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 Post subject: The Law Of Supply And Demand, Irish Style
PostPosted: Wed Jan 04, 2017 7:00 pm 
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Adam Smith in 1776 wrote:

An Inquiry into the Nature and Causes of the Wealth of Nations

BOOK I. OF THE CAUSES OF IMPROVEMENT IN THE PRODUCTIVE POWERS OF LABOUR, AND OF THE ORDER ACCORDING TO WHICH ITS PRODUCE IS NATURALLY DISTRIBUTED AMONG THE DIFFERENT RANKS OF THE PEOPLE.

CHAPTER VII. OF THE NATURAL AND MARKET PRICE OF COMMODITIES.

The market price of every particular commodity is regulated by the proportion between the quantity which is actually brought to market, and the demand of those who are willing to pay the natural price of the commodity, or the whole value of the rent, labour, and profit, which must be paid in order to bring it thither. Such people may be called the effectual demanders, and their demand the effectual demand; since it maybe sufficient to effectuate the bringing of the commodity to market. It is different from the absolute demand. A very poor man may be said, in some sense, to have a demand for a coach and six; he might like to have it; but his demand is not an effectual demand, as the commodity can never be brought to market in order to satisfy it.

When the quantity of any commodity which is brought to market falls short of the effectual demand, all those who are willing to pay the whole value of the rent, wages, and profit, which must be paid in order to bring it thither, cannot be supplied with the quantity which they want. Rather than want it altogether, some of them will be willing to give more. A competition will immediately begin among them, and the market price will rise more or less above the natural price, according as either the greatness of the deficiency, or the wealth and wanton luxury of the competitors, happen to animate more or less the eagerness of the competition. Among competitors of equal wealth and luxury, the same deficiency will generally occasion a more or less eager competition, according as the acquisition of the commodity happens to be of more or less importance to them. Hence the exorbitant price of the necessaries of life during the blockade of a town, or in a famine.

When the quantity brought to market exceeds the effectual demand, it cannot be all sold to those who are willing to pay the whole value of the rent, wages, and profit, which must be paid in order to bring it thither. Some part must be sold to those who are willing to pay less, and the low price which they give for it must reduce the price of the whole. The market price will sink more or less below the natural price, according as the greatness of the excess increases more or less the competition of the sellers, or according as it happens to be more or less important to them to get immediately rid of the commodity. The same excess in the importation of perishable, will occasion a much greater competition than in that of durable commodities; in the importation of oranges, for example, than in that of old iron.

When the quantity brought to market is just sufficient to supply the effectual demand, and no more, the market price naturally comes to be either exactly, or as nearly as can be judged of, the same with the natural price. The whole quantity upon hand can be disposed of for this price, and can not be disposed of for more. The competition of the different dealers obliges them all to accept of this price, but does not oblige them to accept of less.


Fast forward to Ireland 241 years later in 2017

Limit residential property supply, especially where it is needed. Ignore increases in demand for residential property, especially where it is needed. Provide incentives for people chasing limited supply of residential property, especially where there is greatest demand and least supply.

Unnecessarily increase residential property development costs so capital is diverted down the easier route of acquisition rather than development.

What could go wrong?

http://www.independent.ie/business/pers ... 36958.html

Quote:
'Stimulating demand creates a bigger problem' - Property expert on Help-to-Buy scheme as 10pc house price jump forecast

Hopeful house buyers "will find it tough to find something", according to a leading expert on the Economist at Trinity College, Ronan Lyons, predicts that house prices will continue to rise between 5pc and 10pc over the next 18 months.

However, house prices in the capital have risen dramatically over the past three years - increasing by an average €102,000, or 46.2pc, since the end of 2013 - while those outside Dublin rose by an average of €48,000, or 36pc.

"It's important to distinguish the difference between Dublin and the rest of the country," Mr Lyons told RTE's Today with Sean O'Rourke.

"In Dublin there was a 5pc increase in prices in 2016 and that compares to a 2.5pc increase in 2015 so there is an inflation in cost in the capital. But it's still well below house price inflation outside Dublin - a 10pc increase in 2016.

"In practical terms it means that we saw countrywide an 8pc increase and the average asking price nationwide is 220k compared to a low of 160k about two years ago."

