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

jimmybobbyschweiz

https://www.boards.ie/discussion/comment/119646214#Comment_119646214

HAP is a two birds with one stone policy for the government; it puts a very high floor under the rental market which we know by know inflates the whole property market and it also appears to deal with the populist-termed homelessness problem.

It is ultimately a hugely expensive demand-side expenditure that does not increase supply. If rents only fell to 80/85% of their current levels, they would still be unsustainably high which is why I think there is scope, based on a simple measurement against what wages are in this country, for a more significant correction. Then the state (IE the taxpayer) will be on the hook for above market rents for institutionals when the correction occurs - it's ridiculous.

LJ12345

https://www.boards.ie/discussion/comment/119644954#Comment_119644954

yes when you look at the micro perspective but when you pan out and look for the domino effect and where it could start, it’s probable the imploding Chinese property market and its economy will be the final straw when it becomes visible that the debt is being called in, the interconnected global web of reits and funds and lending practices is probably going to end up as movie material one day. China is an incredibly dubious player to have as one of the worlds leading economies.

https://www.bloomberg.com/news/articles/2022-08-24/blackrock-ubs-among-funds-slashing-exposure-to-china-property

Dav010

https://www.boards.ie/discussion/comment/119647820#Comment_119647820

And the alternative to Government support for Hap recipients?

Complaining about HAP while failing to understand why it is necessary shows a lack of understanding. Homelessness isn’t a “populist termed problem”, perhaps you should ask families living in hotels if it is real, or just a catchphrase.

Timing belt

https://www.boards.ie/discussion/comment/119647882#Comment_119647882

Hotels and hostels are practically full now so would be lucky to be housed anywhere at this stage and it’s meant to get worse over the winter.

Dav010

https://www.boards.ie/discussion/comment/119647902#Comment_119647902

I could be wrong but it seems that our Swiss resident thinks eviction of HAP recipients is a price worth paying for lowering of rents for private tenants.

Timing belt

https://www.boards.ie/discussion/comment/119647879#Comment_119647879

China is an insulated economy with an artificial exchange rate and trillions of USD and other hard currencies They may burn investors to teach a lesson but there won’t be a major collapse as they have the resources to refinance the economy and are not reliant on international bond holders to bail them out. Let’s not forget that they introduced the 3 red lines policy to control the property market and orchestrate what’s happening.

Timing belt

https://www.boards.ie/discussion/comment/119647914#Comment_119647914

Think it’s more a case of burn the economy…set fire to everything!!!!! I won’t be impacted and will still have my job and level of pay so will be better off than I am now… make people sleep under bridges I don’t care as long as I can buy cheap.

LJ12345

https://www.boards.ie/discussion/comment/119647937#Comment_119647937

The Chinese govt are not propping up the Chinese developers or their property market. The 3 red lines were brought in to bring developers back in to line that attempted to dictate to their govt and to speed up the inevitable fallout from their obvious bubble. What matters here is the global funds and Chinese funds which invested globally. The sell off from that debt being called in will satiate demand for the remaining solvent funds. This could be the reason Irish developers are reporting their intention to scale back.

Timing belt

https://www.boards.ie/discussion/comment/119648036#Comment_119648036

Never said they were propping up developers said the deliberately introduced policy and it is engineered and If it gets to a stage of contagion they will step in bail out banks etc or take over developers companies and turn them into state assets. The last thing they want is social unrest so they will only let it go so far.

Irish developers are scaling back because they no longer can guarantee that it will cost x to build.

