Social Mobility in the Housing Market

myshirt

More and more first time buyers are using the bank of Mam and Dad, up to 5 in 10, and a further portion have inheritances, perhaps an additional 1 in 10.

The effect of this is one of exacerbating inequality in Ireland and impeding social mobility of otherwise more capable, able, and competent contributors to the economy.

Owning a home is quite literally a pipe dream for a significant portion of these young people who's parents before them, or wider family, have not built up housing wealth or do not hold as high levels of educational attainment. How do they break the mould?

What can be done to give these kids a fair chance in our housing market?

myshirt

My own view as an initial point of policy is this:

Where direct government intervention to assist and benefit this prior generation has occurred to the extent that it did occur, it is only right that this generation be heavily, heavily taxed (via CAT) to redress the balance, not perpetuate the issue, and restructure our system for a more equitable, fair, and competitive economy.

Remember, as a brief example we had a high level of second home ownership amongst unsophisticated investors at one stage in this country, something completely dysfunctional. The point follows through that there are many other things dysfunctional about our market today, and a restructuring is needed. One of them is the level of retained wealth from dysfunctional fiscal policy.

High CAT rates is a good start for me, and a restriction of the FTB grant away from those with familial wealth.

If we don't, is the market in Dun Laoghaire giving us a snapshot of the wider Dublin market in 2 years where all the kids will need to stump up 800k for a house?

Feckofff

myshirt wrote: »

My own view as an initial point of policy is this:

Where direct government intervention to assist and benefit this prior generation has occurred to the extent that it did occur, it is only right that this generation be heavily, heavily taxed (via CAT) to redress the balance, not perpetuate the issue, and restructure our system for a more equitable, fair, and competitive economy.

Remember, as a brief example we had a high level of second home ownership amongst unsophisticated investors at one stage in this country, something completely dysfunctional. The point follows through that there are many other things dysfunctional about our market today, and a restructuring is needed. One of them is the level of retained wealth from dysfunctional fiscal policy.

High CAT rates is a good start for me, and a restriction of the FTB grant away from those with familial wealth.

If we don't, is the market in Dun Laoghaire giving us a snapshot of the wider Dublin market in 2 years where all the kids will need to stump up 800k for a house?

So you're annoyed you can't afford a house and you'd like society to fix it for you?

myshirt

Feckofff wrote: »

So you're annoyed you can't afford a house and you'd like society to fix it for you?

No. I have a house and I can give my kids money for theirs, but others cannot. Dysfunctional fiscal policy has put wealth into the hands of some, and it distorts the market, so why not ensure they can't pass it on to the next generation and perpetuate the issue?

Do you not agree that what we have in Ireland at the moment is exacerbating inequality and social mobility?

TheQuietFella

myshirt wrote: »

No. I have a house and I can give my kids money for theirs, but others cannot. Dysfunctional fiscal policy has put wealth into the hands of some, and it distorts the market, so why not ensure they can't pass it on to the next generation and perpetuate the issue?

Do you not agree that what we have in Ireland at the moment is exacerbating inequality and social mobility?

Way too many issues that can be covered by that statement!

My ideology is work hard, save hard and don't go looking for handouts!

The 'I believe that I'm entitled' wreaks my head! Work, work, work!!!

Feckofff

myshirt wrote: »

No. I have a house and I can give my kids money for theirs, but others cannot. Dysfunctional fiscal policy has put wealth into the hands of some, and it distorts the market, so why not ensure they can't pass it on to the next generation and perpetuate the issue?

Do you not agree that what we have in Ireland at the moment is exacerbating inequality and social mobility?

The ugly truth of social mobility is that if someone wants to move up then someone else has to move down. It can't happen without a fight/competition. It is a zero sum game, some will win, some will lose.
I would love it to be different but this is the reality.

myshirt

TheQuietFella wrote: »

Way too many issues that can be covered by that statement!

My ideology is work hard, save hard and don't go looking for handouts!

The 'I believe that I'm entitled' wreaks my head! Work, work, work!!!

Hang on, I'm with you on that. The point is these kids are doing that, and then they come up against it. How do you propose they overcome these barriers?

