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

HAP was begun in 2014, at a time when there was plenty of excess capacity in the construction industry in Ireland. Social housing wouldn't have been built in competition with the private sector construction for most of the last decade, it would have been in addition.

"also average construction costs of 350k, 60k* 350k * 3% financing = 630mm annual financing costs. HAP is actually cheaper as you only subsidise social housing tenants partly"

You're ignoring the fact that the money used to construct houses would largely stay in the Irish economy, and create Irish jobs - paying builders, Irish companies/suppliers etc. Whereas a large part of the HAP money goes to REITs and foreign landlords, ie straight out of the country. The former is much, much more beneficial to the overall economy of Ireland than the latter.

You're also ignoring that the financing costs in your simplified example would decrease ever year as the principal was paid down. Whereas HAP outlay is growing by 10% per year, with no sign of that stopping...

edit: to put this in a simplified/personalised example, and since this is the property forum - would you rather 1) get a mortgage and buy a property, knowing you'll have to pay interest on the mortgage but also that you'll gradually pay down the principal over the years and own the asset long term? or 2) comitt to renting a property for decades, with the rent costs going up by 10% per year, and no potential to ever own it? Which do you think would be the better value proposition over decades?

Because the Irish state has spent most of the last decade focusing efforts on doing option '2', which I think most people on this forum would agree isn't exactly conventional rational economic thinking.

These stats put Ireland's price-to-income ratio at 7.3 which is the 14th most affordable in the world, and most (not all) of those ahead of us are outlier oil rich Arab states. So not too unaffordable in reality.

It's fluid, but as people have mentioned wages are generally trending up strongly while house prices are quite stable, which is only going to increase affordability. This is by far and away a more desirable trend than simply dropping house prices as it is good for both new buyers and existing mortgage holders.

What am I missing, surely giving people more money, with a limited supply, and the price of houses can only inflate more?

House prices have diverged massively down wages due to limited supply since 2012. Hopefully now as supply has ramped up heavily that gap can close.

But the gap can close in two ways. Either house prices go down, or wages go up. I think what we’ve seen over the last 12 months - more housing being built, house price inflation going to 0 or slightly negative, wages going up is the best way for the gap to close. Hopefully that continues and we can get back to ‘affordability’ without massive negative equity issue.

Wages been trending up for years, and really gathered extra momentum in the last 24 months.

Inflation is high. Unemployment is the lowest in the history of the state. We’re beyond ‘full employment’. The government has insane surpluses that all the unions are eyeing up already…

Wages to not rise is a very brave call to say the least!

I don’t know what industry you’re in because we and any company I know of spend 90% of our time worrying about how to retain staff and hire for new roles.

It’s a top risk discussed at board level in many companies right now. We’re having to pay retention bonuses regularly, counter offers all the time and every single new hire is negotiating a signing on bonus, even at junior levels. It’s become industry standard in financial services.

If you can cut people’s wages when unemployment is under 4% then fair play to you. You must be in specific part of the economy that is struggling.

On average people are worse off now in real terms than they were just after the financial crash of 2008. Whilst wages may be increasing in the past two years, they've a long way to go to match the inflation experienced over the past 15 years.

Every housing market normally reaches an affordability peak. I believe this is 9 times the average salary. We must be approaching that level by now. Given the government's supports already propping up the market for the past while, with further interest rate increases on the horizon I can't see prices being driven up any higher. If you took the LAs and councils out of bidding on the private market I reckon you'd see significant drop off in prices.

Its certainly interesting times.

But, I do believe the number one priority of central banks right now is to actually bring down wages and even cause job cuts. As bizarre as that sounds, thats the best way to hit their 2 percent inflation target.

Could we have an odd situation where house prices are falling, salaries are falling and intrerest rates remain high. It may be the bad tasting medicine that does good in the long term.

Ya definitely you are both right. The majority of people were way better off in 2009-2014, unemployment was running at 12-14% back then at present it's 3.5%.

Tax and service increases as well as wage cuts cost me and the better half nearly 8-10+k in real terms o er 2-3 years . Public servants saw about 15% wage cuts in real terms.

I would not qualify either of you as economic geniuses, I go so far to say if either of you gave me economic advice I do the exact opposite

Unemployment rate is fools gold when the median worker can barely survive and your average Joe needs government supports just to put a roof over their head.

Last year alone workers in Ireland took a 3.9% pay cut as wages lagged behind inflation.. Worse than the global average of 3.19%. Cumulative inflation of the past three/four years is running near 15%. Not everyone is getting pay increases of 15% plus.

What is forgotten about is its people under 30 who are struggling to buy most people in their 40s would have their homes. A person in their 20s in the round earns a lot less than someone in their 30s and someone in their 30s earns less then those 40+ Not one mention of the other cost of living factors that people have to pay for out of after tax profit, remember in a lot of cases these pay rises have been already half eaten by tax what other % goes on rent/interest rate increases, travel/petrol/deisel, food etc. While there are pay rises going on in some sectors a lot of people are not getting pay rises as well. New houses are unaffordable by the market that they are tailored for I mean you only have to look at the first time buyer measures that are there if all was so hunky dory and prices were affordable then there would be no need for them at all.

Who is better off an unemployed person in a recession earnings 200/ week( actually younger workers below 21 got 100/ week) with services cut all over the place. Or a full employment economy where at a minimum most workers are earning wages of 30k minimum, where many are on 40-50( average full time workers earnings 50k) .

PS pay cuts restored. Yes there are problems within the economy but it's much better than 2009-2014.

The only cohort I think that would have been better off in 09-14 would be young highly educated with robust job prospects but very early in their career. A newly qualified accountant/lawyer maybe. Probably earning 20grand less than today but housing half the price so better off overall.

Under 25 in 2009 Ireland without an excellent education, you were very likely unemployed and heading for the airport.

Also, 70% of people own their own homes in Ireland so the overwhelming majority unaffected directly by house prices.

Show me an 18 year old that owns their own house.

I know several companies who are starting to struggle to hire young people, because they cant afford to live. Think about that.

More and more companies are moving part of their workforce abroad to places with cheap labour and cheap cost of living. And we have people silly enough to tell us, its never been better here. This is a dangerous trend for our young people.

I agree completely, there’s huge problems for younger people at the moment and things are far worse now for that cohort than 2015-2019. The comparison though was directly to 09-13/14. Things were not all rosey for young people then, that’s for sure.

And there were 18 year olds in 2009, fresh out of their leaving certs taking mortgages and buying houses too 😂😂

Im not arguing things are better than ever now but you’re directly comparing to one of the toughest times in recent history. If you were 18 in 2009, absolute best case scenario you were going to college if your parents could afford to send you. Your living situation and quality of life was entirely dependent on your parents as decent part time jobs for young people were gold dust. And even if you had money from your parents, your mates probably didn’t. Life wasn’t all cheery, happy with young people frolicking around in their newly purchased homes in 2009.

Rose tinted glasses.