Like others in this thread I'm not an expert, but it seems to me that the thing every cyclical housing market has in common is a heavily subsidized/credited/backed mortgage market. I think the counterexample is Germany? They build a good amount of housing every year, they watch housing prices very carefully and pull some levers if they tick up or turn down, and they don't store a huge amount of their population's wealth in their homes.
Anything else wildly perverts monetary policies. The mortgage market is suddenly the real bond market, there's extreme moral hazard, there are either explicit mortgage market safety nets or quasi-nationalized mortgage providers, etc. It becomes a weird monetary policy slush fund that is incidentally also where people live.
Germany also has a much more decentralized economy and more spread out population compared to other European countries. There is no city equivalent to London, Paris or Dublin.
For example Berlin's population only started growing in the 2010's (it's was stable or declining since the 1990's) and prices have been growing quite rapidly lately so arguably it just a few years (or decades) behind other major European cities. Munich on the other hand is almost as expensive as Paris.
Cities are hard because it's kind of a function of services and space constraints. If there's only so many square meters within 15 minutes of public transit, for example, that's gonna spike prices--as long as public transit is desired. You can look at Los Angeles for a different set of rules--super sprawl, heavy prevalence of cars and traffic, various environmental/cultural concerns, etc. City planners know all this and the zeitgeist now is the 15 minute city (or whatever number of minutes) to try and reduce these inefficiencies of scale and become less car-obsessed.
But all that aside, I'm not really talking about housing prices. I'm talking about the boom and bust cycles.
A house. Let us say 160 sqm with 800 sqm garden. You can buy such property very cheaply somewhere in rural Thüringen, but for Munich, you would have to be a millionaire or close to that status.
You don't <<need>> a 160sqm house with a 800sqm garden to raise kids :-)))
You <<want>> that house, notice the difference?
I grew up in a very practically designed 2 bed room apartment of about 90sqm. It was more than adequate and to preempt comments, it wasn't "inhumane" or a "slum" or whatever. I'd live there today if Romania as a whole wouldn't have a lot of growing up to do.
A 100sqm apartment, made larger to account for modern sensibilities, is more than enough to raise 2 kids.
I think the biggest difference between Germany and Anglo-Saxon markets is that houses here aren't a commodity. People rarely move out of and sell houses. Most owners buy once in their lifetime. Consequently, houses sold are quite old on average and often not worth much.
Germans rent a lot. They have the highest rate of rentals in the EU, I'm not sure how this compares to the US. I'd guess Germans rent more than Americans.
Maybe this is because you're not missing out on a housing market rocket by renting? With a reasonable tenant's rights framework, I think the benefits of home ownership are mostly aesthetic. That's not to diminish the aesthetic value, but I think a lot of people have this hierarchy where renting is below owning, and my guess is that's almost entirely to do with building equity in a home. You can imagine a alternate conception where home ownership is seen as more of a labor-intensive DIY project (which it totally is) and thus cheaper than renting, so only people who are into house DIY stuff would get one. Everyone else gets the equivalent of Gmail for homes. To be clear, I think this is currently the case, we just don't conceive of it in this way, either culturally or financially.
I mean aesthetic in the broader sense. For example I'd love to have rainwater capture and solar panels at my home, and maybe a composting site and garden too. Apartment living rules those out, but if I owned my own home I can probably get them going (coop boards or HOAs notwithstanding).
But like, I don't need them. Almost no one does. It's an aesthetic lifestyle choice. I'm (probably, anyway) willing to purchase a home in order to do this--and other non-apartment-friendly things--but I don't think it should be the goal of national housing policy to ensure that everyone has this option.
I can also imagine a more sophisticated tenant/landlord/housing policy that allowed tenants to do more significant things to land or structure. It's not like these things are unprecedented: leasers of agricultural land and commercial office space do it all the time. But again, I think it probably boils down to "poor, unsophisticated people rent, letting them lease your property is a huge risk, here's a thick contract and some biased tenant/landlord statues to protect landlord interests" thinking, which is definitely inaccurate.
It's like this guy has never heard of a speculative bubble, and sets up a series of straw men to nock down instead. Even though "bubble" is in the title.
