2021 Irish Property Market chat - *mod warnings post 1*

RichardAnd

Ozark707 wrote: »

No change in policy coming even though housing minister is personally against what is happening.



https://www.independent.ie/irish-news/politics/housing-minister-darragh-obrien-doesnt-approve-of-cuckoo-funds-which-buy-up-housing-in-bulk-but-wont-ban-them-40385146.html

Could O'Brien do anything about it even if he wished to? The state as a whole seems to be very, very eager to encourage investment funds' buying of property. Most likely, these funds comprise a lot of state pensions...

timmyntc

RichardAnd wrote: »

Could O'Brien do anything about it even if he wished to? The state as a whole seems to be very, very eager to encourage investment funds' buying of property. Most likely, these funds comprise a lot of state pensions...

State pensions yes, but not the Irish state.

RichardAnd

timmyntc wrote: »

State pensions yes, but not the Irish state.

But how do we know to what end an investment fund is directed?

Wanderer78

timmyntc wrote: »

Because the Irish wild-west property market would have been solved if the state just kept on deficit spending instead? I dont think so.

we keep defaulting back to a credit fueled economy to resolve our most critical issues, particularly in relation to our property needs, its obviously not going to work, the fire sectors(finance, insurance and real estate) approach to running an economy is failing, and not just here in ireland. we must try break this positive feedback loop, by moving more towards a deficit run economy, similar to what america is doing right now, as this approach is just causing our credit fueled boom bust cycles.

Hubertj wrote: »

“Mandatory hotel quarantine”, not the thread to discuss it but I was linking it to recovery in hotels/tourism as well as immigration. Embarrassing to this country.

if this is not the thread to discuss it, why mention it in the first place?

Hubertj

Wanderer78 wrote: »

we keep defaulting back to a credit fueled economy to resolve our most critical issues, particularly in relation to our property needs, its obviously not going to work, the fire sectors(finance, insurance and real estate) approach to running an economy is failing, and not just here in ireland. we must try break this positive feedback loop, by moving more towards a deficit run economy, similar to what america is doing right now, as this approach is just causing our credit fueled boom bust cycles.



if this is not the thread to discuss it, why mention it in the first place?

It was relevant in that it has a significant negative impact on Ireland’s ability to attract tourists going forward. Also impacts immigration - direct experience of it where I work in terms of new employees.

I didn’t want to get into a discussion about the infringement of people’s human rights by locking them up or the fact that it is a load of populist bollo* that has damaged Ireland’s reputation.

Wanderer78

Hubertj wrote: »

It was relevant in that it has a significant negative impact on Ireland’s ability to attract tourists going forward. Also impacts immigration - direct experience of it where I work in terms of new employees.

I didn’t want to get into a discussion about the infringement of people’s human rights by locking them up or the fact that it is a load of populist bollo* that has damaged Ireland’s reputation.

so you can mention it, but others cant? we ve had no choice to bring in quarantine, this is very obvious why!

ireland is not the only country currently engaging in this, again, its obvious why!

timmyntc

Wanderer78 wrote: »

we keep defaulting back to a credit fueled economy to resolve our most critical issues, particularly in relation to our property needs, its obviously not going to work, the fire sectors(finance, insurance and real estate) approach to running an economy is failing, and not just here in ireland. we must try break this positive feedback loop, by moving more towards a deficit run economy, similar to what america is doing right now, as this approach is just causing our credit fueled boom bust cycles.

So you cannot answer my question, and instead repeat the same nonsense you've been spouting in this thread ad nauseum.

And no America is not moving to a deficit run economy - otherwise why would they try and justify their post covid stimulus plan with tax increases on corporations to raise revenue to fund those measures?

Wanderer78

timmyntc wrote: »

So you cannot answer my question, and instead repeat the same nonsense you've been spouting in this thread ad nauseum.

