Property Market 2019

PokeHerKing

Bluefoam wrote:

Well done. Banks did lend in the recession.... However, if someone is struggling to buy at current prices, to either save a large enough deposit, or to earn enough to meet the central banks criteria.... Then they are not the kind of person the bank will want to lend to in a pressurised situation like a recession... If a buyer is putting off buying their first home in order to save a few quid, and take advantage of a possible recession, then they have their priorities wrong. No one wants to get caught at the height of an upward price trend, but one thing is inevitable, prices over the long term will rise. They will drop in the short term occasionally, but the general trend is upwards.

I have no interest in whether prices rise or fall. My only point pages ago which has been jumped on by people is that banks always lend. It is literally their business model.

They lent to people during the recession under the same criteria that they apply now. The only difference back then was prices were much lower due to public sentiment.

PokeHerKing

zreba wrote:

In large due to the bailout. A massive stream of equity dropped on banks by Irish taxpayer.

Shock horror Central banks covering the iou's written by banks during a downturn! Swear that hasnt happened before...

zreba

PokeHerKing wrote: »

I have no interest in whether prices rise or fall. My only point pages ago which has been jumped on by people is that banks always lend. It is literally their business model.

They lent to people during the recession under the same criteria that they apply now. The only difference back then was prices were much lower due to public sentiment.

Sorry man. You're so wrong. That's simply not true. Banks withdraw lending whenever constraint on equity. That's a fact. If you have shareholders who are willing to inject capital into them then yes, banks can continue lending. A taxpayer injecting billions of euros may not happen again. In bad times nobody wants to capitalize banks. Usually only politicians are willing to do so.

Bluefoam

PokeHerKing wrote: »

Bluefoam wrote:

Well done. Banks did lend in the recession.... However, if someone is struggling to buy at current prices, to either save a large enough deposit, or to earn enough to meet the central banks criteria.... Then they are not the kind of person the bank will want to lend to in a pressurised situation like a recession... If a buyer is putting off buying their first home in order to save a few quid, and take advantage of a possible recession, then they have their priorities wrong. No one wants to get caught at the height of an upward price trend, but one thing is inevitable, prices over the long term will rise. They will drop in the short term occasionally, but the general trend is upwards.

I have no interest in whether prices rise or fall. My only point pages ago which has been jumped on by people is that banks always lend. It is literally their business model.

They lent to people during the recession under the same criteria that they apply now. The only difference back then was prices were much lower due to public sentiment.

Good for you. The banks loaned money during the recession. It's a very useful point in the context of the discussion. Hopefully we won't have to repeat it ad nauseum

zreba

PokeHerKing wrote: »

Shock horror Central banks covering the iou's written by banks during a downturn! Swear that hasnt happened before...

Ok, if you're so sure then another bailout is on the cards then sure. I'm not going to engage further.

PokeHerKing

zreba wrote:

Sorry man. You're so wrong. That's simply not true. Banks withdraw lending whenever constraint on equity. That's a fact. If you have shareholders who are willing to inject capital into them then yes, banks can continue lending. A taxpayer injecting billions of euros may not happen again. In bad times nobody wants to capitalize banks. Usually only politicians are willing to do so.

Im done with this circular argument. Show me where and when the banks withdrew lending? Prove it. As others have proven my point for me and I know from personal experience that they did not withdraw lending.

You're view of how things work and have always worked is extremely naive.

PokeHerKing

Bluefoam wrote:

Good for you. The banks loaned money during the recession. It's a very useful point in the context of the discussion. Hopefully we won't have to repeat it ad nauseum

Pretty sure the only reason it's being repeated is because posters are disputing it.

Bluefoam

PokeHerKing wrote: »

Im done with this circular argument.

Thanks be to jaysus... Please stop.

Nikki Sixx

One of my siblings got a mortgage recently of circa €600,000 on a property in Dublin. Is this risky with Brexit’s fallout looming large?

Bluefoam

Nikki Sixx wrote: »

One of my siblings got a mortgage recently of circa €600,000 on a property in Dublin. Is this risky with Brexit’s fallout looming large?

If it was for a two bed in Crumlin, then yes, it's a massive risk. Presuming they are providing 20% deposit, €750,000 is above market value for that type of house.

Sorry, I'm messing. But without some details and a crystal ball, no one can answer you effectively. Brexit definitely holds a threat, the extent of which is as yet unknown. If you sibling has bought well and has job security, then I don't see what's to worry about.

Bob24

Interested Observer wrote: »

You seem hell bent on demonstrating SOME people would still get mortgages, we know this, it's obvious.

A large minority would still get them is what I’m saying (it was one third compared to now at the bottom of the previous recession)

I’m not sure everyone on this thread actually gets that. I see many posts saying her it was virtually impossible to get a mortgage during the recession and anyone thinking they’d get one is daydreaming. Which is incorrect.

The_Conductor

zreba wrote: »

Even if they bring them down to near 0%, how much of a price drop can banks sustain before going under water again?

The minimum deposits of 20% add a safety zone of 20% for banks, but FTBs only need 10% deposit. A price drop by 30%-40% and nearly no mortgage withdrawn in the last 3-4 years would be safe.

