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

Boomers don't really exist in Ireland as they do over in the USA. I think the closest we get is what I call Generation Live Aid…

There's a paradox that I'm yet to hear a good answer to at the heart of a debate about removing RPZ.

The idea is that we need to increase supply to meet demand to decrease high rents. To increase supply prices need to appreciate to provide viability to developers. To incentivize investors to finance apartments, we need to get rid of RPZ.

Getting rid of RPZ will increase the rate for existing tenancies.

I don't see how this solves the problem.

This was from 2016 so would need to see an update

http://www.publicpolicyarchive.ie/characteristics-of-households-with-very-little-wor/

Removing RPZs in the short term would likely result in a decrease private rental listings quite quickly.

It would though raise rents more generally.

The general reporting on rent increases has focused on Daft numbers, which relate to the open private market (or really what is left out there after all of the tinkering we do). The headline high rates of increase never reflect real rental inflation which has been lower. Daft put this into all of their reports but it is ignored in the media, we had low level “in situ” rent inflation vs. (at times) double digit inflation in the private market.

The overall dynamics on what it would mean for supply is hard to determine I suspect. That is because we have so many developments now forward funded by the State at the inflated market costs. So we arguably have a lot of schemes being deemed viable because of this. We have no addressed the fundamental fact that building is far too expensive and that our tinkering on regulations caused this.

I don’t think it is palatable to remove RPZs in the short term but I do think we need to move away from them over a period of time.

Yep, they will face a bit backlash, but it is what needs to be done, if private residential investment is to flow into Ireland.

Without it, how will we deliver 50k homes per year, in the absence of a huge output in state built homes.

Right, but if prices of the developments need to keep increasing to support an expansion of development then to maintain the same rental yield investors need to charge higher rents.

And if supply is sufficient to reduce demand and by extension reduce rents, then investors go elsewhere with their money and supply contracts.

I would be most critical of the government's efforts to reduce the cost base of building, as I don't see any real focus or initiatives to do it.

Maybe they should increase output of State Build homes? On State owned land as was floated by others in opposition?

If they were genuinely not just thinking of market concerns (?) but the needs of citizens in what is a housing crisis.

Now people on middle to good incomes need help buying homes as well as those requiring social housing .

Know this is simplistic but I don't see how we are going to ever come out of this unless there is a boom in state building of homes, starter homes or for downsizers.

There needs to be a constant supply of state build housing every year to stop this cycle of price and rent increases beyond what people can afford .

Yes, I agree. There needs to be a state build programme, so that the govt can leave the private market alone.

Currently, the state is purchasing or renting private housing stock, which adds to the inflationary effect on private rents and house prices.

The govt just doesnt seem to have any intention of delivering meaningful state construction, sadly.

The MO is just to wait for private developers to build new complexes and then raid them twice.

Once for the mandatory part 5 social allocation and again when they purchase or rent additional units; leaving slim pickings and higher prices for the private market.

A two pronged approach is needed. Ramped up state construction in social, affordable and cost rental homes, along with incentives for private investors to build in the private market; and realistically, this probaly includes removing the rent caps, as well as reducing construction costs, planning delays and so forth.

Tax incentives should play a part also. We have the money, so we should contribute towards the private investment via tax relief, at least until we are able to start pumping out 50k + homes per annum.

Ideally those people borderline affordability should be given discretionary help to keep people in full employment but soften that edge between whether they can manage to do without a subsidy to afford a property or not .

People could argue that this is inflationary but it is important that people do not feel that work is not worth it . They are also tax payers.

This discretionary subsidy is used in other areas like GP visit card, medical card for some longterm illnesses .

No reason why it could not be stretched to housing and rent subsidies.

The Squeezed Middle needs to be cut a break!

Would love to shift the tax code away from income to land. I would accept a moderate degree of income tax cut if we jacked up taxes on the land tax side. People who earn 50k who have a house are an entirely different world from people who have 50k who do not, regardless of how they've acquired that house.

We need to seriously increase taxes on land to stop folk sitting on land, and take into account the privileges having a house in Dublin gives you, even a mortgaged one.

Lots of flaws with that idea. There are a lot of people in Dublin that are asset rich via increased property prices but low income. Lots of people made sacrifices to be able to afford a property and effectively this would punish them and reward those who spent badly. People that used inheritance paid tax on it and effectively you want to tax them again on that because the bought property rather than spent it.

Then you also have to ignore the cost difference of labour in Dublin for construction costs along with insurance.

Overall your idea suits you and ignores the reality of people that aren't you because you want to take from them. It would not surprise me if you are annoyed when people buy in a rural location with the earnings they made in high paying jobs in Dublin.

People who are asset rich and cash poor are still asset rich. They have options to free up that equity. They can get loans using their high value asset as collateral and get a very good income for the rest of their lives.

I would say the status quo suits you and ignores the reality of people that aren't you. People who are asset rich shouldn't be exempt of the rules simply because they don't have much income - they choose not to have the income, they have the option of leveraging their asset for an income.

At the end of the day, wealth is wealth. And an expensive house in Dublin city is wealth, whether you are a doctor, tech bro, or an OAP. All 3 should be taxed equally on their wealth.

I'd love to see you calculate that out and realise what you are saying doesn't make any sense. How much can you borrow and not pay back to have income from to keep you going? How many years is it going to keep you going?

I am pretty sure the constitution applies to your family home to prevent a law not in place currently. There are no rules as you say to be exempt from. We are talking about new way to tax people that is never going to come in and would be extremely unusual in the world.

Tax on income makes more sense. Suggesting people should move or sell their homes (even in part) to avoid a new tax is a pretty dictatorial idea and would never happen here. The suggest to give incentives to older people to down size is met with anger so telling them to do it to survive won't ever happen

Suggesting people should move or sell their homes (even in part) to avoid a new tax is a pretty dictatorial idea

If people are sitting on empty properties when we are in a housing crisis coinciding with the highest level of homelessness in our history, people should be heavily taxed on them. They have the option to rent or sell, if they are choosing to do neither (which is their prerogative) they should be heavily taxed on it.