I’m Forever Blowing Bubbles



From top, Houses under the hammer in Ballsbridge, Dublin 4, Tony Groves

We don’t have a deficit of land. We have a deficit of vision and we are walking into another bubble.

Tony Groves writes

Cicero warned, “The only thing we learn from history is that we never learn anything from history”.

Today we have a media surprised and faux-outraged that property prices are growing at Bubble levels. It’s as if this just happened today. It’s as if we need to wait to hear from Daft.ie in order to know that our dysfunctional property market is dysfunctional!

In late 2016, the Central Bank Briefing Report confirmed nearly 20% of Mortgages were not in line with their Rules. Not only were they not compliant, many of these were 100% Loan to Value Mortgages.

In November 2016, Pepper Ireland, announced they were entering the Irish Mortgage Market. The government hailed this as proof that their “strategy” of not having a mortgage strategy was working.

Pepper is a Subprime Lender. It will lend to people who cannot meet the (already 20% broken) Central Bank Rules. Pepper will charge a premium for the additional risk. Then, Pepper will repatriate over-inflated profits to its Vulture Fund Overlord.

In short, this added competition is not going to drive down the highest mortgage rates in the EU. It will actually lift our blended rate nationally. This will trigger the debt bundling that was the main driver of the Mid 2005 Mortgage Switcher Market.

People, under financial pressure, will bundle short term debt with their mortgage and think they are better off. Short term gain for long term pain. This is where we are going. Back to the Future…

In January the 13th Annual Demographia International Housing Affordability Survey: 2017. Rating Middle-Income Housing Affordability, was published.

A riveting title, it’s sure to be a bestseller. Only it should be. It should be compulsory reading for our Politicians, our Planners and anyone who gives a damn about inequality.

What this body of real experts (as opposed to the experts who brought us Irish Water) do is work out how affordable is a house, based on dividing the average price by the average wage.


The good news for Ireland is that we currently have zero Severely Unaffordable housing markets. Great news, right…


The bad news for Ireland is that we are fast on our way to getting there…


Look at the warning above. Dublin has gone from Moderately Unaffordable 3.3, to a Seriously Unaffordable 4.7, in less than 5 years.

As I type we are probably tipping over into the Severely Unaffordable zone of 5.1 or over. Think this is only a Dublin problem, think again. Galway and Cork are rapidly climbing the charts.

Without denigrating Cicero, I refuse to believe that we can’t learn anything from history. History teaches us that a malfunctioning Land market breeds inequality. Inequality means revolution.

Blame becomes the currency and it’s spent on creating division and fear. Elites, deriding the rise of Populism have only themselves to blame.

Ireland has a chance to avoid this “fear of the other” and blame-throwing culture. We had an Unaffordable Score of 6 at the top of the Celtic Tiger insanity. If we don’t act urgently, we will return to that level.

Remember these facts when you hear developers aren’t building because of low profits. How can profits be too low and Unaffordability so high?

Remember these facts when trying to reconcile the Governments Housing Plan has less ambition towards building Social Houses than we had in the darkest days of the Irish Economy.

These are facts; don’t listen to the alternative facts, post-truths or fake news. A lie is a lie is a lie. We don’t have a deficit of Land. We have a deficit of vision.

Dublin has over 60 hectares of vacant land. We don’t need incentives for developers; the only incentive for building we need is the FACT that we are rapidly headed back to Property Bubble Land. And Bubbles Burst.

History repeats itself, first as tragedy, second as farce. If we allow this tragedy to happen again, then the joke will be on all of us.

Tony Groves is a full-time financial consultant and part-time commentator. With over 18 years experience in the financial industry and a keen interest in politics, history and “being ornery”, he has published one book and writes regularly at Trickstersworld

Irish House Price Report Q1 2017 (Daft)


71 thoughts on “I’m Forever Blowing Bubbles

  1. Ultan

    Yes, but by allowing another bubble, the banks will get more money when they evict all the people in mortgage arrears. And that’s the Government’s housing policy in a nutshell. Feck the citizens, there’s vultures to feed!

    1. Sheik Yahbouti

      It is also worth noting that the LPT of every existing home-owner will rise proportionate to this artificial “bubble” as a direct result of Government policy.

