June 5, 2014

Is housing too important to be left to estate agents?

Posted in Ireland · 66 comments ·

It is hard to believe that we are at it again, but we are and it’s kind of surreal. I was walking past a small end-of-estate, three-bedroomed semi the other day. It is for sale, and it is going for auction – a sure sign that the mania is upon us again. The “for auction” sign is enough to torpedo the spirits of even the most optimistic first-time buyer.

Once you see “for auction” you know the estate agent plans a bidding war, where the winner takes all. The winner is likely to be a cash buyer, who will elbow out the first-time buyer and hope that the same first-time buyer will become his tenant.

This particular auction sign bragged that the “site” had potential for another house. The “site” in this case is the smallish back garden in a run-of-the-mill 1960s estate in Dublin – the type I was brought up in at a time when a decent back garden meant room for a 20-a-side soccer match. (The days when we had jumpers as nets, defining the size of the plot, not estate agents’ sales patter.) So yes, maybe there is just about room for a house – but we are talking a Wendy House or a Leprechaun house, a place for the little people to live.

Across the road from where I am writing, there is another telltale sign of the panic, this time fomented by another estate agent. The photo here reveals the state of mind of the estate agent as he goads renters to get in quick and pay up pronto, otherwise they haven’t a hope of getting a place to live.

Indo Photo

The “sorry too late” taunt truly sums up the sense of hysteria that some estate agents are obviously happy to stir up in the minds of renters.

The truth, for me at least, is that this sign suggests that he is not sorry at all, but is in fact delighted because the more panicked are renters, the higher the rent he can get. The higher the price he can get, the more cash buyers he will attract into the market (to become “tuppence-ha’penny” landlords) and the more cash buyers, the more auctions the estate agent can preside over. And what does all this mean? It means big juicy fees.

Now you can hardly blame the estate agent for maximizing his profit. After all, that is what he is paid to do.

But should the Irish State yet again stand idly by and allow its citizens be mortgaged again in what is likely to be another monumental transfer of wealth from young workers to older landlords and landowners? Should we allow the housing market – the market for that most basic of human needs, accommodation – be used as a “get-rich-quick-scheme” for the already wealthy?

Forget for a minute the self-evident equality issues at stake here and let’s consider the economy, which has to compete in the real world.

If you take a bit of altitude from the streets of Dublin, and think about the impact of unnecessarily high house prices on the competitiveness of our economy, you can see the inconsistency at the heart of economic policy here.

Ireland has to pay its way in this world. This means that our living standards are ultimately determined by whether we can sell stuff to the rest of the world at a profit and the extent of that profit determines our standard of living. Therefore, all prices in the country matter.

The first thing to appreciate is that cheap accommodation, like cheap energy, is a huge positive to the ability of the economy to compete. Countries with expensive housing are automatically at a competitive disadvantage.

Consider how can a country with high costs for housing compete with a country with lower housing costs? Either it is better at producing stuff, or it has smarter people, or better systems or a massive inherited stock of capital that means it is already rich. In the absence of any or all of the above, a country with high costs of housing must possess lower costs elsewhere to compensate.

Given that the biggest costs in any economy are wages, if property prices are high, either wages will have to be lower or, if they are not, unemployment is likely to be higher.

Do you begin to see the picture? Expensive property in a highly open economy is not a sign of wealth but an indicator of likely future poverty!

Ireland is the least densely populated country in Western Europe and yet we have now the fastest-rising house prices.

So what can be done about it?

The key is to get more and more houses built and in the time that it takes to build them to ensure that people don’t panic and drive prices upwards. The worst thing that we could do is allow prices to spike up now and then allow supply to come on stream too late. This is what happened in the 2000-2007 period when we ended up building far too many houses, too late and in the wrong places!

The way to stop house prices rising dramatically from here is to stop credit going to housing, because ultimately credit drives asset prices. This can be achieved by preventing banks from lending excessively against property. If we were to lend against the average house price over the past 20 years, rather than the last price rise, it would prevent the inbuilt dynamic which links banks to credit to house prices kicking off again.

One other move could be to introduce “use it or lose” it rezoning, so that developers can’t sit on land banks and have to build within a certain timeframe.

This would accelerate building because they’d have the incentive to build.

Both of these moves are part of an arsenal that could be deployed to prevent us making the same mistakes again.

You may say that it is all a bit too early to be getting worried about this again, especially when in lots of parts of the country the property market is moribund.

That’s a fairly understandable position, but we Irish have a bizarre psychological relationship with land and houses and you can never be too early.

The only way of preventing bubbles is to be early, when everyone else is nonchalant. If we wait until people get into a frenzy again, it will be too late.

David McWilliams hosts the Dalkey Book Festival from June 19 to 22. dalkeybookfestival.org


  1. Tull McAdoo

    ZZZZZZZ Adam

    • Tull McAdoo

      Sorry couldn’t resist Adam. All fine in Perth ;)

      • And nearly bedtime for you Jim!

        Glad to hear it.

