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

Marius34

https://www.boards.ie/discussion/comment/118296575#Comment_118296575

"This time it's different" - for sure it ain't.

The ones who laughed at this phrase comparing 2008 crisis to 2020 got totally wrong. I think it's time to recognize.

Amadan Dubh

https://www.boards.ie/discussion/comment/118296923#Comment_118296923

Firstly, there is no crisis in 2020 or did I miss something? All economic, market and housing metrics showed incredible resilience and growth.

Why would there have been a crash already? We are still deeply entrenched in pandemic mode with unprecedented government and central bank support for the markets and the economy as well as draconian legal rules in place (eg eviction and travel bans, bar codes to enter businesses, limits on socialising etc). Of course there has been no crash as of yet because things are being propped up with absolutely extraordinary State measures. The issue with Evergrande and the global economic contagion risk from the impending Chinese economic crash is that we truly don't know what will happen as we know that globally China is a dominant economic force and the interlinking of economies around the world is a labyrinth so we just don't know what will happen outside of China. But one thing is for sure, that I think so long as you have the State so involved in every aspect of markets, the economy and our lives, things will trickle along a bit longer.

However, there is no orderly unwinding of the State's involvement in markets and the economy post-pandemic, with the problem being too much of a focus on looking back to what the economy was like pre-pandemic and not enough recalibration done to see how we shpuld evolve post-pandemic. What I mean by that is how will we see people being able to pay house prices and rents that are increasing 5-10% per year when there is no additional borrowing capacities introduced? How will investors look to get high commercial rental yields from empty offices in the likes of Dublin City? Where will the "front line economy workers" (ie baristas, delivery drivers, shop assistants, chefs, etc.) live if they can't actually afford to live on the wages these jobs pay? Quite simply, the economy is being strangled by high housing costs and will come to a consumption halt unless we see rapid wage inflation which of course will stoke the inflation flames to unsustainable levels.

Amadan Dubh

https://www.boards.ie/discussion/comment/118296746#Comment_118296746

From what commentators say, a huge part of their GDP is based on activity in the residential property sector. And a lot of Chinese have almost all of their wealth invested in the sector via their own house and in other properties. As in, the average Joe in China is almost fully invested in the property sector for their personal wealth. And a lot of this activity has been funded by debt. We all know what happens when individuals are given easy access to credit which goes into property; risk of a crash dramatically increases.

Some of the stats I've seen are Chinese GDP relies on the sector for around 25% of its activity and new home sales have dropped around 30% each of the last two months.

The big curveball is that we have very little visibility on China and it is a communist country so how will they handle the fallout?

Marius34

https://www.boards.ie/discussion/comment/118297214#Comment_118297214

"Firstly, there is no crisis in 2020 or did I miss something? All economic, market and housing metrics showed incredible resilience and growth."

Tell this to all those crashers here, you missed last years party on here. The property price crash was lagging 1 month, than 3 month, than 6 month, latest was until summer 2021 (end of lockdown)...

Here is the whole wikipedia page about the crisis:

https://en.wikipedia.org/wiki/Economic_impact_of_the_COVID-19_pandemic_in_the_Republic_of_Ireland

Summary. There was crisis in 2008, there was crisis in 2020. And the ones who said "This time it's different" were right.

growleaves

https://www.boards.ie/discussion/comment/118297351#Comment_118297351

When covid first began I was expecting a price crash because I did not fully understand QE yet.

The world economy would have collapsed without the QE anti-gravity machine given the length and totality of the trade embargoes (aka lockdowns).

Fair play to you if you predicted that wouldn't happen and fully understood why not at the time.

hometruths

that transitory inflation is getting stickier and stickier

Inflation jumps to 20-year high of 5.3% as energy prices soar

The combined effect drove inflation to 5.3 per cent on an annualised basis in November, the highest level of price growth recorded since June 2001. That is up from 5.1 per cent the previous month and frm just 0.3 per cent in November last year.

