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

Alot of companies pay dividends and still are proceeding with share buybacks with borrowed low interest rate corporate bonds and why would they not lock in low interest rates now knowing that inflation comming will financially repress their debt makes perfect sense to do it.

I really hope they actually try fight inflation (not the pussy footing 0.25% rate and Asset selling that knowbody knows when its commencing or at what rate) even if it causes a recession becauses if they don't this will get very very ugly long term.

Thats what I would think - but to date no plans have been made public, yet the commitment to house 200k has been made public. It doesnt bode well for Irish house prices, that kind of demand surge will see prices rise for the next decade. Even if the situation in Ukraine normalises in the next 2 years, you wont have all 200k leaving immediately (or at all for some - as their homes and cities were flattened). That and the legacy impacts of diverting builders into building emergency accomodation for up to 200k people will all have lasting impacts on property market here.

Needs to go alot higher though ERSI saying it will peak at 8.5%inflation and they are behind the curve and have been since June 2021, so I would suspect it could even hit 9-9.5%.

On another note, did anyone ever read the ERSI report into the rental equivalent method for calculating housing inflation that is then inputed into the CPI. I would suggest people to read it, I **** you not they actually use 2012 and 2013 data and this report was done in 2020.

One major flaw I see in this new model of calculating housing inflation is the way they weight the new rentals which are typically higher with the long term rents that are usually well below that. Basically they are weighted using pre pandemic proptions yet 90% of people I know (mostly Dublin) that were working from home during the pandemic gave up their cheaper long term rents that they were in especially house shares, to go back to their home place.

Now there are more people than ever entering new rent agreements as they have got sick of living with their parents (and want to get back to dublin for social aspect) and/or returning to offices hence making their proportion affect no atall correct.

I actually tried contact on of the research authors on this to get his views but got knowledge.

yeah good point on emigration. i do wonder how property market in oz will react to rates rising, possible it ends up not being a destination for those leaving ireland i wonder?

I would be a high earner too, but there is just something obscene about paying those prices being asked. Im just not going to help them get away with it. Thats what fuels inflation. I know the value of a breakfast and a cup of tea and im not paying anyone anymore than its worth - ever.

Another one that happened to us recently was getting fleeced in the cinema. I went on to Amazon while in the cinema and ordered a projector. Its all set up now with movie night every Friday night. We wont be going to the cinema again :)

This is a bit of an echo chamber. Pubs, restaurants and cafes are absolutely hopping at the moment. The prices are high but clearly there are more than enough people willing to pay.

Not to mention the fuel costs and interest rate hikes coming….Disposable income will fall and people will cut back on discretionary spending in restaurants, pubs and cafes.

House prices are clearly falling - at this stage they are rising in nominal value at well below real world inflation levels.

There's an opportunity here for first time buyers who take this chance to negotiate wage hikes and buy, before everything normalises again.

Earnings are only just starting to rise in response to inflation - in some sectors not at all yet.

When that happens, expect house prices to surpass inflation again also - because its a supply shortage problem.

central banks are currently stuck in the low rates environment, theres simply too much debt out there now, particularly private debt, which is the far more dangerous debt, raising rates too soon too fast by too much, would probably induce recessions. wide scale debt forgiveness would probably be a far safer approach, even though problematic, but only corporations would probably be given this privilege, leaving the average punter in the crappier, debt forgiveness should also be available to the household....

People are still spending it’s just that spending patterns will change…less discretionary and more on essentials.

you may have a recession in the services sector such as pubs/restaurants while growth in other sectors.

There is big wage inflation in certain areas where companies are paying 10+% to attract staff….which will put upward pressure on houses prices as people will be able to borrow more under LTI rules.

it’s all a bit crazy to be honest