Property Market 2018

Samuel T. Cogley

Augeo wrote: »

There are frequent mentions of this. I got a mortgage off BOI in 2005, i borrowed slightly over 4 times my annual salary but they weren't going to give me much more.

Looking at some figures, €50k salary back then was about €3000/month net after basic pension contribution etc etc.

A €500k 30 year mortgage was about €2500/month ....... did anyone get a 10x salary mortgage? Seriously like.

I think I was on 26K and wife was on a 13K bursary. Based on us both having potential higher earnings and affordability we had no problems securing a mortgage for 300K+. Through a broker - which was key I think (Dodgy deals).

MayoSalmon

Samuel T. Cogley wrote: »

I think I was on 26K and wife was on a 13K bursary. Based on us both having potential higher earnings and affordability we had no problems securing a mortgage for 300K+. Through a broker - which was key I think (Dodgy deals).

Wow

M.Cribben

Augeo wrote: »

There are frequent mentions of this. I got a mortgage off BOI in 2005, i borrowed slightly over 4 times my annual salary but they weren't going to give me much more.

Looking at some figures, €50k salary back then was about €3000/month net after basic pension contribution etc etc.

A €500k 30 year mortgage was about €2500/month ....... did anyone get a 10x salary mortgage? Seriously like.

A family member was on 30k and borrowed 275k I think iirc. That was 2004.
Know someone else working in a call centre who was given a 100% mortgage for apartment. Can't remember how much though.
Bank of Ireland were always one of the more prudent lenders. There were a lot of subprime players in the market (Start mortgages, GE money, etc) with looser restrictions.

Bob24

Samuel T. Cogley wrote: »

I think I was on 26K and wife was on a 13K bursary. Based on us both having potential higher earnings and affordability we had no problems securing a mortgage for 300K+. Through a broker - which was key I think (Dodgy deals).

Was that a 100% mortgage???

(And yes some brokers are great but others are a hazard for the economy ... since they know exactly how the system works it is easy for a broker with poor ethics to work around the rules and present the facts in a way which will please the bank while it should cause alarm).

super_furry

Augeo wrote: »

There are frequent mentions of this. I got a mortgage off BOI in 2005, i borrowed slightly over 4 times my annual salary but they weren't going to give me much more.

Looking at some figures, €50k salary back then was about €3000/month net after basic pension contribution etc etc.

A €500k 30 year mortgage was about €2500/month ....... did anyone get a 10x salary mortgage? Seriously like.

The amount of people that started off on 'interest only' mortgages back then was insane. Now I think 10x salary loans is overstating it, but 5x and even 6x wasn't uncommon.

M.Cribben

super_furry wrote: »

The amount of people that started off on 'interest only' mortgages back then was insane. Now I think 10x salary loans is overstating it, but 5x and even 6x wasn't uncommon.

I think some people are forgetting just how loose the banks were with credit back then.
I remember getting letters in the door from my bank pre-approving me for home improvement loans up to 50k.
Credit card companies (MBNA for example) were on the streets of Dublin with clipboards signing people up.
Pure madness.

Edit: found this article from 2004.
In the UK anyway, Bank of Ireland Mortgages were loaning 10x salary:
https://www.standard.co.uk/news/mortgages-at-ten-times-your-salary-6951501.html

In the most extreme example, a conditional offer of almost £350,000 was made after the 'applicant' admitted to a salary of £35,000.

The lender, Bank of Ireland Mortgages (BOIM), offered the mortgage under its controversial 1st Start scheme - aimed specifically at first-time buyers.

super_furry

M.Cribben wrote: »

I think some people are forgetting just how loose the banks were with credit back then.
I remember getting letters in the door from my bank pre-approving me for home improvement loans up to 50k.
Credit card companies (MBNA for example) were on the streets of Dublin with clipboards signing people up.
Pure madness.

Hah, I remember phoning Bank of Ireland to tell them to stop increasing the limit on my credit card. They kept doing so for three or four quarters in a row without me ever asking. I'd just get a letter to let me know they'd upped it again.

Bob24

Another one on rent increases with a bit more comments: https://www.irishtimes.com/business/personal-finance/housing-crisis-continues-as-rents-soar-past-celtic-tiger-highs-1.3482965

Good to see this called our clearly: “Dr Lyons said the latest figures would not be welcomed by policymakers given that they show the introduction of rental increase caps in cities have failed.”

