It is a fallacy that house prices are too high in Ireland

Purple said:
A ferrari is a discretionary luxury item. A place to live isn't. A doubling in the price of caviar shouldn't concern everyone but a doubling in the price of bread and vegetables should.
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A place to live in Dublin is luxury compared to living half an hour outside Dublin. If u can't afford smthg, then look at the options.
 
House prices in Dublin are so high that two people (the Taoiseach and a doctor) can only afford a terraced house in Dublin 8.

The width is one door and one window.

And yet it is 800k.
 
The Horseman said:
So the issue is the State not the developer or the cost of property. These properties would find a natural market price if it was not for the States interference.
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It's not binary. Because of the supply side issues with land and the dysfunctionality of the construction sector the market doesn't function in the way is should under a theoretical model where there is limitless potential short to medium term supply to match whatever demand there is.
 
PebbleBeach2020 said:
A place to live in Dublin is luxury compared to living half an hour outside Dublin. If u can't afford smthg, then look at the options.
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So someone on a moderate wage who can't afford a home in Dublin should buy 30-50 Km outside the city and have to shoulder the extra cost of that commute? They should take their kids away from their friends and family and school?
I'd rather we fixed the supply side issues. I don't think living in a modest home on the outskirts of Dublin should be seen as a luxury.
 
Purple said:
It's not binary. Because of the supply side issues with land and the dysfunctionality of the construction sector the market doesn't function in the way is should under a theoretical model where there is limitless potential short to medium term supply to match whatever demand there is.
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It would if it was allowed to find its equilibrium. There are plenty of developers who are only too happy to commence construction if the State stopped changing the rules all the time. it is you who suggested we get supply up and it wont happen if the State continually changes the conditions.

This is adding to the banks reluctance to loan to developers. As I have already said developers don't care who they sell to but they can't finance the builds if the market is not allowed find its natural place. The State is introducing business uncertainty which is influencing the banks decisions to loan and at what interest charges.

It makes no business sense for a developer to sit on land with the risk of increased taxes. If your view is correct then why would a developer not go to for example Germany (or whoever can construct off site) and order the units to meet the site requirements and reduce his costs (30% waste v your 5% waste figs) and make bigger profits?

Surely developers would be queuing up to do this if it was the way to go?
 
The Horseman said:
It would if it was allowed to find its equilibrium. There are plenty of developers who are only too happy to commence construction if the State stopped changing the rules all the time. it is you who suggested we get supply up and it wont happen if the State continually changes the conditions.

This is adding to the banks reluctance to loan to developers. As I have already said developers don't care who they sell to but they can't finance the builds if the market is not allowed find its natural place. The State is introducing business uncertainty which is influencing the banks decisions to loan and at what interest charges.

It makes no business sense for a developer to sit on land with the risk of increased taxes. If your view is correct then why would a developer not go to for example Germany (or whoever can construct off site) and order the units to meet the site requirements and reduce his costs (30% waste v your 5% waste figs) and make bigger profits?

Surely developers would be queuing up to do this if it was the way to go?
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So what is there a housing crisis?
Why are they talking about vacant site taxes?
Why are there banks of land sitting undeveloped for years?

Why are you talking about developers and builders as if they are the same thing?
 
Purple said:
So what is there a housing crisis?
Why are they talking about vacant site taxes?
Why are there banks of land sitting undeveloped for years?

Why are you talking about developers and builders as if they are the same thing?
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Access to credit is why. Developers make money from developing. Banks are reluctant to loan because of risk of non payment.

Why do you think so many foreign banks are leaving Ireland. If we have the highest mortgage interest rates in Europe business logic would suggest they stay and more would be attracted to Ireland (remember your supernormal profits example in an earlier thread).
 
The Horseman said:
Access to credit is why. Developers make money from developing. Banks are reluctant to loan because of risk of non payment.
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Really? That's it? Just access to credit?

There's no shortage of labour?
There's no issue with land suppy?
The fact that the sector is grossly inefficient isn't a problem?
If the developers had better access to credit the builders would just appear, the land would become available and prices would drop. Is that what you are saying?

The Horseman said:
Why do you think so many foreign banks are leaving Ireland.
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Off the top of my head I'd say it has to do with Capital Ratios, the large number of Tracker Mortgages which are even less attractive in a low interest environment, the unwillingness of the courts to allow repossessions and the high costs they face in what is a small market.
 
