The Irish economy is not overheating, because the Irish economy isn’t really a distinct economy in its own right. It is a number of smaller economies, some of which compete in the global trading system and some of which are protected and compete within the local or national system. Bits can overheat at different times.
One area of the economy that displays the most significant signs of overheating is the property market, where overheating is evident in Dublin, particularly in the area between the Grand and Royal Canals, in the centre of the city. Elsewhere there is some recent evidence that properties are not selling near as quickly as vendors were led to believe they would.
Between the canals is where new employees of largely foreign service companies want to live. These workers are competing against both the local workforce and the local, dysfunctional planning system. The result is that rents are being driven up as supply lags well behind demand. The average rent in the south of Dublin city is €1,992, a rise of 11.5 per cent this year.
Because the multinational workers, many of them highly educated foreigners, are better paid than those Irish workers operating in the domestic economy, they are outbidding the locals, leading to worries about overheating.
But just because a place is expensive doesn’t mean that it is overheating or that a crash is inevitable. Switzerland in general and Zurich in particular are very expensive, but this doesn’t mean that their prices or economies are about to slump.
In addition, just because Ireland had a credit, housing and banking boom-to-bust cycle in recent memory doesn’t mean that it will happen again in the same or even a similar way.
The expensive property market is displaying profoundly different characteristics from the market 10 or 15 years ago. Back then the pressure on prices came from the bottom up. A debt bubble built at the bottom as banks threw money at people. This buying power pushed up prices and rents. Hundreds of thousands of people were involved, indebted and ultimately enfeebled.
In addition, the domestic punter was on the hook to the domestic banks, and the domestic banks were on the hook to their foreign lenders. This dynamic pushed up rents, and indeed the higher rents and prices had the effect of making all the borrowing look legitimate. There was a circular flow not only of money but also of logic and solvency. One depended on the other.
This time around it’s different.
Rather than being pushed up, rents and prices are being dragged up. By dragged up I mean that the market is now characterised by competition not among very many indebted small players but among a few, leveraged, extremely large players.
Private-equity funds and now insurance funds are buying up large developments in Dublin, leading to the professionalisation of landlordism here. They are buying up large tracts of property – mainly apartments – because they can derive a steady stream of income from rents.
It’s now creeping out to the suburbs too.
Irish Life Investment Managers recently bought 262 apartments in south Dublin that were due to be put up for sale, but the asset manager plans to rent them. In nearby Cherrywood, a joint venture has been formed between the US real-estate firm Hines and the Dutch pension investor APG Asset Management to develop a €450 million build-to-rent scheme of more than 1,220 apartments.
Residential investments by these big companies are now showing the same characteristics as commercial developments.
Thus the overheating is in the competition for big deals from leveraged (or not-so-leveraged) funds that borrow on the international money markets and are part of a movement in the past decade of private-equity funds into urban property – not just here but all over the world.
In this way the Dublin property market has become internationalised. It is part of a global business.
In addition, most of the Irish developers who are back on the scene now are there not as principals but as mere frontmen for the foreign money that is building these developments. The Irish developers are simply taking a wage and, if the development is profitable, a bonus.
This is because of the way Nama has sold its loans and land banks. Nama sold at a huge discount to the vulture funds, but the vulture funds, before they bought the property, had an undertaking from a rejuvenated Irish developer to buy the property from the vulture fund at a small premium. You, the taxpayer, paid the difference between the original price and the final, discounted price.
The Irish developer, who couldn’t get money from the Irish banks, secured what is called mezzanine finance from yet another foreign financier. Therefore the developer who is back in the game is merely working for another foreign financier for a wage and a cut of the upside. Although reported in the press to be back in business, many of the old Irish developers are, in effect, employees of foreign funds. And these funds own large chunks of Ireland.
The overheating followed by slump will materialise only if something major happens in the world economy to suddenly make capital very expensive – something like a shock in the guise of a dramatic increase in American interest rates. But this is unlikely to happen, and in any case US long-term interest rates have risen quite significantly over the past six months.