  2. Scundered

    Sssshhhhhhh this is my chance to get my money back and out of negative equity, keep it quiet lads!

  3. Looking In

    What are we alive for? To pay into a rigged system that leaves us drained, anxious and chained to it. Until we get over our social amnesia and stop dancing to their tune like soulless idiots and start asking questions about the actual value of things and not what the so called market says, we will forever be in this miserable, boring loop. Irish society doesn’t have to be like this, there are other ways, these are the things that need to be discussed. We pay for these people, we vote them in and they treat us like shite.

  4. ahjayzis

    How Ireland went through what we went through in 2008+, and then got back to this place so quickly genuinely leaves me feeling completely hopeless.

    How have we not learned that housing can’t be a commodity to be gambled and traded? It nearly destroyed the country for fupps sake.

    1. Cian

      …but without a conclusion. Yes there is a bubble starting… but no thoughts on how to fix it.

  5. Owen C

    “In late 2016, the Central Bank Briefing Report confirmed nearly 20% of Mortgages were not in line with their Rules. Not only were they not compliant, many of these were 100% Loan to Value Mortgages.”

    Between Jan 2015 and June 2016, 0% of new FTB’s had an LTV over 93%.
    0% of new Second Time Buyers had an LTV over 90%.
    No one received a newly originated 100% LTV mortgage. Facts are very inconvenient.

    (pages 23-25)

    1. Tony Groves

      Thanks Owen.
      “Newly Originated” here means none for First Time Buyers. Non Central Bank Compliant mortgages went from 7% to nearly 20% in this period. Facts are indeed telling.

      1. Owen C

        Tony, you said “many of these were 100% LTVs”. Categorically, this is not true.

        On newly originated mortgages, there were 0 mortgages with an LTV of 100%. There was around 1% with an LTV above 90%.

        On refinancings of existing mortgages, borrowers with an LTV of 100% is zero. The amount of mortgages in even the high 90% area appears to be something less than 0.1% per the graph on page 15. This is not remotely categorisable as “many”.


        You also said “In late 2016, the Central Bank Briefing Report confirmed nearly 20% of Mortgages were not in line with their Rules.” This is also incorrect. The Central Bank, in their rules, allowed for a certain proportion of their lending to be above the LTV and LTI caps, to take account of particular circumstances which warranted exemptions. So it is an explicit policy of the CBI to allow for these mortgages. No one is breaking any rules.

          1. Cian

            the rule was “80% of loans must be below this threshold”. And this rule was adhered to.

          2. Cian

            the actual rule for lending caps was “Up to 15% of total lending for primary dwellings (firsttime, second and subsequent buyers) and up to 10% of total lending for BTLs can exceed the LTV limits.”

        1. Tony Groves

          It is not incorrect. Nearly 20% of Mortgages are non compliant. The CBI had a tolerance (generally around 7%) for exceptions. This has gone from 7% to 20%. Are you satisfied that this level of growth in the tolerance of breaches represents good Regulatory Practices? As someone who helped launch the first 100% mortgages many years ago, I can tell you I am not.
          Thanks again.

          1. Owen C

            “The CBI had a tolerance (generally around 7%) for exceptions. ”

            When was this “tolerance” formulated? Because at the initiation of the macro prudential rules in 2014, before which time they did not have formal rules around this issue, they explicitly allowed for 15% of the aggregate flow of housing loans to be above the LTV cap, and for 20% of loans to be above the LTI cap. So on the published figures, the banks are not currently even maxing out their “exemption” limits.

          2. Tony Groves

            I’ve answered your questions. You’ve deflected mine. So once more, do you think the growth of 7% to 20% non compliance represents good Regulatory practice?
            As for your categorical denial of 100% loans (and above 100%) I can categorically say you are wrong and or misinformed.
            Thanks again

          3. Cian

            you also wrote: ” Not only were they not compliant, many of these were 100% Loan to Value Mortgages” but now you seem to be changing this to “Nearly 20% of Mortgages are non compliant”.

            Can you put a number (or percentage) on how many 100% Loan to Value mortgages were issued?

          4. Owen C


            Please show me where the evidence is for 100% LTV loans. I have shown you evidence from the CBI which refutes this. Saying “in their report” is not quite good enough. Once you have shown where some of the 100% LTVs are, you can then explain how you categorise this as “many”.

