Current public sentiment towards the housing market?

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Afuera said:
Your speculation on why they might be vacant is besides the point and doesn't provide a reason for why our vacancy rate is so out of whack with international markets (which would have old people moving to nursing homes, property needing repairs etc.). Should capital appreciation stop (i.e. the famous slow landing) these glut of properties can and will be added to the market (either rental or property sales). The shear number of them identitied by the CSO is the big worry as it represents many years of building.
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Out of whack with international markets for at least one very good reason: High proportion of owner occupiers. So where someone goes into a nursing home (for example), the inertial effect is to churn that property faster rather than to go to the ongoing effort of paying rent; the inertial effect in Ireland with its high proportion of owner occupiers is to leave the property vacant. The reasons for vacancy are relevant; I don't suggest that they make it "right" in some way, and it's certainly not economically efficient.

If the government were to intervene in the property market, perhaps the best ways to do this would be to create incentives to greater efficiency. Annual property taxes for second and subsequent houses unless rented for not less than (say) ten months a year, or registered as a holiday home (which should facilitate infrastructural / schools etc planning in those counties with an especially high proportion of holiday homes.


Afuera said:
Many muliple-homeowners these days are what could be termed "accidental investors". Property was bought while they were young and was held on to longer than they needed it because the mantra was "You'd be mad to sell". Their circumstances may have changed since they bought it (nesting with partner, starting a family) however there's not much to worry about if the capital is appreciating year-on-year. Until recently banks were only too happy to help in this process (often suggesting it in fact).

Without capital appreciation the picture changes dramatically though and you can be guaranteed that that's when a lot of these properties will be added to the rental or housing market.
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I think a very high proportion of the "accidental investors" have had their properties on the rental market anyway. They generally haven't been so cash rich as to be able to afford two mortgages. And people have been worried about the imminence of a crash since at least 2001 - I was very much afraid I'd bought my house "at the top of the market", and just relieved that it was sufficiently affordable for us to be able to stay there even if we went into negative equity...

"So many times on this thread, bulls posit reasons why there are so many vacant homes. The reasons run the gamut of plausible to ridiculous. At the end of the day, it doesn't matter why these properties are empty, simply that they are. Historically, about 3% of property remains vacant. For some reason, in a country supposedly affected by a severe housing shortage, we have a 13.5% vacancy rate."

... is that supposed to be me? I'm not a bull - I'm more or less neutral. I'm buying and selling PPRs just at the moment, but I wouldn't buy a further rental property. Nor, on the other hand, would I dispose of the one I have. I'm probably close to being a property agnostic.
 
Dreamerb said:
... is that supposed to be me? I'm not a bull - I'm more or less neutral. I'm buying and selling PPRs just at the moment, but I wouldn't buy a further rental property. Nor, on the other hand, would I dispose of the one I have. I'm probably close to being a property agnostic.
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Sorry, I meant bulls in a general sense, as in those who believe we have an undersupply in housing which justifies the price increases of the last ten years.
 
Dreamerb said:
Out of whack with international markets for at least one very good reason: High proportion of owner occupiers. So where someone goes into a nursing home (for example), the inertial effect is to churn that property faster rather than to go to the ongoing effort of paying rent; the inertial effect in Ireland with its high proportion of owner occupiers is to leave the property vacant. The reasons for vacancy are relevant; I don't suggest that they make it "right" in some way, and it's certainly not economically efficient.
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Nice try, but if you check out homeownership rates around the world, we're not exactly unique. Germany and France are the obvious exceptions but many other countries have similar or more (Spain, Italy) homeownership than us. And none of those countries have vacancies anywhere near 15% of their housing stock.

Dreamerb said:
If the government were to intervene in the property market, perhaps the best ways to do this would be to create incentives to greater efficiency. Annual property taxes for second and subsequent houses unless rented for not less than (say) ten months a year, or registered as a holiday home (which should facilitate infrastructural / schools etc planning in those counties with an especially high proportion of holiday homes.
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Current government intervention is severely slanted in favour of the investor. I agree with you that it should be changed and made more efficient.
 
homeless said:
I see the McWilliams RTE series starts tonight. Anyone think this will have an affect on sentiment?
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I will say one thing for McWilliams he is consistent. Unfortunately he has been consistently wrong for 7 years and all the analogies (cancer, driving etc ) in the world don't change that. I don't think he is wrong in what he is saying just that he is overlooking factors which have a bigger influence than he is allowing for (e.g. cheap credit, immigration, investor appetite). What is the statute of limitations on predicting a housing crash.
 
