Why Ireland's housing bubble burst • Hacker News Board

Re: Why Ireland's housing bubble burst

#131

Post by goodpoint » Sat, Jan 22, 2022, 8:32 PM UTC

BossingAround wrote: post #48

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 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…

Increasing inequality in the world - driving foreign, speculative, investment e.g. vulture funds

Re: Why Ireland's housing bubble burst

#132

Post by inglor_cz » Sat, Jan 22, 2022, 8:33 PM UTC

oblio wrote: post #124

inglor_cz wrote: post #114

Earlier quoted context omitted.

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 > a 160sqm house with a 800sqm garden to raise kids :-))) You > 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 moder…

The "need" level is very basic, in principle you need just some water and any food and any shelter and people lived like that for millions of years.

Even a Romanian block of flats from the Ceausescu period would seem a luxury to the peasants of Vlad the Impaler.

But we are talking about Germany, Munich. This is one of the most advanced economies in the world, and a great power of export. Having a 160sqm house with a 800sqm garden shouldn't be out of reach of a regular engineer working there. Plenty of people were able to buy similar properties just 30-40 years ago, in Munich, Prague or Copenhagen. Something is seriously askew if a normal middle class in a rich country can no longer do that.

Re: Why Ireland's housing bubble burst

#133

Post by goodpoint » Sat, Jan 22, 2022, 8:40 PM UTC

adam_arthur wrote: post #94

Fordec wrote: post #76

Earlier quoted context omitted.

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. https://www.rte.ie/news/2003/0501/37800-flood/

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…

> So why blame the developers and not the government?

Because responsibility comes with power. Developers are hugely wealthy and have incredible lobbying/bribing power and they are happy to use it.

They know very well that "lobbying" and creating housing bubbles is not a victimless crime and they do it anyways.

Politicians still get blame for accepting bribes but they are not billionaires themselves and it's understandably not easy to push back.

Re: Why Ireland's housing bubble burst

#134

Post by camgunz » Sat, Jan 22, 2022, 8:41 PM UTC

oblio wrote: post #100

choeger wrote: post #96

Earlier quoted context omitted.

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.

Re: Why Ireland's housing bubble burst

#135

Post by capableweb » Sat, Jan 22, 2022, 8:45 PM UTC

coldtea wrote: post #117

capableweb wrote: post #70

Earlier quoted context omitted.

> 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 ma…

>*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... So, thi…

Sounds like your analogy is more about balloons rather than bubbles. Bubbles make me think of these: https://www.techexplorist.com/wp-content/uploads/2020/02/bub...

Re: Why Ireland's housing bubble burst

#136

Post by camgunz » Sat, Jan 22, 2022, 8:53 PM UTC

inglor_cz wrote: post #92

qwytw wrote: post #81

Earlier quoted context omitted.

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 is crazy. You would have to be a very upper middle class to afford children and a house there. Unless you inherited one, of course.

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.

Re: Why Ireland's housing bubble burst

#137

Post by mrspuratic » Sat, Jan 22, 2022, 9:01 PM UTC

rossdavidh wrote: post #15

I'm not sure how many HN readers we have in Ireland, but as an American I'd be interested to hear their perspective on this article.

Almost certainly more than one reader...

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 ...

https://www.irishtimes.com/culture/art-and-design/hugh-lineh...

Re: Why Ireland's housing bubble burst

#138

Post by coldtea » Sat, Jan 22, 2022, 9:03 PM UTC

namdnay wrote: post #119

coldtea wrote: post #112

Earlier quoted context omitted.

> areful, the French measure of “poverty” is a percentage of the median income. It’s more an indicator of inequality than anything else It does say "below the 1,063-euros-per-month poverty line in France" which whether it was calculated with the median income in mind or not, it's quite fine as a poverty measure, not just inequality (that's like making less than $12K/year, or if we adjust for cosr of life, less than $…

Two things: 1) being a fixed percentage of a median, any variation in the median will change the “poverty rate” without it necessarily meaning anything. If the minimum wage increases by 100 euros, the poverty rate will actually increase because the median income will go up and more people will come under X% of it 2) you can’t really compare income across countries. 1000 euros a month means you will receive social hou…

>2) you can’t really compare income across countries.

As a close by European whose been to France many times and have friends there, I can assure you 1000 euros a month doesn't by you much in France. Not sure if it corresponds exactly to $18-20K year, but it's not far.

That said, of course, being someone making 1K in France is better than 2K in the US -- regarding education, health, and several other aspects....

Re: Why Ireland's housing bubble burst

#139

Post by jonwithoutanh » Sat, Jan 22, 2022, 9:40 PM UTC

randomdata wrote: post #31

shell0x wrote: post #20

Meanwhile in Toronto a house is $1m+ while salaries are 100k-150k.

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 Cana…

>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?

Re: Why Ireland's housing bubble burst

#140

Post by ptsneves » Sat, Jan 22, 2022, 9:58 PM UTC

inglor_cz wrote: post #90

neon_me wrote: post #86

Earlier quoted context omitted.

Yes, Prague is the extreme place to live.

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.