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

mcsean2163

The point being made about 3.5 times was that it meant builders didn't have confidence to build in quantity for consumers as they didn't think that the ability to buy would not be there.

The industry guy made the point that building is risky and expensive. A lot more expensive than in the past.

Some of the crap here about moving into an empty house in the 80s is ludicrous, if they didn't have furniture there were lots of charity and thrift shops in the eighties.

The issues are the building standards/ regulations, materials and cost of labour. I'm sure lots of young people would happily move into an unfurnished house. I slept on a mattress on a floor when I first moved out of home. People don't have the option to buy an unfurnished four wall house. I'm sure if they did they would.

Maybe it not a bad idea to tinker with 3.5 if it gives builders the confidence to build more quantity of the expensive houses or maybe the regulations should be eased so people can build starter houses without insulation.

Timing belt

ban investors from buying for 3 years. Would it cause more pressure in the rental market?

https://www.rte.ie/news/primetime/2022/0202/1277268-government-intervention-property-values-housing/

Wanderer78

https://www.boards.ie/discussion/comment/118569403#Comment_118569403

once again, the main reason why we re in this situation is because we ve largely ignored the money supply towards housing, in particular, the credit supply, this is in fact why the 3.5 was put into place, if its increased, it would clearly cause further price inflation, i.e. increasing the 3.5 wont work, and would be simply idiotic. there needs to be strict agreements made between the state and private sector entities, in order to get the job done, one of the main conditions that needs to be included is, 'no excess profits', but if it is found that the private sector entities would be too exposed, state guarantees need to be put into place, so that private sector entities will make some profits, and/or wont go bust....

Timing belt

https://www.boards.ie/discussion/comment/118569458#Comment_118569458

I have said this for a long time that the government should guarantee that they will buy any new property that is not sold to the private sector to give developers/builders the confidence to build. Obviously there needs to be a price cap and it wouldn't apply to houses over a certain price and would be based on building costs allowing for a modest profit on each house.

mcsean2163

https://www.boards.ie/discussion/comment/118569458#Comment_118569458

Okay... If you think no excess profits is going to encourage more home building...

The way I see it.

• Build crappier houses with lower Ber ratings.
• Change 3.5 times.
• Government subsidises house building for individuals.

These could result in more supply.

wassie

https://www.boards.ie/discussion/comment/118569403#Comment_118569403

Maybe it not a bad idea to tinker with 3.5 if it gives builders the confidence to build more quantity of the expensive houses or maybe the regulations should be eased so people can build starter houses without insulation.

Colder houses that cost more to heat is not the answer to lower housing costs. Moreover, nZEB (nearly Zero Energy Buildings) standards are an integral part of Ireland achieving its CO2 targets and transitioning to a green economy.

iColdFusion

https://www.boards.ie/discussion/comment/118569547#Comment_118569547

The government has totally thrown house buyers and self builders under the bus though, if they were serious about encouraging new houses to save the environment they would have cut or removed VAT from new builds instead its just more and more taxation that results in more debt for home buyers.

Houses are expensive to heat partly due to carbon taxes imposed by the government, increasing house prices by building regs increases the tax take for the government, smart meters have already proved to be a lie with suppliers jacking up their rates, the government is actively increasing the cost of new electric cars instead of promoting them and are slashing BIK exemptions on electric cars - its clear to me the "green economy" is just a green washed $CHA$$CHING$ to the government.

MacronvFrugals

Would this be why the markets have baked in two rate rises from the ECB?

J_1980

https://www.boards.ie/discussion/comment/118569772#Comment_118569772

that will never happen.

half the eurozone is technically bankrupt if rates rise. Soon sterling will be back to pre brexit vote levels vs the eur.

Amadan Dubh

Stats like that in the context of the amount of time inflation is sticking around and also in the ECB's failure to predict it which is indicating the ECB hasn't much of a clue.

timmyntc

https://www.boards.ie/discussion/comment/118570004#Comment_118570004

It indicates the unviability of a common currency for so many vastly different economies.

If the options are rampant monetary inflation or bankrupting several EU members, its clear that the policies that led us here in the first place were not good.

wassie

https://www.boards.ie/discussion/comment/118569701#Comment_118569701

Houses are expensive to heat partly due to carbon taxes imposed by the government,

So doesnt it make sense to reduce the running cost to heat a house in a cold climate? i.e. a higher capital cost to reduce the lifetime operational cost with additional benefits of more comfortable, healthier & safer homes for occupants. Substandard housing also tends to negtively impact those who can least afford it.

increasing house prices by building regs increases the tax take for the government

No doubt, but not to the extent you are suggesting. They Govt benefits in many ways along the property development & construction process. But building standards incrementally increase over time in line with societal expectations. Whats more, in line the Energy performance in Buildings Directive (EPBD) in, Ireland carries out a cost optimal analysis to define NZEB requirements.