Another shock could be that those large service-based multinationals pull out of Ireland. This would definitely send the property market into an overheating/slump/crash trajectory.
This doesn’t look like happening – and even if it did, the crash wouldn’t spill over to Irish balance sheets, because we Irish are not really involved in either the financing or the developing part of this property market.
If you are the Irish person looking for a place to live none of this really matters, because it feels as if you are being priced out of your own city by a combination of foreign tenants who are elbowing you out and foreign funds that you are paying the high rent to if you do get a place. Rarely has such a transfer of wealth to so few been underwritten by so many.
However, an overheating market followed by a crash (still unlikely) would actually benefit Irish people and the Irish balance sheet, because these days we are only tenants in our own country.
Point of considerable merit – during the last boom, we reduced the public deficit. To the point that it was the lowest in Western Europe after Spain – another country that managed the same feat. now, of course both countries like private sector debts, malinvestment, and competetiveness spiral out of control. Then came the moment with ICTU, TASC, the assorted quangoes, the media, and various “know-it-alls” demanded a state spending splurge. And the first step towards that goal was the replacement of McCreevy (who wanted to coll the economy) with Cowen (who was there to let rip). But currently….our public… Read more »
I still think that David’s proposal for Dublin Port is the best one with consideration of managing to restore the competitiveness of Dublin.
The current Dublin Bus, route redesign is long overdue. It will make a massive difference.
Ireland does not get a mention in the attached link. But Ireland’s public deficits are now more stretched than those of Greece or Belgium. https://www.zerohedge.com/news/2018-06-12/no-ones-ready-ecb-eurozones-coming-debt-crisis [ The Eurozone states often claim that deficits have been reduced and risks contained. However, closer scrutiny shows that the bulk of deficit reductions came from lower cost of debt. Eurozone government spending has barely fallen, despite lower unemployment and rising tax revenues. Structural deficits remain stubborn, and in some cases, unchanged from 2013 levels. ] [ What we know is that yields would be massively higher. A minimum of 120 basis points above current… Read more »
This is, I think, a well-considered article that takes a reasonably broad view and explores the topics it raises to an adequate depth, that is for the amount of print space allocated to it and for the straightforward and plain speaking form that it employs. It would be hard to do more with it, and kudos to the author David McW. for that. This current chapter in what is now a 20-year-long story in market instability in residential property in Ireland, however, has many other facets and players, which would perhaps be worth some exploration by the author. One facet… Read more »
Surprised David did not mention the 2013 finance bill and it’s impact.
The ‘professional landlord’ that Noonan and co wished has arrived with a substantial premium over our previous residential financing model.
A case of be careful what you wish for.
However the rhetoric is phrased the basic fact is that cheap credit has flooded the world. This is courtesy of the central banking money system. This cheap credit flows to the easiest route. Financial instruments. Bonds, stocks and mortgages basically. The low interest rates give bigger loans to the credit worthy, and other loans to less credit worthy who consequently buy more goods. Mortgages, student loans, credit cards, stocks, government bonds. About the only thing one could call an investment is the real estate and it has skyrocketed in price around the world. The rest of the debt accrued is… Read more »
“However, an overheating market followed by a crash (still unlikely) would actually benefit Irish people and the Irish balance sheet, because these days we are only tenants in our own country.” Let me give you my two pence worth. If another crash came again then this gubuerenment would do the same as the last one. Land the people with the bill to save the financiers. That’s that. Deco is right it’s way worse than 2006. Your article forgets to mention that there is only a fraction of the housing units being produced now as there was then among other considerations.… Read more »
