Government to pursue permanent price/rent increases?

The_Conductor

Thankyou to KomradeBishop for the following:

Good article here, on the dysfunction within the Irish property market, and how Government has a stake (and seems to be actively undertaking policies) in creating an environment of permanently increasing rents and house prices, beyond normal economic headline growth figures (applies mostly, to Dublin):
http://www.progressive-economy.ie/2015/12/nama-part-1-christmas-gift-from-irish.html
http://www.progressive-economy.ie/2015/12/nama-part-ii-in-order-to-solve-housing.html

Much of this effort, would be aimed at promoting the financialisation of the property market here - promoting it as a place for foreign financial investment, not as a place for affordable domestic housing.

Built-in to this apparent policy, seems to be the gentrification of existing population centers - pushing out future generations among the existing population, out to the periphery, so that what is left is more suited to investment/financialization.


This appears to be the New Normal for the property market here - and it will inherently affect the future course of peoples lives, for everybody living in the city - it will also completely redefine peoples relationship, between work and their private life, as this will also act to permanently increase the cost of living relative to wages, for upcoming generations.

It seems as if each successive government - no matter which party - is in thrall to the financial sector including financially-connected property developers, and is actively working against the interests of the public here, in a way which is going to massively harm and raise inequality, against future generations - and doing that, in a very direct way.

It seems to be a very direct and changeable policy choice with how e.g. NAMA is run (which can be turned around and used to promote affordable and social housing, catering to the domestic market, instead of to foreign investors), but the governments deliberate role in choosing this current course, doesn't seem to be anywhere near the focus of discussion in any media - yet it's critically important, and will affect everyone looking to live in Ireland (primarily Dublin) in the future.

KomradeBishop

Ah cheers, didn't expect to post up for me; ta!

The_Conductor

Government to pursue permanent price/rent increases?

The finance minister's backing of the 2015 Central Bank mortgage rules doesn't fit in with the headline, unless it's a headline for Dublin?

The_Conductor wrote: »

........ but the governments deliberate role in choosing this current course, doesn't seem to be anywhere near the focus of discussion in any media - yet it's critically important, and will affect everyone looking to live in Ireland (primarily Dublin) in the future.

KomradeBishop

The mortgage rules don't operate in isolation, on determining the direction of price/rent - keeping affordable housing scarce, through encouraging financialization of the property market (i.e. promoting an environment for investors coming in to disproportionately snap up property to be put up for rent and speculation) and the mechanisms described in the article (downplaying development of affordable as well as social housing), will do that despite central bank rule changes.

KomradeBishop

KomradeBishop wrote: »

The mortgage rules don't operate in isolation...........

True, so too, NAMA don't control all the property. The articles are Rory Hearne's opinion, nothing more. Presumably that's you.

KomradeBishop

That's a non-sequitur - what you replied has no relation to what you've quoted, and nobody said that about NAMA. No, I'm not Rory Hearne.

cerastes

Doesnt surprise me, but who is driving this? individuals and party's

KomradeBishop

KomradeBishop wrote: »

That's a non-sequitur - what you replied has no relation to what you've quoted, and nobody said that about NAMA...........

Ok, I'll simplify. The government (represented by the minister for finance) backed the CB mortgage rules which are preventing price increases.

The articles are focussing on the government favouring outside property investors to buy up the NAMA stock.

KomradeBishop

Augeo wrote: »

Ok, I'll simplify. The government (represented by the minister for finance) backed the CB mortgage rules which are preventing price increases.

The articles are focussing on the government favouring outside property investors to buy up the NAMA stock.

As I said in my previous post, the mortgage rules don't operate in isolation, on house prices - they don't prevent price increases, they try to prevent overlending.

The mortgage rules are pretty much a red herring. Government can make the mortgage rules more strict, while also creating property market policies/conditions (a move towards financialization of the property market) that cement-in permanent gentrifying-levels of price/rent increases.

Clair de Lune

Speculative price increases.. We all know what eventually happens.

