Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Why Ireland's housing bubble burst

worksinprogress.co

Post reply on HN
Print view View original

21–30 of 161 posts

Re: Why Ireland's housing bubble burst

#21

Post by ashtonkem »

toomuchtodo wrote: post #8
FiReaNG3L wrote: post #4

Earlier quoted context omitted.

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…

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]. [1] https://ourworldin…

That’s only true if we cutoff immigration, which is how the US has offset the downsides of lower fertility.

Even if we can’t defer those problems forever, we can slow down the transition, making it less painful than the one experienced by Japan.

Re: Why Ireland's housing bubble burst

#22

Post by coldtea »

chrisseaton wrote: post #16
coldtea wrote: post #13

Earlier quoted context omitted.

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 absolutely soared. People saved money rather than spent. Most people's jobs carried on as normal or were protected by the government. As a concrete example, bank account deposits in the UK rose 10% during COVID.

>The markets absolutely soared.

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...

https://www.cnbc.com/2019/01/23/most-americans-dont-have-the...

- though I guess those people don't go out buying houses either.

Re: Why Ireland's housing bubble burst

#23

Post by coldtea »

yojo wrote: post #17
coldtea wrote: post #11

Because that's the nature of bubbles? 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...

Re: Why Ireland's housing bubble burst

#24

Post by chrisseaton »

coldtea wrote: post #22
chrisseaton wrote: post #16

Earlier quoted context omitted.

The markets absolutely soared. People saved money rather than spent. Most people's jobs carried on as normal or were protected by the government. As a concrete example, bank account deposits in the UK rose 10% during COVID.

> The markets absolutely soared. 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 contribut…

If the class of people who buy houses (people with assets and deposits) get wealthier then house prices go up.

As you say, people who aren't buying houses anyway not getting richer doesn't have any impact on the price of houses.

Re: Why Ireland's housing bubble burst

#25

Post by toomuchtodo »

ashtonkem wrote: post #21
toomuchtodo wrote: post #8

Earlier quoted context omitted.

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]. [1] https://ourworldin…

That’s only true if we cutoff immigration, which is how the US has offset the downsides of lower fertility. Even if we can’t defer those problems forever, we can slow down the transition, making it less painful than the one experienced by Japan.

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.

Re: Why Ireland's housing bubble burst

#26

Post by subpixel »

BiteCode_dev wrote: post #3

I can't wait for the housing prices to go down, but there is no sign they will in France. They kept going up, even during the covid crisis.

The value of real estate may decline but it’s very unlikely to dip into the “affordable for normal folks” territory where demand exists.

Rental houses are an asset class now, and that’s unlikely to change while the rich can get richer renting to people who can’t afford to buy.

Re: Why Ireland's housing bubble burst

#27

Post by ashtonkem »

chrisseaton wrote: post #16
coldtea wrote: post #13

Earlier quoted context omitted.

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 absolutely soared. People saved money rather than spent. Most people's jobs carried on as normal or were protected by the government. As a concrete example, bank account deposits in the UK rose 10% during COVID.

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.

Re: Why Ireland's housing bubble burst

#28

Post by e12e »

> 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"?

Re: Why Ireland's housing bubble burst

#30

Post by eliasmacpherson »

coldtea wrote: post #23
yojo wrote: post #17

Earlier quoted context omitted.

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...

People were a lot more economically illiterate before the GFC, and it was an awful lesson for a large section of the global population.
Post reply on HN