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

jimmybobbyschweiz · 17-09-2022 9:17pm

https://www.boards.ie/discussion/comment/119630970#Comment_119630970

I had always said we need at least a year after COVID restrictions end to see price correction start to occur and the fallout to begin (as stated previously COVID was not negative in any way to our economy, in fact it was a blessing for almost all of it). Restrictions only ended in January 2022 (it feels a lot longer for me that they ended, not sure if others feel that way) so through this year as things open up, we start to get a feel for how things play out and from next year onwards we see the true fallout from COVID. We are still within my timeframe of a year after the restrictions end.

My other timeframe was over a year ago to wait 2-4 years before buying if you were renting as the deposit will be larger, mortgage smaller and there will be greater supply (prices coming down may not happen in that timeframe); this is still playing out.

jimmybobbyschweiz · 17-09-2022 9:30pm

https://www.boards.ie/discussion/comment/119631467#Comment_119631467

The rental market should've imploded when COVID hit, because it was and is unsustainable but the government went beserk with cash to prop it all up where we now have 50%+ of all tenancies getting some form of rental support. This is not stable and necessarily requires a magic money tree to keep the whole charade going! I don't subscribe to this FF/FG/SF magic money tree school of thought so I still sit back and watch as the government try to squander more good cash into propping up the rental market - they are running out of magic tricks however from what I can see.

The stock market is another component of the asset bubble; the main US stock markets are the most grotesque bubble there has ever been, hence why it has been correcting and continues to correct. It is being propped up by the Fed and the corrupt politicians that, like our own, have skin in the game. Again, as a free market proponent, I would like to see more of a free market in operation and not this pathetic, deformed socialist market where profits are privatised and losses are socialised. Ireland is a micro-USA and we see what impact rate rises are having to the asset bubble there. This is a compulsory recession in order to unwind some of the QE/low for too long rates and is necessary, but that doesn't mean it won't be harsh.

Again, if the fundamentals were solid, the economy broadly diversified, individuals in generally a solid financial state, then there would be little to worry about for the coming winter and continuous rate rises, so I'm assuming that you are not worried for Ireland and its economy and housing market for the next few months.

Dav010 · 17-09-2022 9:31pm

https://www.boards.ie/discussion/comment/119632091#Comment_119632091

This is the collapse which we have passed the brink of no return? An increase in supply, but prices may not come down in your 2-4 year timeframe, during which, renters should continue to pay rent.

And Covid will cause some businesses to shut.

This is your insight/prediction? How disappointing.

jimmybobbyschweiz · 17-09-2022 9:35pm

https://www.boards.ie/discussion/comment/119632155#Comment_119632155

Some businesses to shut?! Some!? It is going to be a bloodbath; 24000 firms now unleashed into the free market from the Revenue's debt warehousing scheme in the last while, SMEs getting devastating energy bills has just begun, this is going to lead to them cutting down production which will mean cutting overheads, raising prices etc which will have a knock on effect, all feeding into the difficult to quantify but extremely important "sentiment".

Though as I understand you, the economy is booming so a few high energy bills for a few months won't do much to quench any growth.

Being totally honest, I do think prices will have come down by 3-4 years (2-3 years from now) in addition to supply being raised so I would be more confident now about prices than I was last year. This is because the rate rises are happening and happening with gusto, which are inversely correlated to house prices and rents.

Edit: I would also go further now since the money has dried up in Silicon Valley and we have a huge concentration risk from tech companies, that demand for rentals will dry up significantly unless rents start dropping materially. We are only at the start of hiring freezes and job cuts, with many of the cuts not even happening as of yet due to notice periods, but we have no alternative economic activity producing such high earners to be able and willing to take on 1100-1500 pm per room rates of rent. This is where Ireland will suffer disproportionately to our EU cousins who do not have a similar concentration risk with tech companies.

combat14 · 17-09-2022 9:41pm

ECB could raise interest rates into next year, says Philip Lane

Euro zone economy likely to flatline over winter months and a recession cannot be ruled out, says chief economist

https://www.irishtimes.com/business/economy/2022/09/17/ecb-could-raise-interest-rates-into-next-year-says-philip-lane/

throw in rising energy, food, heating and fuel bills and we have the perfect storm heading into 2023 .. but for many on this thread property only ever goes up

Dav010 · 17-09-2022 9:48pm

https://www.boards.ie/discussion/comment/119632200#Comment_119632200

Can you name a single poster who said “property only ever goes up”? Just one will do.

jimmybobbyschweiz · 17-09-2022 9:48pm

https://www.boards.ie/discussion/comment/119632200#Comment_119632200

When it all stabilises in a few years, we then have SF unleashed onto our politics, economy, property market etc and, at current trends, most of the electorate will be renters in 10-15 years which obviously means that high house prices are not what the electorate will vote for. In the same way salaries have not really increased hugely in 20 years, I don't think house prices in 10-15 years will be what they are today in Ireland, unless the whole property market was socialised by the State via another bailout like it introduced after 08 to prop up the market - the green agenda won't enable the State to throw cash at the market again to do this however.

