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Why Ireland's housing bubble burst

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Re: Why Ireland's housing bubble burst

#21

Post by me_me_me »

vasco wrote: post #6
all2 wrote: post #4

Earlier quoted context omitted.

Proponents of what is called the "real estate cycle" say it is about 18 years long (plus or minus, and discounting its disruption due to wars), from peak to peak. They say the next peak is due in late '26 or early '27 (October or March, if the month matters). There are some that say they can predict the movements of land speculation based economies. I'm familiar with old blog posts from back as far as maybe 2005 that…

Proponents of "millennial cycles" say it's about 1000 years long. They know as much as the 18-year cycle ones. There's guys predicting the end of the world tomorrow from an alien invasion also, and if it happens they'd have been right, but not any smarter.

haha, exactly! The bauble bursts for a reason.

and the reason that there is not enough housing available for the demand, the investment corpo is now buying up the housing as a new avenue of income and population is still growing is only pointing to prices growing indefinitely.

Unless there is a population crash, people suddenly stop requiring having place to live, or someone discovers personal pocket dimensions with free houses.

But I wouldnt expect it in next 10 years.

Re: Why Ireland's housing bubble burst

#22

Post by tmnvix »

takinola wrote: post #12
tmnvix wrote: post #5

> 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. (emphasis mine) That wasn't the accepted wisdom at the time. Prices going up spelled 'supply shortage' to most. When the tide went out (i.e. credit availability) it revealed an oversupply. We should learn fr…

From the article, it seems like the distortions were introduced by policy makers. There was a tax benefit from building new homes in certain places. In those places, prices went down. However, the policy allowed the tax benefits to be claimed against any homes the developer built. This meant a developer could build in tax advantaged locations even though there was already over-supply there. This did not help location…

Yes, the author (correctly, in my opinion) raises the issue of tax incentives. There are similar distortions in the Australian and NZ tax systems (mostly around taxation of capital gains).

What the author fails to emphasise more - and really should given the title of the article - is the part played by availability of credit. This was the nail in the coffin. It's possible to come away from this article with the impression that oversupply caused the crash, rather than the more correct take that it was a collapse in investment demand due to availability of credit (in my opinion).

Just overlay any graph of interest rates together with house prices for pretty much any market with an accommodation crisis and the correlation becomes pretty obvious. Interest rates go up and booms stop. Sometimes they crash spectacularly.

Re: Why Ireland's housing bubble burst

#23

Post by tmnvix »

mytailorisrich wrote: post #19
tmnvix wrote: post #5

> 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. (emphasis mine) That wasn't the accepted wisdom at the time. Prices going up spelled 'supply shortage' to most. When the tide went out (i.e. credit availability) it revealed an oversupply. We should learn fr…

Supply soared but I believe that population soared as well and continues to soar. Exuberance may have been created by easy credit and speculation but the root cause was indeed a growing market fuelled by real demand, which is a common pattern. Growth attracts investors and speculators.

I live in NZ. We have a rapidly growing population with one of the highest levels of immigration in the world.

From late 2021 mortgage rates went from as low as 2.5% up to around 7%. Subsequently, in my city, prices quickly dropped 20% and both the number of properties available for sale and for rent increased by as much as 50%. Where did those properties come from? In my opinion the increase is representative of the underlying existence of underutilised properties that are a result of excessive investment demand that has now fallen dramatically.

I am firmly of the belief that a property boom can cause an increase in the proportion of underutilised properties even in the face of growing demand for homes - especially now that short term rental markets are playing a bigger part.

Re: Why Ireland's housing bubble burst

#25

Post by TimPC »

skeeter2020 wrote: post #11
jwond wrote: post #3

Earlier quoted context omitted.

People predicting the Canadian housing bubble would burst probably didn't think the government would resort to such absurdly high levels of immigration. https://globalnews.ca/news/10386750/canada-41-million-popula...

I'm interested that you used the word "absurd" - how come? Historically nothing sets up a country better for future success than lots of immigrants - if it's paired with government policy that doesn't discourage growth...

If Canada took in half the number of immigrants it does it would still have one of the largest rates in the world. We are massive outlier for how many we are taking in and all sorts of things aren't keeping up with the demand. The biggest two are home building rates and the health care sector but there are other problems as well.

