Tag Archives: Housing market


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)



It’s positively Mexican.

Dr John McCartney, Director of Research at Estate Agent Savills writes in today’s Irish Times that “property prices will have to go up, or costs will have to come down, before we see the resumption of large scale housing development“.

A First Time Buyer writes:

It’s a Mexican stand-off.

Prices will only increase with wages or if the Central Bank relaxes its mortgage lending rules.

Increasing wages would make our economy less competitive and would be detrimental for our FDI [foreign direct investment] and SME [small and medium enterprises] sectors.

Relaxing the CBI rules would increase the available mortgage amounts for borrowers, which would directly result in higher bids on the few properties that are available.

But house prices are already expensive with the result that would-be homebuyers are again having to look to the commuter belt.

Robbie Kelleher, Senior Investment Strategist at Davy’s outlines that the ratio of average house price to average incomes is currently close to 6x – in the past this ratio ranged from between 3x and 4x.

So what about the costs?

We’re told that the reason for the lack of housing supply are the high costs incurred by builders which, at current selling prices, they find increasingly difficult to pass on to potential buyers.

These costs include including labour, materials, professional fees, site acquisition, finance costs, development levies, social housing obligations and building and planning regulations.

Builders say they need to make a profit of at least 15% in order to achieve replacement costs and that, at the prices being achieved at present, this isn’t possible.

The banks are making exorbitant profit margins on variable rates. The ECB has cut its rate to zero per cent and the Irish banks refuse to pass on these savings on to their customers.

The Legal Services Regulation Bill was diluted down and is unlikely to lead to any significant reduction in legal costs.

The Planning Guidelines on Design Standards for New Apartments introduced last December now allows for smaller sized one, two and three-bedroom apartments.

The Part V social housing requirements have been reformed and a rebate scheme has been introduced in respect of levies paid to local authorities in Dublin and Cork, on foot of affordable housing development.

The Urban Regeneration and Housing Act introduced a vacant site levy but it is not in effect until 2017 and not payable until 2019.

The Department of Finance are adverse to introducing tax breaks for the residential property market as they may simply lead to a transfer of tax revenue from the State to developers with no effect on supply.

The definition of Mexican stand-off is a situation in which no one emerges a clear winner.

One thing is for certain there are a lot of losers as a result of our housing crises. But who is going to break the deadlock?

Industry view: Prices must rise or costs come down for major house building to restart (Irish Times)

Ireland in 2016: Housing Remains the Big Challenge (Davy)