One of the first things that expats have to adjust to in their new home is the local outlook towards renting and property ownership.
In the U.S. if you don’t own, or aspire to own at some point, you are seen as “less than”. In Ireland, a country where many locals mistakenly claim that the Irish were not “allowed” legally to own property for long stretches of time when they were occupied by Britain (and the church), they claim to be gung ho about property ownership because it was denied them for so long. Bushwa.
In Ireland, property ownership is largely a status symbol. Now, don’t get me wrong, there are plenty good and decent landowners and landlords (my good neighbor Des, for one) but the number of abysmal ones is far greater. The frequency with which Irish landlords look on their rental properties as an ATM rather than a long-term investment is appalling. They seem to think, “If I charge €1500 in rent, I can spend €1500 on a good time”.
And one need look no further than the recent plague of grossly overpriced unlivable squats that passes for the current rental market in Dublin to see that the Irish “landed classes” have lost all touch with the realistic “value” of their property, and seem (like the Irish Water Company) to have simply settled on a target price point in their head, and are determined to get that price regardless of those pesky bothersome details like hygiene, livable conditions, and actual usage.
And Ireland’s real estate sales market is no better. Recently word came down from on high that the Irish housing market has increased by 14% nationwide, and by 25% in Dublin. Great cries of joy were heard. But, I ask you, “increased” based on what? Have the owners done thing one to improve their property by even 1.4% or 2.5%? No. It’s all perceived value. It’s smoke and mirrors – a pipe dream.
And the Irish government keeps a calling for multi-thousand unit increases in building inventory. A July article in The Independent claims that housing demand calls for 10,000 new housing units per year in Dublin alone. Assuming that at least two people will live in each of those units, are there really 20,000 extra people moving to Dublin each year, over and above the thousands of properties NAMA (National Asset Management Agency – an Irish governmental body tasked with buying up abandoned, and financially plagued property – effectively nationalizing real estate defaults) already owns? I seriously doubt it. Does the Irish government merely want to prop up the construction industry in the hopes of kick starting another bubble? Bubbles always look good in the short term (coincidentally for just about the time between election cycles). Hmmm.
All of this begs the question, did Ireland learn nothing from its last boom/bust cycle, or are the Irish so desperate to own land, and be part of the wealthy landed classes, that Ireland will once again assume the binge/purge mannerisms of an alcoholic state, and fall prey to its bankers, again?
Fortunately, the Irish state is now making noises about instituting mortgage/lending restrictions in the new year (2015). That may help. And, at least Taoiseach Enda Kenny (the Irish version of a prime minister) and his pals are acting the responsible parent. But is it too little too late? And does it send mixed signals when coupled with official calls for massive property building?
From the people’s perspective, clearly more is simply better. The planned lending restrictions are expected drive a lemming-like parade of last minute outsized mortgage requests. Have the Irish people already gotten a taste for blood (uh, money, land, and the finer things)? Will they do whatever it takes to outflank realistic loan to income ratios, welcoming a return to 2008 as long as they are part of the landed/wealthy classes?
It’s frustrating to watch this happen again, just a few years after the first bust, but it’s very instructive, and should be a warning for all expats. Don’t just look at rental pricing. Take a hard look at your new home’s relationship to property overall. A historic overview of their relationship to land (as a dalliance or an investment) will give you some idea of whether you can expect your landlord to return your calls and fix things in a timely manner, or simply collect the rent.
Things to look forward to in upcoming posts:
– The leading edge