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Thread: The effect of demographics on the housing market

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    Default The effect of demographics on the housing market

    I'm no expert, but I seem to recall that there was a bit of a baby boom in the late 70s that petered out afterwards. Meaning that a majority of that age cohort are approaching the age when they're not going to be able to get a 30-year mortgage, or at least, not the traditional kind, where the banks expect you to still be working during the last years of the mortgage.

    NAMA, the banks and the developers still have hundreds of thousands of empties to find buyers for, and they would appear to be squandering their chances of getting them sold while the window of opportunity remains open.

    This would appear to bolster the bearish case on housing: that this apparent pause in the fall in house prices is not going to be permanent.

    Remember, the grim reaper will ensure that there is a steady year-on-year addition to the ranks of unoccupied houses, even in supposedly tight markets like Dublin. And emigration will be doing a number on the ambition of the banks to convince those born in the 80s and 90s to shackle themselves to bricks and mortar for the majority of their working lives.

    Not just that, there's even a slim possibility that some of those younger people might actually realise that, in an economic system which has served up a brutal depression which has lasted the best part of a decade, chaining yourself to an immovable asset is perhaps not the most sensible plan in the world.
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    The demographic picture is interesting.

    But the bottom line is that house prices are primarily a function of the availability and cost of finance.

    There will be no proper recovery until the banks are fixed. And that's still a distant prospect.

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    What about the effect of the Housing market on demographics over the last decade?

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    IIRC the baby boom was early-mid 70s i.e. my own age cohort. I seem to recall much talk of it when I was at UCD, how in a year or two the numbers doing the Leaving Cert would begin tailing off and how this might impact on ye olde points race and third-level funding etc.

    Then there was another baby boom in the Bertie Bubble years.

    So yeah....fewer numbers in the late 20s/early 30s age cohort, when a large proportion of those are either emigrating or unemployed, means much less demographic pressure for housing over the next 20 years, even if Ireland didn't have hundreds of thousands of empty units to begin with.

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    Whilst agreeing that the demographics may not be in favour of a long term rise in house prices I think we can lay less emphasis on the surplus new housing stock as being a factor in house prices generally. At some point the banks/NAMA are going to have to bite the bullet and run a bulldozer through many ghost estates which could make a significant difference to the overall availability of new homes.

    I'm not convinced that emigration is going to continue at these high levels anyway, soon enough both the Australian and Canadian bubbles will burst and the options for the young will be even more constrained.

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    The baby boom peaked at the end of the 70s IIRC.
    So this cohort fuelled the boom from ages 25-27.
    They've been having children themselves, so another mini-baby-boom began a few years ago. Demographics will indeed be unkind to the property market for around 15-20 years, but might cause a bit of an echo bubble after that...

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    What "apparent pause"?

    DaftDrop: The Irish house, apartment & site price history tracker.

    More Taxes, Cuts, Deficit, Eurozone Crisis, Bailout Targets, Insolvency Rises, Rent Allowance Cuts, Record Emigration, Record Unemployment, Bank Losses, Troika Repossession Legislation...

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    One interesting structural change is that historically the safest section of the workforce to lend to has been the public sector. There has always been absolute job security, good pay and guaranteed increments.

    But the next generation of PS workers won't be so lucky. We are already seeing new teachers and nurses being recruited on less generous terms. And the CIE dispute shows how the government is determined to squeeze pay.

    So this whole cohort of the population is going to have less capacity to borrow in the future. That should put further long-term pressure on house prices.

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    Quote Originally Posted by Davidoff View Post
    But the next generation of PS workers won't be so lucky.
    Neither might this one

    A leaked European Commission report suggests the Troika wants public sector pay cuts to remain on the table.


    Leaked files suggest Troika want public sector pay cuts | BreakingNews.ie

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