Edit: oh I get it, his point is that yes there was a bubble, and that's why prices went up. Without extra supply it would have been worse. I think that's putting the horse before the cart, because without the bubble the extra supply wouldn't have been built.
Very curious to see what happens with the US housing / real estate market. I think stocks / equities are going to see a severe down turn this year and a good deal of money is going to leave the market. At the same time inflation is very high so sitting in cash is a loser as well albeit not as bad as riding the markets down. Will that money from the stock market go into real estate or will real estate crash too as the fed raises rates? Will remote work continue and in doing so will it reduce pricing on commercial business offices? Will business offices convert to condos? I have no idea but interested to hear any theories.
Depends on how much the real estate market is being fueled by the Stock Market. We've seen a bull market now for the last, what, 13 years? Is this continual wealth driving all the other prices upward?
As we saw in 2008/2009, financial markets are linked more so than they tell you. Diversifying your portfolio is a good idea, but having both real estate and stock investments is probably not in fact diversifying.
Include labor and leverage in your thinking on diversification as orthogonal dimensions to asset class. Even rich people can bring their own labor out of reserve when there assets are losing value. When assets appreciate, they can rebalance towards leisure.
The fun bit is that everything is 'overvalued' now - stock market, real estate, even crazy things (many parts of crypto such as NFTs, but also Pokemon cards and other collectables) are through the roof, where will all this money go? money out of a bubble has to go somewhere...
How far are we from the boomer generation leaving the market (one way or another)? This will create a lot of oversupply and negative pressure on prices I would assume - who will buy all their houses in the country, their share in the stock market? The answer to that is that we've been doing that already in the past decade with all the money printing / inflation / devaluation of wealth... not sure where the train stops and who will be left holding the bags.
Anyone buying in between now and the future is holding the bag as value terminally declines. These are structural demographic issues combined with technology deflationary pressures, leading to heat death of asset baskets supported by declining productivity of aging populations. See Japan for a preview.
The juice was squeezed over the last 40-50 years, and those times aren’t happening again [1].
Birth rates are down worldwide except in Africa, and if I had to forward look based on current developed world policy (Japan, US, Europe migrant policy), I don’t think the US is going to drastically increase immigration quotas. Again, like Japan. Older citizens will want to keep their culture static, and they weight that higher than economic growth.
I think you're drastically underestimating how many people emigrate to America. As of 2018 44 million Americans were born in another country and immigrated here[0], representing one fifth of the world's immigrants. As a percentage of the US' population (13.7), this is very close to the all time high of 14.8% in 1890. Our immigration wave right now is damn close to the peaks of the Ellis Island period of Italian and Irish immigration in the late 1900s. And that's as a percent of the current population, by total numbers this is the biggest wave ever.
Japan is trying to increase its immigration for the same reasons I mentioned, and they're struggling for the reasons you mentioned. Only 2% of their population is foreign born[1], which is up from past figures, but still a drop in the bucket compared to the US system.
You're totally right that there's going to be political and cultural issues over immigration, there always is. But America has the political and social institutions necessary to maintain a high level of immigration over long periods of time, which can help damped the blow of fertility change even if it's insufficient to fully reverse the trend.
You are describing hyperinflation. Everything is up, except for salaries. There are two options:
A) accept the prices as real, embrace the inflation, and raise salaries
B) crash the markets and real estate, kill all the crypto-scam economy, keep jobs running with government money
Some kind of mix of both will happen. I doubt that salaries can continue this low when basic needs cannot be covered. And I doubt that it's possible to just rub off so much inflation, some things need to go down. So, we can meet in the middle.
What's happening in much of the world today isn't hyperinflation, it's just fairly high inflation, after a long period of very low inflation.
The two options you describe sound to me like they're only viable in a very centrally planned economy, and are fairly independent of general inflation. You can't really deliberately move prices like that unless you're willing to interfere in markets to the extent that, say, the Chinese government does.
Stock markets will do their own thing. The price of a share of a given company will go up and down based on ever-changing estimates of future earnings of that company.
Real estate demand is fairly inelastic, so prices there won't really go down unless you either massively increase supply (staring down NIMBYs and keeping costs under control - challenging on both counts), or decrease demand (somehow make huge numbers of people move to places with less pressure on housing, kill people's earning and saving potential, convince huge numbers of people to move back in with their parents and/or houseshare with others - also challenging on all counts).
