When will mortgages return to 2.5 times the first borrower's income?

Dionysus

I was reading this thread over on PropertyPin recently and I've a few questions.

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'The CSO website last available earning statistics (Q2 2007)suggest that the average wage in Ireland is 657 Euro, or 32.6k.

Traditionally, before the madness, the amount you could borrow was 2.5 times the main earner plus 1 times the second earner, and the term was usually 20 years. Longer was exceptional.

Deposits required were at least 10% and more often 20%.

Better terms (ie 25 years, 3xmain plus second income, 10% deposit) where only available to better prospects, such as young professionals (and to be clear solicitors, doctors, dentists, bank managers and chartered practising accountants where all that qualified for these terms).

Interest rates where on average higher, but these rules also applied in low interest periods, such as the 1950-1965 period. Taxes also matter but in the period up to the mid 80s mortgage tax relief was unrestricted in terms of amount, term and tax rate.

These rules applied by all the Irish Banks, lasted well into the Mid 90's, and where applied for decades.. After that the inmates took over the asylum.

If we returned to this lending model, then a couple earning the average wage could afford 3.5 times average wage of 32.6k could spend a maximum of borrowings of 114k plus deposit or 142k, and a dual income professional couple on 100k each could borrow at most 450k, and spend 500k on a house.

I believe that we will return to this sort of lending model and that average house prices will return to the average, which would be around 150k, in an average 3 bed semi in Deepest South Dublin. Or at most 4 times income.

That means house prices must fall again, and by another 50% from now, or around 75% from peak.'

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1. Is there any reason why mortgages will not once again be based on the same income conditions: 2.5 times the first earner; 1 times the second earner?

2. Is there any reason why the Financial Regulator cannot, for the sake of economic stability, put a limit on the length of a mortgage given the role of 35-year mortgages in increasing house prices in the most recent bubble?

3. What state supports are currently preventing house prices from falling to levels which could be afforded by somebody on the average industrial wage of €33,000? (who in pre-boom times could only get a mortgage for 2.5 times his income which he repaid over a 20-year period)

Mr. Loverman

Irish people are very good at denial, so I'm pretty sure we'll do whatever we can to drag out the correction for as long as possible.

Also, our politicians will do whatever they can to keep house prices artificially high.

So to answer your question I don't know if we'll ever see those multiples again, but I would bet money we have a few more years of house price declines ahead of us.

RichardAnd

Mr. Loverman wrote: »

Irish people are very good at denial, so I'm pretty sure we'll do whatever we can to drag out the correction for as long as possible.

No we won't.....:D

Seriously though, let's consider the situation. We supposedly have a few hundred thousands empty houses and on top of this, a few dozen thousand people who can't pay their mortgages. If houses are repossessed en mass this leaves a huge surplus of houses and when there's a surplus, prices come down and fast.

So what should houses cost? Well this isn't a clean cut question to answer. Some houses are, effectively, worthless as they are sitting in empty estates where no one would be willing to buy. Some houses are the opposite as they are in prime locations and are fine houses thus, they'll still come with a heavy price tag. For an example, consider a house on shewsbury road in dublin, it will be cheaper now than five years ago but it will still be a seriously expensive home.

What we can say is that prices are still falling and I see no reason for them to stabilise.

Euroland

Dionysus wrote: »

1) 'The CSO website last available earning statistics (Q2 2007)suggest that the average wage in Ireland is 657 Euro, or 32.6k.

2) Traditionally, before the madness, the amount you could borrow was 2.5 times the main earner plus 1 times the second earner, and the term was usually 20 years. Longer was exceptional.

3) I believe that we will return to this sort of lending model and that average house prices will return to the average, which would be around 150k, in an average 3 bed semi in Deepest South Dublin. Or at most 4 times income.

1) You better use up to date salary data

2) Nonsense, they should be giving the same 5 times family income.

3) It is absolutely unrealistic price in the long run

Euroland

Mr. Loverman wrote: »

Also, our politicians will do whatever they can to keep house prices artificially high.