Even if they get away with doing this, and prices in Dublin go insane and beyond reach of average income people who is going to buy/rent them? There's only so many wealthy foreigners who will relocate here. I have already seen effects of this in Dublin based software companies. Where normally they would attract talented foreign engineers to relocate here even when offered attractive salary packages, the cost of buying/renting in Dublin is too high so they relocate to a country where their salary isn't obliterated by accommodation costs. The point I am trying to make is, extortionate house/rent prices require a market to maintain the price levels. If the market is just speculators and REITs, it will go pop eventually.

KomradeBishop

KomradeBishop wrote: »

As I said in my previous post, the mortgage rules don't operate in isolation, on house prices - they don't prevent price increases, they try to prevent overlending.

The mortgage rules are pretty much a red herring.........

The mortgage rules are quite obviously not a red herring and also are preventing house prices from increasing my making it more difficult to out together the deposit.

The mortgage rules have more of an impact on the property market than the ramblings in the OP.

Clair de Lune

Augeo wrote: »

The mortgage rules are quite obviously not a red herring and also are preventing house prices from increasing my making it more difficult to out together the deposit.

The mortgage rules have more of an impact on the property market than the ramblings in the OP.

I think the impact isn't as strong when nearly 50% of transactions in 2014 were from cash buyers. Then another chunk of a % from 2nd/3rd/4th time buyers who are selling a lesser value home to finance their new home. Does anyone have recent statistics for what % of market are FTBs?

Clair de Lune

Clair de Lune wrote: »

I think the impact isn't as strong when nearly 50% of transactions in 2014 were from cash buyers. Then another chunk of a % from 2nd/3rd/4th time buyers who are selling a lesser value home to finance their new home. Does anyone have recent statistics for what % of market are FTBs?

2014/2015 would have seen a late surge in investment with the CGT exemption that just expired.

Going forward the CB rules will be more controlling on the market.

OfflerCrocGod

Clair de Lune wrote: »

The point I am trying to make is, extortionate house/rent prices require a market to maintain the price levels. If the market is just speculators and REITs, it will go pop eventually.

A lot of pain can be caused before it pops though, just look at London.

KomradeBishop

Clair de Lune wrote: »

Speculative price increases.. We all know what eventually happens.

Even if they get away with doing this, and prices in Dublin go insane and beyond reach of average income people who is going to buy/rent them? There's only so many wealthy foreigners who will relocate here. I have already seen effects of this in Dublin based software companies. Where normally they would attract talented foreign engineers to relocate here even when offered attractive salary packages, the cost of buying/renting in Dublin is too high so they relocate to a country where their salary isn't obliterated by accommodation costs. The point I am trying to make is, extortionate house/rent prices require a market to maintain the price levels. If the market is just speculators and REITs, it will go pop eventually.

Such a market wouldn't build up to one single bubble and then pop, it would be cyclical - and in each cycle, the overall market will shift further and further to investment rentals rather than homeownership, and each cycle will result in an increase in gentrification as lower wage levels are pushed out.

What you describe isn't a self-limiting situation, it's something that will re-occur cyclically, worsening the problems described in the OP every cycle.

BoltzmannBrain

Nothing changes!

KomradeBishop

Augeo wrote: »

The mortgage rules are quite obviously not a red herring and also are preventing house prices from increasing my making it more difficult to out together the deposit.

The mortgage rules have more of an impact on the property market than the ramblings in the OP.

You're ignoring what was posted now - you cut off the exact part of my post, which explains how the mortgage rules are a red herring. Please quote my posts in full, do not chop up the quotes.

You can have increasing housing prices, along with the increased mortgage restrictions - and this is the third time I've had to point that out to you - mortage restrictions are a downward force on prices, but they do not prevent house prices from increasing, as they can be overpowered by upward forces on house prices (such as the lack of supply of houses).

antoinolachtnai

How can house prices go up if there is no money to drive them up?

If it is possible, it is good news because it means that developers will continue to enter the market and build homes even though the purchasers can't borrow the money.

You appear to be opposed to building high quality housing and would prefer lower quality, less expensive housing to be built instead. I have some sympathy with this view as do many developers.

Marcusm

KomradeBishop wrote: »

Such a market wouldn't build up to one single bubble and then pop, it would be cyclical - and in each cycle, the overall market will shift further and further to investment rentals rather than homeownership, and each cycle will result in an increase in gentrification as lower wage levels are pushed out.

