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

Would a builder building 2 or 3 one off homes a year be capable of delivering 4 to 6 smaller identical homes in the village or town close to these one off homes

Better efficient development, planning, provision of resources and doubling of output in an area that's currently delivering 20% of total output

That isn’t what I asked.

You said they were pushed out into one off house contracting. Building 4-6 houses is property speculation whereas building a one off home on contract with the home owner is not. Two very different business models.

So I’ll ask again, do you know many builders of one off houses who have been pushed out of property development by the bigger developers?

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That would be my thoughts on it as well, small builders may not have access to finance and would be less able to absorb rising costs when developing/building multiple units with their own/the banks money. There is less risk involved with payment for one off builds then there is for land development. That I suspect is the reason

They were pushed out by the system, cost of capital being the deterrent. The state need housing and are paying top dollar for it.

Some of those dollars could be diverted to build central housing in towns and villages across the country in a more efficient manner engaging these builders to build them

No speculation

The case for building double is that we have been in massive under development for the past decade post the crash, we need to make up on essentially the stock that should have been built that wasn't.

I'm assuming that you own a house, it's always the people who own their houses stating that we don't really need much more or that the market isn't too bad.

If you were trying to purchase a house you'd be screaming for the number to be doubled or tripled for the next decade. It's not triple indefinitely but we certainly need to make up for lost time and massively increase the supply.

Why do you think you know more than the housing commission? Do you have evidence that disproves their numbers on pent up demand (up to 250,000).

They have also modelled changing household sizes and different rates of population growth, but the current deficit of housing is at a mid range estimate, 235,000. That's before accounting for new growth every year, so annual completions need to be growth + some portion of deficit.

Around 56k houses per year for the next decade.

https://www.rte.ie/news/ireland/2024/0521/1450318-housing-commission/

totally different business model as you say no small builder will get finance from a bank to build 6+ houses. Neither will any large developer and hence why there is a big dependency on funds to provide finance for developments. Small builders generally don’t have access to this funding or would be able to afford it and still make a profit as they wouldn’t have economies of scale.

And before all the posters talk about funds buying house on the open market that is a different situation. Without the investment from the funds (mainly in the form of debt) the houses would not be built and what the government spends on housing at present would be a drop in the ocean when compared to the finance provided by funds. That’s the reality of the situation and if these funds get spoked by a dramatic change in policy and stop investing then housing will grind to halt.

Yes government could provide funding and build there own which would help if done in addition to same output from the private sector) but be under no illusion the only way government could provide finance to replace funds would be by increasing national debt to crazy levels that would make the bank bailouts look like loose change and significantly impact the credit rating of the country which would mean more expensive finance to run the country which means an increase in taxes and cuts in services.

You are blubbering. You stated that HAP costs 1.2 billion which is totally incorrect. HAP cost about 760 million in 2023. The other rental supports are for emergency rental supports. some goes on people renting who get seriously ill and need support for a while. While more is for women who are sufferers domestic violence. Neither of these are longterm support and will always exist. Neither are appropriate to HAP or to social housing. Neither are limited support like HAP.

During 2023 approximately according to a Dail question the average HAP payment was 972 of which 754 was state funded

https://www.oireachtas.ie/en/debates/question/2024-05-09/199/

I cannot get exact figure for number of households but its about 60-70k we will average at 65k. On that case overall HAP cost is about 760 million before tenant contribution or 586 million to the state. It not the cost many assume. Its about 9k per tenancy.

It would hardly cover the maintenance cost of a council house not to mind the capital costs

Again, different business models. One off builders are paid by home owner, in phased payments, , development involves finance and risk for the builder. A lot of small builders got burned in the last recession due to engaging in development.

I get that, but it isn’t sustainable

I completely get where they are coming from though, all it is moving numbers around and your assumptions.

At a high level, it is saying we should have levels near Germany at around 520 units per 1,000 or around the EU average of 500 where as we have about 420. My guesstimate gets us to about 450 per 1,000, theirs closer to Germany.

Mine is basically closer to the OECD average, theirs the EU. I’d note that quite a few EU countries including Germany have muddled data that includes secondary homes. We don’t have that.

My contention comes from what I believe would normalise supply for this country, not necessarily a direction of where policy makers might want us to go. Household size here should continue to fall, but I don’t think it will ever get to Scandinavian levels. There is a major issue with how Ireland ascribes young adults housing “need” but I also don’t see a scenario where Irish people move out at 18. Attempts to bring our studio sizes even with 10% of those countries are balked at and our third level system remains disproportionally weighted towards staying at home. You can crib about the system but I’d say it has served us quite well. You can also argue it should change, but I’m not sure it’s a major policy priority at the moment.

I’d also add that whilst I do think we need to get students and young adults out of house shares, it is not necessarily the worst thing if we have stock like that (which we do, we have an awful lot of under live in homes still). The key is the option, a studio apartment should be within reach of a reasonably well paid person at 25, at the moment is it out of reach.

Anyway, I think we’ll settle at 2.3 to 2.4 household size rather than many EU states rate (more in line with English speaking countries). Of course the housing commission will look to all possibilities - household size is by far the biggest determining factor.

Back to the core point, my personal belief is that we need to be more towards OECD levels. I think we were 85,000 units behind par from 2010 to 2018. We have already seen how increased supply helped largely cap market rates in Dublin (although these are at extraordinary levels built up over many years).

Housing commission to recommend no more selling of social homes to tenants. And also that social rents be increased to give state some more income to invest in further housing.

If only they looked at the figures for social housing arrears, then they might see the problem. Social housing needs eviction or revenue collection for non payments, in order to secure income stream. The problem isn't the rate

But it is a nothing issue. People are making out that it is going to solve the housing problems. Find something that will actually have an impact to concentrate on.

You could definitely dicuss the level of impact that AirBnB has, but it's incorrect to say that the concept is nothing.

One of the reasons it rubs people up so much is the signal it sends to those being lashed with high rents and a housing market seemingly determined to keep them locked out. Then, you have people with a place to live themselves (more than likely) and the privilege of a second property they rent out to tourists. Lots of units around, but good luck and f*ck ya unless you're a tourist.

It's another signal that the Government couldnt care less about rents/first time buyers.