> Ireland had arguably the world’s largest housing bubble and crash in the 2000s, with prices quadrupling in the decade to 2007, even while supply soared, before crashing by more than half between 2007 and 2012. (emphasis mine)
That wasn't the accepted wisdom at the time. Prices going up spelled 'supply shortage' to most. When the tide went out (i.e. credit availability) it revealed an oversupply.
We should learn from this. Demand comes in two forms. Demand for housing and demand for property investments. We should not lose site of the drivers of the second type of demand. It can make what isn't a supply shortage look like one (and feel like one for the average person).
Edit: It's worth noting that 15 years after the collapse, prices in Ireland had finally recovered and once again a shortage of available housing is a reality. I say 'available housing', because the long term rental market is dire, but if it's a short term rental you're after, well...
Ireland taxes income and capital gains very heavily, and has some truly obscene structures like deemed disposal (taking 41% of your _unrealized_ gains in ETF's). I remember how much it stung handing over 52% of my options to the government so they could waste it on being stupid and incompetent.
They even have a history of going after people's private retirement savings after the fact - https://www.oireachtas.ie/en/debates/question/2024-02-22/119... - and I have ZERO confidence they won't simply steal people's retirement savings when convenient. How else are they going to bail out the farmers destroyed by climate change? (See the IFA's recent complaints about the "weather" that they caused)
""" It was charged on the market value of assets in pension schemes held on 30 June in each year at a rate of 0.6% (2011 to 2013), 0.75% (2014) and 0.15% (2015)."""
Not to mention that the companies handling retirement plans, etc. have gotten used to ripping off the whole country for ages because there were no better options. Want to put €100 in to a retirement plan? Well, we're going to take €5, just because, and also 1% of your investment every year, all so we can underperform a simple index fund (thankfully you can't invest in good index funds in Europe because the US ones won't file a KID form).
BUT! Your primary residence? You can sell that for 10 million more than you paid for it and not owe a cent in taxes. Too bad for all the chumps who rent and have to invest in the market!
I wonder why everyone puts their money in houses? It's an absurd ripoff of a country in every way.
A similar story in NZ. 0% tax on capital gains when selling a property. There is a so-called 'brightline test' which means that if you hold a property for less than two years or purchase a property with the intention of selling it for a profit you are expected to pay tax on those gains, but in practice this doesn't happen. Still waiting for the day that the tax department gets serious about questioning people's intent (as it is plain to everyone that yield is abysmal and capital gains is the real game - has been for decades).
The dialog about this in Ireland is "you can't tax HOUSES that's your gran's HOME you MONSTER!" (gran lives in dun laoghaire, poor thing) but 4 people renting a flat commuting to Dublin from Athlone with a few euro in trading212 or whatever are robber barons who should be taxed to the hilt. Not to mention the health service is appallingly bad and getting anything done takes an eternity.
And I failed to mention, it's not just the lack of capital gains tax, it's the lack of meaningful property tax. My own prop taxes were €103 a year (for a dump in Offaly admittedly) but they're close to zero for the most part.
So local renters work hard and pay mountains of tax to provide infrastructure (though most of it is crap stroads admittedly) making your own house worth more, so making you richer, and that value is never captured at any point or allowed to help the people who made it possible.
Nitpick: Your information on the brightline test seems incorrect.
AFAIK: Intention doesn't matter for property - instead the brightline rule matters. Intent matters for NZ shares. Intent matters for foreign shares costing <$50k in total. Intent also doesn't matter for crypto.
The bright-line capital gains tax rules look at the purchase and sale dates and there's a bunch of extra conditions so it can't easily be avoided.
The bright-line property rule looks at whether the property was acquired:
• on or after 27 March 2021 and sold within 5 years for qualifying new builds or within 10 years for all other properties
• between 29 March 2018 and 26 March 2021 and sold within 5 years
Changes are coming
For properties sold on or after 1 July 2024, the bright-line property rule will only apply if the property is sold within 2 years of acquiring it.
Yeah, I'm not totally sure what they're complaining about there? Cheapest US S&P500 is 0.03% TER, as far as I can see... And so is the cheapest UTCITS one (SPDR). The ones you've linked are world index trackers, so they're a little more expensive (as you'd expect; they'll typically have to manage about 2000 stocks vs 500, on many markets); they're also accumulating, which again adds a little cost (due to differing US rules on taxation of accumulating funds, accumulating funds are much rarer there, but they're well worth the few bps extra TER in most tax regimes in Europe).
The tax burden on the average person in Ireland isn't actually all that high; IIRC you have to be earning over 120k or so before your total tax burden is high for Europe. It's heavily biased towards the top.
> truly obscene structures like deemed disposal (taking 41% of your _unrealized_ gains in ETF's).
The thing about deemed disposal is, it's essentially a wealth tax, but it's a fairly well-targeted one as they go; generally it only makes sense to invest in ETFs after you've maxed pension contributions, because the tax relief on pension contributions is so generous. Anyone buying ETFs outside of a pension can be assumed to be decently well-off.
The trouble with deemed disposal is that it is difficult to administer. It was originally introduced to deter a form of tax avoidance where people would accumulate money, and gains, in gross roll-up funds (ie non-dividend paying accumulating funds) administered by life companies, forever, then use other engineering to pass it onto descendants largely untaxed, thereby allowing very wealthy people to avoid _ever_ having to pay tax on gains. As such, it wasn't designed with ETFs in mind. People do I think _overstress_ the difficulty of administration a bit, but it could certainly be made easier (for instance by forcing brokers to administer it, as some other European countries do for _their_ weirder taxes).
One quirk is that even _distributing_ ETFs, both gains and dividends, are taxed under exit tax; in practice, this means that in most circumstances no-one should ever buy a distributing ETF (if you're taxed as if you're in a gross rollup product, might as well take advantage of the gross rollup), but, exit tax being lower than income+usc+prsi, there are edge cases for heavily dividend-oriented ETFs where this treatment is actually beneficial.
> Want to put €100 in to a retirement plan? Well, we're going to take €5, just because, and also 1% of your investment every year, all so we can underperform a simple index fund
Is this an occupational pension?! If so you should raise it with your employer; those fees are very, very bad in this day and age. If it's a PRSA just move to a proper provider. Most occupational pensions and PRSAs should allow some form of passive index investment. My entire pension is in a fund tracking the MSCI AWCI index; I also have ETFs which track the MSCI World index. They perform similarly, both pretty close to the indexes (which are slightly different; 'World', confusingly, is developed-world only); the fees on the pension provider fund are a little higher than the ETF, though.
> BUT! Your primary residence? You can sell that for 10 million more than you paid for it and not owe a cent in taxes.
Of course, then you'll have to buy somewhere else to live...
I think the early-naughties housing crisis _was_ fuelled by bad tax policy; there were at the time in practice quite a few incentives to invest in buy-to-let property. The current crisis, though, not so much; taxation of buy-to-let has been tightened up a lot, and small landlords are leaving the market.
Then, and particularly now, anyone who is investing in property in preference to fully funding a pension invested in equities wants their head examined. I'd argue more or less the same for anyone investing in property _after_ maxing the pension, tbh, but I think there's maybe _some_ room for argument there?
From the article, it seems like the distortions were introduced by policy makers. There was a tax benefit from building new homes in certain places. In those places, prices went down. However, the policy allowed the tax benefits to be claimed against any homes the developer built. This meant a developer could build in tax advantaged locations even though there was already over-supply there. This did not help locations where there were no such benefits so prices continued to rise there. This creates a situation where supply increases (in tax advantaged locations) and price increases (everywhere else). This is a policy failure not a market failure.
Yes, the author (correctly, in my opinion) raises the issue of tax incentives. There are similar distortions in the Australian and NZ tax systems (mostly around taxation of capital gains).
What the author fails to emphasise more - and really should given the title of the article - is the part played by availability of credit. This was the nail in the coffin. It's possible to come away from this article with the impression that oversupply caused the crash, rather than the more correct take that it was a collapse in investment demand due to availability of credit (in my opinion).
Just overlay any graph of interest rates together with house prices for pretty much any market with an accommodation crisis and the correlation becomes pretty obvious. Interest rates go up and booms stop. Sometimes they crash spectacularly.
Kiwi checking in ... crossing fingers we're not about to enter the crash stage, but certainly the contrast in the past 2-3 years from property just flying out the door (low interest rates) to now (high-ish interest rates, lots of low rate mortgages rolling over) are very stark. Auction clearance rates are well, well down. Lots of houses getting passed in at auction which would have been unthinkable a few years ago.
Still having massive migration numbers which may stave off a full crash as ultimately there is an element of supply and demand - very very hard to get rentals.
We have just gone back to landlord welfare with tax durable mortgages possible. We are also circling in on having the country borrowing money to pay for such policies, while also trying to squeeze in tax cuts.
The attitude to housing here is just gross.
No major party is interested in changing it. I find it very hard to imagine this government (or any other in living memory) letting the housing market drop significantly.
catch 22 - if the housing market drops significantly, the country will be very close to going bankrupt, so all they can do is let air out as slowly as humanly possible.
A full on crash would be ugly. No matter what part of society you live in (well maybe except the 0.1%).
Labour did a pump and dump on immigration to make the books look a (tiny) bit better). National well, yes..
Yes and no. We have a lot of temp workers (students/under 30's) who come for the adventure, get sick of living in a van and going home again after their working holiday is done.
Some other people are willing to justify it (eg coming from the bay area). But I think the reality once they get here is different - about 3-4 years ago I was running a software co that was recruiting a bit of overseas people for the skills we needed, we started to get a few that would leave the country after they realised 'maybe the grass isn't greener'
> Demand comes in two forms. Demand for housing and demand for property investments. We should not lose site of the drivers of the second type of demand.
