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Why Ireland's housing bubble burst

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Re: Why Ireland's housing bubble burst

#41

Post by estebank »

TMWNN wrote: post #34
me_me_me wrote: post #26

Earlier quoted context omitted.

> 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 natura…

> 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. Context for others: Sweden has no language, income, employment, or skills requirement https://www.migrationsverket.se/English/Private-individuals/... > for obtaining citizenship. In completely unrelated news, Arabic is now the second mo…

> Sweden has no language, income, employment, or skills requirement for obtaining citizenship.

Neither does the US. Like the US, it has a requirement of having lived in the country with residency for 5 years. In the US those 5 years are after getting a Green Card (permanent residency), not after getting the original dual intent visa that allowed for the Green Card.

The Swedish residence requirements seem par for the course[1], if more straightforward than for the US.

[1]: https://visaguide.world/europe/sweden-visa/residence-permit/

Re: Why Ireland's housing bubble burst

#42

Post by randomdata »

refurb wrote: post #39
wredue wrote: post #2

I’m not sure what’s different, but I will chime in to say that I’ve been reading about Canada imminent bubble burst for 15 years. I mean, eventually someone may be right, but had I let this get to me and not buy my house 12 years ago, I would be in a much worse position today. Be careful with people trying to predict how markets will move.

Canada had a massive housing crash in 1990. Housing pricing dropped in Toronto by 30% on average (less in the core, up to 50% in the suburbs). Home owners were screaming for relief. If you bought in 1989, you didn’t break even accounting for inflation until 2005 or later. The last decade has been Groundhog Day compared to the 80’s. Complaints of limited supply, people saying “these prices are the new normal”, people…

> wages are lower

That may be true, but houses aren't that expensive. If you're, say, Austin Matthews making $13MM per year in Toronto, you can still buy a lot of houses. That capacity is not diminished by some tech mogul in SF making $130MM per year.

The question is, as always, will something better come along? Indeed, housing is the purchase of last resort. Give people something better to buy and they will! People in Canada especially are happy to buy real estate like mad at this juncture because, frankly, what else is there to buy? Canada doesn't offer much else. You're not going to work to make $13MM just to hold an IOU forevermore. People making $13MM want to collect on what they've created and have something to show for it.

The US housing market crashed back in 2006 because tech started showing promise ("Web 2.0", mobile shortly thereafter) and the money left housing to buy into the newfangled tech. It's not clear what Canada's equivalent will be. Granted, it's banking heavily on skilled immigrants to come up with something, so there is possibility of yield. Time will tell.

Re: Why Ireland's housing bubble burst

#43

Post by xeromal »

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…

Your second demand is what China is going through right now. It's causing a massive upheaval.

Re: Why Ireland's housing bubble burst

#44

Post by datascienced »

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,…

I like the video. But I just can’t imagine “The Rich” hoarding lots of cash to lend out? Look at Donald Trump unable to get cash at hand for example to pay a fine that is a fraction of his worth.

I think the rich will be heterogenous in their assets but most will have non cash assets and borrow when they need cash. Having money out of asset markets so they can time the market based on interest rates doesn’t seem likely. Better off holding SPX or investing in the businesses they probably own that out perform any investment on the open market (for example a company I worked at 100x value in shares over 12 or so years).

Re: Why Ireland's housing bubble burst

#45

Post by rayiner »

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 - if it's paired with government policy that doesn't discourage growth...

Define "success?" Mass immigration to America from continental Europe eventually culminated in the 20th century in the dismantling of the American constitution and the republic the founders created. The resulting country is also completely ungovernable.

Generations of cheap immigrant labor ultimately created a materially rich society (for some people), but whether it has been a "success" is quite debatable.

Re: Why Ireland's housing bubble burst

#46

Post by randomdata »

TulliusCicero wrote: post #29
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.

The most reliable indicator of a shortage is abandonment of a price-based mechanism in favour of something else, like a lottery or needs-based selection. If price is able to select the buyer, then you can't possibly have a shortage.

Re: Why Ireland's housing bubble burst

#47

Post by Spooky23 »

wwweston wrote: post #32
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 go down under pretty much one circumstance: demand drops. People leave an area, or local economics suffer so people double up in housing, or people die. If there are any examples of times/places where rents have fallen in nominal or real terms, they will almost all coincide with this kind of demand drop. Supply-related rent drops are theoretical and almost never happen in real life. Supply is important anyway,…

They happen in parts of the market. Subsidy creates a price floor, but new construction will knock down older premium priced apartments outside of highly desirable areas.

People who advocate for tenements usually do so to eliminate the price floor.

Re: Why Ireland's housing bubble burst

#48

Post by donavanm »

tmnvix wrote: post #27
hugh-avherald wrote: post #16

Earlier quoted context omitted.

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.

Im in Sydney as well. I suspect the immediate effect of rates shook out in Q2/Q3 last year when there was a big dip. Since Q4 inner west-ish prices are up another 10% for properties Im tracking. Clearance rates are still around 70%, though I see a fair number withdrawn beforehand instead of passed in.

> new report suggested the majority of recent sales in Sydney were to cash buyers. How long can that last?

A long long while. Every existing owner, 60% of the population, is at the top of the pyramid scheme. Anecdotally from agents and my observation is the ones selling an existing proprry are cashing out, doing a price insensitive downsize, and/or buying a “first home” for family members. More pressure on the middle market.

Similarly our net new residences and net inward migration is still insane. Something like 40k residences and 500k new people. Interest at a historical norm of 7% isnt going to do anything in light of that. Especially with good odds on RBA decrease this year or next.

Extends to the rental market as well. Minus the inner city covid pause rents are also tracking 10% or higher gains year after year.

So yes tax insanity, finance, and “investment” memes have cooked us. But I dont see anything getting materially better in light of that supply and demand.

Re: Why Ireland's housing bubble burst

#49

Post by randomdata »

all2 wrote: post #4
wredue wrote: post #2

I’m not sure what’s different, but I will chime in to say that I’ve been reading about Canada imminent bubble burst for 15 years. I mean, eventually someone may be right, but had I let this get to me and not buy my house 12 years ago, I would be in a much worse position today. Be careful with people trying to predict how markets will move.

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…

> I'm familiar with old blog posts from back as far as maybe 2005 that predicted the crash in 2008 accurately.

The housing crash happened in 2006, though. I suppose being able to predict the crash even a few months in advance is impressive, but as you're hazy about the years, it is possible that it was really 2006 and the crash had already happened, which isn't so impressive.

2008 was the securities crash. That is when the mortgage market started to crumble under the weight of housing no longer having the value it once did with mortgagers left underwater. The housing market had to crash beforehand in order for this to happen. Once one saw that the housing market had crashed, it wouldn't take too much of a Kreskin to realize securities were on the horizon.

Re: Why Ireland's housing bubble burst

#50

Post by chii »

randomdata wrote: post #46
TulliusCicero wrote: post #29

Earlier quoted context omitted.

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.

The most reliable indicator of a shortage is abandonment of a price-based mechanism in favour of something else, like a lottery or needs-based selection. If price is able to select the buyer, then you can't possibly have a shortage.

> If price is able to select the buyer, then you can't possibly have a shortage.

unless you cannot produce regardless of the price. This is sometimes called a market failure.

And it recently did happen, during covid. A lot of goods went up in price - and even then unable to procure it regardless.

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