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

Amadan Dubh

There is a narrative that inflation is only temporary. But what people don't realise from that is that the price rises which occurred during the temporary period don't end, it is just the rate at which they increase which slows down. The translation for that is reduced spending power until wages climb up. If you are getting the same salary as in 2020 you are going to be poorer this year. As such, wage increases will be demanded or else the economy will start to grind to a halt with people not being able to spend as much cash. Of course wage increases will fuel further inflation. It's all spiralling upwards and the cat is out of the bag.

Eurozone inflation at its highest in 25 years. The ECB is revising its inflation forecasts every few weeks as it cannot grasp fully what is happening. This is troubling to say the very least when they are supposed to be responsible for ensuring price stability. If this new covid variant is treated by the ECB as requiring further QE and low interest rates or just a reason to delay taking action, inflation will continue to get worse and anyone can see this. However, with a lawyer and baby boomer at the helm of the ECB, it's unlikely anything will change and the bubble will inflate even more.

https://www.irishtimes.com/business/economy/euro-zone-inflation-soars-to-highest-rate-on-record-1.4742824

Timing belt

https://www.boards.ie/discussion/comment/118244691#Comment_118244691

You need to look at what is driving inflation at present which is mainly energy and ask would people consume less energy by cutting peoples disposable income by raising rates. The answer is probably not as they still need heating and fuel for transport.

Ireland's estimate of inflation for November is estimated at 5.4% up from 5.1% last month and when you strip out the base effect the inflation would be 4.4% which is still very high but mainly driven by energy costs.

bleaks

Did anyone who has been looking for over a year find an increase in supply at the start of last year, compared to the end of the previous year, or is there any stats available on that?

fliball123

https://www.boards.ie/discussion/comment/118238629#Comment_118238629

You talk a good game with regards to property price migration will be a plus figure next year and WFH will mean people buying away from the traditional hot spots but the infrastructure out in the sticks is still poor and as long as the gap (that is currently huge between supply and demand) with regards to property remains then prices are not coming down. Sorry to p1ss on your theory but there is bugger all evidence of the supply vs demand issue that is currently pushing prices up higher being corrected.

fliball123

https://www.boards.ie/discussion/comment/118245634#Comment_118245634

Well I have kept an eye on myhome for years and over the last 18 months it has not gone up more than 13k properties available country wide went under 12k at one point and currently its 12188. So the dial has not moved with this regards. Be interesting to get an idea of mortgage drawdowns vs new builds for 2021 when the info is available.

keoclassic

https://www.westmeathcoco.ie/en/ourservices/yourcouncil/councilnews/seekingtopurchaseturnkeyagreements.html

Government Still keeping prices up in westmeath anyways.

enricoh

With Fianna fail back at the steering wheel the only way is up for house prices baby!

Renting is totally unaffordable now for working couples due to the governments hap. When buying a house now working couples have to outbid the council, the charities, the approved housing boards, the funds buying to lease to the council.

The government was the third most indebted in the developed world prior to covid and I'm pretty sure we've spent the highest per capita on our response to covid - we may be in second place already!!

The whole thing is ready to blow again imo but house prices went up 12% this year- so don't miss out n panic buy now!

fliball123

https://www.boards.ie/discussion/comment/118246876#Comment_118246876

copy and paste the last 2/3 years people like yourself will be right eventually, still zero sign of the gap between supply and demand narrowing, prices are only going one way till this is dealt with.

enricoh

https://www.boards.ie/discussion/comment/118246903#Comment_118246903

There'll be no sign of demand narrowing when government dough is buying so much housing. Let's hope those nasty bondholders pay no attention to the governments debt levels. They have a habit of spoiling the party I believe.

fliball123

https://www.boards.ie/discussion/comment/118246952#Comment_118246952

Our debt levels have been through the roof for well over a decade now, what do you think is likely to change now with regards to bondholders? I mean if the fact that we are still in the middle of a pandemic and that we are still suffering fall out following on from Brexit has not spooked them what will and with all of that uncertainty prices went up 12% this year? So tell me what will the straw be that breaks the camels back? Could it be as with most commodities that are there to be bought and sold their behavior when there is a supply shortage prices go up and/or a surge in demand (and we have the perfect storm of having both). As I say prices wont be going south any time soon. Throw in net migration inwards last year of over 55K, it will be interesting to get a stat for 2021. Throw in the fact that births are still going up faster than deaths even with a global pandemic killing people in this country and you have to ask where are all the extra houses needed for these people not to mention the large amount of new houses needed before 2020? Throw in the number of house completions this year is no where near solving the housing crisis

https://www.cso.ie/en/releasesandpublications/er/pme/populationandmigrationestimatesapril2020/

https://www.cso.ie/en/statistics/birthsdeathsandmarriages/vitalstatistics/

https://www.cso.ie/en/statistics/construction/newdwellingcompletions/

enricoh

Corporation tax changes and Ireland becoming less attractive to MNCs as a result could well be the straw. The MNCs tax n high wages keep the show on the road here.

