is the whole point bring about a recession and bring down inflation. They have no other tool to do this. Look it will be interesting to see what it goes up by in December, people flagging .5% I think we may see another .75% but a lot of countries are still seeing stubbornly high inflation. Add in the US are up at 3.25% and inflation is still high over there. How else do they quell inflation as I think globally we have a horrible choice so which is worse high inflation rates (while wages are coming no where near to match) or higher interest rates (where people will have to stop spending forcing inflation down). When inflation comes down at least they can control what level interest rates come down by and when.

Give it time if they keep going for another few % it will kick inflations ass in about 12 months time. Also if Russia and the Ukraine decided they have had enough this would also be a big turn of the pressure valve on prices.

don’t forget the retail sales include inflation so if sales were identical to last year you should see a 9-10% increase. So the real drop year on year is closer to 17% (7% + inflation)