> How far are we from the boomer generation leaving the market (one way or another)?
20-30 years, during which time the younger generations will be entering. They are smaller slightly but most countries have immigration which keeps them fairly neutral.
> The answer to that is that we've been doing that already in the past decade with all the money printing / inflation / devaluation of wealth
This is not quite correct. Printing money does create inflation. Cross sector inflation does lead to devaluation of liquidity, but wealth includes more than cash on hand.
Your food and gas bill goes into the income statement of a corporation somewhere, and thus supports stock values. Even if stock prices decline, they will be better value because the companies will be making money
The prices are raising due to fundamental cost. The cost of making your Big Mac or frozen burrito are increased.
Thus, BigCorpFood has to manage price (too expensive and less consumers buy their products) and cost (too much cost means no profit).
BigCorpFood would really like to sell you a hundred frozen burritos at $0.99 that cost them $0.09. That would be ideal.
Less ideal but realistic would be selling you frozen burritos at $2.99 that cost $2.79
Even less ideal - but still workable for short periods of time - is selling you burritos for $2.99 that cost $3.10
What BigCorpFood doesn't want is to sell you frozen burritos at $9.99 that cost $9.79. That is really bad for them. They will sell very few of those burritos, and make almost no profit.
BigCorpFood stock price is more about introducing "New Deluxe Spicy Chicken Burrito, available for $3.10!" that cost $2.75. If eg Beef is getting more expensive and BigCorp can sell you cheaper chicken thigh and save a profit margin, that will help their stock a whole bunch.
ps: Oh, and re "your food/gas prices go into the income statement..".No, they go into the revenue statement. Income = Revenue - Cost.
The money goes around in a big circle. The big mac is pricier because the price of beef went up, for example. So the farmer is making more money. Or perhaps the supplier of feed to the farmer. Somewhere, someone is making more money; it’s not like there’s a link in the supply chain where all the do is set money on fire.
Also: sales is recorded on the income statement, no-one claimed that sales = income.
That's driven by the farmland bubble. Southern Ontario farmland prices are up 700% since the mid-2000s, which has priced urban sprawl out of the market. With Toronto (i.e. the cities around the City of Toronto) unable to expand like they once were able able to, that has increased buying pressure on the land that is already within the city limits, thereby also driving up the cost of housing in those cities.
While Canada as a whole has recently seen some small increases to the cost of housing on the back of increasing lumber and labour costs, the country has a whole has remained largely stagnant, even falling in some cases. The gigantic gains seen, which bring up the country average, are limited to the prime agricultural areas, namely Toronto and Vancouver, where farmers are now willing to pay more than developers for undeveloped land. Something that is historically unusual.
>The gigantic gains seen, which bring up the country average, are limited to the prime agricultural areas, namely Toronto and Vancouver, where farmers are now willing to pay more than developers for undeveloped land. Something that is historically unusual.
Why is farmland in those areas so sought after? Were canadian farmland historically underpriced? Is the land just really good farmland? Are speculators buying it because of global warming?
1. High prevalence of supply managed (dairy, poultry) producers. These farmers are effectively guaranteed a high income through policy. Said income provides a lot of room to buy land with.
Further, the way into these sectors is to buy what we call quota. Dairy farmers in Ontario imposed a price cap on quota back in 2006 in an effort to make it accessible to young farmers. While the fair market value of quota has likely doubled in the meantime, the maximum price you can pay is what it was in 2006. This means that there is even more cash floating around, that historically would have been tied up in quota purchases, in which to buy farmland with.
2. Increased profitability in agriculture in general. The US ethanol subsidy program of 2007 set the stage for significant increases in the price of field crops. As that program winded down and prices were coming back down, the US midwest got hit with three major weather events over the intervening years that decimated their crops, boosting prices again for those who had one. Not to mention that the US Farm Bill has been modified over the years to be more favourable to foreign countries like Canada.
Do you think the legalization of marijuana has had an impact? I visited a cousin in Windsor back a few months before legalization hit, and the surrounding farmland was experiencing a huge boom in greenhouse construction, I assumed to house marijuana grow operations.
very interesting observation. I live in Toronto and it's the first time hearing about this. Can you point to any articles about farmland preventing urban sprawl?