        Site stopped working for a while, said my password was wrong – even though it’s saved in the field.

        Site does bizarre things sometimes.

    • cianireland

      Controlling credit, at this stage, plays into the hands of the now infamous ‘cash buyer’. Not a good idea in my opinion.

      Increasing supply of property while adding access to credit seem to be the obvious options on the supply side. On the demand side the govt could tax second homes and investment properties to reduce demand. Bear in mind that our population and banks are chock full of negative equity. If we can’t re-leverage the property market we will stay underwater and need to consider other options to get the middle classes out of debtors prison and free the banks to lend to SME’s. SME lending being one of the few real job creation interventions with a fighting chance of working.

      Sure in an ideal world we would have sensible 70% mortgages at max 4 times income but it is not an ideal world. Without going rogue and burning bond holders/leaving Europe etc there are few sane options.

      I don’t see how Estate Agents or government mandates on lending can work. Neither are smart enough to impact meaningfully.

      Re-zoning land, lending to hated developers and asking them to build new stock while taxing multiple property/non-domestic owners seem about it. Pretty standard.

      Ideal world banking regulations are a good goal. But we need to get our banks (specifically their loan books) looking like ideal world banks before we can start the process of getting them to behave like state controlled utilities.

      • GF

        Why do people in Ireland want to buy property instead for renting for their lifetime?

        Issue 1 for Government to Sort:
        Legislate for REAL tenant rights with the best-in-class rent control. At the same time ensure the landlords are protected adequately. A wonderful, well thought out, envy of the world Tenant Laws.

        Why do the banks insist on lending too much in these bubble circumstances? Why can we not trust that each decade they will behave like professionals? We can’t, so:

        Issue 2 for Government to Sort:
        Legislate that the maximum a single person can borrow is 4.5 times salary and for a couple 4 times the joint salary. Salary cannot include overtime (no matter how many years it has been happening) and only the average of the last five years bonuses. Sorted, no more mad credit for houses ever.

        Why are all these cash buyers having so much fun? Is it because of the removal of capital gains tax? Or is it simply because there is no real instrument in place to punish those buying a holiday home, a city apartment that the kids can use when they go to college, family home and another home for the golf clubs – there is no incentive not to own property?

        Issue 3 for Government to Sort:
        Reduce property tax for all principle private residences. Increase property tax for all second properties owned by 25% for the second, 30% for the third, 35% for the fourth, etc. This way if you are a real landlord who knows what they are doing they can budget properly knowing that this 15th property they are buying will incur X amount property tax, so it is only worth X price to me to make a profit. This would give the average Joe more money to go out and spend as their property tax would be reduced, and it would curb the cash-buyer inflated bids due to financial sense (cost benefit analysis).

        But these simple steps will not be taken by any government because:
        1. I think all the parties still get their biggest contributions from agents, builders and other vested property persons – and those persons say NO.
        2. The banks are being stress-tested in October this year. If the value of all those properties with mortgages and buy-to-let mortgages have somehow increased by 25% then a large amount of negative equity is removed and the banks look “fitter” (no bail-out needed thank you). Serious rumours, which I actually believe, is that NAMA (or others) or giving certain developers money to develop land with the caveat that they must buy the following properties at the following prices. The person (under agreement with NAMA (or others) then has to wait for the first bid to be made, then they go in with their ridiculous bid – as dictated. Three properties friends bid on in the last two months: a) Asking price 420,000.00 (Stillorgan), they bid 415,000.00, next and only other bidder 640,000.00. b) Asking price 120,000.00 (Arklow), they bid 125,000.00, next bid and final winning bid 265,000.00 (no other bids at all). c) Asking price 325,000.00 (Ringsend), bid 295,000.00, next and only bid 545,000.00.

        We are all being hoodwinked me feels.

      • LOBrien

        Sure, taxing landlords with multiple properties might discourage the new cash buyers but would this not lead to an upward pressure on rents.
        Why not limit the number and/or type of properties a landlord can own to maybe two or three and give them 3-4 years to sell on their surplus properties to genuine home buyers. This would both increase supply and cool down the market.
        Landlords would now become (reluctant) property sellers and would now take an interest in the state of their offerings. This could create a mini building/renovation boom while these ex rentals were made ready for sale.
        Would like to see some smart economist do some projections on how this might pan out.

        • GF

          Hi LOBrien

          Good point. I just worry that many landlords are guys who only have one or two properties to rent and thus they lack the experience needed to deliver high quality rental units (although I might be miles off the mark here).

          I always think that companies with a couple of hundred units might be more professional, well trained, and due to scaling able to provide better quality furniture and fittings? But maybe not.

          In my experience of renting it is always the lads with 5 or less units that release utter illegal crap onto the market (but I have also noticed that people with only one unit to rent really care about it and its always very high quality).

          Interesting point and it could work, but I am not sure.

        • cianireland

          For those who can afford to, buying your own property is a smart move, in my opinion.

          I agree that we should have a more accommodative rental situation. Better and longer term lease agreements but also longer-term mortgages.

