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

I see sheep

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

Of that 60% how many have children and/or grandchildren who either can't afford to buy at all or have to move a long way away to buy?

I don't know any figures on it but it's a lot of people imo, and many will turn their back on FF/FG who obviously have no solutions.

Villa05

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

Those that own holiday homes may choose to live their and sell their current primary residence.

Many were picked up for a pittance during the crash (on my side of the island at least)

L1011

https://www.boards.ie/discussion/comment/118301937#Comment_118301937

One event doesn't prove or disprove anything.

Trying to put holiday home stock down as potential primary residence supply is just trying to fudge numbers. Its just as much - and as little - potential housing as every single field, farm and existing commercial building is potential housing. So not valid to count.

Otherwise you could just make up numbers for potential new builds, potential renovations of derelict and so on.

hometruths

https://www.boards.ie/discussion/comment/118302115#Comment_118302115

Trying to put holiday home stock down as potential primary residence supply is just trying to fudge numbers. Its just as much - and as little - potential housing as every single field, farm and existing commercial building is potential housing. So not valid to count.

Not talking about all holiday home stock, clearly some of it - chalets in wexford for example are not suitable. But to disregard the entire 40,000 properties as unsuitable for primary residences in insane. Some of them were primary residences before they were holiday homes!

The designation of holiday home as per the count, is simply what the owner does with it, not some classification that means it cannot be a PPR. To suggest otherwise is total nonsense.

L1011

https://www.boards.ie/discussion/comment/118302273#Comment_118302273

I've never said they cannot be a PPR. But they aren't going to be. They are no more a potential PPR than an empty field is.

Unless you propose a carrot and/or stick to encourage their sale and prevent the purchase just being for further holiday use

cnocbui

https://www.boards.ie/discussion/comment/118302273#Comment_118302273

My HH was never a PPR and it's in too remote and odd a location to make it a likely candidate as one. Built in 1893, metre thick stone walls, no heating other than open fireplaces that do SFA. The likely cost to turn it into something year round habitable and suitable is probably about the same as to build a modern home from scratch. So that's one off the list.

Holiday homes are often in places which are not ideal as a PPR in modern times.

hometruths

https://www.boards.ie/discussion/comment/118302378#Comment_118302378

Holiday homes are often in places which are not ideal as a PPR in modern times.

For sure, and what is equally true is that holiday homes are often in places that are ideal as a PPR in modern times.

It is one of the reasons why you hear complaints that locals are priced out of a market because rich folk are buying up the houses to use as holiday homes.

And as sure as night follows day a proportion of those 40k properties that are currently categorised as holiday homes, will at some point in the future become PPRs.

And just as sure, some houses that are currently PPRs will at some point in the future become holiday homes.

cnocbui

Have you any evidence that this Irish local needs cráp that has been in place for a good while now, has made housing better available and more affordable for locals?

I no longer believe this one, as the same old complaints are still being made, long after measures were taken to keep f'rners out.

Murph85

These "middle class" voters that SF are attracting, are going to be poverty cases come the next election, with inflation etc. Unless you have the bank of mum and dad to bail you out! I can actually see them having enough to have a majority. FFG cant bring themselves to self harm and do anything about the rip off prices they crave...

The housing situation is going to get a lot worse, its going to totally boil over and explode over the next few years, that is for sure... They are going to have to start doing things non of the parties currently want to do, provide cheaper to construct homes and higher density. The planning system is a farce. This does benefit SF currently, they are running with the hares and chasing with the hounds. If they get a majority, what will their excuse be, to not make inroads into the crisis, and fairly quickly too...

Amadan Dubh

https://www.boards.ie/discussion/comment/118301813#Comment_118301813

To be fair he is saying to take profits which I agree with. Just look at what the rich guys are doing; all selling down billions in equities the last 12 months.

Pussyhands

https://www.boards.ie/discussion/comment/118302021#Comment_118302021

You'd probably be surprised. The amount of money in the country is staggering.

My parents have no money but my uncles and aunts all have lots of money and they gave it to their kids towards a house.

