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

That comes under the heading of a sensible approach. Utility value of the home is maximised

Been a long wait and watch person

1. 2019 - Market overheated already/asset value increasing/interest rates at peak low. We are in a bubble !
2. 2020 - COVID hits - Things will crash for sure now. Economies doomed. Money printing will fuel inflation. People will lose jobs.
3. 2021 - COVID variants strike. Money printing continues. System flooding with liquidity !
4. 2022 - Inflation starts picking up, slowdown in tech, layoffs starting slowly and steadily, interest rate hikes are here !
5. 2023 - Russia/Ukraine war, inflation peaks further, interest rates at peak, tech layoffs accelerate. The housing bubble should have burst here. But No !
6. 2024 - Inflation under control, rates will start to dop, job market still slow, liquidity Colling off.

The most baffling thing is house prices have kept increasing against all this events across the globe. I blame the over increasing population, higher affordability. Throw in lack of builds during COVID. Ireland is a mix of all this plus no supply and booming immigration !

Looks like a big turnout in the elections today. Outcome will be interesting, some seriously dodgy characters on the list

In a normal world house prices dont rise with rising interest rates as people cannot afford and demand decreases😉😉

You're overestimating tech layoffs. Remember that tech went on a massive hiring spree the year previous when stocks spiked and they had a load of extra cash.

Unemployment in Ireland is near historic lows.

That seems to be it. Interest rates rose but not by enough to reduce house prices.

People should note that rising interest rates likely did impact prices. House price growth would like be much stronger if rates had not risen. Reality too in Ireland is main Irish banks did not pass on full impact of rate rises.

I also think once it was clear from back end of last year rates had peaked that added lot of confidence to buyers. I went sale agreed May/June last year after a few months of price declines and real concern mortgage rates would go north of 5%. So I was bidding factoring in I did not know where mortgage cost would be by close. It was really unnerving and was keeping lid on price.

One thing on wage inflation Vs house price inflation is that wage inflation is more pronounced at the upper end of the wage distribution - higher earners are more likely to get inflation beating wage increases and bring up the average. These people are also most likely to already own a house.

So the affordability issue isn't as clear cut - wage inflation doesn't necessarily make it easier for average couple to get on the ladder, as their wages likely have been matching or lagging house prices inflation

There is also dry powder in the property market to keep it juiced in the form of longer mortgages 40 years plus, potentially reducing the deposit requirement to 5% FTBs/15% STBs and/or increasing the borrowing limit to 4.5-5 times salary. All of these are examples of tweaks that a FF/FG government would happily introduce to keep the voterbase happy.

I’d agree this might be the case over the long term but doesn’t seem to have been the case over the last 5 years. IT workers have done well but after that the sectors with biggest pay increases are:

Arts & Entertainment, Accommodation & Food, Construction.

Finance & Real Estate is second last with far lower than average increases. Professional & technical is also below average.

There has also been big increases in minimum wage (30%), far above average.

So this time around it appears the wage inflation has been pretty broad based. Anecdotally I know my own company, and several others of friends, have been offering higher indexation (5-7% PA) to lower grade staff than higher (4-5%). Public service has done similar.

Ya I hear about big pay rises but outside of a promotion or moving company, I have never worked in place where it was more than 3% and had plenty years of no increase. Seen no big compensation for inflation. Few small one off supports. But even smaller increases add up over few years and can significantly boost buying power. A first time buyer might be up against second buyer at 40 bringing in the wage and equity from first house. We did that. Our wages alone would not have put us in the house we got and some people we know are mistakingly thinking we are on big bucks but not the case

An interesting read from the Journal on what the definition of affordable housing is according to political parties

It would appear that Eoin o Broin has a different model to the one described by his party leader during the week, while to me it appears to be the best model (leasehold on state land, with the property remaining "affordable" when sold on). Some serous communication issues at SF

It has significant disadvantages for buyers long-term. If the homeowners ever wanted to move to a bigger house they would have a significant funding gap to make up. Who decides what is affordability. If a owner carried out improvements or an extension they probably could not recoup its value.

Personally I prefer the First Home Scheme than the leasehold scheme

With the FHS the owner has the option of buying out the government's equity. You are charge nothing for tge first five years. This is excellent for younger buyers. Generally there wages climb significantly early in there career. This scheme will allow them to buy a house rather than renting and up there mortgage within five years and buy out the government equity. Even if they fail in the first five years the service charge in tge equity is only 1.75% for years 6-15. On 100k that is 1750/ year. You can buy back the equity in tranches of 5% a year. or as a lump sum.

Again take a couple with 100k equity to buy back they could pay back 5k/ year. For many people especially self employed who struggle to satisfy mortgage conditions but have decent earnings it would allow them to buy houses.

As I said it a much preferable scheme than the leasehold scheme which is basically a piece of sh!t