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

Timing belt

https://www.boards.ie/discussion/comment/117917723#Comment_117917723

Let's not forget that China has intervened with it's 3 red lines policy to slow down property appreciation and this is what has started the Evergrande crisis by limiting the amount of new debt that they can borrow. They can easily step in to resolve the situation but don't see them doing this as this would only send a wrong signal to the Chinese housing market.

The only way I see it escalating to a stage of investors/funds dumping property in Europe is if there are more companies like Evergrande that run into cashflow problems on the back of the 3 red lines policy. (i.e. if more companies have similar issues investors loose all confidence in Chinese investments and we have a total collapse)

Personally I don't see that happening especially when there are a lot of tools that China can use to prevent it. What I think is more likely is that China will step in and protect the 1+Million people that have a deposit for property and take over the company with investors accepting a large haircut or new terms.

mcsean2163

https://www.boards.ie/discussion/comment/117917862#Comment_117917862

Just reading a book by Cixin Liu. I wonder if Xi may be intentionally asserting power.

Evergrande collapse could affect contractors, suppliers, bank and possibly cryptocurrency (tether). Margin calls could have big affects.

wassie

I'm not seeing this a China's Lehman Bros moment. As troubled as these developers are, even though they have relatively large balance sheets, are not financial institutions. My reading of the situation is that the major financial institutions have limited exposure those that do are mainly state-owned enterprises and could avail of direct support from the Chinese Govt if warranted. A bailout of Evergrande is unlikely as opposed to an orderly restructure that would take years to resolve.

Local markets there have also responded seemingly positive at the end of trade. (The Chinese market is closed for local holidays). As for implications for our property market at the moment.....none at the moment. But this does have probably a long way to run.

Pussyhands

https://www.boards.ie/discussion/comment/117916384#Comment_117916384

A lot of chinese stocks have been in a bear market for the last 6-8 months.

BABA (which I have 73 shares) was down 49% in the last 6/8 months before yesterday and still dropped 5% yesterday.

Pussyhands

If the number of chinese investors in real estate globally is as big as some commentators say it is, then if they need to pay debts they could sell their oversea holdings.

I don't know what way it will play out but the guys speaking with their money usually know more than us and sometimes they're even late. Like the S&P500 made an All Time High in late February 2020 when Covid was sweeping europe and china.

If this Evergrande thing is the real deal, it will be a bleed of events over months.

All I know is I would be very nervous if I just bought a property here with prices the way they are.

fliball123

https://www.boards.ie/discussion/comment/117918322#Comment_117918322

Can anyone show me a point in history where Irish property has been interconnected with the goings on of the Chinese property market. If I just bought a property here I would be very happy as with the way the IRISH Markte is our lack of supply and huge demand prices are only going up for the next 3-5 years.

Pussyhands

https://www.boards.ie/discussion/comment/117918454#Comment_117918454

Just because the Chinese didn't invest in Irish property 30 years ago doesn't mean they didn't invest in recent years.

https://www.rte.ie/news/business/2021/0511/1220957-irish-institutional-property-analysis/

Between 2017 and 2019, 80% of funding for housing came from foreign investors.

Then we have chinese investments in irish property because the chinese wanted to take their money outside of China. If they need to pay debts, they could sell.

youtube!

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….

youtube!

evergrande bound to have a big impact

fliball123

https://www.boards.ie/discussion/comment/117918491#Comment_117918491

And there is an overly huge queue of first time buyers and immigrants waiting to buy if they do. As long as supply < demand prices are not going down. Have you any stats on the % of the Irish property market which have been bought or are in possession of Chinese people/companies??

wassie

https://www.boards.ie/discussion/comment/117918538#Comment_117918538

On what?

And why?

youtube!

Worldwide exposure. They have not paid contractors for months . There are videos circulating from recently completed skyscrapers actually being demolished in protest from unpaid main contractors. There are a run on Chinese banks as a consequence. Don’t think it won’t have a huge ripple effect unless the Chinese government intervene which is highly unlikely.

timmyntc

https://www.boards.ie/discussion/comment/117918608#Comment_117918608

How will it effect irish property?