What you describe isn't a self-limiting situation, it's something that will re-occur cyclically, worsening the problems described in the OP every cycle.

I'm unsure what you mean by the "financialization"?; do you mean an increase in the number of non owner occupiers? Frankly, the population increase in Ireland and particularly in the Dublin area could have benefited from decent "financialization" 15 years ago. The lack of a long term supply of decent rental stock facilitating family development and growth was one of the features of the "property ladder" focused topsy turvy growth and contraction in the Irish property market. Long term financial investors, particularly pension funds and life insurance companies, are ideal in that they are focused on stable revenues rather than price growth and instability. Had the Irish Estates arm of Irish Life continued building up a stock of rental developments (such as the Mespil Estate) and focused on managing that for Irish pension funds, i suspect that there would have been better alternatives for mid 20 somethings than heading to the suburbs for the 2/4 bed semi that they didn't really want or expect to stay in for long.

Large scale investors, such as Kennedy Wilson, will hopefully turn into lng term investors and permit the development of a stock of long term rentals in Dublin (especially) which would likely provide stability (including the achievable portion of AK47's ludicrous rent certainty). Decrying all financial investors is a silly activity.

Villa05

antoinolachtnai wrote:

How can house prices go up if there is no money to drive them up?

There is always money. The lack of supply means only the wealthiest can buy, thereby house prices reflect what the top income earners earn.

beauf

antoinolachtnai wrote: »

How can house prices go up if there is no money to drive them up?

If it is possible, it is good news because it means that developers will continue to enter the market and build homes even though the purchasers can't borrow the money.

You appear to be opposed to building high quality housing and would prefer lower quality, less expensive housing to be built instead. I have some sympathy with this view as do many developers.

Lack of supply will drive it up.

There is a huge issue of poor quality housing not built to standards at all price points. Rushing to build just repeats this cycle. As does building smaller unsuitable units for the market. The only people it suits are the developers and bankers. It's all about the profit for them.

Nana and by extension the govt have held back property that could have been used for social housing. The policy has been to maximise return for the banks.

There's been very little done to actually house people. Or keep them in their homes.

There's certainly an agenda. But its been going on a lot longer than the change in mortgage rules. Foreign or domestic investor it's all the same.

FG are no different to FF. Might even end up being worse in the long run. But is there really any quality alternative. The other parties seem equally self serving. There is no political will among politicians or the general population for change. Or unions.

Villa05

Intresting angle in todays Sindo relating to a NAMA sale

Located next to the Luas stop at the Square shopping centre and immediately adjacent to Tallaght Hospital, the apartment complex consists of 161 one-bedroom, 237 two-bedroom and 44 three-bedroom units in 13 blocks..........
With real estate sources ascribing an estimated value of €40m to the portfolio's commercial space and car park, based on a price of €200 per square foot, the 442 apartments are effectively being sold for an average of just €100,000 apiece - or some €90,000 less than the modular homes proposed as part of the Government's solution to the housing crisis.

Could there be a scheme initiated where low income couples/families living and working in Dublin be given the opportunity to purchase these.

Could they stay in state ownership, Surely the state is not that incompetent that they could make a loss on the rent roll derived from these buildings.

Why is the state paying twice the price on temporary structures while opportunities like these are under their nose

snubbleste

Eh, there is no question. Everyone knows the Govt wants cost of housing to rise
Michael Noonan wants prices to rise 09/04/2014

The_Conductor

Villa05 wrote: »

Could there be a scheme initiated where low income couples/families living and working in Dublin be given the opportunity to purchase these.

Could they stay in state ownership, Surely the state is not that incompetent that they could make a loss on the rent roll derived from these buildings.

Why is the state paying twice the price on temporary structures while opportunities like these are under their nose

One of the core problems here- is local authorities were encouraged to divest themselves of residential properties- on the presumption that people, in general, would be able to house themselves in future- without the need for a costly stock of housing to be held on the books of local authorities.

This 'right-to-buy' has never been overturned (Scotland recently overturned their automatic right to buy for precisely this reason).

What the government pays for properties- is irrelevant- if you're going to give people the right to remove them from the system.

