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

I wonder what extent are these investors simply trying to get their money out of dollars and into hard assets?

Asset inflation of this kind could preface a currency crisis or some kind of failure of general confidence in the monetary system.

Financially literate people are never happy for their assets, particularly their main one, to lose value.

Most financially literate people realise that your PPR is not a financial asset. You realise no gain from it's increase in value if it's a market wide rise because you still need to have a house, so if you sell you need to buy again. Trading up or down you will not realise any benefit if scarcity pushes all prices up.

The only good time to have a house increase in value is if you increase the value of your own house, through your own actions (i.e. renovations). Increases due to market wide inflation are never good.

This is not the point at all though. You can argue the ins and outs of the benefits of property price decreases all day if you want, but the point was that a poll saying over 60% of homeowners want prices to decrease is a bogus poll.

The poll did not say "do you believe we need a financial crash" it said do you think house prices should decrease. It's entirely reasonable to suggest most people are in favour of this by massively increased supply.

Trading down is of little benefit when all houses both cheaper and more expensive have gone up in price due to scarcity of supply.

Also have to factor in the availability of options for downsizing - right now there are none, because of said scarcity, which is also the main reason prices are so high. Addressing scarcity will cause prices to fall and also availability to increase. Which is a win for everyone except those institutions treating their properties as assets who have to write off losses in value.

"You realise no gain from its increase in value"

Except for getting more favourable LTV rates

Except for using your ppt as leverage

Except if you want to move to an area that hasn't seen the same price rises since rises do not occur uniformly at all.

Honestly if you can't afford a house now, there's no way you'll be buying a house in a crash. The vast vast majority lost out in the last recession. Very few FTBs were snapping up properties in 2010 after being locked out during the boom. Same as last time, the people who will benefit will be cash buyers, or people who have leverage, and these people already own property.

Ah, the strawman defence.

Ask people if they want cheaper housing, to then not consider what has to happen for the prices to fall, doesn’t seem to be what a financially literate person would do.

You said many people have no idea other than prices going up = good, I would put it to you that some don’t understand that for prices to go down to the level being discussed in that newspaper article, something has to go seriously wrong in our economy. And that could be a very bad thing for us all, including you.

Virtue signalling. People are great it

Negative equity affects such a small proportion of homeowners as to almost be not worth mentioning. Even after 2008 crash the amount of people in negative equity was quite low as a proportion of overall homeowners.

The rarity of people going into negative equity such that it actually affects them is significantly underestimated

Here's an example of a person objecting to new housing because as a result of the new development they argue their house has lost value and they want compensation. Depending on your point of view the actions of this 75 year old man are criminal IE bribery. It's not an isolated instance as the Irish independent reported on other instances of this a few months ago.

Even if you accept that these people are a minority and their actions are legal their actions push up house prices. It highlights how much people will fight to protect the value of their homes. They can justify potentially criminal behaviour in extreme cases. NIMBYs have a lot of power and can cause huge delays to any major building projects. Some have legitimate concerns but a lot of driven by the fear of their houses seeing a dramatic decrease in value.

The poll you mention doesn't change any of the above facts. Even if we accept the poll as valid 40% of voters is a group no political party serious about getting into government will ignore. Under Irelands voting system 40% of the vote more or less gets you into government. You can see this in practice. Every political party says they want more housing built but every political party also supports NIMBYs who don't want houses built in their area.

60% of people say they support lower house prices so what? It's one poll and has limited value in isolation. It needs to viewed in context with other information like the article I've linked to and other information. I could happily link to lots of articles about NIMBYs and politicians opposing new housing developments for all sorts of reasons. All these objections ultimately increase the cost of housing and run counter to the finding in the poll you focus on.

Ok, if you believe a poll like that carries any weight then I actually feel sorry for you. Classic head in the sand stuff.

And to say that someones home increasing in value has no advantages to them too. What are you on.

Your need to be right in your own head is stronger than your need to be objective. So you are blind to anything else but your own single argument.

Here are just a few things that are good about your home rising in value, besides those mentioned by others in the post above.

