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

But we are starting to see wages creep up and this is going to continue through next year, as a catch up the transitory inflation which has and is occurring. What happens once salaries rise across the board? Does inflation hang around even longer?

I'm not sure why you think so, wages going up across Europe and USA. It probably depends of which time interval you choose. But for the last few years, from what I see wages went up faster than CPI.

To be more specific, that's probably valid for Dublin Co, not Dublin City. Only few places in Dublin you would find land not the main cost factor for houses.

Yes, as it says its for Greater Dublin Area, which is important to mention, it's not even Dublin County. And the results for City would be very different.

The thing is, wages have to go up as they are already playing catch up to the inflation we have already experienced. They seem to be a bit slower to go up to meet the inflation of this year but these things don't go up in isolation and wages will climb. I don't think it's a chicken and egg situation whereby increasing wages will be blamed for further inflation through next year; quite simply, inflation is happening, it is debatable how long it will be around, but wages are for whatever reason slightly behind the general inflation trend but they will show their face soon in the inflation metrics.

It's insanity what is going on; low interest rates and QE. It is just not possible to have the economy booming like it is, with hyper QE and low interest rates, but not expect inflation to soar at some point. It is doing nothing but throwing more fuel on a massive bonfire. The headline growth forecast for the Irish economy is now at 14.6 per cent, while unemployment is at around 7% (full employment considered to be unemployment of around 4%). Too many life-longers in the regulators and among civil servants clinging to old world models and beliefs; and have lost control of the ship. Assets such as stocks and houses have soared in value predominantly from policies and actions of state agents, far less so from activity in the real economy.

There are only two ways out of this for those in charge; (A) accept inflation and the consequences that brings, from social, political to economic; or (B) take the lid off the pot and remove the froth from assets (ie stocks and housing) which of course would result in metrics such as GDP, house price and stock indices all dropping a little to a lot in value. At the moment we are heading towards (A), but no one should for one second have a lot of faith in our state actors as having control over the situation.

Excluding their jobs, ordinary people are generally not in the business, with their own lives, to make a lot of money from economic activity the same way investors are; so I don't think trying to profit or time these things is something to look to do. Professionals get paid to do this and can't do it. As an individual, you can't lose if you don't play and I think it is the time to be looking at consumption, sustainability, job security and savings.

Just to update on this, I checked on the land registry one such property out of 4 that were recently sold and refurbished, and I was right. Without mentioning specifics, it was a CRO registered commercial entity who purchased it. I found their name also listed in the linked DCC doc below, stating DCC had signed long term leases for council house tenants with this company. Wow, somebody is making money at the expense of the taxpayer. That is 4 in the same private estate, paying over market value and then leasing back to the council.

https://councilmeetings.dublincity.ie/documents/s32187/Appendix%20A%20-%20Council%20Questions%20and%20Replies.pdf

A certain Irish sports person stands out in that list of entities ;)

Based on the linked doc above, doesn't appear to be any slowdown for commercial, only increase in leasing.

DCC Lease Rent paid:

2020 €4,614,806 

Based on the number of proposals due to be delivered during 2021 the estimated rent payments for 2021 for approximately 330 units is €6.3m.

Pat Farrell with his typical gaslighting paid-for piece in the IT this morning. The usual "we aren't the bad guys, we are actually the good guys who are key to fixing the problem". He talks about needing to be less emotionally led in the discussion while the bulk of the article is an appeal to emotion rather than logic and reason.

I don't think it is unreasonable to think that institutional drove the policies in some way which lead to the smaller landlords getting shafted and moving on. Which would make his argument a perfect example of gaslighting. Ask Pat if dramatically increased supply with materially lower rents; or increasing tax on institutionals and lowering it for smaller landlords is something his members would get behind.

They're loving HAP as it guarantees 85/90% of current market rents over 20/25 years - essentially acting to set a floor on rents when really the rental crisis demands a solution where rents drop 30%+ which would leave the government holding the bag on leases above market rent. The HAP system is an institutional investor lead guarantee of income by the State (see Davy connection to DCC outlined above).

"stunning ability to deny the reality of the world around them" - very emotive there Pat.

"Sustainable" - there's nothing sustainable about the situation of institutionals herding young people into the PRS and working to ensure rents are sufficiently high versus salaries that there is no viable way to exit the PRS and buy a home. There is a great greenwashing going on at the moment in the investment world and I think that word "sustainable" thrown in there is part of the great greenwashing.

I'm not entirely sure how the search system works but when I click into the "Submissions" tab of the planning details on the Mayo CoCo site and see the names of two individuals, is that to be interpreted as the names of those who might have objected to the development? Can anyone make a submission or do they need to be resident near the site? Curious given a quick Google search of the two names listed in the submissions tab.

This won't end well. The brief window at the end of 2019, to try to cool the market after supercharged growth in the preceding years has been closed and the problem of high house prices significantly worse. In 2016 you had 80% of 25-34 year olds not owning homes, which is a growing demographic and will extend further the longer the situation continues. This is 80% of people who would welcome a market crash as opposed to efforts aimed at gradually cooling the market - this will contrast with many people (i.e. homeowners) who welcome price increases and would balk at the thoughts of a market crash.

The polarisation of classes is going to have severe ramifications in our politics going forward as populists propose extreme measures which claim they will do this - it will just keep growing worse as it is generally older people that own homes while younger people rent; unlike the last few decades we do not have younger people (ie under 40s) buying into the "your mortgage is your savings for retirement" system which means the system is seemingly only moving more towards the side of the younger/non-home owning demographics. We're lucky that SF, as the main opposition party by a long way, are not as extremist as they could be, for now at least that maybe prevents too extreme a change happening in our politics and economy.