Who *was* buying all the property?


#1


#2

Good find BJ.

That table is damning evidence that from '03 onwards, it was the wealthy speculators that have bought in the bubble hence driving prices rocketing.

Some wealthy investors would of bought for renting yes which is a good thing, but its obvious due to the census of empties that speculators are massively involved.

Considering that an average wage(30-34k) couple which would be about 70k income total in that table, they could only account for half of purchases at best.

Plus that 66% of the workforce earn below 34k p.a., its been a tiny wealthy minority who have had bought property since especially '03 driving up prices to the detriment of the majority!!

FTB’s are extremely thin on the ground as they would earn less than your established couple in their 40+ age group.


#3

Yes I think this accounts for the average age of a first time buyer being 32 years old.


#4

These are some truly fantastic figures you’ve found!

What we see here is a classic text book case of an under regualted market turning into RAMPANT speculation by an high a large minority of income soci-demographia brought on by an era of abnormally low IR & super loose lending policies. Pure greed fueled frenzy & belief its different/unique/one-way-ticket (now I understand why there are so many bookmakers in Ireland).

I would state that this strata of society are living beyond there means and are deluded into thinking they are “wealthy” simply becasue they are high income earners.

This will of course invert and once more we will have yet anohter episode of social displacement. I believe the intransigent high earners are about to feel for the first time, the effect of their actions over the last 5 years.


#5

it would probably be sensible to factor in that a large proportion of these investors ( as a % of all investors and weighed for demographic ) are over 40 and would tend to remember the 80s …and even if they have suppressed those memories in recent years they will recur .

Relatively speaking there are more 40+ investors relative to all 40+ persons in the population than there are 30-40 investors relative to all 30-40 year old persons .

Dunno if that can be crunched but pm me the stats and I will try to weigh by age group

eg 30-40 40-50 50-60 60-70

I will not even try to calculate 20-30 investors as they are insignificant .


#6

The media should be covering these sort of figures and the collapse in rental yield figures from central bank instead of cheerleading the property market to get more advertising from developers and estate agents.


#7

Should they?

You are confusing their raison d’etre there.

The only thing the media should do is sell more papers, get more viewing figures so that their revenues from all fronts climb.


#8

The property section in yesterday’s Sindo was pitifully thin. I would say anorexic. I don’t think that property is bringing in too much advertising revenue there atm tbh.


#9

Great stats ! And they truely tell a tale.

The basic facts of what really fueled the bubble in plain simple terms was block buying off the plans by professional accounting firms with the intention of selling them to their clients in a ‘tax efficient’ manner. These clients then secured 100% , interest only mortgages from banks. So the poor ftb was out gunned on all fronts. If they could get to the sales office before all the properties were sold , they would then have to compete against interest only mortgage repayments. In short , the cards were stacked on all fronts against them.

The gov , lenders and other VI’s discriminated whole heartedly against ftbs. Now these same parties are starting turning on themselves :slight_smile:


#10

Thats vey interesting. How much knowledge do you have of it, and how widespread do you think it is/was.

How was the TAX effiencey achieved here, was it in charging VAT on the sale to the client?

I was aware that people would buy 5 & 10 units off the plans, you would hear it anecdotally, but moxt don’t consider the mechanisim. but I didn’t realise the complexity of “layers” involved in the transaciton. It would be interesting to understand the many angles of exposure here too, what degree of risk is there in this?


#11

I came across this when I lived in Limerick. We had our auditors in at the time and I commented , over coffee , that a new development I was looking at had nearly all the units sold and this was only the 2nd day of the launch. The guy said that their firm would regularly ’ block ’ up to 20 or so units and then present them to their clients for ’ investment ’ purposes. they would look after all the legal side , Sec.23 regulations , vat etc so it was the sleep easy option for their clients.

So the ordinary guy in the street never really stood a chance as he wasn’t on the inside track :cry:


#12

Right yea, simple It would explain the ability to hoover up so much property easily, you really need a finanacial team to do it right. Makes sense. I’ sure this will warrant a whole chapter in the book.

Section 23 is a farce, using the tax system to create & admninsiter something as complex as human society is a fallacy policy at best. S23 was let go on too long and only served the builders in the end and those who coudl afford to accumulate. As TUG says for every profit there is a loss and the loss I am afraid far out weights the profit on this one.


#13

Government intervention in the market created a regulatory failure which created a market failure.

I wonder how an entirely free market would have reacted to this boom? With an even playing field for investor, trader up/down and the first time buyer ?
Or on the other hand how we could regulate better to prevent this mess and the economic costs of both of these scenarios?
Any takers?


#14

Linked over from the Jeff Tucker on Newstalk thread here

thepropertypin.com/viewtopic … c&start=75

can anyone now provide a speculative response to Blindjustice’s questions above which would appear to never have been answered back in May. Would be interesting to hear the views of the resident experts.


#15

When some of the Bacon report was implimented like removing tax breaks like section 23, there was actually a stall/reduction in house prices. Rent prices however increased significantly and government reintroduced the previous investor friendly measures to increase supply. Then 9/11 happened and cheap credit arrived and higher commercial insurance. Commercial insurance is only now begininning to get down to 2001 levels. I wonder how long it wil take house prices?


#16

Two people earning a combined income of €80k hardly qualifies as “wealthy”. It’s not much above an average income. Couldn’t you just as easily interpret the figures as saying that as house prices rose there was a shift toward buyers with average-or-above incomes as they were the only ones who could afford to buy?

I’m not doubting that speculators fueled the boom to a large extent, but that table is hardly the smoking gun! All it does is show the incomes of buyers. Splitting them into speculators vs real buyers is just conjecture.


#17

Now, maybe some astute reader might correct me on the following. First I quote from the CSO which I recently used on thepropertypin.com/viewtopic … 2443#72443

That equates to €51,368.72 annually in 2005. Yet according to the table above, 80% of the recipients of mortgages given out in 2005 had incomes over the average figure :open_mouth:


#18

In the US there were prenty of what have become known as “liar loans” e.g. customers overstaing income and assets in order to borrow more than he or she can really afford. Is there any evidence of this in the Irish market?


#19

the figures show a definitive trend over the years.
Fiddling income figures can stretch it a bit but not to the extent of the evidence.


#20

I would say the only people that could get away with real liar loans (i.e. larger borrowing) would be the self employed who were self certing on the specialist mortgage application (i.e. sub primes) and then you wonder why one in every six is two months in arrears.

Apart from that unless someone was falsifying infomation (which is fraud) then people could’nt get away with too much in terms of overstating their income.