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

SwimClub · 19-10-2022 9:25am

https://www.boards.ie/discussion/comment/119763787#Comment_119763787

Yes, they have their own criteria, this will only make a difference where people have affordability by all other methods but were ruled out on LTI (the lowest /most stringent LTI in Europe). Paying high rent for years for example is proven affordability that someone can pay half that rent in a mortgage payment, but they could still get blocked from getting a mortgage by an LTI cap in spite of the proven affordability, passing stress testing etc.

They have been on to the CBoI about this for a long time and now they've decided that making it less hard for renters to buy, in a market with no rental units, might not be such a bad thing.

Bass Reeves · 19-10-2022 9:34am

https://www.boards.ie/discussion/comment/119763806#Comment_119763806

He was replying to the following post

https://www.boards.ie/discussion/comment/119763711#Comment_119763711

Who after @SwimClub gave an analysis of what was happening declared he had a vested interest.

Anyway they are not doomsayers they are Chicken Lickens flapping around for the last eight years screaming ''the sky is falling in''.

Just hope nobody took there advice over that time and gave up a purchase and is now squeezed out of the market

jimmybobbyschweiz · 19-10-2022 9:35am

https://www.boards.ie/discussion/comment/119763014#Comment_119763014

We have a government policy that operates to take them in and pile them high, treating them as second class citizens; the Irish dream or something like that. Who cares about Ukranians or south American students, they should be lucky to be allowed into the country - that is how government policy comes across. I am, in fact, on the side of refugees and immigrants, preferring to offer them a good quality of life and not whore them out as profit margin widening, tax revenue contributing worker drones. Until we get our housing market in order with materially and substantially lower costs, those coming here are being forced to live in a state that is barely above the poverty line.

AySeeDoubleYeh · 19-10-2022 9:40am

https://www.boards.ie/discussion/comment/119763890#Comment_119763890

SwimClub said this:

""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."

Quite aside from how utterly disingenuous the comparison to 2007 prices is, the above is reflective of what he wants from the market. So, it's not some kind of unsubstantiated accusation on my part, I was just pointing out it didn't require 16 paragraphs to say "this works for me".

pinksoir · 19-10-2022 9:43am

https://www.boards.ie/discussion/comment/119763010#Comment_119763010

But this won't do anything to help those who are stuck renting. If you were getting outbid by folk at 3.5x you'll be outbid by the same people at 4x. All it's doing is rapidly raising the baseline house price and thus the barrier to entry.

You will also need a larger deposit for your 10%, something that becomes easier to achieve when you have a higher income. So the gap will only widen further.

I'm not sure whether this is incompetence or a cynical move to create higher levels of debt in the population. At some point it becomes indistinguishable.

SwimClub · 19-10-2022 9:45am

https://www.boards.ie/discussion/comment/119763917#Comment_119763917

No, it's what any investor wants and what we all want from the market to increase supply, reduce homelessness etc.

Unless you have 100 billion sitting down the back of the couch you are willing to invest at current rental yields to help housing supply?

SwimClub · 19-10-2022 9:48am

https://www.boards.ie/discussion/comment/119763935#Comment_119763935

That's a supply issue, which is what they are justifying this on, inflation impact on the cost of building.

If there is more supply then the competition and price reduces as the people on higher salaries all buy and the market starts to clear.

pinksoir · 19-10-2022 9:55am

Absolutely it's a supply issue. But the reason that costs are so high for building in Dublin, for example, are because of land prices, not building costs per se. So what do you think will happen when people have access to more credit? Do you think that land prices will remain static?

Never mind the fact that barely any new housing at all has been built in Dublin (besides swathes of btl apartments), and that what has been built has generally already been at the much higher end of the market.

jimmybobbyschweiz · 19-10-2022 10:02am

https://www.boards.ie/discussion/comment/119763159#Comment_119763159

No, unfortunately not and to explain why not I would just point out the massive concentration risk with respect to our tax take which is heavily focused and reliant on corporate taxes that are unfortunately themselves utterly dominated by a few hyper large MNCs that are paying corporate taxes not even based on Irish activities.

Villa05 · 19-10-2022 10:12am

https://www.boards.ie/discussion/comment/119763270#Comment_119763270

I wonder did that research come across the fact that those European markets are far more bubblier than ours and this one measure instantly brings us to those levels at the absolute top of the market.

This allowed a system where wealthy institutions hoovered up property knowing people were constrained in bidding when they were somewhat affordable, now these constraints are being removed when investment funds need to offload and de-risk.

