Central Bank to limit amount banks lend for home purchase

Barely Hedged

dr.fuzzenstein wrote: »

I think that a combined income of €60k should be enough for someone to buy a reasonable home, I don't see what's deluded about that.

What do you define as a reasonable home?

dr.fuzzenstein

Barely Hedged wrote: »

What do you define as a reasonable home?

That's different for everyone. Could be a semi-d, terraced, apartment, the point is that some kind of property should not be out of the reach of a €60k income.
Just look at Berlin, you can get a small apartment for €120k: (of course the sky's the limit after that, but the point is, Berlin HAS a lower end of the market)

http://kleinanzeigen.ebay.de/anzeigen/s-anzeige/your-apartment-in-berlin-apartment-in-berlin/306044154-196-3416?ref=search

I've seen some for sale for €100k. We have this insane mindset of "property in the capital has to be unaffordable for the average Joe, it's not for living in, it has to be speculation fodder for property gamblers" and of course we don't want a family with pets and kids ruining what is an economic asset, now do we?
What would you define as reasonable?

robp

dr.fuzzenstein wrote: »

I think the reasoning is something like that:
"Yay! High property prices! This is good, because recovery! Last time we had high property prices, we where doing great! Ergo high property prices and annual double digit property price inflation=Brilliant!" (dances out of room to "Celebration" by Kool and the Gang)

I honestly don't think* a lot of Irish economists are capable of thinking beyond the above. If you look at any "proper" countries (except the UK) in Europe, you will see a relatively flat and stable property market. Only the Irish have this sickness in their heads that a runaway housing market is a great thing.
I am saving my money so I can exploit the next crash and make it back thrice in the next boom after that. Boom Banga Bang, Baby! That should be the Irish national anthem.

*seriously, where did most of these guys go to clown college?

Well you see something similar in the Mediterranean where home ownership is very high. Spain had a painful drop too. I think a lot of it is due to population structure- Ireland, UK, US have relatively young growing populations compared to Germany. It is less true for Spain but it is still younger then Germany.

Barely Hedged

dr.fuzzenstein wrote: »

That's different for everyone. Could be a semi-d, terraced, apartment, the point is that some kind of property should not be out of the reach of a €60k income.
Just look at Berlin, you can get a small apartment for €120k: (of course the sky's the limit after that, but the point is, Berlin HAS a lower end of the market)

http://kleinanzeigen.ebay.de/anzeigen/s-anzeige/your-apartment-in-berlin-apartment-in-berlin/306044154-196-3416?ref=search

I've seen some for sale for €100k. We have this insane mindset of "property in the capital has to be unaffordable for the average Joe, it's not for living in, it has to be speculation fodder for property gamblers" and of course we don't want a family with pets and kids ruining what is an economic asset, now do we?
What would you define as reasonable?

There is no where out of reach in Dublin for a combined income of 60k. It's been proven for the 3 bed scenario and would similarly apply to other properties.

The issue is the delusion of some people that they're is nothing decent out there and the reason is that they're too expensive. They seem ignorant of the fact that what they think is decent and desirable is also for other people who earn more money than them.

Am I right in saying that the link you have pasted is for a small one bed flat that's 45 - 57 mins from Alexanderplatz by s and u bahn?

Michael D Not Higgins

dr.fuzzenstein wrote: »

That's different for everyone. Could be a semi-d, terraced, apartment, the point is that some kind of property should not be out of the reach of a €60k income.
Just look at Berlin, you can get a small apartment for €120k: (of course the sky's the limit after that, but the point is, Berlin HAS a lower end of the market)

http://kleinanzeigen.ebay.de/anzeigen/s-anzeige/your-apartment-in-berlin-apartment-in-berlin/306044154-196-3416?ref=search

I've seen some for sale for €100k. We have this insane mindset of "property in the capital has to be unaffordable for the average Joe, it's not for living in, it has to be speculation fodder for property gamblers" and of course we don't want a family with pets and kids ruining what is an economic asset, now do we?
What would you define as reasonable?

Berlin's not comparable for a number of reasons but they lead to lower property prices on the whole in that city.

The Spider

Barely Hedged you have my sympathies, I see one of these threads has once again degenerated into an "I should be able to buy in the most expensive part of Ireland on an average wage"

At the end of the day if your household income is 60k then you don't get to buy in D4, D2, D6, D18, D14, this is reality, there are a lot more post codes in Dublin than the above, but these are out of your reach, accept it.

Dun Laoighre, Blackrock, Monkstown, Dalkey, Kilinney, Clontarf, Sutton, Howth, Portmarnock, Baldoyle and Malahide are also out of reach.

Now if you can start your house search with that in mind you'll be in a happier place, on 60k you will never buy in the areas above, to think you can is delluisional at best.

