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

I think they have gone too far though, a well built B1-B3 rated house is perfectly fine for the vast majority of people to live comfortably in but the government have dropped the ball on meeting their environment targets so they have to squeeze home builders even more, adding 25k of build cost (circa 35k of mortgage debt) onto a house to save €500 a year is madness. If someone wants to build an A1/A2 house and has the budget for it that's great but most people don't need that.

Smart meters were sold as heralding a new age of cheap rates for heat pumps and EV charging to save the environment but instead are nearly all more expensive than an old day/night meter.

And I agree with you its far too early to start rolling back on schemes promoting EV's considering our adoption is still quite low but again the government don't really care about the environment its just an excuse to bring in more money and they love money!

"But what happens if they got to 8%.. . I know people say that is unlikely rates will go up that far but you never know especially with inflation at current levels."

If the interest rates and inflation goes high, it's not that bed for current buyers in long term. It might hurt in the start, but may be better off in longer term.

That makes sense for inflation. But how do high rates benefit current buyers?

They dont benefit current buyers, they benefit future buyers are rates drive asset prices downward.

Its obviously not intentionally done to bankrupt countries, but the reality is wage inflation will not pick up evenly across the EU, but eventually there will be a decision to either raise rates to combat inflation (potentially crashing some of the more indebted countries) or let inflation keep rising. We are likely to see wage inflation in the stronger economies first, which will drive inflation higher again - likely wont be as drastic in poorer countries, at least not initially.

When the rate rise does come it will be to suit Germany/France and to the detriment of PIIGS, same way the common currency has always worked ultimately.

Interest rates would likely be high due to high inflation. Thus their overall mortgage pay likely to end up lower percentage of their total earnings. It would be more painful only the first few years of the interest rate rise.

Air tightness is a major difference between B1-3 & A2. Its a cheap win in comparison to the effect it can have on heating costs by maintaining even temperatures. I'd suggest your annual savings would be far greater than €500 year, especially given gas prices now.

Either way its a moot discussion as the reality is residential housing is a major contributor to emissions in Ireland and it needs to be curbed to meet our agreed CO2 targets. I'm not advocating for it, just pointing out the facts. The low hanging fruit is new building.

Retrofitting older houses is a different story and this is where there are significant cost burdens and here the state is stumping up somewhat. But I think they should do much more and here is where some bold policy is required. But Pascal and Co. have shown they aren't prepared to think big over the last 2 years.

The EU will fund green initiatives on a national scale and we should be using this once in a generation opportunity to upgrade housing in this country. The economic benefits would multiply in terms of job creation and benefit all home owners in the long term term. Except not sure where we get the workers from cause we cant house them.

Also I don't argue in favour of the BER rating system. It has a lot of assumptions built into the modelling and whether or not it is fit for purpose is a technical discussion within itself.

If you want the Govt to tackle affordability, reducing Building Regs, which have a functional purpose is not the way to do.

I have a much easier suggestion - simply amend the Family Home Protection Act and bring the ability for lenders to repossess long term defaulters in line with the rest of Europe & UK and that would be a start. This would encourage new lenders, to come back into the market, creating competition and drive interest rates down.

No they don't. It is the consumption of electricity that is expensive and smart meters are designed to influence behavior change to reduce that consumption. If you don't want to change behaviour, your going to pay for it.

What is concerning about smart meters however is obsolescence - AFAIK (stand to be corrected) they operate on the 2G cellular network. If that network is made redundant (i.e. switched off as many countries have done) then all these units will need to be upgraded. Any new meter installed should be operating on at least the LTE network, 5G preferable but we haven't built it out yet.

It’s the Eastern European states that are seeing the largest inflation and wage inflation. But I agree the will need to raise rates eventually if the economy keeps growing

The markets have priced in two rate rises.

BTW under Masstrict, low economic or even an economy in recession is not reason not to raise rates. All Masstrict says is the ECB are obliged to keep inflation under 2% in the medium term regardless of other economic conditions. They are holding fire now because of the pandemic and saying things like they believe it is temporary so they are not breaking Masstrict. But if inflation persists those rates are going up.

I said less as a portions of your incomes over the period of the mortgage.

Plus inflation likely increase the nominal value of the home over the time.

