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

IWW2900 has ensured their threadban is instant. Do not bother replying to their posts.

When the price of houses shoots up, a large part of the increase goes back to whomever owns the site. The person laying the blocks isn't directly benefiting to a large extent. There appears to be a ratchet mentality though out there that once the value of the site increases, the owner must be protected from it ever decreasing again. There is no reason why that should be so.

If I have land worth 10m today, and then the sale price of houses suddenly doubles next week, maybe I figure out that my land is suddenly worth 30 million on paper. Then the following week the house market corrects by 40% (So still 20% above today), well I think that you'd have people on here arguing that houses won't be able to be built because it isn't worth it because the land was valued at 30m and building prices haven't decreased.

To see a 30% drop in a short timeframe I'd reckon that you would have to have firesales. You could get a drop in real terms of those figures over maybe 4-5 years. Which could be mainly due to inflation.

But I can't see the State allowing a situation to develop where there would be firesales. If there was a disaster in terms of interest rates shooting up combined with a recession and people losing their jobs, then the normal rules of capitalism would be that if they fall behind on their repayments, the bank would seize the property and offload it as soon as possible to eliminate any further risk. But that would be unlikely to happen in practice. It would be more likely that there would be supports put in and rules to prevent evictions etc. to force the banks to facilitate people.

I didn't say it could never happen. I said that the State here would, going by past behaviour, try to slow it down and smooth it out and therefore it would be difficult to put a timeline on it if you did think that it was likely to happen. I think the State would try to avoid a deluge of firesales

Many countries will allow the "correction" to take place as fast as possible as it is usually better in the long run to do so.

Before 2008, banks borrowed and that fueled the property bubble. Since 2008, the state borrowed to fuel a new property bubble.

A lot of the government borrowing is off the books but try telling that to a creditor. Soon the time will come to pay the piper and the bill will be a lot higher than it would have been had we just let the banks implode in 2008. The difference is we are on the hook for the money the government borrowed to bail out the banks. And, when all is said and done, the banks are probably going to fail anyway.

Maybe so but their central bank will pivot if their inadequate interest rate rises trigger a rise in mortgage dilinquencies.

Went to Kildare Village as an example on the 27th. People are spending like never before. Plenty of cash in the market still or cost of living ain't affecting them !

Not only Kildare Village, was in town today and it is the same thing.

The madness of the last few years really seems to have come to a fairly juddering halt halfway through the year, like many other countries.

Two quarters now of asking price decreases, and mentions in this of ‘froth’ going out of the market and a ‘price correction’.

There is a “risk … that vendors or estates are slow to accept changed market conditions and settle transactions below asking prices”.

House price multiples are now extremely close to those in the UK. Interest rates here aren’t at their level but may well be within the next few months from what the ECB has laid out. There was a similar stubbornness to accept the market declining there too, until finalised sale prices were confirmed to be dropping.

The Central Banks decision to ease lending rules may throw a spanner in the works but that happening at the same time as reports like this coming out, people may begin holding off as they’re expecting, and therein helping bring about, price drops.

Do you realize inflation will become a much more serious problem if they do react to delinquencies by cutting interest rates? This war NATO provoked with our Russian friends is supposed to make us think Russia is responsible for the inflation central banks have caused.