Protocol said:
House prices in Dublin are so high that two people (the Taoiseach and a doctor) can only afford a terraced house in Dublin 8.

The width is one door and one window.

And yet it is 800k.
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House prices are so high that two people can only afford to pay .... €800k for a house?

There are many houses in the city for €800k (and far less) that are far bigger than the example you've cherry picked.
 
Purple said:
Really? That's it? Just access to credit?

There's no shortage of labour?
There's no issue with land suppy?
The fact that the sector is grossly inefficient isn't a problem?
If the developers had better access to credit the builders would just appear, the land would become available and prices would drop. Is that what you are saying?


Off the top of my head I'd say it has to do with Capital Ratios, the large number of Tracker Mortgages which are even less attractive in a low interest environment, the unwillingness of the courts to allow repossessions and the high costs they face in what is a small market.
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During the last boom Labour was not an issue. Non nationals made up a significant portion of our trades people. Alot of the trade people emigrated after the last boom. Some would return in a heart beat if the work was there.

The land is available the credit isn't.

The capital ratios can be financed by hq's of banks. As Ireland is a relatively small market in comparison to other countries these banks trade in they could easily subsidise the capital requirements.

Couple this with the increase in online banking then the cost base is reducing rather than increasing in the future.
 
The Horseman said:
During the last boom Labour was not an issue. Non nationals made up a significant portion of our trades people. Alot of the trade people emigrated after the last boom. Some would return in a heart beat if the work was there.
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The UK and Ireland were the only counties which allowed free movement of labour from the new Eastern European EU member states. That labour supply isn't there any more so no, that's not a solution.
The Horseman said:
The land is available the credit isn't.
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You should let the government and ERSI know. They, along with just about everyone else, think there's a shortage.
The Horseman said:
The capital ratios can be financed by hq's of banks. As Ireland is a relatively small market in comparison to other countries these banks trade in they could easily subsidise the capital requirements.
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The Capital Ratio's are the reserves of cash the bank has to hold relative to the loans they give out. The Central Bank sets those ratio's.
The Horseman said:
Couple this with the increase in online banking then the cost base is reducing rather than increasing in the future.
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Increased levels of regulation are where the extra costs are coming from. Economies of scale dilute those costs in larger markets. This is a tiny market.
 
The Horseman said:
During the last boom Labour was not an issue. Non nationals made up a significant portion of our trades people. Alot of the trade people emigrated after the last boom. Some would return in a heart beat if the work was there.
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I can tell you the none nationals trade people who left will not be coming back, they are the kind of people who travelled to find work and security for their families,

They trade people and their families who left can be found working for less than they were getting in Ireland all over the EU with added security for their families in the event of being out of work between jobs,


In fact, there are lots of Irish tradespeople who switched to Industrial employment and in lots of cases to lower wages for the security of employment
who will not be switching back to the construction industry having got burned out of work between jobs offer less supports than people who never worked a day in their life,
 
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Purple said:
So someone on a moderate wage who can't afford a home in Dublin should buy 30-50 Km outside the city and have to shoulder the extra cost of that commute? They should take their kids away from their friends and family and school?
I'd rather we fixed the supply side issues. I don't think living in a modest home on the outskirts of Dublin should be seen as a luxury.
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Like it is in new York and London and all other cities of the world?
 
PebbleBeach2020 said:
Like it is in new York and London and all other cities of the world?
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New York and London have excellent public transport links.
As pointed out they are vastly bigger than Dublin (the population with 45 Km of the centre of both cities is a multiple of the population of this entire country).
 
If prices were too high no one would be buying houses. I have a sibling who is trying to purchase for the past while and is experiencing bidding wars for many properties.

Can talk about the prices all day but the issue is the lack of supply.
 
PGF2016 said:
If prices were too high no one would be buying houses. I have a sibling who is trying to purchase for the past while and is experiencing bidding wars for many properties.

Can talk about the prices all day but the issue is the lack of supply.
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Prices are high mainly because supply massively exceeds demand. Prices are too high for average income households to buy 3-4 bed houses in most of Dublin.
Dublin in a small city with lots of space in an underpopulated country on the periphery of Europe.
 
PGF2016 said:
Can talk about the prices all day but the issue is the lack of supply.
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Exactly. The measures the government are bringing in are to stimulate demand in a market where demand already exceeds supply. It makes no sense.
 
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