hi David, I respectfully suggest you add the following economics questions to the next exam paper you write in trinity; q1) True or false, In the recent referendum Donegal uniquely among the 26 counties of the Irish never was a Republic voted no to the proposal to repeal the eight amendment. Do you think one of the reasons this happened was because the people of Donegal realised that the reason the county was so bereft of young people is due to the lack of economic opportunity? Emmigration decimates the place of course and allowing abortion would contribute to the decline… Read more »
Sideshow/ Grzeg
https://www.amsterdamhousing.com/en/rental-listings?gclid=EAIaIQobChMIhcb72tXR2wIVK7HtCh0y9gpKEAAYASACEgI_c_D_BwE#{“view”:”grid”,”sort”:”priceAsc”,”address”:””,”title”:””,”salesRentals”:”rentals”,”salesPriceMin”:0,”salesPriceMax”:9999999999,”devSalesPriceMin”:0,”devSalesPriceMax”:9999999999,”rentalsPriceMin”:0,”rentalsPriceMax”:9999999999,”devRentalsPriceMin”:0,”devRentalsPriceMax”:9999999999,”surfaceMin”:0,”surfaceMax”:9999999999,”unitsMin”:0,”unitsMax”:9999999999,”devSurfaceMin”:0,”devSurfaceMax”:9999999999,”plotSurfaceMin”:0,”plotSurfaceMax”:9999999999,”roomsMin”:0,”roomsMax”:9999999999,”bedroomsMin”:0,”bedroomsMax”:9999999999,”bathroomsMin”:0,”bathroomsMax”:9999999999,”city”:[],”district”:[],”mainType”:[],”buildType”:[],”tag”:[],”country”:[],”state”:[],”listingsType”:[],”ignoreType”:[],”categories”:[],”status”:”available”,”user”:””,”archiveTime”:259200,”page”:1,”gclid”:”EAIaIQobChMIhcb72tXR2wIVK7HtCh0y9gpKEAAYASACEgI_c_D_BwE”}
https://www.expatistan.com/cost-of-living/amsterdam In Ireland we pretend that we do not know the “real value” of anything. This is of course political. Economics should be above political. We pretend that we cant measure the costs of our public services with our international peers. Rte tell us that they are the champions of equality. They never insist that all foregin direct investment plus Irish sme jobs have the same pensions/ perks as our public sevices and rte staff. The Daft Trinity guy tell’s us that we have 900,000 family homes and only 700,000 families. Workers rent 3 and 4 bed houses also. On… Read more »
It’s 21st century serfdom, no 2 ways about it. History repeating itself, absentee landlords in the form of faceless companies have replaced the English and in place of the Irish surfs are highly skilled European tech workers. The thin ice that is the presence of the multinationals is getting thinner with the tax policies designed to bring jobs/taxable profits back to the US, these policies will continue with or without Trump in office. Unfortunately, a reduction in US FDI in Ireland is much more likely now than it was before Trump. On top of that, Ireland is now seen as… Read more »
Will we experience this phenomenon Re; Housing here in the Land of Snakes ? I note no mention in the full discussion available in the link below as to the USA government cutting off payments to individuals of these social welfare applicants on grounds that they clearly not intending to be in tenable paid job. SHOULD IRISH ABORIGINE CITIZENS — AS CATHOLIC-CATHOLICS — EVEN IN IRISH STATE COPY THE STRATEGY AND TACTICS OF THESE FOLKS ? NOTE ; Please excuse that I source this compromised 8-) [ of course ] WEB-PAGE from the generally untrustworthy Rupert Murdoch media FOX News… Read more »
THAT WHICH IS REALLY GOING ON IN THE IRISH STATE, & IT ESCALATED IN THE LAST 30 YEARS, IS …………… PERNICIOUS SOCIAL ENGINEERING BY THE FREE MASONS OF ALL OF IRELAND ON BEHALF OF INTERNATIONAL FREEMASONRY Of course, the social engineering includes artfully devising a vicious disfunctional [ 8-) … but not really so if u are a Freemason State-Crafter ] Housing scene. >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>. EXCERPTS : Disclaimer It should not be assumed that someone who knows about the Dublin Occult Grid is aware of, or is party to, the dark plan behind it. Those who know about the Grid may… Read more »
JUST SOME 8 MINUTES OF VITAL TRUTH IN THIS YOUTUBE VIDEO FOR U ALL TO KNOW
The Audio alone is worthy.