Side point: with the Chinese property market crash, raw materials for homebuilding will get cheaper as this fallout gathers pace, given the amount of raw materials the Chinese housing market consumes. So building in this country will become more sustainable in a couple of years.

HousingisaRight · 17-09-2022 9:57pm

Thanks for your response and debate, I appreciate all points of view.

However I do think that the reason this has become a disaster is because of apathy, incompetence and corruption.

We need a big bang war time effort for things to change.

1. Build Up: I am referring to ending urban sprawl and ensuring maximum efficiency. It has become an acceptable norm in this country to say I am commuting from Longford to Dublin for work each day. Schools ? , I cant afford kids, therefore I wont be having them. That is a fantasy luxury for generation rent as is a garden, we just want to stop paying crippling rent. We need 500,000 new 1 and 2 apartments in this country and we needed them 2 years ago.

2. Landlord TD's: I disagree completely and all you need to do is look at Robert Troy arguing to make it easier to remove tenants and increase HAP pay when he was renting out 9 properties. It is a clear conflict of interest and thankfully journalists are now investigating non declaring TD's rental income.

3. Dubai: I am using the it as an example of a desert in 1990 and a mere 20 years later it is a metropolis. I dont condone slave labour, I am referring to planning and ambition and why we have a 18th century mindset determined to keep a low rise city , why? .We are an international embarrassmentand need to foreign construction workers, well paid to rapidly speed up the time frame. 30,000 houses a year isnt enough, we need 500,000 immediately, therefore we need to bring them now, we proved we can take 50,000 Ukrainians in 6 months. Look at how much we spend on Hotel accommodation and HAP to subsidise landlords and 25 year leases to vulture funds with nothing to show at the end.

4. Shared Equity: Well then, its dead on delivery. 350k is not value and we all know it. Nothing in Dublin under that figure, 1 2-bed in Citywest for 375k, lets end the scheme and call an election.

5. Borrowing: Another benefit of being the EU, along with unachievable climate targets, have we even asked for half the figure,do they know the scale of the problem, we need a government who will demand change and not meekly accept young people living in their box room until they're 40

6. Councils/Local Authorities: No I am saying let them buy off landlords and rent back to low income renters and end this entitlement mentality that landlords have thinking someone else should pay their mortgage, i have spent over €150,000 in rent over the past 16 years. It is taking this vile greed from the market and helping people on housing lists and people on low incomes, spending 60% of their net income to pay rich peoples mortgages.

7. Demolising Inner City Flats: Dire consequences, you mean Ballymun ?, a simple cost benefit analysis would show these locations are worth tens of millions and perfect for high density modern, architecturally beautiful apartment buildings and that giving new builds to residents on the outskirts of Dublin would be a good deal to never make the same mistake again

8. Social Housing on a Mass Scale : Again Resources, solved by point 3, 25,000 foreign construction worker visas to reduce timeframe from 10 years to 5 years,we needed these houses years ago. I am ashamed with how little ambition we have in this country, the embarrassing gombeenery and backwards thinking.

9. Vulture Funds: Should be banned immediately, they are distorting the market and you know it. €1750 a month for a 1 bed is toxic supply and we can cover this shortfall through a mass building program with foreign workers.

10. Shoebox Apartments: Why are they expensive, because of construction materials and labour. With a state construction company mass buying materials at a discount and hiring foreign workers we can address this.

11. Rent Freeze: Good, lets get those greedy people out of the market, we dont need the worlds smallest violin playing for poor people paying rich peoples houses off.

12. Landlord/Teacher/Bluffer TD's : I highly highly doubt people of that calibre are advising the government when its been an unmitigated disaster

and Prof O Hearne and Prof Lyons are ignored.

Remember there are 100,000 apartments with defects, or 80%, that in combination with MICA, will cost the state probably 10 billion once its all said and done.

Sickening,Incompetent,Corrupt,International Embarrassment of a country and noone will be held accountable.