Re: Why Ireland's housing bubble burst

#26

Post by me_me_me »

skeeter2020 wrote: post #11
jwond wrote: post #3

Earlier quoted context omitted.

People predicting the Canadian housing bubble would burst probably didn't think the government would resort to such absurdly high levels of immigration. https://globalnews.ca/news/10386750/canada-41-million-popula...

I'm interested that you used the word "absurd" - how come? Historically nothing sets up a country better for future success than lots of immigrants - if it's paired with government policy that doesn't discourage growth...

> Historically nothing sets up a country better for future success than lots of immigrants

Ummm citations needed urgently. I would point out, immigration policy vs anyone without a passport is welcome are two complete scenarios that the only thing in common is that outsiders are coming in.

Unchecked immigration policy as a good thing is a myth. People from clashing cultures dont mix naturally. Only results are natural ghetos and cultural clashes.

Allowing undocumented people in without any due diligence, only advertises that undesirables from other countries can escape, or being dumped by more crafty foreign leaders.

The immigration as a positive is strictly related to being the cause for brain-drain effect. You want intelligent hardworking people in, not just anyone.

Also its better if people you are attracting are of similar heritage with similar values and culture. As those people assimilate to host cultures within a generation or two.

The european countries don't really have distinctive minorities from their neighbors. The inter-eu immigrants withing generation or two basically become a host country citizens.

I would point to Sweden and their current problems, also to the change of mind of the pro-unchecked immigration politicians. Who now are openly and publicly stating they were wrong.

Re: Why Ireland's housing bubble burst

#27

Post by tmnvix »

hugh-avherald wrote: post #16
tmnvix wrote: post #10

Earlier quoted context omitted.

Haha. Do rents ever not go up? Edit: But seriously, it's available housing that matters. We can have a shortage of available housing with an oversupply if investment demand is high enough. That is what the Irish experience demonstrates. Only second homes and investment properties can be underutilised... This is why I believe that any government serious about tackling an accommodation crisis should start by determinin…

Rents fell during the pandemic in Australia.

I noticed that at the time.

As an aside, I'm quite shocked by what has happened to the property market in Australia since (particularly Sydney). It stands in stark contrast to NZ. I'm pretty confident that it won't continue this way for too much longer. A recent new report suggested the majority of recent sales in Sydney were to cash buyers. How long can that last? The higher rates will eventually have an effect.

Re: Why Ireland's housing bubble burst

#28

Post by me_me_me »

gonzo41 wrote: post #13
skeeter2020 wrote: post #11

Earlier quoted context omitted.

I'm interested that you used the word "absurd" - how come? Historically nothing sets up a country better for future success than lots of immigrants - if it's paired with government policy that doesn't discourage growth...

Poor immigrants now == booming growth over the medium term. Rich immigrants just spend the locals out of their homes. The west is importing the wrong type of migrants.

In canada's case. This was not the thing at all.

It became a trend in china's rich circles to invest in canadian housing market as way to hide money from ccp and to flex your wealth.

Chinese new money are prone to trends, and at scale it can have terrible results for city like Vancouver - quick google - "Chinese homebuyers accounted for nearly one-third of Vancouver's real estate market during 2015"

Re: Why Ireland's housing bubble burst

#29

Post by TulliusCicero »

tmnvix wrote: post #5

> 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. (emphasis mine) That wasn't the accepted wisdom at the time. Prices going up spelled 'supply shortage' to most. When the tide went out (i.e. credit availability) it revealed an oversupply. We should learn fr…

Rising prices will usually indicate a supply shortage, but for property there's also the element of speculation.

In contrast, rents are a more reliable indicator of a shortage, no speculation there.

Re: Why Ireland's housing bubble burst

#30

Post by tmnvix »

mandmandam wrote: post #14

Gary Stevenson [0] is the only economist who makes sense to me on this issue. He mostly speaks about the UK but we're basically all in similar boats with house prices across the English speaking world. Gary put his money where his mouth is, and was the world's most successful trader for three years running. However, since he talks in a candid and coherent manner about inequality and the stunts the ultra-wealthy pull,…

He does seem to have a pretty good take on the bigger picture.

What it means for me, is to pay close attention to anything that looks like another round of QE. I'm sure it will happen, just a matter of when and how much.

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