In fact, if you mean what you say you'd agree with me, because you can very much have a kid working very hard get gazumped by another who is not working hard at all.

myshirt

Feckofff wrote: »

The ugly truth of social mobility is that if someone wants to move up then someone else has to move down. It can't happen without a fight/competition. It is a zero sum game, some will win, some will lose.
I would love it to be different but this is the reality.

Well then take it back at death via CAT and ensure that all are on a level pegging. May the best man win then.

I suspect the fear is you may find that more kids in the higher social bracket will fall under the challenge, and the kids in the lower will step up to the challenge and rise.

Personally I always loved hiring kids from poorer backgrounds because they were grafters and they'd work hard, always were determined to overcome the challenges life had thrown at them, so I hate seeing these kids not getting a fair shake.

Feckofff

myshirt wrote: »

Well then take it back at death via CAT and ensure that all are on a level pegging. May the best man win then.

I suspect the fear is you may find that kids in the higher social bracket will fall under the challenge, and the kids in the lower will rise.

Personally I always loved hiring kids from poorer backgrounds because they were grafters and they'd work hard, always were determined to overcome the challenges life had thrown at them, so I hate seeing these kids not getting a fair shake.

90% of people are going to vote against a system that could leave them or their kids at the bottom of the pile.
Ireland is not a society in the true sense of the word.
We are a collection of people who happen to live and work on this island.

Mrs OBumble

myshirt wrote: »

Owning a home is quite literally a pipe dream for a significant portion of these young people who's parents before them, or wider family, have not built up housing wealth or do not hold as high levels of educational attainment. How do they break the mould?

So their families didn't own their own homes, but you think that the kids should be able to, even though they didn't have high levels of educational attainment?

Upward social mobillity happens when smart kids are born into poor circumstances: they pull themselves up by hard work and educational attainment. The latter can be through formal education - or from the "school of life" for those who actually do learn a business properly (eg get an apprenticeship, learn the trade and the business and start a business for themselves).

Downward social mobility happens when thick kids are born into weathy circumstances. Sadly it's often the thick kids children who suffer the most. But you cannot legislate to stop that.

Trying to make it happen artificially is a recipe for financial disaster. Evidence: the property crash, when people who took on debt that simple stress-testing would have said they shouldn't got burned.

myshirt

@MrsOBumble

Clearly the market itself is not sorting this out, and what we are left with is either perpetuating the issue or redressing the balance and making an effort to restructure.

What do you propose we do to give these kids a fair shake at getting​ a house?

LirW

If we don't, is the market in Dun Laoghaire giving us a snapshot of the wider Dublin market in 2 years where all the kids will need to stump up 800k for a house?

You know that there are other places on this island than Dun Laoghaire? It is not the government's job to take care that your kids or anyone else's kids can buy in Dun Laoghaire.

myshirt

LirW wrote: »

You know that there are other places on this island than Dun Laoghaire? It is not the government's job to take care that your kids or anyone else's kids can buy in Dun Laoghaire.

I agree. Just as it is not the job of these kids to pay the fiscal debt borrowed permitting that type of wealth. Raise the CAT and redress the balance.

LirW

I honestly find this thread a bit odd. What's the point of it? Is it another one about lowering CAT threshold?
To keep up the example with Dun Laoghaire: It is one of the most expensive corners in Dublin, lots would like to live there but few can, because it is an uppermarket area. There are plenty of places in between Dun Laoghaire and South Finglas where you can find something for your budget (I'm not going to dismiss the problem of supply but I think it's not what this thread is about).

So to say, I'd love love love to live in Howth Village, but can't afford it. At the moment the market in Dublin is experiencing a special situation: Lack of supply drives prices up, lack of rental opportunities drives rents up. There are a million theories what is going to happen over the next few years, but nobody really knows.
I do not see inheritance as a big problem here in this city, at least not as much as the low supply for buying and the crazy high rents.
There will always be expensive areas in every town, DL happens to be one of them.

myshirt

LirW, if housing had a simple relationship with supply and price, such that supply goes up and price goes down, do you think that developers would start building?

It's a false narrative. Housing does not behave as a 'normal good' as the economists would call it.