This one act is the greatest act of legalised robbery by the wealthiest on the working citizens of this country

Do other countries have 0 tax for the wealthiest investors, FTB grants, shared ownership BS,

Don't be stooge for a system that is robbing our children blind. Did you read the first article from the indo on the public consultation. The vast majority of respondents said there should be no change. It's the minority that are milking the system that are dictating policy. That minority are extremely wealthy, powerful and traditionally bankrolling the political parties currently in power

Villa05 · 19-10-2022 10:30am

https://www.boards.ie/discussion/comment/119763338#Comment_119763338

Those apartments were priced in an environment that assumed 0 interest rates was the new normal. The state should not be buying them as they are completely unviable hence the investment funds pulling the plug on funding them.

Property needs to adjust to the new normal, while that is happening the state can build on there own land with the surplus labour

Your question is like saying cutting off my hand is good because cutting off my arm would be worse

Villa05 · 19-10-2022 10:49am

https://www.boards.ie/discussion/comment/119763955#Comment_119763955

The Central bank cannot justify a decision on concerns regarding the supply of housing as that has nothing to do with their remit

This is pure vested interest and political interference.

It's a rinse and repeat of the shared ownership, where all independent advise was ignored

Somebody put kwasi kwarteng and lizz truss on notice as this is the only country that would employ their skillset right now and pay them more

SwimClub · 19-10-2022 10:54am

https://www.boards.ie/discussion/comment/119764250#Comment_119764250

Well everyone has to justify their decisions and it's high risk to be accused of unnecessarily worsening a situation (with the most stringent borrowing constraint in Europe) that might lead to a market crash, as many on here seem to be hoping for.

MacronvFrugals · 19-10-2022 10:58am

20% deposit for second time buyers also removed

https://twitter.com/CWeston_Indo/status/1582669813964759040?s=20&t=cwIzcK8jqeo4iaNGgx7xVQ

pleh · 19-10-2022 11:05am

Second time buyers only need 10% deposit.

GoldFour4 · 19-10-2022 11:08am

Some of the rule changes make sense to me. I.e. divorced or separated people being first time buyers as well as lessening the 20% deposit requirement for second time buyers.

pinksoir · 19-10-2022 11:25am

The divorced stuff makes sense, but the rest, the more I think about it, is just so ill thought out. I'm actually astounded by it.

jimmybobbyschweiz · 19-10-2022 11:27am

To quote "he who shall not be named"; The boom is getting boomer". Funny to read back on this article from 2017 and I can't help but think

https://www.irishtimes.com/business/economy/is-there-a-boom-is-it-getting-boomier-1.3047706

Talk of the economic recovery being a "Phoenix miracle" has made it to Dundrum Town Centre, but even in the country's biggest shopping centre the view among shoppers is that the term is not a proper fit. "I heard that the other day," says a surprised Anna Howard, outside the House of Fraser department store, referring to the phrase used last week by Central Bank chief economist Gabriel Fagan.

The term "Phoenix miracle" is not Fagan's; it was coined by Guillermo Calvo, the Argentine-American economics professor at Columbia University in New York, to describe an economy that rises rapidly from the ashes of recession, creating new jobs and attracting new investment but without any rise in debt.

Calvo conceived the model after analysing the Asian economic crises of the 1990s, and spotted that the US experienced a similar recovery after the Great Depression with plenty of growth but no new credit. Sitting in a boardroom of the Central Bank's swanky new offices on the north quays in Dublin, Fagan says that his intention was not to create a new term to rival the overused "Celtic Tiger" or even the more recent "Celtic Phoenix" of fictional Irish Times columnist Ross O'Carroll-Kelly. "It was just simply to say, when we look at the economy, this is a phenomenon that has been observed elsewhere."

“If you use a strict definition, yes, we have seen the stock in credit fall, and yet the economy is growing,” says Dermot O’Leary, chief economist at Goodbody Stockbrokers.

“But it is a little bit dangerous because it may bring about an attitude that everything is very rosy whereas if you look at where the risks are at the moment there are still significant ones. It is somewhat dangerous as to what it does to the psychology of thinking around how sustainable the recovery is.”

The shortage of new housing units after years of inactivity in the construction sector lays bare one of the biggest problems facing the economy. The Housing Agency has said that 81,000 new homes are needed by 2020 to meet projected demand. Just under 15,000 new homes were completed last year, and work began on another 13,234 homes, so the country is falling well short.

This explains why house prices are increasing so quickly in an illiquid market and why average rents rose 13.5 per cent in 2016 – their highest level on record – and are climbing faster since property website Daft.ie first began tracking rental prices in 2002.There is still also a heavy debt hangover in Irish households from the boom and bust as they continue to try to solve past mistakes.