Considering the above, in my view, banks wouldn't get into big trouble on house price correction of 20%, but 30%+ could cause trouble and decreased lending (up to a halt).

The assumption that you're making there is that banks will foreclose on residential property- or people voluntarily surrender residential property- akin to the 'jingle mail' scenario of the States (who, coincidentally- despite breaking their banking system, now have largely cleansed their system of its systemic debts).

A mortgage is a loan with a lien on a property as a security against the debt. In an Irish context- where banks cannot reasonably foreclose on liens- the question has to be asked- should alternate assets have additional liens placed on them- to discourage, in an Irish context, strategic delinquencies.

Keep in mind- at the peak it was estimated that as many as 60% of those in mortgage arrears- could in actual fact afford to pay their mortgages, if they so choose to do so. Why would you though- if you were safe in the knowlege that the bank weren't going to kick you out of your home, even if you stopped paying the mortgage.

The Irish system- is almost unique- and is awful- its a tad shy of a community debt- where individuals no longer need care about their debts- because the tax payer will bail them out (eventually) anyway...........

Our system is appalling.

The point I'm making is that it doesn't really matter whether a borrower has 10 or 20% equity in a property- if it is impossible, from a societal and political perspective, to ever make a call on the asset. Its moot- it doesn't really matter. Irish borrowers know this- and have abused the situation to their advantage- safe in the knowledge that they can remain long term in their property without paying their mortgage (or in the case of tenants- their rent).

This system has been solidified in society and law- by our political overlords- whose principle guidance has been listening to whoever yells the loudest. Its a beauty contest for politicians- on steroids.

hmmm

The_Conductor wrote: »

Irish borrowers know this- and have abused the situation to their advantage- safe in the knowledge that they can remain long term in their property without paying their mortgage (or in the case of tenants- their rent).

This system has been solidified in society and law- by our political overlords- whose principle guidance has been listening to whoever yells the loudest. Its a beauty contest for politicians- on steroids.

To be fair, it's a relatively small group who have abused this. But they've abused it with gusto, and the costs are spread out amongst all the rest of us who have to pay an extra 1 or 1.5% interest costs.

I agree absolutely re politicians leaping on the bandwagon to "stop repossessions", when they know full well it'd be better for everyone if they went ahead. I notice that a lot of people who support these sort of politicians are mystified as to why people vote for parties like FF & FG - well in large part it's because there is a silent majority of people who are tired of carrying the freeloaders and chancers, but if they opened their mouths to say this they'd be shot down by the media.

Arthur Daley

hmmm wrote: »

in large part it's because there is a silent majority of people who are tired of carrying the freeloaders and chancers, but if they opened their mouths to say this they'd be shot down by the media.

That's democracy for ya. Meantime when any form of 'alternative', 'anti-establishment' or 'anti corruption' movement/party does form, the first thing it seeks is an end to repossessions, and the necessary pricing of risk/return through a functional banking system.

Nikki Sixx

I assume the reason rents are spiralling out of control is because of a lot of politicians being landlords themselves. They will bring in token measures which are meant to control rents, but actually don’t have any impact.

Graham

PokeHerKing wrote: »

They lent to people during the recession under the same criteria that they apply now. The only difference back then was prices were much lower due to public sentiment.

That's not what the central bank report:

the tightening of credit standards since 2007 was more acute and longer lasting in Ireland particularly regarding loans to households for house purchases. The tightening of credit standards reported by Irish banks was almost entirely attributed to Cost of Funds and Balance Sheet Constraints as well as Increased Risk Perception and has been reflected in both price and non-price terms and conditions including higher loan margins and more restrictive lending conditions.

PokeHerKing

Graham wrote:

That's not what the central bank report:

Ive no idea what point your trying to make?

Lending criteria tightened after the 2007 financial crash. That is not in dispute.

Irish banks continued to lend through the recession applying the same criteria they're applying now. I got mortgage approval late 2012 for 4 times our joint salary. I'm fairly sure that's all I'd get now if I applied.

Graham

So you're agreeing lending criteria tightened and saying lending criteria didn't change?

I see.

PokeHerKing

Graham wrote:

So you're agreeing lending criteria tightened and saying lending criteria didn't change?

Where did I say lending criteria didn't tighten???

Graham

My mistake. I see you are suggesting the lending criteria during the GFC is the same as it is now.

It's not.

zreba

Nikki Sixx wrote: »

I assume the reason rents are spiralling out of control is because of a lot of politicians being landlords themselves. They will bring in token measures which are meant to control rents, but actually don’t have any impact.

I don't think this is that simple. One of the reasons the constrained rental supply is that private landlords have been running away from the rental market for a few years now, because:

1) taxes eat up to half of the profit
2) regulation making it very difficult to deal with trouble making or non paying tenants.

Politicians being landlords would surely be in favor of sorting out these two obstacles, right?

cunnifferous

tobsey wrote: »

30-40% drop happened once ever. We still haven’t reached the prices that were the case before that drop. There is no reasonable basis to predict that prices will drop by that percentage again. When the last crash happened we had the dual problem of Irish banks being over extended and a global recession. The changes in the central bank rules mean that both of those can’t happen again. If there’s a global recession, Irish banks are in a better shape than last time. If the Irish economy struggles, the same thing can be said.