Has the US ever lost sight of the second kind? To me (as someone who feels hopeless about home ownership) that seems to be the only demand we care about. There’s barely anything new being built, constant blocking by NIMBYs, and investors buying up so much property when interest rates were dirt cheap. I really wish there would be some form of housing market crash but it’s nowhere in sight. My biggest fear is it’s going to come the moment I do end up buying after saving so much.
> My biggest fear is it’s going to come the moment I do end up buying after saving so much.
Honestly, I figured this was gonna happen after Covid, when we finally bought (in a good area, but a small house for far too much money).
However, here we are almost three years later, and prices have again increased such that I'm looking at a nominal gain of like 10% (now obviously inflation played a role, and we've put a bunch of money into the house).
The irish housing market just defies all understanding. We have whole areas of the capital city where the median price of housing is 650k euro, when the top 10% household incomes start at about 100k, and you can only borrow 4 times (for the last year or so) of your total household income.
It. Makes. Absolutely. No. Sense.
And this insanity cost me a bunch of money as I didn't purchase in 2019 because prices seemed too high.
Something something markets irrationality, me solvent.
It makes sense if you don't expect the median housing price to be determined by the immediate 4x income loan without any savings. If you think housing price should be income * borrow rate, then you're entirely discounting any amount of time saving up, like a 22 year old graduate that rents for 13 years and then after saving up for that time decides to dump 300k into property and take out a loan of 350k (4 * 87.5k/yr).
Also a huge factor, housing price is determined at the margins. If 70% of people already own homes, it doesn't matter what their incomes are. Only the 30% that are competing and trying to outbid each other, which of course is going to skew high income.
I.e in the extreme, you could have all of Ireland own their 300k homes and make 30k euro, but if you suddenly get 1% new population that needs to buy a home, and no one wants to sell, then the new 1% can outbid each other to the tune of offering 800k for homes, and it wouldn't matter that the people making 30k euro couldn't afford 800k homes, they already have them.
>you're entirely discounting any amount of time saving up, like a 22 year old graduate that rents for 13 years and then after saving up for that time decides to dump 300k into property
So that 22 year old starts out making the median, pretty good. Thats' 25k/year in 2010. 13 years later he's kept up and is making 39k now. He's supposed to have saved 300k to dump into a house in that time? That's probably more than 100% of his take home pay during that time period.
That doesn't explain the huge parts of Dublin with a 650k median price in a country where a household income of 100k puts you in the top 10%.
That's the part that seems insane to me. Like some proportion are cashing out previous gains but it's hard to believe that this is more than 50% of them.
Yes it does. You're assuming that the median person's income should be affording the median home price. But that's incorrect because it doesn't take into account peoples' existing asset values. Again, if most people have 300k home assets, and then recently high income people competitively outbid each other to raise those assets to 600k prices, only the high income people were attempting to buy a small % of the homes. But, it raised everyone else's prices to 600k. Now they have that as equity, even though their incomes were still like 40k, they're not currently on the market attempting to buy a house, and when they do, they'll have existing 600k equity.
> in a country where a household income of 100k puts you in the top 10%.
Note this point I made.
If we assume that I earn 100k, and have no house. I have savings of 50k, and want to buy a house. I can buy a house of 450k, four times my income plus my savings.
If I (theoretical I, at least) cannot afford the median (i.e. 50% of properties sell for more than this price) price in basically half of Dublin (not a small, city centre area), despite being in the top 10% of income earners, then something seems off with the market.
Even if I have a house worth 300k somewhere else, and everything else remains the same, I won't be able to release all the equity in this house as I've probably only paid half the mortgage (being generous) so I have an extra 150k.
I still don't have enough money to buy the median house in these areas, despite both having a house to release equity from, and a top 10% household (note not individual) income.
This seems very strange to me, but then I live here and have spent a long time trying to understand what's happening in the irish property market.
> Again, if most people have 300k home assets,
Note that this would be a mortgage free house in most of Ireland, until recently at least.
> But, it raised everyone else's prices to 600k.
This won't raise the median price to 600k, it will take way more sales to shift the median (if we're talking about the mean then this is more likely).
This is happening in many countries' property markets, including the US, Canada, UK, Australia, etc.
Two monetary factors can be used to purchase a house: income and wealth. You are assuming income should the only factor at play (it ought to be, but it is not), but not realizing that wealth is also used. The problem is that houses are now treated as a wealth asset, like a stock, with the expectations of 5-10% YoY growth, so there is an enormous appetite for dumping large savings/wealth into them.
> This won't raise the median price to 600k, it will take way more sales to shift the median (if we're talking about the mean then this is more likely).
Do you price a stock based on the median transaction of the last 10 years? No, because they are usually increasing in value. The most recent transactions provide a better estimate on approximately what the median or mean is. The shorter the time interval, the less data points, but the more accurate.
The crux of what you're missing is that home prices for everyone are set on the margin of most recent transactions, and income isn't the whole story, as that assumption isn't making sense to you or the data. It's because there is saved up wealth that is a large factor in price too.
The solution is to build enough to break housing as an indefinite 7% YoY asset, which will stop this awful positive feedback loop.
Yes, but don't assume 100% of people are home buyers right now. Many already own the asset, so it's safe to say maybe the top 5% are buying via income, and some X% are also using existing wealth/savings.
>In contrast, rents are a more reliable indicator of a shortage, no speculation there.
Take a look at the Bay Area. One major distortion: property tax is fixed at the time of purchase. So all these people who bought a house in 1980 are paying yearly taxes at the 1980 rate. This compels people to hang onto the property at all costs, what a lucrative rental cash cow. Of course this also means tax revenue via property tax is skewed heavily to be paid for by new buyers. Imagine paying property tax on a 2 million dollar house, valued at 80K.
This creates (a relative) oversupply in rental houses in the area due to people who intend to hang onto their homes forever. Naturally the area is very strong in NIMBYs seeking to retain home value, plus the political environment, is people who love the environment, so they will shed no tears if no houses are built in order to protect and preserve the pristine natural empty fields of the region.
That's all to say the home buyer/seller dynamics in a region indirectly influence rental prices - vis a vis whether the person deciding to "not live in this house" chooses to simply sell the home or to rent it. This creates a little mini- supply/demand factor interacting with rental prices.
> In contrast, rents are a more reliable indicator of a shortage, no speculation there.
You'd think so, wouldn't you?
However, again the Irish market disproves this to some extent.
So generally you look at rents as a 12-14 year payback window of the house price (for investment). What happened in Ireland in the last decade is that rents increased, such that investors could pay more for houses, which increased rents etc etc.
Like, there's all this purpose built accommodation in Dublin that's sitting empty because they want 3k euro for a two bed apartment. For reference, a top 5% taxpayer would clear about 6-8k euro per month, so those prices are entirely out of whack with what people can afford.
But because it's all private capital, it's mark to myth so many of these apartments are empty. I work near the Central Bank, and there's loads of gorgeous six-eight floor blocks of apartments, all of which are entirely empty while we have far too many homeless people.
> Like, there's all this purpose built accommodation in Dublin that's sitting empty because they want 3k euro for a two bed apartment.
Do you have evidence for this, or is it just something you believe? Last I heard, vacancy rates for REIT-owned build-to-lets in Dublin was _extremely_ low, with the exception of exactly one problem building which the media got very excited about a year or so back.
The real question is how that gets defined. We have multiple sources which disagree.
All I can say about my original post is that I've been in that area in the evenings after it gets dark and there's no lights which would seem to suggest that there's no one living there.
Additionally, I've looked in the ground floors of a few blocks and they look as though they've never been occupied.
If you're in Dublin it's well worth going down to the Point when it's dark and counting the number of apartments with lights on.
Thank you for this. It does clearly corroborate that figure of 9%.
Still, 230,000 dwellings of 2,125,000 in total is a lot to be be vacant during an accommodation crisis. As I said elsewhere, the number of vacant dwellings is higher than most would suspect.
Often the issue is where exactly those vacant dwellings are. Typically, booming metro areas will have a low vacancy rate, while the vacancy rate will be high in rural areas or declining cities, where economic prospects are more dubious.
Demand is local. If someone needs to live in Dublin for their work, it doesn't help them much if there's cheap housing a few hours away.
The only two studies I'm aware of that look at this (admittedly from ~10 years ago and for England and the city of Melbourne in Australia) suggest that the proportion of vacant properties is highest where prices and capital gains are greatest. Not intuitive, but that's what they show.
But yes, it would be helpful to see the breakdown of that census data.
Edit: There is actually a breakdown by county if you scroll down the page. Dublin and Cork appear to be at 6 and 7% respectively.
Quite, indeed in London the pressure group "action on empty homes" say it's 2.2% - and that includes second homes (people with a flat in London and a house elsewhere, airbnbs, etc)
That's a tiny number. Even if that number was zero there would still be a massive shortage. Most claims of "homelessness" ignore overcrowding, they're looking at people living on the street, or at most sofa-surfing, they don't look at overcrowded houses, at 30 year old adults with above-average wages who have to share family homes with half a dozen strangers in HMOs.
I don't know about Dublin but I would be surprised if it's not a similar demographic. A lot of cities have a fair amount of airbnbs because they work better for modern travellers than hotels
The biggest places outside the City of London (the square mile in the very middle, it's a special case due to its size) are holiday hotspots like Cornwall, South Devon, the Lake District, where holiday homes, either private or rented out ("airbnbs") make up nearly 10% of the stock.
They also (like action-on-empty-homes) claim airbnbs as "empty", which is a political view. There are about 200k visitors in a given peak summer week to Cornwall [0] and 13k "second homes" [1]. Assuming they are all holiday lets, and lets go for a typical 4 person family, that's 50k visitors. Slash those numbers and that's a hell of a lot of tourists not spending money, and a hell of a lot of jobs not being funded.
On the other hand cornwall could have its total housing stock increased by 5.6% and all the problems would apparently be solved - as there would then be the same number in primary residential use as exist right now.
That's census data, and their collection of data is... imperfect. A lot of those 'vacant' dwellings are one of:
* Occupants refused to engage with census taker (I used to have neighbours who did this; you can theoretically be fined for it but I don't think anyone ever has been)
* Home is in the middle of being sold
* Home is uninhabitable.
