Property Market 2016

Michael D Not Higgins

Alter_Ego wrote: »

3. The 20% deposit is unnecessary and should probably be tweaked. Why don't just have 10% across the board? You're still limited by LTI ratios, so why requiring such large deposits? 20% locks second time buyers into their existing properties, constraining supply.

Even if you said 10% for everyone then people would still complain. The first time buyers would complain they have to deal with people with equity in their current homes and those who have just got a small bit of positive equity will complain they still can't move.

mel123

sunnyday1234 wrote: »

The rules will be abolished in the summer and ye will get your housing boom then again

I dont want a housing boom. Ive gone sale agreed on something I can afford (under the new rules with 20% deposit), in an area i am 100% happy in if the bottom falls out of the market, and also if my circumstances change (kids, have to look after family etc). Having been through a boom, this was my main concern.
However, i think the new rules are restricting supply in so far as if people want to move they need a 20% deposit. Generally speaking, the situation would be your already paying a mortgage and a lot of bills. You may have kids. Unless youve got a low mortgage or are in the high earner bracket, saving a 20% deposit to move house, along with solicitors fees and everything else, is nearly impossible for the average household these days, in my opinion.

caviardreams

mel123 wrote: »

I dont want a housing boom. Ive gone sale agreed on something I can afford (under the new rules with 20% deposit), in an area i am 100% happy in if the bottom falls out of the market, and also if my circumstances change (kids, have to look after family etc). Having been through a boom, this was my main concern.
However, i think the new rules are restricting supply in so far as if people want to move they need a 20% deposit. Generally speaking, the situation would be your already paying a mortgage and a lot of bills. You may have kids. Unless youve got a low mortgage or are in the high earner bracket, saving a 20% deposit to move house, along with solicitors fees and everything else, is nearly impossible for the average household these days, in my opinion.

The idea is though, that you already have at least 10% equity (from your 10% deposit as a FTB) and have built up equity by paying down the mortgage. it's not like you are expected to have an extra 20% on top of the equity you have built up.

mel123

caviardreams wrote: »

The idea is though, that you already have at least 10% equity (from your 10% deposit as a FTB) and have built up equity by paying down the mortgage. it's not like you are expected to have an extra 20% on top of the equity you have built up.

Yeah i get that as well, but i was thinking more about the people who have no equity because their house value has depreciated, which seems to be a large chunk of market who want to move, im not saying all, but a large chunk. Sorry I should have been clearer.
Example if the house i have gone sale agreed on loses 20% over the years, I am stuck there, because there is no way I would be able to pay the mortgage and save a decent chunk per year as well, unless of course my wages increase substantially/new job etc. Just to note, buying the house on my own, so possibly its easier if there are two people.

Villa05

sunnyday1234 wrote:

they are to be "reviewed" . With election coming up , i would bet that they will be abolished or seriously weakened. No central bank will stand against the kind of pressure that will be exerted on them by the govt in order to win votes

We won't have a year's data before the election.
Politicians can kick and scream but that's all. Its not in their control, thankfully

Michael D Not Higgins

mel123 wrote: »

Yeah i get that as well, but i was thinking more about the people who have no equity because their house value has depreciated, which seems to be a large chunk of market who want to move, im not saying all, but a large chunk. Sorry I should have been clearer.
Example if the house i have gone sale agreed on loses 20% over the years, I am stuck there, because there is no way I would be able to pay the mortgage and save a decent chunk per year as well, unless of course my wages increase substantially/new job etc. Just to note, buying the house on my own, so possibly its easier if there are two people.

The idea behind the rules isn't to facilitate moving house, it's to prevent the boom and bust cycle. The LTI limits prevent people overborrowing, and the LTV protects the bank from exposure risk.

First time buyers are statistically lower risk and can be afforded some leeway in the LTV. This is mainly due to them being younger and earlier in their careers. Their salary will likely increase more than a second time buyer and they have longer left in their careers to continue earning.