Anyway, it's off point, and my fault. The basic thing I am asking is what can be done to assist the kids who do not have the bank of Mam and Dad or an inheritance?

Is this not an issue? Surely I am not on my own in thinking this.

Raising CAT is only one idea, and one I definitely think needs to happen given the backdrop of how that wealth was generated.

Samuel T. Cogley

Social mobility is the 'problem'. Can't possibly buy a three bed terrace in Kilbarrack it's not consummate with my IT job seems to be rather prevalent. I work with a group of lads on about 25K a year basic and while some of them have partners on more than they are, almost all of them have qualified for mortgages and are looking at houses, almost exclusively on the Northside of Dublin and they're finding them.

I've said it before and I'll continue to say it; working class people, of which I am one, need to buy in working class areas where the prices are at a level that can be afforded. People also need a adjust their expectations and realise 100Sqm is perfectly fine to bring up two kids in. People earning 35K a year in IT (for example) also need to understand they're the new working class.

If you break into management or you're going to have increments etc. fantastic, pay off the morgage on the 3 bed-semi/terrnce on the Northside and start looking at the forever home - if there is such a thing. That's what plenty of people have done and are doing at the moment hence high prices in those segments.

LirW

I think it is not so much about owning but more about a stable living situation. The situation regarding rent as it is gives the tenants rights where it's difficult to evict but the leases themselves can give a tenant who has nothing bad in mind like overstaying some sort of stability when circumstances change, like, for example having a kid.

Don't get me wrong, I grew up in the 90's on the mainland being very poor. Life was a struggle for us. When I was 20, I moved out and lived in apartments for years. Both of them had leases that made it a lot easier to feel homely, cost was one factor of it and raising rent was bound to the inflation. So basically I'd never face a rent hike of a couple of hundred euro. The rent cap implied here overnight is a joke because it turned a system 180 degrees, let's say it was quite insensitive and caused lots of troubles.

Now that I'm living here with my partner brought buying property in my mind for the first time ever. I get your point, but I think it's a too simple solution to a problem way too complex. The very rich have their ways to park their money somewhere where it's not affected from any changes in taxes at all.
Let's put it like that: What kind of CAT-changes would you like to see? I'm genuinely interested. How is that going to help the working class kids? If CAT was raised and you have to pay a very high percentage in tax it's putting basically everyone in the "start at the very bottom" position. So one could argue the pressure on the market in a lower price range will be even more than it currently is, which affects prices again.

I do think that the whole market is a powder keg with a lot of factors: supply-demand, the big gap between people with huge deposits from inheritance, rental circumstances, access to credit. You'd need to change more than one factor in the game that it reaches the very lowest of society.

Bushmanpm

Three things I've learned about life:
1, Life's not fair, deal with that and you'll go a lot further
2, "The State" is not your friend, you are merely there to fund their vanity projects, index linked pensions and the overall gravy train
3, You are entitled to nothing. If you want something, attain it through your own efforts, not the efforts of others.
"How can we assist the kids?" is the wailing of a champagne socialist who in the next breath demands MOAR taxes, usually from other (read 'only richer than me') people.
There will always people richer than you but remember, there will always be people poorer than you.

myshirt

I don't agree. A socialist would ask you to tax work. I'm not onside for that at all. I am onside for the light touch stuff like CAT that will do nothing but make the playing field more level. The stuff that prawn sandwich socialists go on about is tax initiatives that damage the economy, and an agenda that keeps wages for the older members of unions to the detriment of the public and of young workers.

Raising CAT and lowering the thresholds, particularly given how wealth was generated in Ireland, is not in the same basket of socialism at all at all.

We have to give these kids a fair shake at home ownership and not lock them out by perpetuating the issue with the passing on of family wealth and giving of deposits etc.

Mr McBoatface

Going to quote myself from another thread on this issue

Mr McBoatface wrote: »

I come from an impoverished background, grew up in an area of Dublin that's considered very rough. During my youth 80% male unemployment was the norm. In my teen years my father worked very hard and set up his own business and done very well. They moved away to a much more affluent area of Dublin where my younger brother grew up... I consider him posh now :-) My father's hard work earned him his assets. I and many of my friend worked hard and done well also. I'm 39 a widower and single parent of 2 children under the age of 9 yet I go to work every day and have amassed substantial assets that as far as I'm concerned are for the benefit of my children, my father and friends have the same attitude about the assets they amassed. The effort we put into bettering ourselves is not so much for us it's for or children.