If you're 50 and you have your mortgage paid off or almost, you're earning 2021 wages. Imagine a union electrician on 50k married to a nurse with 25 years experience on 50k.

That's over 70k net into the household in a year with basically 0 mortgage. Even if you spent 250 a week on expenses, that's 12k a year. About 60k left over per year for a fancy car or giving to kids.

The polls largely show homeowners are still voting for FF/FG. Even look at the by election in DBS. Ivana Bacik, who's basically FG got in from a lot of FG voters. If all the elders were worried about their kids affording housing, they'd have voted for SF, which they didn't.

Have a look at the age breakdown in the 2020 election.

35-49: FF/FG take 43% of the vote.

50-64: FF/FG take 45%

Even the 25-34 age group, FF/FG have a bigger vote than SF.

Bass Reeves

https://www.boards.ie/discussion/comment/118304027#Comment_118304027

People from 40 years of age on know there is no such thing as a free lunch. The only way SF can fullfil all there promises is to raise taxes. It the middle of the road couple that will end up paying that.

The real wealthy will go into tax exile. Older people with very good pensions will move to Portugal. If you over tax business it will shut down and shrink.

The idea of a super tax seem good on paper but many businesses will avoid it by limiting drawdowns.

Villa05

https://www.boards.ie/discussion/comment/118304027#Comment_118304027

The person we purchased our home from used the proceeds of the sale to move to a facility that allowed for independent living while having care on call when needed. An excellent service at a reasonable cost at the time

Since that person moved in, the facility has been sold, services have been cut heavily and fees have ballooned.

This is a person that had a good job/career helped develop many more high paying tax units through his children also been successful

Don't be under any illusion that FF/FG boom bust policies are of any benefit to our citizens. Given our healthcare/housing and pensions time bomb. It's the older population that should be most concerned of the direction this country is taking. They may not know it but taxpayers are funding a system that will destroy them and enrich vested interests that dodge tax at every opportunity

Be prepared for complete stripping of your assets to fund a not fit for purpose health system

I see sheep

https://www.boards.ie/discussion/comment/118304298#Comment_118304298

So FF/FG in power for another 100 years. How bleak.

Villa05

A bit of vote buying to add fuel for the fire and sauce for the investment funds

This time its different indeed

https://www.independent.ie/irish-news/three-years-of-tax-cuts-in-bid-to-woo-middle-ireland-41140036.html

Villa05

The developer view from glenveagh, some interesting points.

Note the close alignment between what glenveagh view as positive and Fianna Fail policy. The Galway tent has gone underground

This time it's different, indeed

https://www.irishtimes.com/business/business-podcast/inside-business-interview-glenveagh-properties-ceo-stephen-garvey-1.4750215

Villa05

Following on from newstalks debate that Ireland has become antibusiness

It appears that their sister station has picked up the lantern with their busines reporter Ian Guider singing the praises of investment funds and co living units in both the report linked below but also a debate later in the week plus an article on the Sunday Business post

It's an interesting development as the media were dead against these investment funds initially, even christening the term cuckoo funds. I'm assuming that they'd be unable to fill their lucrative property pages when investment funds become the dominant buyer. Winder what's feeding this sudden change of view

Mmmh Media capture. This time it's different indeed

https://www.todayfm.com/podcasts/the-last-word-with-matt-cooper/site-of-kylies-donnybrook-to-be-redeveloped-into-85-co-living-units

enricoh

a slump in plannings being sought - is it builders turning off the taps to keep housing scarce n pricey or is it uneconomic to build at the mo ?https://www.irishexaminer.com/business/economy/arid-40763604.html

mcsean2163

So there will be a choice between destroying savings or crippling interest rates. The young v the old.

I wonder how long it'll take for China contagion to hit Ireland....

Marius34

https://www.boards.ie/discussion/comment/118306175#Comment_118306175

Commencements increased this year, so to answer your question, I would say neither one or other.