          That said, I would rather own. Its very Irish to glibly laugh at our ‘property fixation’ and scoff at people who won’t rent but look at the average wealth of a German/other renter country vs Irish/Spaniard. Property in their countries are owned by a small rich elite and the net wealth is broadly 60k vs 300k… Own property would be my advice, just buy wisely and remember the cycle is long. Sitting on your hands from 2002 to 2007 took guts and an iron will but a few smart people did and are happy now.

          You don’t have to live in the property you buy, so you can have the mobility of renting if you want. I defo advocate property ownership. It is particularly valuable later on in life when your income stops. The roof over your head will hopefully be paid for or you can rent it out, with the rent indexed roughly to inflation ensuring a relative income at any stage.

          • Moonlight Graham

            Some ‘heavy hitters’ in the ball park tonight and some plays are a little reminiscent of Shoeless Joe Jackson?
            Anyway,please allow a little elbow room for the rookie, as i “clear the mechanism ” ;)

            As our host summed it up recently – “it’s the vested interests that need to be faced down!!” – Precisely !

            The MSM spin-doctors are only itchin’ to launch another enthusiastic property phantasma of Illusion v. Reality,[preying on buyers' emotional state of mind and purposefully stoking the fire of irrational behaviour by wilfully instilling fear/panic that "if you don't buy now,you're gonna miss out,so buy now,NOW!!"] but aside from banksters, property pornographers and other cheerleaders,a worryingly high % of the estate agent’profession’,over the course of the so-called “Celtic Tiger” and right up to today,devolved into a bunch of cattle rustlers!

            Yea i said it

            It needs saying, c’mon !

          • Moonlight Graham

            This ‘wild-bunch’ of opportunistic desperados (only short of Stetsons and spurs!)were/are in a marketplace with zeeero worthwhile Gov’t Action /Intervention – i.e. almost zero regulation – and this played a pivotal role in our whole bloody mess. And No Change still today.I know,i know regulation is a snooze word for some,[ with cynicism and a warped logic of "it hasn't served us well in the past,so let's give up on the idea" ] but without BIG crucial changes,IMPOSED on these ‘service providers’ [who,are actually often 'shadow speculators' with free chips and betting on YOUR property for their own gain,in addition to an agreed fee ! Whatamess! ],the status quo will remain (and deteriorate further)and they already have simply waaay too much power over the Irish citizens and indeed the family unit.

            Some of these half-cocked cowboys,have the family values of Henry VIII and seem especially motivated in lassooing ‘greenhorns’ and certainly pose an immanent Threat to our economy,yet again !”Lessons learned?”.

            These PRIVATE consortia owners – of Franchised estate agents(a frighteningly small number of people) – can strongly influence, control and determine the rate of ebb and flow in the property marketplace,more than most people may fully appreciate.

  2. stefanooldrati

    Houses in South Dublin same street, one with double garden and 2 floors and 175square meters for 4300 euro per meter, the other a cottage without garden one floor (bungalow maybe) and 115 square meters for 5200 per meter… and for sure people will buy both…

  3. Tull McAdoo

    This article is very important in that it raises the issue of Ireland’s competitiveness and by extension how, when and where it’s economic recovery is to take place.

    The Government believes OR at least the boffins in the Dept.of Finance and their “ass covering “external consultants believe that a recovery is dependent on the “banks” lending back into the economy, making credit available to where a sound business case can be made for its use ( at least that’s where they should be targeting it).

    The boffins talk about the banks recognizing their losses from previous bad lending (mainly property) and moving on. The boffins tell us through their spokesman Headmaster Noonan that that was the reason they were given taxpayers money in the first place and so the speil goes in any case….however……

    What the boffins have failed to realize or at least throw a blind eye to is the fact that in order for the taxpayer to get back the initial bail out money it gave to the banks it means that the taxpayer has ALSO to REFUSE to accept their losses on the very same bad property loans that the banks have made.

    This means that the banks have been incentivized in a way to inflate the property industry in order to give the taxpayer back their money and NOT crystalize losses on their balance sheets, return to private ownership and shareholder value and accountability.

    The boffins have to recognize the losses that they made on bad property deals with the banks and more importantly they have to accept that the bad old days of record stamp duty and other property related revenues were not SUSTAINABLE.

  4. kinsele2

    “The way to stop house prices rising dramatically from here is to stop credit going to housing, because ultimately credit drives asset prices. This can be achieved by preventing banks from lending excessively against property.”
    Judging by the billboards and boom style ads on every corner in Dublin telling us that “we are lending” it seems this is exactly the opposite of what is already happening?
    At the very least the banks should be made to publicly explain why they are lending like this again, giving mortgages to people 6 / 7 times what their yearly salary is, while those salaries are falling year on year, and how they think it’s good for anyone other than themselves.

    • uncle fester

      They are not lending. Mortgage drawdowns have been and still are declining.