And no America is not moving to a deficit run economy - otherwise why would they try and justify their post covid stimulus plan with tax increases on corporations to raise revenue to fund those measures?

which question is that?

america wont be able to balance their 2 trillion stimulus with corporation tax, that was probably just used to shut up the deficit hawks, the majority of that debt will probably sit on their balance sheets long term, and it ll probably just all be fine

Geuze

Wanderer78 wrote: »

So the alternative is, reduce the public money supply, the deficit, become largely reliant on the private sector money supply, credit, and add in a regulator that's either asleep at the wheel or..... What could possibly go wrong!

You contend that as public fiscal deficits fall, then the money supply falls.

This is a false contention.

During the years 2015-2019, the budget deficit fell here, as the economy prospered.

The money supply did not fall.


Separately, if you are calling for more supervision of the growth of loans/credit, to prevent a repeat of the previous credit bubble, yes I agree with you.

Wanderer78

Geuze wrote: »

You contend that as public fiscal deficits fall, then the money supply falls.

This is a false contention.

During the years 2015-2019, the budget deficit fell here, as the economy prospered.

The money supply did not fall.


Separately, if you are calling for more supervision of the growth of loans/credit, to prevent a repeat of the previous credit bubble, yes I agree with you.

its important to realise how the economy 'prospered', and did it really?

a significant proportion of the money supply came from the private sector, in the form of credit, yes i know, our private debts reduced, but globally it rose, who borrowed, but of course large businesses, corporations and institutions, etc, where did they send some of this new credit, but of course, tax havens such as ireland!

our public and private sector money supply, credit and deficit, fell, but since we re an open economy, and have a relatively free movement of capital(credit), we 'prospered'!

timmyntc

Wanderer78 wrote: »

which question is that?

america wont be able to balance their 2 trillion stimulus with corporation tax, that was probably just used to shut up the deficit hawks, the majority of that debt will probably sit on their balance sheets long term, and it ll probably just all be fine

You implied that state deficit spending would somehow have prevented the Irish property market from collapse. When questioned on it you did not answer the question and instead replied with some pseudo economic theory about the money supply drying up if any state debts are repaid (which is untrue)

The US will be fine because it's in everyones interests for the US to do well. The Chinese need them to buy their mass produced goods, and also China holds massive amounts of US debt - if the US were to default it would hurt them hugely too - thats why it is never going to happen. The US have their own currency, global reserve used for all kinds of commodity trading incl oil - and as they control the USD they can manage their debts accordingly.

That said - they are still not moving to a permanent deficit run economy.


Anyways Ireland is a million miles away from the US situation. If anything Ireland is closer to that big deficit spending trailblazer that is Zimbabwe than we are the US :pac:

Ozark707

RichardAnd wrote: »

Could O'Brien do anything about it even if he wished to? The state as a whole seems to be very, very eager to encourage investment funds' buying of property. Most likely, these funds comprise a lot of state pensions...

They certainly do. Whether he can do anything about it is debatable but as he is the minister responsible then if he can't then no one can you would suspect. He has come to the role promising to sort out the housing crisis. I guess that means get as many places built as quickly as possible and to hell with the costs to the state or if it pushes the price of housing up for others who are outside of state supports.

Wanderer78

timmyntc wrote: »

You implied that state deficit spending would somehow have prevented the Irish property market from collapse. When questioned on it you did not answer the question and instead replied with some pseudo economic theory about the money supply drying up if any state debts are repaid (which is untrue)

The US will be fine because it's in everyones interests for the US to do well. The Chinese need them to buy their mass produced goods, and also China holds massive amounts of US debt - if the US were to default it would hurt them hugely too - thats why it is never going to happen. The US have their own currency, global reserve used for all kinds of commodity trading incl oil - and as they control the USD they can manage their debts accordingly.

That said - they are still not moving to a permanent deficit run economy.


