The Silicon Docks and the Housing-Rental Crisis

Brendan Burgess

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Interesting article by Aidan Regan on Irisheconomy.ie

The Silicon Docks and the Housing-Rental Crisis


"Google opened its offices on Barrow Street in 2004. An additional 80+ Silicon Valley firms have since followed. By 2016, the sector had grown to around 16,000 employees. Most of the growth (labour market cluster effect) is driven by inward-migration of skilled multi-lingual graduates.

Might the Silicon Docks, and the inward migration of high-paid sales/tech workers from across the EMEA, explain the rental-price inflation?"
 
This is something I have been saying for some time.

But surely the IFSC is also a big factor in pushing up the demand for housing?

I would also be concerned that if banks move from London to Dublin post-Brexit, it will make the situation worse.

Brendan
 
I'm open to the suggestion that our housing sector has been utterly unable to cope with the levels of inward migration Ireland has experienced... but I find wilfully perverse to single out this particular cohort of workers?
16000 workers are really the cause of rental-price inflation? Really?
I'm going to say 'really' again because there's some major blinkers and dancing on the head of a pin argument going on there from Mr Regan...

Does anyone really think if we'd only had 16,000 inward migration of high tech workers in the last 15 years that'd be enough to trigger rent inflation?

If there's any merit at all to this argument, then surely it applies to all the EMEA migrants that have come here since about 2002?
The quantity of which is more than ten times the number working in Silicon Docks.

What's the point of a census or planning, if at any point, you can get thousands of migrants per year you haven't planned for?
 
I always cringe when I read these sorts of articles.

- Now, I'm no racist but look at the number of foreigners in the country...
- Are you saying that's a bad thing?
- No, no. Of course not! [in a whispered, ominous tone] But Joe Public might...

The problem is a lack of supply - not an excess of demand.

If current Government policy continues to ignore this simple reality then we are going nowhere.
 
Sarenco said:
I always cringe when I read these sorts of articles.
- Now, I'm no racist but look at the number of foreigners in the country...
Click to expand...

It's not racism if they're rich foreigners apparently...

It behooves a government whose public policy favours multinationals, and favours membership of a political association allowing free movement of labour, to put in place the essentials of housing and public services to support this.
 
I've been saying this for years but usually get shot down as being racist!

A small wealthy country like this in a major economic and open borders area is going to have ongoing housing crisis into the future....we'll either have way too much (economic downturns) or be caught massively short (upturns). Not only can EU nationals move here, but our Govt see's fit to hand out thousands of visas's every year to non-EU migrants.
And Brexit will make things worse depending on the deals agreed. Yes, there will be a few thousands jobs moving here from the City. But if Britain puts up a hard border, then tens of thousands of young Eastern Europeans who would have moved to the UK will come here instead. I have spoken to Romanian freinds about this and they tell me they know of families already planning to pull out of the UK and give Ireland a shot.
The only thing that may frighten a lot of them off is the mad cost of housing in the Dublin area. But as they tend to house share a lot more than any Irish family would tolerate, they're prepared to put up with it all for a few years.
 
Brendan Burgess said:
I would also be concerned that if banks move from London to Dublin post-Brexit, it will make the situation worse.
Click to expand...

If lots of well paid bankers move from London to Dublin, that will make Irelands economic situation better.

True we may need to build more homes, schools, hospitals, restaurants, roads etc, that will also be a good thing, it will provide more jobs for builders, teachers, nurses, waiters, bus drivers etc.

Or maybe we should just close down some multinationals send their employees away, keep going until your friend, unskilled of Ballymun, can afford a 5 bed detached in Ballsbridge.
 
Some companies looking to move out of London are factoring the chronic lack of housing around Dublin into their final decision of where they will move to.
 
Ah come on folks, our government and opposition jointly decided in 2009 to constructively shut down our residential construction, property development and new property investment sectors. And within a few years, we turned a housing surplus into a shortage. A few more years on and it's now a crisis.

All totally foreseeable by anyone with a grasp of basic economics. And, even at this late stage, all totally reversible.

Instead, we're looking elsewhere for scapegoats. A leading property commentator was on Twitter last night wanting the State to CPO every Airbnb property in Dublin. Others are blaming Google and fearing (yes, fearing) an Irish employment windfall post-Brexit.

This country is insane.
 
Can the all-seeing experts here point back to examples in 2009/10 of where they pointed out a housing crisis would materialise within 5 or so years?
Can they also show how that they suggested we keep building at a time when the talk was all about ghost estates and how soon could we knock them down, families waving goodbye to loved ones at the airport as they emigrated etc.
And can they also show how the building was to be funded at a time when carers allowances were being cut and medical cards withdrawn from those with Downs Syndrome, pension ages increased, all night talks were taking place with Unions about drastic pay cuts etc.
Oh yeah how could I forge....at a time when the IMF were running the country!!!
 
Delboy said:
Can the all-seeing experts here point back to examples in 2009/10 of where they pointed out a housing crisis would materialise within 5 or so years?
Click to expand...

