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

Buy a new house and immediately attempt to resell at the price the developer is selling similar properties

The developers buyer get a grant, your buyers don't.

Which do you think will sell first

My post was not pro means-testing at all. I was simply pointing out that it's one of many ways in which our tax and social welfare systems incentivise over-investment in property.

I don't like means testing, but if we do it, there's no reason that a PPR should be excluded - at least, don't exclude the value of the PPR in excess of the national average or something similar.

Even with 0% VAT, upfront finance (0% cost), 0% margin (state building) and aggressive land taxes and zoning to push down land prices, you still would not be able to hit 250k per unit build price in GDA

From SCSI 2023 cost of housing delivery

You could drastically reduce soft costs in some ways, but materials and labour is still very high, partially due to new high energy efficiency & BER targets. I cant see those building regs being altered unfortunately.

On the fact that the selling prices of new builds were increased by exactly the same amount available under help to buy. Therefore new buyers had to borrow the same of amount of money to buy the house as they would have of HTB didn't exist.

It was a government scheme designed to keep developers profits healthy in the hope that they would choose to invest those profits in more new developments. It doesn't help the first time buyer in any way. Maybe at a stretch it indirectly helps other potential first time buyers in the situations where the developers use the HTB money to fund other new developments thus increasing the overall supply. But that is a stretch.

It artifically inflated the price of new homes and most likely had a knock on effect of inflating the price of 2nd hand homes. But maybe not to the same extent.

Stripping out the private sector stuff like sales/marketing and margin, and the government taxes like VAT etc, from that image gives a cost of 310k in 2023. Thats house building cost, siteworks, site development, professional fees, land and acquisition.

The state could also presumably build and sell houses at a loss if it was inclined to - build them at that 310k cost say, but sell them for 280k. It wouldn't be any more costly to state finances than current schemes like the HTB, just this would actually reduce the cost of housing instead of inflating it.

The state does also still own significant amounts of land that could presumably reduce the 70k land cost element if used, further lowering the unit price.

Substantial amounts of state build houses being sold for circa 250k say would definitely bring down the average house price significantly. It would also presumably be a lot more popular with voters than social housing - because middle income earners would be the ones benefitting from being able to buy these.

Is any of this likely? Not at all. But it is possible, if we had a government so inclined.

Did it help the applicants buy the house?

Its seriously questionable if it did. Even if it did, if it hampered others it is still a huge problem

The old FTB grant helped nobody, and hampered those who didn't qualify, when it was removed new houses dropped across the board by the same amount.

all good things come to an end

US banks could get slammed with another $160 billion in losses as commercial real estate risks its biggest crash since 2008

https://www.businessinsider.com/commercial-real-estate-crash-bank-losses-interest-rates-2024-2023-12?r=US&IR=T

It still helps get FTBs on the ladder!

Or would you rather the houses were all hoovered up by the govt, the rich, or investors?

It helps FTBs who do get the grant to the detriment of those FTBs who may not. At the end of the day there is a finite number of houses for sale, some people are always going to lose out.

Giving extra money to some buyers just pushes up prices across the board for everyone. Literally is very basic economic theory here.

This is true. The tenement clearances were largely funded and enacted by the state itself. Places like Ballyfermot were largely build up just for this purpose. Isn't it amazing what can happen when the state actively works for the good of its own citizens.

Sadly, some of the rental situations available in Dublin today are starting to look a little like tenements all over again.

It still enables a cohort to get on the ladder, that otherwise would have not been able to do so.

If its a choice between 5% higher home prices and more FTBs or static home prices and fewer FTBs, I would always opt for the latter.

The current government has shown it has absolutely no appetite to build homes, no. A change of government would be required to change this policy.

Luckily theres an election due soon, and housing is the number one issue for the electorate.

We could well end up with fewer homes being built overall under a SF govt.

32k homes will be built this year - above the govt overall housing target and 2024 should see a slightly higher number again, possibly 35k.

Not saying that 30k to 35k is ideal, but it certainly isnt nothing.

I would expect more homes to be completed under FFG than SFFF, as SF will obstruct investment funds, many of whom make our larger scale developments viable in the first place.

Very true.

Supply certainly isnt catching up at the rate we need it to.

How long will it be before we can hit 50k new homes per year instead of 30k-35k, I dont know.

Hopefully the tail off in commercial building will help invest labour into residential construction over the next 5 yrs or so.