It's interesting because back in the 2000's that was the main talk about how Urban Sprawl was going to ruin everything!
This isn't true. Costs of housing have spiralled out of control outside of Toronto and Vancouver -- here on Vancouver Island in Nanaimo the house I built in 2018 for $950k is now worth near $1.5M. Up 20% in the past year. It's nuts.
>While Canada as a whole has recently seen some small increases to the cost of housing on the back of increasing lumber and labour costs, the country has a whole has remained largely stagnant, even falling in some cases
Kelowna? Calgary? Halifax? Are those places being driven up by farmland demand?
I've been looking to buy in the Toronto are. Prices are up 15% since November. Houses that had comparable sales of $850k in November are now going at around the $1M mark. I don't know how that rise is sustainable.
Lol exactly. I don’t wanna tout who has the most expensive houses but Prague and Brno win with the average wage / price ratio. I’m already remote for US company and still cannot a flat here due to abysmal central bank rules.
Interestingly, Warsaw is much more affordable. They also build a lot more condos there. AFAIK around 100 000 new housing units were built in Warsaw in span of just 5 years. That pushes the prices down.
In Poland there is anew term called pato-developer, from patological developer. Patologia is a common derrogative for something not good.
The pato-developer thing comes from the fact that many of these new apartment complexes often make huge compromises on quality or amenities. A common complaint is very thin walls or apartments with windows facing a few meters from neighbors. Search in youtube for pato developer and you will see some really comical videos.
It is very not ideal, but even so it provides a huge pressure relief on housing demand and kind of allows young people the ability to afford something to start a family. Real estate is even so often used as an investment but I think with the current interest rate hikes the crazy valuations on the main cities will come down.
Aren’t the rates fixed? If not then it’s a fairly ridiculous trade to take on. If no one has a fixed rate then without massive inflation any kind of interest surge will decimate the country.
If that is the case, then banks in US are taking the same "ridiculous" trade by offering fixed rates to almost everyone, and will be decimated by any kind of interest surge.
It's not clear to some countries stick almost exclusively to fixed rate mortgages, and others stick almost exclusively to variable rates, but the people in "variable rate countries" have saved a lot of money historically.
Banks package the loans into bonds which are then sliced up and sold to investors. Banks aren’t really in the speculation business as much as the underwriting business when it comes to mortgages.
Fixed rates are always a better option for the person borrowing the money as you can refinance if rates go lower, lowering your monthly payment.
Variable rate loans are far more regulated for a reason.
The standard mortgage in Canada has a five-year term, amortized over 25 years. You generally cannot lock in a low rate for 30 years the way you can in the United States.
Yeah, but on the other hand, black swans. We're navigating into uncharted territory and it feels a bit like 1929. And this time we're much more interconnected.
And the thing is, maybe it would be better to blow off some of that steam in small bursts than find our <<after>> that 2 days ago was the point of no return.
That is true for properties that are valued at less than 1mil. And you have to pay mortgage insurance. For properties that are >= 1mil, you have to put 20% down.
Though bubbles are a bad analogy: actual bubbles burst, economic bubbles deflate - not because of a puncture, but because they were continuously filled with air from a source that at some point can't provide it anymore.
While true, this misses the point of the article. What was the source of the air? The author claims cheap homebuyer credit and laxer lending requirements explains 90+% of the run up. They also claim this is non-obvious.
They do claim it, but how is "cheap homebuyer credit" and "laxer lending requirements" non obvious? I call BS - especially since there have been warning spelling those exact issues out time and again...
> actual bubbles burst [...] not because of a puncture, but because they were continuously filled with air from a source that at some point can't provide it anymore.
Don't they burst because the source doesn't stop before the bubble gets larger than what it can be? The source stopping would just lead to a deflation where it slowly gets smaller if the air hole is still open, or remain the same size until tiny leaks make it not be the same size anymore.
>*Don't they burst because the source doesn't stop before the bubble gets larger than what it can be? (...) The source stopping would just lead to a deflation where it slowly gets smaller if the air hole is still open
To continue my analogy, I prefer to visualize them as flying uncontrollably while shrinking very quickly (but not immediately as a puncture would), propelled by their own deflation discharges...
