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

Crikey, that is insane.

Businesses want profit, and if your business isn’t maximising profit, your acumen has to be questioned. If they charge market rate, they are not gouging, and if you pay a gouger rather than someone who offers better value, that is on you.

Your analogy is a poor one, it would be more relevant if you said it was like a hairdresser who isn’t busy, laying off un needed staff or closing a couple of days a week to reduce costs. If developers don’t see good market conditions, they quite rightly will wait until the market/costs improve again.

How is it insane I think a business hitting the stop button because they may not make as much profit as they were is insane. So what do they do? Can they afford to just stop and expect the business to stay viable? There is also a ticking clock of the shinners getting into power here and they have been quite vocal about how they intend to deal with developers. So once again can they afford to just let things lie and if so for how long? The two viable option they would of had up until now to stay afloat would of been loans which are now a hell of a lot more expensive and in 2 months time they will be more expensive again if they are looking to get by using credit and government interference which as pointed out now has a time constraint. So your opening line "business wants profit" I have pointed out now on multiple posts they have been making a very healthy profit margin and if they stop building they may well move from a "business want profit" mantra to a "business wants to survive" proposition. Also the knock on impact of them not building will be a further drop in raw materials less demand will push that price point lower.

But your argument was that developers would just not build and drop out of the market and that that would be a problem for the housing market.

When in reality as fliball123 has outlined if developers stop building they very rapidly either fire all their contractors, or go bankrupt, or both.

Which if the state had no spare funds would absolutely be a problem because the building of new houses would stop, and unemployment would rise. But for Ireland now thats not an issue, the state will just hire every single unemployed construction worker they can get their hands on for their own currently massively overfunded projects.

True they made a sh1tshow of the childrens hospital, but you have to be realistic. If construction stops the government have no choice but to pick up the slack and build and it could well play into their hands having a lot of construction workers not working and assets that developers cannot use and could be purchased on the cheap. Put it this way they cannot just sit on their hands either as the shinners are stage left waiting to enter the fray. Developers are in straightened times with regards to credit and how that impacts their liquidity and on the clock with regards to their buddies in government.

That is true of "this government" as I said this option is now time limited with an election coming.

Wow. You would think we have never seen that happen before :)

Exactly. The state has no capacity to employ and manage construction works directly. To do so would require serious project/construction management & site supervision capability which the state lost years ago.

It could be done, but setting it up would be a great cost and need to be a long term investment which is not politically compatible with short term election cycles.

Yes this time it will be different :) and builders will keep building when the arse falls out of the market enough to drop house prices significantly.

I dont see it myself tbh.

No capacity are you joking they are literally crowing from the rooftops about the surplus we have got last year and over the next 5 years 65Billion is projected if they cant manage to build more capacity with that amount of cash then anyone not able to afford a house currently may as well pack a bag and emigrate. Housing is the number one issue and will be until it is sorted.

Personally, the hassle of even starting to look into that for 1% per year after DIRT really wouldn’t be of any interest whatsoever.

If you were to split the population down. The only people deposit rates actually matter meaningfully to are people with very large cash holdings, no mortgage (as paying down will always be more attractive) and extremely risk averse (or else you’d be investing it rather than holding cash). That’s likely to be 95% older people who are poor with finances. I just can’t envisage a scenario where these people have even heard of Raisin or Bunq bank, never mind jumping through the hoops to set it up. I could be wrong but I think competition will be slow and be amongst the traditional banks (starting already) - not some random foreign bank.

The state does not have the capacity to directly directly project manage large scale construction projects. We outsourced it years ago.

It takes more than just throwing money at it to rebuild that capacity. Essentially you would be creating a whole new bureaucracy.

I didn't say I was in favour of this outcome, I said it was whats going to happen. A more interventionist state, of the kind we're going to live in within 24 months, has very little need for developers when the government is chomping at the bit to hire tens of thousands of construction workers to build their own social/affordable housing at scale.

"If projected profits make a site development a risk, then they will postpone that development until conditions improve." - how many developers do you think can afford to not build any sites for the entire length of a government (and possibly a second term), all the while paying 5-10% a year vacant site tax? Very few, the vast majority will be forced to sell their landbanks.

Though for what its worth even in the corruption and poverty ridden Ireland of the 1970s, at a time when our population was half of what it is now, the Irish state still managed to build close to 10,000 social housing units a year successfully. So it is completely possible for the state to be building tens of thousands of social/affordable units per year.

Thats much of a muchness really though. The outcome will be the same - if developers stop building, and stop employing, the state will hoover up any workers who become available to work on their projects. As contractors, as consultants, directly employed - all of the above or anything else.

Once again with the amount of cash flowing inwards this could be easily rectified by employing construction experts from outside of the current construction cartel and snapping up construction workers, sites and unfinished works left behind by construction companies who if they are not building will be hitting a wall and laying off staff (I dont see how they can survive the current paradigm they find themselves in). We may well be creating a new bureaucracy but if it was built on a non profit basis new properties being built would be a hell of a lot cheaper and more affordable. Its not like there is a choice, housing is now and for the guts of the last 18 months been the hottest topic among the electorate and anyone stepping up to the plate will have to have a definite plan going forward. To that point its not hard to see that the old guard in government is changing a lot will depend on how the shinners want to go about business and they have built up a head of steam by criticizing the current government and in particular how they have handled housing.

It wouldnt be competing with the private sector it would be building housing for social and lower paid workers and it would take the heat out of the private market. Existing contractors can lobby all they want as if they are not building then they will only have themselves to blame. Sinn Fein coming in means that the old way of doing business is gone for these guys. The idea would be if these guys don't build they have no wiggle room and will have to let a lot of workers go that is when the state can snap these people up and there is also the option to attract talent globally with visas and a public sector job (with the likes of pensions and all the other perks that come with this)

Lumber has dropped, not sure on PVC windows insulation or piping, but concrete, blocks, precast, stone fill, tar, roof tiles have not dropped in fact a lot of main suppliers increased their prices for these materials in March and April.