It's wealth earned from a position of poverty in an effort to better our families future. It's our legacy and gift to them, society has benefited from this IMHO noble attitude. If you remove the benefits of our efforts you in affect remove rewards of incentive to work hard and society suffers. Removing the ambition and incentive to improve our childrens lot is a terrible idea. My hard work should benefit me and mine.

It doesn't matter that my children didn't sweat for it.... I've done that for them in spades.

So OP, let me get this straight you want the government to remove the benefits of all my hard work for my children who are already at a disadvantage in life cause your parent's didn't work hard enough ?

Kindly go take that chip on your shoulder back to them.

catrionanic

We bought in Dublin in 2015 without help from our parents. We are both from working class backgrounds but worked hard and saved like crazy. Both our salaries were close to the average wage in Ireland.

The LTV restrictions do make it impossible if you're living in Dublin and earning close to minimum wage, though.

Bushmanpm

myshirt wrote:

I don't agree. A socialist would ask you to tax work. I'm not onside for that at all. I am onside for the light touch stuff like CAT that will do nothing but make the playing field more level. The stuff that prawn sandwich socialists go on about is tax initiatives that damage the economy, and an agenda that keeps wages for the older members of unions to the detriment of the public and of young workers.

Socialists crave ALL taxes, not just through work, anything that funds their state is considered a worthy tax.

ArnieSilvia

Well, I came here 13 years ago with a suitcase and couple hundred euro, unusable degree and incompatible work experience.
Took me 8 years to get things in order, starting with language. My wife and I still have to do another degree.
Then, after working 3 years in a decent enough job where I had to push a lot of boundaries, we managed to buy a house in Dublin's suburbs. It was 3 years ago.

It can be done. Without inheritance.

The funny thing is that I found ourselves now in a privileged position where our mortgage is half of the rent we would have to pay, almost like a lot of older folk living here all their lives.

Op's argument is important, I fully get it. I'd start with inheritance tax and property tax.

There's a big flaw though. Foreign investors. You can't tax Irish if foreigners​ can come in and milk it. I'd tax them to death. Before, I'd build a ton of social housing with one condition: never to be sold by state. To anyone.

Yourself isit

myshirt wrote: »

I don't agree. A socialist would ask you to tax work. I'm not onside for that at all. I am onside for the light touch stuff like CAT that will do nothing but make the playing field more level. The stuff that prawn sandwich socialists go on about is tax initiatives that damage the economy, and an agenda that keeps wages for the older members of unions to the detriment of the public and of young workers.

Raising CAT and lowering the thresholds, particularly given how wealth was generated in Ireland, is not in the same basket of socialism at all at all.

We have to give these kids a fair shake at home ownership and not lock them out by perpetuating the issue with the passing on of family wealth and giving of deposits etc.

Irish socialists tend to tax work yes, and exempt wealth. But that's not universal.

Yourself isit

Inherited wealth gives you Paul Murphy.

Bushmanpm

ArnieSilvia wrote:

There's a big flaw though. Foreign investors. You can't tax Irish if foreigners​ can come in and milk it. I'd tax them to death. Before, I'd build a ton of social housing with one condition: never to be sold by state. To anyone.

Any money earned in Ireland is taxable, whether the owner lives in Ireland or abroad.

Yourself isit

Samuel T. Cogley wrote: »

Social mobility is the 'problem'. Can't possibly buy a three bed terrace in Kilbarrack it's not consummate with my IT job seems to be rather prevalent. I work with a group of lads on about 25K a year basic and while some of them have partners on more than they are, almost all of them have qualified for mortgages and are looking at houses, almost exclusively on the Northside of Dublin and they're finding them.

I've said it before and I'll continue to say it; working class people, of which I am one, need to buy in working class areas where the prices are at a level that can be afforded. People also need a adjust their expectations and realise 100Sqm is perfectly fine to bring up two kids in. People earning 35K a year in IT (for example) also need to understand they're the new working class.