Amadan Dubh

https://www.boards.ie/discussion/comment/118297775#Comment_118297775

If you look up any high yield and/or Asian bond fund factsheets and investor reports, you'll see that the exposure to Chinese entities and the likes of Evergrande in particular, runs into the billions. I looked up a few Irish funds of well known asset managers and counted billions in exposure to bonds of Chinese entities. If what they say is true, these are the bondholders with effectively worthless pieces of paper.

There is another huge contagion risk to crypto from a Chinese real estate crash. In particular to Tether and, by extension, Bitcoin. A lot of younger guys throwing their cash into those retail trading apps to trade cryptos will be taking a bath if they haven't already taken profits. This is an obvious direct hit from the Chinese property crash but I'm sure many of us could anticipate plenty of other areas where there are contagion risks from a crash.

Since this is an Irish property market discussion thread I'll have to tie this into our market in some way; Chinese investors have gobbled up real estate outside of China, to what extent they have bought up Irish properties I do not know but would suspect these properties will be sold over the next few years to shore up cash.

It's a communist country though and the regime seems to talk of the excesses of capitalism as needing to be corrected so it seems that the rich are going to have to take their medicine and the Chinese State won't be bailing out any wealthy parties. This would be so different to how we dealt with the financial crises after 08.

cruizer101

https://www.boards.ie/discussion/comment/118298039#Comment_118298039

Over 5000 mortgages with more than 10 years of missed payments is madness and makes sense why banks are leaving alright.

Could be solved fairly easily too. Do a blitz of repossessions on the worst offenders and you will quickly find many find the means to start making payments where they hadn't been before. As it stands with no penalty they are happy to coast along letting the rest of us pick up the tab.

No one should be able to get to 10+ years of arrears.

Cyrus

https://www.boards.ie/discussion/comment/118299495#Comment_118299495

Repossessions seem to be politically unpaletable for any of our parties for some strange reason. Maybe Renua might have supported it but they didnt last long enough for us to find out!

cnocbui

https://www.boards.ie/discussion/comment/118298838#Comment_118298838

How are thes young crypto investors doing it, as China declared all crypto transactions illegal in September?

MacronvFrugals

https://www.irishtimes.com/news/politics/sinn-f%C3%A9in-now-the-leading-party-of-middle-class-ireland-1.4751410?mode=sample&auth-failed=1&pw-origin=https%3A%2F%2Fwww.irishtimes.com%2Fnews%2Fpolitics%2Fsinn-f%25C3%25A9in-now-the-leading-party-of-middle-class-ireland-1.4751410

Sinn Féin now the leading party of middle class Ireland

Polls are polls but a consistent trend is starting to form, why are the middle classes turning their back on FF/FG?

Amadan Dubh

https://www.boards.ie/discussion/comment/118299851#Comment_118299851

Quite simply, SF, Labour and lefties support will continue to climb at the expense of FF and FG unless housing costs plummet. It's as simple as that and any further analysis is just unnecessary.

These polls are totally unsurprising when you only see house prices and rents going one way, but they have gone so high so quickly that even just stemming further growth isn't enough. I am curious to see how these polls will manifest in the next GE but I think using DBS as a guide, FF and FG will be small opposition parties in the next government - a mammoth change which will transform our political, economic, social and cultural landscape.

Reading this quote, I do not see how FF and FG can recover unless house prices and rents drop significantly.

Perhaps the most intriguing finding from today’s poll is that Millennials, Ireland’s most educated and employable generation, intend to vote for radical change. Among 25- to 34-year-olds, support for all three parties of Government together is at 33 per cent, compared to 47 per cent for Sinn Féin. The expectations of young people in Ireland have been raised, as too has the bar for politicians and our Government.

awec

https://www.boards.ie/discussion/comment/118299906#Comment_118299906

Based on those poll numbers SF will still be depending on FF going in to coalition with them to form a government if an election was held tomorrow. It is still their only realistic pathway to a stable government that can pass a budget.

So I'm not sure where your "small opposition parties" / mammoth change transforming our entire landscape thing is coming from.