Do you really believe that our prices are too high? I personally don’t believe so.

Mr. Loverman

Euroland wrote: »

Do you really believe that our prices are too high? I personally don’t believe so.

Have you looked on Daft recently?

You still need two above average incomes and a 35 year mortgage for an average home in Dublin.

A single person on an above average wage would struggle to buy an ex council house in a rough part of Dublin.

Mr. Loverman

Euroland wrote: »

Do you really believe that our prices are too high? I personally don’t believe so.

Ah right, I just looked at your old posts and you appear to be an estate agent. Constantly trying to "talk up" the market.

Example

Inverse to the power of one!

Euroland wrote: »

Do you really believe that our prices are too high? I personally don’t believe so.

Mr. Supply, I'd like you to meet Mr. Demand. :eek:

Why should we claim right to higher prices? You'll get more for your money in the US, Germany and many other developed nations. Add to that, most of the places on sale are without character and generic to a degree where I can spot the same standard of finishing all over the country, and the UK even.

Where's the added value? Why would I spend more?

Euroland

Mr. Loverman wrote: »

Have you looked on Daft recently?

You still need two above average incomes and a 35 year mortgage for an average home in Dublin.

1) Yes, I have.

2) In most of the countries in the world you would have to put between 5 and 30 (or more) average annual salaries for buying an average house in country's capital.

whiteonion

Euroland wrote: »

1) Yes, I have.

2) In most of the countries in the world you would have to put between 5 and 30 (or more) average annual salaries for buying an average house in country's capital.

Do most countries in the world have 14.7% unemployment and such a vast overcapacity of houses?

Euroland

Inverse to the power of one! wrote: »

Mr. Supply, I'd like you to meet Mr. Demand. :eek:

Why should we claim right to higher prices? You'll get more for your money in the US, Germany and many other developed nations. Add to that, most of the places on sale are without character and generic to a degree where I can spot the same standard of finishing all over the country, and the UK even.

Where's the added value? Why would I spend more?

1) US houses have completely different (cheaper) construction standards, but despite that, prices in New York are clearly higher than in Dublin.

2) German property market is depressed for many years due to very low ownership (less than 50%). Most of Germans are born, grow, live, and die in rented accommodation. Levels of household income in Germany much lower than in Ireland.


So, these two markets cannot serve as an example to us. As regards to other developed nations, prices in Norway, UK, Australia, Netherlands, etc are higher than in Ireland. When we make adjustment to the household income levels, there would many more countries where prices would be higher than in Ireland.

Euroland

whiteonion wrote: »

Do most countries in the world have 14.7% unemployment and such a vast overcapacity of houses?

Some of them would have lower while others have higher unemployment (i.e. Spain). The same is with the housing stock. The truth is that now most of the markets have been growing up and most of extra housing was again bought out by owner-occupiers and investors.

Godge

Dionysus wrote: »

1. Is there any reason why mortgages will not once again be based on the same income conditions: 2.5 times the first earner; 1 times the second earner?

2. Is there any reason why the Financial Regulator cannot, for the sake of economic stability, put a limit on the length of a mortgage given the role of 35-year mortgages in increasing house prices in the most recent bubble?

3. What state supports are currently preventing house prices from falling to levels which could be afforded by somebody on the average industrial wage of €33,000? (who in pre-boom times could only get a mortgage for 2.5 times his income which he repaid over a 20-year period)

Interesting questions that could lead to an interesting debate.

1. You are right, those are the long-term ratios so either income increases or property decreases should bring us back towards that equilibrium level. However, that assumes nothing has changed and because incomes are higher, we can afford to spend a greater proportion of income on housing so the old measures and the long-term equilibrium may have changed. 3.5 times the main income plus 1.5 the second income would not be impossible. The only other reason that these ratios could change is if we adopted the European model that not everyone can own their own house. House ownership levels in Ireland are still way above the European norms and if people continue to expect to own their own house, those ratios will have to hold as they are the only affordable ones in the long run for the average earner. I think that housing (or at least a house rather than an apartment) will become increasing unaffordable for the average earner.

