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

Subsidies/assistance/help whatever we want to call it all increase price and further damage affordability for singles and couples

Personally I feel there should bo no assistance for anyone in buying a house, all efforts should be put into making rentals more affordable through reducing costs. Any help should be redeemable to help the next person(s)

I could guarantee that housing for all would be in a much better state with such a system

Individuals are welcome to avail of the scheme - that doesn't mean it won't encourage underutilization. Since FHS is new builds, self builds, or ex rentals sold to tenant, it is fairly unlikely to see single people buying 1 beds or 2 beds. There are a frighteningly small number of new 1 and 2 beds for sale in this country.

And as bass claimed up thread about renovations of old 2 beds - that is not FHS, it's a different scheme for vacants. FHS cannot be used for vacants or renovations, so older smaller stock will not come into picture for this scheme.

I thought it was that only high-earning single people could hope to buy a house, so most single owners who are using the FHS are probably on 70k+. Should we use supports like the FHS to help high earners onto the property ladder, or should they target lower-earning couples?

One of sample case studies on the first home scheme site

Jim has his own site and earns 75k a year and appears to be looking for a 100k from this scheme to fund his McMansion

Jim doesn't strike me as an individual that needs state assistance to fund his home.

Simon Harris can't stop mentioning farmers since his elevation maybe this is the reason this case study is in there

Tax isn't a savings account where the more you pay, the more you get back. Usually the opposite.

My personal experience is single people are more likely to house share than couples. Most couples don't want to share, and most singles don't want to live with couples.

apparently the higher interest rates are upsetting the construction companies ..

they cant be helping would be buyers here either

news from US today seems to be inflation is sticky there on top of sharp US growth slowdown - great combo in an presidential election year

I understand and sympathise with all of your well made points.

However the solution for all income groups is to ramp up supply that serve all income groups

This week we announced cheap loans @ 3.5% for existing homeowners to renovate there homes. Could we not do something similar for those with no homes.. According to the developers the labour is present to ramp up output and of course there is no shortage of land

The solutions are simple, what's necessary is the will to remove what's blocking the solution from being implemented.

I'm afraid that giving subsidies to those on a 100k salary adds to the dysfunction rather than doing anything to solve the problems

Builders/developers won't build unless they get the profit they want and the market decides what that is.

They can't get finance at a reasonable figure to actually build. Giving low cost finance to those who want to buy is all well and good but who pays for financing these low cost loans?

No matter what people think I am sure there are aspects of building that we can't control (anything we need to either import or any input where there is a shortage).

It never ceases to amaze me how many people completely ignore simple economics. For example let's look at the rental sector for a moment we have a housing crisis, so we make the rental sector toxic for a landlord resulting in some (not all) selling up because of this fact.

But the property does not cease to exist! Correct but you are under utilising existing stock. Logic suggests give the landlord a short term break to encourage them to stay giving breathing space to increase the number of properties built/renovated (remember increased supply is the answer).

Why should someone on €100k not get a subsidy? This person is most likely contributing between €30k and €40k in income tax, PRSI, usc etc. Do you think their earnings are received from doing an easy job?

Its not aimed at being discriminatory. If we are in a position where the top 10% of income earners and probably the top 5% of the First time buyer pool need subsidies to buy a basic necessity we need to stop and immediately change what we are doing. Surely it's the definition of dysfunction

Focus on supply and stop demand side measures

There were over 30,000 first time buyers last year. Only about 20% of new builds are making it to the for sale window at the auctioneers about 6,000 annually, let's assume that 50% are purchased by first time buyers that's 3,000

Despite 10% in your back pocket and the offer from the state to cover a further 20% of the price, 90% of FTB's are buying from the non subsidised 2nd hand market.

Could it be anymore emphatic that what the government is doing is a failure and is only driving up the cost of new supply thus hindering all income groups in achieving home ownership

I haven't been monitoring this so closely since I finally managed to buy somewhere last year (thank God!), but FWIW, these are my latest stats on supply, based on total properties of all types listed for sale on Daft.

That's a poorly thought out measure

State is buying from developers hovering up a lot of new supply. The developer is paying possibly 10% for finance and charges a margin of 15%+

Suppose the state can borrow at 4% (saving 6%) and contract out to a builder removing developer margin (saving 15%), build on state land (saving 10%). Build to rent and remain in state ownership (remove Vat saving 13%)

Call the Scheme the Covid dividend in housing for front line workers that kept the country ticking over. Expand depending on success

Workers are in affordable rents and can save for there own place negating the need for demand side subsidies (saving billions). They are closer to employment centres improving efficiency and aiding the avoidance of fines for environmental pollution. Housing becomes a state revenue generator rather than billions being spent annually making the situation worse.

High income earners have a greater supply to choose from and those in the top 10% can probably obtain a better home in a nicer location on a single salary without any need of assistance

The market maybe somewhat inelastic in the short term due to supply bottlenecks, but over the long term it behaves fairly rationally.

Plot house prices on a chart against number of houses built over the last 20 years. I think you’ll find the relationship is remarkably strong.

Yes which is the point. You put €50k into a cohort of buyers pockets but not all. Prices go up, but by less than €50k because not all buyers have that amount.

For the cohort you target, houses get cheaper. For the cohort you don’t target, houses get more expensive. On aggregate house prices increase which then stimulates more to be build in the medium term.

This is precisely the aim of the scheme - more houses get built, houses are more affordable for FTBs, non-FTBs lose out.

It's a bit like increasing the minimum wage for the lowest rung civil servant. They might be the focus, but everyone else lifts as well.

For people already "on the ship" so to speak, the rising tide lifts them anyway for trading up etc. (not exact but near enough). The bottom of the ladder ultimately sets (or feeds up into) the other prices too. And what you have in this country is a scenario where nearly everyone getting onto that bottom rung is getting the handout. Those that aren't, are not significant enough to cause any real deviation.

If I'm happy to pay 300k and Paddy is happy to pay 295k for the house, I will win it. If we both get a handout of 50k, then I will still win it, but at 350k. If the handout changes to 100k then I might decide instead to let Paddy have it and I can go down the road to get the nice house that Jimmy was bidding 450k on last week. Happy days for me. Except that Jimmy now also got the 100k.

Such subsidies are only an advantage if not many people get them or if there is a real oversupply