Current public sentiment towards the housing market?

[BigM]

With the current situation, private vendors are subsidising developers. Developers can currently charge a stamp-duty premium as their sales are exempt.

I think both Whathome and Calina are right:
SD-exemption on new homes was supposed to stimulate the building of new homes targetted at FTBs. That is no longer required, so either SD all FTB homes or none.
But it still doesn't address the fundamental issue that it is the increasing supply of cash/debt that has made prices reach these crazy levels where an above average earner cannot afford a FTB house.

 

[whathome]

But in a market driven by sentiment this stands a good chance of keeping the party going, even if it just staves off the perception of a slowdown on the horizon.

Any effect on sentiment will be short-lived, like a sandcastle close to the shorline - will be quickly washed away by the rising interest rate tide. Interest rate increases have already wiped out any growth in the market, there's no way a piddly change in stamp duty will turn things around.

 

[KarlK]

FTB's don't currently pay stamp duty on property below €317,500 so the effect on the market from your example will be zero.

my mistake!

This gets back to my point - abolishing stamp duty for FTB's will have little effect in stimulating the market.
Builders and new homes estate agents will be hit as a key competitive advantage for new builds will be gone.
With the current situation, private vendors are subsidising developers. Developers can currently charge a stamp-duty premium as their sales are exempt.

Any idea what average FTB prices are? or the split between second hand/ new build for FTBs?

 

[miju]

If the current rate of building continues, who’s going to buy the surplus 35,000 units built annually?

some beermat maths here but wouldn't that equate to 35% if this years housing stock?

what was that figure again of the percentage investors make up of the market 40%????

stagnating prices means investors will dry up so that will most definitely cause an oversupply , isn't it funny how when the bulls try to use figures to "support" their outlook it usually highlights another fatal flaw

 

[liteweight]

I'm not sure if this has been said before on this thread but while speaking in the Oireachtas Bertie Ahearne stated that of the approx 3b collected in stamp duty, only 70m was paid by FTBs. This surprised me. Thinking about it though, the 317K stamp duty exemption more or less only applies to second hand homes. Apart from the fact that a new build property has to be over 125sq.mts. before a liability arises, stamp duty is also only charged on the net value of the new build. A FTB, therefore, can afford to pay 317K plus 13.5% and still pay nothing in stamp duty. Perhaps the exemption limits should rise for second hand property only thus creating a more equitable state of play. Perhaps not.

 

[liteweight]

Any effect on sentiment will be short-lived, like a sandcastle close to the shorline - will be quickly washed away by the rising interest rate tide. Interest rate increases have already wiped out any growth in the market, there's no way a piddly change in stamp duty will turn things around.

Feeling poetic today are we? I agree with you.

 

[whathome]

I'm not sure if this has been said before on this thread but while speaking in the Oireachtas Bertie Ahearne stated that of the approx 3b collected in stamp duty, only 70m was paid by FTBs.

You're right, I saw that. Listening to Bertie Ahern during that exchange in the dail gave me the impression that FTB stamp duty will be abolished. He emphasised how little revenue it pulls in.

 

[BigM]

Listening to Bertie Ahern during that exchange in the dail gave me the impression that FTB stamp duty will be abolished. He emphasised how little revenue it pulls in.

It's also a distortion of the FTB market so they can abolish it and Cowen can still argue that they're not interfering - they're just removing interference... so everyone's a winner

 

[Eirmail]

It'd be nice to bury it on a sleepy Sunday.

While the stats are being prepared to start bringing the bad news to the massses, I expect a fightback to begin and a shutdown of supply by the VI's. We should see layoffs of construction workers, a halt to residential land rezoning, and planned new starts never get beyond the site clearing stage.

Laying off construction workers could be counter productive. Most of these would emmigrate to the UK or elsewhere to work .That would mean a lessening demand for housing. The VI's are in a catch22 situation.

 

[room305]

It's also a distortion of the FTB market so they can abolish it and Cowen can still argue that they're not interfering - they're just removing interference... so everyone's a winner

If they simply move the bands, the opposition can get in plenty of soundbites about simply putting the extra money in the pockets of wealthy developers. This is a much harder thing to argue if the stamp duty is abolished for FTBs.

€70M is a tiny amount in the context of the budget and it may even prove self-financing if it stimulates the trader-upper market by allowing potential STBs to offload their current homes.

 

[irlstu]

Just spotted this while going for a stroll in Dun Laoghaire, seems that Sherry Fitzgerald are selling their own property!

Is this another sign that those on the inside are getting out?

The pink signs in the window are "wet paint" signs. Looks like they are scrubbing up to impress buyers!

Photo here

 

[Arthur Daley]

Would an estate agency own most of it's branches? I'd have expected they would be leased, as if the property market collapses they don't want to be totally exposed.

