. 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.
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you better watch out AD - I can hear the furious typing of the uber-bears alreadythis will be a price worth paying to prop up the whole ball game.
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.
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.
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.
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.
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.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.
Whats a VI?
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.
In my experience anyone with property for rent in cities and towns has no problem renting i.e. no suggestion of excess supply.
- 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?
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.
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.
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.
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