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

fliball123

https://www.boards.ie/discussion/comment/117922815#Comment_117922815

The reason why we would see a collapse would be more for the countries who are currently borrowing at near 0% to pay for corona all loans have to be rolled over in the mid term and if those loans come back with 2/3% interest on top of what your paying you would see a lot of countries heading into bailout/IMF/ countries defaulting on debt territory. You can forget about the average Joe who took a 200/300k mortgage out as all bets are off

coolshannagh28

https://www.boards.ie/discussion/comment/117922815#Comment_117922815

This is bang on the money , central banks are running out of tools to keep the rollercoaster on the rails , nobody knows the time or the cause but a trigger will cause a crash at some point. Interesting to note now around the anniversary of 9/11 that it was that action which initiated this increasingly desperate economic cycle.

Amadan Dubh

https://www.boards.ie/discussion/comment/117922815#Comment_117922815

Yes, I agree. To me the responses provide reasons to "do nothing" and just accept the current situation. It is defeatist and very short term, backward looking as it assumes that the way things have been done is how they should continue to be done. As you say, the big question is why is current economic prosperity so fickle that mere 2/3% interest rate increases would crush people?

Rental market inflation has been on average at least 4% per year for a decade and renters get on with it - this equates to hundreds of euro extra per month in rents. It is just not sustainable that we allow such volatility in the renal market - particularly when we are dramatically trending towards being a majority rental nation in the next 15 years - this will then be reflected in how our government makes decisions as the majority of people in this country, in 15 years, will celebrate when housing costs decrease so there will be votes gotten where political parties seek to quench the housing market - this is inevitable as I see it, but what I don't look forward to is the brainless, populism which will accompany such measures (e.g. rent freezes, banning corporate ownership of property etc.)

Mad_maxx

https://www.boards.ie/discussion/comment/117920617#Comment_117920617

https://www.boards.ie/discussion/comment/117921815#Comment_117921815

https://www.boards.ie/discussion/comment/117892229#Comment_117892229

The biggest threat to either the property market or the economy in general is a SF led government, that is now a real possibility

Ireland is a very open economy, a Marxist party in charge would change this perception utterly

accensi0n

https://www.boards.ie/discussion/comment/117922789#Comment_117922789

"Renters were promised changes introduced in the summer would lead to lower rent increases under his rent pressure zone legislation."

Well, 3 is less than 4. :D

JimmyVik

https://www.boards.ie/discussion/comment/117922940#Comment_117922940

The main reason landlords are leaving is constantly changing legislation.

Here it is about to change ... again.

You need stability to invest in anything. Property is anything but.

New legislation every time a minister has ready brek for breakfast instead of corn flakes.

oh, its ready brek this morning, must come up with more legislation for the afternoon.

fliball123

https://www.boards.ie/discussion/comment/117922939#Comment_117922939

Well I think the shinners will be in for a surprise when they try to pay for what they are promising, big difference between talking and walking if they get in I can see them lasting no longer than 2/3 years. I will predict that now. Its like what mad Maggie Thatcher said. The problem with socialism is you eventually run out of other peoples money. With what we are on the hook for already, the collapse in 08, bailing out banks, paying for covid, collective bargaining, bench marking and our welfare state and that's before putting a cent into other capital expenditure projects. The money is simply not there to achieve what they are trying to implement.

Timing belt

https://www.boards.ie/discussion/comment/117922815#Comment_117922815

The world economy would crash over night if rates got raised to 2-3% without growth because governments would be hit hard by the increase in debt servicing costs and would be forced to cut spending and increase taxes to pay for it.... this would lead to a large recession which in turn would lead to a loss of jobs and a need for more spending for the newly unemployed.... Add on top of that the fact that asset prices would crash which would lead to lower consumer confidence which would deepen the recession.... And to top it all off pensions schemes would be left with a massive deficit due to the falling asset price which would need to addressed which yet again would take money out of the economy make matters worse.

All this pain just because someone thinks that they will be able to buy a house cheaper when in reality they would be no better off than they are today unless they were able to buy a house outright with cash.

Saying that this all started in '08 is rubbish... rates have been cut for the past 40 years so it's noting new.

fliball123

https://www.boards.ie/discussion/comment/117923005#Comment_117923005

totally agree the people who usually do well in a crash are those with cash. People hoping for a house cheaper during a crash will have to look at how their financial position will be if this happens as well as the fact that the banks will tuck their balls between their legs and simply stop lending.

This morning I was quite alarmed listening to Ivana Bacik and her proposals. It has set me thinking how soon should I sell up and invest more in stocks etc. Maybe to part invest in corporate letting. Whilst I am a small time landlord, I have strong beliefs in social justice and would not be a traditional FF/FG supporter; yet I fear what SF has in store and would prefer a more nuanced approach to the rental market that would incentivise landlords to provide long-term quality stable lets. The revenue take on lettings is enormous and government has not seen fit to risk changing the economic model any time soon.

JimmyVik

https://www.boards.ie/discussion/comment/117923078#Comment_117923078

By the time SF are finished you will own your property and be responsible for all costs and repairs and be taxed even more heavily on it.

Yet you wont be able to ever get it back or sell it on once rented. Unless you can find another victim to take it off your hands then.

cnocbui

https://www.boards.ie/discussion/comment/117921603#Comment_117921603

Sorry, could you please explain why rents should be less than the cost of finance?

Apartments cost more to build by floor area, than houses and are usually fairly high up in people's idea of rental accommodation formats.

cnocbui

https://www.boards.ie/discussion/comment/117922792#Comment_117922792

What construction materials are coming from China? Bricks, cement, sand plasterboard, paint, Kingspan insulation, timber, slates?