 

[whizzbang]

Just spotted this while going for a stroll in Dun Laoghaire, seems that Sherry Fitzgerald are selling their own property!

Is this another sign that those on the inside are getting out?

The pink signs in the window are "wet paint" signs. Looks like they are scrubbing up to impress buyers!

Photo here

"yes its a great time to buy... erm.. easpecially estate agencies!"

 

[Eirmail]

Would an estate agency own most of it's branches? I'd have expected they would be leased, as if the property market collapses they don't want to be totally exposed.

You see the market hasn't collapse YET! An estate agency can afford to run the risk of selling at the very last minute as they are in the know.

 

[liteweight]

You're right, I saw that. Listening to Bertie Ahern during that exchange in the dail gave me the impression that FTB stamp duty will be abolished. He emphasised how little revenue it pulls in.

I got the impression that he was trying to dismiss the opposition's argument, that FTBs are being prevented from buying because of the stamp duty, by citing the fact that very little was collected from FTBs anyway. The opposition would like to be seen as the knight in shining armour who stepped in to save the FTB from the dreaded tax, while in fact, very few have to pay it!

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.

 

[whathome]

I think if stamp duty is abolished for FTBs, the builders will run amok with prices.

Quite the opposite, without the stamp duty advantage over second hand property, builders would be forced to lower their prices to compete.

 

[bearishbull]

I finally managed to read the whole thread
A few hours here and here and it took me three weeks

So here’s my first post
I have to disagree with some posters calling for punitive taxes on people who hold onto landbanks.
My father struggled for years to make a living on our farm in Tipperary but suddenly he’s a paper millionaire.
It’s the best development site in our area and valued at over €4 million as it’s zoned for residential development.
But it won’t be sold until the M7 to Limerick is built as this can only increase its value to Limerick commuters who wish to commute to Limerick but live in a beautiful area beside Lough Derg. Leave aside thoughts of a crash for now.

So you could say why isn’t the land sold at agricultural prices so purchasers get can cheap and affordable homes.
I’m sure most posters would support calls for the end of land speculation as it could decrease the price of housing to more reasonable levels.

Just remember, that you may curse the property developers who make millions from this building boom but it has also affects farmers on low incomes in a positive way.
I’m hoping for it to stay stable for three more years and then I can collect my inheritance. I accept it can drop and I’ll be reading this thread with interest as it’s very informative.

Like everyone here I was pretty bearish as everyone says the smart money has left the Irish property scene.
This may be true but is everyone here correct and Sean Dunne and Bernard McNamara wrong?
Everyone here has an opinion but you have to respect these two businessman who backup up their beliefs with hundreds of millions.

With all respect, your father bought the land to farm, not to make millions. Farmers have done well enough over last few decades in Ireland. Your father did nothing to earn the windfall increase in his land value, if his land was in a location where building homes was not feasible his land would be only worth a fraction of the 4million.
The councils are the ones that made his land that valuable, not him. If he bought the land just for farming then how can he complain if he only gets agri rate for it?? If on the other hand he bought the land with a view to speculation as well as a bit of farming then he should be heavily taxed on the windfall profits.
The restriction on development land/rezoning/dogdy corrupt planning has us in this precarious situation we find ourselves. Theres no natural shortage of land in ireland for development(we are only 4% urbanised compared to 10% in much of Europe) and its the artifical nature of restrictions that has caused prices to rise to highest in europe despite the long term health and fundamentals of the economy being less than rosy.

What the government and councils shoud do is rezone massive amounts of agricultural and industrial land so the market price of land would fall and the economy would benefit in the long term. As it stands high land prices just make us uncompetitive and moves wealth from young irish to old irish- we are ripping each other off!

 

[liteweight]

Quite the opposite, without the stamp duty advantage over second hand property, builders would be forced to lower their prices to compete.

Why so? Do you not think if stamp duty was abolished for FTBs, then the secondhand property market would become a more viable option for some, creating competition for new builds?

 

[whathome]

Why so? Do you not think if stamp duty was abolished for FTBs, then the secondhand property market would become a more viable option for some, creating competition for new builds?

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

 

[Arthur Daley]

Theres no natural shortage of land in ireland for development(we are only 4% urbanised compared to 10% in much of Europe) and its the artifical nature of restrictions that has caused prices to rise to highest in europe despite the long term health and fundamentals of the economy being less than rosy.

What the government and councils shoud do is rezone massive amounts of agricultural and industrial land so the market price of land would fall and the economy would benefit in the long term. As it stands high land prices just make us uncompetitive and moves wealth from young irish to old irish- we are ripping each other off!

Steady on, there'd be rioting in the tents at the Galway races with such bolshivism.
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.

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.