The same culprits responsible for pushing up house prices last year - lack of supply and a growing population - will lead to more double-digit increases this year, according to survey author Ronan Lyons.

Increases in house prices are particularly expected outside the capital, which saw double-digit inflation in 2016, according to Daft.ie.


The Help To Buy scheme should more correctly be called the Help Sellers to Make More Money scheme or Force Buyers to Compete More scheme. It is the state-sponsored financial equivalent of a wellie throwing competition.

Just as Cato the Elder was said to have ended every speech with “Delenda Est Carthago”, every post here should end with “Domus Sunt Construendae”.

Simpleton Simon is no Scipio Aemilianus. He is not even a Bob The Builder.


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 Post subject: Re: The Law Of Supply And Demand, Irish Style
PostPosted: Thu Jan 05, 2017 11:13 pm 
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Joined: Jan 28, 2013
Posts: 1336
Anybody who can't see that property in Ireland is just a racket is a total idiot. It's not going to end well.


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 Post subject: Re: The Law Of Supply And Demand, Irish Style
PostPosted: Sat Jan 07, 2017 1:42 am 
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Joined: Jun 13, 2008
Posts: 612
It's not that it's not going to end well.

It's patently already not well.

Ireland is badly run for a Northern European country its not funny.


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 Post subject: Re: The Law Of Supply And Demand, Irish Style
PostPosted: Sat Jan 07, 2017 2:23 am 
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Location: Oighearland
Mission Accomplished, property prices are restored. Even though Dublin has been stuffed beyond the brim with people , no one can afford to live there unless they are sharing three to a bedroom.

another property crash, how could that happen. more mass sell-off to vultures? we're the petri-dish for massive sell off of loans to vultures, this has to be replicated in another territory......

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 Post subject: Re: The Law Of Supply And Demand, Irish Style
PostPosted: Sat Jan 07, 2017 8:39 am 
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Yep mission accomplished. I don't care what the stats say Dublin prices are looking as mad as they were in 2006, especially for ordinary homes. Last time there was credit to fuel the madness this time there is panic, propaganda and government racketeering. I've given up predicting when the next crash comes however it feels close.


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 Post subject: Re: The Law Of Supply And Demand, Irish Style
PostPosted: Sat Jan 07, 2017 10:43 am 
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Joined: Oct 29, 2007
Posts: 11535
Location: Multiverse
Scratcher wrote:
Yep mission accomplished. I don't care what the stats say Dublin prices are looking as mad as they were in 2006, especially for ordinary homes. Last time there was credit to fuel the madness this time there is panic, propaganda and government racketeering. I've given up predicting when the next crash comes however it feels close.


We're probably 75% of 2006 prices (in the frothiest of areas).
It's easy to forget how truly insane boom prices were.

http://www.irishtimes.com/life-and-style/homes-and-property/victorian-house-in-rathgar-makes-4m-1.1026018


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 Post subject: Re: The Law Of Supply And Demand, Irish Style
PostPosted: Sat Jan 07, 2017 11:53 am 
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Property Magnate

Joined: Oct 12, 2014
Posts: 596
Location: Dublin
mr_anderson wrote:
Scratcher wrote:
Yep mission accomplished. I don't care what the stats say Dublin prices are looking as mad as they were in 2006, especially for ordinary homes. Last time there was credit to fuel the madness this time there is panic, propaganda and government racketeering. I've given up predicting when the next crash comes however it feels close.


We're probably 75% of 2006 prices (in the frothiest of areas).
It's easy to forget how truly insane boom prices were.

http://www.irishtimes.com/life-and-style/homes-and-property/victorian-house-in-rathgar-makes-4m-1.1026018


+1
Prices will be "surging" upwards for a while yet. All Govt policy (actual and unstated) is intent on it. I fully expect the VIs to focus their firepower on the LTI 3.5 limit through 2017/18, so that "the peoples can afford dem new builds".
They'll quote the example of the UK's higher LTI limit - which is working out like gangbusters for them over last few years. :-GC

Also, to the cash buyer the limits are irrelevant anyway. A lot of people in Dublin with increasing amounts of cash in last year or so.