Any money that's thrown at property now will only increase price. The only solution is to add supply. The age of cheap money may be coming to an end at least in the medium term. We have Runaway corporation taxes many feel the level of such taxes are temporary. The solutions are under our leaders noses all they have to do is sniff

27000 construction workers have applied for working visas to enter the country. The government have instigated an action plan to process these visas, while at the same time have deployed staff to trade fairs to sell housing to investors

Housing is their number 1 priority

people are desperate, because its a desperate situation, security of accommodation is a critical human need, this is why people are making these decisions, its nothing to do with them making poor decisions.

state borrowing is the only way out of this, state debt does not need to make returns, it just needs to be serviced, baring in mind, governments have the ability to borrow long term, i.e. long term perpetual bonds etc. by not doing this, this forces us out into private sector credit markets, and credit is hard wired for returns, and a lot of that time, this is done at all costs, which tends to lead to credit fueled asset bubbles, and.......

...and makes no sense that corporation taxes will fall, yes its possible, but corporation profits are at an all time high globally.... we should also radically change the way we accept this form of revenue by part acceptance of stocks and shares, and utilize sovereign wealth funds from there, but thats another days work.....

....and doing everything possible to inflate the prices of those houses.....

Family home is protected under Irish law people have a right of residence so cant see repossessions in any great number there may be a few buy to lets hit. When are we going to stop borrowing we cant continue in the current manner, we are already hugely in debt and with interest rising it means more and more will be taken from the day to day spending and spent on servicing the debt. We have embraced public debt any more on top will turn the embrace into a strangle hold. Get the popcorn, the next 5 - 10 years is going to be bumpy I will give you 10/1 that PS unions this year will be in asking for massive pay rises to cover inflation , which has knock on effects for their pensions that we have to pay. Then the dole heads will be looking for their payrise and once again it will be left to the middle and high earners to pick up the tab and of course that will role into generations so your kids and grandkids will be left paying for the sins of their ancestors. I can also see a lot of the high earners who can remote work leaving. We really could be in some serious trouble in 5 - 10 years time if the shinners (or who ever else is in power) act the b0ll0x and borrow like there is no tomorrow. The debt has to be paid back with interest and that is rising we were able to borrow at close to 0% for the pandemic that will all change and when our debt rolls over we will be hemorrhaging money

once again, it is in fact our over reliance on private debt/credit in order run our economies, that has brought us to this point, baring in mind, all money begins its life as debt, so if we dont continue to borrow publicly, this critical need falls back towards private debt/credit, this approach has run its course, its no longer providing us with our needs as it is just leading to credit fueled asset bubbles, as credit is hard wired for maximising returns, at all costs.....

once again, increasing the income of those in the public and private domains actually makes sense, including those on welfare, as a significant amount of this money is spent into the economy, i.e. this money moves from the public books into the private domain, increasing the velocity of the money supply, keeping businesses open, and creating jobs.....

yes, if we maintain the status quo of attempting to balancing the books, this will more than likely lead to the middle being squeezed further, solution, dont balance the books, theres no need to, in fact its actually dangerous to, by running a perpetual deficit, this reduces our reliance on the private sector money supply, i.e the credit supply....

We cannot keep borrowing on the never never the bill will have to be paid at some stage and some people think the magic money tree will be there forever and basing this on the borrowing during covid which was a once off global event. It wont and when interest rates rise we will be struggling to pay the interest alone. If we had no debt to service maybe your theory would be one that could work but under the current constraints it is not and there will be a lot of other areas looking for some relief or some money to be pumped in. In my opinion the public sector and welfare should not be getting any more cash before the USC is taken away from workers. The public sector cuts from after 08 have been more or less reversed where is the reversal of this "so called temporary tax"

So just to throw it out there I see the following areas looking for cash or for the burden placed on them to be cut due to rising costs of day to day living.

Tax payers

OAP

PS workers (knock on effect to their pensions)

Welfare recipients

infrastructure (roads, education, health, emergency services, etc)

Housing/homelessness

Employers

A.N.Other (farmers, fishermen, etc)

If you give it out in one of the areas above it will be to the detriment of the rest we can not continue to borrow at the rates seen during the pandemic what you and others are looking for would push our interest repayments to unmanageable levels. Do we keep borrowing and wait for the IMF to come in again?

We also have serious threats to corpo taxes and our high earners the state could lose billions from both of these sector over the next decade.