To my knowledge there isnt massive chinese investment in Irish property. Nor would Chinese property crashing impact most of the employers here in Ireland. So with that in mind, how could it impact Irish supply or demand?

fliball123

https://www.boards.ie/discussion/comment/117918538#Comment_117918538

It may also be a case that this could put further pressure on Irish property supply as the case could be made that Chinese people may now see Irish property as a better bet and may take their stake from China and put it else where and guess what the Irish property market with their laws, tax, ROI and rental schemes such as the government rental one would skew Irish property to the top of a lot of investors as can be seen by the amount already been bought over the last 4/5 years for non domestic buyers. So Evergrande could go one way or the other. IMO it wont stop prices going up in the next 3/5 years in Ireland.

Wanderer78

https://www.boards.ie/discussion/comment/117918617#Comment_117918617

our global financial system is complexly intertwined, as 08 showed us, because of this, when a major shock occurs, it has the strong potential to cause contagion in global markets, even if the problematic institutions themselves, have little or nothing to do with investments in other countries, such as ourselves, i.e. its a wait and see game, we ve no idea what ll happen here, if anything at all. we still havent addressed the underlining issues that actually caused the 08 crash, we ve been trying to default back to the status quo since, so........

timmyntc

https://www.boards.ie/discussion/comment/117918646#Comment_117918646

This is not related to the 08 crash - this crisis is not caused by subprime mortgages. Also in 08 it wasnt just the global nature of markets, it hit us so hard because we were engaging in subprime lending also, and all the things that came with it.

Pussyhands

https://www.boards.ie/discussion/comment/117918544#Comment_117918544

if it goes tits up, jobs will be lost. We saw during covid people on PUP couldn't get mortgages.

It'll be worse if it goes belly up.

Wanderer78

https://www.boards.ie/discussion/comment/117918662#Comment_117918662

yes, but the truth is, we re still engaging in high risk financialised activities globally, we have not put these genies back in the box just yet, and since markets do not occur in a vacuum..... oh and baring in mind whats going on in davys....

Pussyhands

https://www.boards.ie/discussion/comment/117918662#Comment_117918662

You don't understand the point he's making at all.

After 2008 the global econony never weaned itself off cheap money and QE.

The world economies have just kept getting into more and more debt.

The US debt ceiling needs to be raised by 1st October or the US will default on their debts. If that happens it's a car crash.

All they're doing is delaying a crash and by delaying it, making the eventual one bigger. There's no such thing as a free lunch.

SmokyMo

Anecdotal evidence, but I am know one person who works for fund I guess... his job is to put portfolio of properties for Chinese investment to buy. Normally is a collection of residential houses, apartment, land. Not sure how widespread this is.. Very hard to gauge. They dont go around screaming about it.

Chinese banking system is not as integrated as US. Contagion wont get too crazy. Sure some banks prolly exposed via HK but I think the fall out is over estimated. Nevertheless it is amusing to watch.

Sierra Oscar

https://www.boards.ie/discussion/comment/117918617#Comment_117918617

It'll possibly have some impact alright, although the immediate impact is likely to only assist the domestic construction sector in my view. The cost of raw materials internationally is on a fairly sharp decline, which will ease construction costs in time. There has been a massive decline in the cost of lumber and there has been a sharp decline in metal commodities since the Evergrande story broke.

Supply chain problems have been alleviating so that is certainly putting a downward pressure on costs, but investors are clearly pricing in lower demand given the floundering construction sector in China.

fliball123

https://www.boards.ie/discussion/comment/117918664#Comment_117918664

https://www.boards.ie/discussion/comment/117918664#Comment_117918664

This has always been the case no matter what threat or what carrot is dangled. I mean in the last 5 years it was Brexit is going to sh1t all over prices then it was Corona and yet 5 years on prices are how much more expensive than 5 years ago. Yet what you have to take from covid/corona is that people who could afford houses kept working as can be seen by the way our income tax take performed, those on the medium to higher wage thrived with savings in irish bank accounts hitting record levels. The other side of PUP is that when people get back working property they will now be added to the queue for people trying to get a house ergo increasing demand. We are also going to have a lot more migration inwards in the next 5 years due to our immigration policy cutting the time for refugees going from undocumented to documented down from 8 years to 4 months. I would be looking at the the factors that are closer to home that will sway price instead of looking at China which as I pointed out could also mean further constraints on supply due to external investors.