No need for your smarm, but I most certainly did predict back in 2009 that Joan Burton's grandstanding and Brian Lenihan's naiviety in hammering landlords would lead to housing shortages. I wasn't alone in this and it didn't require any particular insight to do so: it was well known at the time that the population was rising.

The last time something like this was tried, with the Bacon Report in 1998-2001, it caused shortages too, but this was abandoned before it did too much harm.


This is a total strawman. Nobody who was sane suggested the State should undertake any level of building programme in 2009 or 2010. (I remain of the view that the State still can't afford such a programme, given the meagre investment returns it is likely to generate.)

However it should have refrained in 2009 from queering the pitch for private developers and investors who wished to add to the housing stock. Its actions in this regard are at the root of our current crisis.
 
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Most of the private developers in 2009/10 were either bust or well on their way to being bust. No investors wanted to touch Ireland back then, hence we had to get the IMF in.
How much 'queering' of the pitch actually took place? The banks stopped lending to the private developers but what was the Govt to do (yes they owned the Banks soon after but lending still wasn't an option)?

What did Bruton/Lenihan do to put landlords out of the market? I recall they knocked mortgage interest back from 100% to 75%.
Some landlords got out mainly because rents collapsed incl Govt funded rent allowance. A lot more couldn't exit as they weren't able to sell the house/apt!
But by 2012 they were back to incentivising property investment...7 years CGT exemption for example.

I'm not trying to be 'smarm' here but there's a bit of historical revisionism going on. And a certain amount of ignoring of current conditions in favour of blaming the current crisis on decisions that were'nt made 8 years ago, when, IMO no one foresaw the current crisis.
 
The country is full of private developers and builders who didn't go bust or next or near it in 2009/10. Many of these were people who wisely banked Celtic Tiger gains ahead of the crash and have since equally wisely steered clear of reinvestment in housing which is now badly needed on a macro level.

The 75% mortgage interest restriction was the biggie in putting landlords out of the market. The short-lived NPPR was another measure, as was the idiotic 80% tax on the realisation of land rezoning gains. There were others.

The 7 year CGT exemption was more general than the residential sector and mainly benefitted the commercial property sector where there is no 75% interest deduction restriction.

Your contention that no-one foresaw the current crisis is unfounded. I've been arguing here for 15 years about the rent spiral effects of the Bacon Report in 1998-2002. A similar rent spiral was eminently foreseeable in 2009, after the anti-landlord measures were adopted, except this time on steroids. As has transpired.
 
This is a terrible argument.

The Silicon Docks jobs are well paid. The employees therefor pay significant amounts of income taxes to the exchequer.

Is the suggestion that the preferred scenario would be to remove those high tax generating jobs and fill the grand canal area with low income people who don't contribute as much to the exchequer? Because somehow low income people are more deserving of these properties than higher income people?

Perhaps the one notable take away from this argument is that the Irish education system has failed the economy - producing graduates with inadequate foreign language skills to feed MNC's selling into foreign markets.
 
Delboy said:
Can the all-seeing experts here point back to examples in 2009/10 of where they pointed out a housing crisis would materialise within 5 or so years?
Click to expand...
My posts from August 2008: https://www.askaboutmoney.com/threa...mistakes-of-the-past.90433/page-2#post-694973 and https://www.askaboutmoney.com/threa...mistakes-of-the-past.90433/page-3#post-696110

Last line of the latter:
To finally get back to the point, do you still advocate the reintroduction of Bacon, as you suggested earlier? How would you propose to resolve the inflation in rents that would follow this?
Click to expand...
 
T McGibney said:
A leading property commentator was on Twitter last night wanting the State to CPO every Airbnb property in Dublin.
Click to expand...

Yep, Barry Cowen was calling on the Government yesterday to CPO vacant properties.

I assumed it was a solo run but I just heard a FF backbencher on the radio make the same call so it seems to be official FF policy.

Absolute insanity.

Constitution? Cost? Process?
 
T McGibney said:
My posts from August 2008: https://www.askaboutmoney.com/threa...mistakes-of-the-past.90433/page-2#post-694973 and https://www.askaboutmoney.com/threa...mistakes-of-the-past.90433/page-3#post-696110

Last line of the latter:
Click to expand...
I don't want to get into a 'he said, you said' debate as that goes no where as we can see over on some other threads in the past few days!
And I don't doubt you when you say you foresaw the current accomm crisis. But those links point to a very specific discussion on rent controls/Bacon report type changes being reintroduced. And IMO that didn't happen- yes some changes were made as mentioned on other posts but the collapse in rents due to the loss of jobs/wage cuts was by far the big ticket item that Landlords faced at the time.

I'm going to stand by my own assertion that back in 2010/11 when all the talk was off knocking ghost estates around the country, forums in Farmleigh with the Irish diaspora trying to come up with ideas to bring Irish people back/create jobs....practically no one predicted that within 7 years we'd only have 3,000 houses nationwide for rent or overnight queues for 3 bed semi-d's asking 0.5m etc
 
Go back to my 2008 posts cited above where I clearly predicted a serious housing shortage if the government tried to screw landlords.
 
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