Someone moving home is likely to have equity built up. There is a transition period at the moment where there a homes with negative equity, who can still move with a negative equity loan which ignores the new rules, and homes which have just come out of negative equity, who are the ones trapped by the current rules.

No matter how the rules are set up there will always be at least one group hard done by, but the rules protects the market in the long run. At the moment, it's those only just in positive equity, but also those FTBs who are paying high rents and can't afford the 10% deposit despite meeting LTI limits.

At least for those with a current mortgage they can continue to pay down the mortgage and build equity. With rising house prices and paying off the mortgage they can gather the deposit in equity or if house prices fall they can get a negative equity loan.

sunnyday1234

Villa05 wrote: »

We won't have a year's data before the election.
Politicians can kick and scream but that's all. Its not in their control, thankfully

Pressure will be applied and the central bank will bow to it. Thats a certainty

I Am The Law

sunnyday1234 wrote: »

Pressure will be applied and the central bank will bow to it. Thats a certainty

There was no sign of that in last weeks interview with CB Governor.

sunnyday1234

I Am The Law wrote: »

There was no sign of that in last weeks interview with CB Governor.

he was hardly going to say "yeah we will change the rules in the summer because mr noonan asked us to"

The central bank wont be held accountable for stopping "progress" as they will be told house price increases are. They will loosen the rules and all hell with break loose. Rents will drop a little and sales will go northward and the house price boom will be back on with everyone saying "this time its different"

sweetie

sunnyday1234 wrote:

The central bank wont be held accountable for stopping "progress" as they will be told house price increases are. They will loosen the rules and all hell with break loose. Rents will drop a little and sales will go northward and the house price boom will be back on with everyone saying "this time its different"

Is that not what we had for the couple of years until the rules were introduced?

SeanSouth

There's very little chance that the CB rules will be relaxed and none at all until the supply of housing is substantially increased. If the rules are relaxed without an increase in supply, then prices will rocket and the strongest buyers will still get the houses. So obviously a rule relaxation doesnt help the people who are campaigning for it, it just makes the situation worse for them. It means that they will be able to borrow more money but houses will be more expensive which will get them exactly, nowhere !!

Many contributors talk about volatility in house prices (up and down) If X happens then prices will go up and if Y happens prices will go down. What some people dont realise is that prices are a lot more volatile on the up swing than on the down swing. There is huge resistance in the market place to house price reductions. The 1st huge resistance towards a reduction in prices is home owners themselves. By in large home owners will resist price reductions fiercely. House owners will not normally sell in a declining market. The result is a choking of supply and a stagnant market. The 2nd resistance is estate agents. So outside of major economic shocks, house prices rarely decline. This is borne out through history. I raise this point as I have seen many contributors sitting on the fence wondering what to do and worrying about house prices falling. In the current economic climate, it cannot happen.

gaius c

Sono wrote: »

Houses very slow to the market since the new year, very little if anything going up daily in the areas we are looking to buy, quite frustrating. Anyone else notice it's gone very quiet or is it simply the areas I am looking?

It's very early yet.

Alter_Ego wrote: »

That's how I read it too, but in my view:

1. There are exceptions - up to 15%. That should be abolished. It's either is a rule that applies or it doesn't.
2. The 220k threshold is unfair on Dublin residents as it doesn't apply to such extent in much of the rest of the country because prices are generally lower
3. The 20% deposit is unnecessary and should probably be tweaked. Why don't just have 10% across the board? You're still limited by LTI ratios, so why requiring such large deposits? 20% locks second time buyers into their existing properties, constraining supply.

Giving people more credit to bid against other people also armed with more credit is MAD.
The reason it's lower for first time buyers is because they are the market segment least likely to default on their mortgages. The most likely to default are those who bought a new house while keeping the old one, i.e. leverage - massive total borrowings so the rules make it difficult for them to do that.

sunnyday1234 wrote: »

he was hardly going to say "yeah we will change the rules in the summer because mr noonan asked us to"

The central bank wont be held accountable for stopping "progress" as they will be told house price increases are. They will loosen the rules and all hell with break loose. Rents will drop a little and sales will go northward and the house price boom will be back on with everyone saying "this time its different"

Central bank answer to the ECB, not the government and they don't give two hoots about keeping Irish house prices up.

