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Property prices – who’s to blame?

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By Michael O’Connor

There are multiple theories as to why house prices continue to reach unfathomable heights.

One that gets a lot of airtime is the role of private equity firms in the market. The generally accepted narrative is that these funds come in, buy up all the available property supply and leave nothing for the rest of us. In reality, this effect is somewhat exaggerated.

It's always a crowd-pleaser when you blame surging housing prices on the big bad investment banks. After all, who doesn’t love to rally behind a ‘Vultures Out’ campaign. As much as I would love to burden them with most of the blame, the stats simply don’t back it up.

The share of total home sales that come from investor purchases has actually been in decline. In 2020, estimates showed that investors make up about 20 percent of housing sales.

Bear in mind that number is not just the share of institutional investors but anyone who isn’t just buying a house as their primary residence.

This 20% includes people purchasing second homes, vacation rentals, individual investment properties, and small investors flipping homes for profit.

In the US since 2011, the cumulative acquisitions from institutional investors has approached 400,000 single-family homes. This may seem like a lot, but with 83 million homes in the US, this represents less than half a percent of the market.

If we narrow our focus solely to the 16 million homes on the rental market, institutionally backed firms only own 2.5% of the market.

In reality, large investors make up just one to two percent of all single-family purchases, while other investors make up 18 to 19 percent.

The numbers show that most rentals are owned by small investors; your neighbours and friends.

To be clear, I agree that levies should be in place to prohibit bulk buying of properties, but simply using private equity firms as the scapegoat ignores the crux of the problem.

As masters of the dark arts of deflection, politicians are quick to point the finger. In reality, money supply, over-regulation, a distinct lack of planning, inadequate funding, and extended periods of undersupply post the Global Financial Crisis are the driving forces behind the current housing crisis but I guess it’s easier to fix the blame than fix the problem.

Where do prices go from here?

I expect home prices to grow more moderately in the coming years as more supply reaches the market, but this will take time. Those waiting for a considerable pullback could be left wanting.

Don’t expect housing to become affordable any time soon.

"If I had to guess, it’s going to be years until we see anything approaching a “normal” housing market. We simply didn’t build enough homes following the last housing crash to meet the demand coming from millennials reaching their household formation years" - Ben Carlson 'A Wealth of Common Sense'

Looking ahead, rising rates could slow things a bit if mortgage rates get high enough. With that said, the central banks are relatively boxed in. Interest rates are unlikely to skyrocket given the effect this would have on the service level of Government debt, but that’s for another day.

Remember, just because you think house prices should fall, doesn’t mean they will. The distinction is vital.

The waiting game hasn’t always paid off.

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International day was a recipe for success

By Michelle CreanSpicy dishes and sweet treats were part of the experience in Killarney Community College as students took time out on Monday to celebrate a variety of different cultures. […]

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By Michelle CreanSpicy dishes and sweet treats were part of the experience in Killarney Community College as students took time out on Monday to celebrate a variety of different cultures.

The Modern Foreign Languages Department organised many events throughout the week but activity that took centre stage place was MasterChef for International Culture Day.

60 students from different countries took part by cooking dishes from their native countries. The judges had their work cut out for them but they finally agreed on a deserving winner.

First place went to Greece with a classic but simple Greek salad which was unbelievably well received by all. In second place was the Polish representatives who made mouth-watering pierogi dumplings while students from Germany produced a sweet cake from their own specific region and took third place.

First Year students got the opportunity to sample the food and learn about the dishes and cultures.

Stickers were worn on students’ jumpers from European Day of Languages and allowed students to speak with other students from their country and make new friends.

“It’s important to recognise and celebrate the ever-growing variety of different cultures within our society and our school setting,” Principal Stella Loughnane said.

“These opportunities provide a great scope for our students to learn and have a better understanding of these cultures while creating a greater respect for everyone’s backgrounds. I also got to taste a few of the dishes and even managed to snag a couple of recipes, they were that good.”

BREWING UP

Meanwhile it was a feel-good morning last Thursday at the school as students and staff brewed up for the Kerry Hospice Foundation.

They enjoyed many delicious treats kindly donated by staff all for an amazing cause. The Bewley’s Big Coffee Morning in aid of Kerry Hospice raised a whopping €650, this will no doubt be put to great use in supporting people in difficult times. This charity has an extra special meaning for Killarney Community College as they have had members of staff, who in challenging times, were supported by this outstanding service.

Ms Loughnane commended the efforts of staff involved adding that it was such a worthwhile cause.

“The college was delighted to host this event to raise funds for Kerry Hospice who provide so much support to our community at times of need, it is so important to give a little back.”

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Godley fourth in National Ploughing competition

By Sean Moriarty Four years on from his last appearance at the National Ploughing Championships, Shane Godley continues to move up the ranks in his age group. The Killarney Ploughing […]

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By Sean Moriarty

Four years on from his last appearance at the National Ploughing Championships, Shane Godley continues to move up the ranks in his age group.

The Killarney Ploughing Association member last represented Kerry in the Under 21s in 2018 when he placed sixth in the two-furrow conventional class in the national competition.

Last week at the 2022 National Ploughing Championships at Rathinaska, County Laois he placed fourth in the under 28 age group for the same category.

“Weather conditions for both the ploughing days was very good but the ground was very hard,” he said.

Club mate Mike Brosnan from Gortalea, finished 20th in the ‘Vintage Mounted’ class. They were the only two members of Killarney Ploughing Association to compete at the event.

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