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

have a look yourself you might be surprised on your assumptions https://ec.europa.eu/eurostat/cache/digpub/housing/bloc-2b.html?lang=en

Don't be asking tough questions that there is no answer to.

:)

Have you heard the one about the chicken and the egg?

Would the figures for average earnings for the last 2 years be heavily distorted by the blanket closure of tourism, entertainment, and other less effected sectors that have low wages?

No need to caveat, that is essentially implied with any of us posting here!

Interesting to note once again the correlation to rising population and housing costs being flagged. Only 10 years ago we had net emigration and even up until 6 years ago the economy was in transition. Cost of housing is already on the white board as directly impacting our future competitiveness in terms of further MNC growth. I laugh when I read last week, by way of example, that tik tok is looking for bigger office space to accommodate 2,500 workers. We don't even have that level of housing in Dublin available to rent for this to happen. I think the gift horse may have been looked in the mouth with respect to our well paid, educated immigrants fuelled population growth. That being said perhaps the snap reopening decision might enable our economy to get a jump in on other EU countries as it will attract people who hear that Ireland has reopened to immigration and it is business as usual. This would be a boost for this year at least but beyond the initial reopening boom we just have to materially force down rents and significantly increase supply of housing in order to maintain the lifeblood of our economic success.

The EUR is toast.

the most likely “property market correction” is a massive drop in the value of the EUR.

everyone loses: rents go up a bit, cost of living go up massively, cash buyers lose in $ terms. Only heavily indebted owners benefit, but that’s a small group due to lending rules.

If you looked at the bar graph it gave Q4 earnings yearly from 2016-21. Increases were fairly even. There was a sight fall between Q2&3 in 2021 indicating the semi return to normality last summer. All indications are anyway that building labour costs have increased faster than the rest of the labour force.

Materials costs are effected by Irish labour costs. The suppliers are paying higher wages. The Roumanian house is very basic and very little timber or decoration.

The finishes alone,( kitchen, lighting painting, fireplaces, stairs etc) would swallow up a lot of the 25 k you mentioned.

Labour costs would be 150k+ in the difference between Dublin and Bucharest. The site seems not to be in an overly build up area( looking at street view and map itself) this may reflect more an outskirts of Portlaois price than a Central Dublin.

Our building standards are much higher than Roumania with higher certification as well. It highly unlikely to change.

The Euro is remarkablly stable. It has survived and is growing in strength as a currency. It's going nowhere.

The one to watch is the Chinese Yen as they have depended on keeping it at a low parity with the dollie, as it internal market demands rise it will have to allow itself to climb against the dollar which will effect the competitiveness of China

China is a dead man walking. I was too dismissive of the Evergrande debacles importance but it would appear Cathy Woods of Ark investments was right on the money - China's economy has already died, it's just they have been able to hide the fact due to their usual tight control of information flows and Covid distractions. China looks like a repeat of Japan's property price bubble burst of the 90's, only worse.

My Grandparents once owned a Georgian gate house to Phoenix park called Oak Park, with the park being on the far side of the garden wall.

Reading today in the paper a columnist reckons a 1% rise in interest rates would justify a 20% drop in house prices.

That'd probably bring prices back to the start of COVID. No harm I reckon, it'd be good to take the heat out of the market at this stage, I don't think anything else will!

You do understand that they cut rates and undertook QE to prevent a new Great Depression. Increasing rates to quickly also increases a risk of a new Great depression. The US is increasing rates because of their labour market reaching full employment and with the economy growing and full employment means that workers are able to move jobs and get higher pay. This is the driver that the central banks are worried about as it will generate a wage/inflation spiral.

The UK are in a similar position because of restrictions introduced by Brexit which cut off a supply of labour. To make matters worse in the UK not only are they raising rates but they are also increasing taxes. The combination of these two forces and the fact that they will see massive energy inflation in April (due to energy price caps rolling over) means that the cost of living there will go through the roof and people will be substantially worse off. A lot of economist are concerned that this could drive the UK into a deep recession.

The EU unlike the UK and USA has not reached full employment (Unemployment in the EU is up at 7% verses 4% in USA and 4.9% in the UK) and as a result there is less pressure to raise rates and risk the start of a new Great depression. The inflation they are seeing is mainly from supply side and energy and as a result raising rates would have little effect on the inflation. Wage inflation is not yet evident in the EU at a total level (but does exist in certain countries where the economy is strong and there is a labour shortage). If the EU don't raise rates then the value of the EUR will drop against the UK and the USA which will make exporting to these countries cheaper and countries like Germany and Ireland will benefit as they should see more exports. So the longer the EU are able to hold off in raising rates or introducing QT the stronger the EU economy will get which reduces the risk of a recession when rates rise.

In relation to mortgage repayments the impact of rates rising will mainly impact people who take out new mortgages such as first time buyers or people trading up. Something like 90% of mortgages on Ireland are on a fixed rate for 2-5 years so they would not be impacted straight away.