What will Grexit (Greek exit from the euro currency) do to Irish residential property supply, demand, and prices? The Independent on-line has an article which makes it sound like Grexit is likely now. Will it cause property supply to freeze up? Or what? Just curious what more knowledgeable (or brave!) people think will happen. I cannot see prices falling (just my opinion) but the market could freeze shut so that “price” is meaningless since nothing much trades.
Grexit and the effect on property supply/demand/prices?
Don’t know. The issue I see with this I think is largely from a foreign investment perspective.
Up until now, political risk has largely been theoretical in analyst coverage reports.
This risk has been specifically referenced when research reports were published on the PIGs.
Syriza taking power has actually crystallized this risk and is providing an example for what can happen when an ideological left wing govt takes power.
rejection of prior commitments,
reneging on reforms (rightly or wrongly),
seeking to repudiate contracts,
proposing increases to corporate taxation,
getting to a point where their existence in the Euro area is uncertain,
Ireland’s fastest growing political parties are Sinn Feinn, Anti Austerity/Socialist Parties and left wing independents.
They have all aligned themselves with Syriza and many of them have been on the ground in Greece actively promoting/supporting the actions of the current Greek government.
If you were a foreign investor, would you now question investing in Ireland when the next election could potentially bring to power a party similar to Syriza?
If you were an ex-pat intending on returning home soon (like me) would you put that on hold if you were concerned about the outcome of the next election (I will)?
Most likely nothing will happen and Greece will get an extension and this problem will be kicked down the road for another 3 or 6 months.
In a worst case scenario - foreign capital flight, what could happen?
Foreign property owners could sell up - increase supply of existing stock,
Large foreign developers could stall projects (Cherrywood & Ballsbridge Jursy inn & Berkley Court) - decrease supply of new stock,
Ex-pats holding off returning - decrease demand on existing stock,
Meh, I’ve no idea.
Edit - just to note this is getting an awful lot of coverage on Bloomberg radio here, and I’m dreading the day will come when I hear an Irish voice on supporting them.
International effects are usually swamped by local effects.
I bet some the people who bailed out of Dublin property during the 2011/12 Eurozone crisis feel a bit stupid now.
IMO, theres a risk of contagion should their commercial banks go bust.
The system would begin to unravel and there would be a transfer of wealth to safety
I’d expect there’s very little commercial bank exposure to greek banks.
There has already been a transfer of wealth out of greece. I imagine what is left is money’s owed to normal Joe soaps, and of course the ECB.
There will be a subtle but profound effect in Ireland if (when) Greece exits / defaults.
It will show the Germans that unlimited liquidity support is dangerous and leaves the ECB is a very compromised position (something that Draghi has argued against, but rationally so given his own central bank, the Bank of Italy, is probably also in the same position as Greece regarding large undisclosed debts).
Ireland is a beneficiary of massive daily liquidity support from the ECB, who still prop up our banks (there was a reason why Wilbur Ross sold out at the first opportunity) and our bond market (without ECB repo trades, our sovereign debt yields would be much higher).
The ECB will use their power to force countries like Ireland to de-leverage even faster.
This means strict mortgage and bank lending rules, and despite sovereign yields at c 1%, a higher actual cost of capital.
Grexit looks more likely now with a No vote in Greece. Will there be a property price or listing/sales volume reaction in Ireland? Perhaps nothing during the summer months anyway.
no effect worth talking about , in fact if people see the euro as being under threat , they are more likely to invest in hard assets
Like the last time we had a credit crunch?
Can there be a credit crunch while central banks are providing ELA funds and printing money like there’s no tomorrow?