There's plenty of people in Tallaght exceeding 60k of household income.

dr.fuzzenstein

Yes, that is exactly what was said. With 60k I should be able to buy a house in Dalkey beside Bono and Gaybo :rolleyes:

KaseLieberKase

Parents' home ('96): £97,000 (€125,000)

Adjusted for inflation: €190,000

Same house now: €450,000

Myself and the OH are earning more now (adjusted for inflation) than my parents were when they bought the house yet I'm not even close to being able to afford a house like that.

There's no disputing that house prices are still too high we need to build more to keep up with demand.

The Spider

KaseLieberKase wrote: »

Parents' home ('96): £97,000 (€125,000)

Adjusted for inflation: €190,000

Same house now: €450,000

Myself and the OH are earning more now (adjusted for inflation) than my parents were when they bought the house yet I'm not even close to being able to afford a house like that.

There's no disputing that house prices are still too high we need to build more to keep up with demand.

Silly argument, if your parents were lucky enough to buy in an area that has now become desirable, then looking back at what they paid makes no sense.

It's simple economics if five houses are for sale but thirty people want them, then he who pays most shall get the house.

We can build more houses but they more than likely won't be in the postcodes you desire.

Tigger

i grew up in Dundrum

in 91 as a kid i was on £250 a week
my parents home was sold that year (family split) fo 70 k punts or 280 weeks wages of a kid working in a builders yard
house is worth 600k now (went up went down ) if you divide 600000 by 280 the equivalent weekly wage is €2,140
so the house a 16 year old in his first job had the same affordability then as it does to someone on 111k today
and the tax implications mean its probably like 160k but i haven't worked it out

Barely Hedged

KaseLieberKase wrote: »

Parents' home ('96): £97,000 (€125,000)

Adjusted for inflation: €190,000

Same house now: €450,000

Myself and the OH are earning more now (adjusted for inflation) than my parents were when they bought the house yet I'm not even close to being able to afford a house like that.

There's no disputing that house prices are still too high we need to build more to keep up with demand.

You can't be serious?

You present the above example and then state "There's no disputing that house prices are still too high". It's the most naieve interpretation of why you can't afford your parents house now compared with 19 years ago

Barely Hedged

Tigger wrote: »

i grew up in Dundrum

in 91 as a kid i was on £250 a week
my parents home was sold that year (family split) fo 70 k punts or 280 weeks wages of a kid working in a builders yard
house is worth 600k now (went up went down ) if you divide 600000 by 280 the equivalent weekly wage is €2,140
so the house a 16 year old in his first job had the same affordability then as it does to someone on 111k today
and the tax implications mean its probably like 160k but i haven't worked it out

You're comparing affordability in Dundrum now v 24 years ago???

Firstly you're ignoring improvements in ameneties and infrastructure to the area, the wealth that has brought to Ireland in the last 24 years and the type of person now wanting to buy in Dundrum

gaius c

RecordStraight wrote: »

Is this a decent house?

http://www.myhome.ie/residential/brochure/61-clanmaurice-road-donnycarney-dublin-5/3153204

or this:

http://www.myhome.ie/residential/brochure/69-carrickmount-avenue-churchtown-dublin-14/3160230

Well for starters, the first house has a price per sq ft figure, you'd see in Knocklyon, except that Donnycarney isn't Knocklyon.

gaius c

RecordStraight wrote: »

Somewhere to live?

You have the question backwards: you should be asking why a couple each earning 30k a year can't afford a reasonable house in a reasonable area. It's as if you can't countenance that the problem is the price of property.

To hell or to Balbriggan with them.[/not entirely serious post]

Tigger

Barely Hedged wrote: »

You're comparing affordability in Dundrum now v 24 years ago???

Firstly you're ignoring improvements in ameneties and infrastructure to the area, the wealth that has brought to Ireland in the last 24 years and the type of person now wanting to buy in Dundrum

What does three question marks mean ?

stevedublin

Tigger wrote: »

What does three question marks mean ?

In this context it means "are you serious?"

Eric Cartman

if you want a comparison to the early 90s for prices , you should be comparing castleknock 1991 to ratoath now , dundrum 1991 to blessington , lucan 1991 to kilcock .

urban sprawl drives up prices , more people live here now, there is more demand and it won't be going away.

Mongfinder General

dr.fuzzenstein wrote: »

I think that a combined income of €60k should be enough for someone to buy a reasonable home, I don't see what's deluded about that.

A reasonable home, ok. Where though?

Barely Hedged

gaius c wrote: »

Well for starters, the first house has a price per sq ft figure, you'd see in Knocklyon, except that Donnycarney isn't Knocklyon.

My reply from earlier:

Barely Hedged wrote: »

Also, the last sale price for Clanmaurice road was at the end of 2013 and was 180k. Even considering the house price inflation that's happened since then there's no way you'd get near the 250k asking price, suggesting that the house has a woefully inflated asking price. So, it's not really a great example that you've picked out.