* Home is in the literal middle of nowhere.
I'd be in favour of measures to free up vacant housing (punitive tax on vacant housing etc; there _is_ a vacant home tax now but it's pretty small), but I wouldn't hold out much hope of getting a really meaningful amount of housing out of it.
Strictly speaking, rents (for long term rentals) can be an indicator of a shortage of available housing, but not necessarily a shortage in the total housing stock.
Second homes, short term rentals, and land banked properties are not available to use as a primary residence but are part of the total housing stock. I call these underutilised properties and suspect that there are more than most suspect.
Demand for purchasing these properties is not the same as demand for homes. That is what is often overlooked when people consider solutions to the accommodation crisis (i.e. usually happy to think no further than 'build more houses' without considering everything that pushes up demand).
The most reliable indicator of a shortage is abandonment of a price-based mechanism in favour of something else, like a lottery or needs-based selection. If price is able to select the buyer, then you can't possibly have a shortage.
That simply isn't the colloquial definition of a shortage. If rent is $20,000/month for a studio, going "well technically you can always get one if you can pay $20,000 a month so there's no shortage" is kind of a uselessly pedantic comment.
I agree, in the case of "rent is $20,000/month" calling that a "shortage" doesn't say anything. It is no different than a case where "rent is $200/month". There is nothing the reader/listener can learn by adding shortage into the mix in either case.
Pointless, yes, but I'm not sure pedantic is the right term for describing using a word in a way that does not communicate anything. But, to each their own.
You can set reasonable price benchmarks to define "shortage" by.
Your definition of shortage is too narrow. Price is always able to select a buyer. People will skip eating if you give them enough money. But if that only supplies a couple percent of buyers, that's not going to disprove a shortage.
> You can set reasonable price benchmarks to define "shortage" by.
If there is some kind of useful benchmark, exclaiming "shortage" doesn't tell you anything about that benchmark. Again, nothing is communicated. Pointless, indeed.
> Price is always able to select a buyer.
Always, except for when there is a shortage. There are all kinds of examples of where price cannot select a buyer, most commonly as a result of government intervention making it illegal to pay more than a certain price, leaving many buyers all willing to pay the maximum allowable price for a given good or service, thereby requiring some other kind of mechanism, such as a lottery, to determine the 'winner'.
Do you think there can only be shortages if there's price fixing?
If not, please give an example that doesn't involve price fixing.
I'll give an example for my argument: If there's only enough food for 90 people out of 100 today, it's easy for anyone with enough money to get fed, but it is also a shortage of food.
> Do you think there can only be shortages if there's price fixing?
Clearly not. I just got finished pointing to government intervention as the most likely reason for a shortage. How did you manage to not finish reading the comment before replying?
Price fixing can also theoretically lead to a shortage, but this is the least likely case. Usually price fixers want to push the price higher than buyers are looking to spend, not the other way around.
> If there's only enough food for 90 people out of 100 today, it's easy for anyone with enough money to get fed, but it is also a shortage of food.
Agreed, in two ways:
1. It is apt to end up a shortage as many governments have 'price gouging' laws that would prevent the vendor of that food from charging the fair market value in this type of event.
2. In this scenario, eventually no amount of money can buy food. You could be the richest person on earth, willing to spend every last cent you have, but you're still not eating if you happen to come late to the party. Price is unable to select a buyer, relying on a first-come, first-served mechanism instead.
That doesn't match the housing situation, though. The richest person in the world isn't going to find himself unable to buy a home, even if he takes his sweet time deciding whether he wants one or not. Even at the peak of housing insanity, there were still many houses available for purchase by anyone in the market.
When I say fixing I primarily mean government fixing. But thanks for insulting my ability to read because I used the wrong synonym (fixing/control).
Therefore I will ignore price gouging laws because that's a form of the above but also if reasonable they won't apply to a person selling their own single allocation.
> In this scenario, eventually no amount of money can buy food. You could be the richest person on earth, willing to spend every last cent you have, but you're still not eating if you happen to come late to the party.
If you come after everyone eats for the day then that's not a shortage by my reckoning. Price works just fine as long as you're not insisting on being served between meals.
It's not like you can expect to buy a house in less than a day no matter your budget.
So I still don't see a big difference here between 90 meals and 90 houses for 100 people. There's always a price that will get you one.
> So I still don't see a big difference here between 90 meals and 90 houses for 100 people.
The difference is that once the meals are consumed, that's it. 91st in line can't buy food no matter what. No amount of money is going to produce the 91st meal. As such, when food stocks are tight, you cannot rely on price to determine the buyer. You have to resort to some other mechanism. Given the limited information you provided, it would appear that you chose a first-come, first-served mechanism.
On the other hand, 91st in line for a house, if he has enough money, will buy a house from someone in the first 90 who got there first. There is always a house for sale. They don't disappear (freak disasters excepted). They are not consumable items. Even during the tightest inventory periods we've ever witnessed, there were still many houses available for sale.
Price can continue to determine the buyer here. Those who cannot afford them leave the market. Economically, this is not a 90 houses for 100 people situation. If there are 90 houses, then only 90 people will remain in the market. The other 10 are priced out. Those 10 are not market participants, they are simply dreamers. Dreamers don't count.
Socially, there can be a 90 houses for 100 people situation. I get you are wishing you could use shortage here, but what are you communicating? Everything with a price attached has more people dreaming of ownership than there are units available. That's why there is a price attached. That's literally what price is for – to reduce the number of potential buyers until the number of buyers matches the number of units available for sale, with price increasing until that is satisfied. Basic supply and demand.
When using shortage to include dreamers, everything is in shortage, always. What is the point in drawing particular attention to something that is always the case? It's pointless. You are not saying anything. Nothing has been communicated.
> if he has enough money, will buy a house from someone in the first 90 who got there first
Which takes longer than waiting for the next day. You're making a distinction that doesn't really exist.
> The other 10 are priced out. Those 10 are not market participants, they are simply dreamers.
I can only laugh at this. If people give up, then it's not a shortage?
You claim my definition makes everything a shortage, because you ignore the other rules I would apply because you think they're too subjective. But your definition makes nothing a shortage.
No...? That doesn't make any sense. People also have to give up when there is a shortage. Some people giving up is a constant here. I am sorry to report that the world does not have infinite resources. Economics is a thing only because we have to manage allocation of the limited resources.
If you want to take that angle, the mechanism by which they give up is what is significant. If they give up to a price-based mechanism, then you have what is considered a normally functioning market. But if price is unable to rise and thereby they have to give up to some other mechanism, then you have what is considered a shortage.
> You claim my definition makes everything a shortage
Frankly, I have no idea what your definition is. I stated that if you want to consider dreamers participants in the market then everything that comes with a cost is in shortage. Obviously. That's why there is a price. If we had the resources to allow everyone to have everything they could ever dream up, everything would be free. Any time you see a price of more than free – even just 1¢ - you know there are people wanting more of something than there are of those somethings available.
If it is that this does align with your definition – which I'm guessing is why you called it your definition – what are you communicating by exclaiming 'shortage', exactly? It doesn't say anything.
> If they give up to a price-based mechanism, then you have what is considered a normally functioning market. But if price is unable to rise and thereby they have to give up to some other mechanism, then you have what is considered a shortage.
In that case I can take just about any situation that has a "shortage", then reintroduce prices. Did I just solve the shortage? Assume I haven't changed production or consumption at all.
For example, if there's a lottery then simply allow resale after the lottery runs.
> Frankly, I have no idea what your definition is. I stated that if you want to consider dreamers participants in the market then everything that comes with a cost is in shortage.
We can establish a ballpark for what a sensible price is for most things. Don't worry about the exact number right now. If every house costs $1-10, there is not a shortage. If every house costs $1B-10B, there is a shortage. I think over 90% of people you ask would agree with those two statements.
> In that case I can take just about any situation that has a "shortage", then reintroduce prices. Did I just solve the shortage?
If there was a situation where price was unable to rise, and you found some way to enable price to start rising again thereby seeing a reversion to a price-based mechanism, yes, you 'solved' the shortage.
> For example, if there's a lottery then simply allow resale after the lottery runs.
Or just allow price to rise in the first place, not requiring a lottery to fall back on at all. If you can wave your magic wand like that so easily, I'm not sure what you've gained in the indirection?
Of course, in reality, if price is unable to rise before the lottery, for whatever reason, it's probably still not able to rise after the lottery. Sure, if it is policy driven you might be able to change the policy, but, again, why not change it right from the get go? You don't need to wait.
> We can establish a ballpark for what a sensible price is for most things.
Okay, let's put that to the test. OpenAI releases true AGI tomorrow. What's the sensible price for it? I've picked my number. Now you pick yours and let's see if we're in the same ballpark. What happens if you aren't in the same ballpark as me? Does that not invalidate your claim?
My intuition is that the only way we can come to agree on a ballpark is if we actually stop and talk about the numbers. Which is all well and good, but just saying "there's a shortage" does not get us there. "Shortage" does not communicate anything here.
> If every house costs $1-10, there is not a shortage. If every house costs $1B-10B, there is a shortage. I think over 90% of people you ask would agree with those two statements.
But what have you communicated with the use of shortage? Let's remove shortage and just say "Every house costs $1-10" and "Every house costs $1B-10B". What information was lost in the removal of "there is/there is not a shortage"?
Are you trying to use shortage as an indication of your emotions? As in, "Every house costs $1B-10B, there is a shortage." being roughly analogous to "Every house costs $1B-10B, I feel that is too expensive."? If that's the case, how can others agree? What grounds would you disagree on? You can't logically dispute how someone else is feeling. That like you saying "My romantic partner is great, I love them." with the retort "I disagree, you actually hate them!". It is nonsensical.
I have no more detail to give to my argument, so I'll keep this very brief.
> It is nonsensical.