Afuera said:
Nice try, but if you check out homeownership rates around the world, we're not exactly unique. Germany and France are the obvious exceptions but many other countries have similar or more (Spain, Italy) homeownership than us. And none of those countries have vacancies anywhere near 15% of their housing stock.
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Yes, but they also don't have the same level of churn and high immigration. And I think they do have annual property taxes, though I'm I'm subject to correction.

One factor I see as particularly problematic is that the emphasis is on large scale new development. There's relatively little done to address the quasi dereliction of some older local authority housing, or of the upper storeys of shops / commercial premises. There's definitely room for private enterprise to take a role in renovating local authority housing - whether for profit or on a per unit rate; likewise, while the LOTS scheme was a disaster, a less confining scheme might see higher uptake and an increase in urban density.

Afuera said:
Current government intervention is severely slanted in favour of the investor. I agree with you that it should be changed and made more efficient.
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That's not precisely the point I was making - it's not just investors (and I suspect not even primarily investors) - who are causing the high vacancy inefficiency. On the other hand you're quite right about government intervention: a system which allows investors to write off the full cost of borrowing against their tax liability, while limiting the mortgage interest relief available to owner occupiers to a positively measly sum, does seem unduly generous to the former and intrinsically unfair to the latter.

This isn't something that can be rolled back or redressed quickly though - doing so in one fell swoop would probably be a shock to the economy of a scale that would bring about a full blown recession. Even tinkering around the margins of the property market could be problematic at the moment, so I'd suspect Cowen's going to leave well enough alone and hope for the best.
 
Aesop said:
I will say one thing for McWilliams he is consistent. Unfortunately he has been consistently wrong for 7 years and all the analogies (cancer, driving etc ) in the world don't change that. I don't think he is wrong in what he is saying just that he is overlooking factors which have a bigger influence than he is allowing for (e.g. cheap credit, immigration, investor appetite). What is the statute of limitations on predicting a housing crash.
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This thread isnt about discussing McWilliams. The central bull argument on this thread, popping up at regular intervals, is based on the weakest possible form of reasoning, boiling down to 'prices-been-goin-up-for-X-yrs-so-it-will-continue/plateau'. The irony is, upon closer inspection, this is more of BEAR argument than anything else.
 
Aesop said:
I will say one thing for McWilliams he is consistent. Unfortunately he has been consistently wrong for 7 years
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As a matter of interest, what exactly has he said that has been wrong?

Has he ever named a date, or said "if interest rates get to X" where a crash will occour..? (Not trying to be smart - just genuinely interested in whether he has or not). I often find his sloganeering and endless labelling hard to swallow, but I find his analsysis at the marcoeconomic level to be fairly on the money.

From my point of view he has been saying "we're in asset speculation mania" for many years and that the longer it goes on, the worse the come-down will be. It still seems spot-on to me.

I think McWilliams may turn out to be the Robert Schiller of the Irish Property Bubble (Schiller was derided by his peers for pointing out the insanity of the dotcom bubble a few years before it popped).

I think many people are stuck in ostrich-mode, unable to see that the '100 fags a day and I'm still alive' analogy is very apt IMHO.
 
walk2dewater said:
The central bull argument on this thread, popping up at regular intervals, is based on the weakest possible form of reasoning, boiling down to 'prices-been-goin-up-for-X-yrs-so-it-will-continue/plateau'.
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Or there is the arguement that new supply of zoned land and finished units gets shutdown to counteract the increased supply of second hand properties. People say this will lead to recession and meltdown in the economy, thus suppressing demand further in a vicous circle. I can't see why reducing output to say 20-30,000 units a year which appears normal to me should result in an economic armageddon. People would still be quite well off by EU standards, and people will still wish/feel the need to purchase property. Sure maybe Ireland will have to get used to the end of the handy number and the quick buck. But this would be no bad thing.
 