Amadan Dubh

https://www.boards.ie/discussion/comment/118299825#Comment_118299825

Crypto investors across the world who only got in during lockdown boredom will be the ones taking a bath. Evergrande/Chinese property sector/Chinese economy/Tether/Bitcoin/wider crypto area - it's all linked in a large way that would appear to have a risk of a house of cards type crash; one triggering the other.

https://www.ft.com/content/342966af-98dc-4b48-b997-38c00804270a

Amadan Dubh

https://www.boards.ie/discussion/comment/118299925#Comment_118299925

DBS election.

One other observation is in relation to FG support among farmers which is its strongest voter base. FG being a party for landowners is clearly the takeaway and again with 80%+ of those under 34 not owning land in the 2016 census, FG would need to fundamentally change its identity to stop the rot

awec

https://www.boards.ie/discussion/comment/118297214#Comment_118297214

This is excellent revisionism.

You go back on this forum to 2020 and there were plenty of posters telling us a crash was happening next month, then the next month, then the next month. Repeat over and over and over again. All the jobs were leaving, nobody was going to live in Dublin any more, the foreign workers were going home, multinationals were on the brink of leaving, Joe Biden was trying to screw us, the tax reforms were going to end us. The next crash was inevitable, if you bought a house in 2020 you were stupid because they'd be half price in 2021. There was always something about to send Ireland back to a feudal state.

It is somewhat odd for you to now sit and say "why would there have been a crash already" when you have been, consistently, one of the posters endlessly contributing to doomsday predictions for a very long time now.

JimmyVik

https://www.boards.ie/discussion/comment/118299949#Comment_118299949

FG made a lot of promises to me on the disgusting amount of tax I pay. None of those promises have been kept.

Amadan Dubh

https://www.boards.ie/discussion/comment/118299962#Comment_118299962

Come back to me when the State doesn't support 1/3 of all leases; come back to me when the ECB, Fed etc. aren't creating money out of nothing and introducing billions of free money into the system each day; come back to me when the Irish government finally removes its pandemic restrictions (i.e. covid passes, paying people to sit at home and do nothing, legal restrictions on businesses trading, mask wearing, travel restrictions, eviction ban etc.).

The amusing thing for me is that people genuinely believe that there should have been some sort of crash in the last 18 months. It is extreme complacency and amateur stuff. Reminiscent of Bertie back in 05/06 and I even think this delusion extends to people thinking there is some sort of "recovery" needed after the pandemic - a recovery from what?

• House prices up 12.4% in the year to September 2021.
• Rents up 8% during the pandemic.
• GDP growth was 3.4% in 2020 was and expected to be 15% in 2021.
• Unemployment stands at 5.2% in November 2021 compared to 4.8% in November, 2019.
• The Irish tax-to-GDP ratio in Ireland only decreased by 1.7 percentage points from 21.9% in 2019 to 20.2% in 2020.
• 2020 saw a 9.5 per cent increase in exports to almost €500 billion, while imports declined by 7.4 per cent. This meant that the value of net exports was €76 billion higher than the previous year.
• Wages up 7.7% in 2020 compared to 2019 and at the end of Q2 2021 they were up 4.1% compared to Q2 2020.

The boom got boomier the last 18 months.

JimmyVik

https://www.boards.ie/discussion/comment/118300405#Comment_118300405

Are we extending out the time of the expected crash again :)

awec

https://www.boards.ie/discussion/comment/118300405#Comment_118300405

Eventually things will crash, and then all the people who've been telling us that a crash is happening next month for the years will try and convince us that they predicted it.

Again, I am not sure why you are saying now that people who were convinced there was going to be a crash in 2020/2021 were complacent or amateur. You were one of them.

cnocbui

https://www.boards.ie/discussion/comment/118298838#Comment_118298838

I see no relevance in that link or any evidence to support your claim. Evergrande may well cause a sentiment crash, in all asset classes, but if it does, I doubt it will be any more long lived than the early 2020 Covid panic crash I took advantage of. As Clinton said, 'It's the economy, stupid' or words to that effect. Currently the US is at full employment with well over a million job openings unfilled.

