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

I meant that it would be highly unlikely to cause a collapse in irish house prices

Some very reasonable views in these two IT articles yesterday; from the perspectives of both the small landlords and from smaller players in the construction sector. It would appear that the non-voting institutional investors are the only ones benefitting from our housing crisis at this stage, which indicates to me that perhaps they had far too much of an influence over the policy making over the last 10 years, Irish Institutional Property being the main industry lobby group. Both views in the articles below flag the cost of living increasing and future economic prosperity of the country being threatened as a result of a continuation of the housing crisis.

The landlord view is put forward by the MD of Sherry Fitzgerald in Ireland, Marian Finnegan, in particular she highlights how so many small landlords have exited the market in recent years due to the failure of the government's policy and she discusses maybe the generous tax situation for institutional landlords that is unavailable to small landlords as being one of the main factors.

The construction sector view put forward is in relation to the labour shortages and how this needs to be addressed. One anecdote is from an Irish man living in Australia the last ten years hoping to set up a little construction shop back in Wexford with the hope of bringing home some Irish emigrants but that the cost of living would put them off returning.

I'd be interested to see the calculations behind her 2.5 net yield for the BTL investor with a 70% LTV and what term and interest rate she assumes for the loan. Would have been an interesting example if she laid out the gross yield and deductions.

Tax is high for all individual investors - if you invest in a company that pays a 5% dividend yield you lose up to half in tax aswell if you're on the higher rate of income tax.

Im starting to see 2 markets acting totally differently now in Ireland.

You have the sub €450k asking price houses that are selling for above asking price easily.

And you have the €550k - 600k and above asking price houses where the EAs have chanced their arm actually not making their asking prices.

Takes a while for it to shake out but you can see it in the PPR for the latest houses added to it.

I think that trend will continue for a while sub €450k asking going gor above asking and €550k plus asking going for below asking.

But if I was in the market for a first house I would certainly be doing anything to get on the ladder at this point.

I dont see the sub €450k market getting any better. I am of the opinion that you get on the ladder as fast as you can or you end up renting forever, the way things are going these days.

I just dont see how anyone is going to fix this.

Some housing related news in the Budget; what a joke of a country;

"€168 million in current expenditure, or 7 per cent increase, for 14,000 HAP tenancies".

Infuriating and deeply troubling to see the government further blow up the bubble in the rental sector by pulling money from thin air or its magic money tree to keep up the farcical HAP policy. You can bet that this money is ending up in pockets of people who perhaps have had a hand in perpetuating the policy, which is my own belief. It's criminal.

https://www.irishtimes.com/news/ireland/irish-news/budget-2022-main-points-what-s-in-it-for-you-1.4698158?mode=sample&auth-failed=1&pw-origin=https%3A%2F%2Fwww.irishtimes.com%2Fnews%2Fireland%2Firish-news%2Fbudget-2022-main-points-what-s-in-it-for-you-1.4698158

These aren't "homeless" people on the streets. They are already living somewhere. At the equivalent amount of a higher rate tax payer getting a pay rise of €24k, it is a huge amount to pay per person just for their housing into the pocket of private landlords. We are paying over a billion a year in HAP leases and it has created a rental bubble, no doubt about it, there is scope for a 40% correction in rents quite easily the way things have gone yet the government is blocking this correction through incompetence, or perhaps criminality via accession to lobbyists requests, with this ridiculous HAP scheme.

This €1bn+ per year is coming from where and is ending up where? It is good money being thrown at bad and makes me sick, this budget today just reinforces how FF and FG have destroyed a prosperous future for this country over the last 20 years. The country will end up back where it was at the turn of the century unless the government makes dramatic changes to how our society and economy, including housing, is structured, with SF probably measuring for curtains in the various government department buildings at this stage. The highs and lows of the last 20 years will seem like a dream.

Although you are trying your best not to turn the post into another one of your xenophobia posts it still doesn't answer the question of how rents will drop 40%

When people take out a loan to buy an asset (e.g. a mortgage) this leads to Asset inflation as more money is created and it is chasing the same supply of Assets. This asset inflation then leads to more people taking out loans to buy assets to increase their perceived wealth and this Debt/Asset inflation loop keeps going with a greater % of an individuals income being used to service the loan/debt.

Eventually the debt servicing cost gets so great that the individual defaults on the debt or you end up with job losses when the economy slows down as there is less money circulating in the economy as it is used to service the debt. The issues come when to many people default or loose their jobs at the same time as this leads to fire sale and asset depreciation. The asset depreciation then generates a downward spiral in property prices.

If you look at the central banks data on lending to private households you can see that mortgage growth started again in 2017 and this has been the extra money that has been chasing the same no of houses (as little new houses were built) which lead to property price rises.

If housing was to be fixed and prevent Boom/Bust then there needs to be an adequate supply of houses so that the new money created when the mortgage is drawn down is chasing an increased supply of assets which keeps the price of housing stable. Without this new supply of housing you will always have property inflation as long as the value of new mortgages is greater than mortgage repayments.

In the town in the west my missus is from up to 2-3 years ago you could rent a 3 bed semi or bungalow for around 5-600 a month easily.

Nowadays that's 1000-1200 all due to hap. and with all the anti landlord legislation the last few years there is literally nowhere to rent now.

A working couple a few years ago could save a few quid while working away, nowadays they are at nothing trying to compete with the government. It won't be long before oz Canada etc come into the conversation.

Who defines it as a conspiracy theory and not just regular theory (or fact?)

Either we have had the most incompetent back-to-back governments who keep stumbling at every turn regarding rents, even when plenty of sideline commentators (and no doubt civil servants) have been in their ears with solutions, and yet this hilariously incompetent govt just keep making things worse, or its intentional.

Occams razor suggests the latter to be honest, the state wanted property prices (and rents) to increase to bring more money back into the exchequer.

At least one of the same two parties have been in Government for 102 continuous years, name changes nonwithstanding.