      • atchman

        Indeed the whole thing is a false bubble on the backs of mad cash buyers who clearly don’t care they are paying silly prices for these properties in Dublin and it’s surrounds. However that money will run out and the market will calm down. David is absolutely right though, something draconian needs to be done to control us mad Irish, to save us from ourselves.

        • Irish people think they are way more important in the world than they actually are.

          Most people overseas have never even heard of this place.

          • cianireland

            The fact that we are unimportant, tiny, and at best an after thought, should dictate our policy.

            As we have ceded all of the significant powers to Europe, for now at least, we need to pick policies that acknowledge this. So the first step is to second guess what Europe will or won’t do to help us and then draft policy.

            Europe will do very little it seems. So we will continue with broken banks that we can’t directly fix as it would hole them and indirectly us again. So we need to consider property valuations and how to cleverly use credit to re-leverage, or not etc and so on.

            Removing credit, and or fire selling all the underwater houses to create supply, while there is a credit vacuum will merely sink us further. Its a sad reality that we have a Hobson’s choice re leverage… i m o

          • Bamboo

            Absolutely true Adam

      • michaelcoughlan

        Very important post. I presume its based on statistical evidence? I would be inclined to agree with you so this nonsense happening in dublin seems to me to be a flash in the pan and the higher end of a bull trap. The govt wouldnt have to take another 2bn out of the economy if the recovery was as strong as they are saying.

  5. uncle fester

    A couple of things. Dave is totally ignoring the effect our zero repossessions policy is having on the market. It’s happening in parts of the US too and is called “foreclosure stuffing”. Basically, instead of being forced to sell, distressed mortgage holders are not put any pressure to sell and are effectively holding the market to ransom.

    The government is constantly meddling in the market. First there was the mortgage interest relief extension. Currently, it’s the capital gains tax exemption that is seeing cash pour into the market as it seeks yield that is not available anywhere else.

    Dave is also forgetting that over half the market is cash-only so restricting credit won’t help. We need to wait till the cash runs out.

    • michaelcoughlan

      “We need to wait till the cash runs out”

      I agree and then the graph drops and the real recession begins which is the way it will play out based on McWilliams graph a few weeks back which showed the trend from boom to bust.

    • Colin

      100% correct uncle fester, and likewise in the rental market, rent supplement payments are keeping rents artificially high. easy to tackle both, but the will to do it is severely lacking.

  6. A palm tree… That’s just priceless delusion right there.

  7. Colm MacDonncha

    I’ve been at a couple of these property circuses recently and cannot believe the insanity that’s unfolding…The cash buyer as you’ve said is skewing the whole thing and to see young couples leaving bitterly disappointed having been outbid by friends of their parents is heartbreaking. These same young couples are being out bid in private treaty sales as well as the estate leeches phone around all the prospective buyers to squeeze the last possible drop out of the golden goose. A simple change in the system to charge the seller a fixed fee to sell the property rather than a percentage commission,a sealed bid system to discourage the round robin knockout of prospective buyers that we now have,and a properly regulated reality costed rental market where a tenant has a long term fixed rent leasehold as in Europe and the UK and is not subject to the whims of greedy landlords hiking up rents at every opportunity. Surely Banks should be forced to inject a higher percentage of liquidity into industry and SME activity rather than the no brainer of lending to the white elephant of housing.
    Never going to happen as long as Paddy has to have the great big house, the very big house in the country….

    • Colin

      now is the time for the penny to drop for these young couples. the state hates them. get it? it wants to bleed you dry guys.
      wake up to the gombeen reality!

      solution: emigrate to a country that will treat you and your young family in a fair way, afford you a good lifestyle, and probably a superior climate too.

  8. [...] Is housing too important to be left to estate agents? | David McWilliams Sign in or Register Now to reply [...]

  9. [...] got me thinking of another popular myth: that Ireland doesn’t do planning very well, just today David McWilliams is writing ‘we Irish have a bizarre psychological relationship with land and hous….  I don’t quite buy that. Though there can be a certain antipathy towards planning and land use [...]

  10. McGoo

    As several people have noted, the government will not do anything to stop the crazy rise of house prices, because those rises can make the balance sheets of the banks, Nama, bondholders etc. look good, and *temporarily* make Ireland look successful. At least until the next election, which is the maximum planning timeframe of every government.

  11. Adelaide

    The disincentive trend.

    I was recently at a former work colleague’s farewell night, meeting a few old colleagues, past and present, from a well known Irish tech company. What struck me was that three former ‘star’ colleagues (mid-late 30′s males, ridiculously talented creative technicians who are the real deal) and fully expecting to hear that they’d been promoted I was gobsmacked that they had not only jacked in their jobs but by extension their careers. Their young families had been renting, riding out the decade of boom-bust till they could afford a Dublin home, and they’d simply lost patience. With their cash deposits for a Dublin house they instead used it to buy outright their own houses in rural Ireland. Mortgage free/rent free they are now collecting the dole while doing the odd ‘grind’ freelance work. They were relaxed, content and healthy looking, and financially secure. This is an extraordinary turnaround. They had gone ‘hippy’. Without the incentive of their own Dublin home they saw no ‘value’ in working the long hours the job required, their careers would always require long hours, so what is the point in working in order to pay off someone’s else’s mortgage or enrich a rentier.