You can have that opinion, but I find the idea that price-based distribution makes shortages stop being shortages, with no change in supply, significantly more nonsensical.
> What information was lost in the removal of "there is/there is not a shortage"?
Shortage is less information but it's also easier to say. For more realistic numbers the word shortage is more than an order of magnitude easier to communicate than raw statistics.
This may be your misunderstanding. The 'equation', for lack of a better word, is supply and demand, not just supply. Market conundrums can normally be solved by change in either supply or demand.
A shortage occurs when a situation prevents price from rising, thereby warding off a change in demand. This is where an alternative selection mechanism — examples including a lottery, needs-based, or first-come, first-served — will typically step in to solve the dispute given the constraints in supply.
> Shortage is less information
Less information than what? As you can see, when we removed shortage in the above examples, the reader was left with the exact same information. No information was lost at all. Shortage added absolutely nothing.
> This may be your misunderstanding. The 'equation', for lack of a better word, is supply and demand, not just supply. Market conundrums can normally be solved by change in either supply or demand.
> A shortage occurs when a situation prevents price from rising, thereby warding off a change in demand. This is where an alternative selection mechanism — examples including a lottery, needs-based, or first-come, first-served — will typically step in to solve the dispute given the constraints in supply.
Raising the price so high that demand disappears is not a way to alleviate a shortage. If 95% of the houses in the world disappeared overnight, that would cause an extreme housing shortage, even if it's a perfect free market where anyone with X amount of money can still get a house.
You can always find a point on the demand curve that fits any supply situation. That doesn't stop there from being shortages. "Shortage" is not a niche word that only applies when supply and demand has been prevented.
> Less information than what? As you can see, when we removed shortage in the above examples, the reader was left with the exact same information. No information was lost at all. Shortage added absolutely nothing.
This is like saying "If I give a three minute explanation, and also a 20 second summary, the summary added absolutely nothing."
The advantage of the summary is that you can use it in lieu of the full explanation and it's a lot quicker.
> Raising the price so high that demand disappears is not a way to alleviate a shortage.
Then this must mean that there is a shortage of jets? I most definitely am not paying that high price – you presumably aren't paying that high price – the price of jets is so high that demand has disappeared from almost all people. I'd certainly buy one if they were significantly cheaper. Who wouldn't? But at the prevailing price, no way.
Does that differ from a $1 plastic trinket? I'd take a plastic trinket if it were free, but for $1 my demand is lost. I'd rather spend $1 on something else. I guess that means the plastic trinket is also in shortage since I have decided not to buy due to the price tag being too high? And not just me. The average run for a plastic trinket is around 25,000 units, so we know demand disappears by the vast majority of people at the high price of $1.
What's not in shortage? Even literal garbage will see an increase in demand if the price goes low (negative) enough.
> If 95% of the houses in the world disappeared overnight, that would cause an extreme housing shortage
Agreed. The nature of lag would ensure that price could not react in a timely manner to such an extreme event. Eventually correction could take place, but a shortage would ensue for a period of time.
> "Shortage" is not a niche word that only applies when supply and demand has been prevented.
What on earth does "supply and demand being prevented" mean? You cannot prevent supply and demand. It's not a thing that can be manipulated, it's just the observation of humans (and sometimes animals!) interacting with each other in the face of scarcity.
> "If I give a three minute explanation, and also a 20 second summary, the summary added absolutely nothing."
Well, then, let's reverse it: "Housing, there is a shortage" and "Housing, there is not a shortage". What did I learn from those statements? We will assume I didn't learn that price is able to rise in one case and not in the other. But there is nothing else I can possibly learn from that. It doesn't say anything.
If I read you correctly, I am of the understanding you intend it to mean that housing costs more/less than some "reasonable" number range you've randomly come up with, but as you have not communicated the range held in your mind, it leaves me with nothing. The only way that can work is for you tell me the range, but once you've done that, "shortage" doesn't add anything. Why would you include it?
If you can't learn any information from "shortage" then that's your problem. Most people can.
> Agreed. The nature of lag would ensure that price could not react in a timely manner to such an extreme event. Eventually correction could take place, but a shortage would ensue for a period of time.
Even after the prices correct, it would still be a shortage.
Digging out of that pit of missing units would take orders of magnitude longer than the price adjustments.
> jets, trinkets
You could easily get a trinket at trivial cost if you wanted it, so it's not a shortage.
For jets, we need to consider the utility of them and the production cost. You can't get one, but having one is not important to you, and the price is not being inflated by supply problems. So it's not a shortage (For individuals, at least. Airlines or countries can experience a jet shortage.)
> What on earth does "supply and demand being prevented" mean? You cannot prevent supply and demand. It's not a thing that can be manipulated, it's just the observation of humans (and sometimes animals!) interacting with each other in the face of scarcity.
The stuff you said earlier about government intervention, lotteries, etc.
> If you can't learn any information from "shortage" then that's your problem.
I can learn information when used as people usually use the term. The dictionary definition conveying how most people use the word is quite clear. It is just your usage that doesn't seem to communicate anything. Although I keep asking what it is you are trying to say in an effort to figure out what your non-standard usage is attempting to communicate, but perhaps it is not explainable. I do wonder if your usage's intent is as a scare word? Do you hope we are frightened when you say "shortage"?
> You could easily get a trinket at trivial cost if you wanted it
Yeah, okay, it's trivial compared to my means, but exceedingly expensive to other people. $1 is a substantial chunk of the typical yearly income in Niger, for example. They flat out can't afford a $1 trinket. That is a shortage by what you're telling us, surely?
If not, I take it that shortage only applies when people are as well off or more well off than you? But how can we know how well off you are? And what makes you the benchmark? Why not, say, Jeff Bezos?
> but having one is not important to you
Says who? I would say it is quite important to me. My quality of life is severely diminished not being able to afford a jet. If I want to fly, I have to, <shudder>, rent space on a flight with other flightmates to get the cost down to something manageable, and even then it's still a substantial cost.
If that's not important, then buying a home isn't important either. You can equally find a group of housemates and rent a house. Everyone who wants a roof over their head can have one, even if it requires some compromise on comfort. Owning a home is not a necessity. In fact, historically, owning a home was quite unusual. Only in last ~75 years has it become 'normal'.
> The stuff you said earlier about government intervention, lotteries, etc.
I don't follow. How does that relate to "preventing" supply and demand? That is supply and demand.
What do you mean unless? If no amount of money can produce something then you cannot select a buyer based on price. You have not found an exception. You're parroting the rule.
I can't speak to Ireland, but at least in Canada, between 1990 and 2020, rent increased by about 1.6x whereas house price increased by about 6x. I personally believe that declining interest rates are responsible for this decoupling. This also coincided with an increase in investor ownership, just as you suggest. Interest rates have started rising recently, and we are now seeing a rapid growth in rent costs while housing prices have basically flatlined or fallen slightly. This makes sense if you relate the two in terms of the price a rational investor would pay in order to own an asset providing a certain stream of rental income.
Edit: But seriously, it's available housing that matters. We can have a shortage of available housing with an oversupply if investment demand is high enough. That is what the Irish experience demonstrates. Only second homes and investment properties can be underutilised...
This is why I believe that any government serious about tackling an accommodation crisis should start by determining what proportion of homes are being used as a primary residence.
Rents go down under pretty much one circumstance: demand drops. People leave an area, or local economics suffer so people double up in housing, or people die.
If there are any examples of times/places where rents have fallen in nominal or real terms, they will almost all coincide with this kind of demand drop.
Supply-related rent drops are theoretical and almost never happen in real life. Supply is important anyway, because otherwise rent growth accelerates faster, but the market will almost never supply housing to the point where rent change is negative.
They happen in parts of the market. Subsidy creates a price floor, but new construction will knock down older premium priced apartments outside of highly desirable areas.
People who advocate for tenements usually do so to eliminate the price floor.
That is a rather broad question IMO. I do not own a home due a perfect storm of things (tragedies, health issues, etc), despite making north of 200k/year for many years.
My rent in my single family home has only ever gone up when we had a large property tax increase in the area. I actually looked the increase up for our place and the landlord ate most of the cost. They have NOT raised rent outside of that. They are super responsive to repairs and stuff as well.
Broadly, I'm sure rent prices are on the rise, but there are many reasons for that, with rent comparison/adjustment software being a big part of that.
I have alluded to this on social media platforms, but really, the only permanent solution to stopping explosive price increases on renting or buying. We did this for health insurance and it really did a lot (more than most people realize), if property sales and rent were limited to say, inflation, or even inflation + 5% I suspect things would change quickly.
As an aside, I'm quite shocked by what has happened to the property market in Australia since (particularly Sydney). It stands in stark contrast to NZ. I'm pretty confident that it won't continue this way for too much longer. A recent new report suggested the majority of recent sales in Sydney were to cash buyers. How long can that last? The higher rates will eventually have an effect.
Im in Sydney as well. I suspect the immediate effect of rates shook out in Q2/Q3 last year when there was a big dip. Since Q4 inner west-ish prices are up another 10% for properties Im tracking. Clearance rates are still around 70%, though I see a fair number withdrawn beforehand instead of passed in.
> new report suggested the majority of recent sales in Sydney were to cash buyers. How long can that last?
A long long while. Every existing owner, 60% of the population, is at the top of the pyramid scheme. Anecdotally from agents and my observation is the ones selling an existing proprry are cashing out, doing a price insensitive downsize, and/or buying a “first home” for family members. More pressure on the middle market.
Similarly our net new residences and net inward migration is still insane. Something like 40k residences and 500k new people. Interest at a historical norm of 7% isnt going to do anything in light of that. Especially with good odds on RBA decrease this year or next.
Extends to the rental market as well. Minus the inner city covid pause rents are also tracking 10% or higher gains year after year.
So yes tax insanity, finance, and “investment” memes have cooked us. But I dont see anything getting materially better in light of that supply and demand.
Supply soared but I believe that population soared as well and continues to soar.