The notion that Building regs are randomly introduced by a Govt motivated to increase its revenue is nonsense. Building Regs are generally extremely well considered before being brought into law. All of the Part L regs are also being driven by the EU, so we have little choice in the matter.

smart meters have already proved to be a lie with suppliers jacking up their rates

How are they proved? The reasons for rising electricity costs are fairly well established by now, but Im not aware of any evidence of smart meters having an effect of increasing the wholesale price of electricity. Smart meters will assist the network operator to actively managing & upgrading the network more efficiently by providing close to real time data. This actually helps drive costs down.

the government is actively increasing the cost of new electric cars instead of promoting them and are slashing BIK exemptions on electric cars - its clear to me the "green economy" is just a green washed $CHA$$CHING$ to the government.

I have a leased EV and fully aware of the BIK exemption. Yes the exemptions are being wound down, but this is simply normalizing as the national fleet transitions to electric (personally I think the Govt are doing this too early). You wont have any argument from me on VRT of new cars.

There is no doubt increased building regs over the years have contributed to an increase in construction costs, but again, so have our expectations as a society. But I think you are overplaying the role of Building Regs in adversely affecting housing affordability.

mcsean2163

https://www.boards.ie/discussion/comment/118569547#Comment_118569547

I'm sure a lot of people are more interested in getting out from under their parents feet or away from extortionate rents than co2 targets. If the government wants a greener economy, let it pay the extra cost associated with the Ber ratings or else loosen the building regulations..

In 2009, the house we were renting had frost on the inside of our windows. I would rather have been there than in my parents a rated house. A lot of people need freedom/ independence more than a high BER rating.

wassie

Again, the notion of building regulations reducing affordability is being overplayed.

When we went from A2 in A3, modelling showed the increase in cost was 1.9%, this was estimated to be €8000 on a €400k house. Obviously in 2022 this has increased, in line with everything else. But this is offset by annual running costs being cheaper so savings are made every year by the occupier - again the gap is widening as energy prices spiral.

It would also have zero impact on increasing supply. We need more houses and Building Regulations is not stifling this.

iColdFusion

https://www.boards.ie/discussion/comment/118570026#Comment_118570026

I think they have gone too far though, a well built B1-B3 rated house is perfectly fine for the vast majority of people to live comfortably in but the government have dropped the ball on meeting their environment targets so they have to squeeze home builders even more, adding 25k of build cost (circa 35k of mortgage debt) onto a house to save €500 a year is madness. If someone wants to build an A1/A2 house and has the budget for it that's great but most people don't need that.

Smart meters were sold as heralding a new age of cheap rates for heat pumps and EV charging to save the environment but instead are nearly all more expensive than an old day/night meter.

And I agree with you its far too early to start rolling back on schemes promoting EV's considering our adoption is still quite low but again the government don't really care about the environment its just an excuse to bring in more money and they love money!

Timing belt

https://www.boards.ie/discussion/comment/118570025#Comment_118570025

It's not about bankrupting several EU member states... The reason that the EU are holding of raising rates is because at European level the economy is not strong enough and raising rates risks causing a recession. Rates will start to rise when there are signs of wage growth through out Europe to stop a wage/inflation spiral. This is what is happening in the USA and UK and hence why they are raising rates.

Marius34

https://www.boards.ie/discussion/comment/118568904#Comment_118568904

"But what happens if they got to 8%.. . I know people say that is unlikely rates will go up that far but you never know especially with inflation at current levels."

If the interest rates and inflation goes high, it's not that bed for current buyers in long term. It might hurt in the start, but may be better off in longer term.

Timing belt

If anyone watched prime time last night here is the report that was mentioned:

https://www.rte.ie/news/primetime/2022/0202/1277269-the-data-behind-the-story-housing-really-is-less-affordable/

SmokyMo

https://www.boards.ie/discussion/comment/118570274#Comment_118570274

That makes sense for inflation. But how do high rates benefit current buyers?

hometruths

https://www.boards.ie/discussion/comment/118569772#Comment_118569772

It gets more transitory every month.

timmyntc

https://www.boards.ie/discussion/comment/118570384#Comment_118570384

They dont benefit current buyers, they benefit future buyers are rates drive asset prices downward.

https://www.boards.ie/discussion/comment/118570240#Comment_118570240

Its obviously not intentionally done to bankrupt countries, but the reality is wage inflation will not pick up evenly across the EU, but eventually there will be a decision to either raise rates to combat inflation (potentially crashing some of the more indebted countries) or let inflation keep rising. We are likely to see wage inflation in the stronger economies first, which will drive inflation higher again - likely wont be as drastic in poorer countries, at least not initially.

When the rate rise does come it will be to suit Germany/France and to the detriment of PIIGS, same way the common currency has always worked ultimately.

Timing belt

https://www.boards.ie/discussion/comment/118570394#Comment_118570394

Must be down to the velocity of money

Marius34

https://www.boards.ie/discussion/comment/118570384#Comment_118570384

Interest rates would likely be high due to high inflation. Thus their overall mortgage pay likely to end up lower percentage of their total earnings. It would be more painful only the first few years of the interest rate rise.