    Also they had absolutely no problem with collecting the dole and working nixers as they all felt they had been screwed by the system and this was payback. And that this sentiment was shared among their peer group. They predicted that this form of ‘early retirement/cheap rural home ownership/mortgage free-rent free/nixers/financially secure but modest lifestyle’ life choice will become evident in society.

    When genuinely proven and talented people throw in the towel, how can an economy function when its best contributors no longer see the ‘value’ in participating in the economy?

    • michaelcoughlan


      I am a country person and it’s gone further than that. People are going off the grid completely. Whats happening is people are buying a small bit of land and installing a luxuiorus MOBILE home.

      Bore your own well and use a composting toilet. The MOBILE Will be got for 50k. No property tax, no water charges, no need to connect to municipality waste, no mortgage, no planning required no fuck all. A modest salary or dole will keep you very comfortable if you bake your own bread, and have your own eggs from chickens etc.

      • Pat Flannery

        Mayo and Sligo are full of people doing exactly that, except they are not from Dublin they are all from England – and drawing the dole too!

        • Colin

          Let’s hope they don’t have cockney, brum, manc and scouse accents then paddy. Polluting the clean west of Ireland air, I tells ya!

    • uncle fester

      What a ball of nonsense. Claiming the dole while owning a valuable asset? Every heard of the means test?

      • michaelcoughlan

        i think you are entitled to the dole based on whether you are unemployed or not. Assets don’t count I think.

        • Colin

          Correct Michael, you can spend all your cash buying as big a property asset as you can find, live in it as your sole and primary residence, and claim the dole (unemployment benefit) if you have your PRSI stamps and were made redundant

          • Gerard-e

            The dole is means tested. You get it at first regardless while you have stamps and that does not last more than a year at most. After that, you are means tested and if you have a house sitting idle in the middle of the country side, tough, you can eat it to survive as far as social welfare is concerned.

    • Colin

      a case of the penny dropping, and doing something positive about it, rather than ignore it and staying in the herd.

  12. As there’s no credit bubble, who are the cash buyers? Pensioners? Foreign investment?. Could this be covered in a future article David? Pensioners as cash buyers probably means they are holding on to the belief “safe as houses”, as there’s nowhere else “safe” to put pensions. If this is the case properties should level once the cash runs out. However non resident foreign investment would be far more insidious (and I’ve heard from tradesmen that this might be the case).

    • uncle fester

      Public sector pension lump sums are a big source of it. We sold our apartment to one of them who was bidding against another lump summer.

  13. stevedonog33

    OK ,where to begin. My understanding is there is not much data to make much assertions about supply and demand issues etc. Have a read of Simon Jenkins article in the guardian about this…http://www.theguardian.com/commentisfree/2014/may/21/no-housing-crisis-just-very-british-sickness

    Even in Britain, with 70 odd million people, it doesn’t appear to be so much about supply and demand, but rather distribution. The fact that the majority of houses being purchased are for cash suggests mostly pensioners or inherited wealth buyers. Again, this feeds into Thomas Piketty’s argument regarding inequality etc. And as many people on this site are pointing out governments are happy to go along with it as there is a feelgood factor etc. and increased tax revenues. Of course, the devastating long term effects are ignored. Regarding David’s article about the benefits of an economy with low cost property etc. I don’t really buy into that I’m afraid. Ireland’s economy is quite low-skilled, manufacturing, financial services (tax avoidance ), food etc. It’s not like we are some sort of creativity centre that attracts talent from around the world. I don’t think it is much of an advantage for Ireland to have cheap property, as our economy is so skewed towards tax avoidance that the sums of money involved are enormous. If we had a thriving SME tech sector (and I acknowledge there is reasonable activity in the IT sector) that needed to attract highly skilled people then you could make some argument along those lines..

    • 33square

      Could count Irish IT SMEs on one hand. Ireland currently has an allowance of jobs provided by international IT firms because Ireland does what it’s told. If Ireland were to “burn the bondholders”, implement sane immigration and welfare policies and laws, not hold subsequent referenda about issues until the “right answer” is reached, Ireland would find itself very much up shit creek, without a friendly paddle. The easy money provided by Europe to “build the roads” was the bait. Ireland Inc has been over a barrel with its pants around it’s ankles ever since (in fact long before that). The amount of lube provided will be directly proportional to our obedience to the overlords. Any potential exit strategy from our predicament would be too painful for a government to sell to any populous so it will only happen if things become untenable for enough people. The overlords won’t allow that to happen. In a country the size of Ireland, the scraps they feed us to keep our economy alive are peanuts in the grander scheme of things. Our core strengths as an economy could be intelligent, environmentally friendly, clean, organic, local. But we’re not striving to maintain them, never mind maximise them. Instead we keep playing the big boys games, living on their scraps. We’d be foolish to believe there’ll be any loyalty there. Our continued privileged existence suits at the moment. It might not in future.