It’s not unreasonable to predict that property prices will drop over the medium term, but to predict that they’ll drop by 30-40% has no supporting evidence whatsoever.

30-40% price drops have only happened once but that's because the house price growth of the Celtic Tiger scale only happened once, obviously preceding the aforementioned crash.

Currently we are seeing house price growth of aprrox. 80% in in 6 or 7 years occurring. Such accelerated growth, I would argue, would again put us back in a position for an accelerated fall yet again. Perhaps not to the same extent as 08-13 but certainly a significant fall.

zreba

Ireland has an open economy, vulnerable to external shocks much more than any other European country. The Irish economy is highly cyclical, which means the bull runs are strong, but also the bearish movement are significant. Expecting a full throttle bull run and no significant reversal to follow is naive. Look for the future, but learn from the past.

shenanagans

Nikki Sixx wrote: »

I assume the reason rents are spiralling out of control is because of a lot of politicians being landlords themselves. They will bring in token measures which are meant to control rents, but actually don’t have any impact.

Seriously?

I get the anger in regards to spiralling rents. But legislation changes have favoured tenants Not landlords. Which is why so many LLs have left the market. Reduced supply partly to blame. The legislation now is so in favour of the tenant that LLs have made a major move into short term lettings.... where they don't have to work about bad tenants. You can thanks the politicians for that.... They ran LLs into short term letting which their legislation.

If you are a LL and have a non paying tenant.... the legislation is this country is a joke. If a tenant is 6 months is a place and stops paying rent there's f**k all a landlord can do... Major long expensive process to get rid of them. Which is why many have left the market.

We need serious legislation changes to help decent LLs. If tenants is non paying or anti social etc the LL should be able to evict in a much shorter time frame.

PokeHerKing

Graham wrote:

My mistake. I see you are suggesting the lending criteria during the GFC is the same as it is now.

Graham wrote:

It's not.

So what was the lending criteria during the GFC and when did it change to its current form?

Because I can tell you first hand that in 2012 I needed 10% deposit and was offered 4x our joint salary. I'm fairly positive that a first time buyer today is subject to the same criteria.

Brian201888

Lads it's the 2019 thread, go bump one from a decade ago if you want to keep this ****e up

zreba

PokeHerKing wrote: »

So what was the lending criteria during the GFC and when did it change to its current form?

Because I can tell you first hand that in 2012 I needed 10% deposit and was offered 4x our joint salary. I'm fairly positive that a first time buyer today is subject to the same criteria.

So you think that's it? Anybody having 10% deposit can borrow 3.5 times annual salary for a home anytime? Just like that?

Bluefoam

PokeHerKing wrote: »

Graham wrote:

My mistake. I see you are suggesting the lending criteria during the GFC is the same as it is now.

Graham wrote:

It's not.

So what was the lending criteria during the GFC and when did it change to its current form?

Because I can tell you first hand that in 2012 I needed 10% deposit and was offered 4x our joint salary. I'm fairly positive that a first time buyer today is subject to the same criteria.

First time buyer can get a mortgage on a 20% deposit and based on 3.5 times their salary. The government currently help provide the deposit with a grant of 10%.

Both of these criteria can be appealed for a limited number of applicants, and each can be exceeded on a case by case basis, but not both.

You also need to prove savings, account for all money's and have a monetary history to prove your ability to pay the mortgage.

So no, you are wrong.

sk8board

Nikki Sixx wrote: »

I assume the reason rents are spiralling out of control is because of a lot of politicians being landlords themselves. They will bring in token measures which are meant to control rents, but actually don’t have any impact.

This isnt just the usual BS statement, but in reality they have the opposite effect - as a full time LL, there is nothing they’ve introduced that actually helps landlords - it’s all just token gestures, like pulling forward the 100% mortgage interest deduction by one year.
Changes made recently, especially the rent controls of an investment market, are almost all pro tenant.
I’ve no problem with that myself, but let’s not tell lies because it sounds like a nice sound bite. Bloody politicians, right? They’re all the same, right?

For example, why not allow LPT to be deductible (as they were already recommended to do in 2013s report to M Noonan), or allow serious LLs to professionalise, establish companies, in return for a clear tenant protections, but also clear landlord protections for non-payment of rents.

This “all politicians are landlords” BS is starting to get old - property is an obvious Irish investment market, versus say equities and bonds, which the average person tends to avoid here in Ireland. Politicians are well paid, like lots of careers, and therefore also have savings to invest, like lots of people. It’s hardly surprising that the 170,000 landlords includes 20 or 30 politicians.
Heck, most of them are accidental LLs anyway!

PokeHerKing

zreba wrote:

So you think that's it? Anybody having 10% deposit can borrow 3.5 times annual salary for a home anytime? Just like that?

I know you don't want to hear this but yes. All things being equal, permanent employment and proof of saving the deposit you can get 3.5 times your salary and buy a home.

I could do this in late 2012 also. I feel like I'm taking crazy pills here lads/lassies.