            Please show me where “7% tolerance level” comes from. I have explicitly referenced where the 20% tolerance level comes from.

            On the issue of whether this is good regulatory practice or not (again, you have downgraded this from “breaking the rules”), its a subjective issue. I think some flexibility should be shown given the relatively onerous (and brought in with no lag or incremental manner) level of the LTV and LTI thesholds, and given that the banks seem to be only letting 15% through, and still on conservative LTV and LTI terms (again, this is where the lack of 100% LTV mortgages is important), I am not particularly concerned about the level or quality of mortgage borrowing. When you factor in that 50% of house purchase transactions are cash-based, this implies that only 7.5% or so of house purchases have been as a result of flexibility shown on LTV or LTI, and even then below 90% on the LTV in the vast, vast, vast majority of cases. To somehow suggest that lax lending standards are somehow a big factor in the current housing market price increase is an odd analysis to make given the complete lack of evidence to back this up.

          5. Tony Groves

            “Subjective” here means your own argument is undermined by an unwillingness to address facts that don’t suit your narrative. No matter how much you play with words you cannot get away from the fact that my Article is supported by several sources. Your argument is “subjective”
            Have a nice evening and thanks again.

          6. Cian

            You just wrote: “No matter how much you play with words you cannot get away from the fact that my Article is supported by several sources.” Can you provide your source for your original claim that “nearly 20% of Mortgages were not in line with their Rules. Not only were they not compliant, many of these were 100% Loan to Value Mortgages.” – Specifically the 100% LTV part.


          7. Owen C

            Tony, you’re simply confirming the spoof nature of the “many of them were 100% LTV” claim. I have directed you to specific evidence that this is not true, and your response is an adolscent “LOL, goodnight, look over there”.

            The appropriateness of the rules is a subjective matter. The actual existence of “many” 100% LTV mortgages is far more objectively false in nature. I would caution Broadsheet continuing with your spurious analysis when you can’t even admit when you are making stuff up.

          8. Tony Groves

            Dear Broadsheet,
            Anonymous expert in obfuscation, whataboutery and deflection cautions you against factual articles I can’t rebut.
            They make me uncomfortable.
            Yours sincerely
            The Internet

          9. f_lawless

            Don’t worry Tony everyone knows at this point that the government shills always appear in order to obfuscate in the comment sections of articles like these – ever since Broadsheet was shortlisted a while back for “Most Influential Irish Site Ever” in the Web and eCommerce awards!

        2. Anne

          “On newly originated mortgages, there were 0 mortgages with an LTV of 100%. There was around 1% with an LTV above 90%.”

          On that.. To be more precise -.

          The median LTV for FTBs was 84 per cent. For FTBs, a considerable portion of the distribution was clustered between the regulatory maximum limit of 90 per cent and the 80 per cent limit to which the sliding house price scale applies.

          For SSBs, (subsequent and second time buyers) the median LTV was 72 per cent. The vast majority of lending took place at the 80 per cent regulatory threshold.
          Some lending took place between 80 and 90 per cent LTV which is allowed under the regulations with very little above 90 per cent LTV

    2. anne

      by the way, he could still be correct.. 0% of first time buyers having a loan to value of 93% or higher, doesn’t tell you what percent have 92% LTV, 91% LTV..which up to 220k would be outside their rules.

      likewise for second time buyers. 0% had a loan to value of over 90..but what percent had a ltv over 80%..coz thems were their rules. 20% required for second time buyers.
      0% had over 90% ltv..grand. what about between 80% and 90%

      Before you get all sniffy you’d want to read what he wrote and read what you posted.

      1. Owen C

        Anne, he wrote “many of these were 100% LTV”. I can so with 100% certainty that this is wrong.

    3. kirkbadaz

      your quote says “late in 2016” and your facts end in “June 2016”.

      so both can be true. one does not disprove the other.

      1. Tony Groves

        Late in 2016, as in when the CBI released it Mortgage Market Briefing Doc. That’s my poor writing rather than anybody’s poor comprehension:(

  6. diddy

    The wholes system is geared towards whats good for banks and erstwhile FG voters in neg equity. For many a property bubble is very good news indeed. For the haves (fg voters) this is great.. for those trying to put a roof over there heads the opposite is true. We know with whom this governments intrests truly lie, and it aint the plain people.