Dreamerb said:
Yes, but they also don't have the same level of churn and high immigration. And I think they do have annual property taxes, though I'm I'm subject to correction.
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None of this gets around the fact that we have an awful lot of property that could be pushed onto the market very quickly (possibly turning a slump into a slide).

Dreamerb said:
That's not precisely the point I was making - it's not just investors (and I suspect not even primarily investors) - who are causing the high vacancy inefficiency. On the other hand you're quite right about government intervention: a system which allows owner occupiers to write off the full cost of borrowing against their tax liability, while limiting the mortgage interest relief available to owner occupiers to a positively measly sum, does seem unduly generous to the former and intrinsically unfair to the latter.
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Did you mean to say "a system which allows investors to write off the full cost of borrowing"?

Dreamerb said:
This isn't something that can be rolled back or redressed quickly though - doing so in one fell swoop would probably be a shock to the economy of a scale that would bring about a full blown recession. Even tinkering around the margins of the property market could be problematic at the moment, so I'd suspect Cowen's going to leave well enough alone and hope for the best.
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Yes, it's far too late in the day for something like that now. I think that plans like this will only get rolled out after something bad happens and the public are in the "let's make sure this never happens again" mindset.
 
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Arthur Daley said:
I can't see why reducing output to say 20-30,000 units a year which appears normal to me should result in an economic armageddon.
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Beermat figures, but if 100k units per annum = 262k jobs in construction, then a drop to 20-30k units p.a. could mean job losses of 180k approx. And that's only directly in construction.
 
Arthur Daley said:
Or there is the arguement that new supply of zoned land and finished units gets shutdown to counteract the increased supply of second hand properties. People say this will lead to recession and meltdown in the economy, thus suppressing demand further in a vicous circle. I can't see why reducing output to say 20-30,000 units a year which appears normal to me should result in an economic armageddon.
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You think a drop in house building rates for 90k a year to 30k a year won't cause a recession? When they lay-off all those workers what will happen?

Either the foreign workers leave for sunnier economic climes which will further depress housing demand or else they will stay, competing on price with Irish workers for the remaining jobs.

Neither sounds like a recipe for a the-good-times-they-keep-on-a-rollin' type scenario.
 
conor_mc said:
Beermat figures, but if 100k units per annum = 262k jobs in construction, then a drop to 20-30k units p.a. could mean job losses of 180k approx. And that's only directly in construction.
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Well then maybe unemployment will rise to 97/98 levels again and we'll have more in common with our central European partners who have been funding this party for the last few years. If we expect 100k units a year to be a baseline that is to be sustained we're like the boy in the bubble anyway.
 
Arthur Daley said:
Well then maybe unemployment will rise to 97/98 levels again and we'll have more in common with our central European partners who have been funding this party for the last few years. If we expect 100k units a year to be a baseline that is to be sustained we're like the boy in the bubble anyway.
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Who expects 100k units per annum to be the baseline?

I'm not sure where you're coming from here, but my point is that a drop in output from 100k to 30k could well be nothing short of economic armageddon....
 
Afuera said:
None of this gets around the fact that we have an awful lot of property that could be pushed onto the market very quickly (possibly turning a slump into a slide).
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Possibly, although I think a lot of it would need work before it would be marketable. Point taken, though.

Afuera said:
Did you mean to say "a system which allows investors to write off the full cost of borrowing"?.
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Gah! Of course I did, mea culpa. Shall correct.

But as regards this slow down in the market - I do think that's being somewhat overblown. My house has now been on the market for two weeks. In that time, at least 13 separate potential buyers have viewed it, there are four active bidders, and the current bid is 15k over the asking price with further viewings scheduled. Some of the bidders were so bullish they made offers on the spot at viewings. And all this, though we didn't put a disingenuous price on it (we set it at a level we'd have been prepared to accept, comparable to similar properties locally, and well above what we "needed"). Methinks current public sentiment is somewhat at variance from that on this thread... at least on my thoroughly unscientific sample of one!
 
There's a poster called Green Bear making an excellent case for the change in sentiment for Irish property on this website:

[broken link removed]

There are no price drops listed yet but I would imagine some will show up there in time.

So much interest in the change in sentiment shows how the market is at an inflection point IMO.
 
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