Cuddlesworth

A lot of people fudged their numbers too and the banks didn't look too hard into it.

Marius34

I didn't see anyone mention it. But I believe there are small bit of good news for those who plan to buy property in the near future in Dublin County
I'm following the number of adds for property for sale in Dublin, and the number of adds for sale going up since February, 50-100/week and has reached 4500 (myhome). That's highest in the past 2 years, not seen since beginning of 2016. Meanwhile property transactions and mortgage approvals numbers has stabilized.

In the latest cso report we saw:
"In Dublin, residential property prices increased by 12.7% in the year to February"
This news about double digit price increase are still related to the 2017, since the time lag between sale agreed and to entry on price registry is over 3 month. There is no way that the price would increase 10% or more over 2018 in Dublin. I don't think we will see more than 5% in cso report 1 year later from now
Although I would not expect price fall in the next 5 years, since lack of property rentals, and Irish economy fundamentals speaks for itself.

Bob24

Marius34 wrote: »

In the latest cso report we saw:
"In Dublin, residential property prices increased by 12.7% in the year to February"
This news about double digit price increase are still related to the 2017, since the time lag between sale agreed and to entry on price registry is over 3 month. There is no way that the price would increase 10% or more over 2018 in Dublin. I don't think we will see more than 5% in cso report 1 year later from now
Although I would not expect price fall in the next 5 years, since lack of property rentals, and Irish economy fundamentals speaks for itself.

I don't know ... unfortunately they don't seem to publish Dublin-only 3-months price increase as they used to, but if you look at the national average: http://www.cso.ie/en/releasesandpublications/ep/p-rppi/residentialpropertypriceindexfebruary2018/

The price increase in Feb (1.1%) is larger than in Jan (0.5%), which itself is larger than in Dec (0.4%).

So at least at a national level the figures don't show any cooling down in the past few months, rather the opposite.

Marius34

Yes, but as I said cso data based of sale registry, which is lagging 3-5 months from the Sales agreed time. February data, are mainly for the property that went sale agreed for Sep-Nov. From what I see the cooling has started from the beginning of this year, that's when the supplies started to grow.

Carlos Orange

Bob24 wrote: »

Another one on rent increases with a bit more comments: https://www.irishtimes.com/business/personal-finance/housing-crisis-continues-as-rents-soar-past-celtic-tiger-highs-1.3482965

Good to see this called our clearly: “Dr Lyons said the latest figures would not be welcomed by policymakers given that they show the introduction of rental increase caps in cities have failed.”

I presume since this comes from Daft it is measuring advertised prices not what people are paying currently. I thought one of the impacts of the rent cap was that people were going to stick where they are more often and that would increase the gap between advertised prices of places available for rent and the average rent actually being paid.

oceanman

but where will people get the money from?.....unless wages rise significantly which at the moment they are not!

Bob24

psinno wrote: »

I presume since this comes from Daft it is measuring advertised prices not what people are paying currently. I thought one of the impacts of the rent cap was that people were going to stick where they are more often and that would increase the gap between advertised prices of places available for rent and the average rent actually being paid.

Yes you are right we have a bit of a two-tiers rental market.

Actually limiting rent increase for existing tenants while not increasing supply comes with two very bad side effects:
1) It gives an incentive for landlords to terminate tendencies at every possible occasion (legitimately or not), and it actually does happen regularity
2) Because as you said people tend to stick wit what they have the rental market is even less fluid and more constrained, which tends to add fuel to the fire and make it even harder for those looking for a place.

super_furry

super_furry wrote: »

The amount of people that started off on 'interest only' mortgages back then was insane. Now I think 10x salary loans is overstating it, but 5x and even 6x wasn't uncommon.

Indeed

M.Cribben wrote: »

I think some people are forgetting just how loose the banks were with credit back then.
I remember getting letters in the door from my bank pre-approving me for home improvement loans up to 50k.
Credit card companies (MBNA for example) were on the streets of Dublin with clipboards signing people up.
Pure madness.

