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

The issue isn't really if the state will be efficient at house building or not (it very likely won't be). Or that it competes in the employment market (its already doing that). Its more that it looks very likely the following sequence of events will now unfold:

• Increasing interest rates, and a potential recession, mean the number of people able to afford current house prices drops dramatically
• Our current government, and/or the next SF government, bring in punitive vacant site levies to spur the use of land in high pressure zones, because this is both effective and hugely electorally popular.

Some of the posters in this thread were arguing that developers would then just do nothing, they'd sit on their hands. And as a result no homebuilding would happen in the state, for years on end.

But in reality whats going to happen is some combination of 1) developers start selling more cheaply, eating into their profit margins, because they have to. And/or, at a later date, 2) they shed staff, and start selling off landbanks. Which will then result in the state buying the sites, and making use of any unemployed contractors.

We're in a situation in Ireland in 2023 where the state has effectively limitless money to throw at housing now, and the electorate has incredible demand for it. The only things in the way are getting the contractors and getting the land. So a large number of developers going to the wall wouldn't actually do much to limit housing construction - it would just change the type of housing being built from higher end apartments/housing for profit to social/affordable by the state. But the construction work would still go on.

We've just left a situation where the state could have borrowed big for effectively zero interest to fund all social housing needs for next couple of decades but they chose not to. Our 'limitless money supply' also needs to urgently fund critical infrastructure which has been neglected also.

The national development plan is already showing to be out of date with regards to population projections and if they dont address housing & infrastructure we are going to be under serious trouble.

in your words "Critical infrastructure" and with regards to our national development plan what do you think number one on that list is. I will give you a clue, it rhymes with Mousing and beings with a H :)

We left a situation where for the majority of the time we were in a covid lockdown no building allowed, hardly worth while borrowing for something that was basically outlawed.

I didnt say the state would not be allowed compete and build housing at a lower price point than what is being offered. I'm saying a state run building agency would face a lot of challenges, both politically and practically. You could guarantee the CIF would come out all guns blazing.

Its the role of Government to support people & business during the hard times and I think we all sort of have a common view that any downturn presents an opportunity for addressing the housing crisis. Its just how that can be achieved differs.

In my view the state would be better reorganising itself to better utlilse the existing builders in this country with a more centralised approach. This way they can be supported through a downturn keeping people in jobs rather than putting everyone on the public payroll.

We dont need a state run building company. We already have enough competant builders. We need a proper state run procurement agency. You only need to look at the childrens hospital debacle to see how poorly the Irish Govt is lacking in this department. It was quite simply badly procured.

We could take a lead from Scotland. There is currently no national strategic approach for Scottish contracting authorities, so they are developing a National Procurement Strategy rather than a piecemeal apprach by all of the various state govt departments and agencies. This in turn can better support their national strategic objectives.

And yes laws and planning are both changing constantly, but the point is we are not seeing the reforms go far enough to incentivise house building and stop land hoarding. Land prices & utilisation in this country are function of our outdated tax and planning systems. Building costs get a lot of attention, but land costs are a big part of the equation and could be reduced if the incentive was removed to do nothing. The exodus of SLL could be reversed pretty quickly if the Govt so desired.

Sorry if I misread you, but in your original post you made it sound very much like its a fait accompli with the Shinners getting in, hence the 'silly quip'.

Now your misrepresenting me. I was clearly responding to your notion of attracting "talent globally with visas and a public sector job (with the likes of pensions and all the other perks that come with this)". Frankly the idea of construction workers being brought in at a time when staff are being let go sounds absurd.

Try re-reading the last line of my post.....but sure, scold me for making 'silly quips'.

No idea what this means.

I think the narrative is not that mortgage holders are being subsided by the banks, it’s that they’re being subsidised by other customers with money on deposit. The banks are doing this for competitive reasons, not charitable of course.

But in some ways you’ve highlighted yourself how good a deal Irish mortgage holders are getting - ‘the bank can leave money on deposit with the ECB and earn 3.5%’

but instead they’re lending it out to Joe Soap for 35 years with huge risks attached for the same rate or less than they can get risk free off the ECB.

Irish fixed mortgage rates are so low currently they don’t make any sense long term and will have to go higher. How quickly - who knows.

Every post is “when SF get in” ….believe it or not their hands will be tied by the reality of being in government so there won’t be that much change…They would also need another political party or two to form a government which yet again will mean less change. The only thing that would change is the flow of money and back handers. Being in government is different to sound bites so I wouldn’t expect to much of a change to housing besides it becoming harder for FTB’s as all resource is redirected to social housing so less houses built for FTB’s.

Ah that's sounds a lot like democracy is an illusion..

I don't think SF will be part of the next government but if they are ill be stuffing the mattress as they're not going to ne good for my demographic.

I dont put much stock in Dafts reports at all. Asking prices are nothing to start trying to gauge a market off of. And neither is the amount or type of searches done. People search for property all the time in all sorts of areas and types, without any intention to buy what they are searching.

Collection of searches and asking prices are not dependable data to be basing any sort of report off of unless it is a report about the number of searches only. A search does not equal demand.

Its just Daft trying to stay relevant because they are falling out of favour with people both advertising and looking for rentals.

The dwindling supply of second hand houses wont help them either.

US and Aus house prices seem to be back on the rise after some fairly chunky falls last year/early this year. They are much further down the track of higher mortgage rates. Quite surprising, especially as both had much bigger increases in COVID times due to looser lending policies than here.

https://www.bankrate.com/real-estate/housing-prices-falling-across-country/

Im not as well versed in the US market given they operate a fixed-rate mortgage system, except it seems to disincentivises homeowners from moving house as they would have shift onto a higher new fixed rate loan, the net result is people stay put on their existing 30 year fixed rate and supply reduces accordingly.

But in Australia the drivers in the recent growth surge are similar in some respects to ours - very strong population growth underpinned by immigration driving demand combined with low supply.

I think it will be short lived however. They are facing a fixed rate cliff edge as nearly 1 in 5 loans (estimated at nealy 900,000) will come off fixed rates across this year so the full effect of rate rises hasnt yet been felt.

Definately, especially those who bought in the last couple of years in Aus. Its been noted that not only have they bought at the top of the market, they are also more likely to have LTI of 6x or greater on their borrowings.

The mortgage controls here in this country I think should be given a lot more credit for keeping house prices from going even higher than what they have. I think we have already seen the bounce in the FHB market since LTIs were increased to 4x.

A lot of FHBs over there are facing "mortgage prison" and unable to refinance as the roll of ultra cheap fixed rates due to not having enough equity.

As much as I don't like to say it, at least their banks can repossess defaulters....

Those are MoM increases, associated with the 'Spring' selling season. YoY decreases are increasing due to the fact the MoM increases last year in Spring were higher than this year. The 30yr rate also hitting levels seen back in November so I suspect these rises will be short lived.

Meanwhile in the UK...

https://www.telegraph.co.uk/property/house-prices/house-prices-fall-buyers-high-mortgages-interest-rates/