Not everything comes from China, despite some perceptions to the contrary. Construction materials are usually bulky and heavy and it tends to be more economical to have local supplies just in terms of transportation costs.

Amadan Dubh

https://www.boards.ie/discussion/comment/117923150#Comment_117923150

I'm only explaining why incomes should be linked to rents as that is where we need to look if we want to keep most market participants happy and achieve a better chance of equilibrium in the market, with less of a risk of boom/bust cycles.

Why should rents take up a larger percentage of salaries each year, at the rates they have been climbing since 2012? At what point does it become unacceptable as the economy cannot grow due to the black hole of property sucking so much from the productivity in the economy?

Amadan Dubh

https://www.boards.ie/discussion/comment/117923178#Comment_117923178

Fair point but I think the poster is speculating that the costs of Chinese supplies could plummet which would render it too good to turn down for our own construction industry.

Amadan Dubh

https://www.boards.ie/discussion/comment/117923001#Comment_117923001

The Irish government debt now stands at €240bn - where do you think that money came from? It was €109bn in 2009 but the government thinks that the percentage of government debt relative to GDP somehow makes this sustainable. It is a con and there is a literal magic money tree supporting our economy since 2008 so the ship of questioning the costs of SF plans has long sailed.

iColdFusion

https://www.boards.ie/discussion/comment/117923178#Comment_117923178

I can't comment on those particular materials but alot of the Mechanical and Electrical fitout items such as cables, lights, sockets, conduit, pipework, sanitary ware, heat pumps, solar panels etc come from china, so this has a big effect on larger projects such as office blocks but has started to add 3-4k onto the average house fitout alone.

Timing belt

https://www.boards.ie/discussion/comment/117923247#Comment_117923247

Unfortunately it's not a magic money tree and any debt issued needs to be repaid or rolled over... The only reason that governments can borrow at low rates is due to QE which is controlled by the ECB and not the Government

Amadan Dubh

https://www.boards.ie/discussion/comment/117922939#Comment_117922939

David McWilliams says to wait a few years before making a big purchasing decision, especially as a FTB, but his rationale is for supply reasons; that the increase in supply will give people a better choice of home. But I think the bigger reason to hold off a few years is to wait and see if SF and friends are going to be given the keys to the asylum, it is going to be significant to our society and our economy, particularly this Ireland, Inc. reputation.

Timing belt

https://www.boards.ie/discussion/comment/117923287#Comment_117923287

Well if SF get into government there will be an increase in supply due to people emigrating once they implement their economic policies and increase taxes.

Amadan Dubh

https://www.boards.ie/discussion/comment/117923280#Comment_117923280

But that's the point; this debt is just going to sit on the ECB balance sheet perpetually, roll over or else just be written off at ECB level.

Just think about €240bn, as it is right now, how can we ever repay this? It is inconceiveable that it will be serviced let alone repaid ever.

Amadan Dubh

https://www.boards.ie/discussion/comment/117923309#Comment_117923309

There will be a certain level of panic-selling as well, by investors but also homeowners who fear what will happen, before anything actually happens, which will add to supply.

https://www.boards.ie/discussion/comment/117923122#Comment_117923122

Harks back to Dev’s rent restrictions in times long past but that continued right up to when I started working.

Mad_maxx

https://www.boards.ie/discussion/comment/117923001#Comment_117923001

They will refuse to leave government

cnocbui

https://www.boards.ie/discussion/comment/117923247#Comment_117923247

Irish debt is completely untenable, especially if you work out it's around €85K per taxpayer. It's one of the minor issues that makes emigrating seem like a good idea. I suspect deposit haircuts will be the inevitable solution the Irish civil service arrives at in order to maintain their employment levels and conditions.

Ireland can not afford it's civil service, but that never seems to be a topic anyone acknowledges or even is prepared to raise. The fact we have that debt level and are about to award an across the board pay rise for the civil service, tells you the prison is being run by the inmates and so there is literally no mechanism for fixing the problem. A cancer eventually kills it's host because of self interest. The national children's hospital is going to cost at least 68% more per bed, than an equivalent facility built in Perth, down under.

The country is circling the plug hole, but the potential victims are all looking at each other and not external frames of reference so are oblivious to the motion and the impending danger.

Marius34

https://www.boards.ie/discussion/comment/117923327#Comment_117923327

It doesn't need to be repaid quickly, it's more about ability of sustaining it, and slowly reducing.

PommieBast

https://www.boards.ie/discussion/comment/117923287#Comment_117923287

The problem is people have already been waiting that "few" years. I don't see how things won't get substantially worse before they get better.

cnocbui

https://www.boards.ie/discussion/comment/117923309#Comment_117923309

With any luck I'll have made my escape by then, or shortly after, due in large part to the economic policies and existing taxes.

I hear Sinn Fein will be riding around the streets of every town and village, standing in the back of .50 cal equpped technicals, dressed in long robes with tea towls over their heads, randomly straffing buildings and shouting 'Allah, akbar!'.

I don't like any of them, I honestly don't think SF can possibly be any worse than their forbears. It's their employees you got to watch out for.

wassie

https://www.boards.ie/discussion/comment/117923261#Comment_117923261

But a lot of these price rises for materials & equipment is not due primarily to increased costs at the source. Material shortages & higher prices are linked to transportation delays and Brexit. Over the last 18 months, an unlikely series of mishaps, freak weather events and other strange occurrences have combined with the pandemic to decimate global supply chains. Reduced demand in China may well have a dampening effect on prices, but not by much I suspect.

AdamD

https://www.boards.ie/discussion/comment/117923377#Comment_117923377

If you're suspecting deposit haircuts you're living on a different planet to the rest of us