Hombre Lobo

Sono wrote: »

Houses very slow to the market since the new year, very little if anything going up daily in the areas we are looking to buy, quite frustrating. Anyone else notice it's gone very quiet or is it simply the areas I am looking?

I've been watching the property market in the Northwest for about 18 months now looking for a place to tick most of my boxes. At the start of this time when I probably didn't have the money to enter but I was still watching, there were about 1200+ houses in the region. Plenty of options and good quality.

A lot of these started to go sale agreed within six months. For the last twelve months the stock has steadily declined and it's only sitting over 500 at the moment. The options left are not of great quality or in great locations. Since December '15 hardly anything new has been listed. Granted it's a holiday period so this could be one of the reasons but the slowdown of new property being listed started back around September. What's left are places that have been sitting listed for years that nobody really wants.

Beginning to feel I might have missed out on something decent and affordable but will just have to remain patient to see if something comes along.

JonDoe

Please people, step back, look outside your primal and necessary need for shelter for one minute and have a look at what's going on in the world before you even think of buying. The recovery since 2008 never really happened, the last facade, the stock markets from around the world are crumbling, Dow, SnP, NASDAQ, Shanghai Composite, DAX, CAC40, FTSE. Dollar is high but starting to tank, Oil is sub $30. Baltic Dry Index all time low, Dow Transports in the hole. Global trade is GONE, it has to collapse, it is collapsing now! Just go and look at some longish term charts.

Alkers

Hombre Lobo wrote:

A lot of these started to go sale agreed within six months. For the last twelve months the stock has steadily declined and it's only sitting over 500 at the moment. The options left are not of great quality or in great locations. Since December '15 hardly anything new has been listed. Granted it's a holiday period so this could be one of the reasons but the slowdown of new property being listed started back around September. What's left are places that have been sitting listed for years that nobody really wants.

So what's the plan, rent for half my wages?

Alter_Ego

JonDoe wrote: »

Please people, step back, look outside your primal and necessary need for shelter for one minute and have a look at what's going on in the world before you even think of buying. The recovery since 2008 never really happened, the last facade, the stock markets from around the world are crumbling, Dow, SnP, NASDAQ, Shanghai Composite, DAX, CAC40, FTSE. Dollar is high but starting to tank, Oil is sub $30. Baltic Dry Index all time low, Dow Transports in the hole. Global trade is GONE, it has to collapse, it is collapsing now! Just go and look at some longish term charts.

And when s*it actually hits the fan, would you prefer to have bought a house, which may be worth less (irrelevant if you are not looking to sell), or would you prefer to have all your hard saved money taken from your account to bail in the banks? I am not advocating buying at all cost, but if you can afford it and the right property comes along (which is the problem now in Ireland) what exactly is the benefit of waiting for prices to drop further?

handlemaster

If the figures line up for you then buy and forget about the noise

jjwada

Alter_Ego wrote: »

And when s*it actually hits the fan, would you prefer to have bought a house, which may be worth less (irrelevant if you are not looking to sell), or would you prefer to have all your hard saved money taken from your account to bail in the banks? I am not advocating buying at all cost, but if you can afford it and the right property comes along (which is the problem now in Ireland) what exactly is the benefit of waiting for prices to drop further?

I hear you. But there is a voice inside me that says to wait. I would hate to buy a house and then for prices to go down.
More the realization that if they went down by €50000 that i could have had that 50k still sitting in my bank account

Probably totally illogical on my part though.

caviardreams

jjwada wrote: »

I hear you. But there is a voice inside me that says to wait. I would hate to buy a house and then for prices to go down.
More the realization that if they went down by €50000 that i could have had that 50k still sitting in my bank account

Probably totally illogical on my part though.

