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

DataDude

https://www.boards.ie/discussion/comment/121710208#Comment_121710208

Fair play to him, but this hardly necessarily proves anything in terms of pricing?

If you don’t have to pay:

Public liability insurance, wages, employers taxes, personal taxes, transportation for workers, insurance for said transportation etc etc. it will naturally be a fair bit cheaper to do something.

If you use a piece of string and a door to take out a tooth it’ll probably be cheaper than the dentist too. Doesn’t mean he’s gouging you.

DataDude

https://www.boards.ie/discussion/comment/121710418#Comment_121710418

Whatever about ‘developers’. But I do think a lot of problems we have today in terms of a lack of labour is due to the lack of respect we as a society give to people in the construction industry.

People (not saying you!) talking down on builders, electricians, plumbers etc and accusing them of ‘gouging’.

They are much much more valuable to a functioning society than the fabled nurses we all love to put out as the gold standard for admirable jobs. All without much job security, pensions and in generally tough working environments.

I think if we as a society placed the same level of respect on all people who are linked to building (this includes financing, cause that matters too) of infrastructure, perhaps we might not be in such a mess.

Dav010

https://www.boards.ie/discussion/comment/121710418#Comment_121710418

That isn’t the amazing thing about your post though.

Developers didn’t bankrupt the country, easy credit, lax regulation, over supply, world economic events, and yes, the public’s seemingly insatiable appetite to own properties at the time all played a part.

You can talk about the government should do this, they should do that, they should tax unused land etc etc, but in the end, anyone with even a modicum of understanding of how housing supply works, understands that to meet the huge number of properties needed, private develops have to build houses, something they will not do unless they profit from building them.

hometruths

https://www.boards.ie/discussion/comment/121710530#Comment_121710530

Granted I'm being a bit facetious, but I'm not really talking down developers, more I'm talking down those pushing the narrative that there is little room for house prices to fall because the developers will get spooked and stop building. There is plenty of that around - from our politicians, media and from posters on here.

As far developers go, irrespective of whether it's the banks (07 etc) handing out money like confetti or the government (now), it's not their fault, and I wouldn't expect them to do anything other than cash in and make hay when the sun shines.

The figures most often cited to justify the narrative that current market values are essentially developers are building at cost with a small but fair profit margin built in are simply lobbying efforts produced by the construction industry.

They don't stand up to scrutiny, and it's not the developers fault that nobody is scrutinising them.

hometruths

https://www.boards.ie/discussion/comment/121710579#Comment_121710579

You can talk about the government should do this, they should do that, they should tax unused land etc etc, but in the end, anyone with even a modicum of understanding of how housing supply works, understands that to meet the huge number of properties needed, private develops have to build houses, something they will not do unless they profit from building them.

I understand this perfectly well. I am not suggesting that developers should be building houses at a loss. I am disputing the idea that they are currently operating on such thin profit margins that if prices fell, none of them would be able to turn a profit.

Blut2

https://www.boards.ie/discussion/comment/121710530#Comment_121710530

They should absolutely be respected more, and pushed more by guidance councillors. But the even faster way to change things is financially.

The wage for a first year apprentice in 2024 is 286euro a week, for a second year 430euro a week. Significantly less than a generic minimum wage job that requires far less effort, nevermind any sort of even entry level clerical job.

Its no wonder its hard to get young people into the trades when they start off paying so poorly. They should be a decent margin above minimum wage (which is 508e p/w now) at the very least from year one.

Anyone any suggestions regarding rates for first time buyer? Currently being offered 5% for 3 years or 5.1% for 5 years if we fix. Seeing lots of info going online about rates coming down but obviously nobody knows for certain. These are both offering 2% cash back with the 5 year another 1%.

we can certainly afford to fix for 5 years but would we be better off doing 3 and seeing if they come down?

MentalMario

https://www.boards.ie/discussion/comment/121710927#Comment_121710927

Go to Bonkers.ie and put in your details. 5% seems very high. Most lenders are doing under 4% fixed rates for 4 or 5 years.

combat14

https://www.boards.ie/discussion/comment/121705843#Comment_121705843

no way RPZ will be removed at present government would be out on their ear

RichardAnd

https://www.boards.ie/discussion/comment/121710927#Comment_121710927

In my opinion, rates are going to come down in the next few months, but likely they will not reach the extremely low levels of the pre-lockdown era.

