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

"inevitably the property market collapses"

thus every taxpayer funded policy measure should be on the supply side easing property price inflation and minimising the damage of the collapse

"The CEO of Hines basically described this as the public demanding Mercedes standards for all and as such it requiring Mercedes funding for all."

The CEO is talking BS, the majority of FTB are purchasing 2nd hand homes negating your FTB grant point and all demand side government interventions. If the public were demanding "mercedes" standards this would not be happening. I'm pretty sure you understand that our young adults are not holding out in there parents box room untill there mercedes standard apartment is built, they want affordable options that match each life stage needs.

Current housing policy will always take us further and further away from that goal ensuring that the damage in the inevitable collapse is maximised

Another way to look at it is that more people are buying their own houses and won't be trapped in a lifelong renters scenario

Seems to be oddly structured, you pay 25% of the sale price of your home to the council plus weekly rent set under the Differential Rent Scheme

No, read again my explanation, this time slowly...

Yep this is the positive. More new home owners.

Although some new owners will be investors who will not rent the property out at all and let the asset price rise in an empty house.

The councils and AHBs will buy some stock.

Yet for the renters who are left in the market its only going to push rent prices up even higher for them.

The market is such a mess at the moment that any change that's introduced will have a consequence as well as a silver lining

Here’s another on viability.

Banks demand 20% down for 1 bedroom apartments. Does this encourage the building of exactly the type of housing typology we need?

You completely missed the point.

No they‘re not. The critical issue people face is getting the money together for a deposit.

I don’t think his actual policy direction supports the idea that he’s trying to protect homeowners wealth at all costs. If anything this admin seems willing to lower house prices if it improves affordability, while pushing for wage growth above inflation, which is already happening. Alot more than Biden managed to achieve.

He also finally realise that affordability is the biggest economic issue right now, and housing is the largest component of that. If his priority were primarily existing homeowners, they would just stick with the Biden era, drunken sailor spending approach, stimulus checks, paused loan repayments, and loose monetary conditions all of which inflate asset prices including housing.

Now its tighter conditions with higher wages, even if that means asset prices, including homes, come down. It's obviouslly really hard to do without a recession. You have to wonder would it just have been better if they had just jacked up interest rates when Trump entered office, similar to Volcker and finally break inflation and get it over with. They knew that house prices had got away from most people forever.

This is a great substack, worth a read on affordability and housing issues, some snippets below. ..

https://substack.com/home/post/p-180058326

When economists celebrate inflation returning to target, they’re celebrating that prices have stopped rising so quickly. They’re not suggesting prices have fallen. A hamburger that cost $8 in 2019 and now costs $11 isn’t going back to $8. That’s the new price. Forever. Nobody lives in a rate. People live in levels.

And different categories experienced radically different inflation. Food prices are up roughly 25% since 2020. Energy costs spiked and partially retreated. But housing - the largest expenditure for most households - underwent a structural repricing that dwarfs everything else. Between 2020 and 2024, cumulative rent increases averaged 24% nationally, but in hotspots like Naples, Florida, rents surged over 60%. Home prices jumped 47%, with the median reaching $420,000.

This is where the hangover becomes debilitating - because housing isn’t just another line item in the budget. It has been the foundation of the American wealth-building model.

That model has cracked. The price-to-income ratio for single-family homes hit 5.0 nationally in 2024 - nearly matching all-time highs from the mid-2000s bubble. In coastal markets like San Jose, homes now cost 12 times the median household income. Homebuying fell to its lowest level in 30 years in 2024, with annual sales of just 4.06 million homes. The share of first-time buyers has dropped to record lows.

What’s emerged is two Americas. Call them Escalator America and Treadmill America. If you owned leveraged assets before the pandemic shock - a home with a mortgage, stocks in a retirement account - you’ve accumulated staggering wealth almost passively. The escalator carried you up. If you didn’t, you now face prices that have permanently reset higher, on wages that have only partially caught up. You’re running on the treadmill, watching the escalator glide away.

The median homeowner now has a net worth of approximately $400,000. The median renter? Just $10,400. That’s a ratio of nearly 40 to 1. According to the Urban Institute’s analysis of Federal Reserve data, this gap has reached historic highs. Over the past 33 years, the median wealth gap between homeowners and renters has increased by 70%. The average gap has exploded by more than 250%.

Consider two neighbors who lived side-by-side in 2019. One bought a modest $300,000 home with 20% down - a $60,000 investment. The other, unable to scrape together a down payment, continued renting. By 2024, that home was worth approximately $440,000, generating $140,000 in equity gain on a $60,000 investment - a 233% return, tax-advantaged, on an asset the owner lives in. The renter watched their rent climb 20-30%, accumulated no equity, and now faces an even larger down payment hurdle to enter the market. Same neighborhood, same years, radically different economic outcomes.The wealth gap between these two groups has exploded to a historic high: the median homeowner is now worth 40 times more than the median renter.

I see this as total hysteria. Living below your means and building up savings, etc., is a skill that pays off. People who didn’t develop it, for whatever reasons, IMHO get what they deserve. I know plenty of people with the same background and pay scale as me who are still renting, going on holiday three to four times a year, or buying fancy cars, which somehow have always taken priority for them.

More specifically, to me this disproportion is driven by choice rather than desperation.