Exuberance may have been created by easy credit and speculation but the root cause was indeed a growing market fuelled by real demand, which is a common pattern. Growth attracts investors and speculators.
I live in NZ. We have a rapidly growing population with one of the highest levels of immigration in the world.
From late 2021 mortgage rates went from as low as 2.5% up to around 7%. Subsequently, in my city, prices quickly dropped 20% and both the number of properties available for sale and for rent increased by as much as 50%. Where did those properties come from? In my opinion the increase is representative of the underlying existence of underutilised properties that are a result of excessive investment demand that has now fallen dramatically.
I am firmly of the belief that a property boom can cause an increase in the proportion of underutilised properties even in the face of growing demand for homes - especially now that short term rental markets are playing a bigger part.
It's the same situation as described in my comment.
You have a robustly growing market so it attracts investors and then speculators, especially if money is cheap. This drives increase in supply but that lead to a bubble. For instance, new builds can be snatched by speculators even if they remain empty because market value increases 10% year on year so who cares... until something happens and the bubble pops. Again, this is a common pattern in growing markets.
People might also try to sell to avoid repossession if rate hikes make mortgages no longer affordable.
There has been an absolutely huge amount of building going on - and while developers are sensitive to mortgage rates, they would have started building prior to interest rate increases.
That said, had building slowed? It’s building sites everywhere I go.
I spoke with someone that helps developers with submissions and interestingly they said they are really busy right now. Turns out though, they aren't busy with new consents but 'minor amendments' - the purpose of which is to reset the 5 year timeframe for the original consent. In other words, they don't want to go ahead right now.
The situation in china has a difference between the situations you find in the west (like canada/australia).
The local gov't in china does not have any NIMBY's at all (they have no rights like that in china), so the local gov't allows developments as long as somebody is willing to pay the price of the land. After all, this is how the local gov't gets their funding.
The central gov't decided to pop the bubble early (before it became the Japan level of bubble back in the late 90's early 2000's). It's hurting of course, but probably a right sort of hurt as it's really investors that lose out (and china actually, imho, doesn't want an investor class being large and demanding more rights as they become richer and richer).
In the west, such a bubble is difficult to form if NIMBY's stop high density development.
Gary Stevenson [0] is the only economist who makes sense to me on this issue. He mostly speaks about the UK but we're basically all in similar boats with house prices across the English speaking world.
Gary put his money where his mouth is, and was the world's most successful trader for three years running. However, since he talks in a candid and coherent manner about inequality and the stunts the ultra-wealthy pull, you'll never see him get to talk for very long on any mainstream news source.
That hasn't stopped his new book from being successful though, due to the popularity of his YouTube channel.
Very good video. The quote that stood out to me was „This is what happens when a country has basically given up on taxing the rich“.
I wonder why this is happening all over the planet. Shouldn’t there at least be some countries that try to remedy this? Why do ALL the countries have given up on taxing the rich, when, just ~100 years ago, we had massive taxation on wealth even in the US?
He does seem to have a pretty good take on the bigger picture.
What it means for me, is to pay close attention to anything that looks like another round of QE. I'm sure it will happen, just a matter of when and how much.
I like the video. But I just can’t imagine “The Rich” hoarding lots of cash to lend out? Look at Donald Trump unable to get cash at hand for example to pay a fine that is a fraction of his worth.
I think the rich will be heterogenous in their assets but most will have non cash assets and borrow when they need cash. Having money out of asset markets so they can time the market based on interest rates doesn’t seem likely. Better off holding SPX or investing in the businesses they probably own that out perform any investment on the open market (for example a company I worked at 100x value in shares over 12 or so years).
I’m not sure what’s different, but I will chime in to say that I’ve been reading about Canada imminent bubble burst for 15 years. I mean, eventually someone may be right, but had I let this get to me and not buy my house 12 years ago, I would be in a much worse position today.
Be careful with people trying to predict how markets will move.
Canada had a massive housing crash in 1990. Housing pricing dropped in Toronto by 30% on average (less in the core, up to 50% in the suburbs). Home owners were screaming for relief. If you bought in 1989, you didn’t break even accounting for inflation until 2005 or later.
The last decade has been Groundhog Day compared to the 80’s. Complaints of limited supply, people saying “these prices are the new normal”, people taking on more and more debt.
To me the most obvious indicator of a bubble is the disconnect between wages and home prices.
Toronto has almost the same home prices as San Francisco yet: 1) wages are lower, 2) taxes are higher and 3) mortgages can’t be fixed for 30 years.
Fundamentally it just doesn’t make sense. Sure immigration can drive demand, but the affordability issue remains. What’s driving it is speculation - people think they’ll make a lot of money so they take bigger and bigger risks - fraudulent mortgages, “interest rates have to come down” mentality, “the government will never let housing prices drop” mentality, private mortgages that let borrowers leverage up way beyond government standards.
I have no idea when it will correct but I’m confident that they will - they always do.
People comparing income multiples in the 80s with today aren’t factoring the increased number of two income families, or even more. In london there are many houses which in the 80s had one income, maybe one and a part time which today have 4 or 5 incomes in a HMO.
Meanwhile empty housing is at very low levels and barely makes a dent (about 1%)
When you have 4 professional adults sharing a 3 bedroom house, there’s a supply shortage.
What’s the income like, though? The further back you go, the more women were held back on hours or career advancement, while many traditionally male occupations had more opportunities & security. The World Bank figures that site uses include anyone who is “economically active” so a household in 1980 with a full-time father and a mother working part time at much lower wages still count as a two-income family the same as a dual-lawyer couple in 2020. The more interesting figure for me is the pay disparity halving over that period, which sounds like a lot of women moving from lower skill/hour jobs to better paying ones.
That may be true, but houses aren't that expensive. If you're, say, Austin Matthews making $13MM per year in Toronto, you can still buy a lot of houses. That capacity is not diminished by some tech mogul in SF making $130MM per year.
The question is, as always, will something better come along? Indeed, housing is the purchase of last resort. Give people something better to buy and they will! People in Canada especially are happy to buy real estate like mad at this juncture because, frankly, what else is there to buy? Canada doesn't offer much else. You're not going to work to make $13MM just to hold an IOU forevermore. People making $13MM want to collect on what they've created and have something to show for it.
The US housing market crashed back in 2006 because tech started showing promise ("Web 2.0", mobile shortly thereafter) and the money left housing to buy into the newfangled tech. It's not clear what Canada's equivalent will be. Granted, it's banking heavily on skilled immigrants to come up with something, so there is possibility of yield. Time will tell.
> The US housing market crashed back in 2006 because tech started showing promise ("Web 2.0", mobile shortly thereafter) and the money left housing to buy into the newfangled tech.
This is definitely the first time I’ve read this. Do you have more info on that?
> This is definitely the first time I’ve read this. Do you have more info on that?
This would be a particularly unique explanation for the bursting of property bubbles all over the world (like, does this also explain the Irish property bubble crashing?).
> If you're, say, Austin Matthews making $13MM per year in Toronto, you can still buy a lot of houses.
If you look at the statistics, the houses in Canada aren't being bought up by rich people, they are being bought by middle and upper-middle class Canadians. Even the "investors" tend to be individuals buying one housing unit as an "investment".
> The US housing market crashed back in 2006 because tech started showing promise
That's wildly revisionist and doesn't really make sense. "Tech started to show promise" so you're saying that people stopped by homes? How many middle class Americans (who make the majority of home owners) shifted their investments from housing to speculative tech stocks? I think you overestimate the penetration of tech into the middle class - most people I knew hadn't even heard of AirBnB until 5+ years after they become "hot" in Silicon Valley.
> the houses in Canada aren't being bought up by rich people, they are being bought by middle and upper-middle class Canadians.
Sales don't happen in a vacuum. The middle and upper-middle have to pay that much because second in line is willing to pay almost as much. Matthews could make an offer of $999,999 on every house for sale in Toronto. He may not get any of them in the end, but in doing so he forces you to pay at least $1,000,000 if you want one.
After all, if you were the only interested party you could just throw a couple of bucks out there and eventually some seller will have to give in. Landowners will not hold a property only worth a couple of bucks in perpetuity. If nothing else, property taxes will eventually compel them to unload it. It's other interested buyers that push you to pay more.
> "Tech started to show promise" so you're saying that people stopped by homes?
Sure. Again, not a vacuum. To stick with the hypothetical for the sake of illustration, let's say Matthews was making such offers but now is enthralled by some AI startup in Montreal instead. By removing those $999,999 offers from the equation, that gives more room for you to come in at a lower price.
Sure, but your examples don't make any sense. Matthews isn't bidding $999,999 on every house. Nor will sellers agree to $2 just because there aren't other buyers.
Property taxes are actually quite low in Toronto compared to other cities. $6k per year on a $1M house is pretty low carrying costs that will prevent you from taking a $999,998 loss.
> To stick with the hypothetical for the sake of illustration, let's say Matthews was making such offers but now is enthralled by some AI startup in Montreal instead
But the overlap between home buyers in Toronto and tech investors who do seed rounds in Silicon Valley is very small, especially for entry level homes.
> Nor will sellers agree to $2 just because there aren't other buyers.
But that's what the house is worth. As the saying goes, something is only worth what someone will pay for it, and $2 is the only possible offer here, given the hypothetical scenario.
Absolutely someone will give in to the $2 offer eventually. People pass on. The estate isn't going to leave the property just sitting there paying $6k per year doing nothing, when, again, it is only worth $2. It is not worth $1M in this hypothetical scenario. I don't know where you dreamed up that idea. Given the conditions of the hypothetical, there is literally only one buyer, and that buyer is only paying $2. It's a $2 house no matter how you slice it.
Again, it's other buyers willing to pay more that push you to pay more.
> But the overlap between home buyers in Toronto and tech investors who do seed rounds in Silicon Valley is very small, especially for entry level homes.