Was it chosen for that reason?

johnp001

There was a Bloomberg article last week on the higher interest rates for German bonds at recent auctions. DMcW's article here looks at this in the context of Honohan's resignation.
http://www.davidmcwilliams.ie/2015/05/05/the-day-of-debt-reckoning-is-nigh

There will be major implications for affordability in the property market as discussed above if the era of low interest rates is going to be a lot shorter than previously envisaged.
Scary stuff for those currently thinking of taking out a large mortgage.

Villa05

It's the mortgages already given out in the bubble that are at risk here. It is a ticking time bomb it's just a matter of what time setting is on it.
Of course variable rate customers will be hammered as well.
Thats why careful consideration should be given to current low long term fixed rates to protect yourself

seamus

gaius c wrote: »

Well for starters, the first house has a price per sq ft figure, you'd see in Knocklyon, except that Donnycarney isn't Knocklyon.

It's also pretty clear that it's excessively priced because of its proximity to the city, Clontarf and the DART, and for the 120sq.m.-plus south west facing back garden. You could triple the size of the house and still have a bigger back garden than most.

Barely Hedged

johnp001 wrote: »

There was a Bloomberg article last week on the higher interest rates for German bonds at recent auctions. DMcW's article here looks at this in the context of Honohan's resignation.
http://www.davidmcwilliams.ie/2015/05/05/the-day-of-debt-reckoning-is-nigh

The level of QE sent out by the ECB has sent yields to rock bottom levels to the extent that fund managers are no longer interested in picking up European government debt at the yields offered initially given the risk they attach to it.

johnp001 wrote: »

There will be major implications for affordability in the property market as discussed above if the era of low interest rates is going to be a lot shorter than previously envisaged.
Scary stuff for those currently thinking of taking out a large mortgage.

Can you tell me what the major implications were for affordability, i.e. the mortgage rates offered by banks when the ECB base rate was 4% in 2007 were and the BOE base rate when it was 5.25% in 2008 versus 0.05% and 0.5% respectively now?

The Fed started QE in 2011 (> 4 years ago) which sent investors away from US government debt and into equities etc. Whats happened their base rate since then?

Scary stuff indeed if youre scare mongering to sell a column in a media outlet.

awec

My biggest problem with these rules is that it is all but impossible to save a huge deposit while paying rent. With rent prices going up it's just getting more difficult.

Seems to be the done thing for people to move back home for a year or two. Not possible for everyone unfortunately.

awec

Though that said, even 2 years of paying no rent would not equate to a deposit. Even if you saved a 1500 euro rent for 24 months you'd only have 36,000 which is still miles short.

markpb

awec wrote: »

Though that said, even 2 years of paying no rent would not equate to a deposit. Even if you saved a 1500 euro rent for 24 months you'd only have 36,000 which is still miles short.

Moving home seems to involve paying their parents a small amount of "rent" which covers rent, utility bills and food. It sometimes covers childcare too. If I didn't have those bills to pay, I'd have a nice deposit in no time.

For a FTBer 36k isn't so bad. What's the average house price? Less than 300k I'd have thought (could be wrong!).

You need 10% of the first 220k and 20% of the balance. With 36k, you can get a mortgage that allows you buy a house for 290k.

Greyian

awec wrote: »

Though that said, even 2 years of paying no rent would not equate to a deposit. Even if you saved a 1500 euro rent for 24 months you'd only have 36,000 which is still miles short.

If you're first time buyers, you could get a 254,000 mortgage (22,000*9 + 14,000*4) with a deposit of 36,000 (assuming LTIs are OK).

That wouldn't get you a big house, but there are a few 3 bed properties in South Dublin (Stepaside, Shankill, Ballybrack) for that.

matrim

Greyian wrote: »

If you're first time buyers, you could get a 254,000 mortgage (22,000*9 + 14,000*4) with a deposit of 36,000 (assuming LTIs are OK).

That wouldn't get you a big house, but there are a few 3 bed properties in South Dublin (Stepaside, Shankill, Ballybrack) for that.

Wouldn't a 36,000 deposit get a FTB a 290,000 mortgage?

Greyian

matrim wrote: »

Wouldn't a 36,000 deposit get a FTB a 290,000 mortgage?

The mortgage would be 254,000, the total amount that the person could spend would be 290,000 (254,000 mortgage + 36,000 deposit).

Just to illustrate, this is the image the Irish Times ran with when the rules were introduced:



The image quality is a bit...well, crap, but you can see that a deposit of 38,000 is required for a purchase price (not a mortgage) of €300,000. If we reduce the purchase price by 10k, we'd need to reduce the deposit by 2k (20% of 10k), giving us a deposit of €36,000, for an overall purchase price of €290,000. That would leave us with a mortgage of €254,000 (€290,000-€36,000).