While the recovery is broadly based in that jobs are being created in sectors across the economy, it has not been evenly spread. The majority of the new jobs created over the last four years are higher-skilled positions, being filled by candidates with third-level qualification.

Villa05 · 19-10-2022 12:25pm

I think it's worth noting the results of the public consultation that led to this decision and how the output differed from those results

The Central Bank conducted a public consultation on the rules last year with a survey as part of this process showing most people saying the rules were working as intended and that they should be a feature of the market going forward.

Only about one-in-10 renters who took part in the online survey said the limits were keeping them from taking out a mortgage.

Instead, most cited high house prices and the difficulties of raising a deposit as the main barriers to home ownership.

Cairn Homes CEO Michael Stanley, who runs Ireland’s largest housebuilder, said in in the past that the Government’s Housing For All plan was at risk because up to 500,000 middle-income earners were locked out of finance by the strict lending rules.

It's clear that high prices and high rents are the key blocker in renters raising the deposit to purchase. The central bank make those issues worse

Edit just in case, the Judas politicians blame the public for going mad or nobody could have seen it coming

ghostofchrimbo · 19-10-2022 2:42pm

There is not enough housing, hence demand outstrips supply, hence prices became unaffordable.

There are only two ways of looking at why there is not enough housing. Either that there are too many extra people, or that there are not enough extra homes.

The word "extra" is of the highest importance, as neither the amount of housing or amount of people were a problem before. This is an issue that has been created out of thin air.

What side you fall on with this issue is a matter of logic and reasoning ability.

Consider a similar status quo situation where the problem must be created; the antarctic. No housing supply issues, not too many people. Some government sends 1000 people to the antarctic, but shock ensues as there is nowhere for them to live. Now, what is the fundamental problem?

Is it that there isn't enough housing, that there should be gigantic pressure put on the government to build more housing in an extremely difficult environment? Should all attention and effort be put on housing solutions? Should one try to steer the cart with the horse behind?

Or, should the question be raised to its due importance as to why a thousand people showed up in the antarctic without any suitable accommodation?

Therefore, the likes of this loosening of financial restrictions is utterly amazing in the face of the issue. It reeks to high hell of a last squeeze and will lead to an even more tattered country.

Ignorance, most willful, is the problem in this place, a complete failure to engage with reality. There'll be very few people who didn't see this coming after the fact, with fewer still that dared to point it out beforehand. But everyone knows the story, despite the facade.

DownByTheGarden · 19-10-2022 3:04pm

https://www.boards.ie/discussion/comment/119764250#Comment_119764250

Whats not being said here is that 3.5 times salaries wont pay what the builders have to get for houses to build and make a profit.

Its an effort to keep building going. It wont keep going when people are frozen out when houses have to be sold above a certain amount.

People who arent effected by the cap arent interested in the houses that the builders need to sell in volume. They are only interested in detatched houses in nice areas these days so the new builds wont be sold to them. Again a results of ill thought out policy in the past number of years.

jimmybobbyschweiz · 19-10-2022 3:09pm

I think that the lack of supply is the main issue, that is the central argument everyone agrees on. I believe the government purposely acts to keep supply way below what is needed as appropriate supply would force down house prices and rents, which is not what the government wants. I also believe that our current supply issue, without necessarily building a lot of new houses, could resolve itself in a manner similar to 09-12 and this is not something many people would agree with; demand dramatically dissipating; but I believe it can so dissipate which would in a large way resolve certain supply problems. What, in particular, I am referring to is the lack of demand for rentals and houses at a certain price point which has been reached at the same time we are about to undergo a significant economic shock in the country.

ghostofchrimbo · 19-10-2022 3:17pm

https://www.boards.ie/discussion/comment/119765833#Comment_119765833

While people fret as to how to build antarctic housing, everyone ignores why it has to built in the first place. Insanity.

The bald ignorance required to evade such bare truth has been going on for many, many years.

This is not incompetence. One can make a mistake. One can make two, even three. But to achieve the same exact mistake again and again, in the same way, with the same result ad infinitum is purposeful.