Wanderer78

https://www.boards.ie/discussion/comment/117918683#Comment_117918683

once again, the 08 crash had little or nothing to do with public debt, it was primarily due to running our economies on excessive private debt, but in saying that, the process of qe has caused a similar problem, i.e. asset price inflation, noticeable in property markets

Amadan Dubh

https://www.boards.ie/discussion/comment/117918617#Comment_117918617

Potentially the spillover into Western markets will lead to the central bankers (ECB and Fed) claiming that they need to keep printing money and keep interest rates low, which of course is the reason we have a massive property bubble again in this country. That is the impact to Irish property. I don't agree that any Western economic fallout as a result of a property bubble collapse in China should receive any central bank or state support - parts of the economy suffering due to the fallout from this affair, should be left to suffer as it is just throwing dead money at a speculative investment which is far too interlinked with the economy to enable sustainability in the long term.

08 should have been a wake up call that economic growth should be siphoned off performance in the property market but I see it once again that economic growth and the prosperity / wealth of people is judged significantly on their property value - no lessons have been learned and the question is whether we are finally going to have to confront the issues which built up over a few decades to 08 or if the can is going to be kicked further down the road.

Just thinking though, if the Chinese real estate bubble bursts, might it help reduce construction costs in Ireland? There will be a lot of materials, machinery and labour hanging around looking to be put to use.

Edit: I didn't read Sierra Oscar's post about the potential reduction in construction costs before I posted. Glad to see someone else has the idea as to how it could affect property here!

Wanderer78

https://www.boards.ie/discussion/comment/117918778#Comment_117918778

....great response, but it truly is important to stress, the money of the 08 crash ultimately came from the financial system itself, in the form of credit, as this is the primary function of private sector banks, i.e. money creation, we also still havent addressed this fundamental issue and cause of the majority of economic crashes in human history, but central banks have also played their part in these crashes, as discussed

Villa05

https://www.boards.ie/discussion/comment/117918675#Comment_117918675

What are Davy's up to now all I'm hearing is how wonderful they are to our sports people and artists with background evangelical musical soundtrack.

Wanderer78

https://www.boards.ie/discussion/comment/117918852#Comment_117918852

theres been clear insider trading post 08, so it was decided to offload it, relieve the top brass of their positions, the ones actually doing the trading, and now BOI own the majority of it, and according to economist bill black, RED FLAGS everywhere, including in BOI! so watch this space!

Villa05

https://www.boards.ie/discussion/comment/117918874#Comment_117918874

Old news and the competent authorities have decided nothing to see here so we're grand :-/

So reassuring to know the financial sector is in good hands

L1011

Alternative economics theories are off-topic

timmyntc

https://www.boards.ie/discussion/comment/117918683#Comment_117918683

Evergrande and the Chinese property industry is not as tightly tied to the global financial markets or the Chinese markets as you think.

Some investors will get burned, but it is not an 08 scenario - nor will we see funds desperately trying to offload their irish portfolios in a fire-sale scenario.

silver2020

https://www.boards.ie/discussion/comment/117918491#Comment_117918491

Very little Chinese investment in Irish property. Not one of the funds that have publicly invested has any Chinese interest.

All you are doing is taking some issue in china and desperately trying to scaremonger people into thinking it it will have serious repercussions here.

The vast vast vast injection of foreign funds here have been large USA, European and Canadian investment/pension funds. The same funds that invest in property in many countries and use the rental incomes to pay out the various pension payments as they become due.

Bass Reeves

Any Chinese investor that has invested outside China will not be putting money back into China. If the companies are separated you do not fund possible loss making companies to support profitable ones.