Net inward migration of 55k last year and half the businesses in the country closed? - only in Ireland! Well true, that'll help keep the 'crisis' going, new blood for the homeless industry etc etc

cnocbui

For another thread, I recently calculated that Ireland's national debt stands at just over €150,000 per taxpayer. I am not including the 37% of earners who pay no income tax.

I have been extremely nervous of Ireland's debt levels for at least a decade. I just hope I can get out in time. Now we have Powel saying inflation is not temporary so debt is going to start hurting soon. Good thing that Ireland is so lightly taxed and the Government can just push harder on the Revenue peddle to open the tax throttle a bit more to maintain speed up that debt mountain. /s

I suppose housing demand will decrease as soon as Fed acts on interest rates and the ECB copy them.

Timing belt

https://www.boards.ie/discussion/comment/118247457#Comment_118247457

You do realise that the nominal amount of debt of the country could fall if rates rise as the market price of the bonds will drop and the government could buy back the debt at a large discount.

fliball123

https://www.boards.ie/discussion/comment/118247319#Comment_118247319

So you reckon MNCs making over 750 million a year having to pay an extra 2.5 % on their earnings will make them run for the hills? I cant see it happening. If you think Ireland are in a little bubble of inflation and prices rising you need to open your eyes, property price rising is a global phenomenon and the price hikes on other things such as building material and fuel is also been seen globally so will it be a case of out of the frying pan and into the fire for MNCs then?

fliball123

https://www.boards.ie/discussion/comment/118247457#Comment_118247457

Any chance you can show us your calculations not saying your wrong just interested in how you are calculating this?

cnocbui

https://www.boards.ie/discussion/comment/118247601#Comment_118247601

As posted in another thread:

Irelands national debt is €248,828,484,716

https://commodity.com/data/ireland/debt-clock/

There are only 1,651,900 taxpayers, since 37% of earners don't pay tax: https://assets.gov.ie/86995/006fad3c-ebb5-4b0e-b067-92f8102d6e43.pdf

So the debt is actually €150,632 per tax payer.

Bass Reeves

https://www.boards.ie/discussion/comment/118248194#Comment_118248194

I would not really worry if that is right. At present interest rates are virtually zero or negative. Ireland restructured a lot of there debt over the last 2-5 years. There is an awful lot of it on 10 or 20 year bonds not maturing before the late 20's. At 0.25% and an awful lot it is below that the 150k/, tax payer is costing 375/year.

The big thing if inflation rises is to try to balance the books straight away. If I was the government/NTMA I would not repay those bonds until they were due.

ittakestwo

https://www.boards.ie/discussion/comment/118247045#Comment_118247045

There was a net immigration of 28k and a natural population increase of 27k in the year to April 2020. This led to a total population increase of 55k in the year to April 2020. Both these fell compared with the year to April 2019.

The average household size is 2.5 people. If the population let's say did increase by 50k a year then we should just need to build 20k houses a year. This is is obviously taking that no previous house become derelict. Obviously with a migration from rural to urban over the last few decades and falling house hold size in Ireland ment we should have always been building more than population increase divided by 2.5. But now are household size are at developed country norms and WFH will slow down the urban rural migration, perhaps 30k a year is enough longterm to meet demand.

In economics terms accommodation is what they call price inelastic, which means a small shortage of something can have a disproportionate increase on its price. The big prices increase recently are partly to blame for the lack of building over the last 10 years. Obviously the construction industry was crushed in the downturn. But now we are getting to normal building output. A decade of building between 30k to 40k house which it looks like we could achieve will help sort out the problem. Within 20 years Ireland's death rate will be the same as are birth rate. Since 1991 are fertility rate fell below the replacement rate of 2.1, Currently it is at 1.7. Ireland is getting old tho we are still relatively young compared with our European neighbours.

