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

Amadan Dubh

https://www.boards.ie/discussion/comment/118321883#Comment_118321883

Don't hate the player hate the game is something I agree with. But those tasked with policy are truly not best resourced or willed.

You can be sure that John is leveraging his contacts in his new role to shape policy in favour of the few big players and it definitely has an effect or else BNP wouldn't be hiring him.

mcsean2163

https://www.boards.ie/discussion/comment/118312579#Comment_118312579

Sorry, the balance sheet of the ECB is €307 trillion? Do you have a link?

Timing belt

https://www.boards.ie/discussion/comment/118323173#Comment_118323173

Balance Sheet of the ECB as at last Friday

https://www.ecb.europa.eu/press/pr/wfs/2021/html/ecb.fst211214.en.html

Breakdown of QE programs as at last Friday

https://www.ecb.europa.eu/press/pr/wfs/2021/html/ecb.fs211214.en.html

mcsean2163

https://www.boards.ie/discussion/comment/118323230#Comment_118323230

14 December 2021

In the week ending 10 December 2021 the net position of the Eurosystem in foreign currency (asset items 2 and 3 minus liability items 7, 8 and 9) increased by EUR 0.3 billion to EUR 321.3 billion.

Maybe he meant billion? A trillion is a thousand billion. Or have I completely misread?

Timing belt

https://www.boards.ie/discussion/comment/118323260#Comment_118323260

He was only looking at some of the QE..... the total QE is 4.7 Trillion

mcsean2163

https://www.boards.ie/discussion/comment/118323266#Comment_118323266

A long way off €307 trillion...

Amadan Dubh

https://www.boards.ie/discussion/comment/118323320#Comment_118323320

Sorry, I read 307,000 million but made the mistake of interpreting that as a 12 zero number rather than an 11 zero number, so you're correct. Thanks!

Cyrus

https://www.boards.ie/discussion/comment/118321759#Comment_118321759

That covid support was paid to a group entity that had it's revenues almost wiped out,it's fair to say that jobs would have been cut without it.

The fact the amount of the covid support and the dividend that was paid about 4 levels up in the group are the same is entirely coincidental.

Villa05

https://www.boards.ie/discussion/comment/118321019#Comment_118321019

Im not convinced about the best people to run the Central Bank need to come from the investment sector and specifically from the big US investment firms. Everyone of them could have been the Bear Sterns and collapsed in 08. I suspect the crisis was used to eliminate the most aggresive competitor.

Agiain im not convinced society is against large scale public housing, could be tweaked to ensure certain estates are not dominated by unemployment blackspots which is a significant factor in deterioration of estates. This could be done by mixing it with affordable rental/purchase. Provide estates with amenities and support services to help it develop positively. The current system does not suit taxpayers, those in need of housing, renters, and potential FTB's. The only sectors it benefits is investment funds and developers ie those that lobby government persistently

Would you consider rent to be in a bubble, given the subsidies paid out to maintain them at current levels?

Timing belt

https://www.boards.ie/discussion/comment/118325077#Comment_118325077

Im not convinced about the best people to run the Central Bank need to come from the investment sector and specifically from the big US investment firms. Everyone of them could have been the Bear Sterns and collapsed in 08. I suspect the crisis was used to eliminate the most aggresive competitor.

I said it makes sense that they have a background in financial markets..... There was no mention of big US investment firms.

Would you consider rent to be in a bubble, given the subsidies paid out to maintain them at current levels?

No I don't think that rent is in a bubble as people that don't own there own property need to live somewhere and as a result this makes the rental market inelastic. People will priorities rent above other basics such as transport and even food if there is no alternative as they need to live somewhere. With a low stock of rental properties prices will rise and if the rent pressure zones didn't exist we would be seeing much higher prices for rent.

People in Private rental properties think that the people with HAP are taking there properties and as a result they have to pay more.... Yes this is true but if you stand back for a second the issue is not that there is not enough rental property.... The issue is that there is a shortage of alternative property for people needing assistance because it's not being built. It's the exact same argument that investment funds and councils are taking homes from FTB's..... Yes they are but they are but this is a symptom of the fact that not enough properties are being built in the right places. So instead of fixing the problem people try to fix the symptom which ends up making the situation worse for one side or the other.

The fact that some of our society cannot afford rent is noting new. In the past this was addressed by providing social housing. As I said before social housing has become unpopular because of the getto's that were previously created and because sections of society just see it as someone getting a free home while they have to pay the top rate of tax. As social housing is no longer popular the next best thing to help people who cannot afford a roof over there head is HAP. It's one or the other unless you want to see trailer parks and people living in cars etc..