If I were in China holding crypto, Evergrande would be of low concern compared to the Central bank making crypto <> fiat dealings illegal.

cnocbui

Never, ever reference taxation in Ireland relative to GDP.

https://www.briodys.ie/post/ireland-is-eu-s-least-taxed-member-state

Amadan Dubh

https://www.boards.ie/discussion/comment/118300524#Comment_118300524

The link goes from Evergrande being a risk of the property market in China collapsing which would trigger wider economic woes in China as the property sector contributes a large part to GDP in China. Tether has extended billions in loans to Chinese companies and claims its stablecoins are backed by US dollars, with its stablecoins being traded for bitcoin far more than fiat currency is traded for bitcoin. So a Chinese economic crises would hit Tether which would have knock on effects for bitcoin and the wider crypto industry due to bitcoins status within the industry. Therefore anyone anywhere with some tin in crypto would be exposed to this Evergrande crisis.

Pussyhands

https://www.boards.ie/discussion/comment/118299906#Comment_118299906

I think you'd be surprised about FF/FG.

60% of people own homes in Ireland.

Prices are crazy, but the prices are still being met by buyers. Amongst my friends they've nearly all bought at this stage.

Those who CAN'T buy are in a small minority imo. They may be low wage workers, just out of college a few years, single or seperated with kids.

When you have couples who both work and add in the bank of mam and dad, there's loads of buyers who are able to buy.

You also have a load of immigrants who don't give a damn about Irish politics or who will solve the problem.

I have now learned that online or media orgs only focus on the extremes. Judging by online fora you would think no one under 30 could buy. I listened and felt like that by association. But I wish I didn't as I could have afforded to buy 3 or 4 years ago and I'd have been far better off.

I'm single, rent in Dublin and am on course to save approx 25k this year on a not too far away from median wage. A lot of people have money. And when people buy, they're not going to vote for SF to crash the market and go into negative equity.

Amadan Dubh

https://www.boards.ie/discussion/comment/118300593#Comment_118300593

I have a couple of points on parts of your post;

• Glossing over the immigrants point; if you look at our projected population growth, it is dominated by immigration resulting in the population increasing. What this translates to is firstly that it is an assumption at this stage that our immigration will remain high. If it doesn't then I think today's valuations could have problems sustaining themselves in the future. Another translation from this projection is that immigrants are typically not home buyers and will be renters - so big question is whether, when comparing today's rents to salaries, these rents are sustainable (let alone further increases in rents). The last point on that is on the political engagement by immigrants; if there is a link between their political engagement and those voting for higher house prices well then it is worth raising the possibility that we see more immigrant engagement with our political process and (noting they are typically renters and have no experience with SF's past) I think they would be likely to vote for policies aiming to view the housing market as something that is broken and needs fixing.
• On the young people buying aspect; the CSO from 2016 indicated that approximately 80% of those 25-34 were renters. I'm not questioning your anecdotal experience but just highlighting the bigger picture and in that context it is something worth noting that renters would actively welcome their rent crashing whereas homeowners would welcome their house price increasing. It is such a polarisation that, should the CSO data be relatively accurate, is likely to continue to increase rather than decrease.

Amadan Dubh

https://www.boards.ie/discussion/comment/118300521#Comment_118300521

For me, there shouldn't be a crash in property which would also crash the economy as that was the whole issue with the crash of 2008. The second point is that, by saying "eventually things will crash" it is indicative that you think things are not sustainable so I don't understand why you are seemingly disagreeing with me? It seems you should be largely in agreement but disagree on timing and scale of a crash.

Pussyhands

The housing market is completely dysfunctional though and it's not sustainable.

My Bungalow Bliss has been on two weeks on RTE and each time the couples have found 100-200k extra almost overnight to increase their original budget by.

The couple the last night paid 325k for a house that was uninhabitable.

Inflation is causing a problem. The EU are now changing their views from "transitory" to "it will go on a bit longer than first thought". The problem the central banks have is, for example, the EU are still lending like mad to EU countries at cheap rates for the covid recovery. They almost can't up rates or countries will be crippled paying interest back.

So looks like they're taking a massive risk with inflation that it is "transitory". If we start running at 5/6% annually we're fcuked. All assets will inflate massively. Then there will be no option but to increase rates which will pop the balloon.