  7. nellyb

    I would give multiple and unlimited mortgages to public sector employees on above 50K. Secure tenure, performance independent wages – ideal customers, little risk of default. Qu’ils mangent de la brioche!

  8. Fully Keen

    If I sell my house for more than I bought it I will have more money. I like money. I will buy a smaller house. And have money left over for fun things.

    It’s fairly simple lads.

    1. ahjayzis

      So let’s all buy large houses we can’t long-term afford and flip them, because prices will only rise. In twenty years we’ll all be getting mortgages on 10 million quid houses.

      1. Fully Keen

        Now you are thinking, the Irish way. Greed is good. Jump aboard the gravy train. Derailing in 5-10 years. Hurry.

        1. Kolmo

          5-10 years?….6 to 8 months at the current rate of clustershambles and vulture-puppet shenanigans…

  9. mkg985

    Careful now Broadsheet, anymore of these articles and you’ll be putting the Recovery at risk!!

  10. Peter Dempsey

    So 20% of mortgages are not in line with CBI rules.

    Why is this an issue? Surely the statistic refers to ALL existing mortgages, many of which were sanctioned in the 100% LTV era (2004 – 2007).

    The CBI have brought in new mortgage rules over the last 18 months. This is a good thing. But they can’t do anything about the mortgages that were agreed and drawn down before these changes.

    1. Tony Groves

      No Peter, you’ve misunderstood the piece. It is not ALL existing mortgages. It is ONLY new business that has 20% non compliance of the NEW CBI rules. That’s why it’s an issue.

      1. ReproBertie

        In fairness, that was far from clear before your post. “In late 2016, the Central Bank Briefing Report confirmed nearly 20% of Mortgages were not in line with their Rules.” There’s no mention of new, existing or a combination in that sentence.

          1. anne

            they’ll be looking for apologies next Tony..go on just get it out of the way. say sorry. you’ll be hounded otherwise. :) isn’t that right owen c.

          2. Tony Groves

            You’re spot on Anne!
            I need a disclaimer at the beginning my articles that apologies for any offence I’m sure to cause and a statement of sincere regret for my poor phraseology.

          3. anne

            im referring to a previous incident where apologies were insisted upon..you’re not half as annoying in fairness.

            I’m scanning the comments here..but i think the gist of the nitpicking is there isnt a breaking of the central bank rules as they allow for a breaking of the rules, and on and on, subjective, whinge, moan, more tedium etc. Is that the gist of it?

            Nothing dealt with about the overall point of unsustainable house prices though by the nitpickers.

          4. rotide

            The gist of the comments is Tony stated something that is 100% untrue.

            Maybe with some editing, it can be made to be true but as it stands it is not, as per Owen C’s comments above.

          5. Owen C


            the gist of the “nitpicking” is that he claimed there were “many” 100% LTV mortgages. This is demonstrably false.

            The other bits about rule being adhered to or broken is more about semantics (rules have been adhered to, thresholds have been broken).

          6. rotide

            Dear To,

            You should probably consider a proof reader and editor before a muse. They will do wonders.


          7. Cian

            Anne, thanks for the link. It’s interesting… but is dealing with 2015 loans.

            For anyone that hasn’t looked at it, it is looking at 2015 loans (see table 2) comparing the In Scope Vs Out-of-scope – as do all the charts. There were 14,500 in-scope Vs 11,000 out-of-scope loans. But one thing to be aware of is that 9,500 of the 11,000 out-of-scope loans were pre-approved (in 2014) – so the limits didn’t apply to them.

            Again, Tony, if you’re reading, can you provide a link to your claim that there were “many” 100% LTV mortgages in 2016.

  11. pooter

    I cant see an Irish property crash without an international property crash. Any thoughts?

    1. Anomanomanom

      People seem to be under the illusion that the property prices caused the crash, That’s completely wrong. The high prices contributed to the loses in the banks simply because when people lost their jobs they could not pay the mortgage. But look at it like this, if house prices keep rising and then even if the bubble bursts and the price nose dives, what would be the problem. Its not the price fall that’s the problem, it would be if the people who paid top prices stop paying their mortgage thats the problem. And with no recession and massive job loses I cant see people refusing to pay just because some else can buy a similar property cheaper.

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