Villa05

https://www.boards.ie/discussion/comment/118301898#Comment_118301898

I'm a bit split on that. House prices are dictated on what's the absolute maximum one can extract out of a tennant/purchaser rather than the actual cost of provision. Its like a mafia business

If purchasers and especially tennants have to pay more for other essentials, less is available for rent

One may argue that if inflation is at 5% wages will rise by 5% however a 5% rise in wages only amounts to 2.5% when the tax man is finished with it

Also wage inflation may be lower in the low to middle income range and this is where the majority of renters are pulled from

Escalating rents and low interest rates are the key drivers of our house prices

High General inflation could impact heavily on those key drivers

Timing belt

https://www.boards.ie/discussion/comment/118308297#Comment_118308297

If you have high inflation people will use property as a hedge against inflation instead of leaving money in the bank which is an increase in demand.

Wage inflation is another story and if we do see it it will push up house prices because people will be able to borrow more.

rent should be protected by inflation because of the new rules 2% or inflation if lower.

The cost of building will rise which will mean a reduction in supply as certain projects become less profitable.

All of these factors = higher prices for property

hometruths

https://www.boards.ie/discussion/comment/118301898#Comment_118301898

Do you think inflation is likely to run at 5% for a few years? Surely that would not be transitory?

Timing belt

https://www.boards.ie/discussion/comment/118308499#Comment_118308499

No I don't expect it to run at 5% for a few years.

Villa05

https://www.boards.ie/discussion/comment/118308445#Comment_118308445

Maybe your right

Maybe this lady has stumbled across the future. A lotto show where the star prize will be the opportunity to win an affordable home.

https://www.irishexaminer.com/news/munster/arid-40763928.html

Wealth preservation must be achieved by bleeding the next generation dry. It will be interesting to see how that particular model works out sustainability wise.

Slavery was sustainable for a long time, I suppose

Timing belt

https://www.boards.ie/discussion/comment/118308631#Comment_118308631

Don't know what you are trying to say all that I am pointing out is that high inflation for a sustained period will result in higher property prices. It has noting to do with different generations, wealth preservation, politics.... it's simple economics

Villa05

https://www.boards.ie/discussion/comment/118308655#Comment_118308655

Nothing personal, just simple economics also

When they were unaffordable 4/5 years ago and the solution appears to make them more expensive, then, we need to think outside the box to get affordable homes for the fortunate few.

Either that or we are in for a major crash to achieve equilibrium pursuing current policy (globally}

Apple hit a valuation of 3 trillion this week. It took its entire life - 2years to reach 1 trillion and during a pandemic it trebles in value

I'm not skilled enough to explain that anomaly but it is the season for the magic of Santa

Timing belt

https://www.boards.ie/discussion/comment/118308689#Comment_118308689

Let me get this right.... you are saying that high inflation for a few years would not be a bad thing..... I highlight that high inflation for a sustain period would increase house prices and you start talking about Wealth preservation and Slavery...... I then try and explain that it is simple economics that houses prices will rise if we experience high inflation for a few years and you start talking about apple share price. What is the point you are trying to make?

Is it that the as a country we have problems with affordable housing.... Everyone knows that but its not as simple as get SF in and they will be able to fix it over night.

And just for clarification I don't expect that we will see high inflation for a few years because either the drivers of inflation fall away or if it does persist then the central banks will tap the brakes on the economy.

hometruths

https://www.boards.ie/discussion/comment/118308819#Comment_118308819

Re inflation I think the drivers of inflation will increase and central banks will have no choice but to increase interest rates. If this coincides with a new SF government, or the mass realisation of the inevitability of an SF govt, things may get very ugly indeed.