I totally understand that argument and made it in my own head for a good while However you need to tell yourself that if you are buying with a medium/long term range in your mind, it is likely that prices, will drop, rise, drop and/or rise again several times over that period and you can't time markets - and who cares what your property is worth on paper if you are not trying to sell it?
When I bought just over 18 months ago, I felt I was overpaying by around 20%, but you will possibly spend your whole life waiting for the "right property" at the "right time". I realised that there will always probably be somebody who has paid less for a property than you, but also probably somebody who has paid more. Once I bought I was able to forget all about the property market hassles and just get on with my life - 18 months on and to a certain extent I couldn't care what happens prices - down or up - I am happy living where I am.

If prices went up by 30% over the next year you wouldn't be any richer and have an extra 30% of your house value in the bank, so the same applies even if they drop 30% (once you are not selling in both cases obviously!)

NIMAN

JonDoe wrote: »

Please people, step back, look outside your primal and necessary need for shelter for one minute and have a look at what's going on in the world before you even think of buying. The recovery since 2008 never really happened, the last facade, the stock markets from around the world are crumbling, Dow, SnP, NASDAQ, Shanghai Composite, DAX, CAC40, FTSE. Dollar is high but starting to tank, Oil is sub $30. Baltic Dry Index all time low, Dow Transports in the hole. Global trade is GONE, it has to collapse, it is collapsing now! Just go and look at some longish term charts.

All these recent stories have got me thinking about all the folk I read about on these forums who are looking to invest in property, and if they are about to buy into a market that is about to collapse, again.

Barely Hedged

JonDoe wrote: »

Please people, step back, look outside your primal and necessary need for shelter for one minute and have a look at what's going on in the world before you even think of buying. The recovery since 2008 never really happened, the last facade, the stock markets from around the world are crumbling, Dow, SnP, NASDAQ, Shanghai Composite, DAX, CAC40, FTSE. Dollar is high but starting to tank, Oil is sub $30. Baltic Dry Index all time low, Dow Transports in the hole. Global trade is GONE, it has to collapse, it is collapsing now! Just go and look at some longish term charts.

Can you explain the specific impact this will have on the Irish property market, otherwise your post sounds like a blabbering mess of stats - some correlated and some not

Villa05

Simona1986 wrote: »

So what's the plan, rent for half my wages?

Many point to people borrowing large amounts of money to buy houses as the root cause of the collapse, including Bertie Ahern in a recent BBC Radio interview.

To me this is very simplistic, People were pushed into buying due to ever increasing rents, Government put incompetent buddies into the role of overseeing banks, This allowed the banks to pretty much do what they like.

They lent as much as they could get their hands on to inflate property, driven by greed culture bonuses.

It would appear that this Government is doing it best to implement the same policy now.

I Am The Law

Villa05 wrote: »

Many point to people borrowing large amounts of money to buy houses as the root cause of the collapse, including Bertie Ahern in a recent BBC Radio interview.

To me this is very simplistic, People were pushed into buying due to ever increasing rents, Government put incompetent buddies into the role of overseeing banks, This allowed the banks to pretty much do what they like.

They lent as much as they could get their hands on to inflate property, driven by greed culture bonuses.

It would appear that this Government is doing it best to implement the same policy now.

Sorry I can't agree with this, the final decision to buy rests with the buyer. Nobody had a gun to their head. People have a hopeless ability to see the true value of property in this country. We are not London, New York or LA, we cannot continue to extort money from each other by driving up property prices to unrealistic levels.

jjwada

caviardreams wrote: »

I totally understand that argument and made it in my own head for a good while However you need to tell yourself that if you are buying with a medium/long term range in your mind, it is likely that prices, will drop, rise, drop and/or rise again several times over that period and you can't time markets - and who cares what your property is worth on paper if you are not trying to sell it?
When I bought just over 18 months ago, I felt I was overpaying by around 20%, but you will possibly spend your whole life waiting for the "right property" at the "right time". I realised that there will always probably be somebody who has paid less for a property than you, but also probably somebody who has paid more. Once I bought I was able to forget all about the property market hassles and just get on with my life - 18 months on and to a certain extent I couldn't care what happens prices - down or up - I am happy living where I am.