  14. Bamboo

    Re: “sorry it’s too late”
    Have you seen posters around of “house wanted in this area”? Please call this number.
    These posters are usually put randomly in an area especially on trees. That is what I see in the big cities in Asia. This is clearly to show how you can boost up your area.
    I am surprised I don’t see it in Ireland.

  15. SMOKEY

    BARTHOLOMEW???? please tell me there is not someone with signs that say BARTHOLOMEW as their first name on them.
    This guy is desperate and needs every penny.
    Bet he never gets laid unless its paid for. A hooker in the vernacular.

  16. CorkRob

    One Solution:

    50% Stamp Duty for Non Owner-Occupiers.

    Rebate of extra Stamp Duty over Owner-Occupier Level over 20 years, if signed over on long term agreement to Local Authority for Social Housing, at pre-determined fixed rents.

    That should allow the 1st Time Buyers to compete and draw the sting of the Cash bidders.

    Oh, and castrate all greedy Estate Agents while you’re at it !!!!!!!!!!

  17. Fat Tony

    Whats with all the hate on cash buyers?

    At the bottom of the cycle in 2013, I bought a (rare) repo rental property a stones throw over the dublin county line, about 20 minutes from my tech job on the outskirts of Dublin.

    I was early 30′s, single, didn’t need a family home but grabbed one now so I would have it for when I do. I was a cash buyer and I a outbid a couple in their 50′s.

    Whats wrong with that?

    What is the profile of a cash buyer?
    All those “kiddults” mocked on RTE for staying at home, out of debt, upto 2007. They didn’t spend their money on sweets you know.
    Revenge of the kiddlts ha ha!

    • Fat Tony

      P.S. Someone of kiddult status for just 4 years, who saves everything, has a house for cash. Not a tall order to do.

  18. michaelcoughlan

    “Whats with all the hate on cash buyers”

    Nothing. The problem with collapsed prices is that a property is being sold for less than the cost of production. This means the previous owner will have losses with state owned banks. Those losses will be recouped from you and everyone alse through higer taxes and bank transaction fes. There is no such thing as a free lunch. You have the good fortune to be in the right place at the right time and that’s it.

    Take care,


    • cianireland

      We’re bound to needing buyers and the govt are likely happy to take them whatever way they can get them.

      We need to refloat our property market to help save ourselves and our banks. I’m sure there are a lot of people who hate that notion but its the way it is if we are going to maintain any stability in our economy.

      There is a lot of in-fighting going on in Ireland and all the while wealth from outside Ireland has and continues to make a killing buying our assets at their cheapest. They will either flip them back to us when we get back to the races or will rent them to us at a handsome profit.

      As Templeton said the smart money buys ‘when there’s blood in the streets’.

      I’d love to have been a cash buyer in 2011!

      • Fat Tony

        Housing is macroeconomic consumption.
        Property reflation is not macroeconomic production – its parasitic. They money is there already, we just need to build more houses. Time to let the green belts go.

  19. Fat Tony

    I am really sure that a significant proportion of cash buyers are just the swings and roundabouts of kiddults (a huge sector) with a good sense of timing – the collapse of the ponsi economy was just the break they needed. What do people think, they only represent 0.1% of cash buyers? What do ye think happened to their wages?

    • Fat Tony

      Otherwise known as “Pent-Up demand”.

      • uncle fester

        The “pent up demand” is emigrating the country as fast as Ryanair will carry them. Plus there’s less of them. 70′s baby boom are all housed by now. The generation after them is 30% smaller. They are decimated with unemployment and are emigrated in large numbers. Population growth has stalled.

        Demand is actually puny. What’s happening is that supply side restrictions are strangling the market and forcing the little demand there is to vastly overpay for poor quality stock.

  20. Fat Tony

    Well the kiddults who had graduated by say 2003-5 would have been well established before the recession hit, and these are the one soaking up the insufficient supply by paying cash. Sure those who graduated therefter had to emigrate (by definition never became kiddults), but the supply of new housing completions reduced in proportion too. So don’t rule out that it is genuine young-ish pent-up irish people (like me) buying with cash. Maybe David should do an article on where are the kiddults now! Coz there is a lot of jumping to conclusions about who the cash buyers are.

    • Colin

      Firstly, I salute you for not caving in to peer pressure and Pravda RTE TV Propaganda in 2005-07 to get onto the property ladder.

      Secondly, I hope to God you paid your parents/guardians a nice chunk of your wages each week (€150 per week for rent/bills/food) while you stayed with them would be reasonable, or was this waived to help you speedily on to the property ladder?

      Thirdly, please advise what industry you work in and what your starting salary was in 2003/4/5 and what it is now. Are you in public or private sector?

      Lastly, how much did you manage to save and how long did it take you to save it?

      Yours is an interesting case study.

      Looking forward to hearing from you.