A few things:
1. Even just one party losing interest in buying a house who has decided to reallocate the funds to a different investment can start to change the dynamic. This idea that every homebuyer needs to consider investing in something else is unfounded.
2. There are knock on effects when someone provides seed funding. Maybe they sold their stocks in Coca Cola to cover the seed, for example. That opens a vacuum that someone else needed to fill – can't sell Coca Cola stock to nobody. Eventually the money is going to be drawn away from housing given the change in allocation, even if through many layers of indirection.
3. The money also isn't leaving necessarily because of investment. There is also an outflow on the consumer side. Tech wasn't showing promise because nobody wanted anything to do with it... If you were prepared to spend every last dime you have on your house to buy into a market you otherwise couldn't afford, but then Jobs just announced that "one more thing", that shiny new iPhone is beyond your grasp. But you want it! It's so cool. So now what you are willing to spend on a house has been reduced, and when you make an offer it isn't going to come in as high. Multiply that out across many players and soon there is a lot less interest in keeping the prices high.
Canada's population just grew by a million people in 9 months; that's like 3%+ annualized growth. Add to that specific regions (Alberta just experienced net migration from every province and territory) and I find it hard to believe that anyone can predict "property bubble" with accuracy greater than 20 years resolution. I'm sure that won't stop so pundit from claiming victory when the music stops (or slows) and they have a chair.
People predicting the Canadian housing bubble would burst probably didn't think the government would resort to such absurdly high levels of immigration.
I'm interested that you used the word "absurd" - how come? Historically nothing sets up a country better for future success than lots of immigrants - if it's paired with government policy that doesn't discourage growth...
First canada has one of the largest population growth rates in the world (very unusual for a G7 country)
Second, Canada had absolutely terrible business development investment. There is no capital to make use of the increase in population and as a result the GDP per capita is going negative every quarter.
Now that the quality of life in Canada is dropping, highly skilled Canadians are trying to get out as fast as they can making the Canadian market even less competitive.
I don't think this combination of variables has been present in previous population booms (post WW2). I think we are in new territory here being pushed aggressively by a few companies trying to find even cheaper labor than what was possible.
If Canada took in half the number of immigrants it does it would still have one of the largest rates in the world. We are massive outlier for how many we are taking in and all sorts of things aren't keeping up with the demand. The biggest two are home building rates and the health care sector but there are other problems as well.
Canada has 21% immigrants[1] - it is not an outlier compared to AU/NZ. Canada needs 1/2 again as many immigrants to match Australia which has 30% already. I'm in New Zealand with 27% foreign born.
Net migration per 1,000 people (2023) figures[2] are: Australia 6.4, Canada 5.4, New Zealand 4.8
So Australia's immigrant population is also growing 20% faster than Canadas. (albeit emmigrant numbers included so perhaps I'm oversimplifying - I'm not familiar with Oz - but New Zealand has significant outflows).
The relevant number is not so much how many people are born outside the country which can include 90 year olds who came to the country in WW2. But rather the YoY population growth from immigration, which is a more accurate measure of recent influx.
Canada welcomed 471,550 new permanent residents in 2023 and had an increase of roughly 550,000 temporary residents. That's a net influx of over 1M people for a country of over 40M. Most of Europe takes in about 1% of population in immigration not 2.5%. Australia targeted 195,000 permanent places and a total of 548,000 places across permanent and temporary programs. For a country of 26M that's 2.1% which is still extremely large but well below 2.5%.
Also even if we use your numbers, Canada mostly accelerated immigration in 2023 and 2024 but already by 2021 our immigration percentage was up to 23% according to our census so your numbers are badly out of date for measuring recent immigration. In terms of reaching 30% with a net influx of over 1M immigrants a year over those two years, Canada could be as high as 27% immigrant now. Which even if it is lower than the raw total in Australia I'm sure we can acknowledge is a very rapid change that puts major strain on services.
Your data source has Canada's net migration at 249,000 which is absurdly small compared to Canada's own data. Canada's own data has migration out of the country at 94,576 people but for the 249,000 number to make sense that number would have to be closer to 750,000. It's clear we are using very different sources to calculate the numbers. I'm 100% convinced your source has badly incorrect data for Canada.
I know nothing about Canada's immigration issues, but I did listen to a conservative podcast[1] the other day and at 20:30 it mentioned the 2023 numbers for Canada were:
• 1.27M immigrants
• 471k settling
• 804k temporary residents
So unless our sources are careful how they measure immigration there's a lot of scope for misunderstanding.
No idea why your number is 550k and the podcast mentions 804k.
> I'm 100% convinced your source has badly incorrect data for Canada.
The 249,000 number is sourced from a file provided by the World Bank. It isn't obvious where the World Bank get their number from. Don't ask me!!! Yeah, it looks wrong, but I don't care enough about the topic to go into it further.
Either way from the foreign born population percentages it is very clear that Australia and New Zealand have been accepting lots of immigrants for years and Canada would need to have much larger immigration numbers to get close to catching up.
If you are interested in the effects of immigration on Canada, then keep an eye on Australia and New Zealand to see how it is affecting them.
> For a country of 26M that's 2.1% which is still extremely large but well below 2.5%.
You are comparing chickens to bandicoots. Either compare residents or compare totals including temporary. You are being epically misleading to compare between the two.
From your own numbers, resident immigrant growth is ~1% for Canada (471k/40M) and 2.1% for Australia... I would guess New Zealand is around the 2% mark. I have little idea about temp numbers, but they are not zero.
I've personally just been looking at having a student guest rent a room at my place for $250 per week - students don't create as much pressure on housing. Permanent immigrants definitely do.
You seem to me to be trying to misinform.
When people talk about the problems of immigration they are not generally talking about temporary students and temporary workers. Might as well as add tourists on too - they are a contentious issue where I live.
I mostly care about immigration numbers, but you are using temp numbers. Yeah, Canada's temp numbers are whacko and that is discussed in the podcast: the temp student numbers surely can't be sustainable for Canada in the long term.
I think 804k is the number of new temporary residents and 550k is the number of net temporary residents. I think it's reasonable to care about the net change in population from immigration because people are going to strain services in mostly the same way whether they are temporary or permanent. I think many temporary residents do strain housing in similar ways though, Canada has seen a massive increase in demand that seems larger than the 1% number you cared about.
Also I think you're just willfully misinterpreting me at this point because the 2.1% number for Australia included temporary residents. The number for Australia based on only new permanent residents is 195,000/26M = 0.75%
I think the issue with this conversation is that you have been talking about temporary immigrants all along, but I did not realise that originally so I have been talking about permanent immigrants all along. Hopefully both of our comments make a lot more sense in that light.
Your first post used the word "immigrants" and talked about the home building rates and the health care sector. Most people don't expect temporary immigrants to have a large impact on health care costs. So I think my initial misunderstanding of you is sensible. I would guess most people mean permanent immigrants when using the word "immigrants" - however I don't know your background...
We also obviously need to be careful when using annualised numbers. For example plenty of the students that come to New Zealand come to learn English over say two months (as I have just been learning since I'm looking at renting a room out to a student or worker).
6 student visas for two months consecutively has the same yearly impact on resources as 1 permanent immigrant. Adding tourist visa numbers to immigrant numbers would be similarly misleading for the same reason. Perhaps we need numbers for a snapshot of all visitors? The information is available to our immigration departments - they know how many people are currently in the country at any point in time.
If the 550k number is a sample at a point of time during the student year then it can be compared as an annualised number - but I can't know the context of your number without knowing your source. If it is a number of VISAs then the number needs to be annualised to work out impact on resources.
I completely agree that temporary immigration has an impact on resources and residents.
I believe that temporary immigration is nowhere near the impact that permanent immigration has on resources - especially in the long term where retired immigrants DO massively affect the health system costs. Temporary immigrants are mostly healthy and sick ones should be covered by travel insurance?
The podcast mentions one long term impact for Canada: that temporary immigrants can have a baby and Canada gives the baby citizenship.
In New Zealand we have massive numbers of tourists over our summer which has a heavy impact on our resources (including housing due to AirBnB). But tourists do pay their way and don't have a long tail of costs (retirement etcetera).
If we wanted to compare temporary residents, then I can include tourists during the tourism season, and suddenly you will find that the numbers for New Zealand are ridiculously high! However I have no idea what it's like for Canada. Our tourism season has a heavy impact - but mostly on tourist locations - less so on our metro areas (although I see personally see the impact of cruise ships on the suburb of Lyttelton in Christchurch).
I recall the podcast seemed to say that your problem with temporary immigrants was a sudden change and that the numbers likely would revert to something more sensible.
I'm sure we can agree that all 3 countries have economic issues with immigration.
And most developed countries are fucked for demographics in the future: permanent immigration is a short term solution but I reckon we are just punting the problem to the future. As a middle aged guy I can see the problem slowly building and I have been doing what I can to prepare!
Since immigration can be a sensitive topic, I want to be clear that I like immigrants and I have close friends and family by marriage that were not born in New Zealand.
All the best. I am hoping to visit Canada in the next 5 years to go skiing. Thank you for the conversation - I comment on HN to learn and I have learnt a few things! Cheers
Right so zero net tourists, therefore zero housing pressure? Nope, that's why people complain about AirBnB.
My point is that picking a number at a point in time doesn't say much about the housing pressure - as the zero net tourists example shows.
Without knowing more about the number of temporary immigrants throughout the year (e.g. total number in Canada per month), the number of temporary immigrants as a yearly value is not much use (just as net zero tourists is not much use). Kinda depends on how quickly the temporary immigrants roll over.
Also, I noticed an article implying that Canada is much more successful at getting wealthy immigrants:
Immigration lawyers [in NZ] are worried by a dramatic drop in the number of millionaires receiving so-called golden visas. "If you have investors looking at options they're going to go for an easier option, they're going to go for Canada", he said.
> ...if it's paired with government policy that doesn't discourage growth...