2. I have heard that other European countries now have inter-generational mortgages so if that is true, I don't think limits on the length of a mortgage have a future. The 20-year mortgage is definitely gone/

3. Rent allowance paid to social welfare recipients is a state support putting a floor on rents and therefore allowing rental yields to remain appropriate for current house prices. Cut rent allowance (easier than cutting social welfare rates) and average rental yields will fall leading to lower house prices.


So to sum up, the ratios are what are required if you are to have 90% home ownership. However, that is not the future for Ireland.

Euroland

Mr. Loverman wrote: »

Ah right, I just looked at your old posts and you appear to be an estate agent. Constantly trying to "talk up" the market.

Example

No, I'm not. I have no any direct connection with real estate. But I’m really surprised why people are still so pessimistic about Irish residential property market?

Euroland

Godge wrote: »

House ownership levels in Ireland are still way above the European norms and if people continue to expect to own their own house, those ratios will have to hold as they are the only affordable ones in the long run for the average earner.
So to sum up, the ratios are what are required if you are to have 90% home ownership. However, that is not the future for Ireland.

House/apartment ownership in Ireland is less than 80%, which is still below of many Eastern European countries.

Mr. Loverman

You've been wrong about the economy and housing market for years.

At this stage I can only conclude:

a) you have a vested interest in pretending house prices have bottomed out, or
b) you are deluded

Either way, it would be a waste of my time to debate with you.

You are wrong. End of.

aftermn

Too many empty housing units, Nama overhang, falling incomes, rising interest rates, emigrating youth, limited mortgage availability, collapsing banks, clueless leaders.
Under the above circumstances, does it really matter what other countries do?
How could anyone have confidence enough to commit to a debt, of any type, least of all for 30 or more years.
There is only one way for house prices to go in the immediate future. Whether they will re-visit 2.5 times income I don't know, but there is still a lot of falling to do.

Godge

Euroland wrote: »

1) US houses have completely different (cheaper) construction standards, but despite that, prices in New York are clearly higher than in Dublin.

2) German property market is depressed for many years due to very low ownership (less than 50%). Most of Germans are born, grow, live, and die in rented accommodation. Levels of household income in Germany much lower than in Ireland.


So, these two markets cannot serve as an example to us. As regards to other developed nations, prices in Norway, UK, Australia, Netherlands, etc are higher than in Ireland. When we make adjustment to the household income levels, there would many more countries where prices would be higher than in Ireland.

http://www.findaproperty.com/displayprop.aspx?edid=09&salerent=0&pid=5872779

Property prices might be lower in Berlin but 6 flats for a total of €730,000????


How about Amsterdam?

http://www.expatsales.com/item.aspx?area_id=1&details_url=97xhttp%3A%2F%2Fwww%2Ehypodomus%2Enl%2Fxpatsales%2F2%2F326&order=1&bedrooms=0&min_price_rent=0&max_price_rent=300000&pagenum=2&rent_type=long&fixedbeds=

A 3-bedroom apartment for €143,000.

Even so you are making the wrong comparison. Dublin is a small regional city in a backwater of Europe and should be priced accordingly. Turin, Montpelier, Arnhem, Tours, Leipzig, Groningen, Edinburgh, Manchester, Leicester. Those are comparable cities.

Godge

Euroland wrote: »

House/apartment ownership in Ireland is less than 80%, which is still below of many Eastern European countries.

I find it hard to believe that our rate of ownership is below many Eastern European countries unless that is the result of the one-off distribution of housing following the abolition of communism.

Furthermore, it is unlikely their prices are less than ours so we do have more to fall.

Normally I admire optimists but in this case I think you are delusional rather than optimistic. Irish prices have further to fall as the effects of a decrease in rent allowance in the next budget combine with higher interest rates as well as the desire to crystallise losses in the banks to leave both investors and house owners on their knees and force them to sell property.

gigino

Godge wrote: »

Irish prices have further to fall.

