Current public sentiment towards the housing market?

[Eirmail]

. It's also why I now believe in a fight back from the VIs and the big weapon they have is controlling the tap of supply.

.

The VIs only have control of additional supply not the supply in general. Just say the supply of homes in Ireland is about 1.2 million and there are an additional 90,000 coming on stream every year.The VIs can only effect the additional suppy (the 90K) . There is a big difference to an asset like this and a commodity like oil , where certain interests can infact control the supply.

 

[BigM]

this will be a price worth paying to prop up the whole ball game.

you better watch out AD - I can hear the furious typing of the uber-bears already

 

[room305]

I agree that there are artificial restictions on supply of zoned land, so we are far from a pure free market here, in the sense of commodities etc. This is what convinced me to delve in and buy in '05 after years of waiting for the collapse. It's also why I now believe in a fight back from the VIs and the big weapon they have is controlling the tap of supply.

In theory you are correct of course but in practice it works more like OPEC. To keep oil prices inflated they agree to choke supply but what happens? Members try to sneak excess supply onto the market relying on the other members to drop supply.

This is typical of the "boom-and-bust" cycle of property developers in the US. As demand for homes builds developers compete furiously with one another to saturate that demand, with no developer wishing to choke their output as it will only increase the number of units a competitor sells during the boom phase. Supply eventually saturates demand and prices start to fall but they still continue to build on existing banks and undercut prices rather than not finish developments. Eventually prices fall so much it is no longer feasible to continue to output at the same rate so developers stop building and start acquiring (now inexpensive) landbanks for the whole cycle to start again in the future. What scares everybody about the current US crash was the speculator led demand. Developers saturated this demand but since this demand was artificial it is now finding its way back onto an already saturated market pushing recovery way off into the future.

I have no fear of the VIs managing to choke supply because their own greed will work against them.

 

[bearishbull]

The VIs only have control of additional supply not the supply in general. Just say the supply of homes in Ireland is about 1.2 million and there are an additional 90,000 coming on stream every year.The VIs can only effect the additional suppy (the 90K) . There is a big difference to an asset like this and a commodity like oil , where certain interests can infact control the supply.

Exactly, if they tried to cut building in half(to 50k houses) the economy would probably enter a recession then anyway. Theres too many people acting independently for a concerted effort, to restrict supply substantially, to suceed without collapsing construction industry.

 

[liteweight]

Yes - it would create competition against new builds, that's why builders would be forced to lower their prices to compete.

I see that's what I meant too. Just read my original post and I wasn't very clear. Thought I'd mentioned that if stamp duty was taken away from new builds only that builders would run amok with prices.

 

[whathome]

I see that's what I meant too. Just read my original post and I wasn't very clear. Thought I'd mentioned that if stamp duty was taken away from new builds only that builders would run amok with prices.

I think if stamp duty is abolished for FTBs, the builders will run amok with prices. At least in the secondhand market, people have some hope of gauging what is value for money but I'd imagine the abolishment of stamp duty would cause these prices to rise also.

As you can see above, your original post indicates that you believed that prices for new builds would increase - note the last word in your post ... "also".

As I have pointed out - if stamp duty was abolished for FTB's, increased competition from second hand property will apply negative pressure to the pricing of new developments. New development prices will fall.

 

[Arthur Daley]

Exactly, if they tried to cut building in half(to 50k houses) the economy would probably enter a recession then anyway. Theres too many people acting independently for a concerted effort, to restrict supply substantially, to suceed without collapsing construction industry.

The safety valve are the transient migrants who will soon move on to the uk etc. There is plenty of fat in this economy that can get trimmed before we get into real bust economics. Going back to even 50,000 houses in output is only going back the levels of a few years back.

My point is more that the tap of supply could prevent a collapse (say 20-50% price drops). Some VIs (think tds on doorsteps next year, lenders on the prudent side of things who are concerned with credit quality) may well be comfortable with the kind of 10-20% price falls you guys have been documenting already on this thread.

 

[room305]

The safety valve are the transient migrants who will soon move on to the uk etc. There is plenty of fat in this economy that can get trimmed before we get into real bust economics. Going back to even 50,000 houses in output is only going back the levels of a few years back.

My point is more that the tap of supply could prevent a collapse (say 20-50% price drops). Some VIs (think tds on doorsteps next year, lenders on the prudent side of things who are concerned with credit quality) may well be comfortable with the kind of 10-20% price falls you guys have been documenting already on this thread.

There are currently three years worth of housing stock lying idle (at a record building rates). We also have a large amount existing supply being recycled back onto the market. All in the face of decreasing demand.