Just to be clear I am not a fan of HAP but I can see why it would be required as a temporary measure until adequate social housing was built.

Villa05

I think Peoples frustrations with HAP is because it has moved from being a floor on rent prices to driving them to new higher levels

This has led to development in Dublin and other high demand areas being exclusively for those in the top income range and the few at the bottom that get social and affordable homes.

I'm not so sure people sacrifice food and transport to be able to pay rent, moreso they move away or move back with parents/relatives.

Increasingly they are moving out of high demand areas to lower cost locations and purchasing there.

This creates a false market where housing is built where people can afford rather than where they need to be close to work

If you listen to the interview with the glenveagh boss, they build to a price point (350k) rather than building where housing is needed.

I don't see how the public would be in favour of paying top dollar for social/affordable over the state building their own and putting an acceptable mix of social, affordable rent/purchase

We are close to full employment, so if managed correctly it could generate an income for the state as opposed to paying billions out to investment funds

This situation goes back to Quantitive easing and low % rates. This period of low interest rates should be used to develop our infrastructure to reduce our outgoings into the future. Current policy is increasing our liabilities, exposing us to rental inflation.

Instead of planning to ease the burden in the future we are spending to increase the liabilities

JDigweed

When I was a kid in the 80's we rented a house from Dublin corporation in West Tallaght. Both my folks worked as did nearly every neighbour bar one or two with many working as civil servants. It seems somewhere along the way the government has failed to make social housing accessible to a wider range of incomes with most middle earners above the threshold for social housing. The point being is that they really need to up the game and start large scale developments such as the ones built back then and plan them in such a way that encompasses a mix of tenants while avoiding the problems that occur in many government built developments.

JDigweed

Timing belt

https://www.boards.ie/discussion/comment/118325798#Comment_118325798

I'm not so sure people sacrifice food and transport to be able to pay rent, moreso they move away or move back with parents/relatives.

That is assuming that you have parents/relatives near by and they have space not all do. Sure for a single person with no kids they have these options but if you have a family with both parents working and kids in School etc moving away or back in with parents/relatives may not be an option. Rent is inelastic because there are very few substitutes and when supply is low people will pay to have a roof over there head as a priority. And just for clarity I am not supporting the fact that rents are crazy... I am just explaining why I think they are and as I have said many times until there is an excess of rental properties on the market and tenants are able to negotiate terms the situation will not change.

I think Peoples frustrations with HAP is because it has moved from being a floor on rent prices to driving them to new higher levels

If the government purchased housing that is currently being rented out and used it as social housing to get rid of HAP, Rents would still go higher as it would reduce supply. it is not HAP that is driving rents to new higher levels it is the lack of supply and the fact that the rental market is inelastic.

I agree that the government should be availing of the low/negative rates that exist at present because of QE and investing in infrastructure such as social/affordable housing and stop the long term leases. That is a no brainer but what you are suggesting is that the state becomes the landlord for private rental properties instead of investment funds and that is a step to far in my opinion.

Villa05

I've always been of the view that the state should build not purchase from the private sector.

Timing belt

https://www.boards.ie/discussion/comment/118326340#Comment_118326340

I am of the same view....and when I say the state should build I don't mean they need a house building department full of all sorts of trades men... They just put a contract out to tender to build x amount of houses to specific standard in a specific time for a specific cost.

iColdFusion

https://www.boards.ie/discussion/comment/118326361#Comment_118326361

There is only a finite amount of builders though so the private buyer is potentially screwed either way if the builders are all tied up building social housing instead of private estates.

Its a total smoke screen by the government, they claim to be fighting off those pesky vulture funds to save private buyers while social housing bodies are buying up full estates.

Timing belt

https://www.boards.ie/discussion/comment/118326610#Comment_118326610

100% correct they buy from builders or build their own social housing to reduce dependency on HAP then it impacts FTB’s due to a reduced supply.

They continue with HAP it takes supply from renters.

you bring in workers to build then you increase immigration and increase Demand.

iColdFusion

https://www.boards.ie/discussion/comment/118326666#Comment_118326666

Its a total disaster basically!

Other thing to note is ive seen a few private developers who have a site and planning and end up doing a deal with Tuath or similar for all the houses, then when it comes to being built the signage and news stories are all about "New Tuath Social housing development" to give the impression it has been planned by them since day one, they own the land etc when really all Tuath have done is sign a contact to take over the houses once completed, it could have easily been a private estate for sale to the public but they try their best to hide that fact.