MacronvFrugals

Allianz pauses investments in Irish residential property market

However, Allianz’s Irish insurance arm lobbied against the move on the basis of the potential reputational risk from the negative public commentary around large institutions owning and renting properties here amid a housing crisis, and being cast as a so-called cuckoo or vulture fund.

Allianz is one of the country’s biggest general insurers, with more than 700,000 customers, according to its website.

Allianz’s decision has been communicated to parties in the property sector here, with the German company ceasing engagement on potential investments.

https://www.irishtimes.com/business/construction/allianz-pauses-investments-in-irish-residential-property-market-1.4743297

Amadan Dubh

It's not surprising but it could just be the start of the political/reputational risk manifesting. Considering the words used to describe SF by those of a certain generation, often reflected in mainstream media opinion pieces and by our FF/FG politicians, will it be a surprise that other institutionals in a few years get spooked and think SF are some sort of mish mash of a communist, terrorist, fascist party? It will probably be self-fulfilling that SF will affect our foreign capital investment prospects given the attitude to them by so much of corporate Ireland and the establishment in this country.

It looks like the foreign and economic policy of just doing whatever corporate U.S.A. wants is going to backfire for Ireland medium term when there's nothing left over after our MNC gravy train is not as lucrative as it has been.

Wanderer78

https://www.boards.ie/discussion/comment/118249661#Comment_118249661

our use of mnc's to modernise our economy has worked, but its now time to move on, its clearly obvious that this approach is now coming to an end, but most arent going anywhere, most will remain here, we need to change with this change, we need to become cleverer with the use of them here, along with the revenue they create

https://www.boards.ie/discussion/comment/118248194#Comment_118248194

what does that mean? It’s not like those 1.6m income tax payers are going to have to stump up €150k each? There are many other taxes. The absolute number surely is meaningless without context, and trend and share of overall taxes

PommieBast

https://www.boards.ie/discussion/comment/118248194#Comment_118248194

To me the 37% non-payers stat in itself is pretty appalling, but that is something for the politics thread rather than here..

fliball123

https://www.boards.ie/discussion/comment/118248194#Comment_118248194

https://www.boards.ie/discussion/comment/118248194#Comment_118248194

Have you taken away what would be garnered in non-income related tax and taken it away to give a proper idea of what the income tax payer is paying??

fliball123

https://www.boards.ie/discussion/comment/118249096#Comment_118249096

https://www.boards.ie/discussion/comment/118249096#Comment_118249096

SNIP - multiple charter violation

cnocbui

https://www.boards.ie/discussion/comment/118251945#Comment_118251945

Are you talking about the Government revenue? If so, I think that's probably somewhere in the second link.

Pussyhands

Stock market taking a beating based on US fed seemingly intent to increase their tapering and interest rate increases. If the decline continues and inflation stays as is, rates will increase. This makes property less attractive for investment and speculators.

Timing belt

https://www.boards.ie/discussion/comment/118253827#Comment_118253827

Stock market is taking a beating because of Covid and the introduction of restricted travel again and the fact that it is highly likely that countries will go into lockdown again. This can be seen by investors pilling into the safety of Government bonds which results in lower yields. The news from the fed has been priced into the market for weeks/months as they have very strong forward guidance so not to spook the markets.

Even if the Fed raised rates 2/3 times in 2022 the rate would only be 0.50%-0.75%. The yield on Irish property is around 3.75% at the moment so I don't think it will cause a big slow down in property.

Pussyhands

https://www.boards.ie/discussion/comment/118254770#Comment_118254770

No, it might seem like it's covid related but the actual reports would suggest the market would go up if it was just covid related.

What I think could be happening now is with the anecdotes and potential mildness of the new variant, is that it signals a final way out of the pandemic. This means the need for financial supports to stimulate the economies are no longer needed and interest rates can be raised, bond buying can be reduced.

"Growth" stocks, which are companies which essentially do not make a profit are getting hammered. Why would that be? Because if they're loss making, it means they need to borrow money. And if they're borrowing money that means rising interest rates will mean they have to pay a lot more money servicing the debt.

Have a look at the top gainers yesterday....what do they have in common? Mortgages...

https://finance.yahoo.com/gainers

Timing belt

https://www.boards.ie/discussion/comment/118255098#Comment_118255098

What they have in common is they are bonds/fixed income and their price increased because the yield dropped.

If the expectation is that interest rates were going higher then the price should fall and yield goes higher.

The market is pricing in the new variant and the slowdown in economic growth from lockdowns and travel bans etc