One of the reasons the 2008 crash was so hard on Ireland is the banks were lazy and used personnel guarantee's to support loans without investigation if the assets. Therefore when calls came even profitable businesses came under stress and collapsed because owners were cross collateralised.

China is similar to Russia if you have money outside the country unless you are an idiot( and having it outside the country shows you are not generally) you keep it outsider the country

Timing belt

https://www.boards.ie/discussion/comment/117918778#Comment_117918778

Lower construction costs = lower inflation

which means less pressure to tapper QE and a lower for longer interest rate environment.

Timing belt

https://www.boards.ie/discussion/comment/117919066#Comment_117919066

It is very difficult to know who has invested in the funds that have bought Irish property as there is a lot of funds investing in other funds.

If there is to be a Lehman's moment with contagion it will be in the funds sector as the majority of risk taking moved out of investment banks and into funds following '08.

Personally I don't see Evergrande being a trigger unless there are other Chinese companies in similar difficulty that come to light and investors confidence is eroded to a stage of a mass exit.

The only impact I can see on the Irish housing market is that global GDP will be lower as a result of Evergrande and as a result interest rates will remain lower for longer which will result in more demand in Irish housing from investors as they chase yield.

Amadan Dubh

In that case, before we get an economic crash or a "reset" to wean the economy off property, we along with other Western countries will see extreme populism become more normalised. Trump and Brexit will seem like sensible, centrist actions of voters if the current high housing cost/extreme inequality situation does not resolve itself by way of a natural correction/crash. At least in Ireland we are going more to the left than the right unlike other countries but even that will cause issues (e.g. as I have said before, SF were openly anti-EU up until recently and they are likely to be the government party in a few years; throw up a United Ireland referendum and then put it in the context of an EU Republic versus non-EU Northern Ireland and our own EU membership could be questioned - it's speculating but the net point is that populism is on the rise and it is directly linked to high housing costs).

Wanderer78

https://www.boards.ie/discussion/comment/117920617#Comment_117920617

exactly what ive been trying to get to, all of these events are interlinked, we better be careful what we truly wish for!

Timing belt

https://www.boards.ie/discussion/comment/117920617#Comment_117920617

You keep talking about weaning the economy of property.... The simple fact is that people need to live somewhere so property is always going to be a large section of the economy as there will always be housing needs (unless we have mass emigration)

You also talk about this as if this is a new problem that never existed before.... Ireland has had many housing crisis over the years and the one thing that was always done to fix it was large scale social housing... Something that is not popular today because people see it as free houses for people that don't want to work.... Any large scale social housing will generate downward pressure on rents and as a result on houses prices.

Social housing historically was delivered to working people with housing needs but over the years it has got the reputation of free housing for people that don't want to work. There was less objection to social housing if it was built on cheap land in "Working class" areas Call it what you want today social housing/affordable housing etc.... but there is a need for it for hard working people who are stuck in a rent trap that are not

If you looked at the housing needs today you would probably find the same people in need of housing people who are working who can't afford a house.

Causes of the next Irish property market collapse:

2019: Brexit

2020: Covid

2021: Evergrade

Beigepaint

How many people are saying “I can’t wait for the economy to crash so I can buy a house (that I’m too poor to buy now) with my buckets of savings and secure job” ?

And how far does that keep the Irish economy from an actual crash?

Theres a graph to be drawn here but I lack the technical knowledge…

wassie

https://www.boards.ie/discussion/comment/117921206#Comment_117921206

Markets don’t crash when everyone expects it. They crash when everyone is crowded and levered long.....oh wait a minute...

Amadan Dubh

https://www.boards.ie/discussion/comment/117921371#Comment_117921371

No one claiming the property market could crash can pinpoint a clear reason why they think this can happen and this is seized upon by those claiming that the market is solid as part of their position that the market won't crash.

But, for me, the lack of a clear reason as to why it could crash does not mean it may not crash and I do think (posted recently why) that perhaps we are at a time where "no one can see it coming" as, for most commentators and observers, there is nothing which would cause the market to crash. I have not seen any clear reason myself as to why it could crash but I do observe that there is a sentiment that a crash is not likely any time soon.