Pussyhands

Another depressing report out today. Where is Darragh O'Brien? Where are his comments to these reports? What are his emergency actions to stop these spiraling house prices?

And then they say inflation is 5%....my arse! A packet of bananas going up 10% from 1.50 to 1.65 isn't the same as a 250k asset rising 25k in a year.

L1011

https://www.boards.ie/discussion/comment/118327714#Comment_118327714

Well, that's what the basket and weighting is meant to cover in inflation calculations. I just have a feeling the basket is very wrong right now. Inflation figures for the past few years were low to negative due to reducing prices of clothes, electronics and stable prices on food primarily - while housing and rents were running wild.

I spend more on housing than I do on clothes, electronics and food and I have a very low mortgage! Renters and people with higher mortgages spend many multiples.

hometruths

https://www.boards.ie/discussion/comment/118327730#Comment_118327730

Even aside from housing, cost of living feels like it has increased over the low inflation years. We had this discussion earlier in the thread, and there were many anecdotally reporting day to day expenses were quietly creeping up pre pandemic, but still we're told there was no inflation.

Now prices are rocketing across the board and we're told it's not real inflation. It's transitory apparently.

wassie

https://www.boards.ie/discussion/comment/118326610#Comment_118326610

But that assumes that all builders are vying for the same work when in fact if the state were to build houses themselves, there would be a cohort of builders & businesses that specifically seek to rely on govt housing projects as a steady reliable income at the exclusion of private sales. A serious concerted effort by the state could drive the cost of building down through sheer scale of volume.

Timing belt

https://www.boards.ie/discussion/comment/118327979#Comment_118327979

You are right that if there was a reliable pipeline of work over the long term you would have builders and business that would rely on it. But that won't happen over night as it would require more trades people to join the labour market if it was to not impact private builds. That is something that would take 3-5 years at a minimum unless you increased labour rates to attract more people to take up trades or for people that previously worked on sites to leave alternative jobs then you end up with an increase in the cost base.

Bass Reeves

https://www.boards.ie/discussion/comment/118326666#Comment_118326666

There is a shortage of construction workers right accross Europe.

https://www.boards.ie/discussion/comment/118327979#Comment_118327979

The state has shown itself incapable of bringing in projects cheaply. Look at NCH. Builders on such a project would be stage payed, holdups and management of such projects would be chaotic and overruns would be common pmace

Timing belt

https://www.boards.ie/discussion/comment/118327730#Comment_118327730

The CPI is based on a basket of goods based on weighting of what people are spending there money on. This works well where a product is the same size, quality etc.

An individuals experience of inflation can be quite different to the CPI as their spending habits may deviate away from the basket.

e.g.

a smoker, drinker, and someone that likes holidays will feel like the CPI is showing a much lower level of inflation than they are experiencing but the actual spending of everyone in the country would be representative of the CPI at an aggregate level and hence why it is the most accurate measure of inflation.

Then you need to you take into account the fact that some people own their properties outright, whilst other people are paying a mortgage. It would not be uncommon for someone living in a house for 10-15 Years to have substantially lower mortgage repayment than someone that bought the house next door last year. So even here people will have different experiences of inflation.

As no two houses are the same the method used in the CPI for monitoring property/rent inflation it is not a good measure because it wouldn't take into account location, quality, size etc... It is for this reason that the CSO uses separate indexes to monitor property prices and rent.

L1011

https://www.boards.ie/discussion/comment/118328244#Comment_118328244

I know how it works - I just personally feel that it hasn't been vaguely accurately weighted for quite some time. I don't smoke and I wouldn't pay attention to the cost of my holidays compared to domestic costs!

The basket is based on the Household Budget Survey which is more than a little self-selecting in who does it; for starters (my parents did it or a predecessor for a cycle, a very long time ago) and often has quite comically outdated items in it - the 2016 rebase removed clock radios, disposable cameras and the cost of having a perm done. I'd imagine collecting data for those wasn't easy!

Timing belt

https://www.boards.ie/discussion/comment/118328314#Comment_118328314

my understanding of the household budget survey is that they looked at actual expenditure over a 2 week period. Or at least what people recorded as their expenditure and didn't have a predefined list of items.

L1011

https://www.boards.ie/discussion/comment/118328677#Comment_118328677

I meant the people who do it are self-selecting. There's no compulsion and no reward so you mostly get settled middle class households willing to do it and would find it quite hard to get anything else.

Mad_maxx

https://www.boards.ie/discussion/comment/118318071#Comment_118318071

Mortgage rates on BTL are very high, much higher than a home purchase mortgage