Anyways Ireland is a million miles away from the US situation. If anything Ireland is closer to that big deficit spending trailblazer that is Zimbabwe than we are the US :pac:

nope, thats not what i said at all, the crash was due to multiple train wrecks coming together, but we have to stop running our economies primarily on credit, its just causing credit fueled booms and busts.

once again, deficits are the public entity of the money supply, potentially the safer of the two, the other being the private sector money supply, the credit supply.

america doesnt need to default, as you said, its the reserve currency, all it needs to do is print more of the stuff, a 2 trillion stimulus, sounds like a deficit to me!

ah i was waiting for it 'zimbabwe', oh the humanity! us adults have moved on from this one to folks, we re a part of the eu, in which cannot afford a single country to crash, or it may face an overall union crash, plough on with the deficit their lads!

Graham

Mod Note

ok folks, I think we're heading way into the weeds here. Please take the economic theories discussion to the appropriate forum.

Do not reply to this post.

timmyntc

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cruizer101

Another housing estate bought in full by investment firm without private purchasers getting a look in.

https://www.irishtimes.com/news/politics/investment-firms-buy-estate-of-112-new-houses-in-dublin-to-rent-out-1.4554949

Something needs to be done about this, and soon, we're going to end up with massive amount of houses privately rented and government having to pay HAP for them because where people could have afforded the mortgage repayments they won't be able to afford the rent.

selassie

The optics of these investment firms buying up potential FTB family housing is horrific for the government. How they're not rushing through legislation to stop it is mind boggling. Single digit FF polls on the horizon.

RichardAnd

selassie wrote: »

The optics of these investment firms buying up potential FTB family housing is horrific for the government. How they're not rushing through legislation to stop it is mind boggling. Single digit FF polls on the horizon.

Bear in mind that about 70% of the population own property. If you're a home-owner, it's more than likely that you would wish your property's value to increase in the event that you need to sell it or simply want to move.

Another thing to consider is that the state itself seems very keen to allow these investment funds to operate here. The government is merely a group of elected officials who come and go; the state itself is a massive entity that doesn't change much from one election to the next. Even if a minister wanted to legislate against this kind of thing, there would likely be an army of civil servants and interests groups who would advice against it.

To me, there seems to be a long term plan to move the population away from ownership of property into rental. This seems to be happening in other Western states too. Why they would want to do this? Well we may each draw our own conclusions.

Timing belt

<SNIP>

C14N

selassie wrote: »

The optics of these investment firms buying up potential FTB family housing is horrific for the government. How they're not rushing through legislation to stop it is mind boggling. Single digit FF polls on the horizon.

I'm going to sound like a broken record, but again I think a Land Value Tax would go a huge way to alleviate this kind of thing. These firms are buying up massive amounts of housing because it is a lucrative speculative investment that is sure to increase greatly in value. If the underlying land was heavily taxed on an annual basis this just wouldn't be the case, while at the same time it wouldn't disincentivise actually building things on the land.

timmyntc

RichardAnd wrote: »

Bear in mind that about 70% of the population own property. If you're a home-owner, it's more than likely that you would wish your property's value to increase in the event that you need to sell it or simply want to move.

Another thing to consider is that the state itself seems very keen to allow these investment funds to operate here. The government is merely a group of elected officials who come and go; the state itself is a massive entity that doesn't change much from one election to the next. Even if a minister wanted to legislate against this kind of thing, there would likely be an army of civil servants and interests groups who would advice against it.

To me, there seems to be a long term plan to move the population away from ownership of property into rental. This seems to be happening in other Western states too. Why they would want to do this? Well we may each draw our own conclusions.

Government revenues go up as house prices go up.
Hedge funds buying property keeps property prices high.
Why would they stop it?

It sure isnt in the publics interest, but it is in the state's interest to keep prices up.

Just as it's hard to cut state spending, its also hard to cut state revenues.
Falling property values mean tax revenues falling.

C14N

timmyntc wrote: »

Government revenues go up as house prices go up.

How do you figure on this? Why would the government get more money from increased house prices? I know we have a local property tax, but it's done by the councils and is quite small and I can't imagine it contributes a significant amount of the overall budget. I know stamp duty is collected too but this would be more likely to favour a large number of sales rather than sales at an increased value since it is only 1% of the price of the sale (e.g. they would collect more on two sales of €300k houses than one sale at €500k).

timmyntc

C14N wrote: »

How do you figure on this? Why would the government get more money from increased house prices? I know we have a local property tax, but it's done by the councils and is quite small and I can't imagine it contributes a significant amount of the overall budget. I know stamp duty is collected too but this would be more likely to favour a large number of sales rather than sales at an increased value since it is only 1% of the price of the sale (e.g. they would collect more on two sales of €300k houses than one sale at €500k).

