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

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.

Some great ideas on this thread!

A few posts ago I suggested the creation of an "IDA" but for investment in housing. I think another thing that could be done is the creation of an national property fund for Irish people who also want to invest in housing. Taxes could be reduced on earnings from this fund to attract people into it.

The only way is up baby

If you think house prices will fall, in the words of our greatest politician you should "go commit suicide".

They have been met the last few years and will be close enough this year.

But yes, they need to grow quickly and they are. from 33k to 50k and then up to 60k by the end of the decade.

If they can break 40k next year as projected, we will be on track.

Imagine showing up for a photo op on a development you opposed

banks have to hold capital for all loans…. Good and bad….yes they need to hold way more for bad loans but even for the safest good loan they also need to hold capital incase it turns bad…. If they don’t have enough capital then they need to raise some and at the time the only way of raising capital was a further bailout.

The headline is nowhere near as bad as the details. But that is the Ditch for you. Dog whistling galore.

This was flagged by McWilliams a few weeks ago

The incoming commerce secretary in the Trump regime. Hopefully this will put a stop to the auction politics election we are experiencing here.

Howard Luthnick

It’s nonsense that Ireland of all places runs a trade surplus at our expense. We don’t make anything here anymore—even great American cars are made in Mexico. When we end this nonsense, America will be a truly great country again. You’ll be shocked

https://x.com/howardlutnick/status/1846588966058799234?t=ZGPGiw6uG03lOshOhOvd3g&s=19

two points:

-irish employees are just dirt cheap vs. the US. With their medicare and obamacare + legal insurance costs they price themselves out of the global manufacturing market depsite the cheap energy and top class infrastructure.

-being 7th largest is not difficult to achieve given the proximity, language and the US only having 2 land borders. Canada, mexico, china, japan, taiwan, germany, france are sure the first 6.

Wages for tech and pharma is far far lower in Ireland than across the US.

In Ireland many firms start graduates at 35-40k, in the US it's more than double that for tech grads