Softening house market?

Albert Manifold CEO of CRH says there's a second wave of building materials inflation coming. Materials will get even more expensive and building will slow, even stop. Then people will start getting laid off in the construction/supplies sector, GPD will take a hit but once the big Tech companies here start taking the hit from their advertisement revenues and their share price starts to fall they will be the next to start chopping. All in All, I can see a lot of the foreign workers both in construction and the tech sector moving out of Ireland in the near term, this will obviously help with the demand but we will still be under pressure on the supply side.

Realistically, we will enter a recession and the ECB will reverse course with interest rate rises and money print till the cows come home with QE, some of this money will be put into the housing sector in order to build more to keep the economy ticking over. This would be the best case scenario for housing but the global economy is absolutely addicted to QE and low interest rates and the jig is up. All this does is create bubbles in asset classes and benefit the rich whilst creating divides at blue collar level.

Commentators saying the ECB could go with 100bps hike, wonder what has changed doubt its the inflation. The only thing that has changed is that they now have a bond buying 'tool' for Italy so the can hike risk free now. These guys are actually jokers, control inflation by printing more money to buy Italy's bad debt, whilst hiking interest rates for everyone else. Anyway don't think it will work they are like junkies, hooked on the needle of low interest rates and ongoing QE in order to create growth. Our growth days are over in the western world our population is on the decline hence overall consumption will always be lower, the baby boomers was our growth period.

Its good that myhome.ie shows price changes, but any idea if daft.ie do it?

once again, inflation is supply side, not demand side, i.e. expanding the money supply during covid did not cause this, raising rates will not and cannot solve supply side problems!

most money created in both the public and private domains has been used in inflating asset prices such as property, it has not made it into the real economy, but has remained mainly in global financial markets, this is exactly what has happened with qe created money, with at least 4 trillion being used in financialised activities such as share buy backs, hyper inflation is highly unlikely to occur in this situation, as again, inflation is primarily supply side based, and not demand side based, i.e. via money supply.....

How do you explain house price drops in places like NZ, Oz, and Canada when they have been forging ahead with interest rate rises?

yes, in property we have rising demand, but the statements of general rising inflation largely due to money creation, is in fact wrong, as this is whats called supply driven inflation, it has virtually nothing to do with the money supply, but the fact global supply chains are in a mess since covid, and now we have a serious energy crisis to boot, i.e. all supply side....

one of the solutions is actually more money creation, but to push that money into the hands of citizens and businesses, and not just into inflating asset prices such as property, as was the case with policies such as qe....

...'left leaning government', seriously!

again, this is not demand lead inflation, but supply side, and this has been confirmed by many respected sources, including from some more conservative quarters, i.e. demand does not have us in this situation, and im pretty sure the average child can see this also!

raising rates is in fact going to do great harm to our economies, as it strangles them of money, as businesses and citizens are unable to get access to credit, and pre existing debts become harder to service, this in turn will cause people to have less to spend, and will more than likely save more.....

...such countries maybe experiencing such, due to the demand for new credit falling, as particularly Australia and Canada have been doing everything in their power to maintain credit fueled property booms over the last few years...

....again, central banks cannot do anything about supply driven inflation....

...so prepare for a significant rise in both business failures and unemployment, due to these actions.....

Then you don't know what you are talking about so.

In these markets, they are highly reactive to interest rate rises because the ability to repay and service a mortgage where house prices are very high depends on how expensive credit is.

A 2% rise in the interest rate may mean a borrower can only borrow 75% of the money they previously would have had access to, hence why property prices there are crashing. Prices in Sydney, Melbourne and Brisbane are falling at the highest rates since the early 80's. Similar in NZ, Similar in Canada. The US and UK are not far behind either once the date comes through over the next few months.

TLDR

Interest rates have a huge impact on property prices.

only is others stop talking sh1te about printing money causing our current inflationary pressures, as its been well confirmed at this stage, its not, again, this is supply side inflation!

Not necessarily. Very little if the last increase of 0 5% had any effect on interest rates with the EU economy. It would actually have been positive for banks.

In Ireland but right across the EU developed economies there is more money saved than lend. Therefore banks had to pay the ECB for money on deposit that was not lend out.

The banks have in general swallowed the last increase which changed the ECB rate from -0.5 to 0%. It's costing banks nothing now to have money on deposit. Even as interest rate rise it's only as banks start to offer positive deposit rates that we will see real interest rates rise.

A 0.75% rise may only see 0.5% of that passed into the general economy. That may finally start to dampen demand. However the ECB should probably have gone with 1% orginally as that would have been a 0.25-0.5 increase in real terms

Interest rates are going to do little to help inflation caused by rising energy prices

Rate rises will curtail spending, including on energy which will mitigate energy induced inflation somewhat.

Should we maybe move the more theoretical 'if this happens in the economy, this could happen in the property market' discussion back to the main Property Market thread, and keep this one more for 'this is what I'm actually seeing happen now, specifically in terms of slowing/dropping prices, reduced demand, increased supply (or otherwise)'.

Otherwise, the two threads are kind of becoming identical?

The ECB's interest rate was negative prior to the last increase. The rate currently is at 0%, so you think it should be cheaper to borrow than to save ?

I think many do not understand moving from negative to positive interest rates is it is very slow to see the effect in the general economy.

Actually the first 0.5% in July might actually be a boost to the economy. Business's with large sums on deposit would have started to exit from having to pay for these deposits. As well as that country has more savings than money lend so banks are actually increasing profits without increasing rates into the economy.