So if your point is that a crash happens when no one sees it happening, then I feel we are in that place where right now no one does see any sort of crash coming. It's counterintuitive of course and therefore hard to grasp.

Bass Reeves

https://www.boards.ie/discussion/comment/117921221#Comment_117921221

If you cannot afford to buy now you will not be able to afford to buy in a crash. If the last crash told us anything it's that cash is king, those that do well out of crashes are those that have access to cash. If you need to borrow funds forget about it

Amadan Dubh

https://www.boards.ie/discussion/comment/117921027#Comment_117921027

Just because it is not new does not mean it cannot change. My default position is that the factors which lead to the 08 crash have not been addressed, in terms of cheap money flooding into property and the fact it is so expensive and interlinked with the economy that a faltering in the property market would still pose a risk to our wider economy.

Property costs should be tied to income and be at a low level in order to ensure that there is more diversity in the money sloshing around the economy, by way of savings in the bank, spending in the local economy etc. My own experience, up until recently, was with Germany and its rental market, with my observation being that the quality of life in Germany was of a higher standard than Ireland, largely due to the much cheaper housing costs relative to incomes. What I found is that people are generally happier and more well rounded as they are more likely to be able to pay the rent for their own place as adults which naturally brings about a maturity and sense of purpose from the pride that comes from having one's own place. My particular experience with my partner's family, who are by no standard wealthy, is that due to their rents being so low, they actually have quite active lives and have cash to spend on themselves - the lower housing costs offset the less income they receive and allow them more breathing space. Another point on the low housing costs relative to incomes is that there are real communities in Germany across all demographics as even those on lower incomes can afford their own place and have the ability to stay long term there as there is no real incentive to force people out by increasing rent by 4% per year or 90% in 10 years. In Ireland, there are little communities in the 20s and 30s age groups as these generations are more likely to be renters in Ireland and therefore transient and unsettled with their housing; this has implications for our communities. Just look at Sandyford and Grand Canal Dock to see what I mean about a lack of communities, as these are mainly rental communities.

Where we are now, having gone through the pandemic restrictions, with so many people at home instead of going to an office for work, we saw the potential for local communities to flourish as people had more cash to spend due to the restrictions and a lot of smaller, independent businesses in local communities thrived as a result. Significantly bring down housing costs and watch communities bloom once again as those that live in the area will be spending more of that cash.

For those that need some help with their living costs, in turn, the cost to the State of assisting them is also significantly reduced when housing costs are substantially reduced so it is in the interests of society and the State to make housing costs extremely low relative to incomes.

The ironic thing is that the measures to substantially reduce housing costs do not actually cost anything to the State, while attempting to tinker around the edges and work within the current system cost an absolute fortune.

Amadan Dubh

https://www.boards.ie/discussion/comment/117921489#Comment_117921489

I don't know about that. I think there is something seriously messed up in our market where rent is significantly more expensive than a mortgage for a similar property. Someone could be paying 1800 for an apartment which would cost 1000 on a 30 year mortgage. Rents could crash 40% and the economy would be fine.

Bass Reeves

https://www.boards.ie/discussion/comment/117921603#Comment_117921603

Rents falling will not bring more houses to the market. Supply is what will reduce prices and rebal pressure. The last recession showed that the big winners were those that could afford to snap up cheap property and sit on it until the recovery. Yes maybe if we had a price drop that more people could afford houses but where will the availibility come from. If prices crash builders stop building hint look at the last crash. Outside of the larger urban area's there is still not huge development taking place and site prices are miniscule compared to large urban centers. Two small developments in the area I live in 6 houses in each development, one of the developments has 4 bed houses at 130 sq meters and prices are in the 250-280K mark. This was a Celtic Tiger site that was partially developmed before going into recievership.

Timing belt

https://www.boards.ie/discussion/comment/117921550#Comment_117921550

The situation today is totally different to '08.... If the property market crashed today it is unlikely that banks would need to be bailed out because they have significantly reduced their risk. It is this lack of risk taking that has contributed to lack of new builds as developers need to rely on funds to finance new developments and this increases the cost of new builds.