Well, exactly. Bringing in large amounts of immigration to support an economy that that largely revolves around property transactions will contribute to an increase in property prices but will drag down GDP per capita and drive up infrastructure costs. This is NZ.
> Historically nothing sets up a country better for future success than lots of immigrants
Ummm citations needed urgently. I would point out, immigration policy vs anyone without a passport is welcome are two complete scenarios that the only thing in common is that outsiders are coming in.
Unchecked immigration policy as a good thing is a myth. People from clashing cultures dont mix naturally. Only results are natural ghetos and cultural clashes.
Allowing undocumented people in without any due diligence, only advertises that undesirables from other countries can escape, or being dumped by more crafty foreign leaders.
The immigration as a positive is strictly related to being the cause for brain-drain effect. You want intelligent hardworking people in, not just anyone.
Also its better if people you are attracting are of similar heritage with similar values and culture. As those people assimilate to host cultures within a generation or two.
The european countries don't really have distinctive minorities from their neighbors. The inter-eu immigrants withing generation or two basically become a host country citizens.
I would point to Sweden and their current problems, also to the change of mind of the pro-unchecked immigration politicians. Who now are openly and publicly stating they were wrong.
> I would point to Sweden and their current problems, also to the change of mind of the pro-unchecked immigration politicians. Who now are openly and publicly stating they were wrong.
> Sweden has no language, income, employment, or skills requirement for obtaining citizenship.
Neither does the US. Like the US, it has a requirement of having lived in the country with residency for 5 years. In the US those 5 years are after getting a Green Card (permanent residency), not after getting the original dual intent visa that allowed for the Green Card.
The Swedish residence requirements seem par for the course[1], if more straightforward than for the US.
> The european countries don't really have distinctive minorities from their neighbors
Well… I wonder how that happened since it certainly wasn’t the case until the period between the mid/late 19th century and the 1940. I guess we’ll never know.
"Keep, ancient lands, your storied pomp!" cries she
With silent lips. "Give me your tired, your poor,
Your huddled masses yearning to breathe free,
The wretched refuse of your teeming shore.
Send these, the homeless, tempest-tost to me,
I lift my lamp beside the golden door!"
The argument is that the immigration rate has nearly doubled compared to the baseline (https://www.statista.com/statistics/443063/number-of-immigra...) and that the country isn’t set up to absorb such a higher number of immigrants, not that immigration is bad as such
because the rapid growth has put so much pressure on house/rent prices, healthcare availability, general inflation on prices etc that overall the standard of living is falling for everyone.
Poor immigrants now == booming growth over the medium term. Rich immigrants just spend the locals out of their homes. The west is importing the wrong type of migrants.
It became a trend in china's rich circles to invest in canadian housing market as way to hide money from ccp and to flex your wealth.
Chinese new money are prone to trends, and at scale it can have terrible results for city like Vancouver - quick google - "Chinese homebuyers accounted for nearly one-third of Vancouver's real estate market during 2015"
> Historically nothing sets up a country better for future success than lots of immigrants - if it's paired with government policy that doesn't discourage growth...
Define "success?" Mass immigration to America from continental Europe eventually culminated in the 20th century in the dismantling of the American constitution and the republic the founders created. The resulting country is also completely ungovernable.
Generations of cheap immigrant labor ultimately created a materially rich society (for some people), but whether it has been a "success" is quite debatable.
> The resulting country is also completely ungovernable.
Another way to look at it: By any reasonable measure — and for all its indisputable problems — the U.S. is clearly the most successful large, multi-ethnic society in all of human history. Sure, it's always a work in progress. But let's consider the movie, not just the freeze-frame.
When people can vote with their feet, it says something that net migration to the U.S. seems to dwarf that to, say, China [1] or India [2].
The US already had the highest standard of living in the world at the time of independence, before it became a multi-ethnic society. The country de Tocqueville wrote about was an overwhelmingly British country. The subsequent trajectory of the US has been one of chipping away at that foundation. The accommodation of vast numbers of immigrants from societies that had no tradition of self government, and little in the way of unifying cultural traditions, created a top-down society that can scarcely be called America.
Looking at migrants is a misleading indicator of preference, because the choice to emigrate is an aberrational one. Just 7-8% of people in south or east Asia would emigrate if they had the choice: https://news.gallup.com/poll/245255/750-million-worldwide-mi....
Let's not forget that (European) immigrants were mostly wanted, so as to provide needed workers. Even the Chinese immigrants of the 19th century were wanted to help build railroads and the like. Racist anti-immigrant factions such as the Know-Nothings and the KKK never really gained the power needed even to try to stop immigration (with the notable exception of the Asian exclusion acts in the late-19th and early-20th centuries).
Scores of millions of Americans, including your servant, are descended from those European and Asian immigrants. Again, the "movie" is that over generations, those people became fully assimilated into American society and values.
As for "accommodating" the immigrants, that brings to mind Heinlein's dictum: Never argue with the weather. It's questionable whether the "British" America of, say, 1787, or even 1868, could have effectively prevented immigration.
We also shouldn't lose sight of the millions of involuntary "immigrants" who were brought here in chains from Africa.
> Let's not forget that (European) immigrants were mostly wanted, so as to provide needed workers.
Sure. I’m talking about the long-term effects of that deliberate policy choice.
> Again, the "movie" is that over generations, those people became fully assimilated into American society and values.
Quite a bit of evidence shows that core cultural values, such as levels of social trust and attitudes towards the nature of government, are durable across generations: https://cis.org/Richwine/Still-More-Evidence-Cultural-Persis.... Scandinavian Americans, German Americans, and Italian Americans to this day exhibit differing levels of social trust that mirrors those of their cousins back in Europe. The waves of immigrants didn’t “fully assimilate” into American society, they changed it into something entirely different.
An overlooked aspect of Donald Trump—who is barely a third generation American—is that he was the last nail in the coffin of British America. British American culture is no longer prevalent enough to sustain even one political party. The Trump GOP has dropped the distinctly British American idea of limited government and replaced it with a cult of personality that can appeal to immigrant Germans, Italians, and increasingly Latin Americans. If Trump acts like a Latin American dictator it’s because that’s what it takes to get all those people from disparate cultural backgrounds into a coalition that can get close to 50%.
People notice this shift, but because we have this mistaken notion that “white people” are a single group, we overlook what it means. It gets framed as the “death of the Reagan GOP.” It is, but more accurately it’s the death of the British American GOP.
> core cultural values, such as levels of social trust and attitudes towards the nature of government, are durable across generations
Interesting. Does that take into account the mixing of cultures as the generations go by? My own immigrant ancestors came to this country in the 19th- and early-20th centuries — from four different countries in northern- and southern Europe; two different religions; and arguably three distinct subcultures. My own kids have three more countries stirred into the mix from my wife's side — and her outlook and attitudes have influenced mine in the decades we've been together. Then there's the influence of the different places I've lived and worked. I can't imagine I'm unique.
> more accurately it’s the death of the British American GOP.
Which "British America[]"? The New Englanders like the Puritans, and later the Adamses? The mid-Atlantic Quakers? The Virginians? The Cavalier enslavers who came from their Carribean sugar plantations to grow cotton? Very different subcultures. (And if you want to talk about "top-down," consider the southern American subcultures.)
And which British American GOP — the now-extinct liberal northeasterners and -Midwesterners? The hard-core racist Southerners who were right-wing "Democrats" until the Nixon-Reagan-Atwater "Southern strategy" coaxed them to the GOP? The California Reaganites of Proposition 13?
> If Trump acts like a Latin American dictator it’s because that’s what it takes to get all those people from disparate cultural backgrounds into a coalition that can get close to 50%.
My guess is that Trump appeals to a certain fearful, hero-worshipping, authoritarian mindset that's widely distributed among the human population, and whose adherents have far greater ability to communicate and organize than ever before. We see that mindset today in the followers of Putin, Orbán, Kim, Maduro, etc., as well as those of Trump. (For that matter, the fascist Oswald Mosley was a Brit.)
> Interesting. Does that take into account the mixing of cultures as the generations go by?
It’s using GSS data, which doesn’t identify ancestry in that level of granularity. But I suspect mixing changes the host culture significantly. My wife is of almost completely British American descent. I’m of completely Bangladeshi descent. But because in my culture married couples assimilate into the husband’s family, the kids are being raised with a strong dose of Bangladeshi traditionalism.
> Which "British America[]"? The New Englanders like the Puritans, and later the Adamses? The mid-Atlantic Quakers? The Virginians? The Cavalier enslavers who came from their Carribean sugar plantations to grow cotton? Very different subcultures.
The British America that was the confluence of those British sub-cultures—the things they agreed on and their distinctive conflicts. In particular, participatory self-government reflecting both Puritan small towns and Jeffersonian agrarianism has been supplanted by mass government.
The widespread American attitudes towards government is now similar to those in Bangladesh, which was shaped by half a millennium of Mughal and then British rule. The government is the administrator of a fractious and foreign population. “Democracy” is reduced to merely “voting.”
> My guess is that Trump appeals to a certain fearful, hero-worshipping, authoritarian mindset that's widely distributed among the human population, and whose adherents have far greater ability to communicate and organize than ever before.
That’s close to the same point that I’m making. Every society has conservatives and liberals—these are rooted in psychological traits. Specific conservative or liberal ideologies, however, are rooted in culture. When you change the country’s cultural mix, you change what kinds of political ideologies you need to carry a viable coalition. And when you fragment the culture, politics becomes much more about unifying around things that speak to gut-level reactions across cultures.
The small-government conservatism that would be popular in Rhode Island can’t win Florida. You need to cobble together a coalition of Mexicans in Arizona, Scots-Irish in West Virginia, Cubans and Puerto Ricans in Florida, Germans in Ohio, etc. And Trump is the manifestation of that.
> But because in my culture married couples assimilate into the husband’s family, the kids are being raised with a strong dose of Bangladeshi traditionalism.
But your kids aren't watching Bangladeshi TV, are they? And I'm guessing they don't run around with mostly-Bangladeshi friends.