• Increased Equity: A rise in home value means the homeowner builds equity, providing a financial cushion and potential borrowing power.
• Profitable Investment: Rising home values can result in profitable returns if the homeowner decides to sell in the future, especially if they bought the property at a lower price.
• Improved Net Worth: As the home's value increases, the homeowner's overall net worth also grows, contributing to long-term financial stability.
• Better Loan Terms: With higher home value, homeowners may qualify for better loan terms and interest rates if they decide to refinance their mortgage.
• Enhanced Creditworthiness: Increased home value reflects positively on the homeowner's creditworthiness, potentially opening up access to other financial opportunities.
• Sense of Security: A rise in home value provides homeowners with a sense of security and stability, knowing that their investment is appreciating over time.
• Potential for Upgrading: Higher home value may enable homeowners to afford upgrades or renovations, further enhancing their living space and quality of life.
• Increased Market Appeal: Rising home value makes the property more attractive to potential buyers, increasing the likelihood of a quick and profitable sale if desired.
• Wealth Accumulation: Appreciating home values contribute to long-term wealth accumulation, serving as a valuable asset in the homeowner's financial portfolio.
• Potential for Generational Wealth: Higher home values can be passed down to future generations, providing a foundation for building generational wealth and financial security.

And also a few reasons why it would be bad home owners if their property value was to fall

• Loss of Equity: A decrease in home value results in reduced equity for homeowners, impacting their net worth and financial stability
• Negative Equity: Falling home values can leave homeowners with mortgages worth more than the value of their homes, leading to negative equity and financial strain
• Difficulty Selling: Decreased home value may make it challenging to sell the property, especially if the homeowner needs to relocate or downsize
• Impact on Borrowing: Reduced home value can limit homeowners' ability to borrow against their home equity for renovations, emergencies, or other financial needs
• Negative Wealth Effect: Declining home values can lead to a negative wealth effect, affecting consumer confidence and spending habits, which may contribute to economic slowdowns
• Increased Foreclosure Risk: Lower home values increase the risk of foreclosure, as homeowners may struggle to make mortgage payments or refinance their loans
• Limited Access to Home Equity Loans: Falling home values can restrict access to home equity loans or lines of credit, reducing homeowners' options for leveraging their property for financial needs
• Diminished Retirement Savings: Homeowners relying on equity from downsizing their home as a significant portion of their retirement savings may experience diminished funds if home values decline
• Community Decline: Decreasing home values can lead to community decline, affecting schools, local businesses, and infrastructure, potentially reducing overall quality of life

Now do you still think a poll asking if home owners think property prices should fall would show over 60% of them saying yes and not include a big proportion of them you are just saying yes for the sake of virtue signalling.

"Almost nobody decides to sell their PPR and then rent indefinitely, so they almost always end up buying again. So any gains they have made from asset inflation are offset largely or entirely by inflation in the rest of the market."

This is not true. It would only apply if you're buying the house next door.

In real money terms, property increases are not uniform. Take for instance someone living in a 3 bed semi in Dublin who wished to move to a comparable house in Meath. A 10% rise may mean their 500k house is now worth 550k, but the Meath house has increased from 300k to 330k. Increasing property prices has worked in that person's favour.

Broad house price rises are more likely in nominal terms than % rises.

The idea that 500k goes up 50k and 300k only 30k is not reflected by the market over these past years.

Property price inflation has been double digits outside of Dublin and typically lower priced areas, compared to in Dublin which has been single figure growth or stagnant for the past few years, depending on sub market. The gap in prices is narrowing, price inflation is higher in cheaper homes at lower end of the market.

If you property increases in value it can be used as security for a loan (not just mortgages etc). To say "net worth or built up equity is equally meaningless" is inaccurate. A financial institution will offer loans based in some instances on the assets the applicant has to offer as security/collateral on the loan.

If a property is in positive equity to a value greater than the value of a future loan or even just the remaining outstanding balance on a mortgage is all the financial institution cares about.

While you may have more buyers at lower prices two factors need to be considered for this to happen (1) how do you lower prices? if you increase min specifications of properties eg BER etc somebody has to pay for these costs. (2) if property prices fall existing mortgage homeowners will be disproportionately affected as they may go directly into negative equity and with that you will see a stagnation of the property sector. How many people where in negative equity following the financial crisis who could not trade up (as family grew etc) because of negative equity.

Its a bit like the marketing material from the celtic tiger where the buyers were marching down the streets with bags of shopping from the high street after there home purchase. That worked out well

A home is highly leveraged purchase, it should not be used as a vehicle for further loans. Most owners have learned that lesson from the last crash.

Most buyers buy once

Most homeowners purchased far below current prices

Its in homeowners interests to have property values stable and affordable thereby eliminating/reducing the risk of a price shock thereby reducing the risk outlined by @SharkMX