If you break into management or you're going to have increments etc. fantastic, pay off the morgage on the 3 bed-semi/terrnce on the Northside and start looking at the forever home - if there is such a thing. That's what plenty of people have done and are doing at the moment hence high prices in those segments.

Well 35k is low for IT - seniors get 60+. The question is though - where is the "middle class". Is it all inherited wealth? The fact that you think IT is working class proves the point - it is without parental intervention.

At least in terms of where you live (which affects the school your kids go to and their accent etc - which is how class is often signaled on this country). .

quadrifoglio verde

myshirt wrote: »

LirW, if housing had a simple relationship with supply and price, such that supply goes up and price goes down, do you think that developers would start building?

I think you should look into the cost of building a 3 bed semi, before profit and realise that a couple on 60K combined would struggle to buy.
Added to that, the cost of financing a housing development has gotten way out of hand.

We've gone from a stage where the banks would give every Tom, Dick and Harry a loan to be a developer to now, where it's basically non existent. Where it does exist, it's build a show house, sell 10 units and we'll finance them. Sell 10 more and we'll finance that. At near extortionate rates.

myshirt

Bushmanpm wrote: »

Any money earned in Ireland is taxable, whether the owner lives in Ireland or abroad.

I think Arnie's point is that first time buyers are going up against foreign investors in the market, and losing out. Foreign investors who would prefer that couple to pay 50% of take-home in rent to them, rather than own the property and pay say 25% of take-home. That's another angle to the market here. Investors with deep pockets. You can make 3% lending money to them to buy, but make 10-12% renting it to them.

Wait until the workers come over from London, we will see the impact they will have on rent here in Dublin with the money they have.

Bushmanpm

myshirt wrote:

I think Arnie's point is that first time buyers are going up against foreign investors in the market, and losing out. Foreign investors who would prefer that couple to pay 50% of take-home in rent to them, rather than own the property and pay say 25% of take-home. That's another angle to the market here. Investors with deep pockets. You can make 3% lending money to them to buy, but make 10-12% renting it to them.

....and with the 4% maximum increase in rents in places like Dublin as well as the Part 4 six months-six years conditions, a lot of landlords will be considering selling up, adding to the housing supply and putting pressure on the sale prices.

myshirt

myshirt wrote: »

I agree. Just as it is not the job of these kids to pay the fiscal debt borrowed permitting that type of wealth. Raise the CAT and redress the balance.

Raise CAT? It should be abolished. Dirty tax punishing successful people who try to make the lives of their kids better etc. Money a family earns should be theirs and the future generations to benefit it most certainly should it be taken and handed to others, if they can't buy themselves or their parents can't help them buy then they have no entitlement to another families money to help them.

Higher earners are already supporting a vast amount of thouse on lower incomes and the dole the last thing they should be faced with is more tax on top of the already crazy amount of taxation they are already burdened with.

There will never be a "level playing field" why should there? There will always be people with different levels of wealth that's the natural cycle of things.

myshirt

Your post don't seem to understand how wealth is generated.

LirW

myshirt wrote: »

Your post don't seem to understand how wealth is generated.

He has a point though. Where do you draw the line? The CAT already has a threshold.

Yourself isit

Alec Damaged Gourmet wrote: »

Raise CAT? It should be abolished. Dirty tax punishing successful people who try to make the lives of their kids better etc. Money a family earns should be theirs and the future generations to benefit it most certainly should it be taken and handed to others, if they can't buy themselves or their parents can't help them buy then they have no entitlement to another families money to help them.

Higher earners are already supporting a vast amount of thouse on lower incomes and the dole the last thing they should be faced with is more tax on top of the already crazy amount of taxation they are already burdened with.

There will never be a "level playing field" why should there? There will always be people with different levels of wealth that's the natural cycle of things.

The natural cycle of things is a very dubious phrase with a very dubious history.