We don't have a current plan in place- sure NAMA will commence delivery of apartments in 2016 etc- however, other than as a good press release- the numbers of properties is only a small proportion of those needed.

The current government's days are numbered- its entirely forseeable that Minister Kelly will pull some sort of a rabbit out of a hat to try to look like hes got a grasp on things.

At the moment- we are getting sticking plaster responses to core issues- booting actually dealing with them further and further down the road.

Its a game of balancing acts- do we put a billion in social housing- and take it from infrastructure investments- or the HSE? Its a real Old Mother Hubbard went to the cupboard game. Noonan et al. have been telling us we're a great little country- and we're recovering nicely- look, sales of all manner of luxury goods have never been so good. He reaffirmed an inflation target of 2.0% recently- and enthusiastically said its foreseeable that we'll meet it in 2016-2017. Yet- only certain segments of the economy are motoring ahead- happy days if you work in IT or pharmaceuticals.

It sounds like Noonan wants to have his cake and eat it- i.e. he wants prices to increase- but he also wants an increase in supply- to chase a new equilibrium.

The big problem with that approach- is what sane lending institution is going to lend money to a developer in Ireland- when we still haven't dealt with the carnage of the bust- fully 10 years later...........

There is no end-sum game- its a simple exercise of booting any unfortunate events down the road as far as possible, and as often as necessary. Worse case scenario- we have a new government- and they blithely point at the actions (and inactions) of the preceding administration- and play a game of 'blame someone else'...........

I honestly do not see any Irish politicians having the balls to tell it honestly as it is- and spell out the possible courses of action to the electorate. And don't get me started about Referendums........

I Am The Law

The_Conductor wrote: »

We don't have a current plan in place- sure NAMA will commence delivery of apartments in 2016 etc- however, other than as a good press release- the numbers of properties is only a small proportion of those needed.

I agree 100% that there is no plan in place, KomradeBishop would need to consider this as he gives the current government far too much credit for any type of forward thinking.

But I must ask who is "We" in the above quote? We the citizens of this country have no say in any plans that may or not be in place. The upcoming election will not give us chance to decided either.Try to ask the gombeen politician who knocks on your door to give you his/her policy on housing.

As with all problems in Ireland "we" just hobble from election to election and never really fix anything.

athtrasna

There's a fine line between the politics forum and A&P on this issue. Can we take care not to cross it please.

Marcusm

Villa05 wrote: »

Intresting angle in todays Sindo relating to a NAMA sale



Could there be a scheme initiated where low income couples/families living and working in Dublin be given the opportunity to purchase these.

Could they stay in state ownership, Surely the state is not that incompetent that they could make a loss on the rent roll derived from these buildings.

Why is the state paying twice the price on temporary structures while opportunities like these are under their nose

65 of the units on this site have been transferred to social housing via Tuath. It's been publicly stated that SDCC rejected the offer to acquire the properties for social housing in its entirety as that is not consistent with its housing plans, ie no 100% housing developments.

I suspect also an issue must arise as to the suitability of the build for low income housing - it looks like a fairly maintenance heavy development requiring significant Mgt charges and sinking funds.

antoinolachtnai

Changing the ownership of housing stock does absolutely nothing to increase he housing stock.

Clair de Lune

athtrasna wrote: »

There's a fine line between the politics forum and A&P on this issue. Can we take care not to cross it please.

They are 2 fairly intertwined issues, hard to discuss government's housing policies without mentioning the government..no?

KomradeBishop

KomradeBishop wrote: »

....... the mortgage rules are a red herring.........

.......... mortage restrictions are a downward force on prices.......

Indeed they are, and as they are government backed it seems that Government to pursue permanent price/rent increases is not 100% what's going on, that is the thread title with a ? after it.

The topic is to debate that point presumably, my view is that they are not pursuing permanent price/rent increases to a degree that would be problematic. Thus they are backing the CB rules. Perhaps you don't like debate, you seem a tad dictorial.

As you said yourself mortgage restrictions are a downward force on prices so they are not a red herring You can't seem to see this.

athtrasna

Clair de Lune wrote: »

They are 2 fairly intertwined issues, hard to discuss government's housing policies without mentioning the government..no?

It's the language being used that crosses the line.