The beauty of the perfect storm conjured up is that as supply is decreased to cope with falling demand, it further depresses demand as migrant workers are laid off and seek employment on other shores.

To keep price drops within your price range they would need to drop supply to zero and probably start demolishing houses as well.

 

[ajapale]

Whats a VI?

 

[Afuera]

Whats a VI?

a Vested Interest... Estate Agents, builders, banks, etc.

 

[bo se]

There are currently three years worth of housing stock lying idle (at a record building rates). We also have a large amount existing supply being recycled back onto the market. All in the face of decreasing demand.

The beauty of the perfect storm conjured up is that as supply is decreased to cope with falling demand, it further depresses demand as migrant workers are laid off and seek employment on other shores.

To keep price drops within your price range they would need to drop supply to zero and probably start demolishing houses as well.

What analysis is available on these 300k empty houses? e.g.

• how many are on the shannon (and similar) built for tax breaks?
• how many are full of immigrants who are shy of forms?
• how many are genuine holiday homes for people who enjoy and can afford a second home?

In my experience anyone with property for rent in cities and towns has no problem renting i.e. no suggestion of excess supply.

 

[bo se]

Whats a VI?

Vested interest I presume?

 

[ajapale]

Thanks, Are all VI's bulls? In other words are there groups of people out there who have a vested interest in seeing the Irish Property Market go into reverse?

 

[conor_mc]

What analysis is available on these 300k empty houses? e.g.

• how many are on the shannon (and similar) built for tax breaks?
• how many are full of immigrants who are shy of forms?
• how many are genuine holiday homes for people who enjoy and can afford a second home?

In my experience anyone with property for rent in cities and towns has no problem renting i.e. no suggestion of excess supply.

But stagnant rents for the last several years suggests there is no shortage of housing in the country.... only an over-demand for houses to buy due to the lure of capital appreciation.

 

[Eirmail]

Even if this is at the expense of some amateur specuvestors who can't rent properties to immigrant construction workers who have scarpered to the UK, this will be a price worth paying to prop up the whole ball game.

The amateur specuvestor will be able to rent out his property he will just have to drop the rent.

 

[jpd]

Yes but at some stage, they money invested in the house could be earning "real" (well almost real) money in a savings account earning 4% at no risk, other than inflation, or probably more in the capital markets (bonds & shares) over the next 5-10 years with more risk.

 

[Afuera]

Thanks, Are all VI's bulls? In other words are there groups of people out there who have a vested interest in seeing the Irish Property Market go into reverse?

Can you think of any yourself?

The most obvious VIs do not want a reversal in the market. Builders want to keep on building, mortgage lenders want to keep lending, the government wants to keep on receiving tax receipts.

 

[Eirmail]

Can you think of any yourself?

The most obvious VIs do not want a reversal in the market. Builders want to keep on building, mortgage lenders want to keep lending, the government wants to keep on receiving tax receipts.

Kids who are still in school and future generations who are not even born yet have a vested interest in seeing cheaper property in the future.The main difference is that these groups aren't getting much airtime on the nations radio stations at the moment.

 

[Marie]

The safety valve are the transient migrants who will soon move on to the uk etc. There is plenty of fat in this economy that can get trimmed before we get into real bust economics. Going back to even 50,000 houses in output is only going back the levels of a few years back.

My point is more that the tap of supply could prevent a collapse (say 20-50% price drops). Some VIs (think tds on doorsteps next year, lenders on the prudent side of things who are concerned with credit quality) may well be comfortable with the kind of 10-20% price falls you guys have been documenting already on this thread.

The perceived positive effect of immigrant-renters on sentiment is interesting insofar as statistics and information about this group is wobbily at best. Until immigration and emigration (and real as opposed to supposed employment patterns) are better understood the role of guest-workers is purely speculative! For example a report published today shows substantively that fifteen hundred new immigrants enter the UK every day!.........and one thousand - mostly British - emigrate (i.e. population is growing by a net 500 emigrants a day plus, of course, births-minus-deaths figures). Hitherto-positive sentiment towards property has been based on at least one pillar which is virtually unknown and speculative. It would be interesting to know what the real movements are and if - contrary to hope and belief - guest-workers are coming and going in the same fashion as in the UK.

 

[2nz]

My two cents re the stamp duty debate is that the government will be very reluctant to make any waves in this market. The last thing they will want is to cause a new price acceleration. Election year might mean that it would be tempting to interfer, but I'm guessing that they wont do anything. They like the rest of are fed up with this market and don't want to go the way of Thailand or Japan.


http://irishhousepricesfalling.blogspot.com/ (71 examples so far)