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

Im not speculating on the likelihood of crashes (my own view of what's "likely" is flat lining property prices with huge general price inflation in the economy peaking at 10% this year [Ukraine conflict isn't in the food prices yet] with ECB base rates of 0.5% to 1.0% by year end with more to come in '23) but the actions of the biggest player in the market (the state) will determine what happens to residential prices in my opinion.

Will they continue to keep the HAP and Homeless HAP chequebook open - probably. The radio had the story of a family in Dublin 15 entitled to 1950 on homeless HAP of 1950 per month or just shy of 24k a year. That's a big chunk of a wage for a higher rate tax payer (48k earned at the higher rate to get 24k net) so that's one juicy subsidy from the state. As long as the state is handing out such amounts, why would REITs/funds/landlords drop the rent? The state will be able to muddle through for a few years before this gets wholly unsustainable. Hell, they may get to a next election and leave the next crowd with an all merciful mess to fix.

Will the state continue to keep buying turnkey properties at high prices? - yes. 5 billion "housing for all" will see to that. They are even showing they are willing to throw half a billion to developers to build apartments but put it through the heritage budget and call it something fluffy "as gaeilge" so people mightn't notice

If a developer gets into a bit of hassle and starts to struggle to sell to private buyers (horses get spooked, interest rates, general uncertainty, belief a crash is coming), do you think the state will stay on the sidelines and say "Weren't you a silly lad paying all that money for land and building properties"? In the short term some public servant will be authorised to purchase more to house a few more people on the list so targets can be exceeded and be seen to be delivering "real houses for real people" (I don't know where the fake people are, I wonder who'll think of them. This again will support a floor on house prices.

Exit strategy for a REIT or opportunistic fund is the unknown in my mind - will they be able to sell the units individually to buyers (will planning allow and does design of block allow) or will they have to sell in bulk to some other fund? Would they even need to sell at all? I wonder who would be one of the first people for them to call if they did have to sell in a hurry? Again, they may sell direct to the state or better yet, agree a long term lease with a council, state guaranteed on upward only CPI and sell to a pension fund who is happy to take Irish government counterparty risk with a nice yield uplift versus a sovereign bond and run for the hills.

The people that make the decisions to purchase and lease on behalf of the state have zero incentive to drive a hard bargain - they'll pay what's asked. Why would they put a commercial hat on and say "we're the only show in town, X million, take it or leave it". People who think like that are on the other side of the trade.

Indo reporting that many mortgage holders are switching from trackers to fixed rates

Poorly advised imo another potential investigation in the future

They can revert back to trackers after fixed rate ends. However I would be slow to change from a tracker even at that. It's unlikely that we will see interest rates hit much above 2%. The economy is not designed to takes rates above that anylonger

friends of ours were interested, agents said they had so much interest that they were selective in who got a viewing appt and all are gone they say...

The bay area has massive recruitment problems - theres a reason companies are expanding more regionally in Texas, Oregon, and the East Coast US also. It simply isnt feasible to keep attracting enough staff to Bay Area campuses anymore - you can expand much quicker and more affordable by doing it regionally.

Same is being seen in parts in Europe now, as Dublin becomes too expensive companies with no other Irish offices will consider recruiting to other European offices. In our field there has never been more recruiters looking to recruit from Ireland to work outside of Ireland. UK and France (regional cities) are really pushing to draw staff out of Ireland.

Nowhere in Western Europe is any cheaper than Ireland though. Sure, it's cheaper if you compare the capital of Ireland to a regional city elsewhere like you mentioned, but that's hardly comparing like for like as they could move to a regional city here where it is also much cheaper. I work in tech and one of the draws of moving back home to Ireland was how much cheaper housing is here compared to London where I lived for about a decade. Yeah, I could move to Sheffield and it'd be cheaper again, but that's because there are fewer jobs and less people wanting to live there. Ireland is not in any way exceptional in terms of the state of the housing market.

Uhh, you sure about that?

This puts Ireland 6th in Europe (not EU) in cost of living, including rents, purchasing power etc

This puts Ireland 11th worldwide in cost of living, 5 of those ranking higher are tiny islands like barbados or turks and caicos

Ireland average house prices against EU members and EU average (EU avg = 100) - from eurostat.

"This quote right here is where tenants and small landlords need to realise that they should not be fighting one another, but should be focusing their efforts on how the market is tilted in favour of the very tiny minority (i.e. institutionals) to the detriment of the overwhelming majority. "

Good luck getting any tenant to start advocating on behalf of a landlord. It's quite a lob-sided relationship.

so you want small landlords to compete with FTB’s…is that not just moving the problem from one area to another…

The pendulum is shifted entirely to institutionals. First and foremost, they need to be charged a premium for doing business in our housing market. After all, as you say, demand is rock solid so they won't be going anywhere. Then use that windfall to reduce the tax burden on individual landlords. There's no silver bullet but the main point is that institutionals have controlled the FF and FG government policy which needs to be unwound now and the trend of smaller landlords leaving must be reversed which necessitates targeting the policies that favour the institutionals.