As prices go up due to demand and shortage of supply, you would expect a higher volume of sales anyways - all the demand makes it more profitable for developers who will build more.

It does make it more difficult to "get on the ladder" as a FTB - but for people trading up/down the increased house prices dont have as much of an effect because its all relative.

I guess the state might think that the reduction in sales from FTB are more than made up for by sales from REIT and similar.


Personally I think its madness - just trying to rationalise why the state would allow the market to work the way it is right now.

RichardAnd

timmyntc wrote: »

Government revenues go up as house prices go up.
Hedge funds buying property keeps property prices high.
Why would they stop it?

It sure isnt in the publics interest, but it is in the state's interest to keep prices up.

Just as it's hard to cut state spending, its also hard to cut state revenues.
Falling property values mean tax revenues falling.

More money into the state's coffers means more pay and pensions. Does the state even serve the interest of its citizens? I'm not so sure.

Ozark707

selassie wrote: »

The optics of these investment firms buying up potential FTB family housing is horrific for the government. How they're not rushing through legislation to stop it is mind boggling. Single digit FF polls on the horizon.

If they were able to point to reducing rents as a result would be one thing. But this is the worst of both worlds, take away supply from buyers while the units which do come on stream for rental are out of the reach of all but the top few.

C14N

timmyntc wrote: »

As prices go up due to demand and shortage of supply, you would expect a higher volume of sales anyways - all the demand makes it more profitable for developers who will build more.

It does make it more difficult to "get on the ladder" as a FTB - but for people trading up/down the increased house prices dont have as much of an effect because its all relative.

I guess the state might think that the reduction in sales from FTB are more than made up for by sales from REIT and similar.


Personally I think its madness - just trying to rationalise why the state would allow the market to work the way it is right now.

I'm not so sure that increased prices necessarily follow from increased volume of sales. I'm not a homeowner but I imagine if I was I might be reluctant to try and sell at a time when prices are rising and it's so hard to buy anything due to how competitive the market is. I think I'd be inclined to sit tight until things were more stable. The demand is high, but when supply is low there just can't be that many transactions.

My belief is that the government allows this to happen becuase it's kind of a majoritarian mindset. People will often allege malicious causes like corruption (cronyism with developers and investment funds, or taking money under the table) or because some large percentage of TDs are landlords, but I think it's more down to the fact that a majority of Irish adults do own property and want the government to protect their biggest investment. Things like higher-density housing developments and land/site value taxes would negatively impact the value of those investments, which would be very unpopular.

Villa05

timmyntc wrote:

Government revenues go up as house prices go up.

How did you come to that conclusion with the state the renter of last resort

Villa05

C14N wrote:

I'm not so sure that increased prices necessarily follow from increased volume of sales. I'm not a homeowner but I imagine if I was I might be reluctant to try and sell at a time when prices are rising and it's so hard to buy anything due to how competitive the market is. I think I'd be inclined to sit tight until things were more stable. The demand is high, but when supply is low there just can't be that many transactions.

Bang on the money, you have a house you sit tight because you can see that renters are being crucified, even if there are clear benefits to you in up/down sizing.
The property market is a casino in the most basic of needs

Sweet.Science

selassie wrote: »

The optics of these investment firms buying up potential FTB family housing is horrific for the government. How they're not rushing through legislation to stop it is mind boggling. Single digit FF polls on the horizon.

They dont even need to rush through legislation . Just stop entering long term leases with these investment firms . Its crazy whats going on

yagan

I think today was something of a watershed moment. Even if they're comfortable in their own homes they can see the government is absolutely useless to protect the national interest for future generations.

A snap election feels closer with every week.