Bushmanpm

Bushmanpm wrote:

Three things I've learned about life: 1, Life's not fair, deal with that and you'll go a lot further 2, "The State" is not your friend, you are merely there to fund their vanity projects, index linked pensions and the overall gravy train 3, You are entitled to nothing. If you want something, attain it through your own efforts, not the efforts of others. "How can we assist the kids?" is the wailing of a champagne socialist who in the next breath demands MOAR taxes, usually from other (read 'only richer than me') people. There will always people richer than you but remember, there will always be people poorer than you.

I refer to my original post.
You pay tax on your earnings, tax when you sell your home, tax on your vehicle that takes you to work, tax on most items you buy:
TAX TAX TAX!
Rely on no-one, expect no-one else to subsidise you and just be damn grateful you're still doing a lot better than most of the rest of the bloody world and drop the
"Wah wah wah, I'm entitled" BS!

Yourself isit

Bushmanpm wrote: »

I refer to my original post.
You pay tax on your earnings, tax when you sell your home, tax on your vehicle that takes you to work, tax on most items you buy:
TAX TAX TAX!
Rely on no-one, expect no-one else to subsidise you and just be damn grateful you're still doing a lot better than most of the rest of the bloody world and drop the
"Wah wah wah, I'm entitled" BS!

I know you were impressed with your sub daily express rant but the rest of us weren't. Otherwise we would have quoted it.

wordofwarning

catrionanic wrote: »

The LTV restrictions do make it impossible if you're living in Dublin and earning close to minimum wage, though.

I am sorry, but IMO no one close to marginal living should be getting a mortgage. There is this belief in English speaking countries that I should be entitled to own a home and I should have to put down very little to own. Who cares if I barely have enough at the end of the month, I need to own a home

You don't need to own a home and really you should not own a home. The whole problem with the housing bubble in the US was giving mortgages to people who should not get a mortgage ie low income and/or low credit rating. The same happened here. Giving mortgages with no deposit or homes that were 10/15 times someones income

The LTV requirements are much needed. The Central Bank knows from research that people on low income should not/can't afford to own a home.

People should be demanding the Government gives them an affordable home to live in ie rent it. Rather than demanding a cheap house that they can't afford and should not own. The American Dream of owning a home is not for everyone. The tens of thousands of Irish people 3/4 years in arrears with no sign of getting out of the hole they dug themselves into should be a remainder of that. But no lets all buy houses we can't afford, sure what can go wrong?

Mrs OBumble

catrionanic wrote: »

The LTV restrictions do make it impossible if you're living in Dublin and earning close to minimum wage, though.

If you're in Dublin on close to the minimum wage, you'll be eligible for social housing - or you'll be getting an education so you can get a better paying job.

myshirt wrote: »

We have to give these kids a fair shake at home ownership and not lock them out by perpetuating the issue with the passing on of family wealth and giving of deposits etc.

Why do we have to?

If they're bright, they'll work out a way onto the property ladder (if that's what they want to do).

If they're unlucky (sick / disabled), not overly bright (so cannot get a well paying job) or lazy, they'll get social housing.

If they're in the middle, what exactly is wrong with them using private sector rental long term? Social mobility should be based on ability, not existence.

Samuel T. Cogley

Yourself isit wrote: »

Well 35k is low for IT - seniors get 60+. The question is though - where is the "middle class". Is it all inherited wealth? The fact that you think IT is working class proves the point - it is without parental intervention.

At least in terms of where you live (which affects the school your kids go to and their accent etc - which is how class is often signaled on this country). .

Without going off on the tangent we have in some other threads suffice it to say the old three tier system is effectively dead with a new system with about three different working class types and three middle class types and the landed gentry effectively gone. In Ireland we still have them, but they've never really been gentry - sorry farmers :pac:

That aside middle class to me is effectively left to work on your own where as working class be it traditional trades, manufacturing or more modern working class of lower end IT workers (effectively intellectual labourers) we really need to get it into our heads that the average wage is about 35-40K and that is going to land you in Donaghmede assuming the partner earns less or kids are into the mix - and there is nothing wrong with that.

Far too many people (IMHO) won't buy anything without rock or knock in the title and I'm convinced this is a large part of the problem. Obviously I relaise that there is a huge supply shortage but people need to give up on the notion that they can get a 150Sqm detached house in the leafy suburbs for less then 500K.