The main question is, what would be the source of the bubble?
Is it cheap capital? Fraudulent bank practices? Or is it because people wanted more space during lockdowns while having the sense of financial stability?
If the demand increased while supply stayed constant, the price increase is not a bubble. I waited for "the bubble to burst" for years before realizing there likely is no bubble where I am from. Housing's just expensive.
My tip is "distrust against the future value of the currency". Bricks do depreciate as well, but not massively.
The bond buying programs of the ECB are pretty expensive already, and the Green New Deal will be mostly implemented on credit. And Europe is already quite deep in debt. So is the USA, but the USA can at least derive some strength from the dollar being the world reserve currency, with no clear challenger in view.
Because tons of professions, small business, workers laid off, etc suffered from the lockdowns, so there was not exactly clear that "people had more money to spend".
The markets are not invididuals, if we're talking about stock markets. And in Europe they don't represent most of the population as asset holders or anything like that.
Case in point for France:
"There was an 8.3% decrease in France’s economy in 2020, and the country has not seen a recession to this extent since World War II. For example, France’s travel and tourism sector’s contribution to the French economy decreased by 48.8% due to travel restrictions. As a result, that sector alone lost 193,000 jobs. (...) Before the pandemic, 9.3 million people lived below the 1,063-euros-per-month poverty line in France. Those who were poor had little opportunity to improve their lives, especially during the pandemic when unemployment rates reached a two-year high. As a result, retail workers, artisans and self-employed people were among those the pandemic most affected. Further, the number of French people in poverty has significantly increased to more than 1 million people during the pandemic. (...)"
>As a concrete example, bank account deposits in the UK rose 10% during COVID.
That's one disconnect. Most people don't have bank account deposits (or don't have any to write home about). That's apparently true for the US too...
Yes. That’s clearly what happened. But lots of people, myself included, expected prices to go down. The early pandemic was marked by a market meltdown and a shutdown of the timber and housing industry as analysts expected a drastic slowdown in home buying and building. It was perfectly reasonable at the time to assume (or hope!) that house prices were going to fall, and let's not brow beat people over that.
Yeah, similar event happened to the car industry. Analysts and factories forecasted dramatic slowdown in sales, so are rental car companies. Yet after the reduction in investments happened, it turned out consumers in COVID prefer to buy additional cars, or rent to go to smaller towns. Cue pandemonium. (And the supply chain shortages of chips)
To be fair, if COVID happened anytime before broadband is available to homes, the analyses wouldn't miss. Novel pandemic, novel technologies, novel situations all around.
In the UK, people who suffered were low wage, casual workers such as hospitality staff- typically not people who were in the house buying market to begin with.
Public sector workers and corporate employees tended to fair well because they were 'working from home' and not paying a siginificant part of their income on getting to the office and back.
Factor in, also, much less properties available. I was looking for a house at the time and anything that came onto the market was getting snapped up in no time at all. This lack of supply soon translated into increasing asking prices.
Except that they’re not driving to work, they’re not eating at the cantine/restaurant at lunchtime, they’re not going on holiday, they’re not going out in the evening…
I've noticed that the covid crisis has resulted in steady or even growing home purchases, many of them as second homes. In the US there was a lot of talk in 2021 of those who had not lost their jobs sitting on more liquidity than ever before, so I'd assume it's many of these people who jumping into the housing market.
Interest rates fell dramatically, government stimulus/cash transfers were far in excess of any lost wages, fewer people wanted to list houses and do showings due to covid.
> Ireland had arguably the world’s largest housing bubble and crash in the 2000s, with prices quadrupling in the decade to 2007, even while supply soared, before crashing by more than half between 2007 and 2012.
So, prices doubled in the years from 2000 to 2012 - a little under 5% yearly growth. Is that really a crash? Or am I misunderstanding "quadrupled then halved"?
Interestingly Leitrim and other counties in the north west he mentions have been high on the list of places people have escaped to from Dublin during the pandemic. Many people are now living there and working remotely for Dublin companies, and there are far too _few_ houses there now, and house prices have skyrocketed
I object to the characterization of Ireland's housing issues as somehow accidental, or solely due to broad market forces.
At every major decision point there were intelligent people screaming in the ear of media and politicians that property developers were getting away with murder.