Very good speaker.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
In the 1960’s, the Left basically said to the Banksters
“OK, ewe give us Sexual Liberation,
And, we won’t criticize ur Economic System.”
HERE IS ANOTHER JIGSAW PIECE OF THE OVERALL SOCIAL ENGINEERING PROJECT BEING WAGED ON THE IRISH NATION ALSO ;
Ref.
Henry Makow
?@HenryMakow
TWEET
An E. Michael Jones compilation on America the Gay Disco.
E. Michael Jones is the editor of Culture Wars magazine.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>.
https://www.youtube.com/watch?v=d-OXt5NWcRs
THIS IS VERY SERIOUS NEWS
Off-topic, but a major development in War being waged upon Syria by U-know-Who ;
Assad speaking candidly in defence of Syria, & what he will have to do.
https://twitter.com/American201800/status/1007087881444315136
EWES THINK EWES HAVE HOUSING PROBLEMS WAIT UNTIL EWES ARE HIT BY IMMINENT WAVE OF IMMIGRANTS FROM SUB-SAHARAN AFRICA >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> FOOLISH FOOLISH IRISH VOTERS GONNA REAP WHAT THEY SOWED FOR HAVING VOTED IN ELECTIONS, & REFERENDA, IN FAVOR OF : Fine GAY & L[ Word ] Fine Fail-AGAIN [ A defo with Me-hole Martin as leader ] Sinn– Frankfurt School Bolloxology — Fein Labor DOES NOT WORK [ Especially with Demon Krapik Left element ] Aunt Dorothy’s Dalliance >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> UN Demands Brussels : A_ Ignore ‘Resistance’ to Mass Migration B_ Share Unlimited Arrivals Across 14 Jun 2018 EXCERPT ; The… Read more »
EU TO LEGISLATE
-> AN INTERNET WITHOUT FREE SHARING
.
.
-> MANDATORY UPLOAD FILTERING
-> AND
-> MANDATORY LINK TAXING
.
.
.
TO BE VOTED -> JUNE 20!
https://juliareda.eu/2018/06/saveyourinternet/
-> SHARE IT WHILE U STILL CAN!
-> HA!
https://www.tomshardware.com/news/eu-censorship-machines-link-tax,37286.html
SAME HERE ;
EXCEPT THEY ARE :
“Irish” MASONIC Corporations
British MASONIC Corporations
USA MASONIC Corporations
French MASONIC Corporations
The German, & Dutch, Masonic Corporations are not interested in having plants, & factories, & businesses, in Irish state.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Henry Makow
?@HenryMakow
TWEET ;
Only the Mexican Masonic Corporations are making money, the Mexican workers are as poor as they have always been.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
https://twitter.com/HenryMakow/status/1007687666438148096
“… because these days we are only tenants in our own country.”
Change ‘tenants’ to ‘strangers’ and it also works.
?itok=Y0gVciVU
HEADING ;
The Texas Bullion Depository Officially Opened For Business This Week
by Tyler Durden
Fri, 06/15/2018
Authored by Mike Maharrey via The 10th Amendment Center,
INTRO ;
The Texas Bullion Depository officially opened for business this week. The creation of the facility represents a power-shift away from the federal government, and sets the foundation to undermine the Federal Reserve’s monopoly on money.
https://www.zerohedge.com/news/2018-06-15/texas-bullion-depository-officially-opened-business-week
MEANWHILE BACK IN THE OPEN-AIR PRISON, .. GAZA, & WEST BANK ;
SORRY, i MEAN …. MEANWHILE, BACK IN THE RANCH ; 8-)
Well, the White House, Washington DC, USA, & “THE RANCH OF USA’s OWNER”
And, surely David should be so aggrieved for the Palestinians so because he curses Trump as being “such a Prick” ;
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Henry Makow
?@HenryMakow
TWEET ;
What’s in Trump’s ‘Deal of the Century’ ?