If prices went up by 30% over the next year you wouldn't be any richer and have an extra 30% of your house value in the bank, so the same applies even if they drop 30% (once you are not selling in both cases obviously!)

Reminds me of all the stalling i did buying my first pc.
I took years before i bought one.
Always waiting for the next better spec one to come out for the price i wanted to pay.

Alter_Ego

jjwada wrote: »

I hear you. But there is a voice inside me that says to wait. I would hate to buy a house and then for prices to go down.
More the realization that if they went down by €50000 that i could have had that 50k still sitting in my bank account

Probably totally illogical on my part though.

Depends if you're buying with cash or not. If you're getting a mortgage, you will most likely pay more than that in the interest alone over the lifetime of the mortgage.

Muahahaha

sunnyday1234 wrote: »

they are to be "reviewed" . With election coming up , i would bet that they will be abolished or seriously weakened. No central bank will stand against the kind of pressure that will be exerted on them by the govt in order to win votes

sunnyday1234 wrote: »

Pressure will be applied and the central bank will bow to it. Thats a certainty

I'm not sure where you get the idea that politicians have power over bankers in any meaningful sense. The governor of the Central Bank is a lot more subservient to his paymasters in the ECB than to the Irish Minister of Finance. The CB are independent of govt and while the MoF can lobby all he wants the governor takes his lead from the ECB, not the Minister.

Perhaps you've forgotten how Patrick Honohan dumped Brian Leneihan in the soup by revealing Ireland needed a bailout on national radio? It was as pure an example of the independence of central bankers and of a Central Bank governor trumping a Minister of Finance as you're ever likely to see in the public domain.

Darkest Horse

I Am The Law wrote: »

Sorry I can't agree with this, the final decision to buy rests with the buyer. Nobody had a gun to their head. People have a hopeless ability to see the true value of property in this country. We are not London, New York or LA, we cannot continue to extort money from each other by driving up property prices to unrealistic levels.

On that, I'm perpetually confused at people's complaints about the size of both rents and house prices in this country given the comparative prices in the named cities. Property is certainly not cheap but it is here compared to those places!

El_Dangeroso

I Am The Law wrote: »

Sorry I can't agree with this, the final decision to buy rests with the buyer. Nobody had a gun to their head. People have a hopeless ability to see the true value of property in this country. We are not London, New York or LA, we cannot continue to extort money from each other by driving up property prices to unrealistic levels.

I used to agree with you but I've realised that the property market in Ireland is completely rigged against the buyer.

How on earth were people buying a house in 2006 supposed to know we'd have an unprecedented drop in house prices? Were they supposed to watch on as prices continued to escalate as they had for the preceding 14 years? What crystal ball was available to them that would have avoided that situation.

I was lucky not to buy during that time, but that's all I was, lucky, most people attributing it down to their financial acumen are kidding themselves.

We might be in the same scenario now (less likely due to credit restrictions) and if we are, how the **** as a buyer who just wants to buy a house supposed to know??

OfflerCrocGod

Darkest Horse wrote: »

On that, I'm perpetually confused at people's complaints about the size of both rents and house prices in this country given the comparative prices in the named cities. Property is certainly not cheap but it is here compared to those places!

A colleague of mine, based in London, is moving to a new role, Development Team Lead/Architect for an online trading web app team. His first year salary will be €175K, that's a CTO salary in Ireland. Senior devs in the financial software industry as perms can get €100K not including bonuses. Those markets have higher cost properties for a reason...

john1963

sunday business post article on should I put my money into property.....I know no one has the answer but has anyone read it and any thoughts about it