Timing belt · 17-09-2022 10:00pm

https://www.boards.ie/discussion/comment/119632148#Comment_119632148

The stock market attracted every Tom dick and harry to invest and was no different to tech stock bubble of the 90’s…the main component that caused it was greed and what is causing the correction is fear.

the fundamentals for the rental market to collapse are not there we have a supply that is shrinking with demand rising. I don’t agree with HAP but the alternative is social housing and there are plenty on here that will give out about free houses for people. At the end of the day the government have always provided housing supports to people that need it. The alternative is sleeping in cars and under bridges like you would get in a totally free market. I for you one think that we are a more carrying society to not let that happen than live is an Society that only cares about themselves.

of course there are things to worry about with energy bills as a lot of pubs restaurants and shops will go out of business will this impact house prices of course it will but will it mean lower house prices no as there is wage inflation. It will probably mean housing is cheaper in real terms (inflation adjusted) compared to a year ago but not in nominal terms.

Rate rises are required as the economy is running to hot…that can be as dangerous as a recession so central banks have no option to keep hiking until the pressure in the jobs market falls away otherwise you just go into a wage/inflation spiral as people can just move jobs for higher pay.

As for Ireland’s economy the biggest concern I would have is if they did something stupid and guaranteed a price cap on energy thinking it would cost 1bn and end up costing 100bn because no-one knows how high prices will go or for how long. we still haven’t seen the impact of high oil prices on flights and wouldn’t be one bit surprised if a flight will cost twice as much as it does today by next summer…that would kill tourism.

Jonnyc135 · 17-09-2022 10:20pm

https://www.boards.ie/discussion/comment/119632200#Comment_119632200

What a waster this guy and his cronies are. Honestly I know deep down they want inflation to stay around 5-6% for the next 5 years with interest rates only going to max 3% giving real terms negative interest rates of 2.5-3%. This is the only way they can sustainably reduce their debt burdens using this fiancial repression model whilst not blowing up the economy by raising interest rates too high.

I honestly believe this is why the ECB left it so long as they nearly wanted it to become fully entrenched. If they are able to keep everyone pacified with a looming energy crisis incomming then it might just work, but the probability of that happening is very low.

Philip Lane is a waster in my eyes but I do not envy the job he has to do especially if all goes south which is becoming ever likely.

Timing belt · 17-09-2022 11:08pm

https://www.boards.ie/discussion/comment/119632262#Comment_119632262

The housing crisis doesn’t just impact you it impacts families and schools and infrastructure are required there is no getting away from that.

There is a place for landlords in the market and to not be able to see that is just stupid. The issue isn’t the landlords it’s the lack of supply…if we’re taking out the little violin then give it to FTB’s that can afford to buy but can’t find property because the councils are out bidding them….or give it to the guys that are paying mortgage and working there asses of while somebody else gets it free next door to them because they know how to play the game and milk the system….the housing crisis isn’t just about renters.

Saying you paid a 150k in rent maybe we should give you the little violin…..I paid 450k over a similar period..ok it wasn’t in Ireland and it was normal to pay up to 50% of pay on rent….the issues are seen through out the western world and not just Ireland.

if renters had choices they would be able to push the prices of rent down. Wanting to reduce the supply is just crazy. Likewise advocating that council buy more of the existing property just drives up prices and they won’t be renting them significantly cheaper because they they need to recoup costs.

you should look at the credentials of the consultants that the government hire before they make any decisions…they are top consulting firms which hire the top grads. The only reason they hire them is they can blame them if things go wrong and say they were given bad advice. Your proposal adds nothing.

HousingisaRight · 18-09-2022 12:33am

My proposal is the true solution but it will never happen because this country is too backward and corrupt.

Landlords are the leeches of society, and i am the one working my ass off to pay their mortgage.

Like many other young people,our best option is to leave this country and find some quality of life elsewhere.

Timing belt · 18-09-2022 12:58am

https://www.boards.ie/discussion/comment/119632626#Comment_119632626

true solution……Without landlords where would you live?

HousingisaRight · 18-09-2022 1:19am

in my own house/apartment and not in this dysfunctional disaster created by landlord tds,unfireable apathetic civil servants,and greedy bottom feeding vulture funds that have turned shelter into a commodity and destroyed a generation

Timing belt · 18-09-2022 1:51am

https://www.boards.ie/discussion/comment/119632687#Comment_119632687

It’s interesting that you only joined boards today and your only posts are the few on this thread….you really got up to speed fast. You sure you don’t have another account on here?

mcsean2163 · 18-09-2022 8:40am

Just saw this this morning.

https://youtu.be/OpIRhkTOPAI

They built a fairly decent small house for $15,000 worth of materials. Perhaps we could pay them to build 100,000 such houses for county councils?