The Answers are in Plain Sight
By Jonathan Cook
Israel has already started implementing the deal – entrenching “apartheid” rule over Palestinians.
http://www.informationclearinghouse.info/49653.htm
7:00 PM – 15 Jun 2018
This time the hot-flush is tactical Ewe don’t have to be a limbo-dancer to realise that Michele Obama is really a Mick Obama Now, the Obamas are about to sue ; That was Charles J Haughey’s tactic against Phoenix Magazine following their revelations about secret monies of his even though their info. was correct. >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>… Michelle Obama’s Doctor Goes On Record: ‘I Know What I Saw’ June 6, 2018 Dr. Rafael Espinanzo, who was entrusted with former First Lady Michelle Obama’s care during the 2008 presidential election, is speaking out about something he feels the public needs a definitive answer… Read more »
SAME ROGUERY HERE
HOW ABOUT PROSECUTING THE SENIOR GARDA-lANDLORDS / lANDLORD-GARDAI WHO CONSPIRED WITH OTHERS OF IRISH STATE’S “DEEP STATE” & THE BRITISH INTELLIGENCE SERVICES & THE UNIONISTS-LOYALISTS & CIA TO PLANT BOMBS WHICH KILLED SCORES OF INNOCENT PEOPLE [ including foreigners ] IN DUBLIN & MONAGHAN ?
How come Varadkar & Coveney allow Gay Paris to get a free ride on our tab — “Irish Nation NOT allowed to burn the bondholders. Otherwise, a bomb will go off in Dublin.” says France’s dual-citizen ? ? ? Mr. Jean Claude Trichet — when they could always be reminding the likes of Micron & Co. of Gay Paree’s continual beastly rape of their African young captives ? >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> Fascinating … utterly fascinating And, to think that France is in the Euro too. Perhaps, this Rothschild’s “Private” Central Bank of France bankster scam bundle is a more easy introduction to… Read more »
There is only one realistic long term solution to the whole property issue. The Irish government needs to develop another large city. Let’s say Cork is nominated as IT(not the movie but we don’t want a horror show either) Why Cork – The questions are same no matter the location but Cork has a decent amount of infrastructure already in place. Travel four miles from the city centre and you’ve all the building land you need and it would be relatively inexpensive to build Luas lines. Develop another city and it’s on our terms. The only thing then is to… Read more »
Sometimes there’s a subliminal message in the title of an article.
In this case overheating implies somebody is going to get burned (again) and that’s something I think we’d all agree on.
PLEASE — PLEASE — PLEASE Know that this angle is perhaps the major handle that International Freemasonry has had on a host of politicians & other politicos on both sides of the border ; AND, THUS U HAVE THE DISPLEASURE NOW OF …. Social Engineering being operated on the Housing Scene. The whole Housing Scene of today is a deliberate crisis. THE WAY TO PLAY BALL BACK TO THE FREEMASONS IS THAT EACH HOMESTEAD DEPARTED NATIVE IRISH CITIZEN ASSERTS THEIR CLAIM ON PUBLIC PROPERTY THEIR RIGHTFUL PORTION AS OPTIMUM 3-DIMENSIONAL SPACE WITH OPTIMUM RANGE OF MODULAR PORTIONS CONTIGUOUS AS THEIR… Read more »
McCawber
Great logic.
Makes sence to place all future FDI jobs in the outskirts of Cork, Limerick and Galway.
Dublin ( like public service) has completely overpriced itself with the national median income.
Most Irish workers earn less than 34,000e and have no pension other than the constitutional ( all citizens) contributory pension that will cover all citizens retirement safety needs.
It completely logical to develope areas with sustainable water supplies and affordable development land.
The Dublin & public service costs BUBBLE are unsustainable with the Irish median income of 34,000e.
The sums just dont add up.
Truthist
The median data (rte look away) tells us that the major of people in Ireland earn less than 34,000e. These are all workers that require public services and housing that represent the majority of irish incomes. The people that rte are contracted to represent but dont. In my own opinion, the last thing that rte or the irish times want is equality.
The average data tells us that when you include the lesser but wealthier Irish workers, we have an average income of 37,000e.
I dont know the mode Irish income.
For all I know it could be 25,000e