  21. Colin

    There was a sign (perhaps still is) on the N7 Dublin to Limerick road, on the Limerick bound side of the road, as you approached the outskirts of Roscrea. It read ‘You have just passed Timmy Phelan’s Furniture store’. One day I rang the store, telling them that I was sorry I passed it the last time, and enquired about them maybe putting up a second sign ahead of the approach to the junction from the Dublin side, alerting me to the hidden right turn I would need to take to get there. They told me that they had no intention to do that.

    I think the sorrowful sign was just placed there to annoy motorists, and distract them from driving. I just hope no one has been killed or injured as a result of the sign.

  22. StephenKenny

    As I understand it, economic crashes occur in three waves: first the normal people lose their money; then the smart people lose their money; and finally the very smart people lose their money.
    We’ve cleared phase one, and are starting towards phase two.

    • coldblow

      You might expand on this please Stephen. How will the smart and very smart lose out – through further bubbles and busts? If I understand Tull right, he predicted (and this is going back a good bit) that the ultimate aim was for the very rich to asset-strip bankrupt states.

      For what it’s worth I’m probably one of the smart people (but not very smart), more by luck than judgement (although I never believed in property fairy tales seeing as there was a big burst of the bubble in England shortly after I came here in the mid 80s).

      There was a lot of talk on this site (and elsewhere) about five years ago about burying gold in fields and buying soon-to-be scarce machinery, etc, as well as switching your bank account to Germany. (This is turn followed urgent warnings to get your money out of various institutions before the bank crisis – in fact I moved my paltry SSAs (or whatever) from the Irish Nationwide into the Post Office on the strength of it, but it wouldn’t have mattered if there hadn’t been a bank guarantee because the Post Office messed up the paperwork.)

      I suppose this is all going to start again.

      • StephenKenny

        The form, and the timing, are obviously unclear, and even if I had confidence in a view, I wouldn’t put it up here.

        All crashes, as opposed to common or garden recessions, work in this way. This one is really is new, from one point of view: it’s really global.

        There are many consequences of this, for example, anyone waiting for the dollar to collapse is going to be waiting a long time – there isn’t anything for the dollar to collapse against. The market indicators that we’ve relied upon since the early 80s to enable us to predict economic movements are no longer indicators of economic activity, but central bank intent.

        The central banks warded off collapse in 2008 & 2011 by getting together, and gradually increasing their open presence in the financial markets. Today, the ECB has gone negative, and every central bank is openly intervening to hold every market index within acceptable ranges. They have to. They need low interest rates, so everything that could push them up is being held. We are awash with completely contradictory indicators – it’s absurd really, when you look around, but it’s only absurd if you believe that the indicators mean what they used to mean.

        Gradually, these interventions and statements of intent are becoming stronger and more open, until, one day, as was predicted 6 or 7 years on this site (I forget by who) people will stop believing the central banks assurances. That will be the end of phase 2.

        Phase three will occur essentially because the last 20 years has created a degree of malinvestment so great that it is impossible to unwind. It will have to crash. That will be where the very clever money gets wiped out.

        Of course some will survive, but I fear that by that time we will have elected governments who have promised to ‘sort things out’, and we’ll be faced with popular authoritarian parliaments. Who can blame them, when the countries are now in such a structural state that only the crooks prosper.

        In short, nothing has been fixed, the ‘muscle’ of western economies is atrophying, and there are loads of other medical metaphors you can think of, about someone being kept alive by drugs, not good health.

        • coldblow

          Thanks Stephen.

          Yes, it was six or seven years ago. I knew that but I was trying not to let on that I’m that old! The loss of confidence in the central banks (which seem to be working in concert) will imply the loss of confidence in fiat currency – that much was certainly predicted. As for the unwinding of decades of malinvestment, the approach which has been taken so far (as argued by the likes of James Kunstler) has been to try to fix it by pretence or even accounting fraud.

          My own personal view is that the loss of credibility in the “economic indicators” is mirrored in, and quite possibly caused by, a wider loss of sense and meaning in public discourse and intellectual life.

          I wonder if Tull still sticks by his original prediction.

          • StephenKenny

            I agree, it’s causing a loss of confidence in the whole system.
            ‘Cognitive dissonance’ was a warning thrown around back then – probably part of the reason that the US & UK seem to be working so hard to start WW3, and why everyone seems to have completely lost what plot there was.

    • michaelcoughlan


      I think we are in phase three;


      Warren Buffett explains it as such if I remember correctly. Normal recessions are very important and beneficial to prudent people because they expose the scumbags and exuberant and the assets get returned to the prudent and rightful owner in the form of fire sales.

      Buffet further explains that prolonged recessions bring down the good with the bad and turn all this on its head which in my view is whets happening now because the world is saving JP Morgan and Goldman Sachs deutche bank etc and ordinary prudent people are being liquidated and forced to pay extortionate levels of taxes as a result.

      When the population voted FOR the fiscal compact they handed the government a mandate to assets strip every citizen and business in the state to facilitate this utterly perverse activity of saving the profligate by shafting the prudent.