Time will prove this practical criminality, there'll be tribunals in some years to come. Would there be a one person surprised?

combat14 · 19-10-2022 3:48pm

just great to see the amount that borrowers can access increase just as we head for a recession with rising interest and inflation rates to boot ..

could be the peak of the storm as ESRI already estimate houses here are overpriced 7%+ already

Dav010 · 19-10-2022 3:57pm

https://www.boards.ie/discussion/comment/119765861#Comment_119765861

Why would the Government want house prices/rental to remain high? Your posts are often schizophrenic, on the one hand so say the Government wants high prices, something that will no doubt cost many their elected job, at a time you are predicting deep recession. The conditions that existed in 09-12 do not exist today, we do not have an oversupply, we do not have easy credit despite the changes to mortgage approval policies, we do not have wholesale purchase of investment properties by people who can’t afford it. If anything, the most we are likely to have is less people trying to buy the very limited stock of available housing. There is no chance of us suddenly reaching a situation where we have way more housing available than those looking to buy,

Im sorry, but many of your posts are nonsensical.

Eclectic Econometrics · 19-10-2022 4:43pm

I see people being angry to apoplectic on this and the different housing threads in response to the multiple increase.

I think this may provide a HTB type price lift at the lower end with incrementally smaller rises as you move toward the higher end, making no difference to anything valued at or above seven figures.

We're at the stage where anything the Central Bank or Government try is going to be met with anger by some, it is the contentious issue of our time.

There was a point in/in-between lockdown where EA's started selling houses site unseen, remember that madness? LMFAO. Bidding started going crazy. I think we may have been on the cusp of a slight price correction next year and the correction would've been whatever % that site unseen timeframe added to the overall price increase the last two years (5% guesstimate for the sake of argument).

Going from 3.5x to 4x neither solves or creates a problem, for me. Had they gone to 4.5 I would probably be saying the same. If in five years time we have a 2007 style crisis (we won't) we are not going to be looking back and saying "it was that extra .5 that did it".

jimmybobbyschweiz · 19-10-2022 7:18pm

https://www.boards.ie/discussion/comment/119766139#Comment_119766139

Why would the government want house prices and rents to stay high? Seriously, after all this time you are questioning whether it is not government policy to keep the market high? They are in the vast majority of cases homeowners and in many cases landlords as well as their voter base being made up of landowners, in particular with FG they are the party of farmers. This is a landowning club where policy is being created for the benefit of this upper class at the expense of the lower, non-homeowning class.

By way of example, you will notice they use the term affordable with respect to housing but never do they talk of forcing down rents and house prices, just about making them affordable. What does that mean? It means giving people the cash to pay for high rents and house prices. Total propaganda.

As mentioned and as indicated in the news, tech co growth in Ireland largely mirrors what has happened in the US and these companies are at best experiencing muted growth going forward but in many cases cutting jobs which will dramatically affect demand for rentals. In my view, the housing crisis caused issues for tech and other companies here before 2022 as we reached the point of maximum growth in this country due to the capacity not being there in the economy, largely due to the housing crisis, to produce any more. Of course, I fully expect the housing market slowdown to be blamed on the global economic conditions. "Delayed return to the office" was the official line before 2022 as to why Dublin city was so empty and the docklands apartment blocks so dark in the evenings, but in reality there were thousands of people never returning to Ireland and not moving here as they heard of the housing crisis. The government of course have tried to stall supply while this demand shock materialises as we would very quickly see supply pick up and not from new builds.

The Irish housing market is a politically influenced market and not a product of a somewhat free and functioning economy. Ireland is unique in this regard and the big question is how much longer the government can introduce blatant schemes to keep demand hot and supply low or will the money run out to put an end to the whole merry go round?

Dav010 · 19-10-2022 7:25pm

https://www.boards.ie/discussion/comment/119767101#Comment_119767101

Will you cop on FFS, government policy is to keep prices/rent high, because they are homeowners and landlords? That’s your logic?

Are they all selling their homes shortly? And surely losing their jobs is more detrimental to their personal finance than keeping their property prices high.

Jesus wept, you do post some absurdities.

almostover · 19-10-2022 7:44pm

https://www.boards.ie/discussion/comment/119765833#Comment_119765833

It is an effort to keep building going, I agree. An effort to spare the government's blushes as they gave up building social housing with the last 25 years. But this effort is being funded by giving ordinary people access to more debt. Debt that in the current inflationary climate is becoming more expensive by the day. The prospective first time buyer today faces more expensive energy, fuel and food costs and will be borrowing at higher interest rates. And the CBs solution to this is to allow them borrow more money at a time when their ability to repay that debt is being eroded by inflation. This is lunacy.

ghostofchrimbo · 19-10-2022 7:57pm

https://www.boards.ie/discussion/comment/119767135#Comment_119767135

The government policy was to create and to maintain the housing crisis.

It's either that, or they are less competent than insects.

Over a stunningly consistent run of nearly 10 years, one is believable, one is unbelievable.

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

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