Villa05

https://www.boards.ie/discussion/comment/119647710#Comment_119647710

Is it common to hang out the person that was calling the scam for years prior to the bust or is this just an Irish phenomenon

mcsean2163

https://www.boards.ie/discussion/comment/119645955#Comment_119645955

His response is that it was meant to be a guarantee limited by time. I think the limitation is easier said than done.... however, probably wasn't the worst to have the IMF come in rather than the government digging an even bigger hole. The bank guarantee (total cost 42 billion https://pai.ie/bank-bailout-costs-state-nearly-e42-billion/) didn't cost that much in comparison to the day to day running of the country (national debt 37.6bn (2007) 241bn (2022)). NTMA don't care about hundreds of millions anymore....😂 , so 241 -38 -42 =161

161 billion to pay government salaries, unemployment, etc. Crazy where we've ended up in 15 years. People to continue to shout for more spending on this thread saying GNI matters not gross national debt😝

LJ12345

https://www.boards.ie/discussion/comment/119648126#Comment_119648126

I was filling you in and elaborating on my earlier post, as you took what I said on a different tangent to what was intended. I’m referring to the fallout of reits and funds.

irish developers are reporting handsome profits. In a market which is allegedly so short on supply with so much demand and materials likely to drop in price (demand for building supplies slowing globally as many more countries appear poised to begin a downward spiral), it seems unusual they would put any halt on construction. Perhaps they believe a hard recession is inbound, perhaps they’re attempting to blackmail the govt for more incentives or maybe they’re trying to scare people into buying. Either way, what they say and what the situation is doesn’t corroborate well.

jimmybobbyschweiz

https://www.boards.ie/discussion/comment/119645937#Comment_119645937

Of course it was and is FG policy for the market to rise! Here is Noonan back in 2014 talking about it https://m.independent.ie/life/home-garden/homes/michael-noonan-wants-house-prices-to-rise-further-30192456.html

And getting into bed with the institutionals is not a big shock when we know FG are all about the big corporates. Here are a few examples;

- Owen Keegan of DCC is former Davy and Davy have done so many deals with DCC via their controlled entities to get on board with these social housing long term leases. I don't think this is a coincidence when these have been consistently described as being poor value for the State and not assisting with the delivery of more supply of homes.

- We had a 4% RPZ rental increase limit imposed a few years ago. Firstly, it was odd that it was not a rental freeze as even 4% rent increases per year far outmeasured inflation. However, institutionals have their targeted yields and the 4% p.a. increases align with those targets so that clearly seemed to be institutional driven.

- Pat Farrel is head of Irish Institutional Property, which is the largest real estate institutional investor lobby group in ireland. He is paid for this role. What are his qualifications? Former FF, with plenty of political contacts which of course are valuable, hence why is leading the lobby group.

- The housing charities, AKA the NGOs that FG love to hide behind, typically have an institutional investor representative involved with them. For example, look at the tentacles of institutional investors on the board of Cluid https://www.cluid.ie/our-board/ these housing charities allow for indirect lobbying of the government by institutionals.

The housing market in Ireland is ridiculously manipulated and not for the long term sustainability interests of most people, but instead to enrich a select few. It is a pyramid scheme where good quality State cash is being siphoned off and put into the pockets of property owners where it dies essentially; it requires constantly growing cash piles of State cash to keep increasing in value as the State is the whale in the market, blowing up the bubble.

Timing belt

https://www.boards.ie/discussion/comment/119648284#Comment_119648284

it was his idea and he was unable to see the knock on impacts… how is that hanging him out…wouldn’t trust him with my piggy bank not to mention my pension

Timing belt

https://www.boards.ie/discussion/comment/119648392#Comment_119648392

How long does it take to break ground and build and then sell? Unless all delivery’s and machinery run on Air costs have gone through the room.

if you wanted an extension built and the builder couldn’t say how much it would cost would you go ahead and give it the green light or wait till

Dav010

https://www.boards.ie/discussion/comment/119648471#Comment_119648471

You are misrepresenting the context of the discussion. The discussion took place in 2014 when prices were 50% below peak and developers were unwilling to build because there was no profit in selling houses. He was stating that if the necessary houses were to be built, prices would have to rise. Also, a considerable number of people were in negative equity, unable to sell properties with high mortgages and low value.