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 Post subject: Re: The Law Of Supply And Demand, Irish Style
PostPosted: Sat Jan 07, 2017 5:26 pm 
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Planning Tribunal Attendee

Joined: Jan 28, 2013
Posts: 1336
FTBer wrote:
mr_anderson wrote:
Scratcher wrote:
Yep mission accomplished. I don't care what the stats say Dublin prices are looking as mad as they were in 2006, especially for ordinary homes. Last time there was credit to fuel the madness this time there is panic, propaganda and government racketeering. I've given up predicting when the next crash comes however it feels close.


We're probably 75% of 2006 prices (in the frothiest of areas).
It's easy to forget how truly insane boom prices were.

http://www.irishtimes.com/life-and-style/homes-and-property/victorian-house-in-rathgar-makes-4m-1.1026018


+1
Prices will be "surging" upwards for a while yet. All Govt policy (actual and unstated) is intent on it. I fully expect the VIs to focus their firepower on the LTI 3.5 limit through 2017/18, so that "the peoples can afford dem new builds".
They'll quote the example of the UK's higher LTI limit - which is working out like gangbusters for them over last few years. :-GC

Also, to the cash buyer the limits are irrelevant anyway. A lot of people in Dublin with increasing amounts of cash in last year or so.


I agree with what you say and there is no doubt the idiots in Government want a return to bubble prices (the fabled recovery). However there is no law that markets must retrace 100%. I agree they will like surge higher in next few months as there is nothing for sale and lots of panicked buyers out there..

2017 will be an interesting year. Will the Trump Slump arrive? Will it be the beginning of the end for the EU? Will the bond market finally collapse. Soon overpriced shitboxes in the trendy areas of Dublin might be the last thing worth talking about.


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 Post subject: Re: The Law Of Supply And Demand, Irish Style
PostPosted: Sat Jan 07, 2017 6:09 pm 
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Property Magnate

Joined: Oct 12, 2014
Posts: 596
Location: Dublin
Scratcher - I have no idea if prices will retrace to what they were in the sickness of 06/07. But i do know that the mentality out there among buyers is a little different.
FTBers are so desperate to escape a generational high in renting, that they just want to get out of the rental market, and they want to buy a home. There isn't - as far as I've seen among work colleagues - a speculative mindset of "buy for a few years then trade up" like was more prevalent in 2000 - 2006.

That's what makes this rise in prices so frightening for me: it's fuelled a lot more by desperation than speculation. People are also buying in at the margin of their financial limits, but at historically low interest rates.

It is potentially a bomb waiting to go off... I just don't know how much fuel the Govt and the people will manage to pack in to it before it blows up. Again. And I've no idea what the new peak in prices will be, and over what timeline it will arrive. And I don't know what event might precipitate the next crash.


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 Post subject: Re: The Law Of Supply And Demand, Irish Style
PostPosted: Sun Jan 08, 2017 9:53 am 
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Joined: Jan 28, 2013
Posts: 1336
http://www.independent.ie/business/pers ... 49621.html

Well as you can see that madness is certainly where it was back in the Celtic tiger days. What happens when we have another Lehman moment? I recall all of that 'supply' narrative, regurgitated, ad nauseam by our unbiased media, that fueled the last bubble suddenly evaporated into thin air. Caveat emptor....


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 Post subject: Re: The Law Of Supply And Demand, Irish Style
PostPosted: Sun Jan 08, 2017 12:46 pm 
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Property Magnate

Joined: Jan 17, 2014
Posts: 621
In theory, the government could resolve the problem by literally setting up a new large town outside dublin, on a major pre-existing road and rail link.

I would suggest making it walkable, with a small footprint and high density. Hire international experts on livable cities to draw up a street plan so that no point is more than 1000m away. If covered paths can be made universal, all the better for a rainy country where people die because they don't walk enough.

I would say have a mandatory four-story building height, with lifts mandatory. (I myself would opt for a tasteful reproduction of a medieval/early renaissance walled-town streetscape, because that's the type of living arrangement that pleases me best. But if people insist on a modernist style, fine. The point is to reduce car dependence and persuade people to live in ways that make public service provision simpler).

The state wouldn't build most of it itself, just the basic infrastructure (build the metro and piping and wiring tunnels before you set up the city). They would hire experts to specify exacting standards for builders to follow (like they do in tourist towns on the continent), then leave it up to builders to actually construct the individual dwellings. For major squares and signature buildings (main theatre, university, town hall) you want classically-inspired buildings. O'Connell St is a decent example of this kind of state-guided architecture. You'll notice that most of the buildings that were rebuilt after the rising are designed to a high standard. That's because the city authorities insisted on high standards.