Dav010 · 18-09-2022 8:53am

https://www.boards.ie/discussion/comment/119632952#Comment_119632952

100000 of these would be cheaper, and just as realistic.

https://youtu.be/R-x5QOSqP3E

jimmybobbyschweiz · 18-09-2022 9:09am

https://www.boards.ie/discussion/comment/119632270#Comment_119632270

In real terms the economy has turned as has the housing market, but in nominal terms, as you say, this has not played out yet (it will, don't worry).

The fundamentals are absolutely there for the rental market to crash; we lose just a few thousand staff from big tech companies (barely a few percent of the total employed) and all of a sudden, with a hiring freeze that is being implemented, rental supply ticks up significantly. Additionally, the State needs to borrow to continue on its ridiculous spending frenzy this Budget, which is truly reckless and going to end up in tragedy as it is being totally misdirected - all of a sudden the State is told to clean up its spending by Europe or else there'll be no more free lunches for the Exchequer - the money won't be there to throw at the property market. Two massive risk factors now materialising; loss of big tech companies' employees and State ability to run the country predominantly by borrowing cash is no longer possible without significant cutbacks.

It's absolutely mental to try to argue against the massive red flags in the property market: no rentals whatsoever means no more growth in the FDI model on which the country is utterly dependent. Yet the government is trying to spend and spend like there's no tomorrow. The FDI model has stalled from the housing crisis (although the Business Post today have reported the IDA worries that energy crisis is also going to cause issues with our FDI - a perfect storm) which will feed into reduced tax take for the Exchequer, less demand for rentals and a correction in the property market as the rental market cools. It defies logic and necessarily requires the housing crisis to be resolved to think the economy and property market will sustain these current valuations.

Here is the market sentiment graph; we have been following it in Ireland fairly consistently; I posted it at the euphoria stage in mid-2021 and earlier this year to flag the anxiety stage. Now we are approaching denial. Fear and desperation come December to February.

Balluba · 18-09-2022 9:49am

https://www.boards.ie/discussion/comment/119633006#Comment_119633006

I see in todays Sunday Business Post that BAE System’s (a British sims dealer) pension fund bought 43 second hand Irish properties in 2021 for €14.4 million. Less than 1 year later in April 2022 they sold those 43 properties to a Davy Investment Fund for €16.8 million making a 15% profit of 2.4 million in less than a year.

Why is this flipping of property allowed???

Balluba · 18-09-2022 9:50am

https://www.boards.ie/discussion/comment/119633074#Comment_119633074

Apologies I meant British arms (not sims)

Villa05 · 18-09-2022 10:19am

https://www.boards.ie/discussion/comment/119633074#Comment_119633074

It's systemic, designed to pump asset prices and enrich the financial industry at the expense of youth and the disadvantaged

Some property owners will tell you its there genius and foresight, unfortunately not, it's a rigged system that's hollowing out the "middle class"

Davys entire management should be in court for fraud and insider trading

https://www.businesspost.ie/news/davy-shelling-out-bumper-prices-for-houses-already-leased-to-limerick-council/

https://www.independent.ie/business/irish/davy-staff-could-still-face-criminal-probe-over-bond-deal-40160930.html

Eclectic Econometrics · 18-09-2022 10:55am

https://www.boards.ie/discussion/comment/119633074#Comment_119633074

There are two property threads going at the moment but I think it was this one where someone brought up the idea of a tax if a sale takes place within 5-10 years of purchase. I didn't realise this but they actually have a tax like this in Texas, one of the freest states in the US - https://www.realtyaustin.com/blog/capital-gains-taxes-on-homes-in-texas

I don't like the idea of corporations buying property. I've seen "funding" arguments on here but for me there must be another way. This BAE deal was setup to take advantage of this funding gap. BAE put up the upfront cost, the government sign a long term rent deal which in essence AAA guarantees a return. Why does the government not just fund the purchase itself through a bond and in 25 years at least they own the house?

There are pros and cons with flipping. You could have someone purchase a dilapidated property and make it livable, why should they be taxed? But I think the examples provided by the person I mentioned before were more "bought in May for X, sold in same condition in July for X+20%".