I knew teenagers who emigrated as the writing was so clearly on the wall, and the entire time our print and TV media were inflating the bubble with every tool at their disposal.
Trails of brown envelopes (bribes) have been sniffed out repeatedly, and then left to grow cold. Large scale developments were made and begun without any plan whatsoever to connect them to basic and necessary infrastructure such as sewage, or schools.
The media have pointed fingers at immigrants, dole scroungers, and market forces - anything but policy. They give airtime to politicians who have been repeatedly proven to be actively working against us and caught in lies over and over. They smear anyone speaking truth.
And when it all went tits up the same fuckers - property developers and politicians and media - made even more money. For example, with NAMA, which this author inexplicably ignores completely.
Irish housing policy for the last decade has been to sell property to vulture funds and foreign investors at firesale prices tax free, while the average Irish worker has none of the same advantages and no chance of getting on the ladder whatsoever.
Our Minister of State for Housing recently tried to get his monkeys to find flaws in an ESRI report saying we could borrow billions for social housing. Our Minister for Housing has come through with just 5% of his promised build number. THIS IS POLICY.
Our government funds landlords with schemes such as HAP (1.5 billion euro directly to landlords since 2017) instead of building fucking houses. They then use those schemes to twist the numbers, pissing in our face and telling us its raining despite clear record homelessness and child poverty.
We give foreign companies billions to build houses which we then rent off of them for decades and don't own at the end. It's sheer, clear insanity. And this Oxford chap seems completely unaware, yet wholly confident in his "understanding" of the issues we have.
This crisis was NOT built on misunderstandings, or myth, or innocent mistakes and apathy. It was CONSTRUCTED. And at every point, the wrong people have profited at the expense of the 40% of Irish who don't own a house.
And if I'm not wrong, neoliberals and banks are running this scam all over the world.
Most of property costs can be tied to government policy, re: zoning, interest rates, tax laws etc.
The government is usually always the one that could fix the problem by encouraging building. E.g. in the US we have an 18% tariff on Canadian lumber, which artificially increases cost to build (though is meant to protect domestic lumber industry).
Many municipalities have zoning laws that prevent densification etc.
Government could easily require investors to put more money down in residential (New Zealand just did this), increase tax on non owner occupied, upzone to allow more dense homes/building, office to residential conversions, etc.
Developers fucked us over in a lot of ways. Government and media and banking were fully in on it, and still are.
Remember how I talked about housing estates being built where there was no desire or infrastructure there? They did this by taking advantage of human psychology. When people turned out against a development, they'd simply resubmit the proposal in 6 months or a year and this time people would be fatigued and not fight it. I have personally heard them talk about doing this with my own ears. They made backhanders to politicians, they paid off newspapers and TV stations, they made deals with substandard suppliers.
And why did they do this? There was huge money in it. Government funds, aforesaid substandard materials, treating workers like shit. Ever way the system could be gamed it was gamed; and they didn't even try all that hard to hide it.
Look up CRH, Ireland's concrete cartel. Look up mica blocks in Donegal. Look up NAMA corruption. There's more than enough information out there to put all the pieces together but media and Gardai refuse to do so. Half the population is aware of how fucked all this is and it remains an open secret; so seeing revisionist wank coming out of Oxford academia is actually offensive.
... So, developers got paid. Media got paid. Establishment politicians got paid. Banks got paid repeatedly, as did their bondholders. Everyone got paid except for the people, who were and are being cynically and systematically fleeced before, during and after each boom bust cycle.
Most of the government policy at the time can be tied to bribes by developers. Look up "brown envelopes"[0] or the subsequent Mahon (formerly Flood) tribunal.
So why blame the developers and not the government?
People lobby for different things all the time, it's the government that sets the rules. The only power public has is to vote out those officials, or lobby the other way.
There were structural, government induced factors that helped lead to the 2008 GFC in the US too. You could blame irresponsible buyers, or the banks, but it's the government regulation that is the only thing that can structurally fix problems. Blaming actors within the system devised by govt doesn't solve anything, however cathartic it may feel.
I think the fact that you've been pointed to firm evidence of bribes, yet call the developer's actions "lobbying" says a lot about your good faith here.
In case you're actually reachable though - just because a government fails to stand up for its people does not excuse the complicit parties who "lobby" them to fleece normal people by the millions.