Edit: found this article from 2004.
In the UK anyway, Bank of Ireland Mortgages were loaning 10x salary:
https://www.standard.co.uk/news/mortgages-at-ten-times-your-salary-6951501.html

In the UK & it states in the most extreme example. Not at all typical.

adriaaaan

Can't speak for statistics indicating a slowdown but I've noticed an anecdotal cooling in last couple of months
1) i religiously check the latest price changes register and going back last couple of weeks almost all changes are of the order of 5% reductions . In April and May, the peak selling months, agents are dropping asking prices to stimulate demand, indicating houses are "generally" over priced.
2) I attended the launch of the Whitepines development in "Rathfarnham" last week. The phase 1 houses are well designed in a nice area of SOCO D, which I think have a decent price point. Sherry Fitz agents were deflated not to be sold out by end of day 2 and there was certainly no queues and tents.
3) Talking to mortgage agents, the Central bank have seriously choked their exemption ability. Rising the nett after commitment requirement from ~2200 to ~3800. This (if it continues) will be by far the biggest choke on prices and affordability since wages aren't rising above inflation in Dublin.
4) Ringing agents, prices are hitting generally asking or asking+5%. Bidding wars are rare and exemption choking is the reason.

Just my $0.02 and admittedly my experience is Dublin and suburbs

wetlandsboy

adriaaaan wrote: »

Can't speak for statistics indicating a slowdown but I've noticed an anecdotal cooling in last couple of months
1) i religiously check the latest price changes register and going back last couple of weeks almost all changes are of the order of 5% reductions . In April and May, the peak selling months, agents are dropping asking prices to stimulate demand, indicating houses are "generally" over priced.
2) I attended the launch of the Whitepines development in "Rathfarnham" last week. The phase 1 houses are well designed in a nice area of SOCO D, which I think have a decent price point. Sherry Fitz agents were deflated not to be sold out by end of day 2 and there was certainly no queues and tents.
3) Talking to mortgage agents, the Central bank have seriously choked their exemption ability. Rising the nett after commitment requirement from ~2200 to ~3800. This (if it continues) will be by far the biggest choke on prices and affordability since wages aren't rising above inflation in Dublin.
4) Ringing agents, prices are hitting generally asking or asking+5%. Bidding wars are rare and exemption choking is the reason.

Just my $0.02 and admittedly my experience is Dublin and suburbs

I see the same trends in Galway city. Sales going for 10 to 20 % below asking price are very common, even in very desirable areas close to the city centre. (This is based on asking prices versus ppr values.) Granted, these were sales that completed in autumn/ winter, which is usually a time in which demand is relatively low.

Bob24

If this is to be believed, it seems like we don’t have the labour force required to deliver housing cheaply and in sufficient quantity for the years to come: https://www.irishtimes.com/business/construction/construction-worker-shortage-putting-housing-and-infrastructure-projects-at-risk-1.3486207

Bob24

Considering that...
- tens of thousands of construction folk emigrated to Oz in the recession
- loads of the lads who stayed went into other areas of employment (factory work, retrained etc etc)
- many of the lads in their 40s back in 2005 are now quite likely not at the top of their game physically to work beyond this decade
- the amount of construction apprencticeships completed in the last 10 years was essentially non existent

That article isn't far off.

However, when blocklayers, carpenters etc start commanding decent rates again you can be sure we will see lots of immigration from other parts of Europe. And if you have 6 or 8 folk sharing a 4 bedroomed house the high rent etc isn't a huge issue if they are here to make a few quid for a couple of years.

Bob24 wrote: »

If this is to be believed, it seems like we don’t have the labour force required to deceive housing cheaply and in sufficient quantity for the years to come: ..........

I don't think cheap housing is a realistic expectation in Ireland unless the country is on it's knees economically.

Bob24

Augeo wrote: »

I don't think cheap housing is a realistic expectation in Ireland unless the country is on it's knees economically.

Just to clarify, what meant by "deliver housing cheaply" is simply to have construction costs which are in line with other Western European countries. But yes, even that seems like an aspirational goal which is nowhere close to being within reach.

GingerLily

adriaaaan wrote: »

2) I attended the launch of the Whitepines development in "Rathfarnham" last week. The phase 1 houses are well designed in a nice area of SOCO D, which I think have a decent price point. Sherry Fitz agents were deflated not to be sold out by end of day 2 and there was certainly no queues and tents.

I was up there on Saturday last and the "local" kids causing mischief up and down the road, it's right beside a halting site which is definitely affecting the demand of that estate.

CarlOMartin

adriaaaan wrote: »

Can't speak for statistics indicating a slowdown but I've noticed an anecdotal cooling in last couple of months
1) i religiously check the latest price changes register and going back last couple of weeks almost all changes are of the order of 5% reductions . In April and May, the peak selling months, agents are dropping asking prices to stimulate demand, indicating houses are "generally" over priced.