The Student

https://www.boards.ie/discussion/comment/121710092#Comment_121710092

Any politician/political party who can solve housing would win a landslide victory in the next election. It looks like it is not as easy as some would believe.

https://www.boards.ie/discussion/comment/121710331#Comment_121710331

Land & labour costs are higher in Urban areas. These input costs are less in the country and as such lead into the cost of a property. Development levies and all the various charges add to the costs. Subsidising infrastructure by Dublin to the country also plays a part in the costs be they connections to water, ESB etc.

https://www.boards.ie/discussion/comment/121710418#Comment_121710418

If there is no/not enough profit than a rational business person does not invest. You can't have it both ways if you want private sector efficiency you get it when its economical to do so. If you want State inefficiency you have to pay for it.

The Student

https://www.boards.ie/discussion/comment/121710774#Comment_121710774

Who pays for these increased wages? This is the general problem we have in Ireland we end up pricing ourselves out of everything. Increase wages to help people survive so increase prices and the wage price spiral continues.

Then as prices and wages rise welfare rates have to rise and taxes are then needed to fund these rises and then wage demands increase and we go around in the same circle.

Padre_Pio

https://www.boards.ie/discussion/comment/121711358#Comment_121711358

There's no way that extra cost for land, labour and various charges add 350,000 to the price of a semi detached house.

timmyntc

https://www.boards.ie/discussion/comment/121711528#Comment_121711528

Especially seeing as most of the labour building in Dublin is imported from the regions, and NI, where cost of living is much lower.

A slight premium in labour, but not near 350k worth on a house.

hometruths

https://www.boards.ie/discussion/comment/121711528#Comment_121711528

It's truly astonishing how many people appear to genuinely believe it nonetheless.

The reason house prices cost more in 350k more in Dublin is simply down to greater demand for the location, hence the market price is higher.

That's totally understandable. Why so many people attempt to claim the difference is down to other factors is far less understandable!

The Student

https://www.boards.ie/discussion/comment/121711528#Comment_121711528

If you look at this from a business perspective leave emotions out of the analysis. A developer runs the risk of holding land and does not develop it, so interest rates increase, or we have a downturn in the economy and money and confidence drops. So a developer has an asset that is not earning him any money at all.

Logic would suggest that a developer build and to do that he has to charge the price he has to charge to get a return. I know on a personal level trying to get a trades person is very difficult to even do simple job simply because we don't have enough of them. So if you want to build you have to pay to get the trades people and to get them they will charge what they can basic economics (if demand is greater than supply supernormal profits are earned).

These costs have to be recouped hence they are included in the cost of the property. The banks wont lend the way they did as they don't want to take a risk.

We all agree to bring down prices you need supply of everything, labour, materials etc however labour has to be paid, material prices have increased significantly and there is not a huge amount we can do about this as we import alot of them. Lack of building of social housing and our generous welfare system when it comes to housing (and other elements eg reduction in welfare payments for Ukranians as the Govt acknowledge our welfare system is attracting asylum seekers and refugees).

hometruths

https://www.boards.ie/discussion/comment/121711783#Comment_121711783

So if you want to build you have to pay to get the trades people and to get them they will charge what they can basic economics (if demand is greater than supply supernormal profits are earned).

So if the supply of tradesmen are currently making supernormal profits because demand for labour is currently greater than supply then surely it follows that the developers are currently making supernormal profits because demand for houses is currently greater supply?

Padre_Pio

https://www.boards.ie/discussion/comment/121711783#Comment_121711783

I agree with everything you have said, but it does not explain your comment that there is "not huge money to be made" when houses in Dublin are twice the cost of similar houses in rural areas.

Padre_Pio

https://www.boards.ie/discussion/comment/121711822#Comment_121711822

I don't think there is a huge shortage of trades in construction. It was true maybe a few years ago, but there is definitely more.

Anecdotally there are a lot more ads posted by plumbers, tilers, roofers and flooring lads on done deal in recent months.

hometruths

https://www.boards.ie/discussion/comment/121711897#Comment_121711897

TBH I wasn't really making a point re the number of tradesmen available, I was just curious as to why @The Student appears to believe the tradesmen are making supernormal profits but the developers are not.

The Student

https://www.boards.ie/discussion/comment/121711822#Comment_121711822

Not necessarily supernormal profits attract new suppliers to the market and reduce supernormal profits to normal profits. Developers can't develop if they don't have the trades people to do the work.

The Student

https://www.boards.ie/discussion/comment/121711892#Comment_121711892

I did not say there is not huge money to be made. I merely posted a Journal article that made that ascertain. While I am an accountant by profession I am not involved in the housing sector nor do I have any insights into it but looking at it from the outside it makes no business sense to me that developers will price themselves out of business which is exactly what they appear to be doing.

Why would you price an item at a level that people can't afford? it makes no business sense? It is all over the media what people need to earn to afford a property now (this in my view is headline grabbing as both of my nieces and partners have purchased three bedroom secondhand houses in Dublin while all four are on modest incomes and all are in there late 20's).