In Dublin yes. In other parts of the country prices can be very low already e.g. on daft.ie you will find new 2-bedroom apartments for as little as € 40,000 in Co. Leitrim.

Aard

Euroland wrote: »

1) Yes, I have.

2) In most of the countries in the world you would have to put between 5 and 30 (or more) average annual salaries for buying an average house in country's capital.

30?! You must be joking! Where did you get that figure?

In Vancouver, North America's 2nd most overpriced housing market after LA, houses cost just over 7 (seven) times the average salary.

gigino

Aard wrote: »

30?! You must be joking! Where did you get that figure?

In Vancouver, North America's 2nd most overpriced housing market after LA, houses cost just over 7 (seven) times the average salary.

30 + 7 times ????

Jasus, in the capital of lovely Leitrim, new 3 bedroom properties can be got for 75 grand. ( secondhand ones even cheaper ).http://www.daft.ie/searchsale.daft?id=310833

Thats only approximately twice average salary ?...not 7 or 30 times anyway

danbohan

Euroland wrote: »

No, I'm not. I have no any direct connection with real estate. But I’m really surprised why people are still so pessimistic about Irish residential property market?

and the cockerel crowed for the third time !

how can any sane person equate property in dublin (dingy capital of bankrupt state ) with new york

Snakeblood

gigino wrote: »

30 + 7 times ????

Jasus, in the capital of lovely Leitrim, new 3 bedroom properties can be got for 75 grand. ( secondhand ones even cheaper ).http://www.daft.ie/searchsale.daft?id=310833

Thats only approximately twice average salary ?...not 7 or 30 times anyway

Leitrim overbuilt by an insane amount during the boom. Those are wildly overpriced.

Euroland

Godge wrote: »

How about Amsterdam?

http://www.expatsales.com/item.aspx?area_id=1&details_url=97xhttp%3A%2F%2Fwww%2Ehypodomus%2Enl%2Fxpatsales%2F2%2F326&order=1&bedrooms=0&min_price_rent=0&max_price_rent=300000&pagenum=2&rent_type=long&fixedbeds=

A 3-bedroom apartment for €143,000.

This apartment has poor condition, located in the suburbs, far away from central Amsterdam, and its surface area is only 40 sq. meters. With this amount of money (143K Euro) you can buy something much better in Dublin.
Try here:
http://www.daft.ie/searchsale.daft?search=1&s[cc_id]=ct1&s[a_id][0]=&s[route_id]=&s[a_id_transport]=0&s[address]=&s[txt]=&s[mnb]=1&s[mxb]=&s[mnp]=50000&s[mxp]=150000&s[pt_id]=&s[house_type]=&s[sqmn]=&s[sqmx]=&s[mna]=&s[mxa]=&s[npt_id]=5&s[days_old]=&s[new]=&s[agreed]=&s[search_type]=sale&s[transport]=&s[advanced]=1&s[price_per_room]=&s[furn]=&s[refreshmap]=1&s[sort_by]=price&s[sort_type]=a&fr=default

Mister men

Euroland wrote: »

Do you really believe that our prices are too high? I personally don’t believe so.

Myself and my wife both work. We are both on fairly low salaries but prefer to be working rather than claiming even if with two kids it would be easier to claim. We have zero chance of buying a house in the dublin area still to this day. Prices are way to high for the average working person. We need to see another 30% drop in prices over the next 3 years to have any hope of getting a house to live in rather than rent.

Euroland

Aard wrote: »

30?! You must be joking! Where did you get that figure?

In Vancouver, North America's 2nd most overpriced housing market after LA, houses cost just over 7 (seven) times the average salary.

