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

"The attached suggests "First-time buyers and those seeking a fresh start will be eligible to purchase homes which are significantly discounted from market rates"

https://www.ilovelimerick.ie/bru-na-gruadan-castletroy/

Where in Limerick is this?

Looks like the owners of Arthur's Quay shopping centre are not going to let this opportunity of a lifetime pass them by either.

There is no end to the madness

No idea on the first part, but if you do the maths on the mortgage.
€400k @ 3.6% (AIB) for 35 years gives a monthly mortgage payment of €1,662.

Using the old calculation of an affordable mortgage being 1/3rd of household net take home pay would mean you need a monthly household net income of €4,980. €2,490 per person. €30k net annual, €35k gross annual per person.

Median full time salary these days is c.€50k.

Seems affordable to me. Could you even rent a 1 bed apartment for €1,650 in many places these days?

The area around Bŕu Na Gruadan and the estate itself would have a lot of Student accommodation. It would not be a high priced area. Move that house a mile away into Monaleen and it probably be 100k more.

Its the reality of a lot of locations. The LA for instance often pay 100k+ to renovate houses in some LA estates, where is a house comes for sale it much the same price to buy. Its similar to the recession where houses sold for less than build value.

Locally there is an affordable scheme of 8 houses being build........for the last 5 years. COVID interrupted the process when it started ( they were being build for the LA) as prices exceeded costs the build stopped. The LA had not the flexibility to renegotiate the contract. An affordable housing entity then took over the site about two years ago and its still not finished.

No state body should have anything to do with build housing.

sure thats only a mere 20% increase on already heady prices

Absolutely but if you follow that along it would suggest bank lending is too conservative and limits should be increased further - but I would imagine that would be wildly unpopular with reasonable concerns it would be inflationary.

Perhaps LTI exemptions, underwritten by government, for those selected for affordable housing schemes. Particularly for those already showing evidence of prolonged rent repayments far in excess of the mortgage amount.

This might keep it narrow based enough to not inflate the wider market.

LTI exemptions underwitten by the government would certainly help some households qualify. But its still a zero sum game - the real problem we have is too little supply.

Helping one household to buy a house that would have sold anyway to another just means the other household isn't buying it, so as a country its a net gain of zero additional families housed but at a large financial cost to the exchequer.

It would be much better for the government to use that money to actually just build affordable housing at scale.

I think we’re arguing a slightly different point about ‘affordability’ and ‘attainbility’. Unfortunately the later brings you down the road of loosening lending limits which naturally is very unpopular.

The point I was making is you see lots of quite emotional responses to house prices. Regularly characterised by saying the price in full sentences - ‘That 3 bed house is almost half a million euro’

The reality is, it’s 2024, inflation has happened. €400k is just not that much, especially when you compare it to the prices in the shambolic rental market. Almost any couple working full time jobs, even entry level jobs in their early 20s, could fairly comfortably take on a €400k mortgage if the bank would give it to them.

Agree with all of the above except the last paragraph which has been argued repeatedly on here.

I don’t believe the government is capable of directly delivering house building at scale and with efficiency. I think the current government agrees with that position and feels their best way to scale building is to underpin demand to give confidence to private sector to scale up. They will say this is working. Many will argue it’s not working fast enough.

I accept there is an ideological alternative which I’m not saying is definitely wrong but I just don’t subscribe to it myself.

What auditors review what the tax payers money is spent on? Is it the same auditors who reviewed RTE and their flip flops expenditure?

Apartments 1 to 61 in Ardhu on the North circular road were purchased for 17,500,000 that's less than 300k a piece. This site is very close to the proposed 600k social and affordable apartments the council is purchasing

The issue is that we've spent the last decade trying the FF/FG ideological strategy of the government attempting to inspire the private sector to build in large numbers, while the state stays out of the building market. And the non-partisan, statistical, evidence is very clear that it very clearly hasn't worked.

Even giving them some allowances for the first few financial crisis recovery years, and just taking the years post-crash recovery - our completions since 2015 have only gone up by an average of 2500 units a year (12.6k in 2015 to 32.6k in 2023). We hit 32.6k last year, but every analyst is in agreement we need closer to 60k. And that yearly increase isn't even accelerating particularly - it was only up 2800 units on 2022. And 2024Q1 figures are down by approaching 20% YoY vs 2023Q1 - so we're now actually potentially going backwards.

This all despite a booming population, too. We've added over 500,000 people to the population since 2015, so the per capita output growth is even worse.

We can't afford to spend another decade keeping with this strategy that very clearly isn't delivering.

The state historically did also very successfully build large scale housing, so I think all the evidence would point to it at least being worth a try at this stage. Because we have enough evidence that the hands-off approach definitely isn't working.

I think the worst case scenario is the state does deliver large numbers of housing, but significantly over-cost. But at a time of huge fiscal surplus that would surely be a reasonable outcome for the country. Particularly when the alternative is the state wasting huge sums of money on leasing social housing as we're doing now, instead of just building units and gaining the long term asset at least even if the up-front price is inflated.

I think that’s fair enough to want to give it a try. I’m not sure there’s much chance it happens anytime soon but if it does my prediction is:

Massive cost overruns, government procurement/bureaucracy causing all kinds of delays, tonnes of corruption accusations (most misguided, a few legit), oireachtas committees for each scandal, every poorly designed fire hazard or other evidence of defective workmanship leading to taxpayer bailouts

And crucially, fewer houses built for a higher cost.

Hopefully I’ll be wrong.

If FG are out of government after the next election it would be very surprising if a government with SF as the largest party didn't ramp up state building of housing massively. Its both a stated goal of the party and entirely in their ideological wheelhouse. Even if FF are a coalition party they've historically had no major ideological issues with state development of housing - the ironclad ideological objections are all from FG - so they would be malleable on the issue.

The corruption aside none of those problems happened with previous large scale state building of housing in the state, so why would they happen this time?

And state corruption is far less problematic now across the entire system than it was 30 or 50 years ago, so even that is likely to be far less of a problem. We've come a long way from the Haughey years, as a country, thankfully.

State built housing is if anything known for being built to a much higher than required standard if you talk to anyone in the construction industry whos worked on it also. The Celtic Tiger apartments, mica scandals etc, that have required billions of euros of taxpayer bailouts in the last few decades, have all been from private sector builds that were focused on taking shortcuts to cut construction costs.

the corruption was always there…When they built CUH in cork there were a boom in building extensions around the city and it wasn’t from extra money in people’s pockets but more to with the availability of cheap materials which was no coincidence. The same thing happened for every large scale public development including council estates.. wrong materials ordered, outright theft, material’s slightly damaged and rejected, discount for bulk buying with discount not passed on etc…the list is endless.

Yes certain things may have improved but peoples attitudes to the government picking up the bill hasn’t changed….All that will happen is a different gravy train