You are taking a myopic view of certain parts of the market, using them to suit your narrative without any understanding of how the multiple parts fit together. It was at least as important for property prices to rise at that time as it now for them to fall. The construction sector was at a standstill as Ireland was emerging from recession.

As devastating as poorly thought out RPZ legislation has been on the the rental sector, a rent freeze, which commentators have said would be constitutionally challenging, would have obliterated it as LLs would flee the market in even greater numbers. The emergency legislation enacted during Covid escaped close scrutiny simply because of the unchartered waters the country found itself in, but the legality of a total and lasting rent freeze would undoubtedly be challenged as LLs ignored it.

IWW2900

More fed rate hikes today. Looking forward to the ECB update in a few weeks.

When the price dropping starts to really kick into gear, the hysteria by people who bought at the top of this cycle is going to be sad. Some Countries are going to see spectacular drops. But, it is necessary.

LJ12345

https://www.boards.ie/discussion/comment/119648515#Comment_119648515

Developers are in business to build and the increase in materials price has been the main excuse for putting up their asking prices and subsequent huge profits. Assuming we are genuinely in need of supply the top down control of Irelands housing supply needs a serious shake up. Perhaps that’ll happen if overseas developers short on work head this way and employ all the staff our current lot aren’t using because the price of materials ‘might’ go up.

IWW2900

New Zealand already dropping at quickest rate on record. But property there has a long way to go yet.

greenfield21

And the fed pivot going further away...fun times.

Dav010

https://www.boards.ie/discussion/comment/119648569#Comment_119648569

Just to provide some perspective on this, the average house price in New Zealand nationally currently stands at just under $1m, and in August the national average house price fell by 1.8%. They have two of the most expensive cities in the world to live in/buy property, I’m not sure why you think that is related to Irelands market, this article says there is a small pool of buyers there.

https://amp.theguardian.com/world/2022/sep/01/new-zealand-house-prices-continue-to-plunge-as-national-average-falls-below-1m

IWW2900

https://www.boards.ie/discussion/comment/119648622#Comment_119648622

Of course the more speculative and over leveraged markets will see biggest drops. I'm just highlighting that property everywhere has gone up due to low rates. The reverse will be true.

Its important for people to understand the effect of globalization on even little old Ireland.

LJ12345

https://www.boards.ie/discussion/comment/119648284#Comment_119648284

i think there’s a poster or 2 with some skin in the game!

Dav010

https://www.boards.ie/discussion/comment/119648636#Comment_119648636

Are there limits on borrowing like the type imposed here? And as you will see from the article the expectation is that borrowers will be able to absorb the rate rises, New Zealand has some of the highest average personal wealth in the world, a lower rate of ownership and unlike Ireland, a small pool of prospective buyers.

Dav010

https://www.boards.ie/discussion/comment/119648648#Comment_119648648

Are you surprised that in a discussion like this, there will be owners, buyers, renters, LLs and HAP recipients, everyone has skin in the game.

Ozark707

https://www.boards.ie/discussion/comment/119648622#Comment_119648622

Re the small pool of buyers...does the article not infer it is due to credit restrictions?

“With the evidence of market downturn clear in every corner of the country, the already-smaller pool of would-be buyers – due to tighter, more expensive credit – are happy to bide their time in the falling market,” Goodall said.

LJ12345

https://www.boards.ie/discussion/comment/119648675#Comment_119648675

Some more than others

Dav010

https://www.boards.ie/discussion/comment/119648679#Comment_119648679

I had a quick search for lending rules in NZ and couldn’t find any on a par without our limits related to income, but I’ll admit I only went through a few pages on google.

Dav010

https://www.boards.ie/discussion/comment/119648680#Comment_119648680

No doubt.

Cyrus

https://www.boards.ie/discussion/comment/119648680#Comment_119648680

those that tend to shout loudest are hopeful buyers who expect the impending financial Armageddon that they predict to impact everyone but themselves ….