Was interesting listening to Robert Shortt, economics correspondent on RTE yesterday. He was saying the inflation was centred on energy and it's not reaching the wider economy yet in terms of wage demands etc. I can tell you from my experience, that everyone is talking about inflation. I am expecting at least 3% wage increase next year and all companies our company deals with are increasing prices.

Look at Three, they brought in a 4% annual increase. This will all feedback into itself and drive inflation up and up.

Wanderer78

https://www.boards.ie/discussion/comment/118299611#Comment_118299611

in order to have a functioning repossession process, we must first have functioning markets, in both the public and private domains, particularly in the public, we currently have neither, in fact its getting worse, so......

cnocbui

https://www.boards.ie/discussion/comment/118300585#Comment_118300585

Ahh, it all becomes clearer now - you are parroting Cramer. It might have been easier to just link to him. There's a lot of ifs in that, like the Chinese government allowing the Evergrande unwind contagion to damage a swathe of Chinese companies. I doubt they will let that happen. The Chinese goverment's aim is to burn the foreign debt holders, not their own.

Villa05

https://www.boards.ie/discussion/comment/118300660#Comment_118300660

If we are after a decade of close to 0% inflation. Is a few years at 5% a disaster.

The problem in Ireland has always been the protected sectors and housing

These are all under our own control and those with the power levers have chosen to use them to the detriment of the general public and the economy and for the benefit of powerful extreme minority vested interests

Pussyhands

https://www.boards.ie/discussion/comment/118300929#Comment_118300929

It is a problem when the whole world is hooked on cheap money.

Remember the last few years we've seen articles stating how there's record deposits in the bank? If you have 0% inflation, that's grand especially if you're a homeowner. Your 100k cash is worth 100k next year. But if inflation is at 5% then your 100k in the bank will essentially have 5k knocked off it's value next year. So those with big deposits are going to spend it. Either building extensions, cars, property, holidays.

Realistically anyways, even though inflation was officially low, housing isn't weighted properly. There's been much higher inflation than official records show. There was some reprieve for people when food, transport, energy was reasonable.

Wanderer78

https://www.boards.ie/discussion/comment/118301082#Comment_118301082

...or will people move their money towards alternatives, revolut, cryptos, precious metals, etc etc etc?

Pussyhands

https://www.boards.ie/discussion/comment/118301116#Comment_118301116

No because investing in anything other than property or through a pension broker is an alien concept for most in Ireland and two, tax structure is not good for investing in them.

Pussyhands

Inflation figures released in the US. A 40 year high.

Amadan Dubh

Delete

Amadan Dubh

https://www.boards.ie/discussion/comment/118300763#Comment_118300763

Cramer, the CNBC hack? My rule of thumb is that taking the opposite of what he predicts gives you a more accurate assessment!

Amadan Dubh

https://www.boards.ie/discussion/comment/118300660#Comment_118300660

There's room left to run - sky's the limit!

https://www.businesspost.ie/houses/dublin-house-prices-to-soar-by-25-per-cent-council-study-finds-99d58790

Dublin City Council commissioned a report recently, published in the media the last few days, showing that there is potential for growth in median house prices of 25% over the next 7 years in Dublin.

"No one saw it coming", IT quoting Owen Keegan in 2024, when confronted with the controversy of the government being on the hook for another 15/20 years for leases that are 130% of what are then current market rents.

"Our reports show that institutional investors are the only source of new housing in Ireland's major cities during 2024, we cannot continue to vilify international investors with emotive language and lynch pieces of political pantomine", Pat Farrell writing in the IT, pre-Budget 2025.

"It wasn't just Ireland that suffered from the pandemic fallout", Leo Varadker shoots back in tetchy exchanges with Mary Lou McDonald in Dail confrontation, October 2024.

"FDI got us out of the 08 crash and we need to go back to the capital markets to bail out the government once again", Pascal Donohue explains as he introduces new tax reforms for foreign capital into the Irish economy as part of his "last chance saloon for FF and FG" with his 2025 Budget.

Marius34

Planning permission for 2021 Q3 are out today on cso.

https://www.cso.ie/en/releasesandpublications/er/pp/planningpermissionsquarter32021/

From my point of view, very disappointing numbers for Multi-Development Houses for this year. Only 700 Units in Dublin County so far this year, 10 times less than apartments.