Villa05

https://www.boards.ie/discussion/comment/118570240#Comment_118570240

Is the UK economy strong? If wage inflation exists there, the root cause is probably Brexit discouraging inflows of labour and encouraging outflows

wassie

https://www.boards.ie/discussion/comment/118570196#Comment_118570196

I think they have gone too far though, a well built B1-B3 rated house is perfectly fine for the vast majority of people to live comfortably in but the government have dropped the ball on meeting their environment targets so they have to squeeze home builders even more, adding 25k of build cost (circa 35k of mortgage debt) onto a house to save €500 a year is madness. If someone wants to build an A1/A2 house and has the budget for it that's great but most people don't need that

Air tightness is a major difference between B1-3 & A2. Its a cheap win in comparison to the effect it can have on heating costs by maintaining even temperatures. I'd suggest your annual savings would be far greater than €500 year, especially given gas prices now.

Either way its a moot discussion as the reality is residential housing is a major contributor to emissions in Ireland and it needs to be curbed to meet our agreed CO2 targets. I'm not advocating for it, just pointing out the facts. The low hanging fruit is new building.

Retrofitting older houses is a different story and this is where there are significant cost burdens and here the state is stumping up somewhat. But I think they should do much more and here is where some bold policy is required. But Pascal and Co. have shown they aren't prepared to think big over the last 2 years.

The EU will fund green initiatives on a national scale and we should be using this once in a generation opportunity to upgrade housing in this country. The economic benefits would multiply in terms of job creation and benefit all home owners in the long term term. Except not sure where we get the workers from cause we cant house them.

Also I don't argue in favour of the BER rating system. It has a lot of assumptions built into the modelling and whether or not it is fit for purpose is a technical discussion within itself.

If you want the Govt to tackle affordability, reducing Building Regs, which have a functional purpose is not the way to do.

I have a much easier suggestion - simply amend the Family Home Protection Act and bring the ability for lenders to repossess long term defaulters in line with the rest of Europe & UK and that would be a start. This would encourage new lenders, to come back into the market, creating competition and drive interest rates down.

Smart meters were sold as heralding a new age of cheap rates for heat pumps and EV charging to save the environment but instead are nearly all more expensive than an old day/night meter.

No they don't. It is the consumption of electricity that is expensive and smart meters are designed to influence behavior change to reduce that consumption. If you don't want to change behaviour, your going to pay for it.

What is concerning about smart meters however is obsolescence - AFAIK (stand to be corrected) they operate on the 2G cellular network. If that network is made redundant (i.e. switched off as many countries have done) then all these units will need to be upgraded. Any new meter installed should be operating on at least the LTE network, 5G preferable but we haven't built it out yet.

Timing belt

https://www.boards.ie/discussion/comment/118570521#Comment_118570521

You are correct a lot of it is down to Brexit. Come tomorrow home owners will really fell the pain rates rising and the energy cap rolling over to significantly higher prices.

Timing belt

https://www.boards.ie/discussion/comment/118570420#Comment_118570420

It’s the Eastern European states that are seeing the largest inflation and wage inflation. But I agree the will need to raise rates eventually if the economy keeps growing

csense

By this point, everything taken into consideration, there isn't a shadow of a doubt that

A) very few unintended consequences aside, most of this housing situation has been orchestrated to be exactly what it is. No mistakes or accidents. It is the result of competence, not its antonym.

B) the situation will not be rectified, no matter which flag is flying over any government.

C) the situation is untenable and societal chaos is the only conclusion, next year, 10 years, 30 years or what have you. It is hardwired now. Might be enough time to still get a nice wad of cash, says you, but where are you going to go with your wad of cash when it all comes down? You'll still be here, and your family, living the result of the wad.

If the same scenario had been allowed develop for food, with common food prices rapidly moving out of the affordability range of most people, it would be easier to see the same conclusions. Foreign entities controlling larger and larger tracts of food production, less and less power in the hands of any government, more and more people to feed. Easier or not to see, it doesn't change the fact that these two necessary strands of a population tend toward disaster if managed incorrectly.

I don't know much at all of this eirigi crowd, but having researched a bit following the primetime programme they popped up with their "vulture map". Just look it up, "eirigi vulture map" on google.

Accurate or not, it is one of many signs of the road this country has been brought purposefully down; that is to say, lists are starting to be made, groups are starting to form, anger is palpable.

All those other invisible investors would probably be best off not ending up on lists. I wonder what a spiderweb of portfolios linked to politicians would reveal? I don't wonder at all, actually.

A figurative bull wall may be lined again with those told to get out, and to hell with an economy that benefits fewer and fewer people by the day.

ittakestwo

https://www.boards.ie/discussion/comment/118569994#Comment_118569994

The markets have priced in two rate rises.

BTW under Masstrict, low economic or even an economy in recession is not reason not to raise rates. All Masstrict says is the ECB are obliged to keep inflation under 2% in the medium term regardless of other economic conditions. They are holding fire now because of the pandemic and saying things like they believe it is temporary so they are not breaking Masstrict. But if inflation persists those rates are going up.

SmokyMo

https://www.boards.ie/discussion/comment/118570436#Comment_118570436

So youre saying even with high rates you will pay less in real terms over long enough period with sustained high inflation?