You talk about cheap money flooding the property market and yes there is a influx of cash from QE as investors chase yield which property provides whether it is a fund financing new builds or buying property outright. This is not caused by printing of money as you have put in previous posts but is due to the fact that interest rates are deliberately kept low to encourage investment which in turn drives economic growth.

The vast majority of the cash from QE is still in the financial system and never get's out to the wider economy unless banks increase their lending. This is why QE in the past has had little impact on inflation. This time around it is different as the governments borrowed more and released this cash into the economy by way of fiscal transfers whether it be pup payments, stimulus cheques, or building infrastructure. Without this QE there would have been a major crash and a lot of jobs would have permanently lost.

I would love to see cheaper rent and property prices but if that is not brought about due to oversupply of housing it will be short lived and we will end up back in a situation where no housing is built for a number of years because it costs more to build than to sell. All that would happen is a boom bust cycle that would continue with no houses being built until the lack of supply drives up prices.

I would like to know what measures you think that the government could take to reduce housing costs that would cost them nothing and at the same time ensure that there will be sufficient supply of new houses to meet the demand in the future and avoid a boom bust cycle.

Amadan Dubh

https://www.boards.ie/discussion/comment/117921815#Comment_117921815

Raise interest rates 2 to 3%, taper QE and bring in more meaningful property taxes and you will see the property market bubble deflate at no cost to the State. That is the solution but the political will is not currently there to advocate for this.

The situation is almost identical to the 2008 build up. The shadow banking industry is where the bubble has been created and I can see from our regulator that they have already dropped the ball on this as they were too busy bulking up their enforcement division to fight the last war. In my area, asset management, I can see a very poorly resourced regulator only just starting to poke around in this area and Ireland has a phenomenal level of activity in the shadow banking industry which is where the bubble has been fed. There are investment funds in Ireland, regulated by our regulator, holding US mortgages from the 00s repackaged as debt instruments and only in the last year or so have they copped it to look under the hood and see what is behind the vaguely termed "debt instrument" in which these funds are investing. The shadow banking industry in Ireland is worth over €2 trillion and it is only regulated in Ireland at a very high (ie fund) level but the actual investments of the funds may not be regulated or at least not in a way where the regulator has a clear view as to what the ultimate exposure is to, particularly where the ultimate exposure is taken indirectly.

You use the term "economic growth" but I don't like that term and I think that term is not necessarily a positive thing. Especially when used in an Irish context for the last few years; yes we have had strong "economic growth" but in fact the situation on the ground for individuals has been getting worse each year of this "growth", particularly from 2015; housing costs, childcare, utilities had all increased beyond the CPI 2% inflation reading, but salaries have not shot up to offset it. Even looking back over the last 10 years in Ireland; No meaningful income tax cuts, little to no infrastructure investment, no healthcare or education reform; all the time fretting over public finances yet the economy was apparently experiencing growth? It has been a con, like how the CPI being used as the barometer for inflation, which is a total scam, as it is being interpreted to provide that inflation has not gone over 2% per year for years and years. Yet housing costs have increased 90%+ the last 9 years. That makes no sense and echoes what I have read in 1984 and Animal Farm where the proletariat were told how great everything was in the economy but they didn't really feel it in their day to day lives.

Crashing the property market and aiming to ensure it is disconnected from the real economy is how we get away from a boom and bust cycle. It is the only way to ensure social, political and economic sustainability for the future. The impending Chinese Real Estate bubble popping should be a warning sign to us as to what will happen if we don't wean ourselves off high housing costs (relative to incomes), as the 08 hiccup wasn't enough of a scare, and seek to prevent the property market experiencing massive growth or drops in costs in short periods of time (eg 2008 to 2012 and 2012 to 2021).

Amadan Dubh

https://www.boards.ie/discussion/comment/117921702#Comment_117921702

I fully agree that supply is the issue but significant, far more than it appears we need, supply is needed.

Supply will force down housing costs and Ronan Lyons actually posted his thesis in The Currency a few weeks ago showing that house prices actually decreased between 1995 and 2006, due to the supply of new housing, but that credit lead to prices increasing during that time period.