Apartments overly lower number than last year, but still very strong.

Quite significant increase in once-off houses. Largest increase in counties Donegal and Meath.

hometruths

https://www.boards.ie/discussion/comment/118300744#Comment_118300744

in order to have a functioning repossession process, we must first have functioning markets

Ask yourself which came first? The problems with the repo process or the problems with the market?

hometruths

https://www.boards.ie/discussion/comment/118263416#Comment_118263416

All holiday home stock has to be excluded from calculating available units; because they aren't and never will be active housing supply.

Interesting story in the Examiner: Killarney holiday apartments to be converted into private homes despite objections

Holiday homes. A potential source of housing supply. Who'd have thought it?

Wanderer78

https://www.boards.ie/discussion/comment/118301142#Comment_118301142

....are you sure of that? theres plenty of people starting to move their money towards alternatives in ireland, yes some will indeed invest their money in traditional ways, but i suspect many younger people are moving towards these alternatives, its why i think an increase in use of methods such as negative rates would ultimately fail, as i suspect they already are

https://www.boards.ie/discussion/comment/118301661#Comment_118301661

hard to tell, but could be peas in a pod, both may have occurred together, but now both are creating a positive feedback towards each other, accelerating dysfunction in both

hometruths

https://www.boards.ie/discussion/comment/118301717#Comment_118301717

hard to tell, but could be peas in a pod, both may have occurred together, but now both are creating a positive feedback towards each other, accelerating dysfunction in both

I agree they are now compounding each other, but in my opinion, of all the problems, the softly softly no repo policy is the single biggest cause of the current problems in the housing market.

Wanderer78

https://www.boards.ie/discussion/comment/118301785#Comment_118301785

i somewhat disagree there, the whole thing is a mess, and there doesnt seem to be any real solutions to any of it, we clearly need to ramp up supply, and very quickly, but we dont even know how to do that, so....

again, since theres a serious lack of supply, and no true functioning alternatives, particularly in the public domain, we re simply stuck....

but having functioning repo processes is also critical to have, as dysfunction triggers dysfunctions in financial markets

L1011

https://www.boards.ie/discussion/comment/118301680#Comment_118301680

That's part of a hotel being converted. Not privately held holiday houses.

You still haven't explained how you intend to return privately held holiday houses to the market.

cnocbui

https://www.boards.ie/discussion/comment/118301364#Comment_118301364

https://www.cnbc.com/2021/09/20/cramer-says-take-crypto-profits-cites-evergrande-related-tether-risks.html

Ha, ha...

hometruths

https://www.boards.ie/discussion/comment/118301810#Comment_118301810

It's not part of the hotel. The hotel objected to the conversion!!

L1011

https://www.boards.ie/discussion/comment/118301829#Comment_118301829

Its purpose built rental accommodation on a hotel site. That the hotel owners wanted them kept as that doesn't make it not part of a hotel!

Now, how do you propose to return privately held holiday homes to the market? If you haven't got a workable proposal for this, its absolutely pointless trying to pretend that they can be.

Timing belt

https://www.boards.ie/discussion/comment/118300929#Comment_118300929

If inflation is running at 5% for a few years then houses prices will rise further.

hometruths

https://www.boards.ie/discussion/comment/118301839#Comment_118301839

purpose built holiday rental accommodation that has applied for, and been granted, change of use, and will now become full time residential accommodation. Not a difficult scenario to understand.

not sure how this example is somehow the exception that proves the rule every single holiday home in the country must be excluded from any calculation of potential residential housing supply!

i have no proposal on how to return holidays homes to the market, nor am I trying to pretend anything.

My only point is that it is ridiculous to say all 40,000 holidays homes must be excluded from any calculation of potential future housing supply.

Timing belt

https://www.boards.ie/discussion/comment/118301116#Comment_118301116

Is this not what has been happening with Joe Soap not earning anything with deposits in the bank so they start buying shares and crypto. This in turn pushes prices higher which attracts more Joe Soaps as they see there friends making money..... Add on top funds pushing prices higher and taking profit regularly so that even if the market crashes they don't loose out.