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

The problem though is that if you have a house you can look at it like that. If you havent a house and affordability is running away from you all the time then you would have a different view on it. Those people arent going to want to hear that you are going to inflict short term pain on them for long term gain. They just want to be able to buy a house.

As the man says. When you look out through another mans eyes, only then will you see the world he is living in.

No no, you forgot the lender, the exchequer, and basically everyone involved in the purchasing of the house bar the person going on the hook for the inflated loan.

The people who don't have a house were the ones most negatively impacted by the increase in the loan to income ratio. It didn't increase affordability at all, it just added tens of thousands, or hundreds of thousands, of euros to people's mortgages to purchase the same house that would have cost less had the ratio not been increased.

If person X could suddenly borrow more due to the new ratio then their competitor bidding for the same house in the vast majority of cases, person Y, could now also borrow more. It didn't change the playing field/market at all unless you were going against _only_ cash bidders, which very very few people are in our open market.

The people who befitted from the measure were homeowners who saw their house price inflated.

I suppose the benefit to people was that they were able to borrow more money.........which is generally a benefit, particularily if you have the ability to repay a larger mortgage than your income limit sets on you but are unable to get that mortgage because of the income restrictions.

Yeah, it probably effected different people in different ways.

Wow, I wouldn't have thought it would be prudent for the CBI to make decisions based on how the public opinion weather vane is blowing.

If you think the CBI makes its decisions in an independent vacuum of government influence in Ireland then I've got a bridge to sell you.

It, and its policymakers, are intrinsically linked to the political system they operate within on a day-to-day basis. The governor is quite literally a government appointee.

We also have very recent history of the CBI being disastrously under the sway of government before the 2008 crash with the much publicised "green jersey agenda" scandal. Its beyond naive to think the recent (positive, but slow and limited) 2015 to present EU reforms have fully revolutionised the cozy relationship of the preceding 70 years.

Not exactly a popular appointment was Gabby Mak, particularly amongst those that were tasked with cleaning up the mess of the previous regime

As for government intentions

Agreed. And would also make a big difference if the buyer was renting to now not having to rent.

Not only that but commercial rents would be far higher than domestic rents, so the decision to convert to residential would in itself significantly reduce the book value of the building. At least this is the case in the US, would imagine our cities would be similar

Far better in my opinion to convert the older buildings in the city centre to residential as in many cases this is what they originally were

Probably a lot to do with the economy of the 80's, many young men and women were leaving

They came in 2014 or 15 and yes of course linked to the lessons learned from the previous crisis. But can’t have it both ways

• When strict lending rules are introduced, it’s separate from government. Nothing to do with them

• When they are loosened - lending rules are set by the government.

The governments motives are fairly clear. Get as many people owning homes as possible as homeowners typically vote for them. I strongly disagree with many of their schemes (in particular shared equity). The HTB has its drawbacks but overall is a sensible force for good in my opinion. The idea that they are just trying to inflate house prices for the sake of it is preposterous and is clearly costing them votes and likely their jobs.

eg. Just today. Leo clearly balancing the desire to get people homes and out of rent traps while remaining conscious of not having unintended inflationary impacts on prices. https://www.irishtimes.com/ireland/housing-planning/2023/06/20/taoiseach-disinclined-to-extend-help-to-buy-scheme-to-second-hand-homes/

I’m specifically talking about married women and the fact that most were not in the workplace in the early/mid 80’s and this was one of the reasons why it was possible to buy on one salary.

Again, why would the all powerful, house prices crazed government allow a decade (and still the case) of very stringent lending rules by international standards?

Secondly, ‘quangos’ is typically reserved for people who are suckling on the teet of government and are on some sort of golden ticket which they are terrified to lose.

The vast majority of senior Central Bankers are incredible professionals earning pennies on the euro purely to gain some experience before they move onto massive roles in the private sector a few years later, often abroad.

Many will go on to international private sector banks or insurers earning more in a month than any politician does in a year. It’s a serious stretch to think they would compromise their professionalism just to hold onto their fairly crappy paying jobs.

The issue with central bank prior to ‘08 was that they were not questioning the risks within the banking sector and were relying on whatever returns were made by the banks and taking it on face value. (I.e. asleep at the wheel)

That has all changed to the point where they are now one of the hardest regulators to deal with as they question everything. They definitely ask more questions than other European regulators when it comes to banks.

The other point to note is that they issued a discussion paper on LTI and the message that was received loud and clear from the public was that FTB’s were being locked out of buying because of LTI rules despite demonstrating that they had the ability to repay by paying rent that was much higher than mortgage repayments. This wasn’t a case of the government telling them what to do.

So just to be clear, you're completely ignoring the well documented history of the CBI being influenced by the Irish government within recent years that I mentioned in my post?

Because its not remotely a conspiracy theory, much like in our previous discussion you really should educate yourself on economics before making such absolutist statements. The Wikipedia article (of all things) on the CBI has a good introduction to the issue for you with plenty of sources:

[quote]In 2016, several Irish bank CEOs testified to being asked by senior officials of the Central Bank during 2007–2011 to follow a "green jersey agenda" in obfuscating the facts of Ireland's deteriorating banking system.[57][58][59][60] After the 2011–bailout by the EU–ECB–IMF (e.g. the European troika) of the Irish banking system, a number of non–Irish senior executives were placed in the Central Bank of Ireland, including the Board of the Bank. However, by 2017, almost all these non–Irish executives had departed the Central Bank, and some have publicised concerns about the Central Bank's tendency to push aside risk-management in pursuit of political and Government objectives.[/quote]

The Irish state was forced to implement relatively low LTI ratios after the crash, it wasn't something either of FF or FG willingly wanted to do. They were, as Villa05 linked, lobbying to increase them as soon as feasibly possible in the years afterwards. If given another 5 years in power you can bet they'll be increased again to prop up house prices.