Timing belt

https://www.boards.ie/discussion/comment/118308882#Comment_118308882

The main driver of inflation in the EU is oil and Gas at the moment and Oil has dropped 30% in the past few weeks. We have not seen wide spread inflation like the US is currently experiencing..... Who know's we may see this in time as the public's expectation of inflation drives prices and wages higher. I agree that if inflation is around for longer and becomes wide spread and not just in energy the central banks will have no option but to taper QE and then eventually raise rates. We are in a low interest rate environment and this will continue even if the EU increased the base rates because the ECB rate will still be negative as two or three 10bps rise over a year would be enough to slow down the economy and kill inflation.

hometruths

https://www.boards.ie/discussion/comment/118309020#Comment_118309020

I do agree price rises, (and falls), in the various commodities, goods, services etc that make up CPI baskets can be transitory; by drivers I meant bigger picture factors like supply chains and velocity of money.

We have been in a deflationary trending environment for over 20 years thanks not only to technology but also globalisation, JIT inventory etc.

I think the deflationary impact of technology is likely to level off, but the lasting effects of the pandemic will be a change in business practices that will represent a complete reversal of trend. This combined with increasing velocity is likely to be inflationary IMO. It won't take much for it to become self fulfilling.

Timing belt

https://www.boards.ie/discussion/comment/118309142#Comment_118309142

The velocity of money is falling not increasing because QE increases the money supply and as a result it takes longer for money to circulate in the economy. For this reason it has become less of an important indicator in recent years.

I agree that supply chain issues will contribute to inflation. For me the real risk is China because inflation there will feed into world wide inflation.

hometruths

I think the falling velocity trend will reverse too. If it is rising it will very quickly become an important indicator again.

Timing belt

https://www.boards.ie/discussion/comment/118310883#Comment_118310883

The above graph shows the USA velocity of money and because of the liquidity trap it is unlikely to increase significantly because a lot of the money supply is locked into the banking system and financial markets so is not in circulation in the wider economy.

hometruths

https://www.boards.ie/discussion/comment/118311394#Comment_118311394

Yes, I am aware of the trend to date, as that chart shows. That's why I said the trend will reverse.

Timing belt

https://www.boards.ie/discussion/comment/118311791#Comment_118311791

I'm just surprised that on one hand you are saying things could get messy very quickly and on the other hand you are saying that economy will be so strong that we will see the trend of a declining velocity of money will reverse.

hometruths

https://www.boards.ie/discussion/comment/118311950#Comment_118311950

I said things will get messy if central banks raise rates. If they have to raise rates it will because of non transitory inflation. One of the reasons I think inflation will not be transitory is I think velocity of money will rise.

None of the above is contradictory on the one hand but on the other stuff.

Timing belt

https://www.boards.ie/discussion/comment/118311991#Comment_118311991

For velocity of money to increase and reverse its trend it would be because of a strong economy resulting in the GDP growing or because of a reduction in money supply when people pay off debt. As a reduction in money supply would not be inflationary I can only assume you expect GDP to grow strongly Quarter by Quarter to reverse the trend.

hometruths

https://www.boards.ie/discussion/comment/118312026#Comment_118312026

For velocity of money to increase and reverse its trend it would be because of a strong economy resulting in the GDP growing

Is that not a bit of a chicken and egg situation - i.e which came first?

Sure velocity can increase because an economy is strong with rising GDP, but are you saying an economy and GDP cannot grow because money velocity increases?

Timing belt

https://www.boards.ie/discussion/comment/118312068#Comment_118312068

The only way that the velocity of money can increase without the GDP growing is for the money supply to shrink (which would be caused by people paying off debt) and this would not be inflationary.

The velocity of money is calculated as the GDP divided by the money supply. So you need the GDP to increase or the money supply to shrink to see an increase in velocity of money.

hometruths

https://www.boards.ie/discussion/comment/118312136#Comment_118312136

Let me put it another way. Could GDP and an economy grow as a result of increased spending?

Timing belt

https://www.boards.ie/discussion/comment/118312194#Comment_118312194

I get what you are saying.... The economy is going to be stronger than it has for the past 10 years for at least a few quarters to reverse the trend. If we will have such a strong economy for a year or two then it would be reasonable to expect house prices to increase and for the economy to be able to withstand a increase in rates without crashing the economy as companies would be making more money. Maybe that is why the markets are valued so high because the world economy is going to enter a period of strong growth. Personally I don't see this scenario playing out as I think the EU economies are more shaky than they were before covid hit but that's just my opinion.... Time will tell

hometruths

https://www.boards.ie/discussion/comment/118312246#Comment_118312246

I think markets valued highly since a lot of the money supply over last ten years has gone straight into them, there is no alternative etc etc.