You might be surprised how your kids are being influenced by your wife — and her family. I've read over the years that culture is transmitted primarily by the mother; that certainly fits what I've observed casually.
And let's not forget that at some point most kids tend to rebel — especially against authoritarian fathers (and then maybe later revert to what they remember from childhood).
> In particular, participatory self-government reflecting both Puritan small towns and Jeffersonian agrarianism has been supplanted by mass government.
Alexander Hamilton and his fellow Federalists would like a word. Jeffersonian thinking was certainly present at the Founding but was by no means dominant.
> created a top-down society that can scarcely be called America.
Really? The U.S. is notably less top-down than many other places that either of us could name. And nostalgia for an imagined bygone "British" past is unproductive.
Proponents of what is called the "real estate cycle" say it is about 18 years long (plus or minus, and discounting its disruption due to wars), from peak to peak. They say the next peak is due in late '26 or early '27 (October or March, if the month matters).
There are some that say they can predict the movements of land speculation based economies. I'm familiar with old blog posts from back as far as maybe 2005 that predicted the crash in 2008 accurately.
and the reason that there is not enough housing available for the demand, the investment corpo is now buying up the housing as a new avenue of income and population is still growing is only pointing to prices growing indefinitely.
Unless there is a population crash, people suddenly stop requiring having place to live, or someone discovers personal pocket dimensions with free houses.
> I'm familiar with old blog posts from back as far as maybe 2005 that predicted the crash in 2008 accurately.
The housing crash happened in 2006, though. I suppose being able to predict the crash even a few months in advance is impressive, but as you're hazy about the years, it is possible that it was really 2006 and the crash had already happened, which isn't so impressive.
2008 was the securities crash. That is when the mortgage market started to crumble under the weight of housing no longer having the value it once did with mortgagers left underwater. The housing market had to crash beforehand in order for this to happen. Once one saw that the housing market had crashed, it wouldn't take too much of a Kreskin to realize securities were on the horizon.
One of my friends started a website called "The Mortgage Lender Implode-O-Meter" to track all of the mortgage lenders going bust... in 2006. It is worth remembering that cheap credit with adjustable rates is what fueled that bubble and what made it unsustainable. A lot of the world (including Ireland) floats rates after the first 5 years of a mortgage.
Whereas in the US, anyone with a pre-2022 30-year fixed-rate mortgage now has a massive paper profit due to interest rates going up that can only be realized by slowly making their required payments. That gets vaporized instantly if they sell and pay off the mortgage.
I haven't looked at IReland's economics in forever, objective canadian observer. Lets see if i can find the cause.
Ireland has been in a recession for over a year. Realistically Ireland has been in a depression since covid started, but there seems to be some funny numbers coming out of ireland trying to hide the depression to make it just a recession?
Looking at their central bank's balance, Ireland the country effectively went bankrupt in October 2006. This is when their government hit up against the EU limits on spending. This is when the politicians had to either increase taxation or reduce spending. They chose neither.
Their country never recovered from the bankruptcy in 2006. So when covid hit they were unable to afford a response to it.
Ireland's 'stimulus' package was dissimilar to north american countries. Only months into covid they were urgently working toward getting people back to work. Ireland effectively prove to me they know their country is about to have a major depression in summer of 2020, not because of covid but because of their status going into the crisis.
They have low unemployment comparable to the 2000-2006 era.
But looking at 'participation rate' they increased by about 2%. This is very good for ireland. Infact, this is still trending upwards. The rate exceeds population growth and >10% youth unemployment. So this is the elderly returning to work. From an economic point of view this is a good thing, from a social point of view this is a disaster.
Interest rates are shocking. After 2006, when they went bankrupt, they started increasing rates? That's literally the opposite of what you want to do. 2008-2009 they abruptly reversed course. So in 2005, they were at 2%, in 2009, they were at 1%. Going the wrong direction here would have lasting damage on Ireland.
In 2011, they reversed course and started raising again. Which was very short lived. They screwed up bigtime for a second time.
2015, they had dropped to 0.05%. Then in 2016 they were at 0%.
So from 2016 to 2022, they were basically taking money from retirees to attract money from probably mostly out of country investors. Did it work? Yes, about $100 billion of $ came in and out of ireland on a regular bounce. Foreign investors basically pulled money out of ireland, reducing the wealth of ireland. Their actions delayed their depression, great success economically, but huge failure socially.
And in 2022 they started raising rates they stopped this and pulled the rug out from their housing industry.
In about 2030, Ireland will have to have -1% or worse rates.
Looking at household debts, it's shockingly low. Basically the young of ireland have decided against Ireland? That's shocking. Very south american like.
IReland in 2022 dropped their income tax from 48% to 40%. This too will be beneficial. I expect they will be required to reach into the 30% range by 2030.
Ireland's social nets have decreased about 60% over the last 30 years.
GDP per capita? Ireland is 4th most wealthy country in europe? No. That's not true at all. We shall see where they drop to after they are forced to deal with this ongoing depression. I estimate they will be poorer then portugal in reality.
>The only problem is nobody agrees what actually went wrong.
Seems 100% obvious to me what went wrong. It seems 100% obvious that the government completely understands what went wrong and that it's 100% their fault.
Ireland's conservatives are largely speaking the cause of these problems. In fact, what it looks like is that they were causing problems intentionally to be the solution. They seem to be doing this because they are being elected on bad economy because the opposition are ideologically against the economy.
It appears that the next election they will suffer defeat to
If they keep this ideology when attempting to solve their depression. It's going to go extremely poorly for ireland.
>Here's what I would do as emperor of ireland.
Immediate balanced budget amendment requiring all governments to balance their budget.
~32% income tax.
withdraw from minimum corporate tax treaty, threatening to withdraw from a great deal more. Ireland-exit and Brexit alliance? Probably inevitable at this point?
Elimination of minimum wage.
Unionization on all non-irish owned corporations.
-2% interest rates temporarily.
eliminiation of all new taxes created in the last 20 years.
> Looking at their central bank's balance, Ireland the country effectively went bankrupt in October 2006.
... In what sense did Ireland go bankrupt? That would imply that we abandoned at least some of the state's liabilities; in fact the state was criticised by many for not only paying its own liabilities, including those which it could have gotten out of without serious credit damage, but also for unnecessarily taking on others' liabilities (Ireland was briefly about the only country in the world with an _unlimited_ deposit guarantee). Bit confused what you think the _Irish_ central bank has to do with it; the relevant agencies would be the ECB and the NTMA.
> This is when their government hit up against the EU limits on spending. This is when the politicians had to either increase taxation or reduce spending. They chose neither.
We massively increased taxes, massively cut spending, and borrowed vast amounts of money. We spent more per capita bailing out banks than anywhere else on earth. Again, criticism would generally be of _doing that, rather than becoming bankrupt_.
> Their country never recovered from the bankruptcy in 2006. So when covid hit they were unable to afford a response to it.
By any reasonable metric Ireland was in a far better fiscal state in 2019 than in 2006, and we had a fairly extensive and expensive response to covid.
> IReland in 2022 dropped their income tax from 48% to 40%
This is incorrect. Ireland's marginal rate has been 48% or 52% depending on whether you count PRSI (which is not strictly an income tax), has been for over a decade, and continues to be.
Actually, you know what, I'm not going through the rest of this. This is peak HackerNews; absolute nonsense, stated confidently. I'd suspect the involvement of an LLM, but for the grammar.
Correct that the use of terminology is incorrect because no country can go bankrupt. But the point remains.
>We massively increased taxes, massively cut spending, and borrowed vast amounts of money. We spent more per capita bailing out banks than anywhere else on earth. Again, criticism would generally be of _doing that, rather than becoming bankrupt_.
corporate tax for example was ~38% in 1996, 10 years later after bankruptcy it was 12.5%.
Personal income tax was ~48% in 1996, 10 years later, it was 42%.
Spending vs gdp, 38.6% gdp in 1996, 33.6% in 2006.
I dont agree with your analysis at all. Moreover these 'we' clearly indicate to me you're not objective.
>By any reasonable metric Ireland was in a far better fiscal state in 2019 than in 2006, and we had a fairly extensive and expensive response to covid.
Until a few days ago I didnt know what ireland did for covid. But no, what north america did was significant different from what ireland did. The irish response seemed to have been about reverse course years earlier which is shocking to me.
The reality is that ireland couldnt afford a covid response and the government fully was aware.
>This is incorrect. Ireland's marginal rate has been 48% or 52% depending on whether you count PRSI (which is not strictly an income tax), has been for over a decade, and continues to be.
My source is The Office of the Revenue Commissioners
>Actually, you know what, I'm not going through the rest of this. This is peak HackerNews; absolute nonsense, stated confidently. I'd suspect the involvement of an LLM, but for the grammar.
"Absolute nonsense" is the biased person who has gotten several fact incorrect.
Again, not going to address all this nonsense, but as someone who’s lived here all my life, do you really think I don’t know what marginal rate of tax I pay? Conventional income tax is 40% marginal rate. USC, which is also an income tax, is 8% (depending on how cynical you want to be, you could say that it was separated out either for more progressive banding, or for the financial-crisis-era government to be able to vaguely pretend it was not massively increasing income tax). PRSI, which is a social insurance tax but which behaves almost exactly like an income tax until you are over 65, is 4%. For a total of 52%, or 48% + 4% social insurance tax for real pedants.
That wasn't the accepted wisdom at the time. Prices going up spelled 'supply shortage' to most. When the tide went out (i.e. credit availability) it revealed an oversupply.
We should learn from this. Demand comes in two forms. Demand for housing and demand for property investments. We should not lose site of the drivers of the second type of demand. It can make what isn't a supply shortage look like one (and feel like one for the average person).
Edit: It's worth noting that 15 years after the collapse, prices in Ireland had finally recovered and once again a shortage of available housing is a reality. I say 'available housing', because the long term rental market is dire, but if it's a short term rental you're after, well...