      Mind boggles.

  23. Moonlight Graham

    There is,even today,little worthwhiile regulation governing these ‘yaaahh-hooooers’,who often see their clients as prey and have seriously dubious standards of professional practise and with no sheriff in town enforcing the LAW,criminal,yes criminal gazumping is widespread! Fact!One can almost expect that one’s Rights will be dishonestly violated!

    We’re talking about possibly the single biggest and scariest purchase, maybe in one’s lifetime and yet the citizen is forced [by Gov't INACTION]to fearfully swim the property waters with piranha and sharks!

    Where’s our Consumer Protection ?!

    I can’t see LOST TRUST in this profession being re-earned,until they are more heavily regulated and until this is realised,i for one will have little choice (due to self-preservation)but to continue to consider a significant % of them as rattlesnakes – the nature of which is to look for an opportunity to strike and feed!

    To have one’s “”dreams just brush past you like a stranger in a crowd” – a net result of sorcery from these property gazumping ‘Obeah’ men,is another national disgrace!They are POISON for our crippled economy – families just trying to buy a home getting shafted in a concerted effort to re-inflate this bubble,taking Everyone in the direction of another National catastrophic crash,what a shaaam!!

    An Estate Agent is to our economy,what planetesimal “Theia” was to the Earth circa 4.5Billion years ago!!

    A big shout out to the Tyler(s) @ZEROHEDGE.COM who said recently ;

    ” We have nothing to fear,but the lack of fear itself ! “

    • Moonlight Graham

      I was very close to settling down in Oregon back in ’07/08 and i met with many estate agents/realtors there,and only five miles outside Portland – a city of 1+ million people – i could have bought a five acre plot and built a timber framed,two-storey home,~2500 sq feet,for a then all inc price tag of EU 220,000.What might one have bought five miles outside Dublin then for EU 220k?

      U.S. realtors had a competiitive battleground too right,but the entire process,including bidding,was super transparent,ethics was more than just a punch-line and they observed very high codes of conduct and there was plenty of regulation,whose power to rescind licences and also aggressively enforced stiff fines were feared and concentrated their minds wonderfully,not to ‘stray’!

      And in terms of relevant job qualifications,they seemed to have qualifications ‘up the Wazoooo’ and yet charge ballpark the same % commissions as Ireland,for delivering a far superior service.[ btw,off topic a little,but did you know that in The United States,you have to secure a Bachelor's degree before you start medical school?We in Ireland go straight into pre-med from secondary school, right,but American students must get a degree first,then start pre-med![ Imagine a decade+ of those Tuition fees!Imagine the Loans/Debt!Phew!]

      The same cant be said in Ireland re qualifications,or the difficulty of acquiring licence /permits /insurance to trade etc. Until Feared regulation,including bringing Planning back to Reality happens,TRUST will remain to be nil for this sector.It’s up to us all to light a fire under the arses of our Gov’t politicians to whip this ‘industry’ into shape and boost their poor image of being another crowd of Dick Turpins that we need to worry about!Maybe if all estate agents were forced to offer the same charge,then only quality of service might differentiate one from another and then,with other drastic changes of course,the consumer may receive someSAFE,transparent ,honest and confidence inspiring customer centric service and maybe in time this improved harmony may help the cause in us seeing affordable housing emerge,or is that just folklore ?

      • Moonlight Graham

        So many Future Threats from within this sector still remain –

        Banks are on a tightrope and want/neeeed the high propeerty prices to continue in order to create the illusion that their balance sheets are not in tatters and to hold back the reins on negative equity and project an “all is ok with our capital position” – a mirage induced delusion.

        Property prices still haven’t dropped to where they need to and so we continue the avoiding the pain of a reset – an illusion of Reality that we need to face up to?

        Scheduled mass re-possessions and their ramifications. What was ‘the word around the campfire’ recently on this blog? – A huge new arrears department is soooon to open in one of our main banks?What’ll be the impact of this fuse being lit?

        The fate of Long term in-arrears? (in-limbo more like!)

        The implications for Ireland of an aggressive QE programme by ECB?

        Bank stress tests – To separate Fact from fiction,or more smoke and mirrors,or is it something to worry about NOW – so we can pre-empt and not have to react to punitive fines or worse for past banking ‘indiscretions’,that citizens will be forced,indirectly ,to pay for directly and the vice like squeeeeze gets even worse?

        Threat of NAMA ROI and a future PE vultures feeding frenzy and subsequent possible ‘pump and dump’ and the macro implications of same for our economy? (remember these foreign vultures can position themselves in such a way to ‘afford’ themselves so so much room for future manoeuvre and control – of determining our fate!)

        [ The suggestion here of late that Government ought to create a fund for a long term investment opportunity was a splendid suggestion and would give a message of ‘steadying the ship’,and that there is ACTUALLY a vision and passionate determined PLAN to change,thus giving a much needed message of Hope !

        This property battle we need to fight coz that’s what livin’ is – the six inches in front of your face!!!


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