Vancouver's super-hot real estate market has hit an expensive milestone, with the average price of a home reaching $1 million for the first time.
More than 1,300 single detached homes were sold in greater Vancouver last month, for a whopping total of $1.35 billion.

http://www.ctv.ca/CTVNews/Canada/20100406/vancouver_100406/


Table 2-11 – continued
Seasonally adjusted estimates of average weekly earnings, for all employees, for selected industries — British Columbia, 2010

Industry - NAICS Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec.

Service producing industries

765.26 A 771.67 A 774.05 A 779.40 A 782.73 A 776.79 A 784.52 A 785.69 A 787.49 A 791.14 A 790.08 A 793.81 A

Trade

619.36 A 628.49 A 632.92 A 638.68 A 633.06 A 620.89 A 628.40 A 634.37 A 636.28 A 642.02 A 640.45 A 643.24 A

Wholesale trade

950.06 A 972.88 A 969.85 A 981.01 A 964.30 A 928.22 A 910.04 A 933.04 A 957.45 A 983.09 A 956.98 A 1,000.24 A

Retail trade

500.93 A 518.88 A 519.14 A 525.15 A 513.28 A 515.16 A 532.95 A 524.57 A 520.41 A 527.42 A 525.58 A 521.31 A

Transportation and warehousing

899.30 A 904.86 A 916.89 A 919.99 A 921.16 A 926.67 A 942.92 A 943.34 A 902.19 A 930.31 A 924.83 A 919.18 A

Information and cultural industries

1,074.20 A 1,092.19 A 1,085.08 A 1,133.24 A 1,116.06 A 1,107.33 A 1,098.52 A 1,105.31 A 1,114.75 A 1,166.87 A 1,152.25 A 1,158.84 A

Finance and insurance

1,036.28 A 1,077.89 A 1,031.12 A 1,053.35 A 1,029.50 A 1,034.13 A 1,045.17 A 1,031.56 A 1,025.82 A 1,047.92 A 1,050.62 A 1,044.03 A

Real estate and rental and leasing

802.74 A 751.57 A 825.57 A 822.41 A 814.20 A 814.05 A 766.48 A 770.94 A 787.17 A 781.09 B 816.07 B 791.35 A

Professional, scientific and technical services

1,126.18 A 1,108.88 A 1,131.53 A 1,113.10 A 1,140.31 A 1,138.53 A 1,112.49 A 1,124.17 A 1,112.94 A 1,123.79 A 1,141.37 A 1,210.07 A

Management of companies and enterprises

1,191.81 A 1,381.15 B 1,275.91 A 1,244.10 B 1,159.75 A 1,282.11 B 1,235.82 B 1,137.86 A 1,257.83 A 1,192.11 B 1,159.86 B 1,129.37 B

Administrative and support, waste management and remediation services

717.94 A 708.44 A 753.71 A 752.54 A 775.66 A 772.21 A 754.26 A 765.53 A 751.32 A 766.01 A 735.58 A 800.72 A

Educational services

939.75 A 948.58 A 985.92 A 938.57 A 964.59 A 938.62 A 959.14 A 969.19 A 949.83 A 947.23 A 934.96 A 953.60 A

Health care and social assistance

759.67 A 754.99 A 730.51 A 743.46 A 774.83 A 755.61 A 798.15 A 800.36 A 807.95 A 787.34 A 795.45 A 806.10 A

Arts, entertainment and recreation

543.27 A 576.30 A 535.32 A 550.38 A 526.28 A 537.93 A 550.18 A 546.86 A 520.42 A 546.85 A 561.13 A 567.94 B

Accommodation and food services

343.93 A 353.47 A 351.65 A 355.09 A 377.93 A 371.46 A 377.56 A 363.04 A 353.37 A 345.11 A 343.28 A 347.14 A

Other services (except public administration)

656.59 A 681.15 A 691.32 A 693.93 A 686.46 A 674.26 A 699.72 A 666.14 A 692.13 A 686.51 A 690.44 A 717.75 A

Public administration

1,090.20 A 1,099.88 A 1,067.97 A 1,120.52 A 1,060.22 A 1,049.59 A 1,084.08 A 1,098.74 A 1,109.78 A 1,154.79 A 1,092.36 A 1,081.48 A

http://www.statcan.gc.ca/pub/72-002-x/72-002-x2010012-eng.pdf

Now, do the math

Euroland

Mister men wrote: »