Just my $0.02 and admittedly my experience is Dublin and suburbs

I double this. I've kept a close eye on few neighbourhoods for the last year or so while I'm saving for the deposit, and I've seen similar trend. Price hike, if any, is very small since December and is now limited to the properties in extremely good condition or similar comparative benefits.

I also noticed that all prices for the similar houses in a same neighbourhood are (almost) the same now. No kidding, you'd say - but up to few months ago they differed wildly, as the sellers didn't know what to expect really. Looks like the market is much steadier now and sellers/agents feel it..

olkon

Interesting article here echoing similar problems elsewhere.

https://www.huffingtonpost.com/entry/housing-crisis-small-cities-boise_us_5ae878f7e4b055fd7fcfcee0

wersal gummage

adriaaaan wrote: »

Rising the nett after commitment requirement from ~2200 to ~3800.

Could you please provide a link to this policy??

It seems very unusual. If a person earning 50k can get 3.5x, they can perhaps borrow 175k, with an exemption to borrow 4x, they can borrow 200k, but you are saying this person must have some arbitrary figure available after all commitments are met?? Whether it be 2200 or 3800 a month? And this figure is not related to salary? Sorry if I've missed something obvious and grateful for any info.

Ps, on your other points, and on some other people's related comments re houses selling for asking etc... I am looking at houses at present and the ones I am looking at are going for between 125k and 200k over the asking..... Maybe I'm just unlucky so far

cruizer101

I don't think it exists as central bank policy but affordability is considered by the banks.

They look at your net monthly income minus the cost of repayment stress tested and any other financial commtments (e.g. loans) and after that you must have a certain amount left over, which they see as standard living expenses. For AIB this was 1275 or 1639 if looking for an exemption.

I know they other banks we applied with did the same calculation but maybe had different figures.

So there isn't a set figure from Central Bank but they are putting pressure on individual banks. AIB told us these figures had changed.

handlemaster

If you look at whzt happened in London for example. There was a property boom then a crash then a boom again. Prices went past the previous boom level. I see that been the course for Ireland also in the high population areas /cities. There will not be any cracking in prices until this happens

Henbabani

http://cso.ie/en/releasesandpublications/ep/p-rppi/rppi/
another increase in March.
But, at yearly pace as i understand it, we are only 1.9% increase for the first 3 months, which means we are on 8% year pace, even less because the first 6 months always the busiest.

Bob24

Henbabani wrote: »

http://cso.ie/en/releasesandpublications/ep/p-rppi/rppi/
another increase in March.
But, at yearly pace as i understand it, we are only 1.9% increase for the first 3 months, which means we are on 8% year pace, even less because the first 6 months always the busiest.

An interesting point of comparison can be to look at the same figures for last year: http://www.cso.ie/en/releasesandpublications/ep/p-rppi/rppimar2017/

The same sum of the first three months of the year for 2017 was 1.2% so this year is starting a bit stronger. Due to the lag we should keep in mind this is mostly indicative of sales getting agreed at the end of the previous year, but these figures don’t seem to indicate a slowdown for that period compared to the previous year :-/

adriaaaan

wersal gummage wrote: »

Could you please provide a link to this policy??

It seems very unusual. If a person earning 50k can get 3.5x, they can perhaps borrow 175k, with an exemption to borrow 4x, they can borrow 200k, but you are saying this person must have some arbitrary figure available after all commitments are met?? Whether it be 2200 or 3800 a month? And this figure is not related to salary? Sorry if I've missed something obvious and grateful for any info.

Ps, on your other points, and on some other people's related comments re houses selling for asking etc... I am looking at houses at present and the ones I am looking at are going for between 125k and 200k over the asking..... Maybe I'm just unlucky so far

There won't be a policy written down and it's constantly changing based on rate of drawdowns, number of exemptions banks have given out, and other factors. We should have been prime candidates for a big exemption (were expecting up to 4.5) but according to AIB and BOI the CB is squeezing exemption room to manoeuvre. So ended up with 3.7 times salary off a nett take-home of 6.7 k just because of a leftover limit of 3800. We were late to the party and got AIP in early April after the exemptions were used up, but that's life. We'll find somewhere.
Also if houses are going for 200 k over asking they are either woefully priced by the auctioneer or there is something seriously wrong with people paying that much over asking price