The Irish housing market has hit peak dysfunction. Stay away. The fourth quarter of 2020 saw the lowest level of supply of homes for purchase since 2006. In Dublin, supply was down 21 per cent last December relative to the same time the previous year, with just 3,400 homes listed and prices up 7.2 per cent over the same period.
In the Connacht-Ulster market these trends are more severe, with supply down 30 per cent over the year to December and prices up 8.8 per cent. In December there were just 15,390 properties listed for sale on Daft.ie – down about one third from an already low level a year earlier and well below the average 40,000 properties listed annually over the past 13 years.
The property market’s suppliers have gone on strike. Stay away from a market like this because it holds no value.
Millennials, single buyers and other aspiring homeowners, your euro is being debased because there are too many buyers chasing too little supply and, in all likelihood, the quality of much of what is on display isn’t that great. Supply has been affected by bans on viewing, meaning that second-hand property on the market is most likely probate housing, which is rarely suited to the needs of young buyers.
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Additionally, with a Covid ban on construction, there are no new developments. Therefore, most of what is on the market is second- or third-rate and far too expensive.
Such a dysfunctional market creates panic-buying, where the fact of rising prices panics people into buying because they are understandably unnerved, thinking that if they don’t buy “something” now, they will pay even more next year and the year after that.
A one-way ticket to bad decisions ensues, where one person’s poor decision propels the next person to jump in, compounding the poor decision-making. Such is the nature of group psychology. The only winners here are the sellers of second-rate properties.
Buyers’ strike
Aspiring buyers should respond to this year’s property supply strike by instigating a buyers’ strike. Staying away from the market for a year or two would give much better value, and the more people wait, the bigger the bargains. At the moment, young buyers are being abused by the market, mocked by an industry that has failed to provide homes for Ireland’s 30-somethings. They need to take back control.
There is a statistical link between people having children and buying property. Today in Ireland the average age of having your first child is 31, meaning we have an expecting generation trying to buy a home just when the Irish housing market is at peak dysfunction. Single people trying to buy face even more stringent affordability conundrums. Only the extremely well paid (or those with wealthy parents who will pay down not just the deposit but a large chunk of the principal) have any hope of acquiring their own place.
The housing/accommodation crisis is a national emergency. If we can lock down the country for Covid-19, we should be able to provide affordable housing for the millennial generation. Germany rebuilt its destroyed country in 10 years in the mid-20th century, brick by brick. This type of national effort is now required.
If the State will not or cannot accelerate supply, then, as a matter of extreme urgency, buyers have the power to turn the market on its head. It is time for a millennial boycott of a market that makes fools of them. A generation facing the prospect of low value per sq m could withdraw consent, borrowed money and demand.
Imagine a generation embargoing the market until prices and value come back to reality? When the price of homes becomes stable and affordable relative to income, then the prohibition on buying might be lifted.
So, rather than vote for the political party that actually builds homes, eradicates and penalises dereliction, forces the 160,000 vacant properties in the country to be made available as homes, curtails ridiculous planning restrictions, throws out bogus Nimbyist planning hold-ups, eliminates height restrictions and stops extortionate selling behaviour, 30-somethings could take things into their own hands.
History is replete with examples of oppressed minorities withdrawing financial consent from abusive landlords, racist retailers or oppressive systems. House prices will fall if demand is withdrawn.
Rigged market
The fundamentals are pretty straightforward. Ireland has the lowest population density in western Europe and among the highest land and home prices. This implies the market is rigged.
In the 1950s, then president of the United States Dwight Eisenhower warned the US of the military-industrial complex – a nexus of the military and its manufacturing base, the arms makers and security industry – capturing Capitol Hill’s decision-making. Today in Ireland we have a property-finance complex, which has weaponised the housing market for its own advantage, ransacking the expecting generation.
The worst thing about this state of affairs is that once you buy a property, you swap sides. When looking for a property, the buyer wants prices to fall, but once the property is purchased, self-interest morphs the new homeowner into a person who wants prices to rise.
However, this game of looting the younger generation to copper-bottom the wealth of the older generation can only go on so long. Eventually, prices go so high that rates of home ownership plummet, as is happening now. At this point, the state that is wedded to the property-finance complex comes up with all sorts of wheezes to keep the intergenerational scam going.
In Ireland, every intervention in the housing market is designed to keep prices high, whether it be “help to buy” or “equity to buy” schemes, 30-year mortgages, trackers or first-time buyer grants. Each is designed to capture more of the income of the average person for longer and transfer it to the clutches of landowners, banks and the various iterations of the property-finance complex.
Panic is contagious. Like coronavirus, it jumps from one desperate buyer to another. Unlike coronavirus, the high-risk generation in the property market is between the ages of 25 and 40, not over 80.
A buyers’ strike is a cure for this disease, a mass vaccine for a suppliers’ strike. Such as lockdown would stop the plague of rising house prices in its tracks.
As the ad says, the disease is still with us and we are all the solution. Millennials should hold firm. Don’t panic. You have the purchasing power. Use it – by not purchasing.