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

Indeed, and thats why I included it in my post.

We wont see price declines in rents or sales, as long as we standover a 2% population increase each year that we are simply unable to house - unless there is an economic crash.

HTB and other minor impactors on price and availability are strawman arguments and detract from the real issue.

I am pro-immigration, but to state the obvious, it does have to be managed.

I wonder how many of those 100k arrive into employment. That would be an interesting stat.

The buyer own the property outright, regardless of subsidies to help them get there. It is not a council house and never was; it is a subsidised build and a subsidised purchase, resulting in 100% ownership.

You pay your taxes, you get something back.

A median earner is the forgotten demographic, I agree with you.

We need more cost rental and affordable. Any govt new build scheme should be 33% affordable, 33% cost rental and 33% social.

Same percentage split for Part 5 allocation in private developments.

Again, the way out of the mess is to increase supply and FFG have the quickest route to housing delivery on offer.

These are the measures Denmark implemented. They're all completely reasonable, easy to implement, and obviously if Denmark has them Ireland could no problem (with regard to the much mentioned "international obligations"), and they worked to reduce numbers of asylum seekers arriving by 90%:

https://en.wikipedia.org/wiki/Immigration_to_Denmark#Features_of_the_present_Danish_asylum_system_(2023)

That by itself would have a huge impact on the housing market - approx 25,000 fewer humans needing to be housed this year, or the equivalent of about 10,000 extra housing units built. It would also save the government very large amounts of money (we're on track to spend €1bn this year housing asylum seekers, nevermind the additional costs on top). And would be hugely popular with voters. But its not being done by our current government due to either incompetence or malice, take your pick.

HAP only came into existence because there was a shortage of social housing being built. Theres a need for a few thousand households to be on some sort of temporary rent assisstance, but nowhere near the 60,000 that are on HAP at present. About 50,000 of those households should be in social housing instead of being on HAP, inflating the private rental market hugely.

This is a very deliberate result of primarily FG's opposition to building social housing. They bear full responsibility for it.

Indeed, but what would you replace HAP with?

It all comes down, again, to supply.

If the tenants arent receiving HAP, they are either on the street or living in hotels.

I an quite sure we would all want the people living in homes of their own, given the other grim options.

Until we have enough homes to house the growing population, we would still need HAP, or at least a version of it.

I do think tenants on subsidised housing should house share, in order to maximise the housing stock.

The professional private market does it, why not the subsidised market.

The UK has entirely different immigration patterns to Ireland.

Asylum seekers are the only immigrant group that are a huge net drain on public finances here, that are growing far more rapidly in number than any other demographic, that are the government's responsibility to house, and most importantly that are within our power to restrict tomorrow if we decide to do so.

EU migration isn't restrictable, and non-EU work visa based legal immigration could be reduced somewhat but is for the most part neccessary for the economy or for critical services like nurses in the health sector these days.

So "there is no longer an easy way to resolve the problem" just isn't true. We have a directly comparable country to us in Denmark, which successfully reduced the numbers of asylum seekers arriving by 90%, by using a number of very easy to implement policies. We could do the exact same tomorrow if we had a competent government. And it would have an immediate very significant impact on both the housing market and government finances.

There isn't a single other government policy that would effectively result in 10,000 new homes being built in Ireland this year, while saving the state money instead of costing a cent. At this stage its now probably the biggest single policy change the government could make to reduce pressure on the housing market immediately.

HAP didn't exist historically, because the state built social housing. The people on HAP wouldn't be on the street or living in hotels, they would, and should, be living in social housing instead.

The only reason we have 60,000 households on HAP, costing the state €500mn and climbing per year, while also inflating the rental market for tax payers, is because of FG's policy of not building social housing over the last decade+. Which we can now see has been an absolutely huge mistake.

That's how things are unfortunately. Maybe adjust your budget down a little?

That’s precisely the cohort where the inflation doesn’t matter! Of course it increases prices there, but as long as the increase is less than the subsidy then affordability is still improved.

The main dissent against demand side subsides is that they have knock on inflationary impacts on the market as a whole. That’s where its inflationary impact could matter as it makes things worse for people who can’t avail of it…the point being its current scope is so small it can’t possibly be having any significant broader impacts

Yes. In the case of HTB and FHS, you artificially inflate the demand of the people you most want to get the houses (first time buyers). This is at the expense of non first time buyers.

The only way this scheme is objectively working is if an FTBer who was previously unable to outbid someone else, now is due to their subsidy. By definition this has to increase the sale price. You have three desireable outcomes:

1. FTBer gets a house they otherwise wouldn’t (perhaps at the expense of a would be landlord)
2. The house is cheaper for that FTBer than it would have been without the subsidy. Because although the price will be marginally higher it will always be less than the subsidy itself..
3. You increased the profit of the builder who should theoretically be more confident to build more. Same as a VAT cut or whatever else people so opposed to the scheme often scream for.

Win, win, win

The downsides

1. It has a cost to the taxpayer. There may be better uses of this same money.
2. It could push displaced buyers of new properties (I.e. poor mr landlord) into secondary markets

1 remains the key downside. 2 I’m saying is not happening because the number of subsidies is so small (because it is so targeted to only cheap new build houses) it can’t influence the market more widely.

I think our disagreement is important though. You are saying subsidies are bad full stop. I am saying they are good, but can be bad if they are too broad that they become inflationary across the market. Extending them to cover more and more houses including second hand would be a bad decision. For a subsidy to be effective it must be sufficiently targeted.

There is absolutely no need to continue to increase it like you’re suggesting. It could be retained forever more as is (price caps and grant should be adjusted up for inflation). It would work fine.

The butterfly effect analogy here is beyond a stretch. If markets worked in such a way that you can inflate a tiny tiny subset of properties and all the others just magically go up, you would have an infinite money code. You cannot subsidize 1.6% of all transactions by c.30% and magically have a huge knock on effect on the 98.4%.

I am absolutely confident HTB and FHS could be abolished tomorrow and you wouldn’t be able to discern any material effect on house prices. I watched it unfold in north Wicklow when the HTB became defunct in April 2021. Impact was zero.

I don’t feel that strongly about them. I think they’re a marginal force for good (particular HTB, not so much FHS). I’d be indifferent if they were abolished. But it’s become this lightning road of attention totally outsized to its scale. Some people genuinely think with all their hearts that it’s abolition would have a material impact or even crash property prices. That is a sad state of affairs and means proper meaningful conversations are not had.

I think one of the problems with the the current government and their plans is that their targets are too low to solve the problem, even if those targets were met … which they will not be.