All the state needs to do is look at the OSI surveys they already have access to, select the best possible site based on what they know. Then compulsory purchase the land and pass a bill. The city itself would probably be able to issue bonds to pay for the infrastructure build.

One thing is totally certain: the new town WILL, by total coincidence, be located at the intersection of at least three constituencies, so that over a dozen TDs can vote for it saying they brung home the bacon to the home patch.


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 Post subject: Re: The Law Of Supply And Demand, Irish Style
PostPosted: Tue Feb 28, 2017 8:56 am 
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Didn't know where to stick this, but sure as night follows day

Early signs that Help-to-buy could be driving up property prices

http://www.irishtimes.com/business/econ ... -1.2992084

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 Post subject: Re: The Law Of Supply And Demand, Irish Style
PostPosted: Tue Feb 28, 2017 10:48 am 
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Joined: Apr 4, 2008
Posts: 2561
NegativeEquity wrote:
Didn't know where to stick this, but sure as night follows day

Early signs that Help-to-buy could be driving up property prices

http://www.irishtimes.com/business/econ ... -1.2992084


But wasn't that not just the implied intention but the actual stated intention when Coveney announced it? Something about closing the gap between what people could pay and what builders wanted to sell for

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I know a lot of them, like [Jimmy] Flynn, [Noel] O’Flaherty and the Baileys. You meet the Baileys at Croke Park every time you go there. You can’t avoid getting a slap on the back going in from them. Most of these guys lost their shirt. I feel sorry for them - Bertie Ahern


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 Post subject: Re: The Law Of Supply And Demand, Irish Style
PostPosted: Tue Feb 28, 2017 4:42 pm 
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Property Magnate

Joined: Oct 11, 2012
Posts: 665
Joe-Levity wrote:
In theory, the government could resolve the problem by literally setting up a new large town outside dublin, on a major pre-existing road and rail link.

I would suggest making it walkable, with a small footprint and high density. Hire international experts on livable cities to draw up a street plan so that no point is more than 1000m away. If covered paths can be made universal, all the better for a rainy country where people die because they don't walk enough.

I would say have a mandatory four-story building height, with lifts mandatory. (I myself would opt for a tasteful reproduction of a medieval/early renaissance walled-town streetscape, because that's the type of living arrangement that pleases me best. But if people insist on a modernist style, fine. The point is to reduce car dependence and persuade people to live in ways that make public service provision simpler).

The state wouldn't build most of it itself, just the basic infrastructure (build the metro and piping and wiring tunnels before you set up the city). They would hire experts to specify exacting standards for builders to follow (like they do in tourist towns on the continent), then leave it up to builders to actually construct the individual dwellings. For major squares and signature buildings (main theatre, university, town hall) you want classically-inspired buildings. O'Connell St is a decent example of this kind of state-guided architecture. You'll notice that most of the buildings that were rebuilt after the rising are designed to a high standard. That's because the city authorities insisted on high standards.

All the state needs to do is look at the OSI surveys they already have access to, select the best possible site based on what they know. Then compulsory purchase the land and pass a bill. The city itself would probably be able to issue bonds to pay for the infrastructure build.

One thing is totally certain: the new town WILL, by total coincidence, be located at the intersection of at least three constituencies, so that over a dozen TDs can vote for it saying they brung home the bacon to the home patch.


Interesting idea, which sadly will never happen. A more realistic plan would be for the Govt to make a serious effort to designate Cork (or Galway) as the counterweight to Dublin, and invest heavily in transport and other infrastructure there, doubling or tripling the size of the University, along with moving half of the Govt departments there. The aim should be to have a population of at least 400,000. This would in turn lead to increased populations in surrounding towns and lessen the distortion caused by Dublin's size relative to the rest of the country.


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 Post subject: Re: The Law Of Supply And Demand, Irish Style
PostPosted: Tue Feb 28, 2017 6:44 pm 
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The simple solution is to slightly dumb down the building regs so that builders can build at what the market will pay with NO HELP and ratchet up the regs as the prices rise organically (if they do with supply coming on)

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