It's simply an ineffective way of looking at the world.
The government is the one that sets policies, not the developers. To me a government official that accepts a bribe and makes far reaching policies in response to one is much more culpable and to blame than somebody making the bribe.
It's like if a company hired a lot of unqualified people and then blamed those people when it failed, rather than their system of checks and balances in the hiring process.
Focusing on the player and not on the rules of the game is simply a losing mentality, sorry.
The whole point of democracy is about holding government accountable when they make mistakes. Diverting blame to non government actors doesn't solve anything
Most of that happened before the craziness which was 2002 onwards. Like, Dublin planning is messed up because of brown envelopes, but they don't appear to have contributed in the same way to the worst excesses of the Boom.
The corruption was a little more subtle in those days (although I look forward to the coming NANA tribunal).
> Trails of brown envelopes (bribes) have been sniffed out repeatedly, and then left to grow cold. Large scale developments were made and begun without any plan whatsoever to connect them to basic and necessary infrastructure such as sewage, or schools.
Can't argue with this, in fairness.
> The media have pointed fingers at immigrants, dole scroungers, and market forces - anything but policy. They give airtime to politicians who have been repeatedly proven to be actively working against us and caught in lies over and over. They smear anyone speaking truth.
This is just not true. It's almost libellous it's so wide of the mark. I don't know where you're getting this from. Nobody of any substance has ever blamed the crash or the housing crisis on immigrants, people on the dole, direct provision or anything like that. Immigration in particular has been an absolute non-issue the entire time.
> Irish housing policy for the last decade has been to sell property to vulture funds and foreign investors at firesale prices tax free, while the average Irish worker has none of the same advantages and no chance of getting on the ladder whatsoever.
This is not true either. Vulture funds buy non-performing loans (not property, loans), of which there are many, and for which reason we have higher than average mortgage rates. It's distasteful, but without them our current account fees and loan rates would be higher than they already are.
REITs are not vulture funds. They generally build to rent: they finance the construction, and then collect the rent. Without them there would be thousands fewer apartments in Dublin in particular. Cork city went a full decade without a single apartment complex being built. They serve a purpose. They don't pay corporation tax, but they do pay tax. See here: https://www.revenue.ie/en/tax-professionals/tdm/income-tax-c...
The funds swooping in post-construction and buying entire blocks of houses or apartments that would otherwise have gone on the open market, they're a different story. They can die screaming.
> Our government funds landlords with schemes such as HAP (1.5 billion euro directly to landlords since 2017) instead of building fucking houses. They then use those schemes to twist the numbers, pissing in our face and telling us its raining despite clear record homelessness and child poverty. We give foreign companies billions to build houses which we then rent off of them for decades and don't own at the end. It's sheer, clear insanity. And this Oxford chap seems completely unaware, yet wholly confident in his "understanding" of the issues we have.
HAP is a bad scheme. Totally agree. The "Oxford Chap" is a Trinity academic who writes the daft.ie reports on housing in Ireland. He knows what's going on as well as you do.
> This crisis was NOT built on misunderstandings, or myth, or innocent mistakes and apathy. It was CONSTRUCTED. And at every point, the wrong people have profited at the expense of the 40% of Irish who don't own a house.
Nobody manufactured the crisis on purpose. That's tinfoil hattery.
Prosperity, low-interest rates, wider mortgage product offerings, and easy to access credit cause
pricing bubbles.
Now, forces that make a housing bubble pop include a downturn in the economy, a rise in interest rates, as well as a drop in demand.
We've had all that and credit is getting more expensive.
Theres only so many people who can live somewhere or buy to rent scheme spaces, developers building as much and fast they can and you can't renew all the older buildings.
In the end, follow the money, all the stake holders and you'll find it is always universal greed at the root.
I am not so sure that building houses for non business purposes should be handled so liberally.
I lived there at the time, and it may be foolhardy to argue with an Assistant Professor of Economics, but it seems that the author is willfully ignoring the distinction between 'Unfinished' and 'Empty' houses. The Central Statistics Office (which often has difficulty counting things) found around 230,000 empty houses at that time. So while he may have a point that some of the 'Unfinished' ones never made it past the plans, there were also completed and empty housing estates, some of which were bulldozed.