Maybe if the govt relaxed/removed the part 5 requirements (maybe they already have) house prices would reduce. 80% of properties in new developments are subsidising the 20% required for the part 5 requirements. If you are looking at a house at as in your example of a €700k house. How much of that is a subsidizing the part 5? could it be €50k, €75k or even €100k per property ?

hometruths

https://www.boards.ie/discussion/comment/121711976#Comment_121711976

I am talking about houses that have already been built. But I think you knew that.

It's quite something the lengths some will go to simply to avoid the suggestion that developers might be making fat profits.

Which brings to me back to my original point - "It's amazing how quickly developers went from pariahs who bankrupted the country with their price gouging to noble entrepreneurs struggling to make a honest buck"

It's the not the fact that developers are making fat profits that I am objecting to - I don't have a problem with that.

What I'm objecting to is the pretence that they're somehow struggling to make profits at all. It's bizarre.

Blut2

https://www.boards.ie/discussion/comment/121711399#Comment_121711399

On a Dublin house with an average price of €430k how much do you think increasing the wages of first year apprentices would add to the price of the house?

And how much of that would be offset by us having far more tradesmen in a few years, building more houses, reducing the demand in the market?

Nevermind the moral or practical issues here - do you think its right that someone working a difficult, physical, job thats very neccessary to the country gets paid 286eur for 40hours of work? And how do you suggest someone earning 286euro a week supports themself on that, if they aren't living in their parents house?

The country is, and has been for a number of years, crying out for more tradesmen. Theres no point in wringing our hands and saying "why won't the youth go into the trades!!" when the very obvious answer is because its a hard job thats very poorly paid for the first few years. Fix that and the numbers would shoot up.

The Student

https://www.boards.ie/discussion/comment/121712032#Comment_121712032

Developers did not bankrupt the country as has already been suggested to you. It was loose credit, people taking 100%/110% mortgages people not stress testing themselves for interest rate increases.

Do you think people were forced to take these mortgages?

The Student

https://www.boards.ie/discussion/comment/121712081#Comment_121712081

Okay lets say you give an increase to an apprentice. Then the second year apprentice looks for more, then the third year apprentice looks for more and so on. They other trades see this and they say they want an increase.

Look at the Trade Unions, once one unions go into for a pay rise you can bet shortly after the next one is going and for their increases. You can't deal with one aspect without it having a ripple effect.

People will pick those jobs that pay them the most and are easy thats human nature. Maybe tax breaks should be given to those who take up these roles that way everybody pays by subsidising those in these roles by covering their tax liability. While I admire your moral standpoint Ireland of 2024 is nothing like Ireland of the 1980's & 1990's where we more together as a society. Ireland is becoming more me, myself and I rather than "we"

hometruths

https://www.boards.ie/discussion/comment/121712087#Comment_121712087

As I explained above i was making a comment on the narrative not the developers.

I don't believe developers bankrupted the country in 07 any more than I believe they're struggling to make a buck today.

No I don't think people were forced to take those mortgages. The people who took out loans and mortgages they could not afford were the ones who were at fault.

And as I've said many times on this forum we should have let the banks repossess those problem mortgages 15 years ago.

But of course that wasn't the narrative at the time.

Blut2

https://www.boards.ie/discussion/comment/121712132#Comment_121712132

You haven't answered my question. Labour only makes up circa 25% of the overall cost of a house, and most of that goes to qualified workers - not the tiny number of 1st and 2nd year apprentices. The idea that a few 1st year apprentices suddenly getting minimum wage would drive up the salaries of qualified tradesmen earning 25euro+ a hour to unsustainable levels is nonsense. By that logic nobody in retail, or hospitality, or any other industry should get paid minimum wage either, because it would just drive up the salaries of everyone in the shop/restaurant/etc.

Someone earning 286euro a week is paying no tax per year already, thats a yearly income of €14872. They don't earn enough to pay tax, or get tax breaks.

Timing belt

https://www.boards.ie/discussion/comment/121711528#Comment_121711528

It will mainly be cost of land and the profits included within this cost that are not shown as developers profit on construction.

e.g.

Developer buys site from 3rd party for 100k via an investment company and then sells onto building company for 300k.

cost of site is then recorded as 300k and the 200k profit is not shown as it sits in separate company. Developer can then claim only making a small margin.

The Student

https://www.boards.ie/discussion/comment/121712169#Comment_121712169

OK let me ask you to can give me an example where a union/trade body will negotiate a pay rise for one grade/level and does not seek a similar if not a higher increase for other that they represent.

Do you actually think those not getting a pay rise will just accept it?