Myself and my wife both work. We are both on fairly low salaries but prefer to be working rather than claiming even if with two kids it would be easier to claim. We have zero chance of buying a house in the dublin area still to this day. Prices are way to high for the average working person. We need to see another 30% drop in prices over the next 3 years to have any hope of getting a house to live in rather than rent.

Buy an apartment then

Mr. Presentable

Mr. Loverman wrote: »

Have you looked on Daft recently?

You still need two above average incomes and a 35 year mortgage for an average home in Dublin.

A single person on an above average wage would struggle to buy an ex council house in a rough part of Dublin.

To be fair, average house price vs average wage is a national formula, not "South Dublin". Which is to say, if you are on c30k per annum, there are places in Ireland where one years wage could buy an average house. There are no "national average" houses in South Dublin to the best of my knowledge.

robd

Well the central bank still sees about 30% from today's price
http://www.rte.ie/news/2011/0316/banks-business.html

As usual for a international institution charged with price stability it's conservative.

50% from today is about right.

We've reached peak oil and peak credit and we're left with the problem globally of trying to wean ourselves off exponential debt increase. Looking to the past and across other markets for lead as to where this is going is fairly pointless as they are suffering from the same problems as Ireland. Ireland is just the first in a line of dominos to fall.

One thing I can guarantee, credit will be restricted for many years to come. There's going to be a far more conservative approach to growth and lending and building than we've seen over the last 2 decades. Much more focus on sustainability (both environmental and financial) and living within one's means. There's a huge shift taking place in front of our eyes in how the financial market works and if you can't see that you will get burnt.

This is why house prices will crash a further 50% from today's price, 75% from peak.

Euroland

robd wrote: »

Well the central bank still sees about 30% from today's price
http://www.rte.ie/news/2011/0316/banks-business.html

As usual for a international institution charged with price stability it's conservative.

50% from today is about right.

We've reached peak oil and peak credit and we're left with the problem globally of trying to wean ourselves off exponential debt increase. Looking to the past and across other markets for lead as to where this is going is fairly pointless as they are suffering from the same problems as Ireland. Ireland is just the first in a line of dominos to fall.

One thing I can guarantee, credit will be restricted for many years to come. There's going to be a far more conservative approach to growth and lending and building than we've seen over the last 2 decades. Much more focus on sustainability (both environmental and financial) and living within one's means. There's a huge shift taking place in front of our eyes in how the financial market works and if you can't see that you will get burnt.

This is why house prices will crash a further 50% from today's price, 75% from peak.

So, do we soon have to expect the houses in Foxrock at 50 grand then?

I would buy 3, at least.

ardmacha

So, do we soon have to expect the houses in Foxrock at 50 grand then?

Whatever the price is, there will aways be places that are above average. Foxrock will always be well above the Irish average and Vancouver well above the Canadian one. So posting comments like the above are no help, whatever little smilies you put on them.

Mister men

Euroland wrote: »

Buy an apartment then

No thanks they are to dear also and would'nt raise the kids in an apartment.

Dannyboy83

Some of the reasons being proposed here as to why property won't fall further, while nice in theory, don't really have much bearing in reality.

Q. What determines house prices?
A. Above all else; The capacity of the buyer to (re)pay

Irish new house prices and first time buyer mortgages relative to average industrial earnings, 1990 – 2009


Avg Industrial wage was 31k last time I checked.
Taxes are still going to increase.
Benefits will still be cut.
Interest rates are going to increase, both ECB and local banks.

A salary of 31k p.a. is about 2k net per month.

Can people afford to put over 50% of their salary away on mortgage repayments every month?
No.

