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

There is one striking parallel to the crash and that is the incredible rate of property price growth.

The shortage in supply has had knock-on effects even in the first time buyers market:

Moving home to reduce rent and increase savings

Save an outsized portion of wages to chase inflating property values

Saving for longer to breach the gap between mortgage limit and house price

Attaining a mortgage at an older age, meaning larger gross salaries as they are well advanced in their careers

They could continue to rise for some time of course but the pace of the rise is very concerning and clearly a different approach is required from policymakers. What we have is not working.

The difference is that this time it's AHBs doing most of the buying.

Though they get some rental income and council funding for housing social tenants, they also borrow a lot of finance from private sector. 30% state loans and 70% private - the 30% state funding effectively bridges the viability gap at which no normal business would get a loan for a housing project. Not too unlike shared equity in FTB market.

It would be interesting to see what their debt profile is and their cash flow.

If the government turned around and said we can't/won't pay top up rents for social tenants anymore - would the AHBs need to start selling assets to keep above water?

https://www.businesspost.ie/news/revealed-irelands-big-six-affordable-housing-bodies-amass-e7bn-worth-of-property/

Agreed. It's apples and oranges. I think that the comparison is made for two reasons. Firstly, it's a very recent experience of a property crash that was preceded by a bubble that seems similar superficially to what is happening today. Secondly, the idea that the current market could collapse quickly is something many would welcome (I don't blame them), so there is a sense of hope.

The housing crisis is just a symptom of globalism and an economy that has become too large for the country in which it exists. It's not going to change until something external makes it impossible to sustain both mass immigration and rampant money printing.

It's very rare to have 2 identical asset price bubbles. New ways are found to pump money into the bubble, hence the notorious statement. "This time is different"

In the noughties the bubble generated huge taxes, this time it's soaking up huge amounts taxpayers money

Is the first home scheme a substitute for for a credit fuelled bubble?

Are new rents sustainable at or above median salary?

One lesson from that program to definitely watch out for is when you see insiders selling property

They gave examples of sale and leaseback deals by banks and estate agents in 2006

if you were highly paid and could work anywhere in the world, why would you pick dublin.

Yeah, 20% of the labour force being digital nomads can't be true. Not sure where they've pulled that figure from?

The sales & leaseback stuff is a red herring. If banks had any idea of the scale of the collapse that was about to unfold, they wouldn't have ended up effectively bankrupt. No-one has a crystal ball.

Their definition of what constitutes a digital nomad is wrong. They are probably counting PAYE people working for tech companies who moved here for work. That is not a nomad.

True nomads choose locations based on tax incentives that reduce their liability on overseas income to zero.

Does anyone know how the government come up with a claim that Help to Buy is helping 500 people a week to buy there first home

In Q2 2024, there were 2404 mortgage drawdowns by FTB on new or self build homes

That works out at 185 transactions a week nowhere near 500. A high proportion of those would be self build and half of recipients are shown to have not needed the grant

New housing output remains below last year's at Q3.

Impressive by our political leaders to be portraying this as the best in Europe and a good news story. Can't beat spin

So, if net migration is higher than new housing stock what impact does that have on the likelihood of housing price collapse in Ireland?

Again, some of the analysis in here is based on the line being too high and the line looks like 2008 therefore it's 2008 again.

I'd love to see a post that anticipates a huge crash that is based on the type of metrics that actually contribute to credit and price risk in retail mortgages.

For example, if this is 2008 all over again, how is it the same. Are the number of cash buyers the same? The demographic makeup of buyers the same? Institutional purchases? LTI? LTV? DSR?

Do you believe nothing is different this time? Explain why.

As I expected. Cheers lads. 👍