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

I hate to break it to you, but based on your logic he's no longer a kiwi, he's Irish now.

Do you not think that in a modern EU economy without borders, and with free movement of people, our economy’s growth is still organic, just on a larger scale and perhaps not as insular and xenophobic as some would like? With that organic growth up to 2002 came a demand for goods and services which required additional labour, that had to come from somewhere.

The world in 2022 is very different to 2002, you can’t turn back the clock just because you think items should be cheap and foreigners should go home.

Wish I could give this post 100 likes. Too many people believe that selling price = cost price + predetermined profit margin. That is not and has never been the case. Price is always set by what the consumer is willing to pay for the product or service. If people can borrow more money, house prices will rise in tandem. All these new central bamk lending rules will do is facilitate people getting in over their heads in debt, again. Mortgage defaults here we go!!

Not at all, a multiplier of 4 is still at the one of the lowest in Europe level and they are just one of multiple criteria that lenders set on affordability.

Recent news has been of banks tightening their own lending criteria.

What this will do is allow people who had affordability on all other criteria and stress tests but were restricted by the 3.5 multiple to borrow more.

Prices will go up but there is no reason to expect mortgage defaults, the CBoI has done research on the impact of this and it's still one of the lowest levels in Europe.

I don't see how this makes it harder for anyone, other than people praying for a crash (lets get the IMF in again and austerity measures so people can get a cheap house). Not that it's relevant but I amn't looking to flog anything at the moment.

Why do I have to keep reminding people this is not an immigration thread?

It's in the mod warning that the thread title instructs you to read.

Actual profile warnings will be given next time as I'm tired of repeating myself

I don't think they will go up 10-12%, honestly I hope not.

What I think most people would agree we want and you have in housing in more stable long term markets like France are prices that go up with or a bit above long term inflation every year and give a good rental yield.

We are up around 2% on prices 15 years ago, so well below inflation increases, but obviously we had a bubble up to that and that short fall is due to giving some of that bubble overpricing back. Valuations are based on salary multiples and what the asset can earn hypothetically in rent, if the ESRI says they are roughly 7% overpriced coming out of Covid that seems like a reasonable valuation.

This is a small country and we have much more volatility on economic conditions, that can change rapidly, than a large country like France, just look at variability in budget receipts and no-one seems able to forecast those well.

That means more volatility in housing prices without some control in the market, you've people who wish for that because they buy as a gamble and will try to sell at the top and other people who want to gamble to wait to buy and get a deal in a crash. We don't want these boom bust cycles in housing.

We've had price increases due to lack of supply recently in particular with Covid. To get around those we need supply.

To get supply we need an attractive investment, without massively volatile prices that will command a big investment premium.

The government finances are susceptible to quickly changing economic risks and FDI choices they are not stable long term investors for the whole housing market, they need to keep reserves to pay the public sector when times are tough.

Policy seems to have been to get others in, and to attract them, to transform the market from boom and bust speculation model to a more long term stable one.

Once you start courting those investors you don't want them pulling out en masse, but they are going to be happy with small price increases once it's a stable market with high rent.

The issue is in a high interest rate environment the yields that were acceptable are no longer attractive and we have rent caps preventing rent increases.

Then on the cost/investment side building costs have gone up but capping on rent means yields drop further. The political pressure is on keeping rents down but something has to give so it seems they are allowing prices to go up a bit more than salary inflation by relaxing the LTI cap.

All of this is a feature of living in a very small country with its various peculiarities. If we move toward socialising the entire cost of housing, at some point when bad times hit it will be a race to the bottom with austerity and cuts everywhere. We are too small a country with too volatile an economy to be doing massive long term infrastructure projects, and the immigration side is a cost of EU membership that we have to plan and pay for.

And just thinking on on all of that, the recent flood of mom and pop landlords leaving the market might just be a case in point of why the government might be happy to get rid of them under a long term stable house price target.

why is there an assumption that someone who disagrees with the doom sayers has a vested interest?

There is no reason for the CB to this unless they have been bribed by developers. Well bloody sure i am going SF. Really hope they destroy this economy for the pigs.

Why do you present any negative comment as doom-saying? This specific piece of news will keep prices higher than the market would otherwise have dictated they be. That is good for some, bad for many others. Should not be difficult.

You'd imagine with rising interest rates many people will just fail the other stress tests if trying for 4x salary