A lot of the arguments on here seem to be about how much housing should be a right Vs how much housing should be allowed to be a speculative asset, "I took a risk when I was young, we paid 40% interest rates and only ate coal for dinner etc.". I sympathise with both points of view but current market conditions should drive legislation. For example, and as I probably mentioned before, I would be against individuals who are not tax domiciled in Ireland being able to purchase property here. I am not in any way, shape or form in a desperate housing situation but the thought of BAE fu*king Systems outbidding people for housing, in this market, sticks in the craw.

cnocbui · 18-09-2022 11:23am

It seems if you want to address housing supply, you first have to address problems with the planning system, and boy does Ireland have problems with that.

https://www.smh.com.au/national/nsw/crowded-house-s-can-new-zealand-s-planning-reforms-show-sydney-the-way-20220914-p5bi15.html

coolshannagh28 · 18-09-2022 12:01pm

Ireland, its economy and property market has become a microcosm of America. Strip out FDI and we have a very low average EU economy. A change in sentiment in the multinational sector will have multiplier effects thriugh the rest of our economy in a mirror image of the impact of big funds leverage for the last 10 years in the property market. Our national debt is too high if the US money withdraws and we could see huge changes in a short space of time as in 08.

jimmybobbyschweiz · 18-09-2022 12:15pm

https://www.boards.ie/discussion/comment/119633074#Comment_119633074

Davy have Owen Keegan of DCC still on the payroll almost the way they have been flipping properties to DCC from their property funds. More evidence of a bubble as this is just blatant corruption! Everyone at the inner circle table is a winner including the BAE Pension Fund; great little country.

cnocbui · 18-09-2022 1:18pm

https://www.boards.ie/discussion/comment/119632952#Comment_119632952

I'd love to see an Irish quantity surveyor cost those materials at rip-off Ireland mark up.

Timing belt · 18-09-2022 1:45pm

https://www.boards.ie/discussion/comment/119633006#Comment_119633006

There will be a slow down as central banks raise rates but let’s not forget that the reason for raising rates is to cool the economy. It is being done deliberately or have you missed that point.

Will the central banks over do it and create a recession very possibly.

Will they over do it to an extent that it creates a very deep recession that results in large scale winding up of business? Very unlikely

Maybe you are unaware as no longer in the country but there are thousands of people who can’t find any accommodation to rent. Even if a few thousand properties hit the rental market in the morning it would have little impact on rent prices because the demand is there to easily absorb it.

Will this demand go away? No not unless people leave the country on a mass scale. A hiring freeze just prevents new jobs being added or existing jobs being replaced when people move on. It doesn’t result in people leaving Ireland.

Thanks for you economic lessons on economic cycles but I don’t need a screen shot from some sensational YouTube channel to explain. At the end of the day There are 2 things that move any market fear and greed.

The high house prices and rents are being generated from fear and not greed at present. Fear generated by a chronic lack of supply and the prospect that they will end up homeless despite having a job and being able to afford to pay rent.

jimmybobbyschweiz · 18-09-2022 1:59pm

https://www.boards.ie/discussion/comment/119633823#Comment_119633823

You have plotted the picture exactly in your post but aren't yet joining the dots.

Central Banks have to induce a technical recession and will likely overdo it like the way they overdid the accommodative policy.

People have already left the country during COVID in the Big Tech companies which is why they are being slow to implement full return to office policies. People left during lockdown and havent come back, but some people in this country dont believe this. What's more, the current lack of housing is pushing more people out of the country - to think otherwise is to have solved the housing crisis. The demand reducing from emigration risk is currently materialising and you refuse to acknowledge this.

Fear and greed move markets, well, hello fear - it's starting to grip. Greed moved it high with politicians and Investors as well as older homeowners all absolutely delighted to see rents and prices rise each year to the point where no homeowners will accept 30-40% Off their house value of it meant we could solved the housing crisis.

You have all the pieces and are aware of the issued, but aren't accepting yet that this is actually playing out right now in front of us.

Timing belt · 18-09-2022 2:29pm

https://www.boards.ie/discussion/comment/119633893#Comment_119633893

Ffs you contradict yourself again….you say a large no of people left during covid and didn’t come back…If that’s true it had zero impact on demand…I will make the assumption that they were renters so if they left it proves that there is adequate demand to be able to absorb it. Like it or not it’s not playing out like you have said it will just like your predictions of the past few years didn’t play out and the exact opposite of what you predicted happened.

return to office hasn’t worked because there is a chronic shortage of workers and if it’s enforced people will move jobs not because they are secretly trying to hide something.

Villa05 · 18-09-2022 4:53pm

There appears to be no let up in investment fund activity

2/3 of completed property in Dublin, Kilkenny and Monaghan in the first quarter of this year were purchased by investment funds. Notable how this issue has spread to more rural locations. Its like cocaine

The state will run out of land to build in the next few years in Dublin.

DCC have completed 0 homes in that time period

https://twitter.com/aoifegracemoore/status/1571464299847057408?s=20&t=yd3Pdym4Or4ZKx8MG1hkjA

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

Comments

Euro zone economy likely to flatline over winter months and a recession cannot be ruled out, says chief economist

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