If you factored in property tax/water charge/abolition of mortgage interest relief, would people still be able to afford 50%?
No.

Say they can afford 40% max.
That's 800 per month.

The PTSB 10 year rate is now nearly 10%.


It's more likely that property will dip to 2x the average industrial wage before it eventually settles at around 3x.


I started a thread about this a while back, here

irishconvert

Dionysus wrote: »

'The CSO website last available earning statistics (Q2 2007)suggest that the average wage in Ireland is 657 Euro, or 32.6k.

Traditionally, before the madness, the amount you could borrow was 2.5 times the main earner plus 1 times the second earner, and the term was usually 20 years. Longer was exceptional.

Deposits required were at least 10% and more often 20%.

All good, but what was the average wage in the Mid-90's?

Euroland

Mister men wrote: »

No thanks they are to dear also and would'nt raise the kids in an apartment.

1) Now you can find even 2-bed apartments in Dublin within €100-150K range.

2) More than 40% of Europeans bring their children in apartments and I don’t see any major difference with a house except the tiny patio. Otherwise, you would have to postpone you family plans for many years.

Dannyboy83

irishconvert wrote: »

All good, but what was the average wage in the Mid-90's?

Don't think you understood his post.

He is referring to a return to ratio, not a return to price.

Euroland

Dannyboy83 wrote: »

It's more likely that property will dip to 2x the average industrial wage before it eventually settles at around 3x.

try to find another country where you could by an average residential property at 2 times average industrial wage

Kalimah

My salary in 1993 was 16k (old Irish pounds obviously). My husband's was more or less the same. We were both in decent jobs-me in the bank and him in a semi state. Our first house cost 38k in 1988 and we were on 10k each at the time.When we moved house in '93 our mortgage was twice my husband's income at the time. We never remortgaged and we're not in financial difficulty with the mortgage. neither are any of our friends as we were all in the same boat starting off. Ok the banks were conservative in their lending but it worked.

robd

Euroland wrote: »

So, do we soon have to expect the houses in Foxrock at 50 grand then?

I would buy 3, at least.

That's some liberties you've taken in interpreting my post.

I don't recall, in fact I didn't, quote any prices or areas only percentages. Also, by your assumption (in interpreting what I said) houses in Foxrock are 100k at the moment (on average) and were 200k at peak (on average), which is complete nonsense.

It's certainly not inconceivable that a 4 bed in Foxrock would be 300-400k, which is about 50% off most asking prices there for a 4 bed at the moment. The cheapest 4 bed on myhome today is 499k.

Euroland

Kalimah wrote: »

My salary in 1993 was 16k (old Irish pounds obviously). My husband's was more or less the same. We were both in decent jobs-me in the bank and him in a semi state. Our first house cost 38k in 1988 and we were on 10k each at the time.When we moved house in '93 our mortgage was twice my husband's income at the time. We never remortgaged and we're not in financial difficulty with the mortgage. neither are any of our friends as we were all in the same boat starting off. Ok the banks were conservative in their lending but it worked.

But the prices will never come back again to that level, neither would the incomes

robd

Euroland wrote: »

But the prices will never come back again to that level, neither would the incomes

Again you're taking liberties with your interpretations. The important part is the ratio's not the income. It's a given that inflation has changed the value of money, hence why the world generally uses real rather than nominal values.

Dannyboy83

Euroland wrote: »

try to find another country where you could by an average residential property at 2 times average industrial wage

Show me another country in similar circumstances as ours, and you will find it.

Euroland

Dannyboy83 wrote: »

Show me another country in similar circumstances as ours, and you will find it.

So, you have no answer then?