Also, the author claims that he couldn't find empty estates near Dublin, but if he went as far as Celbridge he would have found some. Futhermore he seems to jump back and forth between rural Leitrim and Dublin to make his point, depending on what suits his argument. Rural areas had huge ghost estates.
And as to there being a myth about the Irish property bubble refuting the laws of supply and demand, I don't think anyone has made this point in my earshot or viewing. This third myth is itself a myth of the author's own creation.
He covered the empty estates issue well enough I thought: by the mid-2010s they were mostly fully constructed and occupied, including in rural areas. That chimes with my experience, having lived in a few different parts of the country (urban and rural) over that time period. It was rare for completed housing estate to be bulldozed.
You will find that you are wrong about the occupation rates in rural areas, it's still at around 180000 unoccupied dwellings at the last count. Misleading not to make the distinction between Unfinished and Empty just to make a point, leaving out half the story in numbers terms. The article would have been more accurate if the titles of the 'Myths' were about Dublin and not Ireland.
I don't have figures for the amount of bulldozing that went on, but it was enough to make headlines for the years between 2008 to 2012, the bottom of the market.
> around 180000 unoccupied dwellings at the last count.
I spend a lot of time in rural Ireland (ok, in the eastern, wealthier, part). This figure doesn't really reflect what I see on the ground, which is scarcity of supply - you got sources for that figure, preferably with a breakdown by region?
It is rare for people in Ireland to consider the eastern part, Leinster, rural, even while parts of it might be. Connaught is where the unoccupied dwellings are most common.
In any case here's the link I was looking for earlier, which should source the breakdown you are looking for.
A lot of the complete-but-unoccupied homes in rural areas are holiday homes I believe, but I can't give you a reference for where I read that. Another big chunk are basically barely-habitable hovels in probate.
You won't find many empty 3-bed semis with a BER above F outside of urban areas. I still think he was broadly right about the ghost estates nationwide.
Interesting and accurate (though he's the academic, not me, so that's not really my call to make).
Ronan Lyons is a fairly well known name for people who would read the Business section of the newspapers. He compiles a a quarterly report for Ireland's largest property website that gets pretty much guaranteed coverage upon release.
Since the terms "transport", "landlord" and "highest mortgage interest rates in
the eurozone" appear nowhere, I believe the article is a relatively shallow
analysis, though some good points are made. This is probably the most important
assertion, to my mind:
Put another way, nobody worried about the cost of building a home rising from
€125,000 to €225,000 when credit had pushed prices up from €150,000 to €350,000.
But when prices crashed back down to €175,000, the system had a real problem on
its hands – one that policymakers have been loath to touch.
It's long been my opinion (I have no economic background) that the last decade or
so has seen successive governments sit out the problem: stalling until the indebted
inflate their way out of debt. Attempts to stimulate supply have been wrong footed,
attempts to reduce demand have resulted in grants and tax relief being withdrawn
from the renter/owner (in stark contrast to the ever increasing reliefs granted to
the investor, but I understand supply and demand). The lower end of the market is
particularly competitive as a result. The Central Bank borrowing limits referenced
have kept price growth partly in check, but favours foreign investment (pension
funds in particular get bad press).
Small scale private landlords are exiting the market, there's general unease with
large scale commercial operations (a novelty here) given tight supply and not so
ancient Irish history. A particular issue in Dublin city is the scale of privatised
student accommodation to avail of various tax reliefs (recently some 18k units, in
over 50 individual developments).
I have a reluctance to take on personal debt, I was able to save and needed only
a small mortgage for a house in Dublin city (and more importantly, within cycling
distance of work). I consider myself one of the lucky ones. My mortgage repayments
are approximately my previous rent, I rented for more years than my mortgage
term (but ability to move according to work was my preference for a long time).
It's no small irony that the house I live in was built in the 1950s, local authority
housing designed by Dublin corporation architect HG Simms - back in the original
Dublin housing crisis ...
Anything else wildly perverts monetary policies. The mortgage market is suddenly the real bond market, there's extreme moral hazard, there are either explicit mortgage market safety nets or quasi-nationalized mortgage providers, etc. It becomes a weird monetary policy slush fund that is incidentally also where people live.