You said earlier that velocity is unlikely to increase significantly because "a lot of the money supply is locked into the banking system and financial markets so is not in circulation in the wider economy".

The money flowed into the markets without much trouble, so I would have thought it could flow out just as easily. What makes you say it is locked in?

Timing belt

https://www.boards.ie/discussion/comment/118312277#Comment_118312277

The money I was talking about is the money in M2 supply so it excludes the money that has flown into the stock market.... What I meant by the money supply being locked into the banking system is the liquidity trap that exists due to the low rate environment. The specific element that relates to the financial markets is the cash that has been posted as collateral with the banks.

If the money flowed out of the markets without much trouble then the it would either end up in cash/banks which would lower the velocity of money further or would go into bonds which would lower rates further. (That is unless everyone decided to buy bitcoin or gold)

So which is it we will see the velocity of money reverse its trend or the money will flow out of the markets and lower the velocity of money further?

hometruths

https://www.boards.ie/discussion/comment/118312335#Comment_118312335

So which is it we will see the velocity of money reverse its trend or the money will flow out of the markets and lower the velocity of money further?

Trillions worldwide will flow out of the markets and start circulating in the wider economies - it will be spent on goods and services, increasing velocity of money and will be inflationary.

Timing belt

https://www.boards.ie/discussion/comment/118312442#Comment_118312442

So you are saying the money supply will increase by trillions and yet the velocity of money will increase and reverse trends.. for the velocity of money to increase by enough to change the velocity of money trend with the money supply increasing by trillions we would need hyper inflation. which means that houses prices are undervalued as they will be worth 1000's times more in a year.

hometruths

https://www.boards.ie/discussion/comment/118312479#Comment_118312479

If somebody had 50k in their bank account, used it to buy 50k of Apple shares in their stock broking account, now worth 75k today, then decides tomorrow to sell that 75k in shares and move it back to their bank account, and then spends that 75k on goods and services on Tuesday, how much has these transactions increased the money supply by between today and Tuesday?

Timing belt

https://www.boards.ie/discussion/comment/118312514#Comment_118312514

Once they sell the 75k and move it back into their bank account the M2 money supply increases by 75k... if they then use that money to buy good or services the money is still in circulation..... So the money supply has increased by 75k which lowers the velocity of money unless the GDP grows by a greater amount (either via inflation or real growth)

Amadan Dubh

https://www.boards.ie/discussion/comment/118311991#Comment_118311991

Not only raise rates but also stop supporting assets. The ECB bond buying is phenomenal and has involved creating money from nothing in order to directly purchase the bonds of private entities. The current balance sheet stands at €307 trillion! Our markets are already socialised and reintroducing capitalism is what we need to get proper valuations out of them (housing included). ECB corporate asset purchase programme home page;

https://www.ecb.europa.eu/mopo/implement/app/html/index.en.html

For the first time I decided to actually try to find out specific information on the corporates which the ECB is choosing to prop up, available in this file;

https://www.ecb.europa.eu/mopo/pdf/CSPP_PEPP_corporate_bond_holdings_20211203.csv?1c4bf5668283443a45d103b89ca0323e

Two very disturbing features of the list of bonds which the ECB holds are that there are huge real estate asset managers and employers of tens of thousands of emoyees within the list. There is no orderly unwinding of the capital "S" State from private markets.

hometruths

https://www.boards.ie/discussion/comment/118312538#Comment_118312538

Ok fair enough, my theory is hampered by the precise calculation of velocity of money. So let’s agree your earlier comment that is not a useful indicator is correct.

if larger amounts of individuals than normal were to withdraw their 75k out of financial markets, and circulate into economy, would that be inflationary?