McTigs

Euroland wrote: »

This apartment has poor condition, located in the suburbs, far away from central Amsterdam, and its surface area is only 40 sq. meters. With this amount of money (143K Euro) you can buy something much better in Dublin.
Try here:
http://www.daft.ie/searchsale.daft?search=1&s[cc_id]=ct1&s[a_id][0]=&s[route_id]=&s[a_id_transport]=0&s[address]=&s[txt]=&s[mnb]=1&s[mxb]=&s[mnp]=50000&s[mxp]=150000&s[pt_id]=&s[house_type]=&s[sqmn]=&s[sqmx]=&s[mna]=&s[mxa]=&s[npt_id]=5&s[days_old]=&s[new]=&s[agreed]=&s[search_type]=sale&s[transport]=&s[advanced]=1&s[price_per_room]=&s[furn]=&s[refreshmap]=1&s[sort_by]=price&s[sort_type]=a&fr=default

This is clearly wrong. I know amsterdam pretty well and that apartment is probably at most a 20 minute cycle (on clear cycle path) or 15 minute bus ride to the centrum. I was in amsterdam last week and i didn't see one traffic jam. As for the condition of the apartment, i can't see how you reckon it's in poor condition and it's right beside a park.

It's not deluxe and it's not the poshest (but definitely far from the worst) part of town but dublin by very virtue of being dublin has nothing of that quality at that price.

professore

Godge wrote: »

http://www.findaproperty.com/displayprop.aspx?edid=09&salerent=0&pid=5872779

Property prices might be lower in Berlin but 6 flats for a total of €730,000????


How about Amsterdam?

http://www.expatsales.com/item.aspx?area_id=1&details_url=97xhttp%3A%2F%2Fwww%2Ehypodomus%2Enl%2Fxpatsales%2F2%2F326&order=1&bedrooms=0&min_price_rent=0&max_price_rent=300000&pagenum=2&rent_type=long&fixedbeds=

A 3-bedroom apartment for €143,000.

Even so you are making the wrong comparison. Dublin is a small regional city in a backwater of Europe and should be priced accordingly. Turin, Montpelier, Arnhem, Tours, Leipzig, Groningen, Edinburgh, Manchester, Leicester. Those are comparable cities.

We also have one of the lowest population densities in Europe.

Dannyboy83

Euroland wrote: »

So, you have no answer then?

The answer is, there is no other country.

Property prices have fallen in Ireland more than anywhere else in the world.
And they are falling faster than anywhere else in the world.

The mortgage market has fallen by 90%

80% of people were refused a mortgage in 2010

Emigration is expected to run at 100,000 over the next 4 years

In order to inflate that bubble, our borrowing looked like this:



In short, we are already going to have our own chapter in future economic textbooks.
And we haven't even reformed state sector spending yet.

professore

Euroland wrote: »

So, do we soon have to expect the houses in Foxrock at 50 grand then?

I would buy 3, at least.

For houses to slide to 50K in Foxrock, if there is to be a further slide of 50% from where we currently are this implies there are currently houses for sale in Foxrock for 100K. I don't believe that. Cheapest asking price for a 3 bed terraced house from a quick Daft.ie search was 440K. This would imply a slide to 220K for this house. This appears quite realistic to me.

professore

Euroland wrote: »

1) Now you can find even 2-bed apartments in Dublin within €100-150K range.

2) More than 40% of Europeans bring their children in apartments and I don’t see any major difference with a house except the tiny patio. Otherwise, you would have to postpone you family plans for many years.

There is no comparison between the poorly built shoeboxes that pass for apartments here and the spacious quality purpose built family size apartments available in Europe.

Also here you generally have little or no storage, bike shed, or parking space that come as standard over there unless you pay through the nose for it. I am comparing average size European cities here, BTW, not Cannes and Monaco and the like.

Dannyboy83

professore wrote: »

There is no comparison between the poorly built shoeboxes that pass for apartments here and the spacious quality purpose built family size apartments available in Europe.

For example:
http://www.daft.ie/searchsale.daft?id=584221&search=1

You'd barely fit a dog in there.
And that's going for 5 times the average industrial wage.:D

professore

Two things will cause the last great collapse:

1. When the banks start repossessing houses in earnest.
2. When property tax is introduced.

This will cause prices to fall like a stone. We ain't seen nothing yet.