However, when you have such powerful vested interest groups with the ear of the government, between existing home owners who would balk at hearing a new policy would materially decrease the value of their home and then the building groups claiming it is too expensive to build for profit so the government should pump money into the market to make it viable (ie keep housing costs high), we are unlikely to see the goverment take any meaningful action to dramatically increase supply if such steps could substantially reduce the cost of housing.

Edit: typo.

lossless

https://www.boards.ie/discussion/comment/117922002#Comment_117922002

Well identified here.

I'll be less patient in summation: we are being fed a steaming pile of shyt and disaster is ahead. Not "housing crash" disaster, but sheer societal disaster.

The hyper-commodification of housing as a last ditch effort to extract money from a failing economy is the ruination of society.

Vast swathes of the country's productivity is immediately negated by this valueless void, weekly. Family formation is being utterly destroyed. The future has been sold for the present.

And what will the big brains suggest as the population trends toward invalidity? Ah, yes, we need more slaves nee immigration to replace the future children already lost. And again and again, and more rapidly, and in greater number ever so with each passing cycle of this manufactured "problem". It'll also just so happen to keep the housing crisis going at the edge of its seat. So very coincidental and not in the slightest bit connected.

But the elderly and will-be-elderly can be placated by a paper increase in the "value" of their home, a notional nothingness until they bite the dust, all while the shucksters use them as a means to extract actual money.

Yes, there needs to be a de-coupling of profit+housing. "Value" needs to be lost, the hoodwinkers need to be eliminated, and sustainability and the future put first and foremost.

The corruption in this country, and elsewhere, may be evading the law thus far, but the moral corruption is in plain sight for all to see on a daily basis.

The pent up retaliation against this shake down is going to be brutal in the truest sense, whether it begins next year or in 25 years, but it's coming one way or the other. It'll be a sight to see.

For now, back to the regularly (and most certainly) scheduled programming of "the housing crisis".

Timing belt

https://www.boards.ie/discussion/comment/117922002#Comment_117922002

If interest rates were raised by 2 to 3% you would have an economic collapse unless this was accompanied by economic growth. You say you are in asset management so I don't think I need to explain what would happen as investors exit asset classes with a lower yield on mass. At the same time you need to take into the account the increase in the servicing costs of the government debt which could only be paid for with tax increases or spending cuts. I don't think that scenario achieves deflating the market bubble at no cost to the state.

I agree that the regulator has not being focused on shadow banking mainly because it has been implementing reform to the banking sector and making sure that it has a solid regulation that would ensure that another banking collapse would not happen. This is the direction that all European regulators have followed in order to comply with EU regulation issued by the EBA (mainly CRDIV).

Shadow banking has been flagged by the ESRB and by the Irish Central Bank as an area that could systematic risk could exist. Back in March 2020 it looked like this risk was going to crystallise with a run on funds and investors looking to see exactly what was in the CLO's that they had invested in. Calm was brought to the sector via the intervention of the ECB/FED and there announcements of they will do what ever it takes.

I agree that investors don't have a clue what they have actually invested in when they bought into a fund. This is where the risk is.. Evergrande is a good example where someone selected a high yield Asian investment when selecting there asset class on a pension because it has been providing the best return for the past no of years. It's job of the rating agencies to provide an adequate rating for these investments and not the regulators job.

Economic Growth is a term that is thrown around a lot and in Irelands case GDP does not tell us what Growth there was in the real economy because of the impact of FDI but if you look a  Domestic demand it tells you what is happening in the real economy and during the period 2015-2019 it was running at 3-5% which was well above the rate of inflation. Yes I know you don't trust CPI but it is the most accurate way of calculating inflation....The biggest bug bearer is that it does not include property inflation as it considers it an asset rather than a commodity but for the people that are renting or have a mortgage it does take into account the inflation.

Crashing the housing market by raising rates is not an answer because there would be to many job lost in the real economy as a consequence. Even job's in asset management would be heavily impacted by doing so without real growth.